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This doesn't make clear at all how converting the free event to a ticketed event "broke" economics textbooks.

by sweetheart 6y ago

QuasiAlon 6y ago
Apologies. Fireworks are the text book example of public goods.
- andi999 6y ago
  The state of economy as a science seems to be in much deeper trouble than I expected.
- anigbrowl 6y ago
  But how does this break economics textbooks? They took a public good and effectively privatized it, ostensibly for the public benefit (reducing infrastructure costs on NYE) but conceivably for private benefit (passing out VIP tickets as favors or steering a profitable security contract to an ally). There's nothing in economics that says the optimal outcome will naturally emerge. There's the concept of equilibrium in price theory, but that only exists under conditions of perfect competition - zero exit/entry costs, absolute market transparency, and fungibility of what's traded. To parallel your firework example, that works quite well for commodities like oil or many ag products, but not for housing. Check out this book, which provides a good explanation of why it is politically profitable to do things like privatizing public goods: https://en.wikipedia.org/wiki/The_Dictator%27s_Handbook https://en.wikipedia.org/wiki/The_Dictator%27s_Handbook Essentially, the authors' argument is that political power can easily be modeled as transactions in a political capital market where access to public goods is traded for political support (participatory or vote delivery blocs in rigged elections, or non-interference by military actors in more obvious dictatorships). The wiki article includes a link to their more rigorous academic exploration of the topic which is almost equally readable.
oconnor663 6y ago
I think it just means that a commonly cited example of a public good in textbooks is arguably no longer a good example. But yeah, the choice of words is pretty clickbaity.

This doesn't make clear at all how converting the free event to a ticketed event "broke" economics textbooks.

QuasiAlon 6y ago

Apologies. Fireworks are the text book example of public goods.

andi999 6y ago
The state of economy as a science seems to be in much deeper trouble than I expected.
anigbrowl 6y ago
But how does this break economics textbooks? They took a public good and effectively privatized it, ostensibly for the public benefit (reducing infrastructure costs on NYE) but conceivably for private benefit (passing out VIP tickets as favors or steering a profitable security contract to an ally). There's nothing in economics that says the optimal outcome will naturally emerge. There's the concept of equilibrium in price theory, but that only exists under conditions of perfect competition - zero exit/entry costs, absolute market transparency, and fungibility of what's traded. To parallel your firework example, that works quite well for commodities like oil or many ag products, but not for housing. Check out this book, which provides a good explanation of why it is politically profitable to do things like privatizing public goods: https://en.wikipedia.org/wiki/The_Dictator%27s_Handbook https://en.wikipedia.org/wiki/The_Dictator%27s_Handbook Essentially, the authors' argument is that political power can easily be modeled as transactions in a political capital market where access to public goods is traded for political support (participatory or vote delivery blocs in rigged elections, or non-interference by military actors in more obvious dictatorships). The wiki article includes a link to their more rigorous academic exploration of the topic which is almost equally readable.

oconnor663 6y ago

I think it just means that a commonly cited example of a public good in textbooks is arguably no longer a good example. But yeah, the choice of words is pretty clickbaity.