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> Economists solved that one along time ago: revealed preference. I'm quite certain they didn't solve the problem of determining the correct long term value sy

by CPLX 6y ago

> Economists solved that one along time ago: revealed preference. I'm quite certain they didn't solve the problem of determining the correct long term value system for the human race. For context I have looked into the idea, I have a degree in Economics. We don't even have a perfect optimal strategy for the completely bounded game of chess yet. But somehow we've solved the problem of determining optimal strategy for the unbounded game of social and economic interactions between millions of independent actors? It's a pleasant thought, but no, we haven't. In real life what people are doing is making economic tradeoffs within a narrowly constrained section of a complex adaptive system within which no actor can do much more than guess at the prospective outcomes of their decisions. Or put another way, in economic terms how would an economic actor express a clear preference for a sequence of events that leads to a personal connection with someone who doesn't have any money, when they are not aware that's even a thing they can do?

pdonis 6y ago
> I'm quite certain they didn't solve the problem of determining the correct long term value system for the human race. Having a non-tautological way of capturing what "more productive uses" means, which is what I was responding to, in no way requires solving this much more difficult (and quite possibly unsolvable in that there might not be a single answer) problem. > in economic terms how would an economic actor express a clear preference for a sequence of events that leads to a personal connection with someone who doesn't have any money, when they are not aware that's even a thing they can do? If they're not even aware of the option, then the obvious thing to do is to make them aware of the option. Economists call this "creating a market". Enabling transactions to take place that couldn't take place before is one of the primary ways that new wealth is created. If this isn't happening, it's a sign that "the system" is, once again, not a free market; and the way to fix it is to make it more of a free market.
- CPLX 6y ago
  > If this isn't happening, it's a sign that "the system" is, once again, not a free market; and the way to fix it is to make it more of a free market. Indeed. In our back and forth we've now teased out the basic "no-true-scotsman" argument used to advocate for free markets, also known as the Efficient Markets Hypothesis. Why the free market will solve the problem. What's that you say? The market is producing disastrous outcomes making life unlivable for huge swaths of humanity? Well clearly you should add more free market then, as the cause is clearly not having enough of that. The reality is that not all social goods and goals can be priced, or measured, or even understood and articulated in a way we all agree on. And, the really core and subtle point that often gets missed is that it's literally impossible to base your normative system on the idea that we'll all just optimize for outcomes when that system is non-deterministic. All models are false, some are useful. For sure the economic canon has some analytic and descriptive value, that's not in doubt. But it has very serious and severe limits, and that's where all the actually interesting public policy discussion happens.
  - pdonis 6y ago
    > the basic "no-true-scotsman" argument used to advocate for free markets, also known as the Efficient Markets Hypothesis No, that's not the basis for wanting more free markets. The basis for wanting more free markets is that, under conditions where a free market is not efficient (and yes, such conditions often exist), the failure modes of a free market are still better than the failure modes of the alternatives. In other words, free markets are not "best" so much as "least worst" (the worst except for all the others, as Churchill would have said). In the particular case we were discussing, you were assuming that a transaction was possible (a personal connection) that both parties would value. That means, in a free market, both parties would agree to the transaction, so it would happen. The problem, as you stated it, was that a market did not even exist for such transactions--the parties weren't even aware of each other. And, as I pointed out, the obvious way to fix that is to allow someone to create such a market. Nobody needs to make any decisions about "how social goods are priced" to do that--the market participants themselves will take care of that, by deciding which transactions to engage in and which not. See further comments below. > The market is producing disastrous outcomes making life unlivable for huge swaths of humanity? No, it's not. What's producing those disastrous outcomes is the failure modes of the alternatives to a free market. See below. > The reality is that not all social goods and goals can be priced, or measured, or even understood and articulated in a way we all agree on. Yes. And in a free market, we don't have to agree on all those things. All we have to agree on is whether or not to engage in particular transactions. If you and I can have a transaction that both of us voluntarily agree on (and that's the definition of a free market, that all transactions are voluntary--nobody is ever forced to make a transaction they don't want to make), then it doesn't matter what the rest of our values or goals are; all that matters is that we agree to make the transaction. And that is why the failure modes of free markets are better than the failure modes of the alternatives--because the alternatives force people to do things that they don't want to do, or that they even think are very bad ideas, just because someone else in a position of power says so. That is what makes "life unlivable for huge swaths of humanity"--people being forced to do what some idiot in power says, instead of what their own intelligence and common sense would suggest. > it's literally impossible to base your normative system on the idea that we'll all just optimize for outcomes when that system is non-deterministic You're assuming that there has to be a single "normative system" that everyone is forced to abide by. And that, as above, is precisely what a free market does not do, and why our current system, which does do that, causes so much misery. Your so-called "public policy discussion" is all about what normative system to impose on people. Your public policy "experts" never even consider the idea of not imposing things on people at all.

