 is, would market regulation be best for society? And our debaters will be discussing the resolution, market regulation is both beneficial and necessary for a healthy society. Our moderator today is Mr. Brian Brunberg of the King's College in New York City, and I'm now going to turn it over to him to both introduce our speakers and tell us about the format of today's debate. Thank you, Sarah. Again, the resolution on the table is that market regulations are both necessary and beneficial to a healthy society. Let me introduce the speaker who will be taking the affirmative position on that resolution. His name is Dr. Peter Lindsey. He's an associate professor of political science and philosophy at Georgia State University. He received his PhD from the University of Toronto and is the author of Creative Individualism, as well as numerous articles, review essays, op-eds, and book reviews on various subjects in political philosophy and higher education. He's lectured in the United States and abroad on topics such as the ethics of health care, just war theory, property rights, and university education. In addition to Georgia State, he has taught at Harvard University, University of New Hampshire, and University of Toronto, over which time he has won numerous teaching awards, including the American Political Science Association and Pi Sigma Alpha Citation for outstanding teaching in political science and the Georgia Board of Regents Hall of Fame Teaching Award. Arguing the negative side of the resolution is Dr. Paul Swick. He's a professor of economics and finance at the University of Mount Olive. At last year and this year, he taught the BB&T classes on free enterprise at North Carolina State University. He earned a BA from Hillsdale College in Michigan, an MA from Tulane University in Louisiana, and a PhD from Auburn University in Alabama. He has taught classes at several colleges and universities, such as Auburn University, Campbell University, and Walsh College. He's been published in several academic journals and lives in North Carolina with his wife, his son, and two daughters. Let me outline for you the format of the debate. We'll begin with a six-minute opening statement from each side. That'll be followed by four-minute responses from each side and then another set of four-minute responses from each side. Following that, we'll have some time for questions from our audience of students and then two minutes of closing statements from each side. Again, the resolution on the table is that market regulations are necessary and beneficial to a healthy society. We'll begin with an opening statement from Dr. Peter Lindsay arguing for the affirmative. Thank you very much. Okay, the statement, the question here, regulated markets are necessary and beneficial to a healthy society has to be true. And it has to be true for the simple reason that all markets, by their very nature, are regulated. And so in truth, the statement is no different than the statement that would read markets are necessary and beneficial to a healthy society. If that statement is true, and I believe that it is, then this one has to be true as well. Another way to look at it is the following. You could say, regulated markets are necessary to society. Full stop. They have to have them. So let's be clear. The issue here is not regulation. It's whether regulation in question is good or bad. Some regulation is. Some regulation is problematic. But it would be incredibly simple-minded, I think, to claim that regulation is bad per se. If you don't believe me, try to imagine a completely unregulated economy. In this economy, you couldn't use money. Currencies require some sort of standardization, and thus regulation of their use. Buyers and sellers would have no recourse in the event of fraud or even theft. Those too also require regulation, regulation about what property rights involve and what the basic procedures of tort would be. Again, regulation. So the point is simple. All meaningful economic transactions in anything beyond a very primitive barter society will involve some basic rules. Rules that regulate behavior. Rules that dictate the terms on which people will exchange goods and services. So if I sell Paul and Apple, and there are rules that say it has to actually be an Apple, and if it isn't, Paul will have some recourse against me. Rules like that actually change the terms on which Paul and I will exchange, but of course, exchange needs some background rules. And these rules regulate the way in which people act in the market. They determine, for instance, how long I can own a patent, what my trademark protection entitles me to, how high in the sky or low beneath the ground my property extends. They determine whether I can build an addition on my house, even if it blocks the solar panels on your house. Rules determine if I can pass through your property to get to the beach at the other end. Property, private property, can only exist if there is some common understanding about what the rules are and make no mistake. Those rules regulate our actions. So in a certain sense, property itself is nothing but a regulation. It is the state regulating our social behavior. It is the state telling us you can't go there because somebody else owns that land. It's the state telling us, oh no, you can't take off with that loaf of bread because that belongs to somebody else. When we're dealing with a property society, there is no government-free action. Everything we do is in some way regulated by the body that creates and enforces property. Again, the only question to ask of that body is, is the way in which it's regulating our actions good or bad? Now, that's an empirical question. It's a question we can