4 ms·

I wonder if the necessary prerequisites for a free market will ever become common knowledge. This approach of just not regulating markets in the hope that a fre

by DasIch 10y ago

I wonder if the necessary prerequisites for a free market will ever become common knowledge. This approach of just not regulating markets in the hope that a free market magically appears seems insane to me. It is like hitting a screw with a hammer and hoping the screw turns into a nail before the hammer connects. It never happens and you'll always get a huge fucking mess everyone somehow is surprised about. Health care is the best example. The only thing unexpected and worrisome about it is that the executives at pharma companies have just now realized that they can increase prices this way. Doesn't exactly speak well for their knowledge of economics.

SomeCallMeTim 10y ago
Saw a great talk recently that explained there is no such thing as a free market. Any market needs government oversight and laws to exist. It needs government (courts) to enforce contractual obligations. It needs infrastructure to deliver goods (roads) and to run businesses (power; water; garbage; police). All successful markets have rules. The so called "free market" proponents simply lobby for the rules to be changed in such a way that those at the top make more money; they are almost never lobbying for extra actual net freedom, but just a different skew to the rules so that they can take home still more of the profits.
- zzzcpan 10y ago
  Sounds like a pro-government propaganda. Illegal market places exist and operate successfully despite breaking laws, hiding from the police and not having anyone to enforce contractual obligations.
  - Spooky23 10y ago
    They tend to degrade into cartels. With the absence of courts, they do stuff like decapitate the competition.
    - icebraining 10y ago
      When only people who are willing to risk imprisonment participate in those markets, violence is to be expected, no? Extrapolating that to what would happen in an actual absence of law seems unsound.
      - xg15 10y ago
        That would explain the violence but not the cartels. In legal markets, monopolists have many other non-lethal but highly effective methods to eliminate competition without actually providing a better service - as shown in this article. (And yes, there are ways that work perfectly well without government intervention either, e.g. technical lock-in.)
      - Spooky23 10y ago
        Violence is only one expression of lawlessness. Price fixing, divvying up retail locations to minimize competition, etc are other more subtle things that happen.
        icebraining 10y ago
        I'm not sure there's evidence that price fixing without the State's help can last for more than a few years, is there?
  - int_19h 10y ago
    It all depends on your definition of "successfully". They are successful in a sense that they exist, and that money continues to flow. It doesn't mean that the social effects of such a market are beneficial. Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you").
    - zzzcpan 10y ago
      > Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you") I don't find this to be true, given that most are online markets.
      - int_19h 10y ago
        Even online illegal markets have coercion. Remember all that assassination stuff around Silk Road? But I also seriously doubt that most illegal markets are online. Even first world countries have actual physical black market networks for illegal goods. And if you venture into a country where corruption is routine (which is where most of the world lives), illegal markets are literally right around the corner - drugs, fake IDs, firearms, you name it. (Personal side note: it can be a very... eerie... experience when you happen to run into such a thing by accident, and realize just how close it was all the time.) And most of those physical markets definitely have coercion aplenty.
- DasIch 10y ago
  There is a difference between free markets and unregulated ones. An unregulated market is unlikely to be a free market, turn into one or stay one. Most self-proclaimed free market proponents aren't advocating for free markets at all and couldn't care less about free markets, they just want an unregulated one in which they can do whatever they want. Free markets are a tool, they don't always work (infrastructure, health care, other natural monopolies) and require careful maintenance in form of anti-trust regulation.
  - icebraining 10y ago
    Why are these conversations always filled with claims, with few arguments and no evidence? Not to pick on you specifically, it's just frustrating to see this again and again.
    - DasIch 10y ago
