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Ok, if you're using such a broad definition of "market", then I probably agree with most of what you just said. It's not broad. It's that most people conflate

Ok, if you're using such a broad definition of "market", then I probably agree with most of what you just said. It's not broad. It's that most people conflate various discrete ideas. I personally believe a lot the current political situation was caused by a total lack of these endogenous corrective forces. You're right, and my position is that much of this is because of exogenous interference. For example, people like to talk about the post-WWII "Golden Age of Capitalism" that involved Keynesian stimulus policies to one degree or another (though there were exceptions, like Eisenhower's response to the 1958 recession). What people often conveniently omit is that the Federal Register was only a seventh the size of what it is today: https://www.federalregister.gov/uploads/2015/05/Federal-Register-Pages-Published-1936-2014.pdf https://www.federalregister.gov/uploads/2015/05/Federal-Regi... For this, I'm going with Mark Blyth's response to a similar statement about modern economic thought. You seem to think I subscribe to rational expectations or something. No, it's a basic public choice and regime uncertainty point. If anything, Blyth's comment is overly myopic and his complete dismissal of "time inconsistencies" is unjustified. The Cantillon effects of monetary policy alone are well-acknowledged across the political spectrum, and that's a straightforward example of temporal disequilibrium. EDIT: Another contradiction is the Greenspan put.

pdkl95 11y ago
I think you're missing the point re: Blyth's comment. (I probably should have explained more about my reason for in for including it) It doesn't matter if a theory is correct when "nobody knows what that sentence means!" Blyth isn't dismissing the concept of time inconsistency - he's pointing out that models that rely on people making "rational" decisions are total junk if nobody actually understands the required concepts. Models that assume people would change their behavior because of time inconsistency should never have been considered in the first place because most people don't know what the term even means. In a similar manner, I'm suggesting that while it would be nice if we could set up "markets" that self correct or allow problems to be handled locally, this might not be possible in practice.
- vezzy-fnord 11y ago
  Oh, a basic criticism of modeling assumptions is orderly. Though, your particular example of people not changing their behavior because they're unfamiliar with a specific terminology is absolutely baffling. The phenomenon exists regardless of whether people are familiar with the lexicon. Whether or not it's possible to set up markets that self-correct is a different matter. They already do to various degrees even in current hampered regimes, modulo business cycles. Though, we must extend the same skepticism towards state attempts at equilibration if we are to be consistent. But far too much doubt becomes an analytical nihilism.

pdkl95 11y ago

I think you're missing the point re: Blyth's comment. (I probably should have explained more about my reason for in for including it) It doesn't matter if a theory is correct when "nobody knows what that sentence means!" Blyth isn't dismissing the concept of time inconsistency - he's pointing out that models that rely on people making "rational" decisions are total junk if nobody actually understands the required concepts. Models that assume people would change their behavior because of time inconsistency should never have been considered in the first place because most people don't know what the term even means. In a similar manner, I'm suggesting that while it would be nice if we could set up "markets" that self correct or allow problems to be handled locally, this might not be possible in practice.

vezzy-fnord 11y ago
Oh, a basic criticism of modeling assumptions is orderly. Though, your particular example of people not changing their behavior because they're unfamiliar with a specific terminology is absolutely baffling. The phenomenon exists regardless of whether people are familiar with the lexicon. Whether or not it's possible to set up markets that self-correct is a different matter. They already do to various degrees even in current hampered regimes, modulo business cycles. Though, we must extend the same skepticism towards state attempts at equilibration if we are to be consistent. But far too much doubt becomes an analytical nihilism.