ask by looking at the actual reality. But make no mistake, any new regulation doesn't stop exchange and it certainly doesn't end property as we know it. It doesn't change in any fundamental way what goes on in a market. All it does is change in a minor level the calculations that people do as they engage in market exchanges. So to give an example, most models of market activity assume what we call perfect information. And they assume that consumers and producers know everything there is to know. And the assumption is there because people only buy things, according to the model, if the marginal utility it brings them exceeds the price. And so we need to assume that they know what brings them marginal utility. But of course perfect information is a myth. People don't have perfect information and largely because it's a myth and to facilitate consumer knowledge all industrialized market societies have in the past 100 years instituted consumer information regulations. Regulations that require producers to label products with their ingredients and to give warnings about the potential hazards of those products, hazardous materials or substances. Does that involve coercion? Are producers somehow less free? Well, I mean sort of. Except that they're no less free than the people they're competing with. And that's what really matters. But one thing for sure is that consumers are more free. They're more free because they don't have to just rely on the producers. They don't have to trust their producers that they're going to sell them what they think they're going to sell them. They don't have to track down the information themselves. Now they can do what the model suggests. They can make informed decisions. And what will that do? It'll increase the odds of what we call a Pareto optimal outcome precisely what the market is supposed to create. So yes, consumers and producers make different decisions than they would before such a regulation goes into effect. But from a market perspective, that will perhaps be good. That's not all regulations do, by the way. Regulations facilitate market exchange in many other ways. And another example quickly because I'm running out of time is environmental regulations. Why do we have these? We have these because in a certain sense the market has already failed. Costs are being borne on non-participants in the market. If you live downstream from a mountaintop removal site, you are effectively subsidizing the mining company. You, with your polluted drinking water, are picking up the costs of its production. A regulation here, a new regulation, what we call a Paguvian tax, merely says no, producers, producers, not innocent bystanders, need to pick up those costs. So the regulation would change the terms of exchange, yes. But in doing so, it would make the exchange more closely approximate the ideals of the market. Now, that's the broad conceptual overview I want to give you. I want to leave you. That's all I have time to discuss in these opening statements. But I'm happy with the remainder of this debate to discuss particular regulations and discuss whether they're good or bad. In fact, I would welcome that. That's to say I'd welcome the kind of reasonable discussion we need to have about regulations, one that looks at them on a case-by-case basis and asks both about their effects, intended and otherwise, and also about the consequences of not having those regulations. Thank you, Dr. Lindsey. Dr. Swift to the negative. Thank you. I'd like to thank Fee for hosting this debate. I'd like to thank Dr. Lindsey for joining us. There's a couple of things that I'd like to point out, and it's the word regulation. Dr. Lindsey says that all markets are regulated. Well, I'll agree that there are rules that are necessary, that I agree that private property rights are necessary for a well-ordered society. But if we're going to define that private property rights are regulatory, I don't think that's really in the spirit of what we're trying to do, because I'll concede that private property rights are necessary. But I think what we're really looking at in the terms of the spirit of the debate is the rules and the regulations that government micromanages our economy. And this is a significant problem. In 2008, the household burden of rules and regulations and taxes was $37,962 a year. For businesses, one out of every $3 earned goes to compliance for laws and regulations. For small businesses, that's under 20 employees. The regulatory cost per employee was $10,585 per employee. For medium businesses, that's between 20 and 499 employees, it's $7,454 per employee. And for large businesses, it's well over $7,700 per employee. What this adds up to is a regulatory burden of $1.75 trillion in our economy. And that was up 3% over the five years between 2003 and 2008. All of these numbers that I have been giving you come from a study that was conducted in 2010, and the data ended in 2008. That means what? That means George Bush. This does not include the Obama administration. These numbers do not include all of the new regulatory burdens that come into effect with the Health Care Act or any of the other sorts of regulatory burdens that have been placed in the economy since his election. Why is this important? Why is this important to business? Well, businesses have this thing called a gross margin. Suppose the gross margin is 25%. That means when I earn a dollar of revenue, $0.75 go to paying for the labor for the electricity and the other inputs. The other 25% goes to overhead. If I'm breaking even. But if I'm not breaking even, let's say I'm earning a loss. Suppose there's a recession and so I'm earning a loss of $1,000. In order for me to make up that difference, I