Why Are (Economic) Conservatives Still Relevant?

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Why Are (Economic) Conservatives Still Relevant?

Postby TheBeeCeeEmm » Thu Oct 30, 2008 8:44 pm UTC

I'll be the first to admit that I don't know a lot about economics. I didn't major in it and I don't own stock. However, what seems like common sense to me is not happening, and I figure there's gotta be some reason for it, and I was hoping you guys could tell me why I'm wrong. Here's what I mean.

The folly of conservative economic policies, and most specifically, deregulation of the economy, has been shown to be disastrous for the second time in the last one-hundred years. In a market like ours, such policies have led to two Depressions, various recessions, and uncountable environmental, social, and political scandals, corruptions, and destructions. These policies have done nothing more than make the rich richer and the poor poorer on an unheard of scale. In fact, many people (citation needed, I know) are saying (and have been saying even before the collapse) that America may be on its last legs economically, and perhaps as a nation altogether. And yet, no one seems to really be saying anything about this in the media or in politics. In fact, it's taken nearly perfect circumstances just to make a Democratic candidate have a chance at winning over the majority of the American people - though that's somewhat of a different topic.

Tell me why I'm wrong, and tell me why the idea of the "free market" is not being publicly scoffed at.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby DrProfessorPhD » Thu Oct 30, 2008 8:49 pm UTC

Because the idea of a free market is, to most people, ideal. People want freedom. The only problem is that it is just so hard to make work. Someone inevitably screws up.
Slightly off topic, this is why I favor the economics of Democrats for the most part, even though I want to favor free trade (which would make me a hardcore libertarian). I wish for free trade, but it just doesn't work out well most of the time.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby qinwamascot » Thu Oct 30, 2008 9:14 pm UTC

Personally, I think it's because people don't realize that economics has evolved since the 1700s. The free market no longer solves everything. Inflation and unemployment are just 2 examples (although important ones). If people spent the time to learn macroeconomics (and, possibly more importantly, the mathematics behind it) they'd realize that the free market really isn't so great.

But people haven't done that. So conservatives can scare the people by amounting rational economic theories with "socialism" or "communism".
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Jessica » Thu Oct 30, 2008 9:21 pm UTC

Well, because you're misunderstanding economics.
a) We've had 1 depression. The great depression in the 30s was the last time we had a depression.1. Since the 30s, we've had a number of resessions, which have each lasted at most 2 years.
b) People predict the downfall of the economy all the time. Currently while news sources have heralded the end of the world, we're no worse off than we were during the dot com bubble burst, the mid 90s recession, or the 80s recession, and significantly better off than the 70s stagflation.
c) Economies follow a relativly predictable "boom & bust" wave2, with periods of growth followed by periods of stagnation. It's the governments job to manage the severity of these cycles, by muting highs and lows.

Conservative ideas of economics are not evil or bad. while widespread deregulation can cause problems, so can widespread regulation. Governments have 2 ways to affect the money flow, taxes and government spending. Reducing taxes increases the money the population has to spend, making the economy grow (which is a conservative idea), and increasing government spending increases the money the population has (a liberal idea). Both have the opposite effect of dropping gvmt spending, or raising taxes, which causes the equivalent loss of money for people to spend.

Deregulation allows companies to compete, which allows for greater choice and prices for the consumer at times. Regulation, or crown corporations (companies owned by the government) often have monopolistic tendancies, as they're legally not allowed to have competition, which is bad.

Really, there are a number of factors that "conservative" vs "liberal" is not as easy of a choice as it may seem at first. Really, the important thing is to keep a middle view between regulation and free market.

1 http://en.wikipedia.org/wiki/Depression_(economics)
2 http://en.wikipedia.org/wiki/Boom_and_bust
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Thu Oct 30, 2008 9:28 pm UTC

What Jess said. Conservatives are still relevant because they're (by which i mean "we're") not what you think we are. No one believes in 100% deregulation anymore, it's just not feasible. The farthest right that people go is "As little regulation as possible." Which is where i stand. What you're doing is the same as saying "Liberals are all wrong because it's stupid to socialize everything." It's true that it's stupid, but it's irrelevant to almost all economic liberalism.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby TheBeeCeeEmm » Thu Oct 30, 2008 9:35 pm UTC

I feel like the "as much deregulation as possible" stance is one thing I'm addressing. When the goal of an economy is to make people rich and not to make people content or happy, or when you focus on how to make people as rich as possible instead of how to best keep other factors (environment) in check, I feel it leads to problems we're facing (and have faced) now. Also, I don't think linking to that article on what a Depression is helped since it pretty much nailed exactly what we're going through.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby jadexg » Thu Oct 30, 2008 9:44 pm UTC

Economic conservatives are still relevant because economic conservatism is still a viable idea. You point out the cycles that exist in a free market, and sure, they aren't 'ideal' but there is no system in which they don't exist. Our economic system operates much like our justice system; i.e. 'innocent until proven guilty.' Regulation is imposed on those members of the economic community that make mistakes that harm others (see Enron, and banking legislation currently on the table). Proactively regulating is an invitatiion for trouble not because of teh theory, but because of the practice. The more the market is controlled, the more the 'central power' (the person setting the rules) needs to be able to precisely predict the needs of the market. That is why, if you recall some history, there were such horrid shortages and surpluses in the USSR. The government wasn't TRYING to kill off its people, it just had no ability to predict their needs accurately enough. Since the state was in charge of all commerce and all production, nobody could produce or sell anything without governmental approval, and although the state did its best to predict the needs of the people, if it over-estimated a need, there was a surplus, and if it underestimated a need, a shortage. This is only fixable by a 'perfect predictor', which is where the free market comes in. Sure, a completely unregulated market is bad, simply for security reasons as much as anything else, but what it does extremely well is respond to the needs of the masses. If there isn't enough bread being produced, the price of bread goes up, the profit margin in making bread goes up, and suddenly companies are scrambling over themselves to produce as much bread as possible. This, of course, lowers the price, and the market finds an equilibrium. No regulation needed.

