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Free trade is voluntary, we choose to participate in trade because it benefits both parties. I'm interested in seeing arguments that attack SV/society but start

Free trade is voluntary, we choose to participate in trade because it benefits both parties. I'm interested in seeing arguments that attack SV/society but start from this principle?

doytch 9y ago
Are you saying that because both parties benefit then neither party can be to blame? Confirming, not sure based on your wording. If so, that assumes that both parties are going into the trade negotiations on equal footing. I don't think I'm the only one who would argue that's not the case in a great many rentseeker:rentee or owner:employee relationships. Even discarding any social or economic pressures in the current climate, the power of the rentseeker and owner allows them to shape the environment into one that benefits them more (see: lobbying and politics in the USA).
athenot 9y ago
When it comes to free-trade it doesn't need to benefit both parties, it just needs to benefit the party with the most leverage. The other side will then have to adapt.
djohnston 9y ago
Are you suggesting that, if we feel we are not benefiting from the current rent market, we can simply stop participating?
- jessaustin 9y ago
  In Hawaii lots of people live on the beach, and don't get hassled for it. (Maybe they do get hassled, but anyway it isn't enough to end the practice...) There probably should be some sort of freely available liminal space in other states to serve the same purpose. Actually it seems like some people live under bridges?
  - yequalsx 9y ago
    300 million people can't do this. By and large, save for very few people, we all have to participate in the housing market. There are also long term, detrimental effects of having a large percentage of the population living on beaches or other designated areas.
yequalsx 9y ago
Price gouging. It's not really free trade when options are limited. It's not really free trade when "free will" has been subverted. The notion of free trade sounds good at an individual level but does it really exist at a societal level? I think it's like libertarianism. It's sounds plausible at the micro level but doesn't scale well. I think the starting point you seek is itself worthy of criticism.
- jstanley 9y ago
  > The notion of free trade sounds good at an individual level but does it really exist at a societal level? The good news is "society" isn't buying and selling houses, or negotiating rental agreements. Individuals are.
  - maxsilver 9y ago
    > The good news is "society" isn't buying and selling houses, or negotiating rental agreements. Individuals are. That's not really true. If you define "society" as "large groups of people", then they absolutely are buying and selling houses, and negotiating rental agreements. In my hometown, over 50% of single-family houses are owned by major corporations. And some of those corporations are listed and traded, their stock exists in part inside wealthy and upper-middle-class people's 401Ks. "Society" is absolutely buying up houses, and negotiating rental rates.
    - vonmoltke 9y ago
      > In my hometown, over 50% of single-family houses are owned by major corporations. I'm curious as to what town this is, and how many are bank-owned properties that haven't been unloaded yet. This sounds like an unusual situation, considering the places I have lived.
      - tunap 9y ago
        Phoenix, here. If I wanted to move from my grandfathered rental in 85377(VN part of town) to 85020(crack central), I would pay more for the same sqft. My landlord mentioned raising rent back in December, I told him to list it & give me 2 weeks notice. He never received a single call in 30 days. But, yeah, it's "demand" pushing rates up. From 2013, 25% of acquisitions made by funds: http://archive.azcentral.com/business/realestate/articles/20130305wealthy-investors-keep-buying-metro-phoenix-homes-rent.html http://archive.azcentral.com/business/realestate/articles/20... edit: no shortage of For Sale & empty homes up here, too. Multi-million dollar homes are stagnating on the market for years, and subsequently, plenty are for rent, too.
qznc 9y ago
Tragedy of the Commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons Tragedy of the Anticommons https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons Unscrupulous diner's dilemma https://en.wikipedia.org/wiki/Unscrupulous_diner%27s_dilemma https://en.wikipedia.org/wiki/Unscrupulous_diner%27s_dilemma The usual solution to these problems is regulation by government.
- haltingthoughts 9y ago
  How do these apply to what we are considering here?
  - qznc 9y ago
    Which one? The high rents in SV? That would be Tragedy of the anticommons. The single resource is the land. The numerous rightsholders are the landlords and whoever profits from high rents. This assumes that zoning laws are the biggest issue and some people would argue against that. The more general question was how free trade, where both trade partners voluntarily participate, can lead to bad outcomes. The answer is that a non-trading third party can be harmed and the environment can be harmed. Those Wikipedia links provide many examples.
wavefunction 9y ago
This is a very simple statement you've made but introduced the exact issue while also glossing over it. Trade is voluntary. Free trade is an agreement between two parties. But free trade does not benefit 'both parties' unless you vivisect -for example- the American people into those that actually benefit from free trade and those that do not, largely. This is borne out by the reality we live in: that income and wealth inequality is increasing and doing so at an increasing rate and capital is accumulating due to public policies both domestic and international in nature that disproportionately favor the rentiers. The US has a lower rate of individual participation in the economy now than before NAFTA. That's a major failure in my opinion.
alistairSH 9y ago
In a perfect market? Sure. But, this is real life, not an Econ-101 textbook. In the housing market, there are regulations put in place by NIMBYs to protect their own investments. These limit the supply of housing in popular areas, driving up prices. Nothing a rentee can do but pay up or move elsewhere. In most job markets, the employer has more knowledge (about compensation plackages) and the job-seeker needs a job ASAP to avoid starving. In the case of Juicero, the toothbrush subscription, etc? Closer to a textbook-pure market, for sure.
- orangecat 9y ago