would need to sell $4,000 a new product in order just to break even. So 25% of $4,000 is that $1,000 whole. But instead, I might not be able to increase the amount that I sell. How else do I make a profit? I need to cut my costs. Well, I could look at some of my employees and say, I need to cut $1,000. I'm sorry, you have to go. But a more expedient way is to cut the burdensome rules and regulations that we see are imposed on business. Now, business is necessary and fundamentally good because it enriches our lives. It allows us to be more. So when we're looking at rules and regulations, we cannot just simply say, well, they're good rules and they're bad rules. Okay, we can agree that there are bad rules. And that's what I want to focus on. Now, let's look at some of the things that Dr. Lindsay has said. He said, well, of course we need rules and regulations when it comes to money because we don't have a standard of value otherwise. Well, that's not true. We can easily have a competitive currency. Multiple banks can have multiple currencies and they will compete in the marketplace in which we will see that different values and different purchasing powers emerge. And so there is a regulation that emerges out of a market. But that's not the sort of artificial regulation that we're discussing today. You see, just because there is an order, that's not the same as an imposed artificial ruler regulation. So I don't think that we should assume that if we decrease or get rid of governmental rules and regulations, that we're going to have no order. So do we need recourse for fraud? I think yes. But is that something that is regulatory? Now, I think that what we end up seeing is that rules and regulations in the modern context are the sort of micromanaging that says, you are only allowed to take such and such job if you get this license. In North Carolina, you need a license for over 186 jobs. You need to get a license if you want to braid hair. You need to get a license if you want to be a chick dealer, if you want to be an egg inspector. All of these sorts of things constrain and confine us so that we cannot live the lives that we want to be. And so for a better society, a more healthy society, I say let individuals be free. And will an order emerge spontaneously out of the marketplace? Yes, absolutely. Thank you, Dr. Swick. A four-minute response from Dr. Lindsey. Okay, just back to my basic point, that Dr. Swick wants to say that there's a problem with my eliding all rules with regulations. But indeed, a regulation is simply a rule that dictates the terms on which people make exchanges. And so there's really no principle distinction to be made between any regulation and any rule that people have to abide by in a well-ordered market. The only question to ask is, does that particular regulation inhibit exchange in a way that's unacceptable? Does it lower Pareto optimality in the market? Does it make societies a whole less operative? And those are individual empirical questions. But Professor Swick talks about the burden of regulation. So you can add up the compliance costs of regulation, and these numbers sound astounding. But don't forget that within any sector of the economy, every firm that's abiding by these regulations is competing with other firms that are abiding by these regulations. So it's not giving them a competitive disadvantage with the firm with whom they're competing. It's simply, again, changing the terms everyone has to abide by these regulations. But the real question to ask, if you're going to bring up the costs, why bring up the costs and not discuss the benefits? Let's be clear. Benefits of regulations are things that people tend to overlook, because they think, oh, they're being coerced. Well, yeah, to some extent, all rules coerce you. The question is, what about the rules that coerce us in a good way? For instance, how about having a police force, or how about having a court system that coerces you, by the way, because we think that having laws that are abided by in a decent society, actually, while they do constrain us, ultimately increase our freedom. So let's talk about the benefits. Let's talk about the benefits. And again, I go back to environmental regulations. Yeah, yeah. There are restrictions put on what people can do, what Exxon can do. But would we really be better off? Would we be more free if these restrictions weren't put on them, if they could simply pollute the environment that all of us have to live in, even non-participants to those markets? So it's fair to say that these things are expensive, but it's not fair to say they're expensive and not talk about what the expenses bring. I could later, as we go down, I'll ask persons which regulatory agencies and which rules he'd like us to do away with, and we should take a look at what those agencies do and ask ourselves, you ask yourself whether you really want to live without some of these regulatory agencies that exist. Finally, you know, to say that we could have competing currencies, I mean, countries used to have. I traveled in Italy in the 1970s, and every local city had its own currency. So once you left one city and went to the other, unless you exchanged all your money, you were out of luck because the next town wouldn't use the same currency. This, aside from, I'm unconvinced that this would be workable, but even if it were workable, you would have currencies as essentially consumer products. And then what would that imply? Well, even a well-regulated market, a well-ordered market society, those products need to have some regulatory oversight. We need to have some assurance that the product you're buying is of the value that it says it is, that there's something