Unleashing the power of capitalism on talk radio

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Erik Kain

Erik writes about video games at Forbes and politics at Mother Jones. He's the contributor of The League though he hasn't written much here lately. He can be found occasionally composing 140 character cultural analysis on Twitter.

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79 Responses

  1. Avatar Tod Kelly says:

    I have come to think of the popularity of political talk radio as being similar to the popularity of Wheel of Fortune. By which I mean:

    Wheel of Fortune is fun to watch because we all want to feel smart, and not everyone can be Tom Van Dyke – it’s easy to play along at home watching WOF! Talk radio allows everyone to listen and think they know as much or more than those elitist experts that study things. Hence the simple mantras that are used by hosts and callers alike as obvious fix-alls.

    My guess is that someone out there at some time has tried to make intelligent, nuanced, drill down political talk radio, and that they were quickly removed for bad ratings.Report

  2. Avatar Kim says:

    Link.
    I’m told NPR had some good shows on the Supreme Court. But I really believe that a significant portion of Republicans have an authoritarian personality, and just want to be told shiny catchphrases.Report

  3. Avatar Brandon Berg says:

    Observation: regulations are always job-killing, entrepreneur-slaying burdens. Also, regulations are pointless because clever entrepreneurs will always find a way around them. Something isn’t clicking here.

    Perhaps not strictly correct in all cases, but certainly not contradictory. Profit-maximizing behavior under regulations is often not in keeping the original intention of said regulations–i.e., people find a way around them. But they are a drag on the economy, because while the workarounds may be optimal from a private perspective, they often entail rent-seeking and/or deadweight loss.Report

    • Avatar DensityDuck in reply to Brandon Berg says:

      There’s also fix-the-barn-door regulations, like Sarbanes-Oxley, which wind up being nothing more than “spend at least X man-hours per month filling out forms to prove you aren’t doing something that was already illegal”. Decreasing the size of a business doesn’t affect the amount of work required for compliance, which means that smaller firms with fewer employees must dedicate a much greater portion of their total available labor to compliance.Report

      • Avatar Kim in reply to DensityDuck says:

        … all regulations are fix the barn door regs.
        But some regulations make jobs “Thou Must Have Fire Escapes” means more work for construction workers, and may increase public confidence in large buildings, which may in turn reduce profit-loss through time-to-meeting.Report

        • Avatar DensityDuck in reply to Kim says:

          I challenge you to find a good effect of Sarbanes-Oxley that was not duplicated by an existing but unenforced regulation.Report

        • Avatar Brandon Berg in reply to Kim says:

          To be clear, this logic only applies during a recession, and more specifically when resources (both labor and capital) appropriate to these tasks are unemployed. Under normal circumstances, requiring firms to hire people to do one thing will divert resources from other activities, rather than leading to the employment of idle resources.Report

          • Avatar Brandon Berg in reply to Brandon Berg says:

            And come to think of it, it doesn’t even always apply during a recession. If a regulation renders a marginally profitable firm or project unprofitable, e.g. by increasing the cost of building something by more than it increases the amount it can be sold or rented for, then it could result in the firm shutting down or the project being cancelled.

            Now, in principle a regulation should only render unprofitable those projects which shouldn’t be profitable anyway because of externalities the regulation is designed to address. In practice, it doesn’t always work this way. And in any case, a recession is not the best time to be interfering with economic activity.Report

            • Avatar Jaybird in reply to Brandon Berg says:

              The problem with saying something like “this only changes things at the margins!” is that this never ever takes into account that changing where the margins are changes the game.Report

            • Avatar Kim in reply to Brandon Berg says:

              regs can also lead to investment, which if it saves power in the long run, can be profitable. DOE did one of those, where regulations got upwards of 100x returns on investment.Report

              • Avatar Brandon Berg in reply to Kim says:

                I’d like to see that paper.

                Generally speaking, if there’s good reason to believe that an investment will pay off in the long run, firms will make it. If they make an investment only in response to the requirements of a regulation, then the most likely reason is that from a private perspective the business model adopted in response to the regulation is inferior to the pre-regulation model. I see no reason to believe that regulators have any special insight into this question.

                Now, there may be specific cases in which by some happy accident the regulation leads firms to make an investment that pays off better than expected, such that the regulation actually makes them better off than they were before. But there’s no reason to expect this to be the rule.

