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Stimulating Way to Create Jobs

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Bob K
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since 11-03-2007
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25 posted 11-09-2009 04:26 AM       View Profile for Bob K   Email Bob K   Edit/Delete Message      Find Poems  View IP for Bob K

Dear LR,

          Interesting point of view from economics.  I was looking at it in terms of the family therapy version of General Systems Theory and of ecology, though it's really remarkable how all these studies seem to end up talking about stuff with some of the same insights, though from somewhat different directions.  General systems theory seems to offer the suggestion that the notion of looking for a instigator is a waste of time, which I find somewhat liberating.  It's so easy to spend fruitless hours looking at who's to blame, and so difficult to figure out which point in the system is most accessible to strategies for change.

     And Mike, if you see things as being the other way around, I suspect that I haven't made myself clear.  There is no one way for there to have another way around and more than you can argue that a four stroke engine should only have strokes one and two, and that strokes three and four are wrong headed and evil and for me to say that three and four are good but one and two are evil.   It's a false understanding of the process, one which actually needs all four strokes for the engine to work as designed.

     It is not either free market or government controlled markets.  It is that government controls have become something the market depends on to keep from going nuts.  The free market uses governmental controls to serve as institutional memory of past disasters to keep an imperfect grip on the possibility of repeating them.  It's useful that the grip be imperfect because the mistakes of the past may not turn out to be mistakes for all time, so there should be some push against the controls, but not so much that all safety or governance is taken off the system at once.

     If everything comes off all at once, then a positive feedback loop sends the economy into a too rapid expansion and a period of explosive  (I think) inflation, leading to a recession or a depression, which puts the brakes on seriously until equilibrium is restored.  That includes greater degrees of governmental regulation.  

     I think this is probably descriptive of history as much as it is prescriptive, though I leave it to folks who know more about it than I do to correct me.  Maybe you will.

     Maybe LR or Grinch.

All my best, Bob Kaven

Member Rara Avis
since 05-19-99
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Michigan, US

26 posted 11-09-2009 10:18 AM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

The problem with such contentions is that free markets appear to operate surprisingly well in the absence of government controls. The black market is alive and well.

In my opinion, there's no such thing as removing "too many controls." There's only a danger of removing the wrong ones.
Bob K
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since 11-03-2007
Posts 3860

27 posted 11-09-2009 12:37 PM       View Profile for Bob K   Email Bob K   Edit/Delete Message      Find Poems  View IP for Bob K

     In that way, the deregulation process seems to work like pick-up-sticks.  There is a very straightforward way of discovering how much deregulation is enough, and that is what the system uses as a self-control mechanism at this point.  Nobody likes it very much.

     The idea is to treat this sort of system like the system in a thermostat, so that one can arrange the cycle to range around a set point which can be moved up and down; and do so smoothly, without all the hard landings and crashes, shocks and bumps that seem to tag along with the cycle now.

     As a computer guy, Ron, you'd probably have a better understanding of self-regulating systems than I do.    The question does seem to be which variables are the ones to regulate.  Removing the wrong ones will set off the positive feedback loops that can tear a system apart so quickly, which is part of the problem with deregulation per se.  Some the regulation keeps the system on track.  The question is which that regulation may be.

     Interesting, isn't it?  

     When you think about it, the Black Market is very much dependent on government controls to stabilize the price and demand for their product, and to keep the price artificially high.  Without government regulation, many of the Black Marketeers would be forced from business, so the government creates a protected market for the product with room for the principles of Capitalism to flourish.  

     These controls are sometimes called laws, and they are enforced by the police and sometimes the military powers of government.
     Depending on what the black market may be in, and what the actual demand may be, the Black Market substance may have to have more serious controls exerted upon it by having it legalized and taxed.  This depends on how the government needs to deal with that market and how the market reflects on not simply the economics but, probably also the political legitimacy of the government.

     At any rate, I suggest that black markets seem to be controlled by government regulation and don't serve as a good example of a control free marketplace. Indeed, they are virtually a government subsidized market in many ways.

     Over time, the prices in the black market item will stabilize, and no matter how much extra the government spends on enforcement, the return for the government enforcement buck will seem minimal.  Actually, it is because a set point will have been reached, and these set points are very difficult to change.  

     This often works in other sorts of systems as well, such as weight maintainance.  As a guy who is circumferentially challenged, I can speak to you with some authority on that subject.  
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