The free market works

[natedogg]

This new york times piece of all places:

restuarants in Ethiopia


Ethiopian fare is eaten with one's hands, in communal fashion, making sanitation especially important to diners here. As Addis Ababa transforms itself from a tired capital city into a more modern metropolis, its restaurants are becoming more sophisticated and its customers more discriminating - at the table, and at the toilet.

In a recent edition, Fortune (a local Ethiopian paper) awarded three and a half stars (of a possible five) to Olive's Garden Restaurant & Lounge, an Italian establishment, in the "sanitation" category.

....

Before Fortune began its scrutiny, restrooms received little attention here. They were dank outposts. The joke was that waiters did not direct patrons to the facilities but just urged them to follow the smell.

...

Because of the scrutiny by Fortune, and by two Amharic-language newspapers that have begun reviews of their own, restaurants are making improvements. Angry restaurant owners have threatened Fortune with lawsuits over its tough assessments, but most have just quickly cleaned up.

"Some say we are unnecessarily cruel or harsh," Mr. Tamrat said of the reviews. "We can't satisfy everyone. But now, when someone thinks of opening a restaurant, it's in the back of their mind that some people they don't know might walk in and write them up."


Notice that these restaurants have been improving their facilities due to market pressures and publicity alone. No regulations were required.

But I won't be surprised to see local politicans passing new sanitation regulations and claiming that the world would end without these new regulations in place....

natedogg

[Cyrus]

[ QUOTE ]
Notice that these restaurants have been improving their facilities due to market pressures and publicity alone. No regulations were required.
NYT article

[/ QUOTE ] I hear you!

Let's do away with ALL sanitation regulations and enforcement by any kind of local/state/national authority and invite magazine writers to monitor that state of affairs in restaurants and hotels.

What a wonderful idea!

And the Nigerians thought it first!..

[natedogg]

[ QUOTE ]
[ QUOTE ]
Notice that these restaurants have been improving their facilities due to market pressures and publicity alone. No regulations were required.
NYT article

[/ QUOTE ] I hear you!

Let's do away with ALL sanitation regulations and enforcement by any kind of local/state/national authority and invite magazine writers to monitor that state of affairs in restaurants and hotels.

What a wonderful idea!

And the Nigerians thought it first!..

[/ QUOTE ]

You know, you're pretty good when you're talking foreign affairs. You know your stuff and you can speak intelligently to complex issues most people don't understand. You've all but convinced me out of my position on the WWII nukes.

As for anything to do with markets or economics, I've noticed, well, a drop off in quality. Perhaps we can take a lesson from the markets here and focus on our core competencies...

natedogg

PS: The article was about *Ethiopia*, not *Nigeria* but what the hell they all look the same to Europeans right? Here in America we have more exposure to diverse cultures and we are more sensitive that kind of thing I guess.

[Bob Moss]

[ QUOTE ]
[ QUOTE ]
Notice that these restaurants have been improving their facilities due to market pressures and publicity alone. No regulations were required.
NYT article

[/ QUOTE ] I hear you!

Let's do away with ALL sanitation regulations and enforcement by any kind of local/state/national authority and invite magazine writers to monitor that state of affairs in restaurants and hotels.

What a wonderful idea!

And the Nigerians thought it first!..

[/ QUOTE ]

No, that's a stupid idea. Clearly we should always defer to government whenever it's time to make a decision or form an opinion.

[Cyrus]

[ QUOTE ]
You can speak intelligently [on] complex issues most people don't understand. You've all but convinced me out of my position on the WWII nukes.

[/ QUOTE ]
Because you did not understand what I was saying? [img]/images/graemlins/cool.gif[/img]

[ QUOTE ]
As for anything to do with markets or economics, I've noticed, well, a drop off in quality. Perhaps we can take a lesson from the markets here and focus on our core competencies.

[/ QUOTE ]
Business, capitalism and the free market are, more than anything, my "core competency", as it happens.

Make no mistake, Nate: I am earning my daily bread through the workings of capitalism. I am, as it happens, a de facto capitalist.

That, however, as I have said many times before, should not stop me from questioning capitalism and all its apects, just like we should all be ready to question everything else!

...Now, if you would truly feel more comfortable entrusting your health, as far as cleanliness in restaurants is concerned, to Andrea Thompson of The New Yorker rather than a government watchdog, what can I say. This has nothing to do with capitalism, IMHO, but, rather, with common sense.

[Cyrus]

[ QUOTE ]
[sarcastically:] Clearly we should always defer to [the] government whenever it's time to make a decision or form an opinion.

[/ QUOTE ]
Your comment is irrelevant to my point. Decisions should be taken by both government and citizens. (That should be a tautology but let's not digress.) And decisions taken by either government or citizens can be good or can be bad. What else is new?

The point, though, is enforcement: Whether it is more practical, sensible and efficient to assign, for example, the enforcement of cleanliness in restaurants to a government watchdog or a magazine restaurant critic.

And, IMHO, no matter who decides about it, assigning the protection of my health completely to the "free market" is a patently stupid idea. It actually defeats a large part of the essence of the free market, which presumes that the "bad guys" (e.g. when they break the law on forming trusts, health protection, cleanliness, etc) will be punished not only by informed consumers but also by the law.

[microbet]

I'm a pretty solid freedom loving, small government supporter, but I'm fine with government health departments inspecting restaurants.

[natedogg]

The article showed how even though there were ZERO regulations on restaurant cleanliness, there was still a concerted effort by the society to establish clean restaurants.

Amazing that people can organize effective systems to achieve their social goals and values even without a government program or regulation.