  In the housing market, there are regulations put in place by NIMBYs to protect their own investments. Econ 101 includes analyzing the effects of market interference, and in this case its predictions are exactly correct.
  - alistairSH 9y ago
    ...this is real life, not the first chapter of an Econ-101 textbook. Better?
justanotherbot 9y ago
I'm not an economist, but I'll give it a shot: the vast influx of VC money allows for the creation of unsustainable businesses designed to "disrupt" (read: eliminate) traditional players. Buyers are happy to participate because they are getting a "deal" in the short term. Those who have been "disrupted" out of a job are often left to work for those same companies. Meanwhile, the startup is trying to capture enough market share so that it can then raise rates and lower wages with less competition down the road. In other words, the traditional free trade model can be distorted by the effects of VCs who can operate with extraordinary scale of time and geography.
- banku_brougham 9y ago
  This is interesting. Anti-trust laws prevent dominant market players from tanking prices until competitors fold and are aquired. However these SV funding models allow new players to perform the same role on behalf of the owners of capital. My question: "is it the same owners, or different ones?" I'll posit: the answer tells us whether we live in a competetive marketplace or monopolistic hell-zone.
  - eli_gottlieb 9y ago
    Well the government mostly hasn't been enforcing competition laws for a few decades now, so yeah, VCs can fund startup companies to play loss-leader for a monopoly position. Hell, Peter Thiel put that strategy in his book.
- deleted 9y ago
  [deleted]
saimiam 9y ago
How about this?: Free trade used to be between roughly equal parties. You wanted juicer, someone sold you a juicer. Today, free trade has evolved into a transaction between you and the rest of humanity where you are expected to yield your information to an entity so that they can use it to better serve you and the rest of the world. For many scenarios, this symbiosis was a net benefit. Recall Nest and the promise to reduce your electricty bills by 10-15% by harnessing big data. Over time, Silicon Valley got addicted to the promise and possibility of making you yield data to it so that they could "somehow" help you live a better life. They tried to extend the idea into areas where it had no business being - a juicer or a coffee maker. And since the average human knows a bad bargain when they see one, they had to sex up the juicer or coffee maker with beautiful design, empty slogans, and beautiful models. ..which is pretty much the author's entire point if you read between the lines.
maxsilver 9y ago
> Free trade is voluntary, Except all the times when it isn't. Housing isn't really voluntary. Water isn't voluntary. Internet access isn't really voluntary. Electricity isn't voluntary. Free trade requires the option to walk away without catastrophic problems occurring in your life. Increasingly, that option doesn't exist. When the alternative is homelessness, or joblessness, or starvation, you can't honestly claim a choice was voluntary.
- haltingthoughts 9y ago
  The alternative is not homelessness, starvation, or joblessness. The alternative is the next best option. In most cases the alternative is perfectly fine. Making trade more free makes the alternative better. If it is as trivially costly to find a new job or a different appartment as finding another restaurant, then consumers have a better bargaining position.
  - eli_gottlieb 9y ago
    >The alternative is not homelessness, starvation, or joblessness. Tell that to all the malnourished people, all the homeless people, all the unemployed people, and most especially the families of everyone who literally died because they couldn't pay medical bills.
  - _jal 9y ago
    > If it is as trivially costly to find a new job or a different appartment as finding another restaurant, then consumers have a better bargaining position. I don't now where you live, but where I do the next restaurant doesn't have 30-100+ people[1] competing for the same seat, the hostess doesn't run a credit check, and I'm not asked for a multiple of my meal-cost as a deposit. It would appear to follow that > then consumers have a better bargaining position doesn't happen. And... > The alternative is not homelessness, starvation, or joblessness We have homeless folks, we have jobless folks, and while I don't think many people outright starve to death in the U.S., we do have chronic malnourishment. I'd like to ask you to consider how that evidence from the real world should provide feedback to your economic model of the reality in question. This is one of my biggest frustrations with econ[2]. People mistake the map for the terrain in every field, but econ seems to positively fetishize doing it. [1] I have personally witnessed over 100 people at an open house for a single apartment. Amazingly to me, my then-partner and I got it. [2] Actually, it isn't all of econ - one school, in particular, seems to be highly susceptible to this mistake.
Noos 9y ago
That's an idealized version of trade. The problem is that benefits can be asymmetric and pushed by irrational means, when they aren't spurious. This may be done out of fradulent desires, but more commonly it's done because we as a society are too efficient. We have too many goods produced, so the only way to differentiate many products is through "intangibles" which obscure the actual benefits provided, and instead sell things based on irrational factors like sexiness, virility, image associations, and identity. The customer often is forced into asymmetrical deals due to this, because of the relative quality of actual benefits provided. You don't sell cheese any more, you sell artisanal cheese. This is because if we were honest, artisanal cheese is close enough to regular cheese to be hard to differentiate, so they sell the intangibles of artisanal qualities, and people pay more for pretty much the same benefit. I think the article shows that if you take that kind of intangible differentiation too far, you get things that end up harming the benefit to customers and society.
- Kalium 9y ago
  > This is because if we were honest, artisanal cheese is close enough to regular cheese to be hard to differentiate, so they sell the intangibles of artisanal qualities, and people pay more for pretty much the same benefit. If people are willing to pay significantly more to derive greater enjoyment from a basically identical product, then there may be a case to be made that they are deriving greater benefit.

