Justification for government intervention in the economy

[ballin4life]

PG/DH split is dumb

 

[Bob Jane T-Mart]

PG/DH split is dumb

That is true to some extent.

 

[eschemat]

tl;dr intervention isn't needed very much, free market corrects itself because industries and companies always replace each other.

 

[kataklysm336]

Ballin,

I admit to not having read the entire thread, so I apologize if someone already raised this concern, but I believe the main issue with your argument is this statement

How are people getting screwed over when they are VOLUNTARILY buying the products?

Have you ever thought about how regulations screw people over? Regulations are by definition NON-VOLUNTARY.

The voluntary basis of buying goods is only an illusion. Sure, we always have the option of NOT buying goods, but in most cases that option isn't practical. For example, you could choose NOT to buy gas if you feel you are getting screwed by the high gas prices, but then you can't get to work. I suppose you could argue for alternative transportation such as a bike, but then you would have to go buy a bike. Even if you eliminated all products and walked to work, you would be trading monetary expenditures for time.

The point is, most of the products we buy are necessary goods. We need these things on a daily basis to survive or to facilitate survival. Regulations prevent the abuse of this. Companies are able to continue raising prices on things like gas, milk, eggs, ect. because, regardless of price, these are goods people need. Companies lower prices to assure that people will buy their product over another companies version, and not because they want to deliver the consumer the best good at the cheapest price. The problem is companies care about money, and not what's best for the consumer.

 

[ballin4life]

The voluntary basis of buying goods is only an illusion. Sure, we always have the option of NOT buying goods, but in most cases that option isn't practical. For example, you could choose NOT to buy gas if you feel you are getting screwed by the high gas prices, but then you can't get to work. I suppose you could argue for alternative transportation such as a bike, but then you would have to go buy a bike. Even if you eliminated all products and walked to work, you would be trading monetary expenditures for time.

If you choose to buy gas despite the high prices, then clearly you think that gas is worth at least that much to you. Sure, you might wish the prices were lower, but if you're willing to pay $5, then you're getting at least $5 worth of benefit.

Also note that when gas prices have increased people really have switched to other methods of transportation, or started car pooling, etc. to try to use less gas.

Finally, there is always the prospect of competition. If Chevron is selling at $5, then 76 can steal a ton of their business by lowering their price to $4.90.

The point is, most of the products we buy are necessary goods. We need these things on a daily basis to survive or to facilitate survival. Regulations prevent the abuse of this. Companies are able to continue raising prices on things like gas, milk, eggs, ect. because, regardless of price, these are goods people need. Companies lower prices to assure that people will buy their product over another companies version, and not because they want to deliver the consumer the best good at the cheapest price. The problem is companies care about money, and not what's best for the consumer.

But in order to make money, you HAVE to help out the consumer, either by outcompeting other companies on price, or offering a better product, or whatever.

 

[kataklysm336]

If you choose to buy gas despite the high prices, then clearly you think that gas is worth at least that much to you. Sure, you might wish the prices were lower, but if you're willing to pay $5, then you're getting at least $5 worth of benefit.

No, I buy the gas despite the high prices because it's (basically now a days) a necessity. If I want to go do anything I need gas in order to do that. Suppose gas is $20 a gallon, and I am traveling to work in the morning. I notice that my tank is on empty and I need to fill up; however, I don't feel that $20 is an appropriate price to pay for gas, so I forgo the option of buying gas. If I don't show up to work, I can't just tell my boss "sorry, I didn't feel that I was getting my money's worth at the gas station", or I would lose my job.

Also note that when gas prices have increased people really have switched to other methods of transportation, or started car pooling, etc. to try to use less gas.

Some have, but I would argue the majority don't. Maybe in large cities where such practices are already commonplace, but elsewhere people just pay the price because it's a necessity to have, and there really isn't a viable substitute that provides the same benefits.

Finally, there is always the prospect of competition. If Chevron is selling at $5, then 76 can steal a ton of their business by lowering their price to $4.90.

