![]() | #76 | ||
Team-BHP Support ![]() ![]() | Re: Understanding Economics
If you can't keep a civil tone, you better stop now. Quote:
Quote:
If you actually understand Economics, I don't have to explain the importance of regulation to you. But there can be good regulations as well as bad regulations. | ||
![]() | ![]() ![]() |
|
![]() | #77 | |
BHPian Join Date: Oct 2010 Location: N Delhi
Posts: 407
Thanked: 201 Times
| Re: Understanding Economics Quote:
GSA removal was the handiwork of the great Mr G. His premise was market efficiencies must be harnessed than stifled. His prescription for doing so ? Deregulating markets and letting markets be SROs. That oxymoronic nonsensical term still gets used inspite of all the mess. He helped create an environment where the SEC and other regulatory authorities were in bed with the banksters. The results are there for all to see! Please do not try to tell me things would not have been ay different if the bank-sters did not have the freedom they did. With respect to the limited context of the original post of @TSK that I responded to, I still contend market regulation is a MUST. Free markets are an illusion like the mirage of the oasis in the desert. Wherever markets have been allowed to run free and unregulated, they have led to crisis and chaos because the freedom of the markets was subverted by a powerful minority simply because they had the means to do so. | |
![]() | ![]() ![]() |
![]() | #78 | |||||
BHPian Join Date: May 2008 Location: Bangalore
Posts: 106
Thanked: 27 Times
| Re: Understanding Economics
Sorry - forgot that calling a spade a spade can be offensive. Quote:
Your system wants regulations. I am saying that regulations lead to too much power with the government, and ends up in bad regulations that hurts consumers. I am citing bad regulations to support my case. It's a valid logical argument. Oh wait! You're the guy who believes in homeopathy! I am the guy purporting the cause of no regulations, and I am supposed to cite examples that make my own case look bad? ![]() I'd be more than willing to change my stance if you actually cite a real example, instead of very loosely hypothesizing about how bad the world would become if markets were left free. As I said - why don't you cite one real life example where no regulations led to monopoly or "free-market illusions" - as you'd put it. Quote:
Quote:
Quote:
Quote:
Even the modern Keynesians see the value in deregulation. | |||||
![]() | ![]() ![]() |
The following BHPian Thanks e1t1bet for this useful post: | nakul0888 |
![]() | #79 | ||
BHPian Join Date: May 2008 Location: Bangalore
Posts: 106
Thanked: 27 Times
| Re: Understanding Economics Quote:
Also, the banks lobbied for that regulation. As long as governments have that kind of power, what stops lobbyists from getting whatever they want? If we live in the paradigm that regulations are awesome, there's nothing that stops corporates from arm-twisting politicians into getting whatever regulation works best for them. Also, do note that the banking industry is probably the most regulated industry in the world (along with oil and gas). Guess which companies are the most influential in the world? Banks and Oil and Gas companies. Allowing governments to freely pass economic regulations only leads to cronyism. Quote:
![]() | ||
![]() | ![]() ![]() |
![]() | #80 |
Team-BHP Support ![]() ![]() | Re: Understanding Economics
Not true. You are being rude when you can merely disagree. What is this supposed to mean? Oh, now I remember you. You were the guy who called all parents who use homeopathy on their kids as child abusers. Now that I recall you and your usual style of argument, I see no point in having a rational discussion with you. Besides, your knowledge of economics is very anecdotal. Last edited by Samurai : 26th June 2012 at 17:11. |
![]() | ![]() ![]() |
![]() | #81 | |
Team-BHP Support ![]() ![]() | Re: Understanding Economics Quote:
Let me give you ground realities. Lets take broadband. In most areas of many big cities(like noida, ludhiana, gurgaon), there is only one private player. Airtel. The only competition it gets is from BSNL DSL. If govt does not push broadband, does not lay down community owned backbone, this situation will get worse. In the USA the supposed mecca of free market, most small players have been gobbled up, and most areas have one supplier or two suppliers for broadband. So you have one player in cable space(eg comcast), and one player in DSL space(AT&T), Many areas(in metros) are getting only single broadband supplier. This is what flawed regulation, or complete lack off regulation does. What starts as the illusion of free market eventually becomes a cartel. Remember, a corporation does not think, it does not have a concience. Its primary objective is to maximise returns to shareholders. A cartel, duopoly and price fixing, esp in space where barrier of entry is high(eg Airlines, Broadband, telecom etc.,), is always more profitable. Memory makers have been caught with their pants down, but unfortunately, the fines imposed are a small percentage of the profits they made by price collusion. So leaving corporates alone creates a fascist state. Even with regulation, they operate behind lobbyists and are the real power behind laws. They have subverted the power of democracy. | |
![]() | ![]() ![]() |
![]() | #82 | |||||
BHPian Join Date: May 2008 Location: Bangalore
Posts: 106
Thanked: 27 Times
| Re: Understanding Economics Quote:
Network effects lead to natural monopolies - but always in history, they have tended to be transient. Multiple broadband suppliers are already around in some cities (Act, Beam etc), and are undercutting Airtel (AND Bsnl) EDIT: Also, do note that the broadband industry IS extremely regulated in most countries. In fact, most of these companies lobby hard to outlaw sharing of infrastructure (optical fibres, spectrum etc). Their fear being, if one competitor starts, they would all have to - and super-normal profits would dry out. Quote:
