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The problem is not productivity growth it's resource allocation. Markets only optimize for good market performance. Since we do nothing to stop all the non-mar

The problem is not productivity growth it's resource allocation. Markets only optimize for good market performance. Since we do nothing to stop all the non-market game playing (mainly regulatory capture, monopolies & advertising), our markets have been optimizing for firms best able to corrupt the process. Why make an ISP that delivers good speeds at a low cost when you can bribe local government to make you the only supplier? Why make good smartphone hardware when you can bundle a package of hardware, software and BRANDING! And charge vastly more? Why sell access to information people want when you can sell access to marketing information on peoples searches helping pervert the information people use for their decisions? The people in charge are too busy enriching themselves inside the existing system and as a result some huge fraction of the population is working to directly harm the interests of everyone else.

darawk 10y ago
> Why make an ISP that delivers good speeds at a low cost when you can bribe local government to make you the only supplier? Because Google Fiber will come along and eat your lunch. Hopefully anyway. > Why make good smartphone hardware when you can bundle a package of hardware, software and BRANDING! And charge vastly more? Apple does that, and they make a fine business out of it. But Android, who doesn't, is overwhelmingly the market leader. > Why sell access to information people want when you can sell access to marketing information on peoples searches helping pervert the information people use for their decisions? Are you implying that all advertising necessarily perverts decision making? Indeed, 'brand' advertising arguably does. But a lot of advertising is just about making people who want it aware of your product. If you have a need and I make a product that meets that need, and you see an ad for my product, we are both better off now, aren't we?
- bigp3t3 10y ago
  I think SuperJambo is referring to companies who use advertising to skew facts relating to their brand or others. In the US, for example, I understand that companies are allowed to practically slander each other publicly in advertising. It seems very hostile from an outsiders perspective.
- cmdrfred 10y ago
  Google fiber keeps getting sued out of existence, I don't know how you can call it a free market. http://arstechnica.com/tech-policy/2016/02/att-sues-louisville-to-stop-google-fiber-from-using-its-utility-poles/ http://arstechnica.com/tech-policy/2016/02/att-sues-louisvil...
  - darawk 10y ago
    Ya, ISP's are definitely the best argument on the other side. But Google Fiber is slowly expanding. So, I think their monopoly will ultimately be eroded.
cousin_it 10y ago
When used to allocate production, markets maximize efficiency. But when used to allocate consumption, markets often minimize happiness. For example, if you sell a glass of water to the highest bidder, then Poor Alice who's dying of thirst will be outbid by Rich Bob who wants to water his potted plant. That's not just a theoretical example, you can name ten such situations in the real world without stopping for breath. In other words, diminishing marginal utility of money means that markets are only half of the solution, not the whole solution. It's a pretty simple idea and I'm not sure why it isn't well known.
- jerf 10y ago
  If your anecdote were accurate, rich people would not have most of the things; they would have all the things. Your model is so incomplete that it is misleading you. Mind you, I'm not saying you'll love everything about the market when you understand it, but that anecdote is not a useful way of thinking about the world, because the model that it implies clearly fails to accurately model the world. Which is probably why it is not "well known".
  - asdfologist 10y ago
    I don't follow. The rich don't have everything because they don't bid for everything, which is still consistent with your parent comment.
  - asdfologist 10y ago
    I don't follow. The rich don't have everything because they don't bid for everything, which is still consistent with your parent comment.
    - jerf 10y ago
      "The rich don't have everything because they don't bid for everything," No, they can't bid for everything. It's a critical distinction to understanding how the economy works. It is impossible to create a single entity that buys everything, or a single entity that has all the money, permanently. It's literally nonsensical; the result is a form of "money" that may have the name on it, but no longer has any of the properties we associate with money. You appear to be proposing a model where the rich are voluntarily not buying everything up for some reason. Which is probably just an element of your model that you haven't examined, because my guess is that as soon as you consciously examine that, you'll experience some cognitive dissonance because I bet you also model rich people as intrinsically greedy, and thus having no reason to voluntarily not grab resources. People are really bad at following through the implications of models. They make a model, figure that the model touches reality in one or two places, then decide the model must be correct. But reality is pretty darned big, and it's really, really hard to fit "reality" into a simple model. Correct models must match reality everywhere, not just a few points. Useful models must match reality in more than just a couple of places. Follow the model's implications through.... if Rich Bob really can outbid Poor Alice for a glass of water, then why isn't the world actually full of dehydrated poor people? (Not that some people do occasionally dehydrate to death, often for reasons only loosely related to wealth issues... all the poor people should be dehydrated because the rich people are, after all, constantly outbidding them for water, apparently.) The very act of answering that question must, with mathematical force, also demonstrate why the model that produced the question in the first place is irredeemably broken. If the model is that irredeemably broken, then the question is also broken, and what it is trying to imply is also false. (Which, again, is why this result is not "well known". It's, well, not true. The fact that markets are not perfect does not mean that all criticisms of the market are automatically true.)

