Why Are (Economic) Conservatives Still Relevant?

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Ixtellor » Tue Nov 04, 2008 9:32 pm UTC

Before I reply, I think it would be useful for you to define what has not yet been defined in this thread:

What exactly do you perceive economic conservatism to be? Or is this just about regulation versus deregulation?


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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Tue Nov 04, 2008 10:02 pm UTC

What else could economic conseravatism vs. liberalism be about?

*contemplates*
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Tue Nov 04, 2008 10:06 pm UTC

Traditionally it means government spending. Conservativism is supposed to be about having a small government and liberalism is supposed to be about having more government services. Degrees of regulation are kind of a tangenital association. That said, i'm pretty sure that that's what this thread is supposed to be about.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Tue Nov 04, 2008 10:20 pm UTC

Oh, hey, I hadn't even thought of that. Good catch, Gunfingers. Also, tangential, if I'm not mistaken.

And if you expand economic conservatism to government spending as well as regulation, I could see more legitimacy behind it. The government should have controls - people - to check its' size, because it's entirely possible for a government to get too big for its' country to support, and a government composed purely of people who advocate expanding it is going to screw up collosally given enough time.

That's still kind of an extention of my original 'conservatives should keep liberals from screwing up' view, but I do think there's a lot more good work for economic conservatives in the arena of government spending than in regulation.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Griffin » Tue Nov 04, 2008 11:35 pm UTC

'conservatives should keep liberals from screwing up'

Yeah, I think that's the biggest thing -

If the world is a tea kettle, and progressives are the heat that makes progress possible, conservatives are the escape valve that prevent things from getting so hot they explode.

They're primary purpose is (or is supposed to be) to slow things down, to acclaim the virtues of the status quo or even the past, so that if the liberals end up doing damage with their progressive policies, there's something to fall back on.

Mind you, that republicans in general, isn't very conservative, nor is the democratic party very progressive anymore. But they've changed before, and will probably change again, the parties have never exactly aligned with their labels.

Repbulicans used to be the most progressive party around, and democrats had a monopoly on conservatism. That obviously changed, but there's still plenty of progressive republicans, and conservative democrats.

Just because the United States isn't in the same place as many other countries doesn't mean that they are more or less conservative -
Here in New Zealand, for example, the climate is generally FAR more conservative in the united states, but they're starting point was pretty different.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Kachi » Thu Nov 06, 2008 1:07 am UTC

You know, I'm not sure economic conservatives would still be relevant if social conservatism wasn't still so relevant.

I could be wrong.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Gunfingers » Thu Nov 06, 2008 2:06 am UTC

450,000* people voted libertarian yesterday. People who want small government and civil liberties exist.


*This number comes from me adding up counts on google's election coverage.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Kachi » Thu Nov 06, 2008 4:10 am UTC

But their relevance is pretty questionable. :lol:

Sorry, couldn't resist.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby McCaber » Thu Nov 06, 2008 4:21 am UTC

Kachi wrote:But their relevance is pretty questionable. :lol:

Sorry, couldn't resist.

Hey! Don't marginalize my people like that!

I think it's relevant simply because people still believe in it, so they keep trying to make it happen.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Kachi » Thu Nov 06, 2008 4:30 am UTC

Hey, I dream for a political climate where it's libertarian v. democrat. When politics basically comes down to fewer taxes or more social services, I don't know, I guess I won't have much else to bitch about.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Ixtellor » Thu Nov 06, 2008 9:52 pm UTC

Indon wrote:What else could economic conseravatism vs. liberalism be about?

*contemplates*


Spending
Regulation
Fed tools
Monatary tools
Tax rates
Free trade/tariffs/protectionism
Money supply
Savings and Lending
Monopolies and oligopolies
Labor Unions/right to work laws
Truth in advertising
Saftey features and corresponding regulation


Off the top of my head.

So if this thread is just about regulation, I didn't want to start talking about free trade conservative economic principles.



