7 ms·

"We saved some money" is how economics works in price competitive markets. This is a result of many players doing what keeps each one competitive, but without c

by mym1990 5y ago

"We saved some money" is how economics works in price competitive markets. This is a result of many players doing what keeps each one competitive, but without collaborating on what the large scale effects are down the road.

roughly 5y ago
Autonomous agents responding to their environments can create some really wondrous outcomes and also some really, really stupid ones. https://en.wikipedia.org/wiki/Ant_mill https://en.wikipedia.org/wiki/Ant_mill
baq 5y ago
economists have a certain tendency to disregard tail events, which happen much more often than they think, as they don't follow the normal distribution. there's been a plethora of six sigma market movements in the past few years, and six sigma by definition should happen once every 3 million observations or so...
- lazide 5y ago
  ML models do the same thing - it’s over fitting.
stingraycharles 5y ago
And most importantly, economics assumes that the market is perfect, which it most certainly is not in practice. What we didn’t do enough is take the geopolitical landscape into this equation (or a potential pandemic, for that matter), which I hope changes after recent developments. I blame the governments mostly for this, I completely understand the businesses needing to do what’s best for business.
- netizen-936824 5y ago
  Business are still run by people. Nobody was forced to see someone else doing something shitty and then say "well I just need to be a bigger asshole than that guy! Must be okay 'cause it's not illegal" People have far too simplistic models of how things work, this is the consequence of a lack of understanding and shortsightedness
  - lotsofpulp 5y ago
    Businesses also need to have customers. No clothes maker was forced to manufacture in poor countries, but the alternative was to simply stop existing since insufficient customers are willing to pay the price premium for purely American made clothes. Hence the only solution would have been legislation forcing domestic manufacturing.
    - netizen-936824 5y ago
      That's assuming that our current model is the only/best way of doing things, which is a bit shortsighted
      - lotsofpulp 5y ago
        You will have to elaborate on what life looks like without businesses selling to customers, and otherwise going out of business if they do not sell to customers. At least it does not seem to involve any conventional use of the word business.
        netizen-936824 5y ago
        Exactly, and that might be a good thing. I don't have the answer to that question but it sure seems to me like our current system ruins lives and the environment to enrich the few who are willing to step on everyone else. Doesn't seem ideal to put it lightly
        lotsofpulp 5y ago
        I do not see how you can judge others for being “bigger assholes” if you do not have an answer for what better choices they should have made. > Business are still run by people. Nobody was forced to see someone else doing something shitty and then say "well I just need to be a bigger asshole than that guy! Must be okay 'cause it's not illegal"
        5y ago
- roughly 5y ago
  > I blame the governments mostly for this, I completely understand the businesses needing to do what’s best for business. How do you blame government for businesses running around with planning models that miss wars and pandemics, the two most common causes of ruin and disruption for the entire duration of human history?
  - salawat 5y ago
    ...Because making sure businesses in economies plan for that sort of thing is generally something that you have to be a non-transient actor to ensure. Businesses/corps come and go ... the Nation of $nation only tends to do so on the next timescale up. When their actually looking out for systemic blindspots no one else is, and not pandering to the elite.
    - version_five 5y ago
      Also (or as a corollary), otherwise businesses have no incentive to plan for rare, adverse events. They will be out-competed by businesses that don't care. Personally I think the solution is for governments to have a contingency plan, and opposed to forcing any individual business to do anything, but if we did want businesses to change their behavior, it's definitely a government issue. Unless somehow "buy my product , it's more expensive because our business hedges against war and pandemics" works in advertising (eco-friendly seems to get some traction, so maybe?)
    - g_p 5y ago