darawk 10y ago

> Why make an ISP that delivers good speeds at a low cost when you can bribe local government to make you the only supplier? Because Google Fiber will come along and eat your lunch. Hopefully anyway. > Why make good smartphone hardware when you can bundle a package of hardware, software and BRANDING! And charge vastly more? Apple does that, and they make a fine business out of it. But Android, who doesn't, is overwhelmingly the market leader. > Why sell access to information people want when you can sell access to marketing information on peoples searches helping pervert the information people use for their decisions? Are you implying that all advertising necessarily perverts decision making? Indeed, 'brand' advertising arguably does. But a lot of advertising is just about making people who want it aware of your product. If you have a need and I make a product that meets that need, and you see an ad for my product, we are both better off now, aren't we?

bigp3t3 10y ago
I think SuperJambo is referring to companies who use advertising to skew facts relating to their brand or others. In the US, for example, I understand that companies are allowed to practically slander each other publicly in advertising. It seems very hostile from an outsiders perspective.
cmdrfred 10y ago
Google fiber keeps getting sued out of existence, I don't know how you can call it a free market. http://arstechnica.com/tech-policy/2016/02/att-sues-louisville-to-stop-google-fiber-from-using-its-utility-poles/ http://arstechnica.com/tech-policy/2016/02/att-sues-louisvil...
- darawk 10y ago
  Ya, ISP's are definitely the best argument on the other side. But Google Fiber is slowly expanding. So, I think their monopoly will ultimately be eroded.

cousin_it 10y ago

When used to allocate production, markets maximize efficiency. But when used to allocate consumption, markets often minimize happiness. For example, if you sell a glass of water to the highest bidder, then Poor Alice who's dying of thirst will be outbid by Rich Bob who wants to water his potted plant. That's not just a theoretical example, you can name ten such situations in the real world without stopping for breath. In other words, diminishing marginal utility of money means that markets are only half of the solution, not the whole solution. It's a pretty simple idea and I'm not sure why it isn't well known.

jerf 10y ago
If your anecdote were accurate, rich people would not have most of the things; they would have all the things. Your model is so incomplete that it is misleading you. Mind you, I'm not saying you'll love everything about the market when you understand it, but that anecdote is not a useful way of thinking about the world, because the model that it implies clearly fails to accurately model the world. Which is probably why it is not "well known".
- asdfologist 10y ago
  I don't follow. The rich don't have everything because they don't bid for everything, which is still consistent with your parent comment.
- asdfologist 10y ago
  I don't follow. The rich don't have everything because they don't bid for everything, which is still consistent with your parent comment.
  - jerf 10y ago
    "The rich don't have everything because they don't bid for everything," No, they can't bid for everything. It's a critical distinction to understanding how the economy works. It is impossible to create a single entity that buys everything, or a single entity that has all the money, permanently. It's literally nonsensical; the result is a form of "money" that may have the name on it, but no longer has any of the properties we associate with money. You appear to be proposing a model where the rich are voluntarily not buying everything up for some reason. Which is probably just an element of your model that you haven't examined, because my guess is that as soon as you consciously examine that, you'll experience some cognitive dissonance because I bet you also model rich people as intrinsically greedy, and thus having no reason to voluntarily not grab resources. People are really bad at following through the implications of models. They make a model, figure that the model touches reality in one or two places, then decide the model must be correct. But reality is pretty darned big, and it's really, really hard to fit "reality" into a simple model. Correct models must match reality everywhere, not just a few points. Useful models must match reality in more than just a couple of places. Follow the model's implications through.... if Rich Bob really can outbid Poor Alice for a glass of water, then why isn't the world actually full of dehydrated poor people? (Not that some people do occasionally dehydrate to death, often for reasons only loosely related to wealth issues... all the poor people should be dehydrated because the rich people are, after all, constantly outbidding them for water, apparently.) The very act of answering that question must, with mathematical force, also demonstrate why the model that produced the question in the first place is irredeemably broken. If the model is that irredeemably broken, then the question is also broken, and what it is trying to imply is also false. (Which, again, is why this result is not "well known". It's, well, not true. The fact that markets are not perfect does not mean that all criticisms of the market are automatically true.)