This is true, but only works in theory, at some point it begins to cost the companies money to lower their prices that extra one cent. Regardless, there isn't much different in paying $5 and $4.99 from a consumer's standpoint.

But in order to make money, you HAVE to help out the consumer, either by outcompeting other companies on price, or offering a better product, or whatever.

True, you have to help out the consumer a little, but that is covered by offering them the product in the first place. Outside of that, very little is done in the way of the consumer that isn't put in place by the government. In order to lower price, you have to sacrifice quality, and vice versa. You can only go so low on each, and if the price isn't reasonable in the first place it will continue to stay at an unreasonable price.

 

[ballin4life]

No, I buy the gas despite the high prices because it's (basically now a days) a necessity. If I want to go do anything I need gas in order to do that. Suppose gas is $20 a gallon, and I am traveling to work in the morning. I notice that my tank is on empty and I need to fill up; however, I don't feel that $20 is an appropriate price to pay for gas, so I forgo the option of buying gas. If I don't show up to work, I can't just tell my boss "sorry, I didn't feel that I was getting my money's worth at the gas station", or I would lose my job.

The fact that you consider it a necessity shows that it's very valuable to you.

At $20 per gallon you would likely consider alternative options - like other methods of transportation, working from home, or yes, maybe even finding another job.

Some have, but I would argue the majority don't. Maybe in large cities where such practices are already commonplace, but elsewhere people just pay the price because it's a necessity to have, and there really isn't a viable substitute that provides the same benefits.

As the price of gas goes up, other things become more viable too. Like fully electric cars, or cars that run on some other fuel source.

This is true, but only works in theory, at some point it begins to cost the companies money to lower their prices that extra one cent. Regardless, there isn't much different in paying $5 and $4.99 from a consumer's standpoint.

Ok, but most of the time competition between firms has a much bigger effect than 1 cent.

And yes, there is a point where companies won't lower prices any more. This is called the competitive equilibrium - it's where supply equals demand.

True, you have to help out the consumer a little, but that is covered by offering them the product in the first place. Outside of that, very little is done in the way of the consumer that isn't put in place by the government. In order to lower price, you have to sacrifice quality, and vice versa. You can only go so low on each, and if the price isn't reasonable in the first place it will continue to stay at an unreasonable price.

I have no idea what you're talking about. Look at cell phones, for example. Prices have been going down and quality has been going up for years. Why does Apple try to make each new version of the iPhone better than before? It's because making better phones makes them more money and helps out their consumers.

 

[kataklysm336]

The fact that you consider it a necessity shows that it's very valuable to you.

At $20 per gallon you would likely consider alternative options - like other methods of transportation, working from home, or yes, maybe even finding another job.

I would disagree that considering it a necessity show it's of value to me. The gas happens to be necessary for me to get to my job, but it isn't the gas that's valuable to me, it's my job. And my need to keep a job forces me to spend outrageous prices on gas. Companies make money off of my need to get to work, so yes they do help me get to work, but ultimately they exploit my need to go to work.

As the price of gas goes up, other things become more viable too. Like fully electric cars, or cars that run on some other fuel source.

Valid point; however, what happens until that threshold is reached? If it takes gas being $20
before another option becomes cheaper, aren't we still paying nearly $20 for fuel sources until technology allows for them to become much cheaper? Government intervention seems like the only way to quicken this process.

Ok, but most of the time competition between firms has a much bigger effect than 1 cent.

Yes, to the firms. But from a consumer standpoint there are very few indiscernible products that have a high price disparity.

I have no idea what you're talking about. Look at cell phones, for example. Prices have been going down and quality has been going up for years. Why does Apple try to make each new version of the iPhone better than before? It's because making better phones makes them more money and helps out their consumers.

This is true over a period of time because you have to take into account things like advances in technology, I was referring to just one specific point in time. Barring sudden advances in technology, ect. companies would have to sacrifice quality for price or vice versa after a certain point. EDIT: Just read the iPhone part. They make better phones to distinguish themselves from the competition, and make money, not help the consumer. Helping the consumer is only a side-effect.


