Comment by ta434 | Hacker News Reader

Comment by ta434 | Hacker News Reader

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> Another case of the government intervention in the free market hurting the consumers

Your statement is worded as if this is the expected outcome whenever there is government intervention in to a market. I'm not sure if I perhaps misinterpreted that, because your conclusion suggests further regulation. Regulation (from government intervention) doesn't ruin a market - bad regulation does. Just like all private companies are not like Enron - some governments have regulated the telecom market to increase competition.

It's easy to critique the failings of regulation because there are so many examples. Good regulation in my limited observations is very difficult. In my experience, the best regulations are from independent groups such as IEEE. IEC-60079 (Explosive Atmospheres) for example is a great set of rules and regulations from my perspective. As a manufacturer it would likely increase costs, and pure market thinks may suggest that the safest/cheapest manufacturer would win. However that simply doesn't happen in the real world as there are many more variables that our simple models account for.

I'm afraid I'm not sure what Georgian rent over space means, so I can't comment there. However I believe you have effectively suggested more regulation - rather than encouraging further free market, which I would agree with.

Any time there is a monopoly (poles in the ground), it must be controlled with appropriate regulation to ensure the system isn't abused. I lean towards government owned and privately operated/maintained in these scenarios - however that too has it own set of dangers.

> because your conclusion suggests further regulation.

no it suggests fewer regulations

> Regulation (from government intervention) doesn't ruin a market - bad regulation does.

This is the same argument as communism has never been tried argument and that Mao, Stalin et al were doing 'bad communism'.

>some governments have regulated the telecom market to increase competition.

Regulation increases barrier to entry and therefore can not possibly increase competition. Almost all monopolies are the result of government intervention in the market.

>the best regulations are from independent groups such as IEEE. IEC-60079

Im not sure if this regulation is mandated i.e. it is enforced or not, but if it isn't then it's not really comparable to regulation from the government.

> Good regulation in my limited observations is very difficult.

Not surprising.

>However I believe you have effectively suggested more regulation

It's not. It is simply asking the holder of space to pay its rent value.

>Any time there is a monopoly (poles in the ground), it must be controlled with appropriate regulation to ensure the system isn't abused.

The only reason poles in the ground is a monopoly is because there are regulations that stop people from putting more poles in the ground. Do you suggest that the solution to regulations is more regulations?

>This is the same argument as communism has never been tried argument and that Mao, Stalin et al were doing 'bad communism'.

No, sure some regulation is bad, but a lot of regulation is very good. For example, a lack of food safety standards led to terrible things for consumers in the early 20th century.

The problem with the whole idea of government regulation being always bad is that that's only the case if consumers have perfect information, are able and willing to choose any provider, and there aren't economies of scale.

>a lack of food safety standards led to terrible things for consumers in the early 20th century.

and now we have a situation where a little girl gets raided for selling lemonade without a license.

Transfat has been banned in europe but in many other countries, manufacturers are responding to consumer demand by removing transfat from their products without needing to be coerced by the government.

It is not necessary for the government to intervene. Consumers can take care of themselves.

>The problem with the whole idea of government regulation being always bad is that that's only the case if consumers have perfect information,

And how does the government know more than the consumers? Are they privy to secret information?

>are able and willing to choose any provider,

which they are in a free market

>and there aren't economies of scale.

you need to clarify this.

> we have a situation where a little girl gets raided for selling lemonade without a license.

So one bad law invalidates government?

> Consumers can take care of themselves. [...] how does the government know more than the consumers? Are they privy to secret information?

They can, but this goes to the "perfect information" theory that you blithely dismissed. How does the government know more? Two possibilities: 1) As a unit, it doesn't, but actual people running the government have seen negative consequences and, acting as our representatives, regulated against them, or 2) The government employs people whose job it is to assess risks and plan accordingly. What do you know about mudslide prevention or sewage treatment, for instance?

> [regarding choice of vendors:] which they are in a free market

How so? A completely free market requires a willing buyer and a willing seller operating on the same set of information and meeting on a level platform. Much like the "uniform law of frictionless," this can never happen in real life. I am always at a negotiating disadvantage with a large service provider or even with someone who is an expert in his field and I not.

> [regarding economies of scale:] you need to clarify this.

It is not efficient, for example, to have multiple power lines serving a single structure. Nor water, nor roads, nor sewer, and, increasingly, nor Internet access wires. The regulation of such utility structure prevents pictures such as this: https://i.kinja-img.com/gawker-media/image/upload/hphmtnyak5...

Economy of scale, in many instances, means that only a monopoly is profitable but having two competitors would not be so. Garbage pickup, for instance. Or firefighting.

I believe that's what OP was getting at: some things government does well--or at least contracts for a monopoly--on our behalf. Other things, like telecommunications regulation, are unduly influenced by actors with more information and completely different incentives than their alleged customers.

>So one bad law invalidates government?

Bad laws prove that government intervention is bad and we ought to limit its power.

>They can, but this goes to the "perfect information" theory that you blithely dismissed.

I already addressed this issue. What is so special about the government that allows it to have more information than consumers? Nothing. Any information government can obtain for consumers can be obtained by consumers themselves.

>but actual people running the government have seen negative consequences and, acting as our representatives, regulated against them,

Actual consumers running their lives have seen negative consequences and, acting out of their own interest, decided against them.

No need for a government middle man

>2) The government employs people whose job it is to assess risks and plan accordingly. What do you know about mudslide prevention or sewage treatment, for instance?

