The market chat thread

[William Wallace]

I like how this has already devolved into the same thing it was trying to avoid; obviously, the marlet works in this case

Still, an interesting twist this time around.

That's just the nature of a P/R forum.


By the way, do you want take a stab at these?

What constitutes a market failure? It seems like a more difficult question than it initially appears to be. I doubt you could get the diverse persuasions of economists to agree, let alone the various dispensers of political wisdom.

Secondly,

I second the above

 the term "market failure" is generally determined politically rather than objectively, which is where we get all kinds of warped, ideologically based outcomes to things that, really, have simple solutions.

   
How, then, do you address market failure without resorting to the political process? Technocracy?

[Scheavo]

There is nothing wrong with a company deciding to compromise on a design decision to cut cost, but it is critical that the product is not advertised as something it is not. If they deliberately mislead consumer's on the quality or safety of the product, that is fraud. If the company executive didn't have corporate legal protection, they might think twice about doing this.

Fraud, according to a legal system that you don't accept. Again, the point isn't whether or not fraud will exist, but that companies commit fraud, and it's not some rare event. Laws against murder make sense, but no one thinks most people are going to kill people. Laws are almost for the exceptions.

Huh? It's fraud because it meets the definition of fraud, and it would be illegal in just about any legal system.

You don't accept a legal system. You accept voluntary punishment, voluntary submitance to a higher power. The worst of people won't accept this, people who commit fraud won't accept this. The Lex M didn't cover really cover criminal, murderous, evil behavior, it's not an adequate model.

I never denied they were state sponsored, what I'm denying is the reason why corporations are bad is because they are state sponsored, or that what corporations do is ONLY because they are state sponsored. Quit picking up straw men arguments. That's why I said the state does not create greed.

So you concede they are State sponsored, but sweep under the rug the ramifications of actions that are a direct result of State intervention. They are playing in the sandbox the State created for them and in many cases they helped create that sandbox hand-in-hand.

No I think you conventionally define and conceptualize corporations to fit your theory. Corporations are also groups of people; that's a distinction you don't make. Say five people want to come together, to form a business - it would then be a corporation. Think about it, are you supposed to merge all five persons finances? That would be messy, and weird. Legally acknowledging? That's a state, "sponsoring" something. Having government acknowledge them does not necessarily imply special treatment; such is a corrupt government; and they create the playgrounds hand in hand (becuase they're merging themselves).  One of the most obvious reasons a state would acknowledge a corporation is for tax purposes, which you have already said you think is a violent injustice. "They helped create the sandbox hand-in-hand" So then the corporations hand in all of these things is just going to disappear? You're pointing to a symptom of corporate / business greed, corrupting the state, and blaming the state for that corruption. It's like blaming the rape victim for getting raped.

*edit*

Your argument: greed is channeled into good ends under a free-market. It must make a profit, profit is good for the customer, etc. Profit filters out bad behavior, and equals good behavior

Counter argument: Profit can drive shady, unethical, murderous behavior.

Your response: Then they get sued

Your response doesn't defend your original argument, it acknowledges the counter-argument is true.

Good observation, I guess I should add some context to help this make more sense. I need to define the terms better for clarification. I'll also expound a bit so others can understand my comments on "greed" since we had that discussion by PM.

When I'm referring to greed in market activities, I'm referring to voluntary trade between two parties. A profit is not just "making money". When a company creates and sales a product, a profit is calculated when the revenue exceeds the expenses and resources that went into producing it. This is obviously not news to you, but it is important to see what is really going on from a macro perspective. When a company makes a profit in this way, it means they created something that is worth more than the resources that went into creating it. This is called Wealth creation. When wealth is created, the producer is rewarded for its creation and we call that a profit. Conversely, when there is a loss, wealth was destroyed because the final product is worth less than the resources that went into creating it. The producer is punished for destroying wealth and we call this a loss.

Now, you bring up fraud, intimidation and deceptive business practices being driven by greed. This may certainly be the case, but the greed is not for profits because these are non-market activities. These types of actions are non-market activities because they are violent or coercive. There are numerous names we can call them, but they all fall under the umbrella of theft. A profit/loss cannot be calculated since coercion was used because the true exchange price would be different had all information been known and both parties traded voluntarily. Instead, we can say that this was a transfer of wealth. Greed can drive wealth transfer.