      Part of the challenge is that governments tend to come and go on 4 or 5 year cycles, so their priorities tend to be focused on issues likely to (or certain to) happen before the next election or other democratic event. Governments often assume (wrongly) that businesses have incentives to handle long-term risks, since they want to exist for a long time and remain profitable. The reality though is most are more focused on their share price and dividend than handling strategic risks.
- fsckboy 5y ago
  > And most importantly, economics assumes that the market is perfect, which it most certainly is not in practice. do physicists assume frictionless surfaces and perfectly elastic collisions? yes when they're explaining the basics of Newton's Laws, but they also develop theories and models for friction, etc. Same with economists, they study economies and do their best to come up with complete models. Are they perfect? no. Do they know more about economies than anybody else? yes.
- eru 5y ago
  > And most importantly, economics assumes that the market is perfect, which it most certainly is not in practice. What makes you think economics makes that assumption? The economics literature is full of papers investigating various kinds of market imperfections. (Mostly because all the papers involving perfect markets have already been written. It's publish or perish in academia after all.)
car_analogy 5y ago
Until running into an agent that does exhibit collaboration on large-scale, long-term effects, that uses these economic principles against countries foolish enough to hold on to them.
- eru 5y ago
  Who are you talking about? So far the free world has trumped everything and keeps going from strength to strength. Russia has a tiny and impoverished economy. China is still rather poor. (And only started to grow richer when they reformed in the direction of economic freedom starting in 1978-ish.)
  - car_analogy 5y ago
    As to who, see my other comment: https://news.ycombinator.com/item?id=30458506 https://news.ycombinator.com/item?id=30458506 And "direction" is doing a lot of heavy lifting in your statement about China. They were, and still are, very protectionist of their internal market, using official and unofficial means. Not to imply western countries are exempt - they also made (and make) use of protectionism in growing their industries. Only after industries matured, would the market be opened, and economic propaganda launched how unrestricted trade was the only way to prosperity (and, by pure chance, this would give the now globally-competitive industries new export markets). See https://en.wikipedia.org/wiki/Protectionism#In_the_United_States https://en.wikipedia.org/wiki/Protectionism#In_the_United_St...: Alexander Hamilton, the first United States Secretary of the Treasury, was of the view, as articulated most famously in his "Report on Manufactures", that developing an industrialized economy was impossible without protectionism because import duties are necessary to shelter domestic "infant industries" until they could achieve economies of scale. The industrial takeoff of the United States occurred under protectionist policies 1816–1848 and under moderate protectionism 1846–1861, and continued under strict protectionist policies 1861–1945. In other words, protectionism has a proven track record of developing economies, while unrestricted free trade is only theoretically able to accomplish this. Of course economists are immune to empirical proof - from that same wikipedia article: There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has a positive effect on economic growth.
rob74 5y ago
Yup... and another result of that is climate change.
- deleted 5y ago
  [deleted]
- eru 5y ago
  The Soviet Union managed to contribute to economic disasters even without much capitalism. See eg https://en.wikipedia.org/wiki/Aral_Sea https://en.wikipedia.org/wiki/Aral_Sea
hammock 5y ago
>"We saved some money" is how economics works in price competitive markets. This is a result of many players doing what keeps each one competitive, but without collaborating on what the large scale effects are down the road. An excellent and accurate elaboration of the modern economic theory that led us, nevertheless, to our current precarious position.
- munk-a 5y ago
  Modern economic theory doesn't disallow subsidies - it's very possible to exist in a primarily capitalist society with either tariffs or domestic business subsidies to ensure certain key industries remain on local shores - it might be politically infeasible for such laws to be passed in the US, but it is a very reasonable response.
  - hammock 5y ago
    It doesn't disallow them but it discourages them - the ruling class of the Western world has been on the side of globalization for many decades now (still is) and that is really what is in question.
