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Lazy8

Lazy8 Avatar

Location: The Gallatin Valley of Montana
Gender: Male


Posted: Dec 7, 2019 - 8:32pm

NoEnzLefttoSplit wrote:
Circular reasoning.. you do have a desired socio-economic result: "a free society where as many different ideas of what the ideal society is as possible can be tried and where ideas can succeed on their merits."

That is not an economic outcome, it's a political one: the laws that govern us, not how we prosper under them. I have no interest in picking winners and losers.

FWIW, I totally concur. That is also the kind of society I want to live in. We just differ radically on how to get there.

In my opinion the biggest threat to our common ideal is not the (frequently selfless) efforts of the thousands of people out there fighting for equal opportunity and access to free education and healthcare as you seem to fear but the efforts of large corporations trying to milk a market to their own advantage.  Since you seem to have no aversion to the concept of monopolies, let's widen the term to include market consolidation. I assume you accept that there has been a huge drift towards market consolidation over the course of the last fifty years. Disruptive technologies aside, do you not see any dangers in this?

You seem to be having some difficulty grasping a concept, so I'll try again: pointing out that your preferred approach to opposing monopolies is counterproductive is not equivalent to an endorsement of monopolies. For the record: I don't like monopolies, but the historical record does not show them to be a natural state in a free market. They are always propped up (against market forces) by the interventions of a state or state-like actor.

There are so many examples out there I am not sure where to start. A lot of my business is in the automobile industry (German). It's not much fun being a supplier to the OEMs, believe me. You have zilch bargaining power and the only response and, quite often, the only way to survive, is to consolidate with other suppliers to increase your own bargaining power. You either accept their terms or you are out of business.

You could do what I (and most of the 7.5 billion of us on this planet) do: don't take the money. Work for someone else.

I will point out that the German state of Lower Saxony controls 20% of the voting shares of Volkswagen Group, and that the automobile industry is one of the most heavily regulated in the world. Don't believe me? Try and start an automobile company in Germany and see how far you get. All those regulations are a formidable barrier to entry, one you can't overcome with a better product or clever manufacturing.

Those regulations are government interventions.

Another example, a current one as it turns out, as we had our dishwasher here in Auckland repaired today. The Chinese guy who repaired it said it was nearing the end of its life and sooner or later we would be forced to replace it. "But don't buy an expensive one. Buy a cheap one. They are all the same on the inside. And all new ones have a shorter life than the old ones. Cheap just means noisier."
I happen to know he is right. According to a report I did recently there are only three suppliers of front panel systems for dishwashers worldwide. Due to the oligopoly in the market they are purposely building machines with shorter lives. How can this possibly be good for the consumer - or the environment for that matter?

Controlling a dishwasher isn't a terribly difficult task; I bet I could find a dozen companies who could do it on Alibaba in half an hour. I deal with more suppliers than that (for very similar controls for the products I design) here in the US.  If you don't want to use one of those three companies (and don't want to make your own dishwasher controls—not a terribly daunting task) I can set you up. Might cost more than a dedicated supplier with a generic product, but if you want to differentiate your dishwasher from the 20-odd brands out there it would be a good way to do it.

The anecdote sounds bogus on its face. Maybe there are only three specializing in dishwasher controls—haven't read your report. With as many global appliance brands as there are (and a very competitive marketplace) differentiating yourself with a longer-lived product is a viable strategy, it just costs more. A free market lets the buyer make that tradeoff: is an extra year of life worth the resources I have to dedicate to it? Restricting those choices means that a lot of potential dishwasher owners would be priced out of the option.

Or what about Nestle buying up the rights to water wells in Africa in order to sell their bottled water to a captive market - water wells that traditionally were seen as common property?

Common property...who could that have been making that sale? A...government, perhaps? Otherwise how did anyone get ownership of the water source?

Assuming it actually happened at all, and isn't just another bit of anticorporate folklore.

Or US Pharma's pressure on the US government to force open the UK health market under a post-Brexit trade deal? How can such moves possibly be conducive to the common good or creating a free society?

Um...you mean a government intervening to allow more competition in a market? Yeah, can't see any good coming from that.

Not familiar with the minutiae of brexit, but I'm not seeing what this does for your argument.

If you think government regulation is not very frequently to the benefit of the consumer you are being intentionally obscurantist. Moreover, if you think there is not some kind of marriage of forces between government regulation and private sector corporate interests, you also being more naive than I hold you for. The point is keeping these forces in balance to their mutual benefit.

Yes, I'm a bad person—an obscurantist!

Say I were. That wouldn't make me wrong.

I'm pointing out a mechanism that you seem determined not to understand: that competitive forces drive bad behavior (as seen by customers) out of markets, and that government interventions into markets discourage (if not ban) the entry of competitors. The resulting monopoly draws a call for ever more regulation, erecting ever more barriers to entry. The end state of this cycle is something like regulating the resulting monopolies as public utilities; at that point they are nigh unto  impossible to dislodge.