You mentioned competitive equilibrium, and I would like to expand on that part of the conversation. This works with regards to what people are willing to pay (demand). I know many people who wouldn't mind paying 20 dollars for gas. People drive hummers, and SVU's like there is no tomorrow even though gas is continually going up. There is almost no ceiling on what people are willing to pay for necessities, just like there is almost no floor on how much people are willing to work for. This leaves MUCH room for abuse, which is why we need government intervention.

 

[ballin4life]

So basically, you're saying that since you really, really want certain products, the government should make those products cheap?

That might not even be possible - what if it costs companies $18 to make the gasoline in the first place?

But regardless, if you consider gas a necessity, then clearly you are getting tons of value from it. It's not abuse for you to willingly pay lots of money for it.


Also on competition/iPhones/etc - obviously the process of competition in the cell phone market has helped out consumers a TON. The same is true in other markets. The reason that there isn't a "high price disparity" is because if one firm lowers its price, the other firm has to do the same or lose all their business.

 

[kataklysm336]

So basically, you're saying that since you really, really want certain products, the government should make those products cheap?

That might not even be possible - what if it costs companies $18 to make the gasoline in the first place?

I understand that prices can only go so low. Like you said, what if it cost them $18 to make? They have to make a profit, but without government intervention the price will inflate to absurd prices as the product becomes scarcer, and only then will other things become viable. With government intervention we can push the production of more viable options before things get out of hand.

But regardless, if you consider gas a necessity, then clearly you are getting tons of value from it. It's not abuse for you to willingly pay lots of money for it.

I don't consider gas a necessity because I get value from it, I consider it a necessity because without it I am (more or less) unable to perform a task I do get value from. A necessary evil, but an evil none the less.

Going out on a limb here, but just because you are willing to pay money for something doesn't mean you aren't being abused. Take the mafia example used previously. They provide "protection", essentially making you pay so they don't destroy your shop. Obviously you would be willing to pay so you don't lose your shop/life, but the abuse here is clear.

Also on competition/iPhones/etc - obviously the process of competition in the cell phone market has helped out consumers a TON. The same is true in other markets. The reason that there isn't a "high price disparity" is because if one firm lowers its price, the other firm has to do the same or lose all their business.

This is true, but like I said helping the consumer is only a side effect. The goal isn't to help the consumer, its to make money. Look at smoking for example. I suppose it helps the consumer by supplying them with a product they want, but in the long run it poses serious health risks.

 

[ballin4life]

I understand that prices can only go so low. Like you said, what if it cost them $18 to make? They have to make a profit, but without government intervention the price will inflate to absurd prices as the product becomes scarcer, and only then will other things become viable. With government intervention we can push the production of more viable options before things get out of hand.

I'm not sure how you define "things get out of hand", but other things become more viable as the given product becomes more scarce. What if the government decides to push some kind of alternative energy when it really isn't worth it at all yet? Like the government subsidizing ethanol based automobiles - what if ethanol is way more expensive than gasoline?

I don't consider gas a necessity because I get value from it, I consider it a necessity because without it I am (more or less) unable to perform a task I do get value from. A necessary evil, but an evil none the less.

I don't see the difference. It allows you to perform a task that you get value from. Therefore you get value from it.

I'm not sure your distinction even makes sense - after all, do you really get value from work? Or do you get value from the money that comes along with your work? But do you really get value from money? Or do you really get value from the things you can buy with that money?

Or equivalently, you are willing to pay for it, therefore you get value from it.

Going out on a limb here, but just because you are willing to pay money for something doesn't mean you aren't being abused. Take the mafia example used previously. They provide "protection", essentially making you pay so they don't destroy your shop. Obviously you would be willing to pay so you don't lose your shop/life, but the abuse here is clear.

Using violence to make you pay is not the same as paying willingly. That's why I emphasize lack of violence. If there is violence involved, it is obviously not an agreement.

This is true, but like I said helping the consumer is only a side effect. The goal isn't to help the consumer, its to make money. Look at smoking for example. I suppose it helps the consumer by supplying them with a product they want, but in the long run it poses serious health risks.

