Legislating individual vs. corporate freedoms

You mean like arresting a grandmother for purchasing a box of Zyrtec-D and a box of Mucinex-D less than seven days from each other?

No, shit like that only happens in places like North Korea.

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For example, some corporate regulation is recognized as necessary by nearly all political ideologies, such as basic antitrust regulations. Many others are widely recognized as being beneficial, such as regulations on banks, financial reporting standards of publicly-traded corporations, FDA regulations on food additives, etc.

There's a significant body of libertarian/anarcho-capitalist thought that denies that almost any corporate regulation is necessary or desirable. There are strong arguments against all the examples you list.

The argument that bank regulation is a large component in the current financial crisis is a strong one (regulators basing capital requirements on ratings by rating agencies whose ratings were flawed, FDIC deposit insurance discouraging depositors from paying attention to the level of risk taken by their banks, regulators encouraging banks to make home loans to riskier borrowers, moral hazard created by past bailouts of heavily regulated financial institutions that still got themselves into trouble...).

Sarbanes Oxley is widely viewed as favouring larger corporations that can afford the high compliance costs (a general argument against regulation is that it often favours large incumbents over smaller companies) and imposing heavy costs on the economy with little benefit (it failed to prevent widespread misreporting of the health of banks for example, or off balance sheet shenanigans).

The FDA made headlines with it's somewhat bizarre attempt to regulate Cheerios. More generally there's a strong case that the FDA impedes medical progress by imposing huge costs on developing and testing new drugs, making it unprofitable for drug companies to target many diseases because the market is too small to justify the regulatory costs. The FDA's ability to prevent the terminally ill from trying experimental cures is morally dubious as well.

Even anti-trust regulation is widely criticized, though some will acknowledge that given the many regulatory favours granted to large corporations it plays a balancing role that ideally wouldn't be necessary in a freer market.

Public Choice Theory explains why most regulation tends to have the actual effect of favouring special interests and politically favoured groups at the expense of the broader public and smaller firms. It is a mistake to think that regulation is created to protect consumers - that is merely how it is sold/justified. Like all forms of political activity it exists to further the careers of politicians by imposing diffuse costs on the general public and delivering concentrated gains to the special interest groups that finance and support the politicians.

The biggest problem with trying to regulate corporations is that the rules usually end up getting made by the people their suppose to keep in check. For this reason I feel the problem with the libertarian solution is that if you scrap all corporate regulations they will just turn their lobbying dollars to new intellectual property laws or better loopholes for long, expensive legal battles to squash their competition. If you keep doing that once government oversight is stripped to the bones thy will just decide that since they have all the power they don't want to play by your rules and maintain their monopoly by whatever means necessary.

Corporations are purely creations of the government, and have no natural rights of any kind. If you don't like the set of benefits and restrictions that the government decrees, you're free to pursue your goals by other means.

Organizing as a corporation has huge advantages for the participants - particularly the freedom from any personal liability for the corporation's activity. But there is also a price.

One difficulty is that this is a legal issue. Very few of us are qualified or experienced enough to understand the actual law, nor to understand the impact of these changes.

Modifying the legal definitions and scopes of business entities is a very significant event. Even small changes may potentially invalidate or modify thousands of precedents and potentially many thousands of contracts.

The suggestion to "scrap all corporate regulations" would radically alter the legal landscape in ways nobody can understand.




As an analogue, rather than changing the legal standard, think about changing the programming language standard.

In C++, consider the simple addition of the "axiom" keyword is going to potentially break many thousands of programs. It is a small change with minimal impact, but it will still cost some work for a lot of people.



Imagine if a lay person were to suggest changing the c++ language standard. Perhaps their simple suggestion was that the .end() idiom return the last element rather than one past the end, because that makes more sense to them.

The lay people could discuss on forums about how good the idea is, and perhaps how it would make more sense in a few situations. But ultimately these people do not have the background necessary to make the decisions, and don't (fortunately) have the authority to make the changes.



So it is with this type of legal issues. Understand that changes to the law can have major impact and unintended consequences. Those unintended consequences are even bigger when you are a lay person rather than those who are well-versed in corporate law.

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Original post by Kaze The biggest problem with trying to regulate corporations is that the rules usually end up getting made by the people their suppose to keep in check.

Indeed. You only have to look at what's been happening with the financial industry over the last few years for an object lesson. When the former secretary of the treasury is also the former head of Goldman Sachs you have to question in whose interests he is acting. More generally this problem is known as Regulatory Capture and it is another reason to be wary of increased regulation.

