5 ms·

There is no such thing as a free market.

by ncmncm 4y ago

WalterBright 4y ago
You're right, perfection is never possible. Free markets, however, have the wonderful property that the closer one gets to them, the better they work! On the other hand, the closer one gets to socialism, the worse it works :-(
- ncmncm 4y ago
  It just means markets have to be managed. Better management makes better markets, but politics only tolerates so much management merit. Socialism is politics.
- Retric 4y ago
  The issue is free markets require more than just open competition, they need zero market coercions such as monopolies or misinformation, while also being free from governmental interference. That’s clearly a direct contradiction. So basically nobody is actually promoting free markets, they all have their own spin to get past these contradictions.
  - WalterBright 4y ago
    Free markets do not require perfect information. Every transaction made has an element of risk in it - the risk is factored into the price. Buying a used car is a perfect example. They cost more at a dealer than from a private party - because people will pay more for lower risk. Another example is name brands costing more than generic items. Another is less risky investments come with lower returns. I don't know where the idea that free markets require perfect information comes from. As for monopolies, the historical ones are ones set up and enforced by the government.
    - ncmncm 4y ago
      Free markets need management to continue existing at all. When one gets to a monopoly or oligopoly, it's not a market anymore, so isn't counted. Monopoly is the natural end state of an unregulated market.
      - WalterBright 4y ago
        Name a monopoly in the US not put in place by the government. Historical or contemporary.
        Retric 4y ago
        Standard Oil, plenty of others like Microsoft are more arguable but standard oil simply out competed and then bought up the competition.
        WalterBright 4y ago
        Standard Oil never was a monopoly, and never was convicted of being a monopoly. It was convicted of restraint of trade. SO never had a market share that exceeded 90%. Throughout the years-long anti-trust trial, SO's market share declined, as competitors had learned how to compete with SO. During the height of SO, the consumer price of kerosene dropped 70%. There is no evidence SO harmed consumers or charged monopoly prices. As for Microsoft, they never had more than 90% share, there were always alternatives consumers could buy (Linux and Apple), and their market share has slipped quite a bit since the Justice Dept took no action against them. There's no evidence Microsoft charged monopoly prices - they charged with giving away free copies of their browser! They still give it away for free. Nobody ever demonstrated any harm to consumers from Microsoft.
        Retric 4y ago
        Monopoly isn’t defined as having a market share over 90%, or any specific percentage. Standard oil was the massively dominant player which controlled enough of the oil supply to be able to set the market price because the competition had insufficient capacity to make up the difference and there was a lack of an equivalent substitute good(s). That’s the economic definition of a monopoly. As to being convinced, it isn’t illegal to become a monopoly.
    - Retric 4y ago
      It’s not perfect information, it’s a lack of misinformation. Indistinguishable fake products remove the possibility of name brands. You run into situations where people can’t trust a gas station is actually selling gas when anyone can slap an Exxon sign up. Reputation networks fill some of these roles, but gatekeepers aren’t free markets.
      - WalterBright 4y ago
        A free market comes with it government protections against use of fraud and force. Fraudulently misrepresenting your product is a crime and is actionable in a free market.
        Retric 4y ago
        That’s exactly the kind of contradiction I am talking about. Some people view such government intervention as part of free markets, others feel free markets only exist without any government involvement.
        lern_too_spel 4y ago
        There is a certain kind of religious nut that exists in the US, and no other place as far as I can tell, that believes that the invisible hand of the market is the benevolent hand of God, and that leaving it to its own devices is best. This is dogma, which needs no proof, and any market failures we mortals point out are simply failures to understand the Divine Plan.