      The reason for that is simply that most of the time people aren't just making claims, they're referencing claims - just like I have. The arguments and evidence you think my comment is missing, isn't actually missing it's just implied. The claims I made specifically are essentially just repeating what Adam Smith wrote in The Wealth of Nations in the 18th century. This is fairly basic economics. Also not sure what the curriculum in the US (or elsewhere) is like but I learned about this in high school (well, at a Gymnasium which is supposed to be more advanced but still). I wouldn't bother to provide arguments, evidence or any kind of proofs in a discussion involving high school mathematics either.
      - icebraining 10y ago
        Yes, your post was a poor choice for my reply, I apologize.
- int_19h 10y ago
  Part of it is terminological confusion, which is, to some extent, deliberate. The original definition of "free market", as defined by Smith, was all about free competition. In other words, a market with monopolies, cartels, and other forms of collusion or regulation that inhibit competition are not free, and this applies to monopolies and barriers to entry that arise naturally. Other classical economists generally used that definition. Smith also explicitly stated that an unregulated market will usually result in a monopoly, and that government intervening to prevent that is not a bad thing (while also calling against tariffs, government-protected monopolies etc). At some later point, the laissez-faire crowd basically asserted that 1) Smith was wrong (in that unregulated markets can be monopolized), and on the contrary 2) any government regulation makes market less competitive, and therefore 3) the only free market is unregulated market, effectively conflating the two terms. For those who don't subscribe to laissez-faire economic theories, it makes sense to continue using the traditional definition, and carefully distinguish the two.
michaelkeenan 10y ago
I think I probably agree with something near your point, but I don't think your examples work. This case - where laws block the sale of internet services - isn't a case of not regulating markets in the hope that a free market magically appears. Rather, it's just bad law. Healthcare is also not an example of not regulating markets; rather, it's one of the most regulated markets in the USA. Some of the regulations are net-harmful, leading to problems like the gigantic prices of monopolized products. I think you're mistaken about high prices for monopolized pharmaceuticals being a new phenomenon. Are you referring to the EpiPen, Daraprim, Alcortin A, Novacort, and Aloquin price hikes? But high prices are typical in monopolized pharmaceuticals. For example, Harvoni costs $32,000 in the USA, while its generic version costs $900 in India. This kind of price difference between the monopoly price and non-monopoly price is common. All that aside, I agree that we can often do better than just not regulating industries. Much care should be taken to craft helpful regulations, and perhaps some kind of technology or institution can be developed to inhibit regulatory capture.
- DasIch 10y ago
  The problem isn't monopolized pharmaceuticals, other countries deal with that as well nor is it too much regulation, it's too little. Other countries simply accept that there is a monopoly and that therefore the prices will be sky high, if they allow the companies to just set the prices to whatever they want, so these governments set prices and negotiate or empower consumers. The situation in the US would be very different, if you had nationwide insurance agencies and medicare negotiating drug prices and being able to say no to drugs that provide little to no benefit.
  - michaelkeenan 10y ago
    > nor is it too much regulation, it's too little I think the framing of regulation as a spectrum of less to more is unhelpful. We don't need more regulation, we need better regulation. Some better is more; sometimes it's less.
  - pitaj 10y ago
    > The problem isn't monopolized pharmaceuticals True. The problem is IP law. > nor is it too much regulation, it's too little IP law is a form of regulation > Other countries simply accept that there is a monopoly There wouldn't be, if not for IP law > that therefore the prices will be sky high, if they allow the companies to just set the prices to whatever they want They can only set the prices so high because they have a government-enforced monopoly on those products due to IP law The US needs to focus on further opening markets. Make the markets more easily accessible to competition. That means reducing the regulatory restrictions to something reasonable and, like you suggest, opening all markets for competition from everywhere. I would love to be able to just buy catastrophic healthcare insurance for unforeseen or accidental injuries or illnesses, and just paying for healthcare checkups out-of-pocket. But is that option open to me? Not really. I'm open to considering the idea of implementing a nationwide single payer system but I'd prefer it to be handled on a per-state basis first to test how it would work, and what kinds of unforeseen consequences it would have.