Driving also poses serious health risks, therefore we should ban driving.

 

[kataklysm336]

I'm not sure how you define "things get out of hand", but other things become more viable as the given product becomes more scarce. What if the government decides to push some kind of alternative energy when it really isn't worth it at all yet? Like the government subsidizing ethanol based automobiles - what if ethanol is way more expensive than gasoline?

But why wait until gasoline is more expensive than a more expensive alternative to begin making that alternative cheaper? We know that gas is going to run out. Why not begin developing technology that can decrease the price of an alternative so we never have to see $20 a gallon.

I don't see the difference. It allows you to perform a task that you get value from. Therefore you get value from it.

I'm not sure your distinction even makes sense - after all, do you really get value from work? Or do you get value from the money that comes along with your work? But do you really get value from money? Or do you really get value from the things you can buy with that money?

Or equivalently, you are willing to pay for it, therefore you get value from it.

I suppose you define value as "it does something for you", in which case I suppose gas does hold value to me. No arguments here.

Using violence to make you pay is not the same as paying willingly. That's why I emphasize lack of violence. If there is violence involved, it is obviously not an agreement.

But are you not willingly paying them to not harm you? Lets say a gang is destroying your shop, a rival gang says that if you pay them they will protect you, however if you don't they will also destroy your shop. This is voluntary in the same way gas and other goods are. You could choose not to pay them, but this would have no practical benefits for you and would be detrimental in fact. The same way you could choose not to buy gas, but NOT buying it has no practical benefit for you. So in both cases I would argue there is a restraining factor forcing the agent to do something.

Driving also poses serious health risks, therefore we should ban driving.

Nice try, but safe driving doesn't. Theoretically if everyone did what they were supposed to there would be no accidents (safe driving); however, there is no such thing as safe smoking.

 

[ballin4life]

But why wait until gasoline is more expensive than a more expensive alternative to begin making that alternative cheaper? We know that gas is going to run out. Why not begin developing technology that can decrease the price of an alternative so we never have to see $20 a gallon.

But this will happen (is happening) since once we run out of gas whoever can step into the alternative market will make tons of money.

Again, how is the government supposed to time this perfectly anyway?

But are you not willingly paying them to not harm you? Lets say a gang is destroying your shop, a rival gang says that if you pay them they will protect you, however if you don't they will also destroy your shop. This is voluntary in the same way gas and other goods are. You could choose not to pay them, but this would have no practical benefits for you and would be detrimental in fact. The same way you could choose not to buy gas, but NOT buying it has no practical benefit for you. So in both cases I would argue there is a restraining factor forcing the agent to do something.

Yes, but I make a distinction between violence and other actions. The action of violence itself benefits only one party to the detriment of the other, whereas a non-violent agreement benefits both parties. If we assume that the gang violence already exists, then when I agree to pay the gang it benefits us both. But it's inefficient for the gang violence to even exist in the first place.

The difference between this and gas is that there is no violence.

Nice try, but safe driving doesn't. Theoretically if everyone did what they were supposed to there would be no accidents (safe driving); however, there is no such thing as safe smoking.

"Safe" driving will still be very dangerous for obvious reasons. If someone else on the road is not driving safely, you are still in danger.

Also I don't think safe driving is perfectly safe anyway - no one drives perfectly all the time.

But who cares about any of that - just look at the statistics and see that tons of people die or are injured from driving every year.

 

[kataklysm336]

But this will happen (is happening) since once we run out of gas whoever can step into the alternative market will make tons of money.

Again, how is the government supposed to time this perfectly anyway?

Yes, but I make a distinction between violence and other actions. The action of violence itself benefits only one party to the detriment of the other, whereas a non-violent agreement benefits both parties. If we assume that the gang violence already exists, then when I agree to pay the gang it benefits us both. But it's inefficient for the gang violence to even exist in the first place.

The difference between this and gas is that there is no violence.

"Safe" driving will still be very dangerous for obvious reasons. If someone else on the road is not driving safely, you are still in danger.

Also I don't think safe driving is perfectly safe anyway - no one drives perfectly all the time.

