The Government: Have they failed?

brianthebard

The Economist wrote: »

You're arguing that the market wasn't liberated enough. I'm glad we agree on something, Brian .

In the first place, the market was a monopoly of the State. Rather than having nice, benevolent prices for the masses, we were ripped off. Really, really ripped off. Competition, albeit limited, was introduced when Esat were given a licence. Prices plummeted. You should see the graphs. Remember when everyone started to get phones around 1998? Thank you, Europe. (However our deregulation was crap. Why? Because the unions threatened to pull out of social partnership is our telecommunications industry was deregulated! Bloody stinking f*cking unions!)

I doubt we agree on much. But monopoly is monopoly, whether it be by the state or otherwise.

Industrial organisation theory has developed ever so slightly since 1960.

You mean monopoly doesn't happen any more? Really?

US aviation
European aviation
Fixed line telecommunications (there was too much intervention tbh)
Dublin-Galway bus routes
Dublin-Cork bus routes

You also need to define what "intervention" means. The rabid right-wing capitalist in me still wants a competition authority stepping in when necessary - would you consider that intervention?

Yeah that would be intervention. Its not a bad thing imo, but looking at what dfella says I think he believes it is. The free market will fix itself right? (rhetorical)

donegalfella wrote: »

This would be Marxist economist Paul Sweezy, who ardently defended Stalinist policies while ignoring the mounting body count?

And that has what exactly to do with monopoly?

Permabear

This post has been deleted.

oscarBravo

donegalfella wrote: »

This post has been deleted.

Doubtless you have a long list of monopolies the market has broken down without government intervention.

Can I take that as your admission that governments damage the economy when they create monopolies?

I'll freely admit that some government monopolies can damage markets. That said, there are things I think government should provide, including healthcare and education. I think there are such things as natural monopolies, such as the provision of drinking water to urban populations, and the operation of electricity grids, and that the government should run them.

Well, good for you. You seem to have remarkably pessimistic expectations for your future business prospects.

If I wasn't optimistic I wouldn't be in business. You've taken your set of flawed assumptions about the nature of this marketplace and engineered a set of conclusions from them. Revising your conclusions would require that you re-evaluate the premises on which they're based.

I argue continuously with your worldview because I've always felt it's entirely grounded in simplistic theoretical models of how the world works rather than any actual empirical evidence. This conversation has copper-fastened that feeling.

And those would be...?

If you don't know, how can you be so confident about the future of the technology?

I note that almost everybody who has made forecasts about the "intrinsic limitations of technology" over the last half century has been proven wrong. "I think there is a world market for about five computers," said IBM chairman Thomas J. Watson, Jr. in 1958.

What was the world market for computers in 1958?

Time Magazine

brianthebard wrote: »

I doubt we agree on much. But monopoly is monopoly, whether it be by the state or otherwise.

To a certain extent. You'd expect a private monopoly to screw the public, absolutely no question there. However it would be possible for a public monopoly to still produce the competitive output (higher than a monopolistic output) and price accordingly (lower than the monopolistic price) if it were to act in the public interest.

Unfortunately, and I agree it is unfortunate, this just does not happen in reality. State monopolies are often even worse than private monopolies. Why? State monopolies are statutory. They cannot be broken, full stop. Private monopolies often can be. So let's say everyone ditched Aer Lingus and changed to Rynair, such that Ryanair had a 100% market share. Thus they would be a monopolist. However if Ryanair really acted the mickey and started charging, say, €400 for a flight to London, Aer Lingus could re-enter the market. Thus sometimes you can have markets with monopolistic firms, but the threat of entry curtails their activities. Unfortunately when Aer Lingus charged €400 fares to London, the consumer could do f*ck all about it.

You mean monopoly doesn't happen any more? Really?

No. I mean Sweezy was wrong when he said duopoly inevitably slides to monopoly. Just to cite a couple of examples rather than going into the maths of it: Coke & Pepsi don't command the same market share as they once did. Nor do AIB and Bank of Ireland.

Yeah that would be intervention. Its not a bad thing imo, but looking at what dfella says I think he believes it is. The free market will fix itself right? (rhetorical)

I disagree with your definition of intervention. Having a ref is different to competing in the match. Your definition of intervention doesn't distinguish between the two.