Quote:
Quote:
Quote:
I am not for "no regulations". Contracts need to be respected, Consumers need to be protected against fraud, the environment needs to be protected etc. That is the role of the government - to maintain law and order. I even buy Coase theorem to some extent. What I am strictly against is any legislation that selectively favors any industry (either preventing it from collapse, or allowing it to function inefficiently with super-normal profits) in the name of "increasing competition", "protecting jobs/doom/etc", "promoting inclusive growth" etc Last edited by e1t1bet : 26th June 2012 at 14:22. | |||||
![]() | ![]() ![]() |
![]() | #83 | |
BHPian Join Date: May 2008 Location: Bangalore
Posts: 106
Thanked: 27 Times
| Re: Understanding Economics Quote:
Note from mod: Please do not discuss mod actions in public Last edited by tsk1979 : 26th June 2012 at 14:25. | |
![]() | ![]() ![]() |
![]() | #84 | ||||
Team-BHP Support ![]() ![]() | Re: Understanding Economics Quote:
As for a real example. Do you know that "broadband" in India is defined as 256kbps. Before TRAI stepped in, companies were offering 64 and 128kbps as broadband. Now TRAI is going to step in(if its allowed) to have 512kbps definition. If companies have their way, its far more profitable for them to offer 256kbps minimum speed after fair usage limits expire, then offer 512kbps. So my hypothesis is based on ground realities. Quote:
Quote:
Quote:
As for regulation. Increasing competition : Absolutely necessary. without competition you get monoply, which can then set any price they want. Protecting jobs : Again important. Many prosperous countries are surrounded by poor countries where people are willing to work at 1/2 the cost. Without regulation of immigrants, the social system of the country and quality of life will collapse Inclusive growth : Again its necessary. Airtel will not erect a tower in a village of 20 subscribers unless they can recover cost of infrastucture. If a company is allowed to use infrastructure put by the country, there needs to be regulation to force inclusive growth. Govts job is growth of all its people, not just the elite few. That said, I want to see an example of "no regulation" leading to high quality of life for the community(not for the corporation), most successful societies I have seen are in Northern europe(when it comes to Quality of life), and Europeans are very very strong headed when it comes to regulation. What will just get you scolding from justice department will actually get you millions of euros in fines in Europe. Their economy may be in doldrums, but their social quality of life is excellent. And its regulation which helped achieve that. Look what no regulation did to the railroads in america. | ||||
![]() | ![]() ![]() |
![]() | #85 | |||||||
BHPian Join Date: May 2008 Location: Bangalore
Posts: 106
Thanked: 27 Times
| Re: Understanding Economics Quote:
Quote:
The on-ground reality is that there are ISPs providing 10mbps connections with a FUP of 75 GB for 1000 bucks or so. The government never legislated this, and the state owned company doesn't provide such speeds at such a low cost, or the same reliability. When there is demand, the market answers. The process might take time, but supply eventually arrives. Such ISPs don't exist in most parts of the country because of lack of demand. If I choose to live 200 miles from any civilization, and demand that I be provided 24/7 3 phase electricity, and well-maintained roads - it's not going to happen. Whether it's the market, or the state - there is a cost to providing services. If there is lack of scale, no one can solve the individual's problem. There is no Beam or Act in Ludhiyana, because perhaps there is no "perceivable" demand at this time. Quote:
Quote:
Quote:
Quote:
The Asian Tigers - Some of them started with almost similar per-capita GDP as India, and around the same time. I wouldn't say they had no state-intervention, but minimal regulations, low taxation and free trade got them where we cannot reach anytime soon. Of course, the situation in these countries is very different today. Again - I am not claiming that these countries didn't have regulations - just that they were far less regulated than most other economies (like India, China or even the United States) Quote:
![]() Norway is an exception as I cited earlier - too small a population surrounded by oil. The other major ones are all in a tiny bit of trouble btw. Denmark has this situation where their skilled labor is migrating out because the Danish welfare state overtaxes its skilled youth (I think the rate there is more than 50%) to fund its welfare programs. Sweden started off as one of the most deregulated markets, creating most of its wealth by the 70s before socialists like Olof Palme took over. Consequently, Sweden ran into a major crisis in the 90s, and has ever since been on a path of deregulation + random state projects like Vinnova. However, the scandinavian economies have never been regulated in the same way as the US is or India is. They have very strong "consumer protection" kind of laws, which I don't think I, or any free-market advocate is against. If someone sells a lemon as a car and refuses to replace it, and is slapped a million dollar fine - that isn't really an economic regulation. It's a law/regulation that enforces contracts, and penalizes individuals who don't respect contracts. My problem is with regulations that tinker with the market's natural pricing mechanism. Rails are tricky because they tend to be public goods. For eg. In India, I'd like to see private options in rail, but I don't think doing away with the state company is a good short-term strategy. I am not against government intervention - however I strongly believe that most of the recent problems people keep citing are because of too big a government and not the contrary. Last edited by e1t1bet : 26th June 2012 at 15:27. | |||||||
