Free State Project Forum

FSP -- General Discussion => Prospective Participants => Topic started by: Dan on November 06, 2002, 01:06:18 am

Title: Industry Regulation
Post by: Dan on November 06, 2002, 01:06:18 am
It seems an important point to you is the removal of regulations.  For the most part I agree, however I have a couple problems:
1)A big purpose of regulation is to make it possible for a company to enter into a market with an extremely high barrier of entry.  It also keeps the company honest when it is impossible for another company to enter the market and compete.

A good example is telecommunications.  There is no way a company (lets call it ATT) could have built a telephone system on it's own.  ATT would expend enormous capital just to get the basic infrastructure it needed to do business.  It would take a long time to turn a profit.  And on top of all that; there was no guarantee phone service would take off.

Assume ATT has somehow established itself.  There is no way a competitor (lets call it RMT) could enter the market.  If ATT had the last word it would never allow RMT to lease it's phone lines.  RMT could never run their own lines, the expense and duplicated effort would be staggering.  Now ATT can set prices at whatever it wants and ATT has no reason to innovate (ever see Brazil).
How would your state handle a situation like this?

2)Think about the children :).  We need some regulation on liquor stores, pharmacies, and opium dens to ensure they don't sell to minors.  I agree it's mostly the parents responsibility but I still want my local liquor store to help me out a bit.

Title: Re:Industry Regulation
Post by: mlilback on November 08, 2002, 03:36:32 pm
I think you'll find a good number of people here that agree with you, even if they aren't the most vocal.

But the exact level will be worked out once the state is picked and FSPers have moved there. I like to think of the FSP as shfiting the debate about government in the target state towards individual freedom and smaller government. There will still be debates, dissention, and politics.

Everyone in the FSP just has to agree that a state needs to have a shift in perspective, and to work towards that end. And as much as I'd still like to see anti-monopoly regulations, I'm pefectly happy living and working with those who want no regulations, as it is better than our current system.

Title: Re:Industry Regulation
Post by: JasonPSorens on November 08, 2002, 08:54:03 pm
I believe that the power of government should be used to restrict the access of minors to things like drugs and sex, and I think almost everyone here would agree - the main differences would be on who should count as a minor, and what kinds of drugs and sex should be restricted.

On telecom regulation, my own view is that dual or even triple telecom lines are both possible and desirable as means of introducing competition and eliminating the need for common-carrier regulations.  Suffice to say that in general we should only privatize and deregulate *after* we have ensured a competitive market.  Latin America tried monopolistic privatization and it did not work.
Title: Re:Industry Regulation
Post by: Dan on November 13, 2002, 05:48:46 pm
I agree with most of what you said, except the triple phone lines thing.  This boils down to my theory that there are two types of products.  There is the one user, build many (Type I) products and there is the many user, build one (Type II) products.

Cars are Type I products.  A manufacturer designs a car and then builds millions of them.  The material and labor costs to produce a single car are only expended when someone buys that car.  

Phone lines are a Type II product.  The manufacturer builds one phone line and all the customers share that one line.  The manufacturer must pay for the entire system before he can sell it to just one customer.  If cars were a Type II product then Ford would have to build 5 years of cars before it can sell just one.

Type I products work well in an open market.  Entry into the market is relatively cheap.  Type II products just don't work in an open market.  It's almost impossible to get an industry started and when it does the entry fees for competitors are so great you are almost guaranteed a harmful monopoly.

Currently telecom is becoming more of a Type I product (Level3 and such) and eventually they will be able to be largely deregulated.  But that's not the point of my post.  I am concerned about future immature technologies.  I was trying to use the telecom industry decades ago as an example, when AT&T was just starting out.  Back to my car example, imagine when Ford first built the Model T.  Imagine him going up to investors and telling them he has to build 5 years worth of Model T's, plus a bunch of the next gen models before he could make 1 sale.  It's just too expensive for such a risky business model.

