Claremont McKenna vs Pomona

santino
Mon, 24 Mar 2008 14:06:08 +0000

Ah, I see your point know.

Alright, so without getting philosophical of theoretical, I am going to try and sum this up:

Governments are institutions created by people to protect liberty. The notion of a license has several philosophical, moral, economic and practical problems:


A license is a right to sell your product or service. Some consider licenses unconstitutional as they violate property rights. Economic freedom deals with an individuals ability to buy, sell and trade property in product and service in their quantities. The immediate implication of a license is that You can sell, but someone else cannot! Such a system tramples economic freedom and in its extremity is a feudalism. Philosophically, it asserts that Men are not equal before law.
Economic: I already mentioned these arguments before. They create an artificial scarcity, red tape, barrier to entry, consumer-producer surplus lost. Most monopolies or oligopolies are government granted - either through licenses or intellectual property rights. Now think about Smith’s market information. People really misinterpret this. Worse, rarely anyone ever reads the Wealth of Nations. In Classical Economics, market information is information about price, product and quantity. These three fundamentals of information guide and direct a free market mechanism. In the contemporary sense, industry information is mostly composed of regulatory papers, filing and procedures. Most of it is tax forms, registration forms, regulatory approvals, adherence to codes. (I’ll talk about the dangers of these in a minute). This creates a market of brokers, analysts and consultants who ease the pain for you at a price. So you’re right when you say that information isn’t flowing freely, but we’re talking about two different kinds of information and two different diseases. (Princeton Review, Kaplan, CC all are part of this information gap capitalization)
Practical: Licenses are wrong in theory and have devastating effects in practice. The first problem is, how does the government know who to give a license to? Now, in the utopian world, they would conduct thorough research and give out licenses to the right people, correct? But even in this utopia, there’s ample waste. Taxpayers like you and me would pay the government to conduct long surveys and then create these licenses- even worse, tax us more for creating agencies to enforce them. And all this for what? When I have something you want and I can sell it to you. Its not a middle man, its a middle army.
In the real world, this leads to lobbying, corruption and shady practices. The system has an in built incentive for existing business and government to collude and safeguard their interests. So the taxi drivers in New York can form a lobby group and keep the licenses regime. However, the consumers or potential producers of a taxi service have not realized their loss and therefore don’t collude. At the highest levels, licenses and sub contracts corrupt our political system because we allow our economic freedom to trampled for special interest.
Property Rights: License systems undermine property rights. If I own property and I sell it to you, then you own that property for a monetary transaction at a mutually agreeable price. Right? Not quite with license systems. Because the government rules only certain producers legitimate and the rest illegal, the property a licensed producer sells to me isn’t mine any longer since I’m limited in my use of it. (this same argument can be extended for flat tax…)


Alright ****, I have to go…I have class. I promise to come back and finish this. I’ll address minimum wage and anti trust.

Nice talking to you.