So, you consider greed only as a market function, and ignore the fact that greed is a human vice; you then go on to completely blur the lines between worth, value, profits, what goes into the costs of a product, and how much they charge for a product, to perfectly fit your argument. Say I cut corners, pay people less, use a cheaper method, use cheaper materials, have lower standards, etc, etc, etc - I can make a profit, more of a profit, and not be "punished" for creating a loss. You cannot ignore how greed effects the prices, the product, and thus fundamentally determine the market.

Sometimes profits can be ill-gotten when there is State intervention. This is why Libertarians oppose regulations and intervention in the economy since certain parties will be granted priviledged status or receive additional business that otherwise would not have occured had the intervention not been in place. Even though the consumer and company make voluntary trades, this breeds malinvestment since intervention caused transactions to occur with bad market information. The causes bubbles/recessions and the business cycle. This is the context I was referring to when I stated lassaiz-faire will channel greed to increased productivity in a free market.

Human nature creates bubbles. Look up the tulip bubble in Denmark. People are social animals, they jump on bandwagons, they're lazy, greedy, and short-sighted. That creates the business cycle. Government can make this better or worse, and lately, we made it much worse (again, to corruption).

You have to be able to make distinction between regulations, and why they're in place. They're not all one and the same. Oil and Corn subsidies are obviously corrupt, they help keep the market stagnant and do harm. Guess what? I hate them. That doesn't mean that regulating harmful chemicals from my drinking water is at all the same, or regulating a company from emitting toxic chemicals into the air.

Are there economic consequences? Ya, but life isn't all about the economy. "Less Productive" doesn't mean worse, nor does "more productive" mean "better." People and the economy have gotten more productive, in technical terms, over the past decade. Most people saw no rewards for this, and we all know where our economy currently is at.

You're defining of greed doesn't solve the argument, it just calls for a proper set of terms. It's purely linguistic.

[Riceball]

By the way, do you want take a stab at these?

Well, the rationalist in me wants to believe that you can give anything to a technocrat and they will come up with a solutions, but realistically politics simply has to be responsible for deciding what is a failure of the market. Leaving it to hardcore analytics isn't efficient amd would probably, socially, not be optimal.

What irks me, I guess, is when political ideology/pragmatism gets in the way of what is logical. Take Australia's carbon pricing policy for example.

The left-leaning Labour Party holds minority government (ie there isn't an absolute majority in the lower house) due to an agreement with the Australian Greens party (those who want a giggle should look at their policy platform) have put together a plan to price carbon through a fixed price for five years then a floating price thereafter. They do this in an economy which is extensively reliant on exporting carbon-intensive goods using carbon intensive methods, at a time where this industry is almost single-handedly saving the nation from aenemic growth and higher unemployment. Now I'm for pricing carbon, thats not the issue here. What they have done with the policy is create this elaborate wealth redistribution roundabout, with tax cash raised from miners and energy generators being used to prop up Australia's old school manufacturing industries and tax breaks/increased transfer payments to their traditional powerbase, the low income blue collar worker. And the outcome? A miniscule reduction in emmissions in the Australian economy; translating to pretty much no reduction in global emmissions.

Now, a technocrat would say that yes theres a market failure going on here, but unilaterally imposing an economy-wide carbon price that doesn't do anything material for the environment but hurts the most important parts of the economy isn't solving the market failure. Yet, they persist, 95% because the Greens have them by the scrote. Thats when I sometimes wish politics didn't determine a market failure/the solution to said market failure.

[Scheavo]

Figured this might as well just go here:

Here's an open question to free-marketers:

Generally speaking, you guys don't like FDR too much, because of his expansion of the federal government. I'm not debating this, it's historically true; my question is: if, since 1932, we have lived in a country with a big, intrusive government, with a manipulative role in our economy, how have we flourished? Why should I believe that the Fed is a huge problem, cyst and disease for and on the economy, when since the Fed's institution, the economy has boomed and grown into the greatest thing yet seen?

[Rathma]

Some oversight is needed (common sense, obviously), but do you think companies are out to harm consumers?... they wouldn't have consumers then.. and they'd get sued left and right.

Goldman Sachs' selling "shitty" investments to their customers and betting against them immediately came to mind. Then there are the credit card and loan companies that would rather have customers miss a payment so they can start applying higher interest rates.