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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Fri Nov 07, 2008 9:44 pm UTC

Man, I've been exposed way too long to republican straw conservatism.

I can't speak for anyone else in the thread, but I'd be all for discussing protectionism vs. globalization and other positions like that.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Bubbles McCoy » Fri Nov 07, 2008 9:54 pm UTC

Does anyone here believe in protectionism? I could be wrong, but I was under the impression that for the most part it's just a populist talking point the Democratic Party pulled up this year due to general resentment of outsourcing opposed to being a serious idea. I suppose there is some argument that economically weak countries should engage in some degree of protectionism, but the OP seemed fairly geared for the United States.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Fri Nov 07, 2008 9:59 pm UTC

Well... I'm really not much of a fan of protectionism. I don't mind using things like sanctions as economic weapons, but I don't think protectionism is the way to go for an economy which is well-prepared for growth, and that use of protectionism is just a poor band-aid for not being well-prepared for growth.

If we aren't going to have good, free education (to encourage a capable workforce) and a strong welfare system (to encourage a dynamic workforce in an economically changing world), protectionism is a distantly viable alternative.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Bubbles McCoy » Fri Nov 07, 2008 10:10 pm UTC

Even if you don't educate your workforce, protectionism still doesn't do you a whole lot of favors because any industry that is excelling within your country is now bound by retaliatory protectionism and your own people are forced to accept an overpriced, poor-quality domestic alternative.

All the other topics as proposed Ixtellor seem a little narrow to be keeping within one thread, and have to do more with specifics of a very general economic theory than why economic conservatism still has relevance as originially brought up in the OP. I suppose we could try to generalize and discuss how the components of workers, companies, owners and countries can best combine for economic efficiency, but that's a rather Heruclean task.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby DarkKnightJared » Sat Nov 08, 2008 6:06 am UTC

Absolute wrote:
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.

P.J. O'Rourke wrote:"When buying and selling are controlled by legislation, the first things to be bought and sold are legislators"

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.


This was what I was trying to say, but I guess I should never post here when I don't have any caffiene in me, as you can plainly see.

Like someone else mentioned, I think the most optimal relationship between business and government is that business cannot bribe and blackmail the government, and government has the barest of regulation to protect the people from fraud.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Griffin » Sat Nov 08, 2008 6:15 am UTC

government has the barest of regulation to protect the people from fraud.


And, in my opinion, negative externalities liking dumping pollution in the river or smog into the skies etc. etc.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby DougP » Sat Nov 08, 2008 3:05 pm UTC

In the United States economic conservatism v. economic liberalism seems to be the difference of a few percentage points in any given tax bracket. The farthest left people we have in power would be right of center in most european/ "western" nations. No one is suggesting any major restructuring of the economy or anything meaningful. Part of it is that the right wing has successfully convinced most people that anything besides "free market capitalism" takes away freedom, which is one of the great lies people have bought into.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Sat Nov 08, 2008 5:32 pm UTC

Griffin wrote:And, in my opinion, negative externalities liking dumping pollution in the river or smog into the skies etc. etc.


What about positive externalities such as education and physical infrastructure?
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby DarkKnightJared » Sat Nov 08, 2008 6:47 pm UTC

Griffin wrote:
government has the barest of regulation to protect the people from fraud.


And, in my opinion, negative externalities liking dumping pollution in the river or smog into the skies etc. etc.


I'd think that with things like reducing smog, chemical dumping, and carbon emmisions, the government could give tax credit to companies that consistantly cut down on said problems, and maybe even research towards alternative energy and storing systems.