Now, some might be concerned that without government codes and inspectors we'd all eventually die of food poisoning from some dirty rathole restauarant. This is what Cyrus more or less implied.

Let's examine that notion.

If we lived in a world where restaurants were completely unregulated, how would you know that you could trust a given restaurant to be cleanly?

Well for one, there's price. Anyplace with four stars and $40 entrees is going to have to poison 0 people per year to stay in business. But it seems unfair that only the rich can feel safe at a restaurant, so we must enforce codes via govt inspecters right? Wrong.

Even non-wealthy people want to live, so imagine you, a lowly middle class wage earner, have a desire to eat out one day but you want to be sure you won't die. How would any restaurant be able to assure of this?

Like many other industries such as securities and insurance and autos, there is always room for a third party analyst. If all the regulations disappeared, I would gladly start a new company that did nothing but inspect restaurant kitchens and bathrooms and put our seal of approval on the door. For a small fee.

But you might worry that we would become corrupt and certify anyone, except for that little problem we call "market share". My company must provide accurate seals of approval otherwise YOUR company will take my customers.

Even then, it might be hard for a consumer to meaningfully distinguish the quality of privatized restaurant inspectors.

Another way to add insurance that you won't die is just that: insurance.

Would you be willing to patronize a restaurant that wasn't insured for damages against poisonings? I wouldn't. So, in addition to seeing a seal of approval from "natedogg's Restaurant Inspection Corp", I'd also want to see a certificate of insurance from "Rothbards' Restaurant Poisoning Liabilty Insurance Company".

Eventually I'd only feel the need to see the insurance proof, since I woudl know that no insurance company would insure this place without having it inspected by a reliable inspector.

But, you might say, how am I to know that the insurance company is doing so? How can I be sure this insurance certificate on the door is from a company that is not only solvent, but prudent and diligent? How do I know they are not just a front?

Allow me to introduce you to "Morningstar". They rate insurance companies. If you don't see a high rating on the certificate you go down the street to a restaurant with a certificate that has one. Or if god forbid they claim a fraudulent rating, they will have to answer to Morningstar in court.

So you see, a reliable way to ensure restuarant cleanliness would certainly occur even without government regulations. And in the process, lots of profit making and job creating and investment returning, all of which does NOT occur under the more inefficient, incentive-less government version we have now.

Everytime you hear of a restaurant poisoning, and they do happen from time to time despite the regulations we have in place, do you also hear that the entire health department has been fired?

Well guess what, under the free market system, they would suffer market loss if not go out of business. Any restuarant that had subscribed to an insurance company that used an unreputable inspector would switch carriers the day after another restuarant using the same carrier had had a poisoning.

With the government system we have now, nothing changes, no one is fired, and no one has any incentive to avoid mistakes or even to work diligently at all. No one is accountable for anything that goes wrong.


natedogg

[Cyrus]

The problem with capitalists is that their triumphalism inhibits their thinking. It is quite arrogant to assume that everything that went before is leading to capitalism, that capitalism should be adopted "as-is" by every country, that the conditions in every country or region might differ (and differ radically) but capitalism should be applied exactly the same way, etc etc.

The free market works in some areas of human endeavour, and should not even suggested for others. For instance, I would challenge anyone to demonstrate that, in a road crossing, the rule of the free market (ie, no signs or lamps at all, the motorists negotiating in situ the priority) is better than total government regulation (ie traffic lights).

You are making a false assumption when you are assuming that the government, through its regulations and enforcement agencies, will guide you to the best restaurant, for example. That's not what the government is supposed to be there for! The government is supposed to be ensuring a minimum of safety, security, and fair play for one and all -- and that's all there is to it!

And if an business owner wants to go beyond what OSHA regulations require for his workshop, then he will be simply trying his initiative in the market : If enough customers reward this, his business will do well, if not, the relative cost disadvantage will force him to see things differently.

In sum, I do not want to see (a) the government regulating everything and (b) neither do I want the "free market" ruling uninhibited. The reason for (a) is because the notion of a democratic government, even in western democracies, is still a misnomer : The citizens are not the government. Rule by self-determination has nothing to do with the kind of representative governance we have. (Yes, outside the western democracies things are worse but so what? We should not be "content with what we have" but instead be trying to reach true democracy.) Therefore, the probability of abuse of power by our (western democratic) government, when it is assigned the authority to rule over everything, is enormous.

As to my unwillingness to assign to the "free market" all authority, the argument is again political: We do not have equality as citizens but as capitalists, in the capitalist system. Money truly talks - a dollar has more "votes" than a dime. I am weary of allowing decisions about human fate (and human economy rules over and affects every aspect of human life, if not the planet itself) to be taken by capital, literally by the power of financial numbers. This would be simply barbaric.

Final words : The economical is political. We have to decide first how we want our society to be governed - and then the matter of how the economy will be working is derived in an obvious manner. The Libertarians have the right approach, as a starting point, by being hostile to government intrusion, but because they go about it for mostly misguided reasons ("Out of my cold dead hands!", etc) they regress quite quickly to primitive social notions, such as survivalism.

--Cyrus

[LomU]

i always find it remarkable, the libertarian belief that man will ALWAYS act in the best interest of his finances, without doubt, ALWAYS.

and what's more remarkable to me is their even firmer belief that, man, when acting in his own best interests, the interests of others will NEVER be subverted or unfairly hurt, without doubt, NEVER.

perhaps you are correct that regulations and government involvement need not be placed on certain areas of industry, but i think, in any society, even capitalist societies, rules, limits and boundries must be set, so that the honest and hard working are to benefit, not the underhand and sly.