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Old 09-26-2008, 07:40 AM
 
485 posts, read 1,835,061 times
Reputation: 389

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It seems like every time an industry is deregulated chaos starts.

Energy and Utilities are deregulated and prices go way up and Enron creates an energy crisis in CA.

Airlines are deregulated and we have an industry that treats its customers like dirt and loses billions.

The Financial Services Industry is deregulated and we have a trillion dollar bailout.

Where has deregulation actually helped?
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Old 09-26-2008, 07:51 AM
 
Location: S.Florida
3,326 posts, read 5,324,214 times
Reputation: 343
Deregulation in theory should work and work well but in reality it does not.

Deregulation depends on ethical ,honest people in order for it to work. However corporate CEOs , Wall street brass have no concept of that.

They disdain those qualities and this is main reason of many why deregulation does not work .
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Old 09-26-2008, 08:39 AM
 
19,198 posts, read 31,378,135 times
Reputation: 4013
Deregulation is sold as promoting competition. Instead, it promotes consolidation and increasing power to influence and eventually control markets. This rarely works out well. At the end of the day, laissez-faire free-market capitalism is a Roadmap to Disaster...a way to eventually damage the interests of consumers and producers alike.
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Old 09-26-2008, 09:07 AM
 
13,053 posts, read 12,904,904 times
Reputation: 2618
Quote:
Originally Posted by Refugee56 View Post
It seems like every time an industry is deregulated chaos starts.

Energy and Utilities are deregulated and prices go way up and Enron creates an energy crisis in CA.

Airlines are deregulated and we have an industry that treats its customers like dirt and loses billions.

The Financial Services Industry is deregulated and we have a trillion dollar bailout.

Where has deregulation actually helped?
Look at it from a whole. The problem starts with regulation. The issues in CA concerning utilities was a direct result of the heavy regulation on the industry. They operate as a welfare center in the red for the years they are under it suffocating competition. How many energy companies were in CA at the time? How many went out of business during the regulation? Smaller businesses or upstarts can't compete with regulated systems as they don't have the resources to survive it and there is no incentive for new companies to start because it is regulated so heavily. In essence, competition is obliterated leaving only the most powerful businesses standing in the end. Those businesses begin to cut deals with state officials and the "dirty pool" begins. In the end, once competition is removed, they push hard for deregulation (greasing officials hands) and when it comes off, they own the market. It takes time for the competition to get on its feet and have the market benefit from the competition.

The question isn't if deregulation is good, the question is if regulation of industry at the level we see is good. That answer is no. So when you start saying we have a failing "free market", you first have to realize it wasn't "free" in the first place due to the obscene regulations.
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Old 09-26-2008, 09:10 AM
 
Location: Texas
989 posts, read 2,491,147 times
Reputation: 698
When does socialism ever work? It fails EVERYWHERE its tried. Even France and Germany had to reform their economic systems. The government needs nothing more than to mandate transparency, provide sound money, security, and an effective judiciary.

Let the market work, as nothing is more effective and stabilizing than willing buyers and willing sellers determining the value of a product or service.
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Old 09-26-2008, 09:15 AM
 
21,026 posts, read 22,074,871 times
Reputation: 5941
Quote:
Originally Posted by Refugee56 View Post
It seems like every time an industry is deregulated chaos starts.

Energy and Utilities are deregulated and prices go way up and Enron creates an energy crisis in CA.

Airlines are deregulated and we have an industry that treats its customers like dirt and loses billions.

The Financial Services Industry is deregulated and we have a trillion dollar bailout.

Where has deregulation actually helped?

Ask the Republicans....they ARE the party OF DE-REGULATION.....wanna vote more in????
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Old 09-26-2008, 09:30 AM
 
Location: PA
5,562 posts, read 5,662,252 times
Reputation: 1962
Lets look at some other examples of less regulated business and see how they benefit the comsumer and costs.
CEll phones are dirt cheap almost everyone has one and there many plans to choose from. Different companies and different services. WHY because the government hasn't stepped in and tried to control it. In fact everytime you notice your phone bill increase it's probably a government sales or usage tax.
First we must understand the basics of economics, and that consumers, supply and demand control the prices. It is when other companies or industries go to washington and try to regulate prices, supply and demand at the power of the federal government. Government was never to be this power to regulate and corrupt the free market. Also included in this is our Federal Reserve system that is controlling interest rates inflation. Allowing banks to lend money to peoplw who never should have had it based on their poor credit and artifically low interest rates to create mal-investment.
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Old 09-26-2008, 09:39 AM
 
Location: Albemarle, NC
7,730 posts, read 14,106,501 times
Reputation: 1520
Quote:
Originally Posted by Nomander View Post
The question isn't if deregulation is good, the question is if regulation of industry at the level we see is good. That answer is no. So when you start saying we have a failing "free market", you first have to realize it wasn't "free" in the first place due to the obscene regulations.
I always laugh when people make the claim that the free market failed. No, it didn't. The markets are doing exactly what they should. They're purging the system of banks that made bad loans or investments. The bailout would interfere with the natural process of that.
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Old 09-26-2008, 10:09 AM
 
26,122 posts, read 48,737,202 times
Reputation: 31536
Cell phones are dirt cheap? Really? Isn't the iPhone about $300? Weren't they $600 to start with. That is NOT cheap!

