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>>The problem with this oft-used dogmatic argument is that it’s pure claim and no evidence. The anti-money position you're espousing is the one that's dogmatic

>>The problem with this oft-used dogmatic argument is that it’s pure claim and no evidence. The anti-money position you're espousing is the one that's dogmatic. It ignores what a century of economic scholarship says about how prices work to measure shortages and direct resources to alleviate them. It belies an anti-profit cognitive bias: https://digest.bps.org.uk/2017/08/04/we-have-an-ingrained-anti-profit-bias-that-blinds-us-to-the-social-benefits-of-free-markets/ https://digest.bps.org.uk/2017/08/04/we-have-an-ingrained-an... >>The problem with this oft-used dogmatic argument is that it’s pure claim and no evidence. The theory that price controls harm the functioning of the economy is overwhelmingly supported by the empirical evidence. There is plenty of evidence showing the detrimental effects of price controls on post-disaster situations (aka anti-price-gouging laws) specifically as well, e.g. https://scholarworks.montana.edu/xmlui/bitstream/handle/1/9083/TarrantM0515.pdf;sequence=3 https://scholarworks.montana.edu/xmlui/bitstream/handle/1/90... >>It’s a huge and unrealistic assumption to think that we can stockpile the “correct” amounts in advance of a crisis. We can get closer to the correct amount when people are incentivized to calculate the correct amount, and the corrective feedback loops of the market work to reward good allocators of capital (those who are good at making predictions on the supply excesses and shortages, and acting of them) with more capital, and poor allocators of capital with less. Overtime, this leads to an economy that allocates resources more effectively. Profit/loss produces this outcome spontaneously and naturally, as a very consequence of the behaviour that leads to profit, versus that which leads to losses. Most knowledge is diffused widely across society, and it only comes to bear when people are financially incentivized to act on it. Many have specialized domains of expertise owing not from PhDs and theory, but from mundane experience. The economy is too complex to govern using theory, which is why we need bottom-up processes, like capital allocation through emergent phenomena like markets, to tap this vast ocean of knowledge, in order to govern it. Prices work. That's what evidence shows. You will not find the economic scholarship supporting your canned anti-money/profit talking points. >>The second part doesn’t make sense, you said prices are astronomical because anti-price-gouging laws are in effect? What do you mean, why would anti-price-gouging laws cause price gouging? I meant the grey/black market price. It's astronomical due to extreme shortages during crises, due in turn to stockpiling not sufficiently being incentivized, owing to anti-price-gouging laws. Price caps paradoxically lead to higher prices.

dahart 7y ago
I appreciate the reply and the links. FWIW, I think trying to paint my views as anti-money and anti-profit is a straw man that is extreme and doesn't effectively respond to what I said. I believe that competition and profit does do what you're saying sometimes. I know there's evidence that it works sometimes. I may be perfectly comfortable saying it works most of the time. But there's also historical evidence that it fails sometimes. You're glossing over that by ignoring externalized health and environmental concerns, among other things. The market might be stronger if it's left unchecked, but that's not the same thing as slowing down the spread of a disease. Free Market theory simply does not guarantee that we'll have the safest outcome in the shortest time. Even if we assume it does work as advertised, the best we can say it economic inputs and outputs balance at some local optimum some time in the future. > We can get closer to the correct amount when people are incentivized to calculate the correct amount I think that's wishful thinking when you're talking about unforseen crises, and history has shown this over and over. > Price caps paradoxically lead to higher prices. Ah yes, you're right and it's true this can happen on the black market under price controls. In your thinking, why is that worse than unrestrained price gouging? What is the meaningful difference in outcome? Does it matter how much higher? Does it matter what the balance is between price-capped sales, and black-market overpriced sales? Bigger picture, my more fundamental question is why free-market thinking is diametrically opposed to slowing down changes in pricing during spikes, if we were to assume that prices will be uncapped eventually? Even under ideal conditions, the market takes time to respond to changes in demand. When spikes in supply are price-capped, let's assume not that it'll be price-capped forever and all time, but that either it will be price-capped during a time period that is too short for the market to respond to, or that changes in pricing will be rate limited rather than value limited. If price changes are rate limited, instead of hard-capped, then in theory nothing changes in the limit, the market can still optimize eventually, right? What does it matter if a market takes a little longer to balance?
- xapata 7y ago
  You shouldn't limit price value or velocity, as evidenced by the perverse effects of rent control laws. However, a limit on price acceleration could provide a good balance, allowing the market to adjust on a reasonable time-scale, such that humans can react. That's my theory for immigration controls as well. Economic theory suggests that unlimited flow of human capital is just as valuable as unlimited flow of financial capital. However, we know that shock movements of financial capital can be bad, and instinctively people dislike shock movements of people. A good solution for both is to limit not velocity, but acceleration. The economy can absorb a steady flow, but needs time to react to rate changes.

dahart 7y ago

I appreciate the reply and the links. FWIW, I think trying to paint my views as anti-money and anti-profit is a straw man that is extreme and doesn't effectively respond to what I said. I believe that competition and profit does do what you're saying sometimes. I know there's evidence that it works sometimes. I may be perfectly comfortable saying it works most of the time. But there's also historical evidence that it fails sometimes. You're glossing over that by ignoring externalized health and environmental concerns, among other things. The market might be stronger if it's left unchecked, but that's not the same thing as slowing down the spread of a disease. Free Market theory simply does not guarantee that we'll have the safest outcome in the shortest time. Even if we assume it does work as advertised, the best we can say it economic inputs and outputs balance at some local optimum some time in the future. > We can get closer to the correct amount when people are incentivized to calculate the correct amount I think that's wishful thinking when you're talking about unforseen crises, and history has shown this over and over. > Price caps paradoxically lead to higher prices. Ah yes, you're right and it's true this can happen on the black market under price controls. In your thinking, why is that worse than unrestrained price gouging? What is the meaningful difference in outcome? Does it matter how much higher? Does it matter what the balance is between price-capped sales, and black-market overpriced sales? Bigger picture, my more fundamental question is why free-market thinking is diametrically opposed to slowing down changes in pricing during spikes, if we were to assume that prices will be uncapped eventually? Even under ideal conditions, the market takes time to respond to changes in demand. When spikes in supply are price-capped, let's assume not that it'll be price-capped forever and all time, but that either it will be price-capped during a time period that is too short for the market to respond to, or that changes in pricing will be rate limited rather than value limited. If price changes are rate limited, instead of hard-capped, then in theory nothing changes in the limit, the market can still optimize eventually, right? What does it matter if a market takes a little longer to balance?

xapata 7y ago
You shouldn't limit price value or velocity, as evidenced by the perverse effects of rent control laws. However, a limit on price acceleration could provide a good balance, allowing the market to adjust on a reasonable time-scale, such that humans can react. That's my theory for immigration controls as well. Economic theory suggests that unlimited flow of human capital is just as valuable as unlimited flow of financial capital. However, we know that shock movements of financial capital can be bad, and instinctively people dislike shock movements of people. A good solution for both is to limit not velocity, but acceleration. The economy can absorb a steady flow, but needs time to react to rate changes.