Nov. 28th, 2011

redsage: (Default)

I am really fascinated with the above article. The story is about an injunction against new business licenses for gold buyers while the city council looks into limits on this industry.

At what point should you restrict licenses for a certain type of business to maintain profitability for existing businesses, if ever? How should a city handle a class of business that could easily be a part of blatant crime? At what point should we restrict licenses based on regulation capability?

In general, I like regulated capitalism. This article poses a lot of questions on what limits are appropriate, and I've been thinking about it all day. In theory, it seems like licensing fees should cover the cost of regulation enforcement.

I'm not sure I'm comfortable with the idea of regulating the numbers of businesses to protect profits for those already existing. It seems like some of the business owners quoted in the article love the idea of limits on their businesses because they think it will protect their profits, which seems sketchy to me. What if existing businesses offer bad deals or poor service? The golden ideal of regulated capitalism is that the best businesses win the most customers, and protecting existing businesses against competition sounds like bad news.

I am comfortable with other reasons for regulation, though. I like consumer protection laws, employee protection laws, environmental protection laws. I support profit, not rapaciousness.

For pawn shops and gold buyers, one of the most important regulations has to do with what records they should keep. Given that these places buy valuable things, it seems reasonable to make sure that these things belong to the sellers. How do you protect against the sale of stolen property without creating an undue burden on either buyer or seller?

I guess the reason I find this so interesting is that there are no right answers to these questions. Even within traditional American economic ideologies, I can imagine a pretty broad spectrum of answers for what is appropriate or acceptable.


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