                The argument for regulation is that it corrects negative externalities. Claims to the effect that on average it makes us better off in ways independent of the correction of those externalities are highly questionable at best.Report

              • Avatar Kim in reply to Brandon Berg says:

                … if you make a reg that makes air conditioners more efficient (eventually), that costs the air conditioner maker money. but it SAVES their customers (many businesses) money in the long run. And, if you force customers to buy new air conditioners, you may also have the AC makers making money.Report

              • Avatar Robert Cheeks in reply to Kim says:

                Wow!!!
                The purpose of gummint is to make AC more efficient and to force the stupid taxpayers to buy the damn things. Kim, I hate to tell ya, but that ain’t ‘merican!Report

              • Avatar Dave in reply to Robert Cheeks says:

                Actually Bob, the broken windows fallacy seems to have become an American tradition, and such stunning examples that were seeing too.Report

              • Avatar North in reply to Robert Cheeks says:

                It’s the Dawn of the Dead round here!Report

              • Avatar DensityDuck in reply to Kim says:

                “if you force customers to buy new air conditioners, you may also have the AC makers making money.”

                uhhhh…I think that’s the first time I’ve seen someone encourage profligate “always buy this year’s new model” consumption as a desired outcome.Report

              • Avatar Kim in reply to DensityDuck says:

                if it’s money saving, it’s a good thing. if it’s power saving, that does more stuff than simply saving money.Report

              • Avatar DensityDuck in reply to DensityDuck says:

                yeaaaah i guess it saves money

                i mean it would if i didnt spend two hundred dollars on a new air conditioner every year

                carnegie might have rebuilt his steel plant every year but thats because they were inventing bigger and better ones every yearReport

              • Avatar Kim in reply to DensityDuck says:

                DD,
                allow me to restate: “getting a new air conditioner every five years may net your corporation profits assuming regulations encourage efficiency upgrades from the ac makers.”Report

      • Avatar E.C. Gach in reply to DensityDuck says:

        Clearly, Hannity just wants to see the American economy go super Sayian.Report

    • Avatar wardsmith in reply to Brandon Berg says:

      How much do regulations cost the economy? Is that cost destructive (breaking windows) or productive (fixing windows)? Can an economy be based on breaking and repairing windows?Report

      • Avatar Kim in reply to wardsmith says:

        … food regs save BILLIONS in worktime, and in hospital beds. Is that fixing windows, or breaking windows? Iunno.Report

        • Avatar wardsmith in reply to Kim says:

          So Kim, your thesis is that money grubbing corporations would rather hurt their customers than put out a decent food product? This works in what alternate reality? You probably also believe in tooth fairy ideas like there really /are/ gov’t health inspectors examining every cup of yogurt that goes out the door. Bureaucrats do what bureaucrats do, which is shuffle paper. More regulations equals more bureaucrats, but by no means equals more compliance.Report

          • Avatar Kim in reply to wardsmith says:

            wardsmith,
            In a capitalistic system, someone put a money value to a person getting sick. If you can churn out corn at a half cent cheaper, and one in a hundred thousand people get sick, you’re turning more of a profit (assuming enough corn production). If you can 100% plausibly blame someone else (to a jury’s satisfaction), then you have no cost for making someone sick.
            If you fail to turn the most profit for your shareholders, you are legally liable.Report

          • money grubbing corporations would rather hurt their customers than put out a decent food product?

            Unfortunately the answer to this is, sometimes yes. Reputational damage and self regulation aren’t enough to ensure public safety. Look at the food safety incidents in China, counterfeit medicines and foods, inappropriate pesticide controls, and so on, all amount to a great deal of public health damage – admittedly, there are complicating political dynamics at work, but these China cases help prove Kim’s point about the possible harms that emerge from too little regulation. Altogether it amounts to public health damage for the sake of short term profit. What’s more, contra Brandon Berg @ 2:22pm, regulations can reach a level of making “us better off in ways independent of the correction of [negative] externalities”. With respect to the public health arena especially, regulations amount to building an environment where consumers are confident that the products they’re buying won’t harm them.