backing it up. So again, just going to multiple currencies doesn't do away with a regulatory society. In fact, I would suspect it would increase the amount of regulation that goes on. Thank you, Dr. Lindsey. Dr. Swick, four minutes. Excellent. I appreciate your comments about the Italian cities. And I do agree that technology will help, so that you don't have to immediately exchange currencies every time you cross the border. In fact, today we can just use our bank cards, and I go to another country, and we can visa a MasterCard or whomever will do a spot market transaction. And so all I will ever really need is a bank card. But this is also getting to some more of your fundamental points. How do we know that it's going to be safe? How do we know that without government over there, overseeing that we're going to get some benefit? And he asks, well, what are some of these concrete examples? Well, let's look at some of these. Let's look at lawyers, right? You need to regulate the lawyers because they could be crooks. Well, I ask you, what law school did Abraham Lincoln go to? Well, he didn't go to a law school. He did what? He read some books in the market, said whether or not he was a good lawyer. Does a government license on his wall guarantee that he's going to be a good lawyer? No. What about all of these electronic products in front of us? How do we know they just won't explode? Well, they have a little sticker on, says UL, Underwriters Laboratories. Well, which government agency makes sure that these electronics won't explode? Well, no government agency, Underwriters Laboratories, is a private firm. Well, can't we just bribe them to put the stickers on there? Well, if they do that and it goes and explodes, what happens? We see that UL loses its reputation. There are market consequences and its entire business disappears. Well, maybe for electronics and maybe for lawyers, but what about education? We need education. We need to make sure we get quality education. Mount Olive is accredited. Well, what government agency? No government agency accredits my business school. It's a private association. And what we see is that this continues on. What about doctors? Do we need licenses for doctors? Well, what if they make a mistake? Only a government license on a wall guarantees that, right? No, of course not. Why not have private associations that will certify and rate them? Say, well, that's a AAA rated hospital over there and that's not the same sort of rating system or not the same sort of rating for that hospital and such. And so you can pick and choose as to what sort of quality that you want in terms of health care, in terms of education, in terms of lawry, in terms of all these different things just as we see today in terms of higher education. Now, when it comes to other things, like what regulatory agency would you get rid of? I'd get rid of FDIC. What? How can that be? Doesn't that protect the person who wants the bank goes under? Yeah, but it also has perverse incentives built into it. FDIC creates an unstable banking system because it takes away the fear of mismanaging other people's money. We accuse bankers all the time of being greedy, but the only thing that checks, greed is fear. And what we clearly see is there's not enough fear of loss and that's what happens more often when it comes to rules and regulations. It becomes crony capitalism. It protects special interests. It keeps out competition. It makes things more expensive. It makes things more dangerous, more hazardous. And he says, so why is this so bad? It doesn't create an uncompetitive edge business to business. Well, that might be true because we're all in the same boat, but it slows the entire economy down and makes us worse off. Now, I will get to the environmental thing, but I think I've run out of time, so we'll talk about that in a second. Dr. Lindsay, four minutes. I mean, the only thing that I would have fear of in this scenario without the FDIC is a bank run that would cause social panic. Anyone who remembers or who read history books of the 1930s and the Great Depression will remember those. Those are, that was what brought about the FDIC. President Roosevelt instituted the FDIC in order to prevent the social havoc and the danger that was brought about from it. In terms of, you know, independent rating agencies, then the question arises, well, who's going to rate them? Who's going to rate the independent agency? Who's going to oversee to make sure that the agencies that are attempting to protect consumers are actually doing their job? We know Standard and Poor didn't actually do much prior to the 2008 meltdown. There should have been better oversight there. Let's talk about the history of federal regulation. In 1905, the Meat Inspection Act was passed. It was passed because meat producers actually wanted to have some federal oversight so that they could restore consumer confidence that was waning because of the poor conditions in a lot of the meatpacking industry. If you've ever read The Jungle by Upton Sinclair, you'll remember that. So it is a natural outgrowth of the market that independent producers will look to have some sort of accrediting agency or some sort of licensing agency and they'll look to the federal government because that will provide consumers with the most confidence and indeed has. You would expect to find, if the claim about deregulation were true, you would expect to find that societies that are the least regulated are the most productive. But there is actually no empirical evidence to show that less regulated economies or governments with smaller governments are more successful in any index of economic performance in capital formation, in national