I Wasn’t Talking to You

The dark lord says:

The typical arguments are made by the right too. If the economy is going good “see, the deregulation has brought about unprecedented wealth. How can you propose more regulation?”

When the economy goes bad, we get the answer “see, the crisis is brought about due to regulation in the housing mortgage market. How can you propose more regulation?”

Yes, the libertarian right makes this argument, but there is a consistency in it. We believe that most regulations do harm, and that a lightly regulated economy works best.

If the socialist left made the counter-argument, that too would be internally consistent. If you really wanted to regulate the economy all the way to the Soviet Union, you could justifiably claim that both the US and India are variants of the same system. But in my post, I wasn’t arguing with the socialist left – I don’t need to, as history has already answered them.

My argument is with those who say that “we need a free market with some regulations, but that doesn’t mean that we should be socialist”. If you hold that belief, I would expect you to believe that there is some point at which additional regulations do more harm than good, so you’d support some regulations and oppose others. But what I notice is that for supporters of regulation, the right amount of regulation is always “A little more than we have now”.

5 thoughts on “I Wasn’t Talking to You

  1. Patrix

    Re: “a lightly regulated economy works best.” How much or what defines “lightly regulated”? Is there a point at which we say, ok any more and we’ll screw things up? Or are regulations always playing catch-up to changing scenarios and applied always in hindsight when it is too late hence detrimental?

  2. Chetan

    This response pertains to the previous post as well as this one. Its not an refutation, rather an observation. You see that kind of rhetoric from the Left because you have libertarians who argue from a consequentialist perspective, claiming that free markets imply better economic conditions for all. These libertarians point to deregulation as a cause of economic growth during an economic boom and heckle the left liberals. They get paid back in the same coin by the left liberals who argue the exact opposite during a downturn/recession.

    The problem with consequentialist school is that they are not brave enough to define, let alone defend what they imply by better economic conditions. So in a downturn you rarely hear them saying stuff like, ” Hey, you had 4 preceding years of economic growth where many businesses got bloated trying to maintain pace with the competition. The current downturn was caused despite everyone following the rules, regulations or not. You will be hard pressed to find villians. It is a systemic risk. It comes with the package (free market). But the good news is that once discovered the risk will be mitigated in the future as the recession provides businesses with an opportunity to cut flab, reevaluate their business model, make sure mistakes aren’t repeated and be nimble again. The government interference will probably solve this temporarily but will introduce another risk which will lead to a recession somewhere in future. This might be hard for everyone and lead to job losses for many but overall in the long run this will be better for the economy.”

    Once you say this, you sound ruthless, especially in a recession. You lose all hope of people converting to your ideology. Also, the consequentialists do not have any cohorent theory about how deregulating during the current recession would lead us out of this recession faster compared with the Keynesian ideas. Since for the majority long recessions does not form a part of their definition of ‘better’ economic conditions they lose out there. Part of the reason they cannot admit to inherent inequities and risks of free market system is that despite knowing it themselves they can’t possibly proselytize others with this disclosure. It makes a lot more sense to point fingers at some anachronistic misdirected regulation which played no part in causing the recession and argue that such regulations have prevented the consequentialists from proving that free markets lead to better economic conditions for all.

    I think the natural rights guys are the best at defending this. If tomorrow China turns out to be an economic powerhouse, the consequentialists arguing in favour of better economic conditions through free markets would be forced to concede that despite lack of freedom, quasi state controlled economy and regulations, the Chinese system is better. Whereas a natural rights guy can easily say that, “well, freedom is the most important right and we can live with being economically less successful than sacrifice free markets and let government coerce our brethern for economic betterment.”

  3. Gaurav

    Not that I have any objection to the entertaining feud between Atypical liberal (i.e. Chetan) and atypical Cartellian (i.e. Ravikiran). I should point out that to the extent China becomes a economic superpower in near future it will be due to the liberalization, communism is just responsible for genocide of Chinese people. To paraphrase Nietzsche, Keynes is dead, let him rest in peace.

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