As a half-Libertarian, the problem with a lot of libertarian logic is that it's too black and white.
Less government/regulation is good if and only if the underlying market is highly competitive. High competition protects consumers. Examples: restaurants, barbers, tailors, spas, almost anywhere small businesses exist. All ancient, well-functioning industries that are comparatively minimally regulated.
The problem with deregulating banks is that the banking industry is low-competition. A few corporations dominate the landscape. So deregulation just strengthens the predators.
All deregulation should be accompanied by an equal effort to foster a massive amount of competition within the industry. Otherwise, things can go south rather quickly.
> The problem with deregulating banks is that the banking industry is low-competition. A few corporations dominate the landscape. So deregulation just strengthens the predators.
But that's not a natural state of affairs. Look at the savings and loan scandal! Without the regulation, banking was intensely competitive. Why assume that, if you took the regulation away, banking would take no notice and stay exactly the same?
> All deregulation should be accompanied by an equal effort to foster a massive amount of competition within the industry.
Deregulation is an effort to foster competition within the deregulated industry. Those regulations are barriers to entry, which is why large companies always want more of them.
I guess I’m only 1/4 libertarian. I don’t think competition is enough. The risk of harm needs to be balanced as well.
With airplanes, you have not only the risk to paying customers, but to bystanders who in many cases cannot be made whole in the event of an accident (i.e., you might get a financial settlement if an airplane crashes into your house, but that won’t bring your family members who were in the house back to life.)
I’m all for cutting superfluous government regulation, but deregulating airline safety is quite possibly the dumbest possible place to do it.
I'm pro airline regulation given the current state of the market.
But you could also argue the airline industry is fairly concentrated. There are only so many airlines. If a Delta flight crashes, you might still fly Delta again in the future, because there are only so many options.
Now imagine if there were as many airlines as restaurants. If one Delta flight messes up in any way, people would never fly them again. They'd go out of business.
Of course, a market with as many airlines as restaurants isn't practical in the current day (maybe when AI robots become feasible). Hence, agree that airline regulations are necessary.
Even if AI robots somehow replaced all of the airline employees it still wouldn't be economically viable to have more than about four major airlines covering routes between all major US airports. The limiting factor is gate access. If we wanted to make room in the market for more airlines then we would have to expand most airports, or build new ones.
There are a number of smaller airlines competing with the big players but they have limited route networks and little opportunity to expand.
> But you could also argue the airline industry is fairly concentrated.
That's great and everything, but I don't see what it has to do with what I wrote: even given infinite competition, the risk to the public from an improperly managed airline is great. If an airplane fell out of the sky onto my house, I'd be glad for them to go out of business, but that wouldn't fix my house or heal or revive the people inside the house.
There is simply no amount of competition that would change that dynamic. The concepts are orthogonal.
I don't work in the airline industry, but my father in law did. He was a large jet mechanic. He constantly told stories of airline managers pressuring mechanics (and inspectors) to sign off on returning airplanes to service that were not airworthy, at least by regulation. Some gizmo or another would be broken and it just wouldn't seem like it should be such a big deal. We need this plane back in the air. What's taking you so long?
Competition doesn't make those people go away. If anything, more competition would make those kinds of people more likely to be upset over a plane not generating revenue over what (to them) seems like a minor problem.
Regulation is what keeps those people in check. Today, the airline can't overrule the licensed mechanic or inspector. The licensed expert has to personally sign off that needed repairs are performed and performed correctly, not the idiot who just doesn't understand what the big deal is.
> Now imagine if there were as many airlines as restaurants. If one Delta flight messes up in any way, people would never fly them again
Analogies like these usually deviate from actual reality. Numerous restaurants have had E.Coli outbreaks, sometimes fatal. And yet they remain in business. Thriving, even. Memories are short and people generally believe bad things only happen to other people.
“They go out of business”… is that way to say they rebrand themselves and blend in with the crowd? As that seems highly likely with a theoretically crowded but not regulated airline market.
Yeah, damaging their brand would only matter if their brand was worth a lot, which would only be the case if there weren’t too many airlines for people to keep track of.
If you agree that all people are fundamentally "good". But that's not true, so the barber will start skimping on barbicide and people will start getting infections.
We need regulation because people are not fundamentally "good", even if they mean well. I'm glad you're "half-libertarian" because you are halfway there!