wealth and income, in unemployment, in inflation. The conclusion we have to have is, we have to see is that there is no measure of economic performance that can be tied with less regulation and less government. Look at the real success stories of the post-war period. The United States, when our marginal income tax were up to 90% in the 50s and 60s, was incredibly robust and productive. Western Europe still is. You would expect to see if these claims of stagnation were true as a result of regulation, you would expect to see some correlation between high rates of regulation and poor economic performance. You simply don't. You want to see a government or an economy that is under-regulated, it doesn't have much regulation. Look at post-Soviet Union Russia. This is crony capitalism. Why? Because there isn't a strong enough central government or federal governments to keep economic actors in play. Let me close my remarks by just thinking about financial regulations in general, because Paul picked out banks as potentially being unregulated. We had vigorous, vigorous financial regulations in this country in the post-war period and in the 50s and 60s, they operated very, very well. Early in the Reagan administration, we started deregulating banks as to what they could do, their lending practices. It led to SNLs, which led to the SNL crisis that ended up costing taxpayers billions of dollars. There was a second round in the Clinton administration of financial deregulations, and what did that bring us? The financial meltdown of 2008. Say what you will. I mean, I think that the evidence shows that the regulations are wanted by producers and consumers. They increase our information. Yes, having a license from a federal accreditation board helps me when I want to go see a doctor, and it helps you when you want to go see a doctor or a lawyer. But at the bottom line is if you don't regulate, you perhaps bring on the potential future of social chaos and unrest that's going to cause some real problems. Thank you, Dr. Lindsey. Dr. Swift, four minutes. Thank you. How do we know which rating agency will be the best? Well, how do we know which soda is the best? How do we know which set of shoes is the best? How do we know which grocery store is the best? Well, that's the competitive market. He said, oh, S&P, well, they didn't do very well. Yeah, they took a big hit in their reputation, and that's what we see when we see that the big three rating agencies, S&P and Moody's have fallen, and now we see a whole bunch of new competitors like Fitch's rising to the top. He says we needed meat regulation to bring confidence back into the situation. Well, there's an article by T.S. Ashton in a high-excited book, Capitalism and Historians, and he goes back and he reads all of the transcripts to the parliament and the testimony, and he says it's not about that at all. It's really about what? It's about the industry captains wanting the rules and regulation. What? Yes, that is what Dr. Lindsey said. He said the producers want rules and regulations. Why would they want that? Because it freezes out competition. Businessmen want rules and regulations. They don't want to compete, competition is hard. Any upstart can come along and knock you off your throne. That's very, very difficult to stay at the top of your game. He says there's no evidence that smaller government shows any amount of economic growth or leads to economic growth. Well, that's just not true. The Freedom Index shows that it does. We talked about them today, all leading to economic growth. He says, well, there was a state in the 50s and 60s where we had high degrees of taxes and we look at Europe and we see that we had high growth rates, so there's no correlation there. Well, if you only look at those two things, I'd have to agree, but those weren't the only two things that were going on. We see that there was a liberalization of trade. We see that Europe's economy was recovering and that created markets for the United States and so after World War II, there was a whole lot more going on than simply taxes and growth. He says that, Dr. Lindsay has said, well, the post-Soviet Union is a good example of crony capitalism. Well, I agree with that, but who's the cronies here? Who's restricting people? Well, it's not just the illegal sector, you know, the mafia types, but it's also the government that's getting in collusion with it. That's what crony capitalism is. Now, one thing that I do want to point out is with this FDIC debate with bank runs. So that could lead to a bank run. Yes, bank runs are sloppy and messy and destructive. Yes, that's why they should be feared. Failure is a necessary option. We live in a society of profit and loss. If we take away the loss, we take away the fear and that promotes greed. That allows greed to go unchecked without that fear. So yes, we absolutely want to expose banks to that horror. Will some people get swept up if something happens? Yeah, but that happens all the time. It's not a question of can we create utopia or nirvana. It's a question of which system is more stable, which system is better in producing more goods and services and higher living standards so more people can live their lives. Now, let's go and look very briefly at the environment. We can talk about this later. But usually what happens with the environment is not that the market is causing the problem, but it's a lack of property rights. It is a misdefinition. What gets polluted is usually something that we all own in common, so nobody owns it, so there's no incentives. We have the tragedy of commons that emerge. And so if we can restructure property rights, the rules then become, I mean the regulations of a command and control