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>humans have all sorts of cognitive biases, how come it's ok to use that fact while at the same time we insist there's some kind of free market? [...] How can t

by jasode 6y ago

>humans have all sorts of cognitive biases, how come it's ok to use that fact while at the same time we insist there's some kind of free market? [...] How can the free market work if everyone is so easily affected by suggestion? I'm (genuinely) surprised that someone with your financial background knowledge would write those sentences about "free market". I think you already know that the "free" in "free market" means free (as practically possible) from government controls. (The first sentence in wikipedia.[1]) E.g., the baker decides to bake 10 loaves of bread instead of a government official telling him a quota. Yes, I understand that many people use another definition of "free market" to mean "theoretical and impossible to exist market" -- because it would require all humans to be all-knowledgeable Laplace's Demon[2] and impervious to hidden influences. Ok, I get that language usage evolves and labels get diluted and therefore, "free market" is meaningless. In that case, what _do_ we call imperfect humans trading without government dictating quotas to us? I'm open to alternative labels. EDIT: people are misunderstanding my comment to lordnacho. I'm not against government intervention to limit bad effects of ads. I'm dissecting lordnacho's rhetoric. [1] https://en.wikipedia.org/wiki/Free_market https://en.wikipedia.org/wiki/Free_market [2] https://en.wikipedia.org/wiki/Laplace%27s_demon https://en.wikipedia.org/wiki/Laplace%27s_demon

lordnacho 6y ago
Well we gotta call it something, kinda like communism and democracy. It means a lot of things to different people, but those things still vaguely refer to similar ideas. I tend not to support stringent definitions on things ("The US is a republic, not a democracy") because basically it ends up being word games. If you look at economics, the idea is that people are rational agents. At least the orthodox idea which people are not told to question. From there you get all sorts of efficiency ideas that are the support for that government intervention idea of free markets. It goes free thinking -> efficient decisions -> government shouldn't intervene. So of course if people aren't so free thinking, doesn't that change something? The issue with advertising is that we have indeed agreed that certain interventions are legit. Externalities are another one of those things they mention in economics, and you'll find all sorts of models for how to deal with them. There are in fact loads of regulations, all grounded in the idea that even rational agents sometimes cause things to happen that we don't want, and should be fixed by intervention. Typically to do with information problems. So then if actually we think government should intervene in some situations, why not in this one? Maybe it's just a matter of time, as evidence builds up. I suppose there's already controls for things like addictive gambling.
- jasode 6y ago
  >So of course if people aren't so free thinking, doesn't that change something? [...] So then if actually we think government should intervene in some situations, why not in this one? Since the majority of your reply is about justifying more positive government intervention, I've done a poor job explaining what I was talking about. I already agree with government intervention to limit bad effects of advertising. That's not what my comment was about; instead, I was critiquing your rhetoric. E.g. the following type of statement : "If people are not truly free thinking, how can we have a free market?!?" The above statement has a nice poetic symmetry but doesn't actually advance the discussion in a productive way. Let me try more rhetorical examples and hopefully you'll see the same pattern: Proposal: Facebook should open its social graph as API so users can be free to choose their own 3rd-party client and not be locked in a walled garden. But if users are not so free thinking, how can there be a free choice to choose their own social client? Proposal: People should be able to freely choose which state or house they want to live in. But if citizens are not aware of hidden influences, and are not perfectly rational agents, and disadvantaged with information asymmetry, can there truly be a free choice to pick a home? Proposal: People should be free to choose their spouse. But... [same pattern]... because people don't know hidden life influences that had predetermined their eventual mate selection, etc. What I'm saying is that yes, we can be flexible with definition of "free" -- but that just means we're going down a rabbit hole of philosophical word games. I contend this isn't productive discussion. If we want to recommend more positive government intervention, we can do that without the "free isn't truly free" philosophy.
  - lordnacho 6y ago
    I guess you are getting at the whole Marxist false consciousness idea? Because while false consciousness is one of those convenient thought-ending "explanations" that seem to explain everything and nothing, we actually do have evidence that people can't do rational very well. So how do we square that circle? > If we want to recommend more positive government intervention My instinct is normally against intervention, so I do feel a bit quesy about finding problems all over the place that need fixes that are potentially themselves wrong. It's an issue for sure. I don't know how to resolve it either, just looking for people's perspectives.
Super_Jambo 6y ago
My view is we should be aiming for _competitive_ markets or perfect markets. Markets which approach as near as possible perfect competition[1]. It's obviously impossible to realize in reality. However, it's instructive that we get closest to it in the stock market. The market most important to the very rich. Elon Musk can't even tweet a joke about TSLA stock. Meanwhile if you're _buying_ a Model 3 you'll get expertly crafted disinformation shoved down your throat from every billboard and website. [1] https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition
specialist 6y ago
What's your position on cigarette ads targeting children? re [1], which of the mutually exclusive definitions of "free market" do you subscribe to? Adam Smith's Georgism? Hayek's laissez faire? Other?
throwaway2245 6y ago
"For classical economists such as Adam Smith, the term free market does not necessarily refer to a market free from government interference, but rather free from all forms of economic privilege, monopolies and artificial scarcities." so this usage is at least 250 years old - and canonical. I suspect the 'free from government interference' definition is a modern conservative creation, attempting to claim the ground of what an ideal market looks like in the public's imagination.
legulere 6y ago
Market free from government control is an oxymoron. Trade starts at the local group based on gift and debts. States create markets by making people pay taxes that they have to get the money for. Without a rules a market ceases to be free as it breaks down e.g. by monopolization.