            A Guardian piece, Made in China: tainted food, fake drugs and dodgy paint, vividly describes the outcome of insufficient regulation Kim alludes to,

            Along with health and the environment, consumer safety has been one of the biggest victims of the rush to get rich. The domestic market has probably been affected more than international trade because export standards are higher than for goods sold in China. Last month, food inspectors said paraffin wax, dyes, formaldehyde and cancer-causing compounds were detected in food produced by unlicensed and small producers.

            There have also been scandals related to fake or poorly made drugs. Last summer, 11 people were killed by antibiotics that contained diethylene glycol, an industrial toxin. In 2005, two boys in Guangdong province died from rabies after receiving bogus vaccinations. A year before, at least 50 babies in Anhui province died and more than 100 were malnourished after being fed fake milk formula, some of which had only 6% of the vitamins, minerals and protein needed for a growing infant.

            Report

            • Avatar wardsmith in reply to Creon Critic says:

              Chris, I know all about China, I’ll remind everyone for the dozenth time that my wife is Chinese, I speak Chinese etc. The dynamic there is totally different. The “black eye” that a corporation could get here for malfeasance is due to something we take for granted that simply does not exist in mainland China. That something is a /free/ press.

              Eventually even the most corrupt Chinese corporations get some sort of comeuppance. Interestingly their CEO’s often receive the death penalty. Life is cheap in Asia.Report

  4. Avatar DensityDuck says:

    “…which reminds me, apparently the Affordable Care Act is also destroying jobs and the economy in spite of its actually being implemented yet.”

    ah-heh. Employers have already declared that since the government is going to pay for health care then they don’t need to bother. And let’s not forget Seibelus sending out a proclamation that there would be Severe Repercussions against companies whose projected cost and earnings statements included breakouts for compliance with the Act.Report

  5. Avatar Jason Kuznicki says:

    There are a couple of things (at least) that I don’t think are fair in this post.

    First:

    Observation: regulations are always job-killing, entrepreneur-slaying burdens. Also, regulations are pointless because clever entrepreneurs will always find a way around them. Something isn’t clicking here.

    Has anyone ever claimed both of these things simultaneously? If not, retract. It remains very clearly the case, at least in my mind, that many regulations fall into the first category, and many others fall into the second. Both are potentially valid criticisms, depending on context.

    Second:

    In any case, this new jobs plan from the president seems entirely reasonable, if entirely too small, to me.

    How large would be large enough? Did you have a number in mind before the speech? Our recent forays into Keynesian stimulus don’t seem to have done much good, have they? Even by the administration’s own projections, the earlier stimulus was an utter failure.Report

    • Has anyone ever claimed both of these things simultaneously? If not, retract.

      Seriously? “Retract”? I’m pretty sure that if you listen to talk radio economics you could find plenty of incoherent discussions of economics, regulations, etc. This isn’t Cato we’re talking about here, this is Sean Hannity.

      Second, I guess smart people are going to disagree about the stimulus and we can argue unto the ends of the earth about it without any resolution. Side A can say “It didn’t work because stimulus doesn’t work!” and Side B can say “It was too small!” and we can all turn blue in the face.Report

      • Avatar Jason Kuznicki in reply to E.D. Kain says:

        I don’t think it’s unreasonable to ask for a citation of someone holding both of the views you claim.

        “Oh, talk radio is just awful!” isn’t going to be enough. And your praise of the Cato Institute is kind, but no amount of it would be sufficient to carry an unrelated point like this one.Report

        • So you want me to cite the talk radio shows I listen to occasionally while I’m driving where I’ve heard both these views expressed…?

          Look, the point I’m making is that people really do hold these two views – that regulations create such a terrible burden on the economy that it is dragged down into the mud and that, at the same time, they’re entirely pointless because there’s always a way around them. Now I realize that inside that critique you can point out how this creates all sorts of bad incentives, and how certain firms are given special treatment, or how this creates barriers to entry, etc. and I would probably agree with a lot of this. My point is that the standard rightwing boilerplate on the issue is in fact incoherent and boils down simply to “Stop Obama so that we can unleash capitalism!”Report

          • Avatar Jason Kuznicki in reply to E.D. Kain says:

            So you want me to cite the talk radio shows I listen to occasionally while I’m driving where I’ve heard both these views expressed…?