economy then are not necessary. We can structure property rights that can create solutions. Thank you, Dr. Swick. We'll now move to a period of questions from our student audience. Students may ask a question of one or both of the presenters here, and both presenters will have a chance to answer any of the questions asked. Again, if you have a question, you can line up behind the microphone. They're slowly making their way there. Okay. So a lot of what we talked about this week had to do with greed, and I noticed that it didn't arise in Dr. Lindsay's arguments at all, but it did arise in Dr. Swick's. So my question would be, what role does greed play in this debate? Well, I mean, let's not say greed. Let's say self-interest and desire to increase your marginal utility. It plays a huge role. It plays a huge role. And it doesn't go away when you have a regulated market, simply because producers are told that they need to produce in a particular way. It's not going to diminish their greed and it's not going to diminish their desire to bring a product to the market. It's just going to change the terms on which it happens, and it will change those terms for everybody. So to your question, greed or self-interested behavior is at the basis at the heart of a market relationship. But that doesn't mean, by the way, and I've only gotten into regulations that can make the market perform better. It doesn't mean that we let the market ride roughshod over other values that we find important, like justice, like decency. And so greed is important, but greed needs to be checked where greed can lead to pernicious outcomes in the public interest. I'd agree with the first part of Dr. Lindsey and say, yes, greed and self-interest are a huge motivating factor, but I would also say that it doesn't stop in the private sector. It also extends in the public sector in politicians as well. Can I just concur with that? I mean, nothing that I'm saying should be taken to disagree with Paul on the issue that we don't want bad regulations, and there are many bad regulations that come about because, as political scientists say, regulatory agencies get captured by private interest. They lead to terrible regulations, and they exist, and they make the market less effective, and they don't do what they're supposed to do. It seems to me that the debate is not necessarily centered around regulations being good or bad. We all probably agree there's a certain amount of rules that need to be in a society and specifically in the market, but my question is, let's say we accept the idea that certain regulations are necessary, as I think you both probably do accept to a certain extent, but what is the extent to which those regulations should be implemented and enforced on a market? Well, again, I mean, you can't give a blanket statement to that. You need to do effective cost-benefit analysis of regulations, but in doing so you need to know how to measure your costs, so you capture externalities that exist, and you need to know how to measure your benefits, so you also capture positive externalities. There's no blanket statement to that, but the question is a great question because it brings up the fact that we actually need to look individually at regulations and what they do and what their effects are, and we need to, as the libertarian 19th century economist Frederick Bastiat would tell you, you need to actually look at the unintended consequences, so it may be over time you need to revisit regulations and tweak them. It's important to have oversight. I'm not saying regulate, regulate, regulate, I'm saying regulate where it's prudent to do. I think... And Paul agrees. Well, I think one of the things, I mean I appreciate Dr. Lindsay's approach where he says what we need to do is a cost benefit analysis. The problem is that when we ask about costs, the true cost is an opportunity cost, which is an unmeasurable thing. And so what we end up with is a distortion on the cost side. And then we say, well what are the benefits? And the benefits that without regulation, this unseen is something that we don't know. So by regulating we close off an avenue. And by closing off an avenue we are no longer permitting ourselves to go in a direction that otherwise we may have gone. So what is the cost or the ungained benefit of that? And that's unmeasurable. And so to just say well we just look at the data and we can say what are good and bad regulations I think you need to have a philosophy that is driving whether or not these are good or bad regulations. And so for me to bring simple rules of law such as specific private property rights to allow a maximum amount of freedom is the philosophy, the freedom philosophy that allows us then to prosper in society. Thank you. Next question. Hi, yeah. I'd like to agree that market regulations do have both bad and good sides to it. But my question is why does it seem that the American people have little input into the regulations cast upon our society? The American people have little input into the regulations? Yeah, why does it seem like that? I'm not sure why it seems like that although you know we have a dysfunctional democracy in many ways but regulations are voted on in our legislative bodies at the state federal and local levels and to the extent that they're voted on by legislators who were voted the people do have a say in it. Now again there are problems with our democracy but I guess one question I would have is how democratic this libertarian philosophy is. If in point of fact people want regulations and let's be clear since the markets began and you can sort of date the insurgents of the free market to about the 1830s in England with the corn laws, the spinem land