I pay Verizon $65 a month for service and two phones. I use my cell phone about 65 minutes a month, that's $1.00 per minute. Cheap? Are you kidding me? I have a calling card that's 5-cents a minute. Now, that's cheap. I've a land line that is $45 month, with NO limit on minutes, I can talk hour after hour and it's dirt cheap. Why is the land line cheaper? They've a semi monopoly here, only one firm in town, Qwest. Only ONE set of infrastructure to build and maintain, only ONE set of overhead costs, only ONE set of profit numbers. Meanwhile, there's a dozen cell phone providers here, with TWELVE sets of infrastructure, TWELVE sets of overhead costs, TWELVE sets of profit numbers to make...and on and on, TWELVE times EVERYTHING. That's why cell phones are so expensive, we're paying TWELVE times for all the parts that make it go, and that gets VERY expensive.

Pay NO attention to the yapping mouths of cell phone companies about free minutes, it's all a game to suck you in. Pay phones have all but disappeared now as they want you to have one of these expensive gizmo's they're pushing. I love having the cell phone when I'm out of the house, but the cost is a LOT higher than it should be.

Best phone service we ever had in the country was when Ma Bell was all we had, prices were fair and the telephone equipment made by Western Electric NEVER broke. Now, we need an entire issue of Consumers Report to figger out who provides what, at what prices, quality of coverage, and WE are the ones paying for all that duplication. Once they "de-regulated" AT&T, it became nearly impossible to read your phone bill.

Ask ANY professor of economics who is the most efficient provider and they will tell you that a 'regulated monopoly' is the most efficient. Only ONE set of infrastructure, overhead, and profit to cover. I can assure you that you have only ONE water utility in your city. Can you imagine the horror if you had TWELVE companies, all digging up the streets to put in TWELVE sets of water pipes, can you imagine the cost of water, to YOU, in that ludicrous environment? That's the current issue with phone service.

Except for a few ideologues, those same economics professors will tell you that other types of regulation are useful for many types of businesses and industries. Primarily, the point of having a minimal regulatory scheme is to prevent abuses that always show up when totally unfettered economic competition get out of hand, i.e., fare wars in airlines that cause them to end up bankrupt, which means that NONE of us get to fly and the PUBLIC interest is NOT being served.

Further down the regulatory feeding chain are building codes, so that you KNOW what you're getting when you buy a house. If we throw OUT all the electrical, plumbing and other construction standards, corners will be cut and you'll get a rather sub-standard, and UNSAFE dwelling unit or high rise office building. In this case, the "standards" are a form of regulation that have notable benefit to us all.

Total deregulation or total lack of standards is a huge hazard to us, whether in Banking, Investment, Medical, Construction, Transport and many other areas. Even in my hobby of model railroading, we had conformance standards to assure that when we buy a model item that it will run smoothly on the model railroads in our basements.

IMO, anything that gets totally de-regulated leads to a disaster. If existing regulations are too onerous, they can be adjusted, but we've seen several cases of de-regulation and they've all turned out terrible.
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Old 09-26-2008, 10:39 AM
 
13,053 posts, read 12,904,904 times
Reputation: 2618
Quote:
Originally Posted by Who?Me?! View Post
Ask the Republicans....they ARE the party OF DE-REGULATION.....wanna vote more in????
So then you are in support of Regulation then?

Regulation is the problem, the issues you see from de-regulation are created by the regulation.

For example, lets say you have 10 companies. Of those companies, 3 of them are very large, very well established. The rest are varying in size and ability as well as coverage. Regulation is then set in and lets say it ranges from price capping to distribution and service. All of the companies are hit with limitations which depending on the regulations severely hamper their ability to succeed (and some regulations are just horribly stupid). The larger companies buckle down and weather the storm while the smaller companies are slowly put out of business because they can not compete under the restrictions and they do not have the money and power to survive the regulations.

All of these companies either fold or are bought out by the larger ones. You now end up with 2-3 companies (sometimes even less depending on the field) servicing the population. These larger companies are often also responsible for some extended regulations at the time. Why would they lobby for more regulations? Because it allows them to use big government to force out the rest of the competition.

Once all competition is ran out, they begin lobbying for deregulation. What you end up with is a very powerful company with no restrictions and the entire market under its control. They then set the prices as they choose often using the hardships of the previous regulation as an excuse to raise prices so they can "survive". And the simple fact is, they have to raise prices because they did suffer during regulation, they just had the power to ride it out and saw the benefit of using the government as a means to gain more power.

Now you might say, why not just keep them regulated? Well, because they could not operate at that level indefinitely. They eventually would go bankrupt even with most of the market under their control. Keep in mind that the regulations put in place was to force smaller businesses out and it was eating at the more powerful company, they just had the ability to handle it longer. In the end, all would fail with enough time.

So often achieves exactly what the government claims it is attempting to avoid. What is even worse is when you have corrupt officials who are getting kick backs from the "regulation" game which is exactly what was happening in CA with the power companies.

Regulation is not a free market. Claiming that deregulation is bad in the manner people are is a cheap example of showing only the part that supports their argument. It would be like tying up a runners (the market) legs for years and then untying them one day and proclaiming deregulation doesn't work because the runner with its severely atrophied legs can't run a race. Its a setup to failure and then a slide of hand to place the blame on something else.
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