Which brings us to the one point on which we might possible readily agree. The abuse of power (public and/or private sector) to artificially kill off any competition. Why you ascribe such abuse solely to the public sector and not the private sector beats me. I know you are a great fan of rights, something I admire most about you. But I fail to understand how removing the institutions in place to uphold these rights can be of any benefit to anyone.

Sounds more like a fast track to a Hobbesian dystopia to me.

Entrenched players get cozy with regulators because it's easier and less risky than innovating. They hire retiring regulators to help guide them thru regulatory thickets and introduce them to the people who get to make arbitrary decisions that affect their business.

They are, as you point out, responding to incentives—incentives created by regulation, not markets. Markets would have them hiring people to create better products and services, to reduce costs and better serve customers. You can't appeal to Big Brother to keep competitors at bay if there is no Big Brother.

I trust customers to know their own best interests, you do not. You see business and government as opposites balancing each other, and governments as implacable foes of monopolies.

They are hardly opposites. Government is the ultimate monopoly.
black321

black321 Avatar

Location: A sunset in the desert
Gender: Male


Posted: Dec 5, 2019 - 8:50am

interesting below...but it brings to mind, the alleged distinction between the corporation and government is in many ways false. they are both hierarchies, run by people ambitious for power and/or $. the goals of the stakeholders of both are in line as well, $ based. stockholder wants dividends & capital, voter wants low taxes & free stuff.  as the old sayings go, $ makes the world go around, but it's also the source of all evil. 
NoEnzLefttoSplit

NoEnzLefttoSplit Avatar

Gender: Male


Posted: Dec 2, 2019 - 9:54pm



 islander wrote:
 

I agree with nearly everything you've said (I used to sell services to microsoft, they told you the price you would offer to them).

I also appreciate the opportunity to search out this:



 

That's about right.

islander

islander Avatar

Location: Seattle
Gender: Male


Posted: Dec 2, 2019 - 9:37pm



 NoEnzLefttoSplit wrote:


 Lazy8 wrote:


....
I want to live in a free society—one where as many different ideas of what the ideal society is as possible can be tried, and where ideas succeed on their merits.

I don't have a desired socio-economic result. Creative people have always surprised me by accomplishing so much more than I can imagine—I'd rather just let them create and thrive on the results.

I also don't possess the conceit that if I had a desired outcome I could successfully plan for it, that my predictions would come true, or that I—or anyone—has the wisdom to plan the lives of others. I certainly don't claim the right to plan the lives of others, and I wish others would quit claiming the right to plan mine.
 

Circular reasoning.. you do have a desired socio-economic result: "a free society where as many different ideas of what the ideal society is as possible can be tried and where ideas can succeed on their merits."

FWIW, I totally concur. That is also the kind of society I want to live in. We just differ radically on how to get there.

In my opinion the biggest threat to our common ideal is not the (frequently selfless) efforts of the thousands of people out there fighting for equal opportunity and access to free education and healthcare as you seem to fear but the efforts of large corporations trying to milk a market to their own advantage.  Since you seem to have no aversion to the concept of monopolies, let's widen the term to include market consolidation. I assume you accept that there has been a huge drift towards market consolidation over the course of the last fifty years. Disruptive technologies aside, do you not see any dangers in this?  There are so many examples out there I am not sure where to start. A lot of my business is in the automobile industry (German). It's not much fun being a supplier to the OEMs, believe me. You have zilch bargaining power and the only response and, quite often, the only way to survive, is to consolidate with other suppliers to increase your own bargaining power. You either accept their terms or you are out of business.

Another example, a current one as it turns out, as we had our dishwasher here in Auckland repaired today. The Chinese guy who repaired it said it was nearing the end of its life and sooner or later we would be forced to replace it. "But don't buy an expensive one. Buy a cheap one. They are all the same on the inside. And all new ones have a shorter life than the old ones. Cheap just means noisier."
I happen to know he is right. According to a report I did recently there are only three suppliers of front panel systems for dishwashers worldwide. Due to the oligopoly in the market they are purposely building machines with shorter lives. How can this possibly be good for the consumer - or the environment for that matter?

Or what about Nestle buying up the rights to water wells in Africa in order to sell their bottled water to a captive market - water wells that traditionally were seen as common property? Or US Pharma's pressure on the US government to force open the UK health market under a post-Brexit trade deal? How can such moves possibly be conducive to the common good or creating a free society?