Your issue with the market, as I see it, is when companies lie, steal and collaborate, or when the consumer becomes lazy. The free market requires that all members be competitive entities, and that they not collaborate to raise prices together, or intentionally sell for a temporary loss to keep out all competition (read: Walmart). Collaboration is, in our market (a conservative, but certainly NOT free market) illegal, as is lying and stealing. The problem is that its hard to watch everyone, and being vigilant enough to catch problems before they become big is (so far) prohibitively expensive. (note: computers may just change this, but they haven't quite done so yet.) The free market also requires a consumer that buys intelligently, and sometimes people don't. Sometimes that leads to big booms, sometimes to recessions and depressions, but all-out collapse isn't a reality anymore without some enormous outside force ( like civil war or reparations from an event like WWI)

The Housing crisis, for example, is, in fact, a problem that rests with the consumer, not the ultra-banks, as the media coverage might lead you to believe. The people buying those mortgages once they were bundled up were people like you and me. We were investing in the housing boom, and WE, as a whole, saw such awesome profits that everyone stopped asking questions, and stopped looking into the viability of the loans we were backing. At the same time, with money so easily available, consumers felt free to borrow more, spend more, and worry about paying for it later. Were the banks getting into loans they shouldn't have? Sure, but there was profit in it. Were they lying about the security of the investments? Nope. That is actually why the markets fell so hard. The paperwork was always there, its just that all of a sudden people started reading it, realized those loans were never going to be paid off, and so they backed off and sold their investments. If you're selling investments that nobody really wants to buy, you've gotta sell them low, and so they did. This isn't the end of the world, it isn't the collapse of the US economy, and it might not even be a full-scale recession let alone a depression, although both are possibilities. As long as people still need homes, there will be a housing market, and as long as homes cost several times the yearly income of their owners, buyers will need loans, and loans will come from banks. One of two things will come of this: we'll learn our lesson as consumers, and actually watch what we invest in (what a concept, right?) or we won't, and this will happen again, years down the road.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby SJ Zero » Thu Oct 30, 2008 9:49 pm UTC

President Roosevelt banned private ownership of gold in response to the bank runs of 1929. After Nixon eliminated the final parts of the Breton Woods system and eliminated the gold standard completely, he legalized private ownership of gold. This caused gold to spike in price to a level never before seen. People thought gold would never go down.

It wasn't long before gold fever caused by deregulation of the gold supply ended, and gold has never done the same thing again.

The problem with deregulation is illustrated by this story. After years of regulation, the market doesn't know how to deal with new-found freedom, and insane excesses dominate, often causing a short bubble followed by a total crash. Newly enlightened by the knowledge, we tend not to see the same bubble re-occur. Gold has been relatively stable ever since, for example. Deregulation of banks has caused a similar situation, where the banks suddenly made incredibly irresponsible loans because there was no market history to tell them it was a terrible idea. After a bubble, the banks have now crashed, and we probably won't see a similar debt bubble again.

That's my theory, at least. It seems to correctly predict the 1929 banking disaster as a result of the introduction of the federal reserve banking system, since the market didn't know how to react to that either.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Thu Oct 30, 2008 10:28 pm UTC

TheBeeCeeEmm wrote:I feel like the "as much deregulation as possible" stance is one thing I'm addressing. When the goal of an economy is to make people rich and not to make people content or happy, or when you focus on how to make people as rich as possible instead of how to best keep other factors (environment) in check, I feel it leads to problems we're facing (and have faced) now. Also, I don't think linking to that article on what a Depression is helped since it pretty much nailed exactly what we're going through.

I think at this point we're just speaking different languages. I frankly don't believe there's a collective "point" to the economy. I believe there are liberties, and checks to prevent people from violating other people's liberties. There really is no such thing as "the economy", it's all completely abstract, so saying what's best for it is meaningless to me.

By contrast, your perspective is more collectivist. There is an economy, it does XYZ, do things that are best for it. I'm not saying you're wrong, that's just not how i view the world.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby TheStranger » Thu Oct 30, 2008 10:39 pm UTC

SJ Zero wrote:The problem with deregulation is illustrated by this story. After years of regulation, the market doesn't know how to deal with new-found freedom, and insane excesses dominate, often causing a short bubble followed by a total crash.


It's not so much that the market does not know how to deal with it's freedom, but rather that it takes time for the system to stabilize when given a new input. The fluctuations in price are the market seeking a new equilibrium.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Jessica » Thu Oct 30, 2008 10:44 pm UTC

Agreed. The economy doesn't exist in the sense in the same sense that a company exists. An economy is like a network, or a grouping. Or a country. The actual landmass of a country doesn't have a purpose, or a goal. People who live on it do, and they create regulations and set out their own goals. And as a group they might have goals, like environmentalism, or consumerism, or whatever. the the actual landmass has no such goal. Same with the economy.

Also, no, the definition I gave does not define what we're going through now. We haven't even seen the GDP of the current quarter, which was the one with the crisis. Last quarter there was still an increase in GDP. Thus, we haven't had two consecutive quarters of a decline of the GDP of more than 10%. That's a depression, and it's something we haven't had since the 30s. We might be in a recession. Technically it's impossible to know until the GDP stats come out for the quarter, but we probably are in a recession. And it'll probably be bad. But, signals of this recession are no worse than the previous recessions we've had. And, if past indications are correct, it'll last for maybe 2 years. Or less. 2 years max of slowing is not 10 years of economic halt.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby SJ Zero » Thu Oct 30, 2008 10:45 pm UTC

TheStranger wrote:It's not so much that the market does not know how to deal with it's freedom, but rather that it takes time for the system to stabilize when given a new input. The fluctuations in price are the market seeking a new equilibrium.