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For this reason I feel the problem with the libertarian solution is that if you scrap all corporate regulations they will just turn their lobbying dollars to new intellectual property laws or better loopholes for long, expensive legal battles to squash their competition.

Well the real problem with the libertarian 'solution' is that there isn't one. Nobody has really figured out how you create a political system that doesn't suffer from the problems libertarians point out with the current system. In the ideal libertarian political system government wouldn't have the power to further corporate interests so corporate lobbyists wouldn't waste their money trying to get that power used to further their own ends. In reality it is not at all clear how to design a political system that can avoid these problems. The US had a good run at it but appears to be beyond saving now. That's one reason some libertarians are turning away from conventional politics and towards competitive government as a possible alternative.

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If you keep doing that once government oversight is stripped to the bones thy will just decide that since they have all the power they don't want to play by your rules and maintain their monopoly by whatever means necessary.

The theory is that without government privilege and regulatory favours to large corporations, monopoly is not a natural state of affairs. Balance will be maintained by the competing interests of different groups. As far as I'm concerned the jury is still out on that but it's hard to imagine any interest group having more power in a truly competitive economy than the big financial firms have in the US today.

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Original post by mattnewport Quote: If you keep doing that once government oversight is stripped to the bones thy will just decide that since they have all the power they don't want to play by your rules and maintain their monopoly by whatever means necessary. The theory is that without government privilege and regulatory favours to large corporations, monopoly is not a natural state of affairs. Balance will be maintained by the competing interests of different groups. As far as I'm concerned the jury is still out on that but it's hard to imagine any interest group having more power in a truly competitive economy than the big financial firms have in the US today.

Here I disagree, I feel the formation of monopoly's is as natural as the filling of any other power vacuum and a lack of regulation just creates more vacuum for them to fill.

I don't think one has to be a lawyer to articulate a moral vision of how society ought to be arranged. Who should the system serve? Citizens or corporations or the state or the church or some entirely different group as yet unnamed. Who's risk should be minimized first? Corporations operate with the primary motivation of increasing profits. Citizens operate on widely divergent sets of motivations. Hunger, thirst, habitat, reality -- Grief, panic, fear, lust... Let's remember that the creatures are we dealing with here are ourselves. tbc...

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Original post by Kaze Here I disagree, I feel the formation of monopoly's is as natural as the filling of any other power vacuum and a lack of regulation just creates more vacuum for them to fill.

Power vacuums in the commercial world are rarely filled by a single company - the prospect of an untapped market generally attracts multiple competing interests. I haven't been convinced that any natural monopolies exist in a free market - most monopolies tend to exist because of special legal treatment. An operating system is one of the most compelling cases for a natural monopoly and yet if you look at the history of Microsoft and Windows it's fairly clear that the anti trust case brought against them achieved nothing beyond wasting vast sums of taxpayer money on legal fees. The companies that pushed the case hardest (AOL, Netscape, Sun) are largely irrelevant today and Microsoft's market dominance has been slowly eroded instead by new competitors offering compelling alternatives (Google, Apple, Linux, Mozilla, mobile technologies).

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The theory is that without government privilege and regulatory favours to large corporations, monopoly is not a natural state of affairs. Balance will be maintained by the competing interests of different groups. As far as I'm concerned the jury is still out on that but it's hard to imagine any interest group having more power in a truly competitive economy than the big financial firms have in the US today.

Competition does not exist unless enforced. Anyone with half a brain can figure out that a monopoly is more profitable than competition. There is no such thing as "competing interests" in the world of business because everyone is interested in the same thing: money. There is no balancing. Why do you think we needed to regulate in the first place? Because everyone was getting along? Because companies had our best interests at heart?

No company cares about libetarian theory. No company cares about sustainability. No company about the good of society. No company even cares about their own employees. You are either raising your profits or dying. Everything else is meaningless. If merging with your rival to create a monopoly will get you more money (and for less effort!) then you will do it. Regulation is the only thing preventing this (and prejudice/intolerance, but that's not exactly a wonderful solution).

The government may be corrupt, sure. They make be self-interested, sure. They may promote policies that benefit them, sure. But you know what? We regulate the government. That's called democracy: a system of regulation.

The tendancy of Americans to proudly love democracy yet blindly hate regulation is an endless source of amusement. You fight to be free from the government so you can give unlimited power to unregulated corporations who you have no control over and don't give a shit about you, marginalizing the very system of regulation that you preach and even actively spread around the world. Truly, the USA is in a sad state of affairs when it is so eager to abandon its own ideals.