And no I do not think corporations are evil beings. Like markets they are not sentient and therefore lack one of the essential ingredients of being evil. Nor do I think the people running them are evil beings, though I guess they could qualify as being sentient. I know a lot of corporate managers. They are nice people doing the best job they can given the circumstances. Corporations are merely systems reacting to systemic parameters. It is what they do. Taxes are low in the Caymans? Let's move there. Production constraints are low in China? Let's move there. This is why government and concerted international regulation is paramount.

If you think government regulation is not very frequently to the benefit of the consumer you are being intentionally obscurantist. Moreover, if you think there is not some kind of marriage of forces between government regulation and private sector corporate interests, you also being more naive than I hold you for. The point is keeping these forces in balance to their mutual benefit.

Which brings us to the one point on which we might possible readily agree. The abuse of power (public and/or private sector) to artificially kill off any competition. Why you ascribe such abuse solely to the public sector and not the private sector beats me. I know you are a great fan of rights, something I admire most about you. But I fail to understand how removing the institutions in place to uphold these rights can be of any benefit to anyone.

Sounds more like a fast track to a Hobbesian dystopia to me.

 

I agree with nearly everything you've said (I used to sell services to microsoft, they told you the price you would offer to them).

I also appreciate the opportunity to search out this:

NoEnzLefttoSplit

NoEnzLefttoSplit Avatar

Gender: Male


Posted: Dec 2, 2019 - 9:24pm



 Lazy8 wrote:


....
I want to live in a free society—one where as many different ideas of what the ideal society is as possible can be tried, and where ideas succeed on their merits.

I don't have a desired socio-economic result. Creative people have always surprised me by accomplishing so much more than I can imagine—I'd rather just let them create and thrive on the results.

I also don't possess the conceit that if I had a desired outcome I could successfully plan for it, that my predictions would come true, or that I—or anyone—has the wisdom to plan the lives of others. I certainly don't claim the right to plan the lives of others, and I wish others would quit claiming the right to plan mine.
 

Circular reasoning.. you do have a desired socio-economic result: "a free society where as many different ideas of what the ideal society is as possible can be tried and where ideas can succeed on their merits."

FWIW, I totally concur. That is also the kind of society I want to live in. We just differ radically on how to get there.

In my opinion the biggest threat to our common ideal is not the (frequently selfless) efforts of the thousands of people out there fighting for equal opportunity and access to free education and healthcare as you seem to fear but the efforts of large corporations trying to milk a market to their own advantage.  Since you seem to have no aversion to the concept of monopolies, let's widen the term to include market consolidation. I assume you accept that there has been a huge drift towards market consolidation over the course of the last fifty years. Disruptive technologies aside, do you not see any dangers in this?  There are so many examples out there I am not sure where to start. A lot of my business is in the automobile industry (German). It's not much fun being a supplier to the OEMs, believe me. You have zilch bargaining power and the only response and, quite often, the only way to survive, is to consolidate with other suppliers to increase your own bargaining power. You either accept their terms or you are out of business.

Another example, a current one as it turns out, as we had our dishwasher here in Auckland repaired today. The Chinese guy who repaired it said it was nearing the end of its life and sooner or later we would be forced to replace it. "But don't buy an expensive one. Buy a cheap one. They are all the same on the inside. And all new ones have a shorter life than the old ones. Cheap just means noisier."
I happen to know he is right. According to a report I did recently there are only three suppliers of front panel systems for dishwashers worldwide. Due to the oligopoly in the market they are purposely building machines with shorter lives. How can this possibly be good for the consumer - or the environment for that matter?

Or what about Nestle buying up the rights to water wells in Africa in order to sell their bottled water to a captive market - water wells that traditionally were seen as common property? Or US Pharma's pressure on the US government to force open the UK health market under a post-Brexit trade deal? How can such moves possibly be conducive to the common good or creating a free society?

And no I do not think corporations are evil beings. Like markets they are not sentient and therefore lack one of the essential ingredients of being evil. Nor do I think the people running them are evil beings, though I guess they could qualify as being sentient. I know a lot of corporate managers. They are nice people doing the best job they can given the circumstances. Corporations are merely systems reacting to systemic parameters. It is what they do. Taxes are low in the Caymans? Let's move there. Production constraints are low in China? Let's move there. This is why government and concerted international regulation is paramount.

If you think government regulation is not very frequently to the benefit of the consumer you are being intentionally obscurantist. Moreover, if you think there is not some kind of marriage of forces between government regulation and private sector corporate interests, you also being more naive than I hold you for. The point is keeping these forces in balance to their mutual benefit.

Which brings us to the one point on which we might possible readily agree. The abuse of power (public and/or private sector) to artificially kill off any competition. Why you ascribe such abuse solely to the public sector and not the private sector beats me. I know you are a great fan of rights, something I admire most about you. But I fail to understand how removing the institutions in place to uphold these rights can be of any benefit to anyone.

Sounds more like a fast track to a Hobbesian dystopia to me.