            If your claim is that someone believes them both, then yes. Look at it this way — it would be far more convincing, and far more damning, if you did.Report

            • Okay, I’ll see if I can dig up Youtube clips or something. But I’m surprised you haven’t heard this before yourself.Report

              • Avatar Jaybird in reply to E.D. Kain says:

                It seems a lot more likely to me that they had one person on for the Tuesday show who said the one thing and everybody agreed that Obama was the AntiChrist and then, for the Wednesday show, they had the guy who said the other thing and, yep, more evidence that Obama is the AntiChrist.

                It doesn’t matter that Mr. Tuesday and Mr. Wednesday don’t agree on the premises, it only matters that they agree on the conclusion.Report

              • Avatar Robert Cheeks in reply to Jaybird says:

                …Barry’s NOT the anti-Christ? That’s librul talk!Report

              • Avatar Jaybird in reply to Robert Cheeks says:

                My assumption is that the AntiChrist will be one of those anti-immigration types.

                He’ll come out and say “everybody needs to get this tattoo on their hand or forehead! TO PROVE THAT THEY ARE AN AMERICAN CITIZEN!!!!” and, of course, everyone will flock to the Beast and stand in line and brag about how they’re getting the Mark.

                And they’ll complain about the people who didn’t get one.

                And Persecute them.

                Obama ain’t an AntiChrist. He’s not in the AntiChrists’ league.Report

              • Avatar wardsmith in reply to Jaybird says:

                Obama is clearly pro immigration. At least pro relatives immigrationReport

              • Avatar Robert Cheeks in reply to Jaybird says:

                It’s comments like this that make me think the ‘secret’ number will be made available on this site or at Cato Unbounded!Report

              • Avatar MFarmer in reply to Jaybird says:

                I hear a lot of stuff on talk radio that I don’t agree with, just like I disagree with stuff said by the talking heads on MSNBC, but much of the Talk Radio discourse is spot on satire regarding Obama and his failed presidency. Beck and Limbaugh were a welcomed relief to the orginal coronation and deification of Obama. Now Stewart is even getting in on the act. Obama marketing in 2007 and 2008 was one of our nation’s funniest set-ups, capped by the tingle down Chris Matthews’ leg and Brooks’ observation of the creases in Obama’s pants — there had to be satire following such nonsense — this is, afterall, Amurica.Report

              • Avatar Tom Van Dyke in reply to Jaybird says:

                Key point here re satirical vs. serious, irritation and concern vs. anger.

                For the record, the thrill ran UP Chris Matthews’ leg. We must keep our facts straight, lest we be accused of unseriousness.

                😉Report

              • Avatar Tom Van Dyke in reply to E.D. Kain says:

                Reagan’s actual quote: “In the present crisis, government is not the solution to our problem; government is the problem.”

                Defensible then, defensible today in the present crisis of job-inhibiting regulation and trillion-dollar annual deficits. Please, no more caricature that Republicans blithely want to abolish all government and regulation. This all has been painful.Report

      • Avatar Thomas in reply to E.D. Kain says:

        Yeah, it’s crazy talk. I mean, it’s like the old canard that gun bans will disarm the law-abiding while criminals will somehow still have access to guns. Look at Chicago, where guns were illegal for a generation. Criminals didn’t have guns, not until the Supreme Court messed things up.

        Tell me, do I have it right?Report

    • Avatar E.C. Gach in reply to Jason Kuznicki says:

      Apparently, there’s an annual 1 trillion dollar hole in the economy, so that might be a good place to start.

      http://www.nytimes.com/2011/09/09/opinion/setting-their-hair-on-fire.html?ref=opinion

      Is that shortfall in dispute? If not, counter-cyclical spending on that level would be needed.Report

    • Avatar sonmi451 in reply to Jason Kuznicki says:

      If not, retract? Wow, you are even more rude to ED Kain than I have been to him. And he his blogging mate, too, presumably someone at your level. What’s the matter, the resident libertarian is angry that ED is now flirting with other ideologies?Report

      • Avatar Jason Kuznicki in reply to sonmi451 says:

        Erik has never been all that faithful to any ideology, and I don’t expect it of him.

        I do expect, however, that when he makes a claim — such as “there are people who believe both A and B without admitting the contradiction” — that he cite a source for it. Admittedly, I’ve had a bit of a pet peeve lately around people making unsourced assertions, but I’d prefer that the trend I see here not continue.