by jasode 6y ago

lordnacho 6y ago

Well we gotta call it something, kinda like communism and democracy. It means a lot of things to different people, but those things still vaguely refer to similar ideas. I tend not to support stringent definitions on things ("The US is a republic, not a democracy") because basically it ends up being word games. If you look at economics, the idea is that people are rational agents. At least the orthodox idea which people are not told to question. From there you get all sorts of efficiency ideas that are the support for that government intervention idea of free markets. It goes free thinking -> efficient decisions -> government shouldn't intervene. So of course if people aren't so free thinking, doesn't that change something? The issue with advertising is that we have indeed agreed that certain interventions are legit. Externalities are another one of those things they mention in economics, and you'll find all sorts of models for how to deal with them. There are in fact loads of regulations, all grounded in the idea that even rational agents sometimes cause things to happen that we don't want, and should be fixed by intervention. Typically to do with information problems. So then if actually we think government should intervene in some situations, why not in this one? Maybe it's just a matter of time, as evidence builds up. I suppose there's already controls for things like addictive gambling.

jasode 6y ago
>So of course if people aren't so free thinking, doesn't that change something? [...] So then if actually we think government should intervene in some situations, why not in this one? Since the majority of your reply is about justifying more positive government intervention, I've done a poor job explaining what I was talking about. I already agree with government intervention to limit bad effects of advertising. That's not what my comment was about; instead, I was critiquing your rhetoric. E.g. the following type of statement : "If people are not truly free thinking, how can we have a free market?!?" The above statement has a nice poetic symmetry but doesn't actually advance the discussion in a productive way. Let me try more rhetorical examples and hopefully you'll see the same pattern: Proposal: Facebook should open its social graph as API so users can be free to choose their own 3rd-party client and not be locked in a walled garden. But if users are not so free thinking, how can there be a free choice to choose their own social client? Proposal: People should be able to freely choose which state or house they want to live in. But if citizens are not aware of hidden influences, and are not perfectly rational agents, and disadvantaged with information asymmetry, can there truly be a free choice to pick a home? Proposal: People should be free to choose their spouse. But... [same pattern]... because people don't know hidden life influences that had predetermined their eventual mate selection, etc. What I'm saying is that yes, we can be flexible with definition of "free" -- but that just means we're going down a rabbit hole of philosophical word games. I contend this isn't productive discussion. If we want to recommend more positive government intervention, we can do that without the "free isn't truly free" philosophy.
- lordnacho 6y ago
  I guess you are getting at the whole Marxist false consciousness idea? Because while false consciousness is one of those convenient thought-ending "explanations" that seem to explain everything and nothing, we actually do have evidence that people can't do rational very well. So how do we square that circle? > If we want to recommend more positive government intervention My instinct is normally against intervention, so I do feel a bit quesy about finding problems all over the place that need fixes that are potentially themselves wrong. It's an issue for sure. I don't know how to resolve it either, just looking for people's perspectives.

Super_Jambo 6y ago

My view is we should be aiming for _competitive_ markets or perfect markets. Markets which approach as near as possible perfect competition[1]. It's obviously impossible to realize in reality. However, it's instructive that we get closest to it in the stock market. The market most important to the very rich. Elon Musk can't even tweet a joke about TSLA stock. Meanwhile if you're _buying_ a Model 3 you'll get expertly crafted disinformation shoved down your throat from every billboard and website. [1] https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition

specialist 6y ago

What's your position on cigarette ads targeting children? re [1], which of the mutually exclusive definitions of "free market" do you subscribe to? Adam Smith's Georgism? Hayek's laissez faire? Other?

throwaway2245 6y ago

"For classical economists such as Adam Smith, the term free market does not necessarily refer to a market free from government interference, but rather free from all forms of economic privilege, monopolies and artificial scarcities." so this usage is at least 250 years old - and canonical. I suspect the 'free from government interference' definition is a modern conservative creation, attempting to claim the ground of what an ideal market looks like in the public's imagination.

legulere 6y ago

Market free from government control is an oxymoron. Trade starts at the local group based on gift and debts. States create markets by making people pay taxes that they have to get the money for. Without a rules a market ceases to be free as it breaks down e.g. by monopolization.