DIYbanter - View Single Post

Ignoramus28589

On 2010-01-16, wrote:
On Jan 15, 10:47?pm, Hawke wrote:

The problem is that when you let everyone do the planning it never
works. It's chaos. When you allow the smartest people to do the planning

Actually it works very well in a chaotic way. The smartest and
luckiest do well. You have companies as Amazon, Ebay, Facebook,
Microsoft, Intel doing really well. Even in industries as steel you

Competition and free allocation of capital works very well in most
areas. For example, I can compare various lawn mowing persons and hire
the one who gives me best service for money.

Same applies to most products and industries.

Where competition and free market allocation does not work, without
regulation, falls into three areas.

1. Where quality of product is not obvious to consumer and needs to be
regulated. For example, milk sold in stores is regulated as to its fat
content, expiration day, etc. Another example of many, is gasoline. If
stores could cheat and sell adulterated products, they would, and it
would be difficult to see real competition, and the public would be
hurt.

2. Financial activities that lead to creation of money, such as
fractional reserve banking in all forms, leads to regular economic
disruptions of large magnitude (think of bank panics).

3. Activities where large costs are externalized and borne by the
public in general. Typical example is industries that dump their
wastes and pollute environment. Without regulation, we would live in a
world like China (search "china environment" in Google Images).

Item number 1 is the most controversial and its proper treatment is
far from simple.

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