Lazy8

Lazy8 Avatar

Location: The Gallatin Valley of Montana
Gender: Male


Posted: Nov 27, 2019 - 1:35pm

NoEnzLefttoSplit wrote:
Oh grief.. let's just do ourselves a favor and refer anyone interested to the century-long debate between Keynisan economics and classical economics.
There are a lot of better brains out there than you and I who have hammered this out ad nauseum. The real point is that there is not one single national economy out there that does not run on some kind of interventionist quasi-Keynsian framework. Sorry, that is just how it is. Imaging economics without the baggage of state intervention is ivory tower stuff. Wishful thinking. Dreams of open horizons and new frontiers. Delightfully romantic, but sorry, just a dream. The real issue is how governments should best intervene and that necessitates a discussion of economic policy. Even the most radical neo-liberals out there are ultimately basing their arguments on a desired socio-economic outcome. ALL economic discussion starts from this. Presenting the argument as a foregiven outcome "that is just how markets are" is disingenous. You are already assuming that is your desired outcome without having the balls to say it.

I don't know that Keynes had a lot to say about a tendency of free markets to devolve to oligarchies and monopolies, that seems to have been mostly a Marxist trope. In fact I don't see Keynes in particular being relevant to this discussion at all—he's just one of many who advocated for intervening in markets, mostly to counteract business cycle swings.

Adam Smith had a great deal to say about it, and the plain fact that we aren't all living under the thumb of one ginormous worldwide commercial oligarchy proves he was right.

Yes, Keynes is the fashionable orthodoxy. I'm not arguing is, I'm arguing ought.

To your credit: 1. markets not acting perfectly only makes sense within the framework of a subjective valuation (see above).  2. Yes, totally agree, markets just are. They are not sentient beings. No, I do not "blame the market". 3. you are living in one. You obviously define monopoly/oligopoly  much more tightly than I do. But for me any aggregation of bargaining power among a few market players is a distorted market. There are untold examples of this out there. I know. I serve a lot of them. (and yes, I know, disruptive technologies will come along and upend the playing field, but that still does not negate the main argument - the market is skewed.) And no, skewed markets are not just an invention of government intervention but are quite frequently an unholy alliance of the two. Nevertheless, you can have one without the other.

I'm going to repeat my challenge: show me one without the other. In particular show me a monopoly that exists without a government restraining market forces to prop it up.
I know you will never agree to this, but if you could outline to me what your desired socio-economic result is and describe to me the best economic policies to get there, we can continue to discuss things. As things stand, your argument that the market is simply "how it is", which is basically an a priori argument that the market will in and of itself generate the most desirable outcome is simply inadequate from any other socio-political perspective for it is based on the assumption that a free market (with its swings and roundabouts) is inherently the best outcome - whatever that means.

Tell me what kind of society you want to live in. Tell me what fruits of human endeavor your economic concepts will unleash and what implications they have for society as a whole. Tell me also on what belief systems and social consensus they are predicated and maybe we have something to talk about. Otherwise we will continue to talk about two very different things.

I want to live in a free society—one where as many different ideas of what the ideal society is as possible can be tried, and where ideas succeed on their merits.

I don't have a desired socio-economic result. Creative people have always surprised me by accomplishing so much more than I can imagine—I'd rather just let them create and thrive on the results.

I also don't possess the conceit that if I had a desired outcome I could successfully plan for it, that my predictions would come true, or that I—or anyone—has the wisdom to plan the lives of others. I certainly don't claim the right to plan the lives of others, and I wish others would quit claiming the right to plan mine.
NoEnzLefttoSplit

NoEnzLefttoSplit Avatar

Gender: Male


Posted: Nov 27, 2019 - 1:45am



 Lazy8 wrote:
NoEnzLefttoSplit wrote:
1 Like the fact that markets are not perfect? 2 That markets will not necessarily find equilibrium? 3 That free markets will tend towards oligopolies / monopolies and that economies with greater social equality will have higher, on average, total output?  4 Yep, I'm all for it.  I am not sure you are though.

1
First define "perfect".

Delivering some social goal that I define as inherently good is, of course, subjective.  The whole question is irrelevant: markets don't have to serve any particular goal, markets are inevitable. There is always a market, it is always in play, and people will always respond to incentives within it.

2
Like chemical reactions, sometimes the response to a stimulus is loud and chaotic, but if you let it run its course it will find an equilibrium. Humans tend to intervene before that state (overthrowing a clueless regime that recklessly inflates a country's currency before people are reduced to subsistence living, for instance) but there is always an equilibrium state—it just may not be a pleasant one.

You can blame the market (and I know you will!) but the market isn't malevolent or even sentient, it's just where the forces unleashed by various human actions play out. Failing to understand the reactions an intervention will provoke isn't a failure of the market any more than a mess in a test tube is a failure of chemistry—it's a failure of the chemist.

