11 ms·

There’s No Escaping Competition: People Need a Way to Decide Who Gets What

39 points by nkurz 11y ago

em3rgent0rdr 11y ago
excellent points. Indeed, the socialists don't get rid of competition, but simply cause it to reappear in other less-productive manners.
6d0debc071 11y ago
Poor approximations of heaven will suffice for poor approximations of infinite greed.
- ArkyBeagle 11y ago
  Greed is at best an incoherent standard. For it to be bad, it has to be pathological.
  - 6d0debc071 11y ago
    I don't really disagree. For the strongest form of the author's argument; that no other system will suffice, ever; it has to be pathological. If I offered you a nice existence with entertaining leisure activities, would your response honestly be to spend the next ten years of your life lobbying for more of the pie? That's a lot of effort to expend - probably without any significant payoff since the return on happiness in terms of extra money drops off - when you could be enjoying yourself instead. You don't need heaven if people aren't that greedy, (and in my experience - UK based - most people aren't.) Some finite set of resource will suffice.
    - ArkyBeagle 11y ago
      It's reasonably clear that the people who do go beyond are either just lucky or they just like that process more than enjoying the fruits of their labor. Charles Koch was interviewed recently, and he apparently believes strongly that creating consumer surplus is more moral than not working.
asgard1024 11y ago
This article reminds me of theologians who use argument from ignorance to justify their own beliefs in one true god (basically an attempt to impose some absolute moral framework on society). OK, there is always competition, no problem here. But there are nonetheless many other systems than market decision-making, and there is no clear winner from the moral point of view. Just one example can be democratic voting about economic allocation. I would love to see him show that this is not socially optimal, without showing the same about the market system. (To simplify things, we can consider market system to be one where you can accumulate votes.) In fact, we don't even know if "socially optimal" solution exists or is unique! Also, a minor point. It's been shown that price signals work only in the environment with perfect information and rational actors, but then the price is superfluous! This well-known counterargument is not addressed at all. Someone put it nicely here on HN, once economics stopped calling itself political economics, it became much more ideological. P.S. Downvoters, please, leave a comment. I will happily have a discussion with you.
- afsina 11y ago
  For the `perfect information and rational actors` part, it is addressed by many. Just one example from the author of this article: http://fee.org/freeman/do-free-markets-require-rational-actors/ http://fee.org/freeman/do-free-markets-require-rational-acto...
- logicchains 11y ago
  It depends how you define "socially optimal". A key notion of economics is that if two people voluntarily agree to something, it must be of some benefit of them at that moment compared to alternatives else they wouldn't have agreed. A market can consist solely of such interaction. A democracy on the other hand involves people via votes controlling what other people can and can't do (in a market context, reducing their control over what, how and to whom they can exchange their labour and products thereof), which necessarily entails some kind of loss (in terms of otherwise-realised unrealised preference) from the people who are not able to do what they'd be doing absent coercion by the democracy's enforcers. Pure free-market economics adopts the epistemological stance that utility (the economic proxy for value, based roughly on the notion of value being defined as the sum of people's realised preferences) isn't quantifiable, so no potential utility gained from the results of the democratic thwarting of some people's preferences can outweigh the definite loss from those people not realising their preferences. Other schools of economics do view utility as quantifiable, so it's possible to say that there can be a net benefit from interfering with someone's preferences based on the result of democratic process. They disagree however in how utility is best quantified. Schools of thought external to economics often have measures of value that differ substantially from the economic notion of utility. In particular, any scheme that assumes the existence of moral absolutes is fundamentally incompatible with the notion of utility. It's hence important to consider that any economics that makes recommendations (that isn't just econometrics/prediction) is necessarily based on some particular philosophical propositions regarding what's valuable. Without this, economic discussion tends to degrade to people talking past each other because they have fundamentally different theories of value, fundamentally different metrics for the "optimal" in social optimality. To put it another way, whether or not there is an optimal solution depends on how optimality is defined, so discussing solutions without defining optimality is pointless.
amelius 11y ago
This doesn't seem to hold for big corporations, who will just buy out the competition when they feel like it. And that is a fundamental problem with the economy: it is not about who offers the best products (and who has the best "genes" for doing so), but it is about who has the deepest pockets. The company with the most cash can buy the best advertisements. And that company can afford even to buy marketshare in a market in which it is not even active (and crush the competition there).
- lujim 11y ago
  Maybe in the short run, but think about some (at the time) tiny companies like Apple, Google, Amazon that nabbed ideas or market share from sleeping giants like Xerox, Yahoo, or IBM. Sure in 1978, 2000, or 2003 I would have rather owned stocks in the second list respectively, but those small nibble guys in the first list were the winners by 2015.
  - amelius 11y ago
    I'm not sure. Companies are much more protective now. For instance, imagine that IBM, back in the 80s, locked up its PC ecosystem the way Apple is doing now. We would probably not have Linux now (and no BSD either), and no Google or Apple.
littletimmy 11y ago
This is not an either/or proposition. We can definitely have capitalism to decide who gets what many washing machines, or laptops and so on. We do not need capitalism to decide that everyone gets enough food, shelter, healthcare, education etc. Have socialism for the basics, and have capitalism for affluence. That way you keep efficiency without being inhumane.
- lujim 11y ago
  What if I want filet, the shelter on the ocean, the yearly checkup at the mayo clinic, and the Harvard education? Are you ok taking the ramen noodles, drab inner city apartment, va clinic, and community college if the buraeucratic equivalent of the rude lady at the dmv says that's what she considers fair?
  - littletimmy 11y ago
    Buy it. We can agree on basics, which is a yearly stipend of $30,000 from the state. Then you can work to buy what you need over and above that.
    - lujim 11y ago
      Where does your 30k come from? Do we decrease spending from other areas, increase taxes, increase debt, increase GDP, or print money? The answer is usually decrease defense spending, but that's not a free lunch either. You kill a lot of middle class jobs and consumer spending noticeably drops in some regions. The same spending that supports something like 2/3 of the GDP. Basic income is a zero sum game, it redistributes without creating productivity. Now if you gave everyone that wants to attempt to start a small business 30k to survive the first 3-5 years now your talking about something that could drive GDP.
      - littletimmy 11y ago
        Overt money financing, i.e. printing money is a good option. Especially at this point in time, when we are struggling with low aggregate demand and asset bubbles, printing money to give to the poorest makes most sense. It shores up consumer spending without contributing to asset bubbles, unlike pumping money into banks. You are absolutely wrong in that it does not create productivity. When the underclass has the ability to take risk, it enables them to take part in all that which makes capitalism great. The loss in innovation at the top is more than made up for an increase in innovation at the bottom.
vcdimension 11y ago
The article presumes that peoples purchasing choices are made rationally and without coercion, but in a capitalist society the implicit competition between consumers and advertisers can subvert rational decision making. Every day we are bombarded by advertising designed to seduce us into spending more money on products which we don't need. For example, is it really worth splashing out on a new power drill that will probably only be used to drill a few holes? Will a 2 week luxury cruise holiday bring me more enjoyment than 40 nights out with friends? Websites such as which.co.uk, uswitch.com and moneysavingexpert.com help consumers make better decisions, but they don't address financial decision making in the wider sense of personal utility. It would be nice to see some websites/apps to help with this, and I think it would be an interesting and challenging task...
known 11y ago
Your Beliefs Don't Make You A Better Person, Your Behavior Does.