laws we have seen nothing but increased regulations to bring the market about from the previous feudal society you needed regulation to do it. You needed to the enclosure movements which stop people from being able to use public lands. You need regulations because people call upon them and so the question I have for libertarians is what are you going to say to the people who have voted on creating an agency like the Environmental Protection Agency? Oh no this is bad economics well, if a democracy wants it what's wrong with that? I think there's something egregiously undemocratic about a philosophy that says no this should be just constitutional amendments against any regulatory bodies and don't let people vote upon them if they want. To the question I haven't voted for a single regulation. I will vote for governors and senators and presidents or even electors to presidents but I've never voted for a rule or a regulation. What we see in economics is this idea of regulatory capture theory where suppose we have an industry that's being regulated well they need expert advice where do they get the expert advice from the industry that they're regulating when the person from the EPA retires and goes into private industry where do they go? They go into the very companies that they were just regulating and where do those people go when they retire? They might move back into government and so we get a revolving door and so when we look at rules and regulations and who makes these rules and regulations and for whom they are there to protect the interest and this is classic crony capitalism this is regulatory capture theory and Dr. Lindsey says well but if people want it and they vote this way what's wrong with that? Well democracy is not a value it's a system I think that values such as freedom or liberty are what we should have our eyes upon just because a whole bunch of people say hey I think we should all vote to take from Peter and give to Paul well actually I'm okay with that but other than that just because we all vote that way doesn't make it right so I don't think that catering just to the whims capriciousness of society and their passions is something that we should uphold and that's not what our country was founded on Can I just ask what your alternative would be? I mean so we have constitutional checks that protect rights are you saying do away with democracy? I'm saying that we live in a republic not a democracy and that there are constitutional checks have been weakened over time and that the return to some of these checks are what are necessary to uphold the liberties in life and private property protection that we're enshrined in the Declaration of Independence Again I'm not seeing what we're a policy that's going to tell us what to do with democracy okay okay another question Next question please So over time I think you mentioned this earlier that we need to revisit regulations and that there's a whole bunch of regulations on the books more than most people can keep track of so how do we keep up with when new markets evolve or like with the vast growth in the technology industry how do we keep up with ever changing new problems that some say need regulation without the regulation being coming out dated and hampering the economy I've never implied that regulations once they're in place should just stay there and not change especially in technology sectors regulations are going to need to change all the time but of course in a democracy you have new votes and new bills brought forward and you have regulatory agencies that in the last 50 years have cropped up that didn't exist before again to go back to the EPA it didn't exist 60 years ago so it was brought about because a new need came about and if a sector goes out of business and doesn't exist anymore then the regulations that applied to it will also go out will cease to exist so it's very fluid has to be let's get more questions I think it was fine earlier Mr. Swick brought up a point about greed and instead of looking at the aggregate market and looking at a specific piece particularly the financial markets which one could argue is one of the most regulated markets in America but people still want more if you look at specifically financial disclosure wouldn't not having regulations on such things be an incentive for fraudulent behavior and actually cause more greed than not regulating the market at all because there's an incentive for companies that have a weakness at some point to hide such weakness instead of disclosing it because it affects what their stock value is and as an investor I would want to know what that is in an unregulated market I wouldn't have that access to that information so I was wondering what your thoughts on that specific type of regulation because that's something that became ever more prevalent after scandals like the Enron scandal that's an excellent question and I see where that's coming from the sentiment is rightly placed and the first fact that you said that the financial industry is the most highly regulated industry out there so despite all of the oh we deregulated under Reagan, we deregulated under Clinton, we deregulated that is just not true there was some deregulation but there was a whole lot of re-regulation in particular we need to look at the unintended consequences of the secondary effects of these sorts of regulations let's take for one example Sarbanes Oxley the idea was to get this information out so that people wouldn't be swindled okay fine nice sentiment I like that sentiment but here's the problem with this the unintended consequence the vice president of finance or however the company organized itself the law made them personally responsible for