It would be stupid and dangerous to not regulate public transport. Dangerous for obvious reasons; stupid because subsidies are ftw and good regulation can result in nice things like integrated ticketing that are harder to co-ordinate in a purely free market mechanism. I wouldn't call that intervention, I'd call that regulation.

That's a helluva lot different to the joke of system currently provided by the CIÉ companies.

brianthebard

The Economist wrote: »

To a certain extent. You'd expect a private monopoly to screw the public, absolutely no question there. However it would be possible for a public monopoly to still produce the competitive output (higher than a monopolistic output) and price accordingly (lower than the monopolistic price) if it were to act in the public interest.

Unfortunately, and I agree it is unfortunate, this just does not happen in reality. State monopolies are often even worse than private monopolies. Why? State monopolies are statutory. They cannot be broken, full stop. Private monopolies often can be. So let's say everyone ditched Aer Lingus and changed to Rynair, such that Ryanair had a 100% market share. Thus they would be a monopolist. However if Ryanair really acted the mickey and started charging, say, €400 for a flight to London, Aer Lingus could re-enter the market. Thus sometimes you can have markets with monopolistic firms, but the threat of entry curtails their activities. Unfortunately when Aer Lingus charged €400 fares to London, the consumer could do f*ck all about it.

No. I mean Sweezy was wrong when he said duopoly inevitably slides to monopoly. Just to cite a couple of examples rather than going into the maths of it: Coke & Pepsi don't command the same market share as they once did. Nor do AIB and Bank of Ireland.

Coke and Pepsi still control the largest share of the market by far though? What about head corporations owning a number of companies that are 'competing'? I suppose you disagree with the fact that Baran and Sweezy see no/barely any difference between monopoly and oligopolies, but that's neither here nor there for this topic?

I disagree with your definition of intervention. Having a ref is different to competing in the match. Your definition of intervention doesn't distinguish between the two.

It would be stupid and dangerous to not regulate public transport. Dangerous for obvious reasons; stupid because subsidies are ftw and good regulation can result in nice things like integrated ticketing that are harder to co-ordinate in a purely free market mechanism. I wouldn't call that intervention, I'd call that regulation.

That's a helluva lot different to the joke of system currently provided by the CIÉ companies.

Do you disagree because intervention is bad, but regulation is good? My definition doesn't need to differentiate because the point to me is not whether you ref or compete, but whether you are a good or bad ref. (to continue your metaphor and inevitably drive it into the ground).

Permabear

This post has been deleted.

Permabear

This post has been deleted.

nesf

brianthebard wrote: »

My definition doesn't need to differentiate because the point to me is not whether you ref or compete, but whether you are a good or bad ref. (to continue your metaphor and inevitably drive it into the ground).

His point is that you should differentiate between the two in your definition because they are fundamentally different things and I'd agree with him. State intervention in markets and State regulation of markets are utterly different prospects. You surely don't lump State companies providing services with regulations on what is required in advertising a particular type of service into the same category, do you? To carry on the metaphor, the State regulating the market is a bit like setting out the rules of the game, State intervention is the State fielding their own team while also setting out the rules of the game.

Permabear

This post has been deleted.

jmayo

donegalfella wrote: »

This post has been deleted.

So if there is such good regulation how come Enron, Parmalat or Worldcom occurred.
Sending a few executives to jail after the fact is of little consolation to all thsoe that lost their pensions.
How come banks were affectively flogging worthless paper to each other.
Who else but the state can regulate, self regulation does not work ?

Did I ever say that people in government can't be greedy ?
Just because I believe the state should regulate the excesses of private enterprise, should provide certain key services and own certain key infrastructure you automatically label me a communism by dragging up the excesses of communist regimes :rolleyes:

So you concentrate on Eircom to hammer hoime the point that it is becuase they are ex state company, but what of the mess that is the British privatisation experience. Ever heard of Railtrack ?

djpbarry wrote: »

Our health system is not as bad as many think:

http://www.irishtimes.com/newspaper/ireland/2008/1114/1226408634167.html

For a supposed first world economy which was one of the top performers, why did we have so poor a health service ? People are dying through neglect and ineptitude.

oscarBravo wrote: »

... That said, there are things I think government should provide, including healthcare and education. I think there are such things as natural monopolies, such as the provision of drinking water to urban populations, and the operation of electricity grids, and that the government should run them.
...