Free trade is voluntary, we choose to participate in trade because it benefits both parties. I'm interested in seeing arguments that attack SV/society but start from this principle?

doytch 9y ago

Are you saying that because both parties benefit then neither party can be to blame? Confirming, not sure based on your wording. If so, that assumes that both parties are going into the trade negotiations on equal footing. I don't think I'm the only one who would argue that's not the case in a great many rentseeker:rentee or owner:employee relationships. Even discarding any social or economic pressures in the current climate, the power of the rentseeker and owner allows them to shape the environment into one that benefits them more (see: lobbying and politics in the USA).

athenot 9y ago

When it comes to free-trade it doesn't need to benefit both parties, it just needs to benefit the party with the most leverage. The other side will then have to adapt.

djohnston 9y ago

Are you suggesting that, if we feel we are not benefiting from the current rent market, we can simply stop participating?

jessaustin 9y ago
In Hawaii lots of people live on the beach, and don't get hassled for it. (Maybe they do get hassled, but anyway it isn't enough to end the practice...) There probably should be some sort of freely available liminal space in other states to serve the same purpose. Actually it seems like some people live under bridges?
- yequalsx 9y ago
  300 million people can't do this. By and large, save for very few people, we all have to participate in the housing market. There are also long term, detrimental effects of having a large percentage of the population living on beaches or other designated areas.

yequalsx 9y ago

Price gouging. It's not really free trade when options are limited. It's not really free trade when "free will" has been subverted. The notion of free trade sounds good at an individual level but does it really exist at a societal level? I think it's like libertarianism. It's sounds plausible at the micro level but doesn't scale well. I think the starting point you seek is itself worthy of criticism.