all of the numbers so if an accountant two floors below you moved to decimal and made a mistake you are personally liable for that meaning you can be taken to court and thrown in jail for their mistake so what happened well what we saw happening is a lot of these companies went dark in other words they ceased being publicly traded and they became private companies we see that the IPO market in the United States in New York stopped capital can be like quicksilver and so they went to London they launched their companies public launch in London on the London Stock Exchange and we had a very different outcome than what we intended so for the companies that stayed in the United States we got less information and for some of those new companies those new startups that were just to go public they wouldn't open up in the U.S. they went to London as I stated at the outset regulation simply changes the terms of the exchange it's all it does but of course deregulation does the same thing and everything that Paul said with regard to the addition of a regulation would be true with regard to the subtraction of a regulation now he says that there's there was not any great deregulation but again the whole crisis cost the taxpayers of this country untold billions of dollars and that was an unforeseen consequence from deregulating and creating savings and loan institutions that could make speculative loans and the same thing happened in 2008 yes there are unforeseen consequences of any change in the rules of the system but they apply equally to deregulation excuse me to deregulation as it does deregulation that's all the time we have for questions from the audience we'll begin with our closing statements first we'll hear the closing statement of the negative side and then the affirmative side so Dr. Swick if you'd like to start okay first of all regulations micromanaging are basic ways that you lose your freedom to make choices to make your determinations they add an additional burden of disparity a burden to achievement now one of the things that got brought up a few times is what about SNL what about 2008 as soon as we deregulate you ask but why did that happen well it was like a dam and then the water behind the dam kept piling up piling up piling up and when we removed the dam while we saw a flood of change that's going to happen whether you're going to be there yes or no knowing that you're going to have that consequence those are two separate things saying that deregulation caused these problems is inaccurate it was the forces that existed before that that was causing the water to build up rules and regulations can they change yes but they cannot change on a dime in fact what we see is that laws in this country don't have sunsets attached laws in place it remains year after year after year and so we create agencies from these laws and the legislation says then the secretary shall or the agency shall and they fill these things in with rules and regulations and these rules and regulations have the full force and weight of any law that is voted upon but they're not voted upon if we're looking for a true democracy of the people then I think that we should have a free market one that is less rules less regulations because then I get to vote for what I think is the right school the right doctor the right lawyer the right electronics equipment all of that every single dollar then is a vote from me and that's true democracy thank you doctor so I've talked about regulations that are intended to relieve market failures but there are other sorts of regulations too certain market exchanges lead to problems beyond the market problems with respect to basic decency and the respect for human life some exchanges for example can lead to squalid living conditions unsafe or exploitive work environments and the question to ask in such instances is why if through the government we're creating these exchanges would we allow them to violate our senses of decency and our senses of justice why would we create economic systems in situations in which people are agreeing to work under conditions that will leave them as invalids at 35 or at 45 why would we create economic situations in which people agree to own apartments in which children could be burned and killed in fires because they're unsafe does a decent society one that truly respects freedom does a decent society allow that I don't think so let me quote from a truly great thinker regulations may no doubt be considered as in some respects a violation of natural liberty but these excursions of natural liberty of a few people which might endanger the security of the whole society are and ought to be restrained by the laws of all government who said that, Adam Smith said that Adam Smith said that in the wealth of nations that's right the classical economists Smith, Ricardo, senior mill they all advocated markets they advocated child labor laws they advocated workplace safety standards they advocated standards for new products the idea that markets are self-correcting and always rational and working to the public interest is a fiction it's a fiction that's been invented and propagated by libertarian groups in the last 40 years but the classical economists advocated government regulations because they understood something that the libertarians seem to have forgotten and that is the goal of society and that tells from the government the goal of society is to be free and for that we need in a modern mass society a government that in regulating our actions as all governments do, regulates them wisely thank you Dr. Lindsey would you join me in thanking our speakers Drs. Paul Swick and Drs. Peter Lindsey applause applause thank you very much yeah