Re: [unrev-II] Digest Number 18

From: Mike Taylor (
Date: Fri Jan 28 2000 - 15:16:43 PST

From: Mike Taylor <>

Eric Armstrong wrote:

>But when you say "market economy", don't you mean what we have now?
>Don't we regulate it and influence it through goverment?
Yes. There is a role for government - enforcing contracts.

However, much of the government "regulation and influence" simply distorts
markets and moves them in thw wrong direction. The "Law of Unintended
Consequences" means that most government programs, because they ignore or
oppose market effects, achieve the opposite result to that intended. So
that the "War on Poverty" actually increased poverty (by subsidising
poverty, more was created by the market), AFDC increased the number of
single-parent families (by subsidizing single parent families - people
naturally supplied what the government was paying for), and the "War on
Drugs" is increasing drug consumption (by keeping prices high so that
distribution is encouraged). And so forth.

Paul Fernhout wrote:

>Unfortunately, in today's USA, for
>example, politics leads us to spend money to lock up people instead of
>to spend money for prenatal care, educational daycare, parental leave,
>and community services like after-school centers.
Yes. But one can argue that this is a government failure, not a market
failure. The government "crowds out" the opportunity to invest in people.
For example, in the past it was not uncommon for guilds, religions and
companies to offer education to youths at no cost in return for later
service. Sort of a corollary of Gresham's law "Bad money drives out good"

>External costs: In various cases, one can make something at a profit
>(gasoline for example) by passing "external" costs onto others.

Yes. Pollution (and others of these "external costs") is an example of a
"tragedy of the commons" where nobody owns the air and so anyone feels free
to waste it. There are early attempts to create a market in "pollution
rights" but they are minimal. This is clearly an area where the right to
pollute needs to be priced (very high).

>Chaos: Current theories of systems theories and chaos show that many
>systems (like markets) exhibit chaotic trends.

And so I suspect do most systems involving large numbers of humans - mobs,
riots, panic are all chaotic phenomena.
>So, for markets to be humane, there must be charity for those unable to
>participate in the market, and there must be laws governing activities
>with external costs, and there must be regulations to prevent chaos.
>Notice I am applying a word "humane" which is value laden to the design
>of an economic system. As moral creatures, I would argue we must. The
>only question is what are our non-economic goals, and how can we
>structure our economics best to achieve them?

Well I think that many of those issues can be solved themselves with
extensions of the market paradigm. However, I certinly agree in principle
that those issues need to be resolved in a humane way. I think in this way
"humane" means allowing every human being to pursue happiness while making
a positive contribution to society as a whole.

>I think a very good question you implicitly raise is, given the market,
>where can an OHS/DKR fit in?
By making teams of people who choose to cooperate on a common goal more
effective. It is just that assuming these teams can be expnaded to a
sufficiently large scale to encompass the whole of a society is too much
for me.

Mike T.

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