Same thing, different words.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby TheStranger » Thu Oct 30, 2008 10:51 pm UTC

SJ Zero wrote:
TheStranger wrote:It's not so much that the market does not know how to deal with it's freedom, but rather that it takes time for the system to stabilize when given a new input. The fluctuations in price are the market seeking a new equilibrium.


Same thing, different words.


Different words, different view of the system. Your statement implied a controlling influence behind the economy seeking stability, while mine was to imply the economy moves towards a stable state just like any physical system would.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Vaniver » Thu Oct 30, 2008 11:28 pm UTC

Answer: Economic conservatism works.

Follow-up question: Whence comes this crisis?

Answer: We don't have economic conservatism.

Most of what led us into this mess was at least influenced by the government. When the government is pushing homeownership and subsidizing or encouraging mortgages, it's a 'safe bet' to bet that housing prices will continue to rise- and then where there's a housing correction, people lose on the safe bet- and they made plans without considering that they could lose on the safe bet.

As well, as Jessica points out, there are boom and bust cycles. People see that the housing market is heating up, and so they jump in- but at some point there are too many people there, and prices correct. You can't have continual expansion, and so there are regularly periods where weak companies get culled. The dot-com boom is a perfect example of this; since the Internet was the Big New Thing, you could get capital just by making a company that's online, without having a real revenue stream. After a while people realized that a lot of the companies were bad investments and started selling, which started more selling- and so all the companies without revenue streams went under, while the companies that actually could pay their bills (like, for example, Amazon or eBay) stayed afloat. The mortgages that are being foreclosed now are the equivalent of those companies that went under- when you buy something you can't pay for, it catches up with you.


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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Vox Imperatoris » Fri Oct 31, 2008 5:42 am UTC

Exactly; there has never been true economic deregulation, and it has certainly not been "discredited" by the recent financial collapses, which were prompted in large part by government initiatives to give the poor subsidized house loans. I personally believe that, as long as the government maintains a monopoly of force (I am not an anarcho-capitalist), it should not interfere with the economy at all. I am a firm believer in the Austrian School of economics.

What does worry me is the increased popularity of socialism due to the idiotic idea that "capitalism has failed" (and I quote that from several posts made on the internet in complete sincerity).

ETA: And economies have no collective purpose. You cannot reduce them to computer simulations where you can input the right variables for a perfect society. Remember what government regulation means: you are ultimately using men with guns to force people to do things with their own money that would otherwise not be in their best interests.

Which reminds me of the other thing that scares me about the recent sentiments that have been popping up: there is nothing wrong with greed. There is nothing "dirty" about money or the pursuit of it, and the concept that there is dates back from the medieval Catholic Church. And there is certainly nothing illegal (or at least that should be) about doing whatever you want with your own assets, even if it is "bad for the economy". I'm tired of this communist/fascist idiocy that personal ends are somehow evil if they don't serve the good of the state/community (not to mention the increasing popularity of "mandatory volunteerism").
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby DarkKnightJared » Fri Oct 31, 2008 6:40 am UTC

Why are they still relevant? Because their ideas really haven't been used.

The inherient problem I see with people's perception of the current economic woes is that it's assumed that the government just dropped a whole bunch of their rules and let the big corporations run free and take the riskiest ventures possible and it fell in their face and thusly the government has to step in to fix these problems by getting involved in their business.

The problem is that when you consider just how in bed our current system of government and big business has been for the last few decades or so. Just the fact alone that there is a viable lobbiest system in Washington just throws out any regulation that could have been possible. These corporations weren't messing things up because they were free from the government--they were messing things up by buying them off. And now we're supposed to believe that the two becoming more intertwined is supposed to solve everything? It's like treating a cancer patient by giving him more cancer.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Absolute » Fri Oct 31, 2008 8:37 am UTC

DarkKnightJared wrote:The problem is that when you consider just how in bed our current system of government and big business has been for the last few decades or so. Just the fact alone that there is a viable lobbiest system in Washington just throws out any regulation that could have been possible. These corporations weren't messing things up because they were free from the government--they were messing things up by buying them off. And now we're supposed to believe that the two becoming more intertwined is supposed to solve everything? It's like treating a cancer patient by giving him more cancer.

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So long as government has the power to ladle subsidies on one business and confiscate profits from another, businesses will do everything in their power to influence governments. Liberals would limit the efficacy of businesses on governmnent by regulating lobbyists and campaign contributions or some such thing, whereas Economic Conservatives would limit the efficacy of government on business. The basic idea is to leave individual businesses alone and only enforce objective laws(such as those against fraud) equally upon all businesses, which leaves businesses better off. Where the U.S. stands in this respect is arguable, we have things like price supports and interest rate regulations, but these incursions into the market are limited.
Whenever anyone claims "the free market has failed" the obvious question is "when was it ever tried?". The closest the U.S. has ever come was the mid to late 19th century "gilded age", during which unprecedented gains in technology and living standards were achieved. Even then there was a hopeless tangle of political machinations and regulations, and the mere fact that 150 years have gone by makes it hard to draw any conclusions from this. It is possible to derive a general trend from current nations which indicates that more regulation reduces economic growth, but there is no truly free market to be found anywhere.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Fri Oct 31, 2008 5:20 pm UTC

While I'm largely not an economic conservative, I can understand the relevance of the position.