I believe you are more likely to get positive results when your reward people for doing good deeds instead of punishing them for doing bad.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Bubbles McCoy » Sat Nov 08, 2008 8:30 pm UTC

Eh, once you start getting into things like research grants and tax credits you start getting into fairly iffy territory. Once things start being done at such a small level by nitpicking which technologies politicians feel like helping and specialized tax credits, corruption is inevitable and it's highly unlikely that you'll get the optimum solution; how is a politician going to judge whether future technology for batteries or hydrogen cars is going to be better (or if monetarily efficent ethanol could rolls out, etc)? Corn ethanol is a perfect example of this, politicians thought it might be a nifty way to reduce gasoline consumption but they chose one of the worst possible crops in terms of efficiency and helped further global starvation. While I'm not sure if this is strictly economic conservatism, the best bet would probably be to tax all sources of global warming in proportion to the effect they cause and give it back as an annual rebate; it wouldn't raise costs on the average consumer but give them the chance to save money by reducing their global warming contributions (this has the added benefit of being fairly nondiscriminatory in what kind of warming we're preventing, most politicians seem all to content to ignore that cows are a bigger problem than cars).

DougP wrote:anything besides "free market capitalism" takes away freedom, which is one of the great lies people have bought into.


Anything else does take away freedom by definition; free market capitalism in it's purest expression lets anyone create any contract or exchange with another without any limitations by the government. By taking a portion of a man's income, your effectively taking a piece of his life for the sake of the "greater good;" by limiting what he can buy (cars without seatbelts, drugs, guns, etc) you refuse him the freedom to decide what's best for his own life. It boils down to finding a balance between freedom and security, as we cannot fully have both but we need some elements of the two.

Indon wrote:What about positive externalities such as education and physical infrastructure?


Most would probably agree that these are beneficial, it's more of a matter of how they are implemented. Infrastructure on a federal level should only be concerned with projects that effect multiple states (like interstate highways and in some cases levies and the like), and should be open to bids opposed to directly handed to a given company (I think few will dispute this last point though). Schools should be maintained but on a fairly decentralized level; the federal government has no business pretending it can positively effect education and meddling in a system the runs the daily lives of some 80 million people, not including faculty. Also, people should be free to go to a private school and keep the money that the government would have normally spent in a public school.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby cspirou » Sat Nov 08, 2008 9:09 pm UTC

I happen to think that people have the wrong definition of capitalism.

A lot of people seem to think that capitalism and a free market are the same thing. I believe that capitalism is not about being free but about maximizing competition and choice. It trips people up because they think freedom and choice are the same. There's numerous examples to the contrary. Media consolidation is one example. 4 companies virtually own all TV media in the country. That is certainly less competitive then having 100 or even 30 companies controlling media. None of this was possible before deregulation. We knew this before and that's why we passed the Sherman Anti-trust act. Monopolies are inherently less competitive. Imagine if companies were "free" to lie about their product. In a real capitalistic society the superior product is suppose to win. However if a company is allowed to sell a steak that's been lying in filth without telling the customer then it's obvious the best product did not win simply because the company was free to say whatever they wanted.

That's why we have regulations. Not to stifle competition but to enhance it. Now there is such thing as over-regulation but the opposite is not inherently better.

By my definition I also don't believe a government owned enterprise is anti-capitalist. But private industry must be allowed to compete against it to ensure it's at it's most efficient. So I don't want the post office to be privatized when we have DHL, Fedex and UPS keeping it in check.

Also taxes themselves aren't always bad. For me the best disincentive are economic ones as opposed to laws against them. Setting standards for fuel efficiency is one thing but you would get that result much faster if the price of gas is higher rather then mandating fuel efficiency. In fact it already happened. When gas hit $4/gal the demand for SUVs and trucks dropped overnight and car companies scrambled to produce more fuel efficient cars. We could have artificially produced this situation by having a higher gas tax. I've heard that if you want less of something then you should tax it. I believe that's a power we should use. So we should not only give tax cuts to alternative energy but also start taxing pollution. The polluting business would find a way to reduce emissions or actually invest in alternative energy.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Griffin » Sat Nov 08, 2008 10:14 pm UTC

I've heard that if you want less of something then you should tax it


Which certainly makes it odd that the one thing we tax the highest is , you know, being employed...

but that's probably for another thread.


