Comments on: The Myth of the Free Market http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/ Thu, 08 Jan 2009 00:52:35 +0000 http://wordpress.org/?v=2.6.3 By: CG http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/#comment-48285 CG Fri, 15 Aug 2008 09:51:17 +0000 http://blacknell.net/dynamic/?p=1116#comment-48285 ...of course, executing the head of the FDA (as China did) is going too far, however, here Execs who have big time company failures are getting millions in golden parachutes. Now both ends are extreme, but which is really crazier behavior of the two? At least here, when we kick a head of government agency to the curb for poor performance, they don't usually reward them with big bonuses too. (Or at least they have to go to the private sector for that) …of course, executing the head of the FDA (as China did) is going too far, however, here Execs who have big time company failures are getting millions in golden parachutes. Now both ends are extreme, but which is really crazier behavior of the two?

At least here, when we kick a head of government agency to the curb for poor performance, they don’t usually reward them with big bonuses too. (Or at least they have to go to the private sector for that)

]]> By: CG http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/#comment-48284 CG Fri, 15 Aug 2008 09:31:12 +0000 http://blacknell.net/dynamic/?p=1116#comment-48284 I might be wrong on this, but weren't privately run accounting firms supposed to be watching Enron? I would argue a privately run firm set up to do the FDA's job for instance, is still concerned not with the public safety but its bottom line. And the assumption that the bottom line always equals the same goal has often not proven to be the case. Such as when companies start taking shortcuts where they can get away with it, and save money. The company that would be doing the FDA's job could essentially get off track for the same reason any company does when it only looks at profit. I know there are arguments for government waste and inefficiency on the other side of the coin, but I’m less than convinced free markets are any real cure. (I hope i'm not too far off track the premise of the post, which I haven't really explored off site links, as yet) I might be wrong on this, but weren’t privately run accounting firms supposed to be watching Enron?

I would argue a privately run firm set up to do the FDA’s job for instance, is still concerned not with the public safety but its bottom line.

And the assumption that the bottom line always equals the same goal has often not proven to be the case. Such as when companies start taking shortcuts where they can get away with it, and save money. The company that would be doing the FDA’s job could essentially get off track for the same reason any company does when it only looks at profit.

I know there are arguments for government waste and inefficiency on the other side of the coin, but I’m less than convinced free markets are any real cure.

(I hope i’m not too far off track the premise of the post, which I haven’t really explored off site links, as yet)

]]> By: Amit http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/#comment-48279 Amit Wed, 13 Aug 2008 19:48:24 +0000 http://blacknell.net/dynamic/?p=1116#comment-48279 I misspelled my name above. damn public education I misspelled my name above. damn public education

]]> By: Amti http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/#comment-48278 Amti Wed, 13 Aug 2008 19:47:29 +0000 http://blacknell.net/dynamic/?p=1116#comment-48278 when buying a new TV, cell phone, car, etc. I usually check CNET, Consumer Reports, etc and read other reviews that I base my decisions on. thinking a little outside the box, I don't think its a big stretch for me to go to the grocery store and prefer to purchase foods with the "MB 5 Star Organic" label versus the ones that don't. The producers are incentivized to allow the 3rd party watchdog/reviewer into their processing plants etc to get the label and a higher rating because it's good for their business. That doesn't exist today because the govt already plays that role (poorly) and makes it difficult for 3rd party watchdog groups to make a profit and therefore they don't exist. I know you're not suggesting making a profit is evil but dovetailing it with open information in a structured way can promote better and safer products for everyone. This is predicated on consumers wanting quality with their quantity which is not always the case but how much can we protect people from themselves? and should we? when buying a new TV, cell phone, car, etc. I usually check CNET, Consumer Reports, etc and read other reviews that I base my decisions on. thinking a little outside the box, I don’t think its a big stretch for me to go to the grocery store and prefer to purchase foods with the “MB 5 Star Organic” label versus the ones that don’t. The producers are incentivized to allow the 3rd party watchdog/reviewer into their processing plants etc to get the label and a higher rating because it’s good for their business. That doesn’t exist today because the govt already plays that role (poorly) and makes it difficult for 3rd party watchdog groups to make a profit and therefore they don’t exist. I know you’re not suggesting making a profit is evil but dovetailing it with open information in a structured way can promote better and safer products for everyone. This is predicated on consumers wanting quality with their quantity which is not always the case but how much can we protect people from themselves? and should we?