Some deregulation, for instance, could be genuinely beneficial to their industries, as opposed to the attempts of a few lobbyists to get their companies to pocket more money by changing laws that ultimately benefit consumers.

Ideally, the free market is 100% about the consumers dictating what they want, and businesses doing it, because ideally, it's the actions of consumers that determine which businesses thrive and which collapse. In practice, it's really not this way at all, but government can make up some of the difference.

To be honest, I think our culture would have much more room for economic conservatism if we had a better-educated populace. If people weren't so easy to exploit for profits, then businesses would have to directly respond to their needs instead of needing to be told to do so by the government working in proxy for those people.

jadexg wrote:The Housing crisis, for example, is, in fact, a problem that rests with the consumer, not the ultra-banks, as the media coverage might lead you to believe.


If only consumers were all experts in finance instead of taking their advice from specialists, right? Then we wouldn't need investment banks.

Absolute wrote:The closest the U.S. has ever come was the mid to late 19th century "gilded age", during which unprecedented gains in technology and living standards were achieved.

While I don't disagree that 'True Capitalism' or whatever you want to call the economic conservative ideal has never been seen in America, or even the world, I would posit that pretty much every significant economic expansion in the western hemisphere since the industrial revolution has seen unprecedented gains in technology and living standards - that's how technological development works, as part of an accelerating curve.

Plus, I should note that there's rather a parallel here with another economic system which many would claim there's been no "True" implementation of.

What is there in an economic conservative position that implies that "true" economic conservatism can even be established, let alone work? So long as the government has control of industries to some degree - and I think we can all agree that government must have this - it will be abused by those same industries. You can not eliminate corporate corruption by trying to minimize the government's hand in things.

Personally, I see the biggest role of economic conservatism in America as fixing the mistakes of economic liberals - just because regulation is frequently beneficial doesn't mean that it's always beneficial, and just like deregulation sometimes you get regulation proposals which are written for little reason other than to put money in people's pockets.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Game_boy » Fri Oct 31, 2008 5:29 pm UTC

What you're talking about is what I would call economic liberalism, i.e. giving companies and people more freedom to control their own money and actions. "Conservative" implies centralisation of economic power, i.e. communism or lesser forms of. "Left" is distinct from "Liberal" and "Right" from "Conservative".
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Fri Oct 31, 2008 5:47 pm UTC

Actually that's exactly what left and right mean. Liberalism and authoritarianism are "down" and "up" respectively and in the literal sense have nothing to do with economic policy. There's definitely a correlation, though, no denying.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby segmentation fault » Fri Oct 31, 2008 6:45 pm UTC

Vox Imperatoris wrote:And there is certainly nothing illegal (or at least that should be) about doing whatever you want with your own assets, even if it is "bad for the economy".


are you serious?
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Fri Oct 31, 2008 6:51 pm UTC

As the statement seems personally reasonable to me*, i'm going to go ahead and assume that yes, he is being serious.


*With the obvious exception of using it for things that are otherwise illegal, such as hiring hitmen or bombing neighbors' homes.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby rab38505 » Sat Nov 01, 2008 6:55 pm UTC

Several good points have been made in this thread. People often buy into what they're being told by the media way too much without actually checking it out for themselves. The current economic crisis was -NOT- caused by deregulation of banks, but by INCREASED regulation of banks as part of the failed philosophy of affirmative action. For some reason, it sounded pretty good to a bunch of people who haven't studied economics to force banks (especially Freddie and Fannie, but others too) to make "subprime" (which is a euphemism for "really high-risk", which is a euphemism for "really bad") loans to people who could not afford to repay those loans. This lead to a temporary, artificial increase in the money supply to low-income families, with which many (most?) of them then bought houses. The (artificially) increased demand for houses then naturally led to (artificially) higher prices for those houses. However, when the economy started to slow down from the massive growth of '04-'06, those people, unsurprisingly, defaulted on those loans and people started to realize that what economists had been saying for the last 3-4 years about housing being overpriced was, in fact, true. These two factors caused housing prices to return to about normal. Thus, the banks now were not being repaid and had only houses that were worth (often much) less than the original amount of the loan, which means those banks lost MASSIVE amounts of money. This caused the banks to suddendly become much, MUCH less willing to make low-interest loans, which in turn reduced the money supply, which led to the falling stock prices. Granted, the stock prices have fallen well below where they should have fallen, primarily due fear caused by to the poltically-motivated over-hyping of the correction (return to real prices) of the economy by the mass media. Smart people (not the ones who just take CNN/MSNBC/FOX/etc. at their word) have figured out that the stocks were way over-sold and have already started massive buying (see Warren Buffet,) which has led to the record bursts of stock prices over the last few weeks. Unfortunately, the politicians and media are still in fear-factor mode and some people are ignorant enough to believe them, so there's still a lot of volatility in the market between the fear-motivated sell-offs and the reason-motivated buying. Seriously, if you have money, now is the time to invest it. You will likely see 30-50% gains in the stock market as a whole over the next 2-3 years, assuming that people quit falling for the crap being fed to them by politicians and the media and that we don't end up with too many Socialists in Washington next January. If left reasonably alone by the government, the economy will correct itself as it always does. Like was mentioned earlier, every economy has cycles, though free-market economies do tend to have more of them. Over-buying leads to artificially higher prices (see the housing boom, the .com boom, the 20's, etc., etc.) which are then corrected by a sell-offs (see the current bust, the '99/'00/'01 bust, the 1930's, etc.) Similarly, over-selling is corrected by periods of buying. However, over long (several year) periods, the general trend of almost all economies anywhere close to free-market has historically been economic growth, while the same cannot be said for Communist economies (see USSR, China, N Korea, Cuba, etc.) Venezuela would be one of the few pseudo-exceptions to the latter, but that's due to $$$ from oil exports partially overcoming the downward effects of Communism, not to Communism itself.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Griffin » Sat Nov 01, 2008 10:39 pm UTC

I think the biggest problem is that you actually need government regulation in order to have what people consider a free market - power consolidates, and without the government keeping things in line you won't have a free market for very long at all.