Anyways, the reason its still relevant is because the things econoconservatives have pushed in the past have essentially gotten us to where we are today - and that's full of reasons why its good as well as reasons why its bad. We may be doing a bit crappy right now, but generally capitilist and free market economics have also made the US one of the biggest of the big dogs, and you're going to be hard pressed to argue that.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby cspirou » Sat Nov 08, 2008 11:20 pm UTC

Griffin wrote:
I've heard that if you want less of something then you should tax it


Which certainly makes it odd that the one thing we tax the highest is , you know, being employed...

but that's probably for another thread.


Anyways, the reason its still relevant is because the things econoconservatives have pushed in the past have essentially gotten us to where we are today - and that's full of reasons why its good as well as reasons why its bad. We may be doing a bit crappy right now, but generally capitilist and free market economics have also made the US one of the biggest of the big dogs, and you're going to be hard pressed to argue that.



That was more a quote I had from a conservative who argued against taxes in general. It might be a Reagan quote and I was by no means implying it to be universal. But if you take it to it's ultimate meaning then we should absolutely tax stuff we don't want. Plus I don't think you're applying it the same way I'm thinking. You're applying to to money creation itself. If an alternative to making more money was by making less of it then you're analogy would be correct. I'm applying it to a situation where an alternative to make more money exists by producing less pollution.

But you seem to be implying that I'm arguing against capitalism. I am not. I am saying people have the wrong view on what it means. Economic conservatives pushed free markets which usually encouraged competition but they thought it was always true. Regulation can absolutely encourage more competition which is a very capitalistic.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby jferry » Sun Nov 09, 2008 9:12 am UTC

Griffin wrote: I've heard that if you want less of something then you should tax it. I believe that's a power we should use.


Artificially distorting the market is something that will always lead to economic problems down the road, even more so now that we live in an entirely global economy.

Take your gas tax increase to promote fuel-efficient vehicles example: if gas is naturally selling at $2 a gallon and you increase it to $2.50 or $3.00 a gallon, those already in financial trouble are dramatically hurt. They'll change their priorities. Instead of going out to eat or buying new clothes, they pay for gas. Other industries that weren't intended to be affected are affected. They can't afford a new hybrid car, even if it would save on gas and save the environment. Put this onto a large scale and you have massive economic damage that only keeps on spiraling out, all because of a little artificial price increase.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Yakk » Sun Nov 09, 2008 4:51 pm UTC

Note that the money raised in taxes either means other taxes are lowered, or extra spending on various projects by the government occurs, or there is debt repayment.

So sure -- people who drive lots end up either (A) finding a way to drive less, or (B) finding a way to drive more efficiently, or (C) hurting.

That is the point of increasing the price -- it discourages the action involved.

In some cases, this discouragement isn't distortion, but rather correction: the full cost of activity X isn't covered by the two-party exchange. There are externalities, like CO2 emission, or wear and tear on publicly payed for roads, etc. Factoring those costs into the price of paying for activity X fixes distortions, it doesn't generate them.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby cspirou » Sun Nov 09, 2008 6:32 pm UTC

jferry wrote:
Artificially distorting the market is something that will always lead to economic problems down the road, even more so now that we live in an entirely global economy.

Take your gas tax increase to promote fuel-efficient vehicles example: if gas is naturally selling at $2 a gallon and you increase it to $2.50 or $3.00 a gallon, those already in financial trouble are dramatically hurt. They'll change their priorities. Instead of going out to eat or buying new clothes, they pay for gas. Other industries that weren't intended to be affected are affected. They can't afford a new hybrid car, even if it would save on gas and save the environment. Put this onto a large scale and you have massive economic damage that only keeps on spiraling out, all because of a little artificial price increase.