Yes, in addition to competitiveness, complete information must be available. The customers must know that the barbers are skimping on barbicide, and also have a full understanding of the consequences of that. It's not a default situation, and a lot of regulations are about providing that transparency so that customers can make an informed decision.
One of the many realizations that pushed me away from libertarianism is that I don't want to research every part of my daily life. Today in the US, I can
* Buy any brand of meat in any grocery store and be confident it won't make my family sick.
* Visit any barber and be confident I won't get a weird scalp infection
* Fly with any airline and be confident I'll get to my destination alive
This confidence is incredibly valuable to me. I don't know what percentage of my taxes goes towards these regulations, but what ever it is, I'm happy to pay it.
There are a few other issues that prevent True Libertarianism from ever actually being possible, namely you’d need unlimited liability and juries that could appropriately assign blame and penalties but you’re still left with the principal-agent issue where a highly compensated exec could make buckets of money doing unethical business if only the firm is responsible for the outcomes. We’re much better off with minimum safety standards and relying on Capitalism to drive prices and allocate resources inside that ‘arena’.
This isn't entirely fair. There's nothing stopping a rigorous certification system (either private or public) from existing alongside a less regulated system.
USDA organic comes to mind.
Just as libertarians are often overly black and white, so are regulatory regimes.
It's not even a matter of "good" and "bad". Modern society is complicated and individuals cannot (and should not) be expected to study and understand every different ways in which it could kill people.
Like, why do we have maximum seating limits and doors that open outside? You could be a completely honorable restaurant owner, religiously clean the kitchen every day, and strive to give your patrons the best meal every day. And then one day an old wire shorts out, the restaurant catches fire, and people are trapped inside pushing against a door opening inward - something you've never even thought about the whole time. Everybody dies.
* Under libertarian thinking, once everybody dies the grieving families can take their business elsewhere, thus proving that we needed no regulations, after all.
However, in reality, barbers (at least in the US) are not dangerous places.
If a barber starts acting in a way that makes their customers come down with infections, customers will take their business to the other barber down the street. If this new barber does the same, you will simply go to the next barber.
In this scenario, the first barber to treat their customers well (in a manner that does not pass on infections) will gobble up all the business.
Hence, it makes no sense for any barber to act in a manner that gives their customers infections, as they will quickly go out of business.
Same reason restaurants are naturally incentivized to cook their food as well as possible. 1 food poisoning case is all it takes for their business to go poof.
A true free market (as in, one where there's sufficient competition) keeps businesses in check, and protects customers.
Food poisoning is actually a great example of why we need health regulations and inspections. In a given day, we eat so many different things, it would be nearly impossible to accurately attribute a single incident to a single source. Imo the only reliable way to increase safety is to have a common set of standards that are enforced by the state.
That's a beautiful theory that completely falls apart when cause and effect between bad behaviour and consequences is not immediately clear to the person buying the service.
Which, in the real world, is the case with almost everything.
Vendors don't tend to cheat or cut corners or perform malfeasance on shit that's easy to spot.
Worse yet, the customer often can't tell the difference between malfeasance and bad luck. Without an independent regulator looking into this crash, I will have no idea if the airline operating it was staffed by morons and cutting corners, or it did everything right and got unlucky.
And no, the legal system doesn't solve this problem, because any sane company will have a strong preference towards a quiet, confidential settlement, to expose as little of their dirty laundry as possible to the public and prospective customers.
Libertarianism collapses upon contact with the real world, because it depends upon informational symmetry. Yet the way businesses actually operate, it's all informational assymmetry. I don't have the time to devote my life to trying to pick out which vendor will try the least hard to fuck me over, and even if I did have that time, I wouldn't have the information necessary to make an informed choice.
It also falls apart when the consequences of bad behavior are death. The satisfaction of showing everyone exactly how unsafe Airline X is, is a small consolation if my family is dead.
It's not so much a theory as it is an attempt to understand what we already observe in the real world.
Why is it that restaurants, barbers, car washes, and other small business industries have thrived for so long despite minimal regulation?
One reason is the high competition. If you've ever run a restaurant, you know the importance of making customers happy. Because customers have so many other options to choose from. They can easily take their business elsewhere. So you have to perform.
