Re: Leftists knocking Friedman ?

<stuff_stuff@[EMAIL PROTECTED]
> wrote in message 
news:703er3166a373qtveblrpdjj23ua5sip19@[EMAIL PROTECTED]
> On Sat, 16 Feb 2008 08:00:06 -0600, "John Galt"
> <whoisjohngalt@[EMAIL PROTECTED]
> wrote:
>
>>I would personally say that the goverment has a role in mitigating the
>>negative effects on certain members of society whilst such "lurching" is
>>taking place, to the extent that they are reasonably able (thinking
about
>>the avoidance of moral hazard, here, but there are other
considerations);
>>but if the goverment intervenes in the process itself, they tend to 
>>distort
>>the market and ultimately accentuate the negative effects that one was
>>hoping to mitigate.
>
>
> Government also has the ability to dampen the swings of the pendulum
> in this process, resulting in more stability.  Stability is a good
> thing, under valued by too many laissez faire types. They focus on the
> boom and ignore the crash or right it off as an economic
> inevitability, a culling of the herd if you would. But stability
> allows planning and more accurate planning. And that results in more
> investment and more productive investment.

No question, and I'd add "production efficiency". Boom to bust cycles that

cause massive hiring followed by massive layoffs (thinking manufacturing
and 
distribution, here) ignore the time impact of training a new workforce
every 
so often. One of the historically positive contributions of the UAW to the

auto industry during it's golden years was the fact that the automakers 
would lay off during a "bust" cycle, but when the "boom" hit again, they'd

just plug the same workers back into position, since the UAW continued a 
flow of compensation and thus minimized the number leaving the industry.
>
> (This stability is one of the reason markets and the economy perform
> better under Democratic administrations that push regulatory policies
> that increase stability. )

Perhaps a bit of a reach here. You'd have to wait until the end of the
next 
business cycle to determine if such intervention was in fact working, and 
there's a pretty good chance that event will occur in somebody else's
term.

> While the very richest don't get to make
> the massive profits we see under GOP de-regualtory and nonenforcement
> policies, overall the stability allows most of the rest of the herd to
> move forward to greater growth. Thus airline deregulation may allow a
> surge of profitable small airlines for a time, in the long run we get
> numerous failures, bankruptcies, and abandoned obligations.

Personally, I see that as a necessary component of creative destruction. 
Regulate that process too heavily and you'll end up regulating venture 
investment and startup activity. Much has been written, for example, on
how 
the French worker-centric job security laws inhibit start-up activity,
since 
young businesses don't have the flexibility required during the startup 
phase.

For example, it may seem perfectly reasonable to require a certain level
of 
liquid cash before a company exceeds a particular employment level. After 
all, we don't want a 100 to 1000 worker company to suddenly fail; but, you

see the dampening effect a capital requirement regulation could have on
new 
venture formation. So, ultimately, we decide to take a "laissez-faire" 
approach to the matter, reasoning that it's better to risk a few hundred 
jobs here and a few hundred jobs there than to risk stifling new ventures
in 
total.

JG