Umm...they're suppose to change their priorities. That's how economics works. Have you seen a demand curve before? You're saying that they're just going to take an increase in price. With an increase in price they will find ways to use less of it whether it's by public transportation or carpooling. If they don't change their habits then it still hurts and the demand for a car with better mileage or one that runs on another fuel will be there.

Now you have to be reasonable with this as well. You can't instantly make the price of gas $15/gal or else you might get your nightmare scenario. But if scientists, society and even economist have deemed something as a negative and yet it's profitable then we should make that business as unattractive as possible. If you let the "market" decide then they are going to go with what is most profitable regardless of the implications. Besides, projections predict that gas could very well be $500 a barrel. I'd rather change infrastructure before that time comes or else it will be much worse then what you predict with your small price increase.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Indon » Mon Nov 10, 2008 3:39 am UTC

jferry wrote:Take your gas tax increase to promote fuel-efficient vehicles example: if gas is naturally selling at $2 a gallon and you increase it to $2.50 or $3.00 a gallon, those already in financial trouble are dramatically hurt. They'll change their priorities. Instead of going out to eat or buying new clothes, they pay for gas.

Your example seems to assume that people will simply pay more, instead of decreasing their consumption.

jferry wrote:Other industries that weren't intended to be affected are affected.

This is true - but it's also how all economics works, free and otherwise.

jferry wrote:They can't afford a new hybrid car, even if it would save on gas and save the environment.

Alternately: Hybrid cars are cheaper, because they're more profitable for car companies to research and mass produce, because gas is more expensive.

jferry wrote:Put this onto a large scale and you have massive economic damage that only keeps on spiraling out, all because of a little artificial price increase.


My counterexample demonstrates that economics is really not that simple.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby jferry » Mon Nov 10, 2008 8:26 am UTC

The problem is that gas is just too inelastic of a good. The tax for externalties (road maintenance, etc) is necessary given the system we've established but if you increase that tax strictly as a deterrent, you're going to be deterring more economic action than just the sale of gasoline.

If you tax apples, people buy oranges but (unfortunately for the consumer), oranges aren't always in season.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby jferry » Mon Nov 10, 2008 8:34 am UTC

Indon wrote:Alternately: Hybrid cars are cheaper, because they're more profitable for car companies to research and mass produce, because gas is more expensive.


Yeah, that's what would happen but the problem is that the demand for those hybrid cars is artificially too high. That's how bubbles form.

In this scenario, after years of a painful gasoline tax and an explosively growing auto industry based on that tax, what happens when demand is reevaluated? All of a sudden, everyone owns a hybrid and then gas prices plummet. At that point, you can say goodbye to that auto industry bubble.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby cspirou » Mon Nov 10, 2008 3:44 pm UTC

jferry wrote:The problem is that gas is just too inelastic of a good. The tax for externalties (road maintenance, etc) is necessary given the system we've established but if you increase that tax strictly as a deterrent, you're going to be deterring more economic action than just the sale of gasoline.

If you tax apples, people buy oranges but (unfortunately for the consumer), oranges aren't always in season.


It is inelastic because alternative fuels don't exist. But that doesn't mean nothing happens. People will use less gas and demand foe more fuel efficient cars is higher. A company would be foolish not to meet the demand.

jferry wrote:Yeah, that's what would happen but the problem is that the demand for those hybrid cars is artificially too high. That's how bubbles form.

In this scenario, after years of a painful gasoline tax and an explosively growing auto industry based on that tax, what happens when demand is reevaluated? All of a sudden, everyone owns a hybrid and then gas prices plummet. At that point, you can say goodbye to that auto industry bubble.


After years of the auto industry adapting to this there would be hybrids priced the same as current cars. Are you assuming people will instantly demand a lower mileage car? To bring this analogy further if gas went down to 60 cents would the consumer instantly DEMAND a car that is 9 miles/gal? Think about this. You are arguing that people will demand an inferior product. In this case it's more of a hysteresis curve then returning back to it's original state.