        As to whether I’m defending talk radio because I like it, no. Absolutely not. I never listen to talk radio. I find it infinitely more offensive than Erik’s lack of sourcing. Over there, lack of sourcing is a way of life.Report

  6. Avatar clawback says:

    The part I like is that capitalism is a super-powerful job-creating system, but it’s also so fragile an increase in taxes of few percentage points will bring it to its knees. I guess the way to think about it is like it’s Achilles.Report

    • Avatar E.C. Gach in reply to clawback says:

      Not all tax increases harm the economy. For the most part it depends where the starting point is. If top marginal rates were at 5% and went down from there, a couple of point boost probably wouldn’t stall the economy in any noticiable way.Report

      • Avatar DarrenG in reply to E.C. Gach says:

        I think clawback’s tongue was firmly planted in his cheek, and was pointing out the internal contradiction of believing simultaneously that capitalism is world-beating primal force that can provide for every conceivable human want, yet can be utterly destroyed by the government making tiny changes to the tax code or regulatory regime, a la E.D.’s hyperbole in the original post.Report

    • Avatar MFarmer in reply to clawback says:

      The point with tax increases depends on one’s view of whether money is best left to be freely invested in a free market or taken and spent by government through centralized plans of targeted economic growth. If government takes the money and spends it on government plans, that leaves less for the market to use according to supply and demand and the plans of entrepreneurs.

      It is true right now that the accumulation of government intervention has created uncertainty and stagnation — is more government intervention the answer?Report

  7. Avatar Kolohe says:

    The most telling thing is what sort of businesses advertise on talk radio.Report

  8. Avatar Anderson says:

    “Unleash the power of capitalism!”

    For some reason this phrase conjures up images of Ents tearing apart the dams to flood Isengard. (http://www.youtube.com/watch?v=Iw0jwrWqOKI)

    But in all seriousness, that monumental effect would only really be seen in countries that make a shift from actual central-planning to a market economy: Chile during Pinochet, Eastern Europe post 1989, India post 1991, China under Deng Xiaoping, etc. Although, to look at the way Russia had a chaotic entrance to capitalism in which a few oligarchs gobbled up the assets the state sold, this change still must be measured and organized to capture capitalism’s best features.

    At the risk of sounding glib, nothing we’re arguing about in U.S. politics today would lead to an immediate capitalistic explosion of years of 5% + GDP growth, ala Tim Pawlenty. When your economy is already this developed (and dependent on other economies), no policy – or removal of a policy – will unleash anything dramatic and unexpected.Report

  9. Avatar Dave says:

    It’s the Dawn of the Dead round here!

    There’s been a lot of zombie-level finance and economics in these parts. 😉 Lots of broken windows too.

    As far as participation, I’m too busy to write some of the responses I’ve wanted to write to various comments, but since I’m here:

    Not so fast, there…

    http://www.washingtonpost.com/blogs/ezra-klein/post/did-the-stimulus-work-a-review-of-the-nine-best-studies-on-the-subject/2011/08/16/gIQAThbibJ_blog.html

    Yet, when I look at the world around me and see persistently high unemployment, (still) a greater threat of deflation (though we’re not there) vs. inflation despite the Fed’s “best” efforts, issues in Eurozone, major issues in housing, household debt issues and the likelihood that the economy slips into a recession in 2012, is there a reason why I should remotely care about the consensus of academic economists and their statistical significance?

    I think the real world has issued its verdict on this one. All I’ll give ARRA proponents is that it kept the economy from getting much worse during the worst of it in 2009, but those so-called “green shoots” wilted away pretty quickly.

    Utter failure? I won’t go that far, but no one should sing its praises.Report

  10. Avatar Rufus F. says:

    Okay, I’ve got to ask a question that someone smarter than me on economics can probably answer. The US stimulus didn’t accomplish much and it’s assumed that the next one won’t accomplish much. Meanwhile, it’s increasingly impossible for American companies to compete for contracts with companies from China because they’re heavily subsidized by the state. So, what are they doing right that the US is doing wrong?Report

  11. Avatar Sam MacDonald says:

    “that netted much, much more revenue than we gather right now.”

    I’d be interested to know how much more. What’s tax as a percentage of GDP now? Something like 21 percent? I think I have seen people on the right talking about capping it at 19 percent or some such. But I don’t often see folks aregue for levels on the other side. What qualifies as “much, much more”? Something like 30 percent?Report

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