My exact point. Certain infrastructural assets should be held by the government and certain services should be provided by the state.
These should be owned and provided to the citizens of the state by the state.
These include services that people by default need to live in a functioning society i.e. water, power, security, education and health.

Can we get back to the actual topic of discussing what a hames the government has made of handling the current economic crisis, that the preceeding government helped land us in, rather than a discussion how we all be better off if we followed Freidman ?

Fighting Irish

I'm not that into politics, but as far as i can see, Cowen was just in the wrong place at the wrong time. You telling me that when Bertie was in charge everything was great and there was no sight of an end to the greatness?
:rolleyes:

Riddle101 wrote: »

Ever since Brian Cowen came to power i've often said to myself, Brian Cowen is by far the worst Taosieach we've ever, had. I mean seriously let's put aside the fact that he failed to get the Lisbon Treaty passed, even though i voted no. He has also failed to get his act together in terms of the Recession. First he takes away the Over 70's Medical Card and plans to bring in Student Fees, then he closes down those Army Barracks some of which house families of PDF soldiers, then the dispute with Teachers. He also insists that the Gardai have the resources to deal with Law and Order even though we've had dozens of gangland killings and the only thing he plans to do is introduce new survalience laws

Then you have Mary Harney. I don't need to explain why Mary Harney is terrible, the Health System is in shambles with her around. Even with the public outcry to give her the sack she continues to hold her post

Mary Coughlan, what can i say as Taniste she should be helping Cowen to deal with the pressure but I hear little about her on the news, and she seems to be keeping silent, what's the matter Mary cat got your tongue

There's more i could say but i'll stop where i am. I don't know it just seems like the government are failing us and i know it's going to be hard we can't expect them to be good because of the Recession and all but the Government have their heads in their arses now. Look at USA, they're heading into recession now but B-Rock Obama had managed to put hope in the Americans, that's what we need. But what can we do, i mean is there anyone in Irish politics good enough to take up the helm. Fine Gael are most likely the best candidate but i'm not a big fan of Enda Kenny and Labour are only good when they're siding with Fine Gael. The rest are not good enough as they just aren't powerful enough. Sinn Fein i can't get around because they're still living in the 1960's and Green are about as adequate as comatose

Permabear

This post has been deleted.

oscarBravo

donegalfella wrote: »

This post has been deleted.

And do you have a long list of monopolies that have arisen without government intervention? [/quote] I'll take it the answer is "no", so.

The Netherlands, which has taken significant steps in recent years towards private health care, now has the top-ranked health care system in the EU. By contrast, the USA administers the most lavishly funded public education system in the world. It is a dismal failure. According to recent statistics from the U.S. Department of Education, only 35 percent of American high school seniors are proficient in reading; only 23 percent are proficient in math. Some schools spend over $25,000 per student every year to achieve these abysmal results. Over and over again, we see that private systems do work, while government-provided solutions do not work.

And yet, Denmark - with 84% of people educated in public school - has a very high standard of education. What do you do when your correlation breaks down?

I hope someone from Galway can comment on the quality of government-provided drinking water.

So you reckon there's room for competition in the supply of drinking water? Strangely, there don't seem to be too many companies rushing in to compete with Galway County Council.

And are you aware that electricity provided through the ESB state monopoly is the most expensive in the EU? "Electricity costs the Irish domestic consumer 20 per cent more than the EU average, according to the report by Sustainable Energy Ireland (SEI), and some industrial customers are paying up to 52 per cent above the EU average," reports the Irish Times.

No problem, someone's bound to build another 400kV national grid. That's what's needed to address the high cost of electricity, isn't it?

I've offered plenty of empirical evidence. But when I cite statistics, you ignore them. When I cite books or articles, you peremptorily dismiss them. You insist that your personal experience and your personal opinions count as the "truth," and you play the game of calling free-market economics a "simplistic theoretical model" that is laughably incommensurate with your empirical experience in the real world.