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Original post by BeanDog On the other hand, legislation that limits individuals from exercising their freedoms without infringing the freedoms of others often have detrimental effects. Consider the socioeconomic effects of illegalizing alcohol or marijuana consumption, or any example of government-enforced patronage of a private entity (e.g. Peru's government-enforced landline telecom monopoly). In the first case, the result is invariably violent organized crime.

To be able to say that the effect in examples you gave is indeed "detrimental", you have to show that the situation without this legislation would be worse. Do you really think that unregulated consumption of alcohol and marijuana would be better overall socioeconomically, compared to the current regulated state?

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Original post by mattnewport Power vacuums in the commercial world are rarely filled by a single company - the prospect of an untapped market generally attracts multiple competing interests. I haven't been convinced that any natural monopolies exist in a free market - most monopolies tend to exist because of special legal treatment.

AFAIK, Microsoft didn't gain monopoly status through special legal treatment, unless you include copyright as special legal treatment. Although an argument can be made that copyright just makes the business of selling operating systems like any other good. Also, oligopolies can be just as damaging as monopolies, and I'm sure you can find plenty of areas that are oligopolies (x86 processors for one).

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Original post by mattnewport An operating system is one of the most compelling cases for a natural monopoly and yet if you look at the history of Microsoft and Windows it's fairly clear that the anti trust case brought against them achieved nothing beyond wasting vast sums of taxpayer money on legal fees.

It's fairly clear that the reason it achieved nothing is because the "anti-trust legislation is bad, mmmkay" crowd got into power and basically turned their punishment into a wrist-slap.

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Original post by mattnewport The companies that pushed the case hardest (AOL, Netscape, Sun) are largely irrelevant today and Microsoft's market dominance has been slowly eroded instead by new competitors offering compelling alternatives (Google, Apple, Linux, Mozilla, mobile technologies).

Yes, the companies pushing the case are irrelevant. That's not proof that what they were complaining about was not relevant. In fact, in the absence of any other evidence, it would indicate some merit in their arguments.

I think that you severely underestimate the effect that anti-trust legislation has had in helping that erosion of MS's dominance, by the way. The US and EU anti-trust legislation has effectively forced Microsoft to put on the kiddie gloves when it comes to competition. Back in the good-old anti-trust days, there's no way Microsoft would have allowed something like this without forcing the company in question to pay, both literally and figuratively.

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Original post by Gil Grissom To be able to say that the effect in examples you gave is indeed "detrimental", you have to show that the situation without this legislation would be worse. Do you really think that unregulated consumption of alcohol and marijuana would be better overall socioeconomically, compared to the current regulated state?

Its hard to say concerning legal drinking age, but prohibition did raise violent crime rates. The argument surrounding marijuana is roughly the same: that legalization would kill the black-market and make distribution easier to regulate.

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Original post by LockePick Competition does not exist unless enforced. Anyone with half a brain can figure out that a monopoly is more profitable than competition. There is no such thing as "competing interests" in the world of business because everyone is interested in the same thing: money. There is no balancing. Why do you think we needed to regulate in the first place? Because everyone was getting along? Because companies had our best interests at heart?

You should read up on some basic economics. I recommend Economics in One Lesson by Henry Hazlitt or Basic Economics by Thomas Sowell. Competition is the natural state, it takes government intervention to prevent it. A monopoly can be very profitable, which is why it's not a natural state of affairs. Competitors will quickly appear to take advantage of the profitable opportunity. Your suggestion that because businesses are all interested in money there is no competition makes no sense. All sports teams are interested in winning, does that mean there is no competition in sports? Regulation exists because it enriches politicians and entrenched special interests at the expense of consumers and competing companies. Do you really think politicians have your best interests at heart?

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No company cares about libetarian theory.

To paraphrase Morpheus, libertarian theory does not require them to.

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No company cares about sustainability. No company about the good of society. No company even cares about their own employees.

Companies can care about all those things to the extent that it is in their own interests to do so. Companies whose owners have a long term view can care about sustainability. Companies that profit by selling to members of society can care about the good of society. Companies that require skilled employees can care about keeping those employees happy.

Politicians on the other hand have little reason to care about sustainability (they only look as far ahead as the next election and arranging cushy lobbyist positions after leaving politics). They place their own electoral fortunes above the good of society. They certainly don't care about their own electorate beyond telling them whatever they think they want to hear to get their votes.

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You are either raising your profits or dying. Everything else is meaningless. If merging with your rival to create a monopoly will get you more money (and for less effort!) then you will do it. Regulation is the only thing preventing this (and prejudice/intolerance, but that's not exactly a wonderful solution).

