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This is just an observation about such distress calls, but I am trying to learn economics, and something shocks me every time I read up about it. Absolutely no

This is just an observation about such distress calls, but I am trying to learn economics, and something shocks me every time I read up about it. Absolutely no major book, be it pop or a college text touches on the role of power in the relationship. It might be easier to project and create models by assuming human beings to be rational beings, but that still doesn't mean you need to ignore the calculus of power. What we have over here is something most economists simply don't study. Systematic use of power. These banks strut like mafia bosses, because they're exactly like mafia bosses. Their strength and survival depends on having power to push the consumer into beneficial deals. Their survival also depends on pulling the carpet from underneath when the consumer fails to jump through enough hoops. Yes, it's all related to capital in the markets etc., but it's all driven by power. I don't know why we want to ignore this, but as a society these power relationships lurk everywhere. It doesn't mean that they are immoral or anything like that. They're just a fact of human nature. Every contract signed or transaction made is made with the assumption that someone with power will ensure that it will go off without a hitch. What is a contract except for the threat of violence sublimated into abstruse jargon? Think about the robber barons and their ideological descendants wall street bankers. The only difference is that now they're holding a gun made out of paper (or a database). In this case, of course the law makers and everyone else are on their side, but like everything else it's all a matter of time. As things change power will get redistributed from Morgan to Milken. What I'm trying to say is that I think that economics doesn't make sense without this variable. These people call the shots, because they have power. Not capital assets. Those are just symbols of power they have accumulated by various means. Yes, this can't explain everything, but it's just a very different way to look at it and things just make sense after this.

_delirium 16y ago
I'm not sure it's sufficiently studied, but there is some study of power relationships in economics, mostly in areas of economics that argue over the effects of entity sizes and coordination. The theory of both antitrust law and labor law is mostly based on arguments over power imbalances, e.g. whether cartels exercise coercive power that distorts markets, and what power relationships are involved when an individual negotiates with a large corporation (or on the other side, when a large union negotiates with a smaller employer).
deleted 16y ago
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kongqiu 16y ago
I wish I could upvote this more than once.
byrneseyeview 16y ago
Absolutely no major book, be it pop or a college text touches on the role of power in the relationship. I recommend reading up on game theory, which might as well be understood as the study of the role of power in relationships. Interestingly enough, your portrait of banks abusing customers is a lot like my view of how I abuse my bank. They give me risk-free credit, help me manage my money, and make basically zero revenue from me. All I really have to do is read the fine print and avoid going into debt, which isn't especially hard. Milken is an interesting guy to mention, actually. He started out as a great example of powerlessness--a low level employee who happened to be one of the few Jewish guys at a sleepy, Waspy firm, where he was stuck analyzing the stuff nobody else cared about. I guess he had some secret reserve of power that helped him fake his way into basically running the company and making a killing before getting shut down by some overzealous regulators. Milken doesn't contradict your theory, but he does fill in the missing variable--power is something people accumulate, and very often they accumulate it within their lifetimes.
realitygrill 16y ago
You've studied a cleaned-up, simplified (and likely ossified) version of economics so far. Economists analyze market power all the time, and game theory is a good suggestion. Putting it all together in macro terms is difficult, though. I think you may be interested in the older version of economics, political economy. As I understand it, political science is all about analyzing power relationships.

_delirium 16y ago

I'm not sure it's sufficiently studied, but there is some study of power relationships in economics, mostly in areas of economics that argue over the effects of entity sizes and coordination. The theory of both antitrust law and labor law is mostly based on arguments over power imbalances, e.g. whether cartels exercise coercive power that distorts markets, and what power relationships are involved when an individual negotiates with a large corporation (or on the other side, when a large union negotiates with a smaller employer).

deleted 16y ago

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kongqiu 16y ago

I wish I could upvote this more than once.

byrneseyeview 16y ago

Absolutely no major book, be it pop or a college text touches on the role of power in the relationship. I recommend reading up on game theory, which might as well be understood as the study of the role of power in relationships. Interestingly enough, your portrait of banks abusing customers is a lot like my view of how I abuse my bank. They give me risk-free credit, help me manage my money, and make basically zero revenue from me. All I really have to do is read the fine print and avoid going into debt, which isn't especially hard. Milken is an interesting guy to mention, actually. He started out as a great example of powerlessness--a low level employee who happened to be one of the few Jewish guys at a sleepy, Waspy firm, where he was stuck analyzing the stuff nobody else cared about. I guess he had some secret reserve of power that helped him fake his way into basically running the company and making a killing before getting shut down by some overzealous regulators. Milken doesn't contradict your theory, but he does fill in the missing variable--power is something people accumulate, and very often they accumulate it within their lifetimes.

realitygrill 16y ago

You've studied a cleaned-up, simplified (and likely ossified) version of economics so far. Economists analyze market power all the time, and game theory is a good suggestion. Putting it all together in macro terms is difficult, though. I think you may be interested in the older version of economics, political economy. As I understand it, political science is all about analyzing power relationships.