3
Show me one. Go ahead, I'll wait.

There are things economists call natural monopolies—spring water from a particular source, say, or Kodak film* back in the day. In the case of control of a scarce resource (Lady Gaga's voice, for instance) there is still competition of type rather than in that specific commodity. These are created (setting aside government-granted IP monopolies for the moment) by entities (Kodak, or Lady Gaga) serving customers particularly well. If they act like a monopoly (that is, as if they didn't have competition and could do whatever they liked with price or supply) they incentivize innovation and competition.

Cartels and monopolies require government intervention to enforce them. There are always incentives (within a cartel, say, or outside a monopoly) to undercut them, and unrestrained people will respond to those incentives.

So show us an oligarchy or monopoly, and I'll show you a government** intervening—against market forces—to prop it up.

4 Bring it!

*Yes, I realize that Kodak had rivals (Agfa and Fuji to name two) but their market share was tiny, at least where Kodak was allowed to compete. Kodak had excellent products and relentlessly innovated them, acting as if they had competition even when they didn't. But where is Kodak now? Their core competency didn't transfer to the technologies that replaced them, and they're effectively gone—the dominant player in a game no one is playing.

** Or quasi-governmental body—like a drug cartel—using violence and intimidation. And usually the cooperation of at least one government.
 
Oh grief.. let's just do ourselves a favor and refer anyone interested to the century-long debate between Keynisan economics and classical economics.
There are a lot of better brains out there than you and I who have hammered this out ad nauseum. The real point is that there is not one single national economy out there that does not run on some kind of interventionist quasi-Keynsian framework. Sorry, that is just how it is. Imaging economics without the baggage of state intervention is ivory tower stuff. Wishful thinking. Dreams of open horizons and new frontiers. Delightfully romantic, but sorry, just a dream. The real issue is how governments should best intervene and that necessitates a discussion of economic policy. Even the most radical neo-liberals out there are ultimately basing their arguments on a desired socio-economic outcome. ALL economic discussion starts from this. Presenting the argument as a foregiven outcome "that is just how markets are" is disingenous. You are already assuming that is your desired outcome without having the balls to say it.

To your credit: 1. markets not acting perfectly only makes sense within the framework of a subjective valuation (see above).  2. Yes, totally agree, markets just are. They are not sentient beings. No, I do not "blame the market". 3. you are living in one. You obviously define monopoly/oligopoly  much more tightly than I do. But for me any aggregation of bargaining power among a few market players is a distorted market. There are untold examples of this out there. I know. I serve a lot of them. (and yes, I know, disruptive technologies will come along and upend the playing field, but that still does not negate the main argument - the market is skewed.) And no, skewed markets are not just an invention of government intervention but are quite frequently an unholy alliance of the two. Nevertheless, you can have one without the other.
4. I already have, in days gone by, with the graph juxtaposing income equality against economic output, which you rejected out of hand. I don't know how 160 countries constitutes cherry-picking but hey-ho.

I know you will never agree to this, but if you could outline to me what your desired socio-economic result is and describe to me the best economic policies to get there, we can continue to discuss things. As things stand, your argument that the market is simply "how it is", which is basically an a priori argument that the market will in and of itself generate the most desirable outcome is simply inadequate from any other socio-political perspective for it is based on the assumption that a free market (with its swings and roundabouts) is inherently the best outcome - whatever that means.

Tell me what kind of society you want to live in. Tell me what fruits of human endeavor your economic concepts will unleash and what implications they have for society as a whole. Tell me also on what belief systems and social consensus they are predicated and maybe we have something to talk about. Otherwise we will continue to talk about two very different things.



westslope

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Location: BC sage brush steppe


Posted: Nov 22, 2019 - 12:00pm

The reason why so many support single payer medical care is the monopsony power that allows the state-run single payer to reduce drug and other treatment costs.
R_P

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Posted: Nov 22, 2019 - 10:31am

“There are many arguments for what is at the root cause of our current social dysfunction,” journalist Matt Stoller writes at the beginning of his book Goliath: The 100-Year War Between Monopoly Power and Democracy. “Various explanations include the prevalence of racism, automation, the rise of China, inadequate education or training, the spread of the internet, Donald Trump, the collapse of political norms, or globalization. Many of these explanations have merit. But there’s another much simpler explanation of what is going on. Our systems are operating the way that they were designed to. In the 1970s, we decided as a society that it would be a good idea to allow private financiers and monopolists to organize our world. As a result, what is around us is a matrix of monopolies, controlling our lives and manipulating our communities and our politics. This is not just happenstance. It was created. The constructs shaping our world were formed as ideas, put into law, and now they are our economic and social reality. Our reality is formed not just of monopolized supply chains and brands, but an entire language that precludes us from even noticing, from discussing the concentrated power all around us.”

