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I think we've crossed a complexity threshold beyond which there are systemic problems whose solutions cannot be expressed in terms of price alone. It's like we
by __MatrixMan__ 5y ago
I think we've crossed a complexity threshold beyond which there are systemic problems whose solutions cannot be expressed in terms of price alone. It's like we're trying to implement factorial in morse code--it's just not the tool for the job.
For instance, maybe Alice wants $5 worth of some resource, and if she gets it she'll be happy. Bob wants $5 of the same resource, and when he gets it he'll put some plan into action that makes $100 worth of some different resource available to Charlie. But there's a shortage, so Alice and Bob are in competition, and neither is willing to pay $6 for it.
The price system doesn't give a reason to favor selling the resource to Bob. It's up to Charlie to notice the hazard before the transaction occurs and give Bob $1 to tip the scales in his favor--which is a challenging trick to pull off in a world that thinks that price alone should do the trick.
- zo1 5y agoNo it's not up to Charlie to help Bob. It's up to Paul to come in and fill the gap that Alice and Bob are both missing. Price is enough I would argue, what's missing is that there are unknown constraints that are inflexible. I'd posit its something put down by government but anything is possible.
- __MatrixMan__ 5y agoComing up with enough resources to satisfy both sides of my dilemma resolves it for now, but it doesn't really address the fact that our expectations about markets' fault tolerance were wrong and probably will be again. That said, my solution is equally unsatisfying. Saying that we should reconsider our assumptions about markets isn't the same as providing an improved set of assumptions.