- cycomanic 4y ago
  That's a pretty bold claim not backed up by any evidence and I can think of numerous counter examples. So if you make such a claim I you really make a bit of an effort to support it.
  - WalterBright 4y ago
    How about what happened to China when they switched from a centrally planned socialist economy to a free market based economy? Or look at the divergence of the fortunes of North & South Korea after the Korean War? The evidence is everywhere, and very strong.
  - WalterBright 4y ago
    Name a couple counter examples. No evidence? It's all around you. The US for mostly free market. It's done spectacularly well. For communism, how about the USSR, N. Korea, etc. They're not hard to find. Do you think they did well? I read somewhere that N. Koreans were 4 inches shorter than their southern neighbors. Does that sound like hard over socialism is a success? Why is it that every country and society that tried collective farms starved, and sometimes resorted to cannibalism? The Pilgrims tried collective farming for their first year. They starved. Jamestown tried collective farms. They starved. The Israeli Kibbutzen are propped up by the government, as they cannot produce enough food. Kansas was called the "Breadbasket of the Soviet Union." And on and on. I saw on the news the other day an interview with a fellow trying to get in the US via the southern border. He has nothing. He spent 4 months getting from Cuba to that border. What would motivate someone to do that? Triumphant socialism in Cuba?
    - cycomanic 4y ago
      Your statement was: "Free markets, however, have the wonderful property that the closer one gets to them, the better they work!" and you bring up the US compared to North Korea. That doesn't support your point. You simply showed that a market that is freer than NK works better, that doesn't mean that a market that is freer than the US would also work better than the US, or that the US is the global maximum. Europe is arguably a less free market than the US but it's by no means clear which one is working better. Somalia ruled by the warlords was a freer market but nobody was emigrating from the US to Somalia.
- adrianN 4y ago
  That strongly depends on your definition of "better".
  - WalterBright 4y ago
    How about average height? Check out the US figures for the 19th century. Height turns out to be a very good proxy of prosperity.
    - ncmncm 4y ago
      The Netherlands have better height. It is not genetic: they didn't, historically. In the US it is decreasing. And, shall we compare infant mortality figures? How about life expectancy? Europe does better than the US on all but mean income, which is skewed by billionaires. Having more billionaires does not favor your argument.
      - WalterBright 4y ago
        Infant mortality measurement varies because different countries have different measures of what constitutes a baby. The US tries very hard to save preemies, and those failures are considered infant mortality. Other countries don't, calling them miscarriages. It's a moot point anyway, as infant mortality has declined to statistical noise level in all the first world countries. Life expectancy: America has a big problem with obesity, which is a side effect of prosperity. Obesity negatively influences life expectancy. Income: income needs to be expressed in terms of Purchasing Power Parity. Besides, what evidence do you have that this is skewed by billionaires? I'll stick with average height. It's a pretty good indicator of a prosperous country, up until the genetic potential is reached. As for the Dutch, having traveled in Holland, they appear to have a culture of more healthy food. It's their choice, and this choice is available to Americans, too. Nobody makes Americans drink soda pop all day.
        ncmncm 4y ago
        Move goalposts, much? Declining average height indicates something real. And, American obesity, and (more to the point) prevalence of metabolic disorder causing it, is not a product of prosperity. It is, ultimately, a product of dysfunctional government, with a consequence of falling prosperity.
- pjc50 4y ago
  This is a "content free dismissal" that gets re-litigated on HN every week. If you don't have something new or interesting to say about it, just don't.