But who cares about any of that - just look at the statistics and see that tons of people die or are injured from driving every year.

You say its inefficient for gang violence to exist in the first place, yet it does. Just like its illogical to assume that everyone drives safely because we all know they don't. You defend the assumption your originally argued against.

Regardless, violence is a constraining factor. It "forces" people to do something. The same way gas is a constraining factor. People are forced to buy it because it is the most effective means of transportation currently. Of course, people don't have to buy gas but they don't have to pay the gangs either. Both parties are benefitted in the situation regardless, because the owner gets to keep his store and his life, and the gang gets money. You could say his store and life have value to him so he willingly pays the gang money in order to protect those things.

 

[ballin4life]

You say its inefficient for gang violence to exist in the first place, yet it does. Just like its illogical to assume that everyone drives safely because we all know they don't. You defend the assumption your originally argued against.

Regardless, violence is a constraining factor. It "forces" people to do something. The same way gas is a constraining factor. People are forced to buy it because it is the most effective means of transportation currently. Of course, people don't have to buy gas but they don't have to pay the gangs either. Both parties are benefitted in the situation regardless, because the owner gets to keep his store and his life, and the gang gets money. You could say his store and life have value to him so he willingly pays the gang money in order to protect those things.

Most people would say the role of government is to stop things like violence and ensure that a free market exists.

I already said that if we assume the violence already exists then people would probably be willing to pay to stop that violence. (I would say people are usually more likely to pay someone else to use violence against the gang, rather than paying off the gang, but whatever).

But relative to the status quo of no violence - paying a gang to stop them from using violence does not make me better off, while paying for gas does.

 

[kataklysm336]

Most people would say the role of government is to stop things like violence and ensure that a free market exists.

I disagree. You can't speak for most people. As you can see there are a lot of people here that don't agree that the government should ensure the existence of a free market.

I already said that if we assume the violence already exists then people would probably be willing to pay to stop that violence. (I would say people are usually more likely to pay someone else to use violence against the gang, rather than paying off the gang, but whatever).

But relative to the status quo of no violence - paying a gang to stop them from using violence does not make me better off, while paying for gas does.

I agree, paying a gang money to stop them from using violence that they otherwise weren't using in the first place has no benefit for you.

Look at it this way, you have to work. You have to work because you need money, and you need money because you have to survive. Of course, all of these things are voluntary, we don't HAVE to do them, but in a sense we are constrained and forced to do them because we feel the need to work toward survival. Ultimately, we HAVE to buy gas because we HAVE to go to work because we HAVE to make money, because we HAVE to live.

To say that big business works better than the government because it's a system where people voluntarily do things is incorrect, I believe. The government taxes you, and then uses your taxes to do things that supposedly benefit the country, if you don't pay taxes you go to jail. You HAVE to pay taxes much in the same way you HAVE to buy gas.

 

[ballin4life]

I disagree. You can't speak for most people. As you can see there are a lot of people here that don't agree that the government should ensure the existence of a free market.

Most people who support the free market, I mean.

I agree, paying a gang money to stop them from using violence that they otherwise weren't using in the first place has no benefit for you.

Look at it this way, you have to work. You have to work because you need money, and you need money because you have to survive. Of course, all of these things are voluntary, we don't HAVE to do them, but in a sense we are constrained and forced to do them because we feel the need to work toward survival. Ultimately, we HAVE to buy gas because we HAVE to go to work because we HAVE to make money, because we HAVE to live.

You HAVE to do it because it makes you much better off, since nearly everyone prefers living.

But someone using violence against you is impinging on your rights. Your decision whether to work or not does not impinge anyone's rights. That's a better way to articulate the difference I suppose.

To say that big business works better than the government because it's a system where people voluntarily do things is incorrect, I believe. The government taxes you, and then uses your taxes to do things that supposedly benefit the country, if you don't pay taxes you go to jail. You HAVE to pay taxes much in the same way you HAVE to buy gas.