Its the same problem as with anarchy - it's inherently unstable. People may have more freedoms than ever... at first. But the moment some gang with guns come around, they end up worse than before.

So while I support a healthy free market, that can't exist without government regulation - collaboration is simply easier than competition, and less risky too.

So I support heavy government regulation, but of the type that supports and maintains a free, open, and transparent market (where possible). Is that "conservative" economics? Because if so, then I think its still very viable.

If conservative economics is just the government staying out of business as much as possible then... err, yeah, its not all that relevant. Because it doesn't really work, since monopolies, oligarchies, collaboration and exploitation are the natural outcome of that, mostly because its really really really easy to lie to people and take advantage of their trust, especially if you control the medium through which they find out most of their news.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Vaniver » Sat Nov 01, 2008 10:51 pm UTC

There are different kinds of government regulation.

Sane libertarians (i.e. not anarchocapitalists) believe that governments are absolutely necessary to 1) protect property rights 2) enforce contracts and 3) punish fraud. Without those, the economy will collapse (see: third world countries without property rights, contract enforcement, or fraud protection).

This is radically different from other kinds of government regulation- a law that says that you must follow a contract you voluntarily signed is very different from a law that says you must employ at least 10% minorities at the executive level and higher, or that at least 10% of your customers must be minorities, or that you have to pay a dollar for every unit you make that is red.

To give a non-finance example, consider the FDA. You can't sell drugs in America unless they're FDA approved (or they're marketed as 'alternative medicine' or a few other loopholes). This helps protect against fraud (I can't claim Dr. Vaniver's Nerve Tonic cures cancer and is perfectly safe without actual tests to back that up) but it regulates economic activity more than necessary- it should be possible for the desperate to buy unproven drugs for a chance at a cure while still maintaining a legal distinction between proven drugs and unproven drugs. In essence, it's the difference between requiring truth in advertising and the government deciding which products get to go on the shelves.

So, going back to finance, there are regulations that help market efficiency and regulations that hurt it. Just saying "deregulation is bad" or "regulation is bad" oversimplify a complex situation- but in general, deregulation by itself is not enough to cause a collapse.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Mon Nov 03, 2008 10:44 pm UTC

Vaniver wrote:To give a non-finance example, consider the FDA. You can't sell drugs in America unless they're FDA approved (or they're marketed as 'alternative medicine' or a few other loopholes). This helps protect against fraud (I can't claim Dr. Vaniver's Nerve Tonic cures cancer and is perfectly safe without actual tests to back that up) but it regulates economic activity more than necessary- it should be possible for the desperate to buy unproven drugs for a chance at a cure while still maintaining a legal distinction between proven drugs and unproven drugs. In essence, it's the difference between requiring truth in advertising and the government deciding which products get to go on the shelves.

How would an optional program for truth in advertising protect against fraud?

In fact, those tiny loopholes that exist within the system are already practical fountains of snake oil, why would we want to open the floodgates any further than they already are?

Vaniver wrote:So, going back to finance, there are regulations that help market efficiency and regulations that hurt it.

I think there's more to consider than just market efficiency.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Bubbles McCoy » Mon Nov 03, 2008 10:53 pm UTC

I could be wrong here, but I think Vaniver's saying that while the government should not allow companies to outright lie about the products they are selling, drug companies should still be able to sell experimental treatment but not be able to claim that it is FDA approved, just tell the customer what their studies seem to suggest and that there's no guarantee their product is safe. Probably wouldn't be useful too much of the time, but there's the odd disease that has a drug in limbo that you'd be better off risking the side effects or potential inefficacy than certain death.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Mon Nov 03, 2008 11:03 pm UTC

The problem is, what precisely does FDA approval mean, when it is not mandated?

Take, for instance, ESRB ratings. Unless a game has a rating of M, the rating has almost no affect on the game or its' market.

As another example, well, the Comics Code, which nowadays has only one comic in compliance anymore (Archie, specifically).

Edit: What I'm saying is, allowing people to take 'experimental drugs' is a massive loophole which allows companies to market just about any drug without FDA approval (and less expensively because it doesn't need FDA approval), which seems to me that it would make the FDA in this regard nearly impotent.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Griffin » Tue Nov 04, 2008 12:34 am UTC

Except for people who want to know the drugs they are taking are safe, you know?

The other examples you listed A) aren't standards that need to be met to be safe B) aren't government organizations and C) were created by people with nothing better to do, who never had the agreement of the population at large

And if you think ESRB ratings aren't a big deal, you're dead wrong. I've seen quite a few decent games killed by the ERSB. The most recent Manhunt, for example. The game got the ESRBs highest rating (M is not the highest), and thus no one would touch it.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Kendo_Bunny » Tue Nov 04, 2008 12:50 pm UTC

segmentation fault wrote:
Vox Imperatoris wrote:And there is certainly nothing illegal (or at least that should be) about doing whatever you want with your own assets, even if it is "bad for the economy".


are you serious?


Well, let's simplify this. Let's say that I babysat off-the-books for Downstairs Neighbor Lady and made $20. Those are my own assets that I have earned. I decide what could be cooler to do with my twenty bucks then go to a local embassy and buy some duty-free wine and cheese. Technically, this is not good for the American economy. I am not putting money back into our system, I'm putting it in the hands of a foreign economy. I am not paying taxes on my income or on my purchases.

