Stelzer is an economist, business columnist for The Sunday Times of London and was a managing director of Rothschild, Inc. He spoke about “new arguments” in the public policy conversation on how best to balance market and regulatory forces.
To even the dilettante economics or politics student, Stelzer’s five premises will seem extraordinarily obvious. I’ve highlighted them below, along with other remarks that I’ve paraphrased/summarized that I thought were important lines of thinking or take-aways.
1. Government has obligation to foster and promote economic competition
2. Where natural monopolies exist (ie – public services like electric or gas lines), regulation is necessary
3. Social cost of production of goods should be internalized in the cost of those goods
4. Government intervention is sometimes necessary to offset or address market failures
5. Government has obligation to produce law that is perceived to be fair and just (and thus sustainable)
- A “too big to fail” mentality leads to socialized losses and privatized profits.
- Labor unions in 21st century typically do two things well: rape companies and produce bankruptcies.
- Inequality is tolerable so long as outcome (income/earnings) reflects input (effort/merit).
- The notion of “free trade” in a world where a major nation (China) is currency manipulating is crazy.
- Inherent limits to growth potential in quasi-capitalist cultures like China, Russia, and India may mitigate these powers as rivals on an economic scale that would crush U.S. interests.
- An America headed toward 100% debt to GDP ratio would not be told by Keynes to spend its way out of economic downturns.
- The cries of “unintended consequences!” should not necessarily stay the hand of government in terms of regulation — we shouldn’t fear unforeseen consequences so long as goals are modest.
- Don’t live in terror of government action, but keep in mind Himmelfarb’s warning about the role of gov’t in legitimizing or de-legitimizing personal actions/behavior.
- A socially mobile society requires a level playing field and minimal regulatory barriers (i.e. – 1 day to create business in U.S.A. versus 70 days or more in other nations, along with require bribes, etc.)
- An under-utilized tool to achieve smaller government in the long term is an aggressive anti-trust stance in the short term.
- Regulation tends to build permanent, regressive institutions (EPA regulation of carbon emissions) whereas user-based taxation can more efficiently distribute costs (i.e. – gasoline taxes)
- Where we socialize risk (i.e. – national health care) gov’t increasingly must engage in subjective value-based, moral/ethical actions (i.e. – “sin” taxes on soda, trans fat, etc. to combat insurance costs).
- Politicians have a costless incentive to spend public money and lavish private friends; create a stronger cost than election loss.
- Regulation favors incumbents (i.e. – Exxon can cope with new requirements with an army of lawyers and accountants, while smaller rivals are wiped out.)