Greenback lost 41% of its value under Bush

[ParanoiA]

Yes, that's exactly what happened, the regulatory safety net was removed, housing prices skyrocketed, then the bubble burst, and now the economy is in the toilet.

 

And we did that... why? How is that better than regulation?

 

I don't know why they did it, but I'm glad they did and I hope they keep doing it. As the safety net is removed bubbles may or may not burst, depending on whether or not we learn from those lessons.

 

To ask me why that is better is like asking why freedom is better. You'd get the same result if you oppressed the citizenry and restricted our rights and liberties and then suddenly started removing those restrictions. You'd see people doing stupid things, making really stupid decisions with their new found freedoms as a result from being stifled for so long. Do those consequences make liberation NOT better?

 

Come on. Freedom and liberty is a choice, and of course I'll gladly take the disadvantages associated with it as that's a fundamental choice I make from the very beginning.

 

You just expect checks and balances to never exercise themselves. You also, apparently, don't see your government regulation as an unnatural interference in an otherwise fairly natural market. I'm not saying that there should be no regulation, rather that we recognize that regulation hurts the natural forces of market checks. Instead, we seem to prefer to inject unnatural forces everywhere we can in order to mold the economy like clay - where there are no losers. Where people can take "risk", without the "risk". Sweet.

 

Well, if you're going to do that, then don't ***** foot around about it - control every single dynamic. Because to half-assed control it, yet unregulate it, is to create an unpredictable, cyclic mess of an economy. And that's what we have. An economy full of business cycles formed by unnatural free market forces.

[iNow]

What is the history of regulations? One would presume they had good reason to start them in the first place, but I don't quite know what that reason is.

[john5746]

Here is a link

 

http://www.cato.org/pubs/regulation/reg15n1-geddes.html

[iNow]

Here is a link

 

http://www.cato.org/pubs/regulation/reg15n1-geddes.html

 

Thanks, John. That was a good article.

 

 

I found this study they referenced to be interesting:

Gregg A. Jarrell empirically tested those two propositions. He divided states into two groups-those that adopted state regulation during the early wave, between 1912 and 1917, and those that adopted state regulation after 1917. He found that the states that adopted regulation early had, on average, 45 percent lower prices, 30 percent lower profits, and 25 percent higher per capita output before regulation than the states that adopted regulation later. That was the case even after correcting for a number of demand and cost differences. Jarrell attributed those large differences in prices and profits to the effect of different municipal practices on market structure. His evidence contradicts the proposition of the public-interest theory that regulation should have been established first in states where electric utilities were most successful in exploiting their monopoly power. His evidence is, however, consistent with the positive theory of regulation. Municipal regulation through competition kept prices and profits low and caused producers to demand state regulation.

 

To further test those propositions, Jarrell examined how prices and profits changed after the move to state regulation in the early regulated states. He found that the change to state regulation was associated with a 25 percent increase in average price and a 40 percent increase in average profit. The public-interest theory predicts that both prices and profits should have fallen. There is thus substantial evidence that imposing state price and entry regulation was a proproducer move to insulate electric utilities from the competition fostered by the municipal regulation through competitive franchises. It appears that consumers pay more for electricity under a rate-of-return regime as a result of the absence of competition. Municipal regulation may not have been uniform, but it appears to have been more effective than state regulation in properly controlling utilities.

 

 

 

As well as this one:

The crucial question for the assessment of costs is whether the scale benefits of having a single firm serve the market outweigh efficiency losses due to the lack of competition. After correcting for a number of economic variables that could affect costs, Primeaux compared the costs of firms subject to competition with those of regulated monopolists. He found that average costs were lower for small firms facing competition and calculated that competition lowered average costs by 10.75 percent. Those efficiency gains outweighed the scale losses of having two firms serve the market up to an annual output level of 222 million kilowatt-hours. That result implies that, in 1962, approximately 92 percent of all publicly owned systems would have operated at lower average costs if they had been subject to competition.

 

Primeaux conducted a similar study on the prices actually paid by customers of competing versus monopoly firms. He found that the impact of competition on prices was even more profound than that on costs. He attributed that difference to lower profit rates under competition. He found that competition lowered prices by 16 or 19 percent, depending on the quantity of electricity used. The average price (total sales revenue divided by quantity sold) decreased by 33 percent. Thus, the potential gains to consumers from competition, through greater internal efficiency and more favorable profit rates, appear to be substantial.