![]() | ![]() ![]() |
The following BHPian Thanks e1t1bet for this useful post: | nakul0888 |
![]() | #86 | ||
Senior - BHPian ![]() Join Date: Jul 2007 Location: Gurgaon
Posts: 5,974
Thanked: 4,663 Times
| Re: Understanding Economics Quote:
In end 2009 (With copper prices being what it was), airtel's estimates on the cost of reaching a new customer was 20k. Today that would be more. So who would do broadband business? where the cost of acquiry of a single customer is so high? a. Incumbent monopolies b. Someone like Reliance who has the pockets to invest and thinks it can win. Unfortunately, no one like that in the market. c. BSNL (who are losing money in the business btw - do see their numbers!) Thus, instead of competition in this market, i would vote for regulation and stiff enforcement. Now frankly, the other question is what you said: Quote:
India needs to first save foodgrains from rotting by building decent infra (for the welfare system to work) and killing the corruption therein. Last edited by phamilyman : 26th June 2012 at 16:30. | ||
![]() | ![]() ![]() |
|
![]() | #87 | |||
Distinguished - BHPian ![]() ![]() Join Date: Jul 2011 Location: Bombay
Posts: 1,946
Thanked: 15,888 Times
| Quote:
Quote:
Also, you seem to buy the rubbish argument of the most protectionist elements in the West, who believe that low skill Americans with only a high school education deserve a "middle class" life style with 2 cars every 4 years and a 4 bed 3 bath McMansion and that competition from those with similar qualifications but who are happy to work to stay in a 1 bhk flat and to own a motor bike is unfair. The sweat shop factory workers in China voluntarily choose to work in those sweat shops, because they offer much better pay and potential for savings than the agricultural jobs they are moving out of. Au contraire in India, our idiotic labor regulations which you seem to be so fond of, prevent such sweat shops from coming up and have a created a significant risk that our demographic dividend from a rapidly rising labor participation rate will turn into a demographic nightmare, without jobs for semi skilled folks. The same argument about sweat shops has been used by people like Chuck Shumer, who claim that all our techies working for Infosys et al are cyber coolies, who are being exploited since they work for less than a wage that would let them afford a BMW every 3-4 years that similarly qualified people in the US get. Do you agree with that, and would you have been glad if we imposed labor laws on the tech sector that prohibited jobs from being outsourced here without offering similar pay and benefits as were being offered to the Americans doing one jobs earlier? Quote:
1. Safeguard citizens from external threats 2. Punish those who try to steal property from fellow citizens 3. Provide an effective mechanism for enforcement of contracts and settlement of disputes between private parties The Indian state does a terrible job on all these parameters - foreign terrorists strike us with impunity, criminals are almost never convicted or acquitted for that matter within their life spans, and contractual disputes cannot be settled through courts even in decades. Asking for any other regulation or activities from this incompetent state when it fails to fulfil its most basic responsibilities is ridiculous. While there are some highly regulated but successful economies like those in Singapore and Scandinavia, in India, I would much rather trust my luck to a complete laissez faire economy with next to no government regulation than to the Indian state. Finally, we started this topic on fuel prices. And let me assure you of one fact, the market for fuel is highly efficient, and does not need government regulation (beyond high and stable per litre taxes to encourage efficiency) - I cant think of a single successful economy in the world where fuel prices are not market driven, and claiming that the global banking crisis proves that we need government interference in fuel prices is certainly disingenuous. Last edited by Samurai : 1st July 2012 at 19:48. Reason: fixed quotes | |||
![]() | ![]() ![]() |
The following BHPian Thanks Hayek for this useful post: | nakul0888 |
![]() | #88 |
Team-BHP Support ![]() ![]() | Re: Understanding Economics I had given up the discussion on regulation since I realised a certain irony. That people still need to be convinced about the importance of regulation even after the 2008 subprime crisis. Yesterday, I watched this 4 year old documentary which is based on real interviews from the real culprits behind the subprime crisis. I was shocked at how systematically the financial services were de-regulated to literally ensure this crisis. What shocked me most was that the economics professors of Harvard and Columbia were fully hand-in-glove. What kind of training are they providing to future economists and financial professionals? If anyone has not watched this movie, please do watch. The final shock of the movie, most people who were instrumental in causing the crisis were re-appointed by Obama when he took office. So nothing changed... http://watchdocumentaries.com/inside-job/ Last edited by Samurai : 30th January 2019 at 16:28. Reason: changing movie links |
![]() | ![]() ![]() |
![]() | #89 |
Team-BHP Support ![]() ![]() | Re: Understanding Economics How do you make money? through change. What provides the most change? Instability. So crisis is always encouraged. When markets collapse, economies collapse, there is a good opportunity to make money, In a steady safe world, you cannot make money, so they guys always try and keep instability alive |
![]() | ![]() ![]() |
![]() | #90 |
Team-BHP Support ![]() ![]() | Re: Understanding Economics A very interesting interview related to regulations or lack of it. |
![]() | ![]() ![]() |
![]() |