Stoller discusses the backstory and history of this idea on this episode of The World in Time.

westslope

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Location: BC sage brush steppe


Posted: Nov 19, 2019 - 4:16pm



 NoEnzLefttoSplit wrote:


 .....
 
Like the fact that markets are not perfect? That markets will not necessarily find equilibrium? That free markets will tend towards oligopolies / monopolies and that economies with greater social equality will have higher, on average, total output?  Yep, I'm all for it.  I am not sure you are though.

 
Before I go off in all directions what are you NoEnzLefttoSplit exactly saying?  

By itself, it is incorrect to state that free markets will tend towards oligopolies/monopolies.  That only happens when the technology lends itself to significant economies and scale and/or scope.  

Not sure how you mix greater social equality into all this.    Suffice to say that rich western countries who embrace market concentration and regulate it accordingly tend to have higher material standards of living, more generous welfare states, and better socio-economic mobility which over time will result in even greater economic outcomes.



Lazy8

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Location: The Gallatin Valley of Montana
Gender: Male


Posted: Nov 14, 2019 - 8:29am

NoEnzLefttoSplit wrote:
1 Like the fact that markets are not perfect? 2 That markets will not necessarily find equilibrium? 3 That free markets will tend towards oligopolies / monopolies and that economies with greater social equality will have higher, on average, total output?  4 Yep, I'm all for it.  I am not sure you are though.

1
First define "perfect".

Delivering some social goal that I define as inherently good is, of course, subjective.  The whole question is irrelevant: markets don't have to serve any particular goal, markets are inevitable. There is always a market, it is always in play, and people will always respond to incentives within it.

2
Like chemical reactions, sometimes the response to a stimulus is loud and chaotic, but if you let it run its course it will find an equilibrium. Humans tend to intervene before that state (overthrowing a clueless regime that recklessly inflates a country's currency before people are reduced to subsistence living, for instance) but there is always an equilibrium state—it just may not be a pleasant one.

You can blame the market (and I know you will!) but the market isn't malevolent or even sentient, it's just where the forces unleashed by various human actions play out. Failing to understand the reactions an intervention will provoke isn't a failure of the market any more than a mess in a test tube is a failure of chemistry—it's a failure of the chemist.

3
Show me one. Go ahead, I'll wait.

There are things economists call natural monopolies—spring water from a particular source, say, or Kodak film* back in the day. In the case of control of a scarce resource (Lady Gaga's voice, for instance) there is still competition of type rather than in that specific commodity. These are created (setting aside government-granted IP monopolies for the moment) by entities (Kodak, or Lady Gaga) serving customers particularly well. If they act like a monopoly (that is, as if they didn't have competition and could do whatever they liked with price or supply) they incentivize innovation and competition.

Cartels and monopolies require government intervention to enforce them. There are always incentives (within a cartel, say, or outside a monopoly) to undercut them, and unrestrained people will respond to those incentives.

So show us an oligarchy or monopoly, and I'll show you a government** intervening—against market forces—to prop it up.

4 Bring it!

*Yes, I realize that Kodak had rivals (Agfa and Fuji to name two) but their market share was tiny, at least where Kodak was allowed to compete. Kodak had excellent products and relentlessly innovated them, acting as if they had competition even when they didn't. But where is Kodak now? Their core competency didn't transfer to the technologies that replaced them, and they're effectively gone—the dominant player in a game no one is playing.

** Or quasi-governmental body—like a drug cartel—using violence and intimidation. And usually the cooperation of at least one government.
miamizsun

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Location: (3261.3 Miles SE of RP)
Gender: Male


Posted: Nov 14, 2019 - 6:03am

 Egctheow wrote:
Thanks for your posts guys.

I agree that it'll prove difficult to find a consensus on how the system works, let alone what we want from it.

I've always been amazed at the "magic trick" operated by economists who say that all will be for the best if we let things go without interference   intervention. To the best of my understanding, they lay the foundation of their theory on the fact that economic agents are  rational (a basic form of rationality, granted) and  informed. That's just a joke. We're not informed. I wish there were a law that forces sellers to display the breakdown of the costs on the price tag (so much for R&D, manufacturing, transport etc.) At least you'd be able to decide who/what you're paying for beyond the thing you're buying.
In my mind's eye, the invisible hand of the economy looks like the finger

 

about that intervention...

the government framework is supposed to help protect individuals from force and fraud 

be it other individuals, groups or corporations

but what happens when it is captured via lobbying and effectively implements monopolies through special rules legalizing the force and fraud?

monopolies and corporations are government granted powers/fictions

they are a result of concentrated absolute power

monopoly (n.)