]]> By: MB http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/#comment-48276 MB Wed, 13 Aug 2008 14:27:48 +0000 http://blacknell.net/dynamic/?p=1116#comment-48276 Hoobie- I thought that, too. In fact, it could serve as a caution for a number of ideological movements. Amit - except that free market you're talking about doesn't exist, and by all indications (we've got a pretty good body of evidence here in the US), it never will. It's somewhat akin to me saying that communism is the solution, and that the Soviets just didn't do it right. And third-party watchdogs? That's called gov't. I, the citizen, fund the CPSC to act as a check on the business that finds it cheaper to put melamine in my pet food than food. How in the world would a private third party watchdog group ever address that? Manufacturer isn't going to let them in to examine. Can't sue over it (I can't fund a lawsuit over my petfood out of my own pocket, nevermind the favored tort-reform efforts of the "free marketers"). Is the market solution there that the manufacturer will determine the cost-benefit analysis of deaths of customers wrt margin attributable to the filler melamine? A couple thousand dead pets is okay to ensure quarterly satisfaction by the shareholders? This is just an example, but applies equally well across any number of industries. That free market magic wand is just a stick. Hoobie- I thought that, too. In fact, it could serve as a caution for a number of ideological movements.

Amit - except that free market you’re talking about doesn’t exist, and by all indications (we’ve got a pretty good body of evidence here in the US), it never will. It’s somewhat akin to me saying that communism is the solution, and that the Soviets just didn’t do it right.

And third-party watchdogs? That’s called gov’t. I, the citizen, fund the CPSC to act as a check on the business that finds it cheaper to put melamine in my pet food than food. How in the world would a private third party watchdog group ever address that? Manufacturer isn’t going to let them in to examine. Can’t sue over it (I can’t fund a lawsuit over my petfood out of my own pocket, nevermind the favored tort-reform efforts of the “free marketers”). Is the market solution there that the manufacturer will determine the cost-benefit analysis of deaths of customers wrt margin attributable to the filler melamine? A couple thousand dead pets is okay to ensure quarterly satisfaction by the shareholders?

This is just an example, but applies equally well across any number of industries. That free market magic wand is just a stick.

]]> By: hoobie http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/#comment-48275 hoobie Wed, 13 Aug 2008 12:56:54 +0000 http://blacknell.net/dynamic/?p=1116#comment-48275 Read the quote you offered against the background of religion. It applies perfectly. Read the quote you offered against the background of religion. It applies perfectly.

]]> By: Amit http://blacknell.net/dynamic/2008/08/13/the-myth-of-the-free-market/#comment-48267 Amit Wed, 13 Aug 2008 04:19:57 +0000 http://blacknell.net/dynamic/?p=1116#comment-48267 I think a major misconception when it comes to the "free market" is when folks believe it includes the govt giving favors and subsidies to companies. That is definitely not free market. I am a proponent of the free market system and I know its not perfect and perhaps not the most cost effective. China seems to have an efficient model of govt controlled capitalism that I hope America never adopts. In the end, for the free market to work the consumer has to play their role in making informed buying decisions. Many would argue only the govt can regulate industries but I believe in the absence of the govt that third party watchdog groups would fill the void especially in the internet age where information is even easier to share. I think a major misconception when it comes to the “free market” is when folks believe it includes the govt giving favors and subsidies to companies. That is definitely not free market. I am a proponent of the free market system and I know its not perfect and perhaps not the most cost effective. China seems to have an efficient model of govt controlled capitalism that I hope America never adopts. In the end, for the free market to work the consumer has to play their role in making informed buying decisions. Many would argue only the govt can regulate industries but I believe in the absence of the govt that third party watchdog groups would fill the void especially in the internet age where information is even easier to share.

]]>