Consumers can also employ people whose job it is to assess risks and plan accordingly. I don't know about mudslide? I buy a booklet from a risk assessment/engineering consultant/geological consulting firm and they tell me what I need to know. Again, no need for government middleman.

> A completely free market requires a willing buyer and a willing seller operating on the same set of information and meeting on a level platform.

This is not true at all.

A free market does not require people operating on the same set of information. It just needs lack of intervention. I can buy an apple for $2 from a seller I don't need to know how much he bought it from, from whom, when etc. There is no requirement for a symmetry of information.

> I am always at a negotiating disadvantage with a large service provider or even with someone who is an expert in his field and I not.

As said, a free market does not require sellers and buyers to have information parity. A seller who believes he is at a disadvantage can simply 1) choose to not enter any deal 2) obtain more information. He decides what choice is appropriate. Sellers have every incentive to educate buyers and be honest, as doing so would make it more likely that they will get a mutually beneficial deal.

>It is not efficient, for example, to have multiple power lines serving a single structure.

Humans are not hive-minded engineers. The point of a free market is not to maximise efficiency in provision of all services, although it does a pretty good job anyway, but to provide maximum choice and lower price for consumers. Even if there can efficiently be only one power line in town, the fact that there are multiple providers would increase the negotiating power of the consumers.

> Garbage pickup, for instance. Or firefighting.

A market might not be big enough for 2 players, but that doesn't mean that the government should mandate who the sole provider should be.

>Transfat has been banned in europe but in many other countries, manufacturers are responding to consumer demand by removing transfat from their products without needing to be coerced by the government.

And none of that would have happened if REGULATIONS hadn't forced those companies to add trans fat labeling! The decline in trans fat usage correlates very strongly with the labeling requirement.

>and now we have a situation where a little girl gets raided for selling lemonade without a license.

Source, I'm actually curious?

But the real point is that yes, overarching government power is bad. But so is overarching corporate power. There seems to be this belief that the free market is perfectly self correcting, which in theory is true, but in practice isn't. There's a power differential between (large) corporations and individuals in their ability to organize, act, and finance their goals. As a result, large corporations will always be implicitly more powerful than groups of people, even quite large groups.

>And how does the government know more than the consumers? Are they privy to secret information?

Well, yes, essentially. A corporation has no reason to allow me, a private consumer to inspect it. I will have no way to verify that this cheese I'm getting is real or filled with sawdust. So you say, a corporation pops up that inspects the cheese and gives it a seal of approval. Perfect now I can trust my cheese. But how am I to know whether or not the cheese manufacturer is bribing the cheese-authenticating-company?

Or how will the cheese-authenticating-company even get off the ground, it needs to buy thousands of dollars in chemical testing and lab equipment. I have no incentive as a consumer to pay such a company if I think my cheese is fine. So the only chance such a company has of being successful is once consumers realize there is a major problem with the quality of cheese, by which point its too late.

Compare this to the FDA, who can say "let us inspect you and your food" and have the force of legal consequence for saying "no". Then, they're funded by taxes, meaning that even if I personally have no reason to pay them because I think my cheese is fine, I still pay a few dollars to keep the FDA around making sure my cheese is up to snuff.

>manufacturers are responding to consumer demand by removing transfat from their products without needing to be coerced by the government.

And the only reason we know about the contents of food is because of government mandated ingredient lists and labels. Without such government regulations, we'd be even more in the dark about the contents of food.

>which they are in a free market

Sure, if they are willing to spend time and effort to compare and investigate a (technically infinite in a true free market) number of products. Most consumers aren't willing to do this, even if they are able. Take open source software. I'm a user of various pieces of OSS. I've never audited any of the pieces of open source software I use. I could, but I don't have the time and am unwilling to develop the expertise to judge the python interpreter or LibreOffice or openSSL. And that's in an otherwise perfect situation, where I have full access to information. What about when I don't, or when there are 500 minor forks of openSSL that all do things slightly differently and I need to choose the best one for me. A perfect free market isn't feasible, there's too much information to work with.

I mean hell even if openSSL develops as the major one and everyone uses it, now we've got a near-monopoly, and someone who realizes that there's a problem in openSSL that they are unwilling to fix, and lets say its a fundamental issue, well now they have to build something new from the ground up, but it also has to match openSSLs api exactly because otherwise it will never be adopted, the cost of conversion is too high. And it'll take time for information about the problem to spread, and time to develop the alternative, and time for adoption to occur, and...this person needs to make money while developing this alternative somehow.

And that's in a situation with perfect information, extremely low market barriers, and a generally good natured monopoly who isn't acting to intentionally stump out competition.

>you need to clarify this.

Entering a market that has a natural economy of scale is nearly impossible unless you have a huge amount of resources already to throw at the problem. Take telecom. Telecom sucks in the US. We've broken up telcos because they're such natural monopolies, and awful. The only real company competing with telcos right now are internet based alternatives, and google, which is also an enormous company and piggybacked off of prior work by the telcos (dark fiber) to do what it is doing.

There's no way I could compete in that market, even if I promised services thousands of times better than current options. I don't have the resources to purchase 100ft of underground fiber cable, much less lay it.

>>some governments have regulated the telecom market to increase competition. >Regulation increases barrier to entry and therefore can not possibly increase competition. >Almost all monopolies are the result of government intervention in the market

In the UK regulation was introduced stating that the monopoly phone company had to lease access to customer phone lines to other companies on the same terms as themselves. Since then we've gone from a monopoly DSL provider to having a choice between twenty or thirty providers almost everywhere. I'd call that a regulation which has increased competition.

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