No, you have to pay taxes in a way that is very different. If you don't pay taxes, people come to your house and throw you in jail. This is much more similar to the gang situation. With gas, no one's rights are infringed upon - you choose to do it, and there are alternatives. It would be like the gas company throwing you in jail if you didn't buy gas.

 

[kataklysm336]

Most people who support the free market I mean

Thanks for the clarification.

You HAVE to do it because it makes you much better off, since nearly everyone prefers living.

But someone using violence against you is impinging on your rights. Your decision whether to work or not does not impinge anyone's rights. That's a better way to articulate the difference I suppose.

I agree with this.

No, you have to pay taxes in a way that is very different. If you don't pay taxes, people come to your house and throw you in jail. This is much more similar to the gang situation. With gas, no one's rights are infringed upon - you choose to do it, and there are alternatives. It would be like the gas company throwing you in jail if you didn't buy gas.

But instead of the companies throwing you in jail, you would lose your job, which in turn causes you to lose your income. This, in my opinion, is much worse than being stuck in jail.

Also, how exactly does paying taxes infringe upon one's rights? I understand it's taking money from you, but its being used to pay for roads and other things that benefit you in the end anyway. I understand that taxes are not always used for things that benefit us like they should be, but that is a problem with the people we elect, and not with the system itself. Education would greatly decrease this problem, but that is obviously another argument.

 

[ballin4life]

But instead of the companies throwing you in jail, you would lose your job, which in turn causes you to lose your income. This, in my opinion, is much worse than being stuck in jail.

What? You think losing your job is worse than going to jail? You'd rather go to jail than lose your job?

Also, how exactly does paying taxes infringe upon one's rights? I understand it's taking money from you, but its being used to pay for roads and other things that benefit you in the end anyway. I understand that taxes are not always used for things that benefit us like they should be, but that is a problem with the people we elect, and not with the system itself. Education would greatly decrease this problem, but that is obviously another argument.

You might support whatever the tax money is being used for, but it's still infringing on rights. I have no say in whether I give up the tax money or not - if I don't, I get thrown in jail. You might think it's justified but you at least have to recognize that it's basically extorting money from the citizens.

 

[kataklysm336]

What? You think losing your job is worse than going to jail? You'd rather go to jail than lose your job?

Quite. The way I look at it, you face homelessness vs. being in jail, where you get fed daily, have access to medical care, ect. These are basic necessities that a jail or prison provide that you may otherwise go without.

You might support whatever the tax money is being used for, but it's still infringing on rights. I have no say in whether I give up the tax money or not - if I don't, I get thrown in jail. You might think it's justified but you at least have to recognize that it's basically extorting money from the citizens.

But if the money goes towards things you would basically pay for anyway. Take schools for example. You would send your children to school to become educated even if the state did not provide public education. So they are just taking the money you would be spending anyway and putting it towards building schools. The need to not be thrown in jail is the motivating factor that persuades you to pay taxes, you always have the option to not pay them. The need to not lose your job (being thrown out of your house, having things repossessed ect. are the immediate result of job loss) is the motivating factor that persuades you to buy gas, but you always have the option to not buy it.

 

[ballin4life]

Quite. The way I look at it, you face homelessness vs. being in jail, where you get fed daily, have access to medical care, ect. These are basic necessities that a jail or prison provide that you may otherwise go without.

For one, losing your job does not imply homelessness.

But anyway it looks like most homeless people disagree with you anyway, or else they'd all be in jail.

But if the money goes towards things you would basically pay for anyway. Take schools for example. You would send your children to school to become educated even if the state did not provide public education. So they are just taking the money you would be spending anyway and putting it towards building schools.

Putting it towards building terrible, terrible schools though. If that's your reasoning then what's wrong with letting me choose for myself how to spend that?

The need to not be thrown in jail is the motivating factor that persuades you to pay taxes, you always have the option to not pay them. The need to not lose your job (being thrown out of your house, having things repossessed ect. are the immediate result of job loss) is the motivating factor that persuades you to buy gas, but you always have the option to not buy it.

The difference is violation of rights. No one violates my rights when I get fired for not going to work. My rights are violated when I get attacked for not giving someone money.