1530s, "exclusive control of a commodity or trade," from Latin monopolium, from Greek monopōlion "right of exclusive sale," from monos "single, alone" (from PIE root *men- (4) "small, isolated") + pōlein "to sell," from PIE root *pel- (4) "to sell." 

Alternative form monopole (1540s, from the Old French form of the word) was common in 16c. Meaning "possession of anything to the exclusion of others" is by 1640s; sense of "a company or corporation which enjoys a monopoly" is by 1871.

corporation (n.)

mid-15c., corporacioun, "persons united in a body for some purpose," from such use in Anglo-Latin, from Late Latin corporationem (nominative corporatio) "assumption of a body" (used of the incarnation of Christ), noun of action from past-participle stem of Latin corporare "embody, make or fashion into a body," from corpus (genitive corporis) "body, dead body, animal body," also "a whole composed of united parts, a structure, system,community, corporation, political body, a guild" (from PIE root *kwrep- "body, form, appearance").

Meaning "legally authorized entity, artificial person created by law from a group or succession of persons" (such as municipal governments and modern business companies) is from 1610s.


Egctheow

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Location: In over my head
Gender: Male


Posted: Nov 14, 2019 - 2:11am

Thanks for your posts guys.

I agree that it'll prove difficult to find a consensus on how the system works, let alone what we want from it.

I've always been amazed at the "magic trick" operated by economists who say that all will be for the best if we let things go without interference   intervention. To the best of my understanding, they lay the foundation of their theory on the fact that economic agents are  rational (a basic form of rationality, granted) and  informed. That's just a joke. We're not informed. I wish there were a law that forces sellers to display the breakdown of the costs on the price tag (so much for R&D, manufacturing, transport etc.) At least you'd be able to decide who/what you're paying for beyond the thing you're buying.
In my mind's eye, the invisible hand of the economy looks like the finger


NoEnzLefttoSplit

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Posted: Nov 14, 2019 - 1:49am



 Lazy8 wrote:

We can consider economics outside of any agenda, with the goal of simply understanding how a complex system works—just as a biologist can study life without having a plan to rearrange it. Economics can then inform policy without trying to determine it.

The temptation to meddle is irresistible, however, and as economic theories come in and out of political fashion economists often acquire the role of surgeon when prudence and humility would limit them to the role of, I don't know, anatomist or something.

What you're talking about is policy, the realm of politics. And what plays well-what can be sold to an electorate—always trumps a sound policy recommendation. This is simply reality, and as I see it the economist's role here is to educate both policy makers and the electorate. Unfortunately here as well politics trumps not just sound economics but reality itself. Pick the policy you'd like and build a wall of economic obfuscation and deception to support it. People can be convinced the sky is falling when they are historically well-off; horribly destructive actions can be doubled-down upon, Paul Krugman can make a good living bloviating when he should be a laughingstock.

So I'm urging a different set of priorities: find the truth, however inconvenient for the policy you promote, rather than gathering ammunition for the direction you see as right & proper.
 
Like the fact that markets are not perfect? That markets will not necessarily find equilibrium? That free markets will tend towards oligopolies / monopolies and that economies with greater social equality will have higher, on average, total output?  Yep, I'm all for it.  I am not sure you are though.

westslope

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Location: BC sage brush steppe


Posted: Nov 10, 2019 - 2:33pm



 kcar wrote:


.......

Most basic economic models assume equal levels of information between trading parties. And while in reality some trades would have unequal results due to one party being less informed and thus swindled, in aggregate trades should be mutually beneficial.

 
I have felt that way after a purchase when I discovered that my information set was in hindsight incomplete.

Must object to the term swindled.  For one, ethics and morality are absent from most rigorous models of behaviour.  Rightly so.  Get too close to value judgement and the discussion never ends.  One can never reject a hypothesis.

For two, information is costly.  We can cite all kinds of economic behaviour that seeks to reduce the costliness of acquiring information and analyzing it.  Popular brand names for example.  

Suppose that people who search markets pay on average lower prices than those who buy from the first discovered supplier.  Does that mean that people who, for whatever reason, only buy from the first supplier are constantly "swindled"?   

No.  





Lazy8

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Location: The Gallatin Valley of Montana
Gender: Male


Posted: Nov 10, 2019 - 2:11pm

NoEnzLefttoSplit wrote:
To put it another way:

we cannot have a rational discussion about economics until we know what aims we are pursuing (and on this we will differ):
do we want to maximize sustainability, equality,  diversity, output, or individual liberty, to name just a few?

These are not necessarily mutually exclusive aims, but they frequently are.

Secondly, in the unlikely event that we should agree on the kind of outcome we seek, we can start discussing how to get there.

In my experience, most economic discussion focuses on the nuts and bolts of how to get there when the participants  actually disagree on where that "there" is.