Now, are you saying that I do not have the right to do that? That I must pay for American wine and cheese at an American store, even if I do not like the selection? That if I am going to buy foreign wine and cheese, I must pay a much higher price because the government deserves a cut from my labors? You could look at it as good for the American economy in a roundabout way. By giving the foreign embassy American money, they now have more American money to spend on American goods. If enough people are buying their wine and cheese from the commisary of a foreign embassy, American retailers will notice a need not being filled by them. This may increase trade with the other country, even to the point of lowering import taxes on both sides. The lower import tax has us and them paying lower prices for the goods we want, thus encouraging a higher rate of spending.
I'm not sure why it is, but have you noticed that people will buy many more units of something that is low-priced than they would otherwise? Observe people in the grocery store- they walk past a display of candy bars marked 'Three for 88 cents!'. They will often buy three candy bars, just because it's such a good deal. The company isn't turning a huge profit on these, but they're turning a little, as well as clearing out older stock to make room for the new. They're getting free market testing, like finding out that Butterfingers are far more popular in their area than Almond Joys. They can use this information when re-ordering stock, saving transportation costs, shelf space, and increasing profit when they don't have a mountain of uneaten Almond Joys they have to put on clearance.

Note that this is all idealizing, but based on my real life experiences working and managing retail and ordering stock. When I worked for a gourmet dessert store, I could tell you in a heartbeat which flavors of truffles were the most popular and which we had the most boxes of (the answer: caramel, dark chocolate, milk chocolate, and coffee). Based on my research in the field, less popular flavors usually only had one or two boxes around. That kept them from going stale while we waited for the displays to sell.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Absolute » Tue Nov 04, 2008 1:55 pm UTC

Indon wrote:
Absolute wrote:The closest the U.S. has ever come was the mid to late 19th century "gilded age", during which unprecedented gains in technology and living standards were achieved.

While I don't disagree that 'True Capitalism' or whatever you want to call the economic conservative ideal has never been seen in America, or even the world, I would posit that pretty much every significant economic expansion in the western hemisphere since the industrial revolution has seen unprecedented gains in technology and living standards - that's how technological development works, as part of an accelerating curve.

I would posit that every significant economic expansion happens when industries are largely unregulated, such as the dot-com boom, the Reagan boom, or the late 19th century. This is the central idea of economic conservatism, that people do best when left free to follow their own judgment without interference. Sometimes they make bad choices and lose money, but overall they find new ways to make more money, and do it much better than government planners possibly could.

Plus, I should note that there's rather a parallel here with another economic system which many would claim there's been no "True" implementation of.

Of course, it's equally fallacious to argue against regulation because of the evils of Stalin or Mao as it is to argue against deregulation because of the evils of some hypothetical laissez-faire society. The latter is slightly less absurd because the same core ideas are represented by deregulation and total laissez-faire, whereas it's a long ideological leap from regulation to Marxism. Viewing the situation as a sliding scale is more accurate, and while there are exceptions, the pattern is that freer economies are more prosperous. It should also be noted that government intervention can severely delay recovery from natural market corrections.

What is there in an economic conservative position that implies that "true" economic conservatism can even be established, let alone work?
While politically unfeasible at the moment, if the wrong policies are implemented in the near future and the economy goes into a death spiral it may galvanize the public into scrapping the whole regulatory mechanism. This is doubtful, however, given the nature of politicians and the fact that the courts cannot enforce Contracts with America. As far as working goes, conservatives have basically the whole of world history to point to as proof that their policies work in smaller doses, so they should work even better if we take the whole bottle, as it were.
So long as the government has control of industries to some degree - and I think we can all agree that government must have this - it will be abused by those same industries.
Except for that part between the dashes, you're making my point for me. Why should the government have any control of specific industries at all? The punishment of crimes such as fraud is one thing, but attempting to control prices is something completely different. I don't think the price of anything is anyone's business but the buyer and seller, if they both agree on it, who am I to interfere? Controlling prices is the goal of nearly every regulation on the books. We pay oil companies to keep gas prices low. We pay farmers to keep food prices high. We have laws rate-basing utilities, controlling rents, mandating negotiation with unions, criminalizing low-paying jobs, etc. All of these create perverse incentives which discourage people from taking actions which would benefit everyone involved. Things like environmental or workplace-safety laws could conceivably be writen so that they apply to all businesses equally, but it's stuff like this conservatives are talking about when they say "regulation", and I adamantly disagree that this is something the government must have.
You can not eliminate corporate corruption by trying to minimize the government's hand in things.
Why not? If the government has no power to help or hurt a specific business, what possible reason would a business have to try to influence the government? We could still have some legislation which is opposed by all businesses (a particularly draconian environmental law, e.g.), and they would understandably lobby against it. But that's how petitioning for redress of grievances is done these days, and every group of similarly-interested people does it. You can't deny a first amendment right to a group simply because you equate them with "bad guys", and that seems to be what you're talking about. Quid pro quo bribery is already illegal, what you seem to mean is limiting their ability to help elect politicians who represent their best interests, or persuade those politicians to act in their interest. I wouldn't use force to shut up the Brady Campaign or Greenpeace, even though I believe they're wrong in a dangerous way and would cause tangible harm to the American people. I find it interesting that those who would restrict the free market would do the same to the marketplace of ideas.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Tue Nov 04, 2008 4:27 pm UTC

Griffin wrote:Except for people who want to know the drugs they are taking are safe, you know?