Why do you think restaurants have minimal regulations? First, I would say they are indirectly heavily regulated, as the food chain in most countries is highly regulated (health inspectors, care & expiry rules, etc.). Second, most places have direct rules on how to run a safe commercial kitchen. And, the best places (NYC, I know about) have regular kitchen inspections by public officials with public results.
Boar's Head is performing just fine, despite having the walls of their meatpacking facilities covered in flies and maggots. That killed eleven people last year, but guess what, every friggin' deli in the country is prominently displaying their products, and sales are doing great. And for all I know, half the other brands on the shelf are owned and operated by them.
If it weren't for regulators, that facility would still be operating and poisoning people. And the reason it got so bad was because regulator alarm bells were ignored for two years.
I wouldn't even know that they were poisoning people if it weren't for regulation. And while this has lost me as a customer for life from them, what am I going to do when the other giant national meatpacker turns out to be doing the same damn thing?
Not eat meat, I guess. It'll be a libertarian success story.
When you eat at a restaurant, are you making an informed choice?
I'd argue no. I have no idea if the cook that made my meal 30 seconds ago actually followed proper safety guidelines.
However, I think in general, the probability is decent that they did, as they are highly incentivized to do so. Because a failure to do so could mean the end of their business.
What I'm getting at is that there are specific scenarios where market forces are stronger than the ability to make an informed choice. And protect you as the consumer better.
> When you eat at a restaurant, are you making an informed choice?
Given that they don't give me a tour of the kitchen, and that I can't actually verify that they haven't been using meat knives to cut my salad, no.
I take it on faith that the food inspectors will ruin their business[1] if they are regularly pulling those kinds of stunts. I take it on faith that the staff have regulations to lean on when they push back on systemic unsanitary practices.
And no, Joe Somebody complaining on reddit that Earl's gave him food poisoning last week and that we should stay away from Earl's doesn't actually inform me that I should avoid Earl's. I don't know Joe, I have no reason to believe him. For all I know, he's just a disgruntled shill who is just making stuff up. Or maybe Earl's bought a batch of contaminated products from further upstream. Or maybe he caught a stomach bug from somewhere else, and is blaming them. Or maybe he's right, but Earl's actually has a lower incidence of food poisoning than the chicken joint across the street, and they just got unlucky.
I have a lot more confidence in an inspection, than in some noise someone's making on the internet, or in some celebrity endorsement on the TV.
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But there is some aspect of eating at a restaurant where I do make an informed choice.
Does the food look good? Does it taste good? Is it cheap?
These are the easy to observe bits of information about it. I can actually meaningfully express my preference there, and make an informed decision.
And guess what? There aren't any inspectors for any of that. My town doesn't employ a taste comissar, or an art critic for their FoodSafe team. Because I can tell at a glance which I prefer.
I can't tell at a glance which restaurant is less likely to have the kitchen staff poison me.
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[1] In practice, they'd much rather work with the business to bring it into compliance. You know, positive-sum sort of interactions that leave everyone who is acting in good faith better off.
> However, I think in general, the probability is decent that they did, as they are highly incentivized to do so. Because a failure to do so could mean the end of their business.
Yes, their business will end because they'll fail an inspection. As it turns out, these incentives are provided by regulation, not by the free market.
There's abundant history of market forces totally failing to end food businesses that didn't follow food safety practices. The Jungle was published in 1906 documenting meatpacking's horrors and not a single change was made until the Pure Food lobby pushed through regulation, and that was at a time when meatpacking wasn't a concentrated industry. In Upton Sinclair's time, there were at least 9 companies operating in the Union Stockyards where he researched meat packing (it's unclear to me how many there were total).
Look around at food safety inspection reports for your town and you'll very quickly find restaurants that were doing great financially until regulators stepped in and cited them for dangerous practices. Restaurants are, again, a highly competitive industry.
It seems like you're starting with your favored economic ideology and pretending it tells you anything about reality, instead of just looking at reality and seeing what's there.
Less government/regulation is good if and only if the underlying market is highly competitive. High competition protects consumers. Examples: restaurants, barbers, tailors, spas, almost anywhere small businesses exist. All ancient, well-functioning industries that are comparatively minimally regulated.
The problem with deregulating banks is that the banking industry is low-competition. A few corporations dominate the landscape. So deregulation just strengthens the predators.
All deregulation should be accompanied by an equal effort to foster a massive amount of competition within the industry. Otherwise, things can go south rather quickly.