The drive for profits is what keeps companies honest. Unlike in government repeated failure is rewarded by bankruptcy in a free market rather than promotion and a fat pension. Companies will certainly merge if they think it makes business sense. They will also split if they think that will be more efficient (see AMD for a prominent recent example). What prevents monopolies is competition - if a company is earning abnormal profits in a sector that is a strong incentive for a competitor to enter. What maintains monopolies indefinitely is government regulation.

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The government may be corrupt, sure. They make be self-interested, sure. They may promote policies that benefit them, sure. But you know what? We regulate the government. That's called democracy: a system of regulation.

Umm, yeah. And Santa Claus brings all the good kids presents at Christmas. The government is controlled by special interests. I refer you again to Public Choice Theory.

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The tendancy of Americans to proudly love democracy yet blindly hate regulation is an endless source of amusement. You fight to be free from the government so you can give unlimited power to unregulated corporations who you have no control over and don't give a shit about you, marginalizing the very system of regulation that you preach and even actively spread around the world. Truly, the USA is in a sad state of affairs when it is so eager to abandon its own ideals.

I'm a British citizen living in Canada (Vancouver, same as you it appears). I don't believe in democracy. I particularly don't believe in US style democracy as it exists today which is basically a form of Corporatism (not capitalism as Michael Moore fails to understand when he makes his occasionally legitimate rants). Corporatism has become increasingly firmly entrenched over the course of the financial crisis in the US and it is indeed sad that they seem to be abandoning their own ideals as set out in the constitution but they're hardly alone in the western world on that front.

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Original post by Rycross Its hard to say concerning legal drinking age, but prohibition did raise violent crime rates.

By prohibition, do you mean imposing a minimal age to purchase alcohol?

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Original post by Rycross The argument surrounding marijuana is roughly the same: that legalization would kill the black-market and make distribution easier to regulate.

I think this addresses a different question -- how best to regulate consumption. But BeanDog's question (as I understood it) was whether to regulate it at all. His idea being that regulating individual freedoms might have detrimental effects, and marijuana being an example. So I'm saying that I'm not convinced that allowing people to smoke marijuana (or meth, etc.) would necessarily lead to a better socioeconomic situation. It's true that the black market will disappear, but on the other hand many more people will have substance abuse problems, and it's difficult to say which is better.

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Original post by mattnewport Competition is the natural state, it takes government intervention to prevent it.

Seriously? So in the thread about "Free software" people mentioned a few monopolies (like Microsoft, Oracle, Google and Adobe). Are you saying that in each of these cases there was government intervention to prevent e.g. competition to Adobe? And which country's government would that be?

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Original post by Gil Grissom By prohibition, do you mean imposing a minimal age to purchase alcohol?

No I meant the banning of alcohol, commonly referred to as Prohibition.

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Original post by mattnewport The drive for profits is what keeps companies honest.

I did a double-take at this point. Since when have profits kept companies honest? If anything, a company will gladly lie and screw you over if they think they'll get a little bit extra money out of you. I suppose you could try to organize a boycott, but in a world of huge corporations and imperfect information, such a thing is incredibly difficult, if not impossible.

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Original post by Gil Grissom But BeanDog's question (as I understood it) was whether to regulate it at all. His idea being that regulating individual freedoms might have detrimental effects, and marijuana being an example. So I'm saying that I'm not convinced that allowing people to smoke marijuana (or meth, etc.) would necessarily lead to a better socioeconomic situation. It's true that the black market will disappear, but on the other hand many more people will have substance abuse problems, and it's difficult to say which is better.

You're still talking about two slightly different questions here I think. One is whether the government has any business regulating the private consensual behaviour of individuals if they are not infringing on the rights of others. That's a moral/ethical question and as far as I'm concerned the answer is clearly no but that's a somewhat minority opinion. Many people would like to be able to tell others what to do and if that's not an option will settle for the government telling them what to do instead.

The other question is whether prohibition leads to a net benefit to society by some kind of utilitarian calculus. That question is more open to empirical evidence and anecdotal/historical evidence (prohibition in the 30s in the US) and more recent studies (decriminalization in Portugal) suggest that the answer is no. Obviously the answer to this question is somewhat dependent on what criteria you use to judge the positive or negative effects to society but the evidence suggests that abolishing prohibition would reduce violent crime, improve the quality, consistency and purity of drugs and so reduce negative health impacts and lower prices so reducing the incentive to commit crime to fund drug use. There would also be huge savings in law enforcement costs as well as social benefits to reducing the number of non-violent drug offenders kept in jail at great public expense.