Inogenius

Thoughts requested.

Should we have a heavily regulated economic market, or should we instead let the market control itself, and require the population to be a prudent consumer?

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King Steventon

I can't speak for America as a country (if thats what you're asking), but after studying economics for four years it's pretty obvious that a market lead economy is vastly superior to a Government lead one in every way to such an extent that to suggest otherwise would be retarded.

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Inogenius

I agree.

When you regulate the market, you remove a lot of the innovation that drives a market upward. I think a regulated market would remove the sensation of a recession, but I think we would always be in a persistent recession.

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Advocate

Neither, it should be a blended of two. Being a study of economics and finance, I can tell you that deregulation causes problems. At the same time, over-regulation can curve innovation. Some people will argue that consumers should be more prudent, but let's be realistic here. That will never happen. It only takes one major fuck up to screw up the whole system (research Long Term Capital Mortgage as a great example).

Look at the US before the Glass-Stegall Act. Banks had little to no regulation that eventually led to the Great Depression. The Glass-Stegall act was brought in to make sure banks had certain funds on hand. Then in 1999, the US got rid of the act. 10 years later, we are now in the position we are now. Banks were lending out money they did not have. They were getting credit on credit that was on credit.

That is just one example.

So the solution is not deregulation, nor is it regulation for the sake of regulation. It is smart regulation, where you place problem regulation in the right areas, while at the same time encouraging the market economy.

Dakstang

I agree with Advocate.

We need a balance of the two.

But if we can only have one I would choose over regulation.

I cannot stand corporations being allowed to do whatever they want.

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There are thousands to tell you it cannot be done,
There are thousands to prophesy failure;
There are thousands to point out to you one by one,
The dangers that wait to assail you.
But just buckle it in with a bit of a grin,
Just take off your coat and go to it;
Just start to sing as you tackle the thing
That "couldn’t be done," and you’ll do it.

King Steventon

Why not? Sure, unemplyment may rise but overall market efficiency is bound to go up, which is better for us the consumers. As long as the market isn't an economy then prices would fall and we'd get innovation, etc Better than Governments being on control and generaly failing all over the place.

A balance is always the desirable option, though.

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Suffy

Who says corporations always do things right?

A clear example is if you compare health care.

US free-market enterprise compared to Canada-Euro free medicine.

And you can't claim the US has better doctors anyways, just take my word for it but if you compare 10 patients getting a surgery done at St Bonifice hospitals (a hospital in Winnipeg) and 10 patients getting a surgery done in Boston, not only will the Canadian pay less they will have the exact same results.

Government wins.

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Advocate

Right now, corporations are not transparent enough to make that happen though. Look at public corporations, who is making the decisions? Usually the CEOs. Who hires the CEOs? The Board of Directors. Who hires the Board of Directors? The Shareholders. But here is where the problem is. Many shareholders out there do not research or oversea the company that they fund. Most go to their financial planners or use mutual funds. In the end, people know very little except that profits are increasing or decreasing. In many more cases, they just know that their portfolio is increasing or decreasing.

So when it comes to it, the only point of accountability is profit. Well, what is profit? Contrary to belief, profit is not the how much cash the company made after expenses. No, it is how much revenue was accrued after accrued expenses. Revenue and expenses do not necessarily encompass cash. Actually, they mainly encompass promises. If you come to me and tell me you will buy my computer for $500, it is a sale, even if no cash is exchanged. That means, $500 goes on the books.

At the same time, the rules of accounting make it so that it is more of an art-form than a science. Look at Enron. The company had revenues and profits growing like crazy with no liabilities. But in reality, the company owed a shit load of money and the revenues were not even close to what were being reported. Accountings were using their molding clays to deceive the public and its shareholders.




So if I was corrupt and I was a CEO of a company, I would do what ever I could to make the company look as profitable as possible, so when the shareholders see that one little number, they would extend my contract and give me a bonus. If the company goes under, fine. Who cares? I will still walk out a millionaire.





Now, do not get me wrong. I am pro-capitalism (but I also believe in a social element). I have a business degree, a business masters degree, and actually teach Marketing at the Uni level. I also used to operate a business with my family (but now I work for the Ministry of Health ). I do not believe all business is bad. I believe most people have the right intentions. So I am no socialist or pessimist. But I do want to make it clear that there is not enough information out there for the market to control itself.