An Argument for Regulation in the Economy

Massage Magazine, accessed 3/24/2018

I honestly am willing to believe that most businesspeople are just people, and are open to doing the right thing for society. The trouble is, they have to compete in a market where some will cheat, and behave antisocially. In a competitive market economy, it is often the most antisocial who rise to the top because those who wish to do good get squeezed out of the markets by the more aggressive (there's a couple good agent-based models in Netlogo that illustrates this well.). Thus, we are all impoverished by deregulation in the economy as the less desirable companies and individuals succeed over those who add value to the economy and society at large.

If government were to regulate the industries and some general company practices, and actually enforce them, I believe that prosocial businesses can be better enabled to flourish in our human societies. We all can be enriched by government regulations, if they're well-designed and crafted, such that industry can still prosper (or prosper more), and the environment and society are protected. It could be argued that a well-regulated economy is good for businesses and good businesspeople. Deregulated economies only seem to enable and encourage people to do the worst, even if they don't want to.

Another advantage of governments, is that they can also take a more holistic approach to the socioeconomic-environmental system than businesses can. A businessperson needs to specialize in operating their company, while a government official can specialize in overseeing and maintaining the broader expanse of socioeconomic-environmental world. They need to, and honestly should, work together to produce, evaluate, and update the rules of the market game to ensure greater efficiency and more generally desired outcomes. But once rules are worked out and tweaked, the two need to focus on their respective specialties, unless it is sensed that a change is needed in policy and programming as society, technology, and knowledge develops over time. The job of governing and operating a business are complex and difficult enough as it is, and there are real consequences for both of governments and businesses if they fail. A government can get removed from office just as a business can go out of business. Therefore, this is an important division of social labor, between private enterprise and public institutions. They need to work together, and both need to be penalized when they deviate from that cooperation. However, they should still be separate and distinct from each other to enable efficacy through specialization.

But if government is to regulate, how should it? One idea is that we use game theory and institutional design principles from Elinor Ostrom to make game theoretic regulations that can be tested in labs in advance of being implemented in the real world. In this way, regulations can be made with evidence that help pro-social businesses and business practices flourish better in the market than anti-social ones. The key caveat is that public officials need to be accountable to their constituents, and recognize the value of that feedback to prevent unrest boiling over, and to preserve their chances of remaining in office inexpensively and sustainably. It is this pragmatic flexibility and humbling of the officialdom that can ensure the preservation of the officialdom and the social unit as a whole. That simple recognition by the officialdom would go a long way, and save a lot of expenses in life and resources for themselves and others.

We have a basic framework and rationale for regulating the economy for the benefit of individuals and companies alike. These are rooted in specific normative values, such as that humans should be compassionate towards other beings and the environment, sometimes at their absolute expense. But, these normative values seem to produce outcomes that are now healthy and sustainable in a human population. I don't understand how so many people fail to recognize a poor medicinal remedy for society's ills when one is clearly present. I think we'll need to overcome the anti-social normative values that are implied under Capitalism, and perpetuated by Capitalists, in order to achieve a better world for all of us.