But I actually have real-world experience. You seem to believe that your empirical models more accurately reflect reality than my experiences, but you still haven't told me where I can get an overdraft for my business, let alone access the floods of capital you assure me are waiting to inundate my business.

The truly simplistic model, in my view, is to place government bureaucrats on pedestals, give them 41 percent of our money, and trust them with our futures.

Sure, let's abolish government. Who do you reckon is going to supply the drinking water? Oh, and how much will it cost?

Because I've been watching what companies such as Apple, Google, Amazon, Research in Motion, and so on have been doing in recent years. I've been watching how young people are thinking, working, and interacting with technology. And I've been paying attention to where the money is going. It's all about mobile devices now; and mobile devices need fast, flexible mobile Internet.

Sure, there's a lot of hype about mobile devices. No doubt it's a growth sector. But I can't run my business from a mobile device, and when I have a choice between accessing the 'net on my 3G smartphone or my home broadband connection, there's only one winner.

But again, the question is: are you putting your money where your mouth is? If mobile Internet is the future, why aren't you in the mobile Internet business? Can't be a shortage of capital, surely.

Permabear

This post has been deleted.

Time Magazine

brianthebard wrote: »

Coke and Pepsi still control the largest share of the market by far though?

Yeah they hold a big grip, but it's far from a monopoly. Back in good ole '50s, there was essentially no competition between them. It was a duopoly. That "inevitably" slides to monopoly, right? Enter Cadbury-Schweppes. Hardly a small player with $11bn in revenues in 2005. Moreover, the combined market share of these three is declining. See that link, or just do a quick Google. I'm not arguing that this represents perfect competition; I just completely disagree with your assertion of unmitigated monopolistic drift. Here the free market has definitely eroded the duopoly.

What about head corporations owning a number of companies that are 'competing'?

They should be counted as one for market power analysis. If you're getting your information from the labels of bottles you see in Ireland, you'll notice that they have the same distributor, but remain different companies.

I suppose you disagree with the fact that Baran and Sweezy see no/barely any difference between monopoly and oligopolies, but that's neither here nor there for this topic?

But it is. You can cite two leftist, not particularly-celebrated economists who support your view. That's fine. As I said, IO has advanced quite a bit since the 1960s. You're over-looking Baumol's (1982) insight of contestability. (If you're really into IO, you might also have a look at Sutton (1981). John Sutton is Irish, and works in the LSE - Sweezy's old haunt. Probably our best shot at a Nobel in the next while.) However, I digress: I suppose you disagree with the fact that Bertrand and Cournot see a substantial difference between monopoly and oligopolies? Those guys were knocking around in the late 1800s and offered an elementary insight into what Nash essentially got the Nobel for. The simple Cournot model (the output of a monopolist is less than the combined output of two identical firms with constant marginal costs) holds stronger empirically than monopolistic drift models.

TBH brian to me, you and donegalfella are two sides to the one coin. Very few economists would have as much faith in the market as dfella. He seems like a smart guy, but probably hasn't covered the economics literature with the required critical thinking. The consensus is "markets are good, but suck a lot of the time." He tends to overlook the refrain; and probably doesn't read enough of the stuff that shows it. This article should be read by anyone who thinks the market is perfect, and also by those who think regulation is perfect. IMHO you tend to overlook the primary point that markets generally do a good job, and probably don't read enough of the stuff that shows it. Look at how unbelievably crap Dublin Bus are, and look at Bus Éireann's prices where they face competition. Simply citing a biased economist from 40 years ago isn't an entirely convincing argument. Nor is pretending that having a strong competition authority is the same thing as the State having a firm in every industry.

Do you disagree because intervention is bad, but regulation is good?

No. I simply see them as completely different fish.

My definition doesn't need to differentiate because the point to me is not whether you ref or compete, but whether you are a good or bad ref. (to continue your metaphor and inevitably drive it into the ground).

As I said, unfortunately state companies seem incapable of "playing fair" (i.e. producing more than the monopolist output). So yes, the role of the ref makes a huge difference. I could elucidate further, but nesf's done a pretty good job at it.

oscarBravo

donegalfella wrote: »

This post has been deleted.

Oh look, I point out that your argument doesn't hold water and you move the goalposts. What a surprise.