by DasIch 10y ago

SomeCallMeTim 10y ago

Saw a great talk recently that explained there is no such thing as a free market. Any market needs government oversight and laws to exist. It needs government (courts) to enforce contractual obligations. It needs infrastructure to deliver goods (roads) and to run businesses (power; water; garbage; police). All successful markets have rules. The so called "free market" proponents simply lobby for the rules to be changed in such a way that those at the top make more money; they are almost never lobbying for extra actual net freedom, but just a different skew to the rules so that they can take home still more of the profits.

zzzcpan 10y ago
Sounds like a pro-government propaganda. Illegal market places exist and operate successfully despite breaking laws, hiding from the police and not having anyone to enforce contractual obligations.
- Spooky23 10y ago
  They tend to degrade into cartels. With the absence of courts, they do stuff like decapitate the competition.
  - icebraining 10y ago
    When only people who are willing to risk imprisonment participate in those markets, violence is to be expected, no? Extrapolating that to what would happen in an actual absence of law seems unsound.
    - xg15 10y ago
      That would explain the violence but not the cartels. In legal markets, monopolists have many other non-lethal but highly effective methods to eliminate competition without actually providing a better service - as shown in this article. (And yes, there are ways that work perfectly well without government intervention either, e.g. technical lock-in.)
    - Spooky23 10y ago
      Violence is only one expression of lawlessness. Price fixing, divvying up retail locations to minimize competition, etc are other more subtle things that happen.
      - icebraining 10y ago
        I'm not sure there's evidence that price fixing without the State's help can last for more than a few years, is there?
- int_19h 10y ago
  It all depends on your definition of "successfully". They are successful in a sense that they exist, and that money continues to flow. It doesn't mean that the social effects of such a market are beneficial. Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you").
  - zzzcpan 10y ago
    > Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you") I don't find this to be true, given that most are online markets.
    - int_19h 10y ago
      Even online illegal markets have coercion. Remember all that assassination stuff around Silk Road? But I also seriously doubt that most illegal markets are online. Even first world countries have actual physical black market networks for illegal goods. And if you venture into a country where corruption is routine (which is where most of the world lives), illegal markets are literally right around the corner - drugs, fake IDs, firearms, you name it. (Personal side note: it can be a very... eerie... experience when you happen to run into such a thing by accident, and realize just how close it was all the time.) And most of those physical markets definitely have coercion aplenty.
DasIch 10y ago
There is a difference between free markets and unregulated ones. An unregulated market is unlikely to be a free market, turn into one or stay one. Most self-proclaimed free market proponents aren't advocating for free markets at all and couldn't care less about free markets, they just want an unregulated one in which they can do whatever they want. Free markets are a tool, they don't always work (infrastructure, health care, other natural monopolies) and require careful maintenance in form of anti-trust regulation.
- icebraining 10y ago
  Why are these conversations always filled with claims, with few arguments and no evidence? Not to pick on you specifically, it's just frustrating to see this again and again.
  - DasIch 10y ago
    The reason for that is simply that most of the time people aren't just making claims, they're referencing claims - just like I have. The arguments and evidence you think my comment is missing, isn't actually missing it's just implied. The claims I made specifically are essentially just repeating what Adam Smith wrote in The Wealth of Nations in the 18th century. This is fairly basic economics. Also not sure what the curriculum in the US (or elsewhere) is like but I learned about this in high school (well, at a Gymnasium which is supposed to be more advanced but still). I wouldn't bother to provide arguments, evidence or any kind of proofs in a discussion involving high school mathematics either.
    - icebraining 10y ago
      Yes, your post was a poor choice for my reply, I apologize.
int_19h 10y ago
Part of it is terminological confusion, which is, to some extent, deliberate. The original definition of "free market", as defined by Smith, was all about free competition. In other words, a market with monopolies, cartels, and other forms of collusion or regulation that inhibit competition are not free, and this applies to monopolies and barriers to entry that arise naturally. Other classical economists generally used that definition. Smith also explicitly stated that an unregulated market will usually result in a monopoly, and that government intervening to prevent that is not a bad thing (while also calling against tariffs, government-protected monopolies etc). At some later point, the laissez-faire crowd basically asserted that 1) Smith was wrong (in that unregulated markets can be monopolized), and on the contrary 2) any government regulation makes market less competitive, and therefore 3) the only free market is unregulated market, effectively conflating the two terms. For those who don't subscribe to laissez-faire economic theories, it makes sense to continue using the traditional definition, and carefully distinguish the two.

michaelkeenan 10y ago

I think I probably agree with something near your point, but I don't think your examples work. This case - where laws block the sale of internet services - isn't a case of not regulating markets in the hope that a free market magically appears. Rather, it's just bad law. Healthcare is also not an example of not regulating markets; rather, it's one of the most regulated markets in the USA. Some of the regulations are net-harmful, leading to problems like the gigantic prices of monopolized products. I think you're mistaken about high prices for monopolized pharmaceuticals being a new phenomenon. Are you referring to the EpiPen, Daraprim, Alcortin A, Novacort, and Aloquin price hikes? But high prices are typical in monopolized pharmaceuticals. For example, Harvoni costs $32,000 in the USA, while its generic version costs $900 in India. This kind of price difference between the monopoly price and non-monopoly price is common. All that aside, I agree that we can often do better than just not regulating industries. Much care should be taken to craft helpful regulations, and perhaps some kind of technology or institution can be developed to inhibit regulatory capture.

DasIch 10y ago
The problem isn't monopolized pharmaceuticals, other countries deal with that as well nor is it too much regulation, it's too little. Other countries simply accept that there is a monopoly and that therefore the prices will be sky high, if they allow the companies to just set the prices to whatever they want, so these governments set prices and negotiate or empower consumers. The situation in the US would be very different, if you had nationwide insurance agencies and medicare negotiating drug prices and being able to say no to drugs that provide little to no benefit.
- michaelkeenan 10y ago
  > nor is it too much regulation, it's too little I think the framing of regulation as a spectrum of less to more is unhelpful. We don't need more regulation, we need better regulation. Some better is more; sometimes it's less.
- pitaj 10y ago
  > The problem isn't monopolized pharmaceuticals True. The problem is IP law. > nor is it too much regulation, it's too little IP law is a form of regulation > Other countries simply accept that there is a monopoly There wouldn't be, if not for IP law > that therefore the prices will be sky high, if they allow the companies to just set the prices to whatever they want They can only set the prices so high because they have a government-enforced monopoly on those products due to IP law The US needs to focus on further opening markets. Make the markets more easily accessible to competition. That means reducing the regulatory restrictions to something reasonable and, like you suggest, opening all markets for competition from everywhere. I would love to be able to just buy catastrophic healthcare insurance for unforeseen or accidental injuries or illnesses, and just paying for healthcare checkups out-of-pocket. But is that option open to me? Not really. I'm open to considering the idea of implementing a nationwide single payer system but I'd prefer it to be handled on a per-state basis first to test how it would work, and what kinds of unforeseen consequences it would have.