Edit: Also you are taxing for an externality. If you take into account the total cost of pollution and higher carbon and we see that it is an expensive problem to take care of that, then in the end it would cost us more money as a whole. Say you have two cleaning products. Product A and product B. Product A is cheaper but causes health problems and Product B is more expensive but has no side effects. Buying product A will cost you more in the end when you factor in the medical bills.

Not only that but an argument to get off gas is foreign dependence. By spurring alternatives to it we would keep the money circulating internally which would improve the economy. So despite higher energy cost we would have more in the end.

On a tangent I always hear about taxing the rich would reduce productivity. However what if the result of a higher tax on the rich is that the rich make more money? Would they still be objecting to it then?

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Yakk » Mon Nov 10, 2008 4:34 pm UTC

jterry wrote:Yeah, that's what would happen but the problem is that the demand for those hybrid cars is artificially too high. That's how bubbles form.
Unless, of course, it was artificially set to a better value.

If there are externalities in purchasing gasoline that are negative and impact society as a whole, and are not captured in the binary exchange between the two parties, then the price is wrong barring some mechanism like targeted taxation.
In this scenario, after years of a painful gasoline tax and an explosively growing auto industry based on that tax, what happens when demand is reevaluated? All of a sudden, everyone owns a hybrid and then gas prices plummet. At that point, you can say goodbye to that auto industry bubble.
That presumes a collapse in the price of gasoline. Which either means that the cost of gasoline fell (ie, demand dried up, and supply remained the same or similar -- which is quite reasonable, given how refineries work), or people stopped factoring in externalities when pricing gasoline.
cspirou wrote:To bring this analogy further if gas went down to 60 cents would the consumer instantly DEMAND a car that is 9 miles/gal? Think about this. You are arguing that people will demand an inferior product. In this case it's more of a hysteresis curve then returning back to it's original state.
Increased efficiency often comes at some other cost -- a less efficient motor can have a better power to weight ratio. A less efficient car can be larger (like an SUV) with more capacity. It could kill other people in car accidents at a higher rate by crushing other cars, while slightly increasing your own safety, which to the purchaser of the car might be considered good.

If the price of gasoline drops to the point where it matters less, people will tend to view the value of increased efficiency as lower, and make the alternative decisions more. This has capital costs, as factories are not perfectly flexible in what they build -- they need to be retooled if they go from building an efficient hybrid runabout to a bulky, high-power, SUV.

So these things shouldn't be neglected as possible consequences.

I hold, however, that factoring in a better estimate of the true costs of consumption -- the costs that neither the purchaser nor the seller pay by themselves -- is a good thing. It will increase real economic efficiency, rather than encouraging the mass production of negative externalities.
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Re: Why Are (Economic) Conservatives Still Relevant?

Postby SJ Zero » Mon Nov 10, 2008 4:45 pm UTC

cspirou wrote:After years of the auto industry adapting to this there would be hybrids priced the same as current cars. Are you assuming people will instantly demand a lower mileage car? To bring this analogy further if gas went down to 60 cents would the consumer instantly DEMAND a car that is 9 miles/gal? Think about this. You are arguing that people will demand an inferior product. In this case it's more of a hysteresis curve then returning back to it's original state.


Your analogy fails to account for the limitations of engineering.

You can have a vehicle that's cheap, a vehicle that's big, a vehicle that's good on gas. Choose any two. You're not going to magically fill a vehicle with batteries, electronics, and high power motors and somehow make it cost the same as the machine that has only an engine.

With the selection pressures of $4/gallon gasoline, cheap and good on gas vehicles that are small become very popular. The 3 cylinder Geo Metros are growing incredibly popular on the used market right now.

If gas went back down to $0.25/gallon, you'd see people returning to cheap but big vehicles.