With the price of drugs being what they are, a lot of people can't afford to pay the premium to make sure Xaxarax doesn't have a side effect of spontaneous heart explosion. You're basically turning the supposed government guarantee of "This Drug Will Not Kill You", into a premium service that must be paid above and beyond the price of the drug. You shouldn't have to pay premiums for government services.

And the guarantee doesn't stop at not killing you - FDA approval also means, "This Drug Might Actually Do Something". The fact is that most drugs don't make FDA approval because they don't do jack. Snake oil outnumbers real medicine five to one in pharmesutical R&D, and people shouldn't have to pay extra just to get a drug that might actually improve their condition, as opposed to running the roulette.

Griffin wrote:And if you think ESRB ratings aren't a big deal, you're dead wrong. I've seen quite a few decent games killed by the ERSB. The most recent Manhunt, for example. The game got the ESRBs highest rating (M is not the highest), and thus no one would touch it.


The only time the ESRB rating matters is when a game is rated so highly that stores blacklist it. That's it. And you're right, I got the rating wrong, it's AO where most stores don't sell a game, very few stores care about games with M ratings.

Absolute wrote:I would posit that every significant economic expansion happens when industries are largely unregulated, such as the dot-com boom, the Reagan boom, or the late 19th century.

It seems to me that you would have to demonstrate that every fluctuation in the natural expansion/recession cycle is somehow caused by political policies in order to establish this.

Absolute wrote:Of course, it's equally fallacious to argue against regulation because of the evils of Stalin or Mao as it is to argue against deregulation because of the evils of some hypothetical laissez-faire society.

That wasn't my point. My point was that it doesn't matter what "true economic conservatism" is if it can't happen (i.e. it's a No True Scotsman thing). And what is there to indicate that it can?

Absolute wrote:While politically unfeasible at the moment, if the wrong policies are implemented in the near future and the economy goes into a death spiral it may galvanize the public into scrapping the whole regulatory mechanism.

But the economy is already in a death spiral. Because of deregulation. Deregulation has a long history of collusion, corruption, and oligopoly standing in defiance of its' usefulness.

Absolute wrote:Except for that part between the dashes, you're making my point for me. Why should the government have any control of specific industries at all?

McSchooling?

It can be readily demonstrated that there are multiple industries which the market can absolutely not handle alone (such as, for instance, absolutely any industry in which the consumer pays before the service is provided, such as insurance).

It seems to me that economic conservatism is not supported by the science of economics.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Tue Nov 04, 2008 4:42 pm UTC

Indon wrote:
Griffin wrote:Except for people who want to know the drugs they are taking are safe, you know?

With the price of drugs being what they are, a lot of people can't afford to pay the premium to make sure Xaxarax doesn't have a side effect of spontaneous heart explosion. You're basically turning the supposed government guarantee of "This Drug Will Not Kill You", into a premium service that must be paid above and beyond the price of the drug. You shouldn't have to pay premiums for government services.

And the guarantee doesn't stop at not killing you - FDA approval also means, "This Drug Might Actually Do Something". The fact is that most drugs don't make FDA approval because they don't do jack. Snake oil outnumbers real medicine five to one in pharmesutical R&D, and people shouldn't have to pay extra just to get a drug that might actually improve their condition, as opposed to running the roulette.

So it's better to require everyone to pay the premium? The options here are really as simple as "Only sell FDA approved drugs" and "Sell FDA approved drugs, and other drugs as well". The efficacy of the drug and the importance of an FDA approval don't change. You aren't any more likly to get fooled. Snake oil is already available, so changing this wouldn't make it more or less available. And snake oil won't be any more legit because it still won't be FDA approved.

The only practical benefit will be with doctors, who will actually understand the processes and would then have the option of recommending a drug that did not yet have FDA approval.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Tue Nov 04, 2008 4:52 pm UTC

Gunfingers wrote:So it's better to require everyone to pay the premium?

Considering the FDA guarantee is the only thing showing those drugs to be worth anything?

Gunfingers wrote:The options here are really as simple as "Only sell FDA approved drugs" and "Sell FDA approved drugs, and other drugs as well".

Except what those options mean are, "Sell drugs that work," and "Sell 'drugs' that don't". Why would we want to allow people to sell drugs that don't work, except to defraud patients?

Gunfingers wrote:Snake oil is already available, so changing this wouldn't make it more or less available.

And it should be noted that snake oil is availible precisely because drugs can be sold without FDA approval right now - they just can't call it a drug, because it doesn't deserve to be called a drug, because the makers can't prove it does anything.

You're advocating a legitimization for treatments that do nothing and do not deserve to be called drugs.

Gunfingers wrote:The only practical benefit will be with doctors, who will actually understand the processes and would then have the option of recommending a drug that did not yet have FDA approval.


This minor benefit could be accomplished by creating a specific exemption policy which allows doctors to, in some cases, prescribe unproven, experimental drugs. I wouldn't be surprised if such an exemption already existed.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Yakk » Tue Nov 04, 2008 4:57 pm UTC

Why regulation? Take a glance at the Chinese tainted food scandal. Nobody wants to be in a market where poison food is common: sellers don't want it, because their consumers get an ansty, and buyers don't want it, because they don't like being poisoned.

Why not regulation? Because regulation can easily lead to corruption and inefficiencies. Millions of people have died due farms being poorly regulated -- and by poorly regulated, I don't mean "lacking regulation". Similar effects happen in other industries: despite the huge price of oil, Russia has failed to open up new oil supplies, because it's oil industry is poorly regulated. You can actually see this happen in many places: the ability for the private sector to get shit done isn't something conservatives made up.

Take a look at the USA: think why manufacturing jobs are moved overseas. Part of it is because of the regulations that ban treating workers poorly (not paying them that much, refusing to let them unionize, etc). This raises prices to manufacture in the USA. So ... people manufacture elsewhere. The side effect of this is that the USA gets cheaper goods, and has fewer manufacturing jobs.