jstanley 9y ago
> The notion of free trade sounds good at an individual level but does it really exist at a societal level? The good news is "society" isn't buying and selling houses, or negotiating rental agreements. Individuals are.
- maxsilver 9y ago
  > The good news is "society" isn't buying and selling houses, or negotiating rental agreements. Individuals are. That's not really true. If you define "society" as "large groups of people", then they absolutely are buying and selling houses, and negotiating rental agreements. In my hometown, over 50% of single-family houses are owned by major corporations. And some of those corporations are listed and traded, their stock exists in part inside wealthy and upper-middle-class people's 401Ks. "Society" is absolutely buying up houses, and negotiating rental rates.
  - vonmoltke 9y ago
    > In my hometown, over 50% of single-family houses are owned by major corporations. I'm curious as to what town this is, and how many are bank-owned properties that haven't been unloaded yet. This sounds like an unusual situation, considering the places I have lived.
    - tunap 9y ago
      Phoenix, here. If I wanted to move from my grandfathered rental in 85377(VN part of town) to 85020(crack central), I would pay more for the same sqft. My landlord mentioned raising rent back in December, I told him to list it & give me 2 weeks notice. He never received a single call in 30 days. But, yeah, it's "demand" pushing rates up. From 2013, 25% of acquisitions made by funds: http://archive.azcentral.com/business/realestate/articles/20130305wealthy-investors-keep-buying-metro-phoenix-homes-rent.html http://archive.azcentral.com/business/realestate/articles/20... edit: no shortage of For Sale & empty homes up here, too. Multi-million dollar homes are stagnating on the market for years, and subsequently, plenty are for rent, too.

qznc 9y ago

Tragedy of the Commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons Tragedy of the Anticommons https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons Unscrupulous diner's dilemma https://en.wikipedia.org/wiki/Unscrupulous_diner%27s_dilemma https://en.wikipedia.org/wiki/Unscrupulous_diner%27s_dilemma The usual solution to these problems is regulation by government.

haltingthoughts 9y ago
How do these apply to what we are considering here?
- qznc 9y ago
  Which one? The high rents in SV? That would be Tragedy of the anticommons. The single resource is the land. The numerous rightsholders are the landlords and whoever profits from high rents. This assumes that zoning laws are the biggest issue and some people would argue against that. The more general question was how free trade, where both trade partners voluntarily participate, can lead to bad outcomes. The answer is that a non-trading third party can be harmed and the environment can be harmed. Those Wikipedia links provide many examples.

wavefunction 9y ago

This is a very simple statement you've made but introduced the exact issue while also glossing over it. Trade is voluntary. Free trade is an agreement between two parties. But free trade does not benefit 'both parties' unless you vivisect -for example- the American people into those that actually benefit from free trade and those that do not, largely. This is borne out by the reality we live in: that income and wealth inequality is increasing and doing so at an increasing rate and capital is accumulating due to public policies both domestic and international in nature that disproportionately favor the rentiers. The US has a lower rate of individual participation in the economy now than before NAFTA. That's a major failure in my opinion.

alistairSH 9y ago

In a perfect market? Sure. But, this is real life, not an Econ-101 textbook. In the housing market, there are regulations put in place by NIMBYs to protect their own investments. These limit the supply of housing in popular areas, driving up prices. Nothing a rentee can do but pay up or move elsewhere. In most job markets, the employer has more knowledge (about compensation plackages) and the job-seeker needs a job ASAP to avoid starving. In the case of Juicero, the toothbrush subscription, etc? Closer to a textbook-pure market, for sure.

orangecat 9y ago
In the housing market, there are regulations put in place by NIMBYs to protect their own investments. Econ 101 includes analyzing the effects of market interference, and in this case its predictions are exactly correct.
- alistairSH 9y ago
  ...this is real life, not the first chapter of an Econ-101 textbook. Better?

justanotherbot 9y ago

I'm not an economist, but I'll give it a shot: the vast influx of VC money allows for the creation of unsustainable businesses designed to "disrupt" (read: eliminate) traditional players. Buyers are happy to participate because they are getting a "deal" in the short term. Those who have been "disrupted" out of a job are often left to work for those same companies. Meanwhile, the startup is trying to capture enough market share so that it can then raise rates and lower wages with less competition down the road. In other words, the traditional free trade model can be distorted by the effects of VCs who can operate with extraordinary scale of time and geography.