And then, even if we do reach some kind of consensus on where to go and how to get there, none of us can escape the fact that the future is full of surprises, despite our best research (or indeed, because of it). We are in the position of driving backwards in a very sophisticated machine at an increasing speed, using the past to extrapolate the road yet to travel.

Given all this, my personal position is very definitely one of centrism and prudence. I think we should be keeping resources in reserve for a rainy day and not maximizing their exploitation. I also think we should be maximising the well-being of the whole and not the maximum wealth of the individual (and even some billionaires agree on that). I think it is only prudent to maintain proper stewardship of the ecosystem, for its own sake. (I mean it is a system that obviously works well without human control and is the cradle in which we evolved - so why ruin it?).

your mileage (going backwards) might vary...

We can consider economics outside of any agenda, with the goal of simply understanding how a complex system works—just as a biologist can study life without having a plan to rearrange it. Economics can then inform policy without trying to determine it.

The temptation to meddle is irresistible, however, and as economic theories come in and out of political fashion economists often acquire the role of surgeon when prudence and humility would limit them to the role of, I don't know, anatomist or something.

What you're talking about is policy, the realm of politics. And what plays well-what can be sold to an electorate—always trumps a sound policy recommendation. This is simply reality, and as I see it the economist's role here is to educate both policy makers and the electorate. Unfortunately here as well politics trumps not just sound economics but reality itself. Pick the policy you'd like and build a wall of economic obfuscation and deception to support it. People can be convinced the sky is falling when they are historically well-off; horribly destructive actions can be doubled-down upon, Paul Krugman can make a good living bloviating when he should be a laughingstock.

So I'm urging a different set of priorities: find the truth, however inconvenient for the policy you promote, rather than gathering ammunition for the direction you see as right & proper.
NoEnzLefttoSplit

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Gender: Male


Posted: Nov 10, 2019 - 11:48am

To put it another way:

we cannot have a rational discussion about economics until we know what aims we are pursuing (and on this we will differ):
do we want to maximize sustainability, equality,  diversity, output, or individual liberty, to name just a few?

These are not necessarily mutually exclusive aims, but they frequently are.

Secondly, in the unlikely event that we should agree on the kind of outcome we seek, we can start discussing how to get there.

In my experience, most economic discussion focuses on the nuts and bolts of how to get there when the participants  actually disagree on where that "there" is.

And then, even if we do reach some kind of consensus on where to go and how to get there, none of us can escape the fact that the future is full of surprises, despite our best research (or indeed, because of it). We are in the position of driving backwards in a very sophisticated machine at an increasing speed, using the past to extrapolate the road yet to travel.

Given all this, my personal position is very definitely one of centrism and prudence. I think we should be keeping resources in reserve for a rainy day and not maximizing their exploitation. I also think we should be maximising the well-being of the whole and not the maximum wealth of the individual (and even some billionaires agree on that). I think it is only prudent to maintain proper stewardship of the ecosystem, for its own sake. (I mean it is a system that obviously works well without human control and is the cradle in which we evolved - so why ruin it?).

your mileage (going backwards) might vary...
NoEnzLefttoSplit

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Gender: Male


Posted: Nov 10, 2019 - 11:12am



 kcar wrote:


 kurtster wrote:

They also assume rational and predictable behaviour amongst participants.  Their inherent basic flaw.
 

It might be better to say that those models fail to take into account less than rational decisions. But my guess is that again, in aggregate, rational decisions outweigh irrational ones.
 

But rationality itself presupposes a certain framework that itself might be basically flawed due to a lack of information on the part of ALL participants or is premised on a set of faulty axioms. Just look at the erratic swings and roundabouts in public opinion over the decades since WWII. It is a pretty fickle beast.
I met a biologist who thought our current passion for exponential growth was in itself an expression of collective insanity as we race towards the edge of the petri dish. Barring additional technological breakthroughs in food production, she might be right. There are plenty of examples in history of people acting rationally but based on a set of completely flawed axioms.
kcar

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Posted: Nov 10, 2019 - 3:32am



 kurtster wrote:

They also assume rational and predictable behaviour amongst participants.  Their inherent basic flaw.
 

It might be better to say that those models fail to take into account less than rational decisions. But my guess is that again, in aggregate, rational decisions outweigh irrational ones.
kurtster

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Location: drifting
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Posted: Nov 10, 2019 - 12:23am

 kcar wrote:


 steeler wrote:


 NoEnzLefttoSplit wrote:
 
 

The common law underpinning for the magic of the marketplace is caveat emptor. let the buyer beware. Calls into question the notion that all trades are inherently mutually beneficial.
 

Most basic economic models assume equal levels of information between trading parties. And while in reality some trades would have unequal results due to one party being less informed and thus swindled, in aggregate trades should be mutually beneficial.

 
They also assume rational and predictable behaviour amongst participants.  Their inherent basic flaw.
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