Sunday, October 07, 2012

Straw Man Argument

From a pro-Obama video quoting Obama speeches:

 Obama: "You would think (my critics) would say maybe some rules and regulations are necessary to protect the economy..."

 The idea that the debate is between no regulation vs. good ones is a caricature, but it's the conviction of many. These people have no understanding of how many different rules exist, and that there's a difference between less regulation and zero.  As regulations proliferate it's impossible to enforce them all fairly, and so enforcement becomes selective and capricious. Legislative micromanagement is the road to crony capitalism, why so many senior risk managers at large private institutions are ex- government officials with some connections with the regulators. 


Aaron Brown said...

Of course, I agree 100%. There is also a subtler problem with this statement as well.

It's true that in the absense of rules and regulations, some bad things will happen. That does not mean, however, that fewer bad things will happen with rules and regulations.

Opposing a regulation that outlaws last year's disaster is not the same as thinking the disaster was a good thing.

Supporters of a new rule or regulation only point to the things it is intended (or at least nominally intended) to do. Opponents are asked to apologize for anything that might happen if the rule is not adopted.

Eric Falkenstein said...

People hate top-down rules created for their specialty, but imagine win-win rules are easy to create for other industries. Note the many liberal teachers who can't stand the 'No Child Left Behind' mandates because in practice, such rules are so flawed.

I saw an interview with John Stossel, who started as a consumer advocate on TV, catching dishonest businessmen. He said he noted legislators loved using his pieces as motivation for new laws, but then in practice the laws didn't help, though everyone congratulated themselves for making the world a better place. This helped turn him into a libertarian. I should read one of his books and see if I can find such a story fleshed out.

JWO said...

The system has a bad feedback problem and they are trying to keep the current system but completely eliminate the chance of a big bank failing catastrophically. I think that it cannot be done.

JWO said...

BTW Some make an argument that no market can exist without Government regulation but if one goes out and buys marijuana one usually gets marijuana. The black market is completely unregulated in a sense yet it can often function fairly well.

Anonymous said...

You've never gotten mystery leaf in your dimebags - ?

Abe said...

There are so many federal criminal offenses alone at this point they literally can’t all be counted. In the 1980s the estimate was 3000+, now they number much higher, sprinkled throughout ~27,000 pages of federal code.

When practically everything is illegal in some way, shape or form selective enforcement will (or certainly can) make life indistinguishable from living under a dictatorship of arbitrary power. Get ready.

Drewfus said...

You've never gotten mystery leaf in your dimebags - ?

That would affect the reputation of the seller negatively, and therefore raise the reputation of all other sellers in a relative sense.

This is inbuilt regulation. There is no such thing as an unregulated market. The closest you get is when government makes branding and advertisment illegal, as this partly negates reputation as an economic and social force is that market. Note that when face-to-face selling is not available - online - then explicit reputation mechanisms are usually created by the host.

Sometimes the political left attack the market economy and its supporters using straw man arguments, but other times they exploit holes in economic theory. To wit, how is the reputation of firms understood and modelled in microeconomic texts? Not at all?