39 points by nkurz 11y ago

excellent points. Indeed, the socialists don't get rid of competition, but simply cause it to reappear in other less-productive manners.

6d0debc071 11y ago

Poor approximations of heaven will suffice for poor approximations of infinite greed.

ArkyBeagle 11y ago
Greed is at best an incoherent standard. For it to be bad, it has to be pathological.
- 6d0debc071 11y ago
  I don't really disagree. For the strongest form of the author's argument; that no other system will suffice, ever; it has to be pathological. If I offered you a nice existence with entertaining leisure activities, would your response honestly be to spend the next ten years of your life lobbying for more of the pie? That's a lot of effort to expend - probably without any significant payoff since the return on happiness in terms of extra money drops off - when you could be enjoying yourself instead. You don't need heaven if people aren't that greedy, (and in my experience - UK based - most people aren't.) Some finite set of resource will suffice.
  - ArkyBeagle 11y ago
    It's reasonably clear that the people who do go beyond are either just lucky or they just like that process more than enjoying the fruits of their labor. Charles Koch was interviewed recently, and he apparently believes strongly that creating consumer surplus is more moral than not working.

asgard1024 11y ago

This article reminds me of theologians who use argument from ignorance to justify their own beliefs in one true god (basically an attempt to impose some absolute moral framework on society). OK, there is always competition, no problem here. But there are nonetheless many other systems than market decision-making, and there is no clear winner from the moral point of view. Just one example can be democratic voting about economic allocation. I would love to see him show that this is not socially optimal, without showing the same about the market system. (To simplify things, we can consider market system to be one where you can accumulate votes.) In fact, we don't even know if "socially optimal" solution exists or is unique! Also, a minor point. It's been shown that price signals work only in the environment with perfect information and rational actors, but then the price is superfluous! This well-known counterargument is not addressed at all. Someone put it nicely here on HN, once economics stopped calling itself political economics, it became much more ideological. P.S. Downvoters, please, leave a comment. I will happily have a discussion with you.