There is no such thing as a free market.

by ncmncm 4y ago

There is no such thing as a free market.

You're right, perfection is never possible. Free markets, however, have the wonderful property that the closer one gets to them, the better they work! On the other hand, the closer one gets to socialism, the worse it works :-(

ncmncm 4y ago
It just means markets have to be managed. Better management makes better markets, but politics only tolerates so much management merit. Socialism is politics.
Retric 4y ago
The issue is free markets require more than just open competition, they need zero market coercions such as monopolies or misinformation, while also being free from governmental interference. That’s clearly a direct contradiction. So basically nobody is actually promoting free markets, they all have their own spin to get past these contradictions.
- WalterBright 4y ago
  Free markets do not require perfect information. Every transaction made has an element of risk in it - the risk is factored into the price. Buying a used car is a perfect example. They cost more at a dealer than from a private party - because people will pay more for lower risk. Another example is name brands costing more than generic items. Another is less risky investments come with lower returns. I don't know where the idea that free markets require perfect information comes from. As for monopolies, the historical ones are ones set up and enforced by the government.
  - ncmncm 4y ago
    Free markets need management to continue existing at all. When one gets to a monopoly or oligopoly, it's not a market anymore, so isn't counted. Monopoly is the natural end state of an unregulated market.
    - WalterBright 4y ago
      Name a monopoly in the US not put in place by the government. Historical or contemporary.
      - Retric 4y ago
        Standard Oil, plenty of others like Microsoft are more arguable but standard oil simply out competed and then bought up the competition.
        WalterBright 4y ago
        Standard Oil never was a monopoly, and never was convicted of being a monopoly. It was convicted of restraint of trade. SO never had a market share that exceeded 90%. Throughout the years-long anti-trust trial, SO's market share declined, as competitors had learned how to compete with SO. During the height of SO, the consumer price of kerosene dropped 70%. There is no evidence SO harmed consumers or charged monopoly prices. As for Microsoft, they never had more than 90% share, there were always alternatives consumers could buy (Linux and Apple), and their market share has slipped quite a bit since the Justice Dept took no action against them. There's no evidence Microsoft charged monopoly prices - they charged with giving away free copies of their browser! They still give it away for free. Nobody ever demonstrated any harm to consumers from Microsoft.
        Retric 4y ago
        Monopoly isn’t defined as having a market share over 90%, or any specific percentage. Standard oil was the massively dominant player which controlled enough of the oil supply to be able to set the market price because the competition had insufficient capacity to make up the difference and there was a lack of an equivalent substitute good(s). That’s the economic definition of a monopoly. As to being convinced, it isn’t illegal to become a monopoly.
  - Retric 4y ago
    It’s not perfect information, it’s a lack of misinformation. Indistinguishable fake products remove the possibility of name brands. You run into situations where people can’t trust a gas station is actually selling gas when anyone can slap an Exxon sign up. Reputation networks fill some of these roles, but gatekeepers aren’t free markets.
    - WalterBright 4y ago
      A free market comes with it government protections against use of fraud and force. Fraudulently misrepresenting your product is a crime and is actionable in a free market.
      - Retric 4y ago
        That’s exactly the kind of contradiction I am talking about. Some people view such government intervention as part of free markets, others feel free markets only exist without any government involvement.
        lern_too_spel 4y ago
        There is a certain kind of religious nut that exists in the US, and no other place as far as I can tell, that believes that the invisible hand of the market is the benevolent hand of God, and that leaving it to its own devices is best. This is dogma, which needs no proof, and any market failures we mortals point out are simply failures to understand the Divine Plan.
cycomanic 4y ago
That's a pretty bold claim not backed up by any evidence and I can think of numerous counter examples. So if you make such a claim I you really make a bit of an effort to support it.
- WalterBright 4y ago
  How about what happened to China when they switched from a centrally planned socialist economy to a free market based economy? Or look at the divergence of the fortunes of North & South Korea after the Korean War? The evidence is everywhere, and very strong.
- WalterBright 4y ago
  Name a couple counter examples. No evidence? It's all around you. The US for mostly free market. It's done spectacularly well. For communism, how about the USSR, N. Korea, etc. They're not hard to find. Do you think they did well? I read somewhere that N. Koreans were 4 inches shorter than their southern neighbors. Does that sound like hard over socialism is a success? Why is it that every country and society that tried collective farms starved, and sometimes resorted to cannibalism? The Pilgrims tried collective farming for their first year. They starved. Jamestown tried collective farms. They starved. The Israeli Kibbutzen are propped up by the government, as they cannot produce enough food. Kansas was called the "Breadbasket of the Soviet Union." And on and on. I saw on the news the other day an interview with a fellow trying to get in the US via the southern border. He has nothing. He spent 4 months getting from Cuba to that border. What would motivate someone to do that? Triumphant socialism in Cuba?
  - cycomanic 4y ago
    Your statement was: "Free markets, however, have the wonderful property that the closer one gets to them, the better they work!" and you bring up the US compared to North Korea. That doesn't support your point. You simply showed that a market that is freer than NK works better, that doesn't mean that a market that is freer than the US would also work better than the US, or that the US is the global maximum. Europe is arguably a less free market than the US but it's by no means clear which one is working better. Somalia ruled by the warlords was a freer market but nobody was emigrating from the US to Somalia.
adrianN 4y ago
That strongly depends on your definition of "better".
- WalterBright 4y ago
  How about average height? Check out the US figures for the 19th century. Height turns out to be a very good proxy of prosperity.
  - ncmncm 4y ago
    The Netherlands have better height. It is not genetic: they didn't, historically. In the US it is decreasing. And, shall we compare infant mortality figures? How about life expectancy? Europe does better than the US on all but mean income, which is skewed by billionaires. Having more billionaires does not favor your argument.
    - WalterBright 4y ago
      Infant mortality measurement varies because different countries have different measures of what constitutes a baby. The US tries very hard to save preemies, and those failures are considered infant mortality. Other countries don't, calling them miscarriages. It's a moot point anyway, as infant mortality has declined to statistical noise level in all the first world countries. Life expectancy: America has a big problem with obesity, which is a side effect of prosperity. Obesity negatively influences life expectancy. Income: income needs to be expressed in terms of Purchasing Power Parity. Besides, what evidence do you have that this is skewed by billionaires? I'll stick with average height. It's a pretty good indicator of a prosperous country, up until the genetic potential is reached. As for the Dutch, having traveled in Holland, they appear to have a culture of more healthy food. It's their choice, and this choice is available to Americans, too. Nobody makes Americans drink soda pop all day.
      - ncmncm 4y ago
        Move goalposts, much? Declining average height indicates something real. And, American obesity, and (more to the point) prevalence of metabolic disorder causing it, is not a product of prosperity. It is, ultimately, a product of dysfunctional government, with a consequence of falling prosperity.
pjc50 4y ago
This is a "content free dismissal" that gets re-litigated on HN every week. If you don't have something new or interesting to say about it, just don't.