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One of the fundamental tensions I see in economics is this: Cooperation enables greater efficiency. You don't burn resources in efforts that exist just to harm
by munificent 6y ago
One of the fundamental tensions I see in economics is this:
Cooperation enables greater efficiency. You don't burn resources in efforts that exist just to harm your competitor. You get all of the economies of scale of sharing information, expertise, and technology.
But competition incentivizes greater efficiency. A monoculture can stagnate because there is less risk from failure, less urgency to grow and improve.
I think the point of maximum efficiency is somewhere in the middle where there's enough scale that you don't have the economic equivalent of millions of subsistance farmers each using hand tools to hoe their own patch, but where there are enough independent players to create some urgency and make regulatory capture harder.
The hard part is that there is no stable equilibrium near that regionn of efficiency. Businesses naturally consolidate and form cabals and capture regulation, so you have to constantly push against that.
- nicoburns 6y agoI pretty much completely agree with this comment. I would add: the sweet spot is different in different industries (and may different in the same industry at different points in history), and economic policy would do well to recognise that rather than advocating for a blanket policy for everything.
- mrkramer 6y ago"Cooperation enables greater efficiency. You don't burn resources in efforts that exist just to harm your competitor. You get all of the economies of scale of sharing information, expertise, and technology." Exactly if you consume or spoil all the resources you get Tragedy of the commons [1] "The tragedy of the commons is a situation in a shared-resource system where individual users, acting independently according to their own self-interest, behave contrary to the common good of all users by depleting or spoiling the shared resource through their collective action." Market players can self regulate and cooperate for the sake of common interest if not then it becomes zero sum game. [1] https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons