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What would be an example of an evil of capitalism that is not attributable to mispriced externalities? I have trouble coming up with one myself.
by ScottBurson 8y ago
What would be an example of an evil of capitalism that is not attributable to mispriced externalities? I have trouble coming up with one myself.
- mrob 8y agoSomebody could be born, by no fault of their own, with a rare disease that would cost more to treat than they can realistically earn, and which insurers can easily detect as a pre-existing condition.
- xtian 8y agoEven if we're speaking just in economic terms, the value of saving a life or the cost of not saving it is lot more complex than their total potential earnings. Failure to take that into account would be the mispricing in this scenario.
- azernik 8y agoMonopolies that underproduce/underinnovate. The 2008 crash involved a combination of a principal-agent problem (between mortgage underwriters and the ultimate sources of capital that bought the CDOs) and the limits of the market as a transmitter of reliable information. The market does not by default transmit its signals in a way that humans respond optimally to (not even from the point of view of their interests). e.g. people discount the future gas savings of a slightly more expensive car in a way that implies an implicit interest rate much higher than the actual one. The market assigns the power to consume (money) in ways that do not reflect actual human values - i.e. the decision that someone whose skills are in demand should be able to consume 4x what their neighbor can, rather than 2x, is not a question of efficiency but of values, and when it comes to the high and low ends the market's values are inhuman.