  - pirate787 5y ago
    The United States has all kinds of tariff and other subsidies for key industries. Foreign airlines and shipping companies are literally blocked from providing domestic US services. (That's also why all major US cruise ships touch a foreign port in their journey). Steel and autos and much of agriculture are also heavily protected. These are all anti-consumer and bad public policy.
    - lastofthemojito 5y ago
      > That's also why all major US cruise ships touch a foreign port in their journey In a pedantic sense, major US cruise ships don't need to touch a foreign port in their journey. The catch being there is only one major US cruise ship - The Pride of America, which generally does Hawaiian cruises: https://en.wikipedia.org/wiki/Pride_of_America https://en.wikipedia.org/wiki/Pride_of_America The other major cruise ships you see operating in the US are actually foreign-flagged so they can avoid US environmental, gambling and employment regulations, etc. These are the ships that must touch a foreign port during their journeys.
Terry_Roll 5y ago
Thats what we get told, but there is always strategic reasons with so much stuff which few people get to hear about. On the news a while ago, the news was going on about how the UK is banning dual use goods, so this tells us some Govt dept has audited potentially every business and its goods and compiled a list of devices which can be considered multi use. You see this alot with chemicals, Glycerine, used as a cosmetic can also be used for bombmaking. I only found this out when I purchased a litre and then some internet forum started going on about how it can be used for bomb making. Its why we dont get taught everything, not even in the news. Anyway oil prices have gone up which will push more people towards electric vehicles, and yet Russia has the largest oil reserves in the world, so no doubt they will benefit, because if another internet forum is to be believed, the Saudia's have all but exhausted their oil reserves which is one of the reasons for them IPO'ing their national oil producer. Kind of explains why I also wasnt allowed an export licence for an app but also highlights who was behind it!
- Dracophoenix 5y ago
  >Glycerine, used as a cosmetic can also be used for bombmaking. I only found this out when I purchased a litre and then some internet forum started going on about how it can be used for bomb making. It's the chief component in dynamite. >Kind of explains why I also wasnt allowed an export licence for an app but also highlights who was behind it! When do you need an export license for an app?
  - Terry_Roll 5y ago
    This was like 5-10years ago, I developed a bug reporting app and developed a form of encryption which was uncrackable. Now I'm not qualified in anything, never even went to Uni, but what should have taken 6weeks with the UK Dept BIS, took like more than that and then got denied so I shut the business down I'd set up for it. Dont have the source code anymore or anything and its not ever going to happen now. When I say it was uncrackable, it was based loosely on code books which were used in ww2, which is something I subsequently read about later on in the news.
    - 5y ago
xvector 5y ago
It's actually a result of the spineless geriatrics in the government not being willing or able to keep up with an evolving world. We see the same with climate change.
- mym1990 5y ago
  I think the big advantage that companies have is a mission statement in which most everyone is progressing towards within the company. Much of government operates almost the complete opposite, and in a world that is changing faster and faster every day, the politicians are falling farther and farther behind.
echelon 5y ago
> "We saved some money" is how economics works in price competitive markets. It's also a great optimization criteria to use to position yourself for checkmate. Monopolies, countries...
- mym1990 5y ago
  Every company or government will eventually see itself in checkmate. It is in the best interest of companies to push that as far down the road as possible.
TearsInTheRain 5y ago
We optimize for price so you cant align with something that price doesnt capture. Taxes and subsidies allows us to take those factors into consideration
ghostly_s 5y ago
Gee, one might almost reach the conclusion that unregulated free markets are bad...
- mym1990 5y ago
  It really depends on the market...we have to weigh the risks or worst case scenarios. While economics can be pretty cut and dry, the real world is very messy.
eru 5y ago
Regulation begets regulation. Anti-price gouging regulation makes it harder for companies to benefit from disaster preparedness.