Note that this is a draw-down, not a collapse. US industrial GDP: ~2.74 trillion Chinese industrial GDP: ~1.56 trillion (official exchange rates).

Backing up, you have a nation like China that went from being a basket-case to having explosive growth ... on the backs of a liberal massive deregulation.

You do know that recessions and economic collapses happen in less free economies as well? And "last legs economically" often refers to "the USA will no longer dominate the world economic systems like a titan among dwaves". The growing economies of Europe (facilitated by ... economic deregulation) and South East Asia (facilitated by ... economic deregulation) are growing in size to rival USA. The USA remains the only "economic unit" of it's size and efficiency.

(EU is larger in population significantly, but has about the same total GDP as the USA -- that makes it less efficient. Some nations are richer per capita, but much smaller than the USA as a whole -- I'm not aware of any nation on the planet which is richer than every similar population/area sized region of the USA.)

Indion wrote:Except what those options mean are, "Sell drugs that work," and "Sell 'drugs' that don't". Why would we want to allow people to sell drugs that don't work, except to defraud patients?


To be fair, the options are "sell drugs that went through a complex, expensive, and sometimes counter-productive approval process" or "sell drugs that didn't go through the approval process". It isn't cheap nor easy to get through the FDA approval system, and it can require doing things that are not in the best interests of patients (currently, for example, drug companies are very leery about allowing their drugs to be used in non-controlled situations, because adverse effects in 'poor' non-controlled situations can prevent the drug from being approved).

Red tape causes damage -- it can also generate benefits. Claiming that red tape doesn't cause damage -- that the only reason to want to avoid an FDA process is that your drug doesn't work, for example -- isn't accurate.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Tue Nov 04, 2008 5:05 pm UTC

Yakk wrote:To be fair, the options are "sell drugs that went through a complex, expensive, and sometimes counter-productive approval process" or "sell drugs that didn't go through the approval process". It isn't cheap nor easy to get through the FDA approval system, and it can require doing things that are not in the best interests of patients (currently, for example, drug companies are very leery about allowing their drugs to be used in non-controlled situations, because adverse effects in 'poor' non-controlled situations can prevent the drug from being approved).


A fair point, which is where I think economic conservatism could, theoretically, come into play usefully - the regulations could be improved without getting rid of them altogether.

But when economic conservatives make proposals in my experience, they generally aren't of the "Hey, let's fix this bad regulation" flavor - they're generally of the "Hey, I got bribed by people in X industry to propose this legislation which makes them money by letting them defraud customers" flavor.

And as far as I can tell, that leaves the burden of making good regulation with the people who would prefer more of it, as problematic as that solution must ultimately be.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby janusx » Tue Nov 04, 2008 5:27 pm UTC

Indon wrote:
Griffin wrote:Except for people who want to know the drugs they are taking are safe, you know?

With the price of drugs being what they are, a lot of people can't afford to pay the premium to make sure Xaxarax doesn't have a side effect of spontaneous heart explosion. You're basically turning the supposed government guarantee of "This Drug Will Not Kill You", into a premium service that must be paid above and beyond the price of the drug. You shouldn't have to pay premiums for government services.


Except for the fact that since the FDA currently IS in place anyone who needs Xaxarax already has to pay the premium to afford it. Currently you are FORCED to pay the premium for drugs since the cost of getting a drug approved is very high. If you can't afford to pay the premium today, you get NO drugs. Opening the market to experimental drugs would not affect the price of approved drugs, only provide a more diverse product line.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Tue Nov 04, 2008 5:34 pm UTC

janusx wrote:Except for the fact that since the FDA currently IS in place anyone who needs Xaxarax already has to pay the premium to afford it. Currently you are FORCED to pay the premium for drugs since the cost of getting a drug approved is very high. If you can't afford to pay the premium today, you get NO drugs. Opening the market to experimental drugs would not affect the price of approved drugs, only provide a more diverse product line.


Which is better, not being able to pay for something that does something, or paying for something that does nothing?

If you really want to blame someone for the high premium of getting a drug that works, blame the industry that fails way more often than it succeeds in making treatments.

This is the same reason your 'diverse product line' would be chock-full of fraud and failure, with the occasional heart-exploding 'medication'.

Edit: Even with less red tape, in a perfect world, more medications would fail than not. Even those medications that can be proven to do something often aren't proven to do much. The bleeding edge of the medical industry does not deal with cures, it deals with tiny little factors that increase survivability rates by .1%, and that's if it gets lucky and the drug does anything other than cause indigestion.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Tue Nov 04, 2008 6:51 pm UTC

Actually you're forced to pay for premium drugs, and in the price of that premium drug is a few dozen non-premium drugs that were disapproved by the FDA. A pharmaceutical company may put millions of dollars of research into a product that the FDA pulls the plug on at the last minute.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Tue Nov 04, 2008 6:57 pm UTC

The industry doesn't produce 'premium' drugs, is my point. It produces some drugs that can be demonstrated to work, and most that can't be demonstrated to work, or can't be demonstrated to not do the heart-explosion thing.

Not to say the system doesn't have any false negatives, but even excluding those, drug R&D produces mostly failures. Proposals to open the market to untested drugs are proposals to flood the market with drugs that don't work, or in some cases have massive negative side effects.

And even with as much red tape as there is in the system, the FDA still sometimes approves drugs it shouldn't have. Then you get massive class-action lawsuits that should show everyone precisely why the FDA performs a service for drug companies, as well.

Edit: It occurs to me that this tangent could be worthy of thread-splitting if we keep on it. Opinions?
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