Rafael wrote:
This is not true at all. There were large businesses considering the scale of the country long before the extensive regulation and the expansion of this so-called social contract.
And those businesses could not have done business without a government to enforce contracts for them, no matter the scale. In fact, if you look at the relationship between government and private industry in the gilded age, I think you'll find that there was a good deal of regulation (although it mainly served the interests of the wealthy elite). Only after the consequences of that sort of governance - the Great Depression - did government start working for interests beyond just the wealthiest people. We have slid a long way back towards that sort of relationship between government and big money, and lo and behold we are struggling our way out of a near-depression. Shocking, that.
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Government regulation and social programs don't provide customers.
Actually, they do. There are those that believe that supply creates demand. It's just not true. In order for there to be demand, people must be willing and able to purchase various goods and services at alternate prices. The more aggregate demand, the more businesses will flourish as money flows through the various sectors of the macro economy.
However, government regulation definitely provides customers. Customers can be more sure of the safety of products. They work in jobs that provide minimum benefits, wages, and worker safety. As a result, they can afford to purchase more and are more willing to spend money. Public education helps consumers make informed choices (and, you know, teaches them to read and do math), which helps competition. Public transportation increases commerce by moving people about more cheaply. More customers means more sales. Cheap access to the internet allows commerce to flow more freely online. Food preparation regulations help to make people feel more secure about eating out. And they do it more often. Social Safety nets help encourage people to take entrepreneurial risks they might otherwise avoid for fear of being tossed out in the street should their efforts fail.
All of these things help to increase aggregate demand.
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Bare assertion fallacy. No one posited that "taxation is harmful, but necessary". If you are referring to the quote that government is a necessary evil, that's just an appeal to tradition or authority.
So, let's think about this for a second. Let's say there was no government.
Bob goes to your store. He wants a widget that costs nine chickens (you see, there is no unified means of currency without some form of government regulation). He takes the widget to the counter, and when you ask for your chickens, he says "**** you, and **** your chickens".
He's broken the contract. Enforcement of the contract now relies entirely on who is the faster draw. In this case, it's bob. So, not only do you not have your nine chickens, you now have a sucking chest wound to deal with. And without a government, you have no recourse to deal with Bob, who broke your contract and then shot you.
So, government must exist in order to enforce contracts. We all subdue ourselves to a common rule of law in order to mitigate these circumstances. Yes, people will still rob stores. But we as a society have rules about that sort of thing, and a due process in place to deal with it when it happens.
This is one of many basic functions of government.
Here's another example -
You sell prescription drugs. You develop a drug that you claim cures cancer. In reality, it merely makes cancer patients feel a bit better, but actually hastens their demise. Because we live in your world, where government regulation does not exist, you were never required to actually prove that your medicine works.
You are very wealthy. You have many chickens. And you use those chickens to pay off doctors to pimp your crappy drug. Desperate people come to those doctors, afraid for their life, and bring all their chickens. Oh, how the fowl flows into your giant coop. Your chicken profit margin is through the roof, and a lot of people are dead. But who cares? You made your wealth, and even if folks stop buying your crappy product you walk away rolling in Denver omlettes.
Government serves a role in protecting consumers from business people like the example above. It is impossible and unreasonable to expect that consumers need to be doctoral-level experts in every product they buy. The government provides the infrastructure to enforce your contracts, and as a result, you must make sure that the products you sell are safe and effective. It's part of the deal. Your contracts get enforced, but you must submit yourself to regulations regarding product safety and public health.
When consumers are confident in products (because of strong safety standards and consequences for people who scam people), they are more willing to buy. That increases demand, and thus improves the overall economy.
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The wealthy are wealthy because they are able to invest their capital into ventures that return a revenue.
A basic logical fallacy. The wealthy *might* be wealthy because they invested capital into ventures that returned a revenue. They also might be wealthy because they scammed lots of people out of their money. They might be wealthy because they participated in the slave trade. They might be wealthy because they inherited wealth. They might be wealthy because they won the lottery. They might be wealthy because they won a lawsuit. They might be wealthy because they robbed a bank.
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In order for a venture to return a revenue, it must be more productive that what it consumes - it must have revenue leftover to pay dividends, recapitalize the returns and/or pay interest on bonds it issued under its own credit. Therefore, wealthy people got that way by placing capital with ventures that added wealth to society.
Again, a wild logical fallacy. Lots of very wealthy people got there with get-rich-quick scams that over time lost a ton of money, but in the short run paid them a great deal.
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Before you go off on a tangent about investment with speculative firms, particularly those who held large quantities of illiquid assets, such as default mortgages, as bedrock assets. keep in mind that those investments were only attractive ultimately, because of government guarantees and mandate which cause lax lending standards.
The CRA again? Really? It's already been debunked a thousand times. The vast majority of those bad deals had nothing to do with government's attempt to get more people into homes. In fact, the vast majority of defaults come from wealthy speculators and not the people with lower income. That old dog won't hunt.
The bottom line also leads to a great many costs that the public must endure. They are called externalities. For example, when an unregulated company dumps waste into a river that provides water for the local population, the health problems that waste disposal causes constitutes a cost borne by an unrelated third party. Government plays a role in regulating that sort of thing in order to mitigate some of those costs.
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