roughly 5y ago

Autonomous agents responding to their environments can create some really wondrous outcomes and also some really, really stupid ones. https://en.wikipedia.org/wiki/Ant_mill https://en.wikipedia.org/wiki/Ant_mill

baq 5y ago

economists have a certain tendency to disregard tail events, which happen much more often than they think, as they don't follow the normal distribution. there's been a plethora of six sigma market movements in the past few years, and six sigma by definition should happen once every 3 million observations or so...

lazide 5y ago
ML models do the same thing - it’s over fitting.

stingraycharles 5y ago

And most importantly, economics assumes that the market is perfect, which it most certainly is not in practice. What we didn’t do enough is take the geopolitical landscape into this equation (or a potential pandemic, for that matter), which I hope changes after recent developments. I blame the governments mostly for this, I completely understand the businesses needing to do what’s best for business.

netizen-936824 5y ago
Business are still run by people. Nobody was forced to see someone else doing something shitty and then say "well I just need to be a bigger asshole than that guy! Must be okay 'cause it's not illegal" People have far too simplistic models of how things work, this is the consequence of a lack of understanding and shortsightedness
- lotsofpulp 5y ago
  Businesses also need to have customers. No clothes maker was forced to manufacture in poor countries, but the alternative was to simply stop existing since insufficient customers are willing to pay the price premium for purely American made clothes. Hence the only solution would have been legislation forcing domestic manufacturing.
  - netizen-936824 5y ago
    That's assuming that our current model is the only/best way of doing things, which is a bit shortsighted
    - lotsofpulp 5y ago
      You will have to elaborate on what life looks like without businesses selling to customers, and otherwise going out of business if they do not sell to customers. At least it does not seem to involve any conventional use of the word business.
      - netizen-936824 5y ago
        Exactly, and that might be a good thing. I don't have the answer to that question but it sure seems to me like our current system ruins lives and the environment to enrich the few who are willing to step on everyone else. Doesn't seem ideal to put it lightly
        lotsofpulp 5y ago
        I do not see how you can judge others for being “bigger assholes” if you do not have an answer for what better choices they should have made. > Business are still run by people. Nobody was forced to see someone else doing something shitty and then say "well I just need to be a bigger asshole than that guy! Must be okay 'cause it's not illegal"
        5y ago
roughly 5y ago
> I blame the governments mostly for this, I completely understand the businesses needing to do what’s best for business. How do you blame government for businesses running around with planning models that miss wars and pandemics, the two most common causes of ruin and disruption for the entire duration of human history?
- salawat 5y ago
  ...Because making sure businesses in economies plan for that sort of thing is generally something that you have to be a non-transient actor to ensure. Businesses/corps come and go ... the Nation of $nation only tends to do so on the next timescale up. When their actually looking out for systemic blindspots no one else is, and not pandering to the elite.
  - version_five 5y ago
    Also (or as a corollary), otherwise businesses have no incentive to plan for rare, adverse events. They will be out-competed by businesses that don't care. Personally I think the solution is for governments to have a contingency plan, and opposed to forcing any individual business to do anything, but if we did want businesses to change their behavior, it's definitely a government issue. Unless somehow "buy my product , it's more expensive because our business hedges against war and pandemics" works in advertising (eco-friendly seems to get some traction, so maybe?)
  - g_p 5y ago
    Part of the challenge is that governments tend to come and go on 4 or 5 year cycles, so their priorities tend to be focused on issues likely to (or certain to) happen before the next election or other democratic event. Governments often assume (wrongly) that businesses have incentives to handle long-term risks, since they want to exist for a long time and remain profitable. The reality though is most are more focused on their share price and dividend than handling strategic risks.
fsckboy 5y ago
> And most importantly, economics assumes that the market is perfect, which it most certainly is not in practice. do physicists assume frictionless surfaces and perfectly elastic collisions? yes when they're explaining the basics of Newton's Laws, but they also develop theories and models for friction, etc. Same with economists, they study economies and do their best to come up with complete models. Are they perfect? no. Do they know more about economies than anybody else? yes.
eru 5y ago
> And most importantly, economics assumes that the market is perfect, which it most certainly is not in practice. What makes you think economics makes that assumption? The economics literature is full of papers investigating various kinds of market imperfections. (Mostly because all the papers involving perfect markets have already been written. It's publish or perish in academia after all.)

car_analogy 5y ago

Until running into an agent that does exhibit collaboration on large-scale, long-term effects, that uses these economic principles against countries foolish enough to hold on to them.

eru 5y ago
Who are you talking about? So far the free world has trumped everything and keeps going from strength to strength. Russia has a tiny and impoverished economy. China is still rather poor. (And only started to grow richer when they reformed in the direction of economic freedom starting in 1978-ish.)
- car_analogy 5y ago
  As to who, see my other comment: https://news.ycombinator.com/item?id=30458506 https://news.ycombinator.com/item?id=30458506 And "direction" is doing a lot of heavy lifting in your statement about China. They were, and still are, very protectionist of their internal market, using official and unofficial means. Not to imply western countries are exempt - they also made (and make) use of protectionism in growing their industries. Only after industries matured, would the market be opened, and economic propaganda launched how unrestricted trade was the only way to prosperity (and, by pure chance, this would give the now globally-competitive industries new export markets). See https://en.wikipedia.org/wiki/Protectionism#In_the_United_States https://en.wikipedia.org/wiki/Protectionism#In_the_United_St...: Alexander Hamilton, the first United States Secretary of the Treasury, was of the view, as articulated most famously in his "Report on Manufactures", that developing an industrialized economy was impossible without protectionism because import duties are necessary to shelter domestic "infant industries" until they could achieve economies of scale. The industrial takeoff of the United States occurred under protectionist policies 1816–1848 and under moderate protectionism 1846–1861, and continued under strict protectionist policies 1861–1945. In other words, protectionism has a proven track record of developing economies, while unrestricted free trade is only theoretically able to accomplish this. Of course economists are immune to empirical proof - from that same wikipedia article: There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has a positive effect on economic growth.

rob74 5y ago

Yup... and another result of that is climate change.

deleted 5y ago
[deleted]
eru 5y ago
The Soviet Union managed to contribute to economic disasters even without much capitalism. See eg https://en.wikipedia.org/wiki/Aral_Sea https://en.wikipedia.org/wiki/Aral_Sea

hammock 5y ago

>"We saved some money" is how economics works in price competitive markets. This is a result of many players doing what keeps each one competitive, but without collaborating on what the large scale effects are down the road. An excellent and accurate elaboration of the modern economic theory that led us, nevertheless, to our current precarious position.