This has happened in the past. The 1970s gas crisis saw the rise of small cars and the end of an era of driving around cars as big as boats. After the crisis abated, we saw the rise of the SUV. Today small cars are once again becoming very popular. If I'm wrong about the fundamentals of the market and we see gas go back to what it was yet again, we'll see the rise of yet another huge vehicle.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Ixtellor » Mon Nov 10, 2008 5:07 pm UTC

Bubbles McCoy wrote:Even if you don't educate your workforce, protectionism still doesn't do you a whole lot of favors because any industry that is excelling within your country is now bound by retaliatory protectionism and your own people are forced to accept an overpriced, poor-quality domestic alternative.

All the other topics as proposed Ixtellor seem a little narrow to be keeping within one thread, and have to do more with specifics of a very general economic theory than why economic conservatism still has relevance as originially brought up in the OP. I suppose we could try to generalize and discuss how the components of workers, companies, owners and countries can best combine for economic efficiency, but that's a rather Heruclean task.


Well the question was are the economic conservatives still relevant.

To which I reply a resounding YES, when it comes to a variety of conservative economy principles other than regulation.

I think there is a viable argument to be made against the bailouts.

So I guess I am still just curious, if we are discussing the OP or if we have narrowed it to deregulation versus regulation. Of which I have many thoughts.


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Re: Why Are (Economic) Conservatives Still Relevant?

Postby Zamfir » Mon Nov 10, 2008 5:16 pm UTC

jferry wrote:
The problem is that gas is just too inelastic of a good. The tax for externalties (road maintenance, etc) is necessary given the system we've established but if you increase that tax strictly as a deterrent, you're going to be deterring more economic action than just the sale of gasoline.


Jferry, inelasticity is in principle a good characteristic for a good to be taxed, as it means that the economic distortion is lowest. You can see this by assuming that fuel would be perfectly inelastic, i.e. people buy the same amount whether it is cheap or expensive. In that case, putting a tax on fuel will change nothing to the allocation of fuel, but of course people will have less money for other things. The nice thing is that they are now completely free to choose which other goods they want to consume less off.
If you were to raise the same amount of tax income by some other tax, the distortion would be higher, since having people choose their own decreased consumption is the best you can do.

Putting taxes on inelastic goods is rule number one of tax systems. Taxing goods with negative externalities is number two. That's why European tax systems put so much tax on gas: you want to decrease gas consumption, and you can get a lot of money out of doing it, meaning you can decrease other distorting taxes.

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Re: Why Are (Economic) Conservatives Still Relevant?

Postby cspirou » Mon Nov 10, 2008 5:41 pm UTC

Yakk wrote:If the price of gasoline drops to the point where it matters less, people will tend to view the value of increased efficiency as lower, and make the alternative decisions more. This has capital costs, as factories are not perfectly flexible in what they build -- they need to be retooled if they go from building an efficient hybrid runabout to a bulky, high-power, SUV.


Precisely why hybrids would continue to be made. An increase in price creates pressure from the consumer for a more fuel efficient car but a decrease in price just means it stops becoming a major factor. They'll still buy cars and since the cost for retooling factories outweighs the need to go back to previous cars then they just continue what they do. Unless they want to heavily advertise and create massive demand for less fuel efficient cars to outweigh the cost for changing the factories.

SJ Zero wrote:This has happened in the past. The 1970s gas crisis saw the rise of small cars and the end of an era of driving around cars as big as boats. After the crisis abated, we saw the rise of the SUV. Today small cars are once again becoming very popular. If I'm wrong about the fundamentals of the market and we see gas go back to what it was yet again, we'll see the rise of yet another huge vehicle.


True. Although it wouldn't create the collapse that jterry envisions. I also see higher power vehicles as a luxury then a necessity. There will always be people that need trucks for work. However the majority of SUVs and trucks were driven by commuters as oppose to off-road enthusiasts. If/when gas prices drop it wouldn't inspire a need to drop what they currently drive like rising gas prices do.


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