by CPLX 6y ago

pdonis 6y ago

> I'm quite certain they didn't solve the problem of determining the correct long term value system for the human race. Having a non-tautological way of capturing what "more productive uses" means, which is what I was responding to, in no way requires solving this much more difficult (and quite possibly unsolvable in that there might not be a single answer) problem. > in economic terms how would an economic actor express a clear preference for a sequence of events that leads to a personal connection with someone who doesn't have any money, when they are not aware that's even a thing they can do? If they're not even aware of the option, then the obvious thing to do is to make them aware of the option. Economists call this "creating a market". Enabling transactions to take place that couldn't take place before is one of the primary ways that new wealth is created. If this isn't happening, it's a sign that "the system" is, once again, not a free market; and the way to fix it is to make it more of a free market.

CPLX 6y ago
> If this isn't happening, it's a sign that "the system" is, once again, not a free market; and the way to fix it is to make it more of a free market. Indeed. In our back and forth we've now teased out the basic "no-true-scotsman" argument used to advocate for free markets, also known as the Efficient Markets Hypothesis. Why the free market will solve the problem. What's that you say? The market is producing disastrous outcomes making life unlivable for huge swaths of humanity? Well clearly you should add more free market then, as the cause is clearly not having enough of that. The reality is that not all social goods and goals can be priced, or measured, or even understood and articulated in a way we all agree on. And, the really core and subtle point that often gets missed is that it's literally impossible to base your normative system on the idea that we'll all just optimize for outcomes when that system is non-deterministic. All models are false, some are useful. For sure the economic canon has some analytic and descriptive value, that's not in doubt. But it has very serious and severe limits, and that's where all the actually interesting public policy discussion happens.
- pdonis 6y ago
  > the basic "no-true-scotsman" argument used to advocate for free markets, also known as the Efficient Markets Hypothesis No, that's not the basis for wanting more free markets. The basis for wanting more free markets is that, under conditions where a free market is not efficient (and yes, such conditions often exist), the failure modes of a free market are still better than the failure modes of the alternatives. In other words, free markets are not "best" so much as "least worst" (the worst except for all the others, as Churchill would have said). In the particular case we were discussing, you were assuming that a transaction was possible (a personal connection) that both parties would value. That means, in a free market, both parties would agree to the transaction, so it would happen. The problem, as you stated it, was that a market did not even exist for such transactions--the parties weren't even aware of each other. And, as I pointed out, the obvious way to fix that is to allow someone to create such a market. Nobody needs to make any decisions about "how social goods are priced" to do that--the market participants themselves will take care of that, by deciding which transactions to engage in and which not. See further comments below. > The market is producing disastrous outcomes making life unlivable for huge swaths of humanity? No, it's not. What's producing those disastrous outcomes is the failure modes of the alternatives to a free market. See below. > The reality is that not all social goods and goals can be priced, or measured, or even understood and articulated in a way we all agree on. Yes. And in a free market, we don't have to agree on all those things. All we have to agree on is whether or not to engage in particular transactions. If you and I can have a transaction that both of us voluntarily agree on (and that's the definition of a free market, that all transactions are voluntary--nobody is ever forced to make a transaction they don't want to make), then it doesn't matter what the rest of our values or goals are; all that matters is that we agree to make the transaction. And that is why the failure modes of free markets are better than the failure modes of the alternatives--because the alternatives force people to do things that they don't want to do, or that they even think are very bad ideas, just because someone else in a position of power says so. That is what makes "life unlivable for huge swaths of humanity"--people being forced to do what some idiot in power says, instead of what their own intelligence and common sense would suggest. > it's literally impossible to base your normative system on the idea that we'll all just optimize for outcomes when that system is non-deterministic You're assuming that there has to be a single "normative system" that everyone is forced to abide by. And that, as above, is precisely what a free market does not do, and why our current system, which does do that, causes so much misery. Your so-called "public policy discussion" is all about what normative system to impose on people. Your public policy "experts" never even consider the idea of not imposing things on people at all.