afsina 11y ago
For the `perfect information and rational actors` part, it is addressed by many. Just one example from the author of this article: http://fee.org/freeman/do-free-markets-require-rational-actors/ http://fee.org/freeman/do-free-markets-require-rational-acto...
logicchains 11y ago
It depends how you define "socially optimal". A key notion of economics is that if two people voluntarily agree to something, it must be of some benefit of them at that moment compared to alternatives else they wouldn't have agreed. A market can consist solely of such interaction. A democracy on the other hand involves people via votes controlling what other people can and can't do (in a market context, reducing their control over what, how and to whom they can exchange their labour and products thereof), which necessarily entails some kind of loss (in terms of otherwise-realised unrealised preference) from the people who are not able to do what they'd be doing absent coercion by the democracy's enforcers. Pure free-market economics adopts the epistemological stance that utility (the economic proxy for value, based roughly on the notion of value being defined as the sum of people's realised preferences) isn't quantifiable, so no potential utility gained from the results of the democratic thwarting of some people's preferences can outweigh the definite loss from those people not realising their preferences. Other schools of economics do view utility as quantifiable, so it's possible to say that there can be a net benefit from interfering with someone's preferences based on the result of democratic process. They disagree however in how utility is best quantified. Schools of thought external to economics often have measures of value that differ substantially from the economic notion of utility. In particular, any scheme that assumes the existence of moral absolutes is fundamentally incompatible with the notion of utility. It's hence important to consider that any economics that makes recommendations (that isn't just econometrics/prediction) is necessarily based on some particular philosophical propositions regarding what's valuable. Without this, economic discussion tends to degrade to people talking past each other because they have fundamentally different theories of value, fundamentally different metrics for the "optimal" in social optimality. To put it another way, whether or not there is an optimal solution depends on how optimality is defined, so discussing solutions without defining optimality is pointless.

amelius 11y ago

This doesn't seem to hold for big corporations, who will just buy out the competition when they feel like it. And that is a fundamental problem with the economy: it is not about who offers the best products (and who has the best "genes" for doing so), but it is about who has the deepest pockets. The company with the most cash can buy the best advertisements. And that company can afford even to buy marketshare in a market in which it is not even active (and crush the competition there).

lujim 11y ago
Maybe in the short run, but think about some (at the time) tiny companies like Apple, Google, Amazon that nabbed ideas or market share from sleeping giants like Xerox, Yahoo, or IBM. Sure in 1978, 2000, or 2003 I would have rather owned stocks in the second list respectively, but those small nibble guys in the first list were the winners by 2015.
- amelius 11y ago
  I'm not sure. Companies are much more protective now. For instance, imagine that IBM, back in the 80s, locked up its PC ecosystem the way Apple is doing now. We would probably not have Linux now (and no BSD either), and no Google or Apple.

littletimmy 11y ago

This is not an either/or proposition. We can definitely have capitalism to decide who gets what many washing machines, or laptops and so on. We do not need capitalism to decide that everyone gets enough food, shelter, healthcare, education etc. Have socialism for the basics, and have capitalism for affluence. That way you keep efficiency without being inhumane.

lujim 11y ago
What if I want filet, the shelter on the ocean, the yearly checkup at the mayo clinic, and the Harvard education? Are you ok taking the ramen noodles, drab inner city apartment, va clinic, and community college if the buraeucratic equivalent of the rude lady at the dmv says that's what she considers fair?
- littletimmy 11y ago
  Buy it. We can agree on basics, which is a yearly stipend of $30,000 from the state. Then you can work to buy what you need over and above that.
  - lujim 11y ago
    Where does your 30k come from? Do we decrease spending from other areas, increase taxes, increase debt, increase GDP, or print money? The answer is usually decrease defense spending, but that's not a free lunch either. You kill a lot of middle class jobs and consumer spending noticeably drops in some regions. The same spending that supports something like 2/3 of the GDP. Basic income is a zero sum game, it redistributes without creating productivity. Now if you gave everyone that wants to attempt to start a small business 30k to survive the first 3-5 years now your talking about something that could drive GDP.
    - littletimmy 11y ago
      Overt money financing, i.e. printing money is a good option. Especially at this point in time, when we are struggling with low aggregate demand and asset bubbles, printing money to give to the poorest makes most sense. It shores up consumer spending without contributing to asset bubbles, unlike pumping money into banks. You are absolutely wrong in that it does not create productivity. When the underclass has the ability to take risk, it enables them to take part in all that which makes capitalism great. The loss in innovation at the top is more than made up for an increase in innovation at the bottom.

vcdimension 11y ago

The article presumes that peoples purchasing choices are made rationally and without coercion, but in a capitalist society the implicit competition between consumers and advertisers can subvert rational decision making. Every day we are bombarded by advertising designed to seduce us into spending more money on products which we don't need. For example, is it really worth splashing out on a new power drill that will probably only be used to drill a few holes? Will a 2 week luxury cruise holiday bring me more enjoyment than 40 nights out with friends? Websites such as which.co.uk, uswitch.com and moneysavingexpert.com help consumers make better decisions, but they don't address financial decision making in the wider sense of personal utility. It would be nice to see some websites/apps to help with this, and I think it would be an interesting and challenging task...

known 11y ago

Your Beliefs Don't Make You A Better Person, Your Behavior Does.