Sure, some Danes are disaffected with their high taxes. Do you think they'd be happier in a country where the quality of their education was directly proportional to their ability to pay for it?

It is rather strange how companies don't rush in to compete with government monopolies, isn't it?

Is there a law preventing them from doing so? How come nobody ever sets up competing group water schemes? Do you really believe there's no such thing as a natural monopoly?

Exactly. In the meantime, we'll just keep paying the highest electricity charges in the EU to the government-run ESB.

Whoah. You really thing a completely separate distribution grid is a good thing? Suppose I want to change electricity provider - all I have to do is get a new wire strung on a new line of poles to the new substation connected to the new grid.

Are you serious?

You don't seem to have much faith in your business, or in the free-market system that makes it possible for you to have a business.

I'm still waiting for that free-market system to give me an overdraft.

I'm glad Bill Gates, Steve Jobs, Larry Page, and Sergey Brin (among others) weren't such defeatist pessimists.

I've already said I'm an optimist.

Why are you in business at all?

Because there's an opportunity for me to make money. You would have me believe that I'd make more money in the absence of government regulation, but unfortunately you've also demonstrated a dismal lack of understanding of the market sector I operate in. Which is, I guess, why I'm running a business in that sector and you're not.

Why don't you just give up and become a civil servant? If you love government so much, why not work in it?

If you're such a believer in the market, why don't you own your own business?

Actually, scientists have discovered that we don't actually need water. They have it on good authority that nobody ever drank water in Ireland until the establishment of the county councils.

Thought experiment: let's imagine that county councils are abolished in the morning, and the supply of water is left to the market. How do you see the free market operating a competitive water supply business?

Better yet, let's imagine that a brand new town is planned. This town won't have a local authority. The supply of clean water is left as a purely free-market exercise - there is no historical state monopoly to muddy the water (par'n the pun). Can you describe for me how such a water-supply business would operate?

Has it sunk in yet that I am not making an argument about the technological status quo? Really—has it?

Sure. You're talking about some as-yet unimagined new technology that will make wireless broadband superior to fibre-optic services. Let me know when it's invented, I'll buy shares in it. In the meantime, I'll continue to run a business based on technology that actually exists.

...I'm curious why you choose to work in a sector that you describe as "a lot of hype"?

I didn't. You haven't been paying attention.

A sector about whose future you seem extremely dubious? As noted above, this degree of cynicism and pessimism is hardly what one would expect from a self-described businessman. It's all rather odd.

You've never met a cynical businessman?

molloyjh

donegalfella wrote: »

This post has been deleted.

I can see through my conversation with you and Oscars that real world experience means absolutely nothing to you. I have worked in the financial industry for the best part of a decade and have been involved in product introductions and rate changes for existing products. I know first-hand whats involved. But then that doesn't mean anything does it?

donegalfella wrote: »

This post has been deleted.

If its so clear why can't you explain it? The rate athich the ECB lend money to the banks has an impact on bank rates, but does not force the banks hands. Why isn't that clear? If BoI lend me €1,000 at 5% and I plan to lend that myself I'm not forced to lend it at any set rate if I do no want to. So the banks did not have to pass on the interest rate reductions over the last few years if they did not chose to or if the Market Almighty didn't force them.

ninty9er

molloyjh wrote: »

Apologies donegalfella I don't have the time (and don't really have the inclination either if I'm honest )

+1 a lot of that stuff has no place in a discussion about whether the government is a failure...if the market is a failure? maybe

Fighting Irish wrote: »

I'm not that into politics, but as far as i can see, Cowen was just in the wrong place at the wrong time. You telling me that when Bertie was in charge everything was great and there was no sight of an end to the greatness?
:rolleyes:

Well spotted.

jmayo wrote: »

But did they get their cars or was it them that was waiting for their cars to be released ?

They got their cars....hence you see many newish cars with Garda Traffic Corps on the decal.

jmayo wrote: »

Oh and they only patrol good straight roads shooting fish in a barrell and they don't do it at night since they do not have adequate resources.