banku_brougham 9y ago
This is interesting. Anti-trust laws prevent dominant market players from tanking prices until competitors fold and are aquired. However these SV funding models allow new players to perform the same role on behalf of the owners of capital. My question: "is it the same owners, or different ones?" I'll posit: the answer tells us whether we live in a competetive marketplace or monopolistic hell-zone.
- eli_gottlieb 9y ago
  Well the government mostly hasn't been enforcing competition laws for a few decades now, so yeah, VCs can fund startup companies to play loss-leader for a monopoly position. Hell, Peter Thiel put that strategy in his book.
deleted 9y ago
[deleted]

saimiam 9y ago

How about this?: Free trade used to be between roughly equal parties. You wanted juicer, someone sold you a juicer. Today, free trade has evolved into a transaction between you and the rest of humanity where you are expected to yield your information to an entity so that they can use it to better serve you and the rest of the world. For many scenarios, this symbiosis was a net benefit. Recall Nest and the promise to reduce your electricty bills by 10-15% by harnessing big data. Over time, Silicon Valley got addicted to the promise and possibility of making you yield data to it so that they could "somehow" help you live a better life. They tried to extend the idea into areas where it had no business being - a juicer or a coffee maker. And since the average human knows a bad bargain when they see one, they had to sex up the juicer or coffee maker with beautiful design, empty slogans, and beautiful models. ..which is pretty much the author's entire point if you read between the lines.

maxsilver 9y ago

> Free trade is voluntary, Except all the times when it isn't. Housing isn't really voluntary. Water isn't voluntary. Internet access isn't really voluntary. Electricity isn't voluntary. Free trade requires the option to walk away without catastrophic problems occurring in your life. Increasingly, that option doesn't exist. When the alternative is homelessness, or joblessness, or starvation, you can't honestly claim a choice was voluntary.

haltingthoughts 9y ago
The alternative is not homelessness, starvation, or joblessness. The alternative is the next best option. In most cases the alternative is perfectly fine. Making trade more free makes the alternative better. If it is as trivially costly to find a new job or a different appartment as finding another restaurant, then consumers have a better bargaining position.
- eli_gottlieb 9y ago
  >The alternative is not homelessness, starvation, or joblessness. Tell that to all the malnourished people, all the homeless people, all the unemployed people, and most especially the families of everyone who literally died because they couldn't pay medical bills.
- _jal 9y ago
  > If it is as trivially costly to find a new job or a different appartment as finding another restaurant, then consumers have a better bargaining position. I don't now where you live, but where I do the next restaurant doesn't have 30-100+ people[1] competing for the same seat, the hostess doesn't run a credit check, and I'm not asked for a multiple of my meal-cost as a deposit. It would appear to follow that > then consumers have a better bargaining position doesn't happen. And... > The alternative is not homelessness, starvation, or joblessness We have homeless folks, we have jobless folks, and while I don't think many people outright starve to death in the U.S., we do have chronic malnourishment. I'd like to ask you to consider how that evidence from the real world should provide feedback to your economic model of the reality in question. This is one of my biggest frustrations with econ[2]. People mistake the map for the terrain in every field, but econ seems to positively fetishize doing it. [1] I have personally witnessed over 100 people at an open house for a single apartment. Amazingly to me, my then-partner and I got it. [2] Actually, it isn't all of econ - one school, in particular, seems to be highly susceptible to this mistake.

Noos 9y ago

That's an idealized version of trade. The problem is that benefits can be asymmetric and pushed by irrational means, when they aren't spurious. This may be done out of fradulent desires, but more commonly it's done because we as a society are too efficient. We have too many goods produced, so the only way to differentiate many products is through "intangibles" which obscure the actual benefits provided, and instead sell things based on irrational factors like sexiness, virility, image associations, and identity. The customer often is forced into asymmetrical deals due to this, because of the relative quality of actual benefits provided. You don't sell cheese any more, you sell artisanal cheese. This is because if we were honest, artisanal cheese is close enough to regular cheese to be hard to differentiate, so they sell the intangibles of artisanal qualities, and people pay more for pretty much the same benefit. I think the article shows that if you take that kind of intangible differentiation too far, you get things that end up harming the benefit to customers and society.

Kalium 9y ago
> This is because if we were honest, artisanal cheese is close enough to regular cheese to be hard to differentiate, so they sell the intangibles of artisanal qualities, and people pay more for pretty much the same benefit. If people are willing to pay significantly more to derive greater enjoyment from a basically identical product, then there may be a case to be made that they are deriving greater benefit.