Maybe this is the wrong forum for this post, but I was trying to explain that government might have a purpose other than protection.  Maybe Governments purpose is to consolidate resources of the populace to do big, difficult things that are beneficial to the people but that can't easily be done by individuals.  This covers defense.  But it also covers research like NASA; which I think is a good thing.  And It covers regulating immature Type II industries that show a huge future benefit.  Do you really think we would have such a strong telecommunications infrastructure if the government didn't help AT&T out a bit at the beginning?

Title: Re:Industry Regulation
Post by: JasonPSorens on November 13, 2002, 08:59:54 pm
Well, the usual logic for regulating what you call Type II industries is that they have monopoly power and monopoly profits - so the government shouldn't be helping them, it should be restricting how much they can charge!  If the only issue is promoting the technology, then laissez-faire approach to monopolies is clearly the best idea, because that would encourage shareholders to invest, knowing they could reap monopoly profits.  If the goal is to prevent "deadweight loss" and protect consumers, then government regulation is justified (on utilitarian grounds anyway).  Schumpeter and other economists have noted how allowing short-term monopolies can encourage technological development because of the huge profits going to anyone who can develop a competing service to the existing monopoly.  So if AT&T had been allowed to charge what the market could bear on long distance and especially local service, cellular and radio technology would almost surely have developed much more quickly.
Title: Re:Industry Regulation
Post by: Wild Pegasus on November 17, 2002, 05:43:54 pm
Originally, many of the utilities were unregulated and developed as any number of industries.  There was a time when there were 6000 telephone companies in the US and several thousand electrical companies.  The idea of natural monopoly was introduced by companies seeking protection from competition by the government, another case of corporate-government collusion to restrict the free market.

In Somalia, where there is no business regulation, there are several electrical and phone companies building their own lines over one another.  In the northern part of the country, one of the electrical companies gained market share by promising to build and maintain street lamps for free if everyone on the block used their electrical service.  It worked.

- Josh
Title: Re:Industry Regulation
Post by: MrLiberty on November 19, 2002, 04:04:45 pm
I agree with Josh.  The phone companies can do just fine, if they focus small, and then grow as their services bring them profits.

I hate "common carrier" and other regulations on any industry.

As for forcing the drug and liquor stores not to sell to your kids, forget it.  That's a bad idea.  Some stores will say "We card everyone!" and it is your choice to shop there, and I think many adults would.

Then there will be stores that say "we sell to anyone!"  It's YOUR JOB to parent your kids.  YOUR JOB.  YOUR JOB.  YOUR JOB.

Can I say it enough?  Why is your kid at a liquor store anyway?  Why is your kid not at home studying, or with friends at a house where you can pop-in or confer with the parents?  

Kids can get drugs, liquor, and cigarettes EASILY now with the moronic laws we have in place.  How will any regulation help?  It will only hurt businesses by holding THEM responsible!

Title: Re:Industry Regulation
Post by: JayPrimePositive on November 20, 2002, 04:24:37 am
From my point of view: regulations are one way to solve legitimate problems.  I believe that there are better ways.  I am with Dada, and Josh on this.  That is why I vote L and put money into libertarian organizations.  That is why I am in FSP.  I believe there are better solutions, but I want to know for sure: I want to put my house where my mouth is.

Title: Re:Industry Regulation
Post by: Mogray on May 04, 2003, 08:16:34 am
The biggest problem with government regulation, no matter how good a reason there may be, is that then decisions will no longer be made based on the original technilogical, economic, health, scientific, etc. issues but for political reasons.   You'll have [insert your favorite rogue congressperson's name here] deciding how much a doctor can charge to remove gall bladder, or how much steel should cost, or determine what is "fair".  No matter how good our intentions are the result will be a perverted version of it.

Let's always look for free market solutions.  If you can keep the government out of it, good thinking will be rewarded.

  -- Mogray

Title: Re:Industry Regulation
Post by: BobW on May 04, 2003, 09:10:43 am
You've got my support Mog.

I've got a pin here with a beautiful blond woman saying:" I prepared sushi for him, but I burnt it."