Not in my experience. There were Gardaí on a fish in a barrel part of the road this evening on my way home, directing traffic away from a broken down bus as opposed to stopping everyone along the way. I have also been random breath tested 4 times in the last 10 months, so they are out there at night.

jmayo wrote: »

Ps it will cost more since our borrowing now cost more and these borrowing are increasing to meet revenue shortfalls.

That's the €600m;) How else could it cost that much to given nothing.

jmayo wrote: »

It wasn't just greed, house prices went through the roof dragging everything else with them. Retail prices went up, utility costs went up. Saying that, people borrowed more and wanted to live beyond their means keeping up with the Jones down the road.

Agreed

jmayo wrote: »

Funny I always saw the SU as a breeding ground for would be politicans like yourself. Having been in two colleges I always saw them as inaffectual eejits.

Being honest I've considered it, but I don't have the patience to listen to rabble and take a position just because "it's the way it's always been done"

Permabear

This post has been deleted.

Permabear

This post has been deleted.

Permabear

This post has been deleted.

oscarBravo

donegalfella wrote: »

This post has been deleted.

So a regional monopoly is OK, but a national monopoly is execrable?

jmayo

donegalfella wrote: »

This post has been deleted.

Why is hilarious, please tell me ?
All you are doing is discussing an economic theory that has first mooted by individuals from a US college, adopted by what most people in this part of the world would call far right politicans e.g Reagan, Thatcher, Pinochet. Nice collection of individuals there.

This thread was meant to be about how the government has been a failure or not. But you have dragged off to debate economic theories and whether your beloved free market economics are better than what you see as the opposing option, socialism or even communism.

Free Market economics have been a failure, otherwise how can you explain the fact that major banks around the world and biggest insurance company have had to be bailed out by governments, you know the taxpayers of the state :rolleyes:

Your are debating theories that would never be adopted in most of Europe becuase we are not Americans hung up on theory that socialism is a dirty word.
Note I said socialism not communism.

PS when I say the government has made a hames of the economy I lumpthis government in with the last (since really same people) who allowed the economy to become too dependent on a non sustainable form of industry, and allowed our competitive advantage slip.

If you hadn't lured a mod into this debate, you would probably have been told get back on topic by now.
PS I am not modding or even attempting to

I hadn't thought of this, but maybe you see the governmnet as a failure since they haven't wholeheartly adopted free market economics ?

ninty9er wrote: »

+1 a lot of that stuff has no place in a discussion about whether the government is a failure...if the market is a failure? maybe

Not in my experience. There were Gardaí on a fish in a barrel part of the road this evening on my way home, directing traffic away from a broken down bus as opposed to stopping everyone along the way. I have also been random breath tested 4 times in the last 10 months, so they are out there at night.

Being honest I've considered it, but I don't have the patience to listen to rabble and take a position just because "it's the way it's always been done"

donegalfella has achieved something in this thread when he has managed to get myself and ninty99er to agree on things.

It will be interesting to see what Linehan does to handle BOIs precarious position.
Maybe he should let the free market handle it

oscarBravo

My bad, I did drag the thread off-topic.

Ahem.

Back on topic, you lot!!

molloyjh

donegalfella wrote: »

This post has been deleted.

And there we have it. While the ECB rate alone does affect bank rates, it alone does not force their change. The market does. The ECB rate has to be set to something, therefore that level of "interference" is always going to be present. The point I'm making is that the Central Banks permit the activity, but the market encourages it. The same way an increased credit card limit permits increased spend, but doesn't force it and can therefore not be held solely responsible. It proves that left to its own devices the market would have done the very same thing and the only thing preventing that would be Government interference. Which brings us nicely back on track.....

As I said for a bank to change its interest rates it must first get the approval of the Irish Central Bank. The problem we have had in this country is that the policy of the time was to allow the banks to reduce their interest rates as they so wished rather than stepping in to regulate it properly. And while that was certainly a Government failing for not regulating the market properly, the market had it been free would have done the very same thing.

Permabear

This post has been deleted.

oscarBravo

donegalfella wrote: »

This post has been deleted.

Would it make you feel better if Bank of Ireland went out of business?

Permabear

This post has been deleted.

oscarBravo

donegalfella wrote: »

This post has been deleted.

What's intrinsically unsound about Bank of Ireland? What would you have done differently, if you ran it?

Permabear

This post has been deleted.