munk-a 5y ago
Modern economic theory doesn't disallow subsidies - it's very possible to exist in a primarily capitalist society with either tariffs or domestic business subsidies to ensure certain key industries remain on local shores - it might be politically infeasible for such laws to be passed in the US, but it is a very reasonable response.
- hammock 5y ago
  It doesn't disallow them but it discourages them - the ruling class of the Western world has been on the side of globalization for many decades now (still is) and that is really what is in question.
- pirate787 5y ago
  The United States has all kinds of tariff and other subsidies for key industries. Foreign airlines and shipping companies are literally blocked from providing domestic US services. (That's also why all major US cruise ships touch a foreign port in their journey). Steel and autos and much of agriculture are also heavily protected. These are all anti-consumer and bad public policy.
  - lastofthemojito 5y ago
    > That's also why all major US cruise ships touch a foreign port in their journey In a pedantic sense, major US cruise ships don't need to touch a foreign port in their journey. The catch being there is only one major US cruise ship - The Pride of America, which generally does Hawaiian cruises: https://en.wikipedia.org/wiki/Pride_of_America https://en.wikipedia.org/wiki/Pride_of_America The other major cruise ships you see operating in the US are actually foreign-flagged so they can avoid US environmental, gambling and employment regulations, etc. These are the ships that must touch a foreign port during their journeys.

Terry_Roll 5y ago

Thats what we get told, but there is always strategic reasons with so much stuff which few people get to hear about. On the news a while ago, the news was going on about how the UK is banning dual use goods, so this tells us some Govt dept has audited potentially every business and its goods and compiled a list of devices which can be considered multi use. You see this alot with chemicals, Glycerine, used as a cosmetic can also be used for bombmaking. I only found this out when I purchased a litre and then some internet forum started going on about how it can be used for bomb making. Its why we dont get taught everything, not even in the news. Anyway oil prices have gone up which will push more people towards electric vehicles, and yet Russia has the largest oil reserves in the world, so no doubt they will benefit, because if another internet forum is to be believed, the Saudia's have all but exhausted their oil reserves which is one of the reasons for them IPO'ing their national oil producer. Kind of explains why I also wasnt allowed an export licence for an app but also highlights who was behind it!

Dracophoenix 5y ago
>Glycerine, used as a cosmetic can also be used for bombmaking. I only found this out when I purchased a litre and then some internet forum started going on about how it can be used for bomb making. It's the chief component in dynamite. >Kind of explains why I also wasnt allowed an export licence for an app but also highlights who was behind it! When do you need an export license for an app?
- Terry_Roll 5y ago
  This was like 5-10years ago, I developed a bug reporting app and developed a form of encryption which was uncrackable. Now I'm not qualified in anything, never even went to Uni, but what should have taken 6weeks with the UK Dept BIS, took like more than that and then got denied so I shut the business down I'd set up for it. Dont have the source code anymore or anything and its not ever going to happen now. When I say it was uncrackable, it was based loosely on code books which were used in ww2, which is something I subsequently read about later on in the news.
  - 5y ago

xvector 5y ago

It's actually a result of the spineless geriatrics in the government not being willing or able to keep up with an evolving world. We see the same with climate change.

mym1990 5y ago
I think the big advantage that companies have is a mission statement in which most everyone is progressing towards within the company. Much of government operates almost the complete opposite, and in a world that is changing faster and faster every day, the politicians are falling farther and farther behind.

echelon 5y ago

> "We saved some money" is how economics works in price competitive markets. It's also a great optimization criteria to use to position yourself for checkmate. Monopolies, countries...

mym1990 5y ago
Every company or government will eventually see itself in checkmate. It is in the best interest of companies to push that as far down the road as possible.

TearsInTheRain 5y ago

We optimize for price so you cant align with something that price doesnt capture. Taxes and subsidies allows us to take those factors into consideration

ghostly_s 5y ago

Gee, one might almost reach the conclusion that unregulated free markets are bad...

mym1990 5y ago
It really depends on the market...we have to weigh the risks or worst case scenarios. While economics can be pretty cut and dry, the real world is very messy.

eru 5y ago

Regulation begets regulation. Anti-price gouging regulation makes it harder for companies to benefit from disaster preparedness.