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Purely free markets also have some very well-known failure cases: tradgedy of the commons, ability of a large participant to drop prices to eliminate competitio

Purely free markets also have some very well-known failure cases: tradgedy of the commons, ability of a large participant to drop prices to eliminate competition then raise prices, inability of market forces to handle extreme tail risk like major natural disasters.

WalterBright 4y ago
> tradgedy of the commons, Communal ownership is not free market, hence the tragedy of the commons is not a failure of the free market. > ability of a large participant to drop prices to eliminate competition then raise prices, Has never happened successfully. > inability of market forces to handle extreme tail risk like major natural disasters. The free market does very well at rushing supplies into disaster areas. At least until the government put a stop to that with anti-gouging laws. So now, disaster victims have to wait around until the government gets its act together, which takes a lot longer.
- aeternum 4y ago
  >Communal ownership is not free market, hence the tragedy of the commons is not a failure of the free market. Ah yes so in this free-market utopia shall we purchase bottled air from Nestle for our breathing needs? Shall all aerospace companies pay a toll to the estate of Yuri Gagarin whenever they launch a rocket? He was the first in space so must have the most logical claim to the ownership rights. His estate could then help us avoid Kessler syndrome.
  - WalterBright 4y ago
    Isn't climate change the result of communal ownership of the air? As for space, the orbits are full of dangerous space junk. A classic tragedy of the commons.
    - aeternum 4y ago
      Much of the most heavily polluted land in the US is privately owned, so I don't see how that eliminates the issue. I'd be much more concerned with issues like groundwater contamination, seeping gasses, and toxic waste dumping.
      - WalterBright 4y ago
        > groundwater contamination, seeping gasses, and toxic waste dumping Are all not allowed in a free market. A free market does not condone damaging other people or their property. BTW, US military bases are on some of the most polluted ground because they polluted it.
        aeternum 4y ago
        How would aviation, water-rights, or even building a railroad/tunnel work in your pure free market society? Can factories actually exist without 'damaging' the air or water runoff to other people's property?
    - tdeck 4y ago
      So your definition of a free market is one in which there is no possible resource that isn't owned and commodified?
      - WalterBright 4y ago
        No, I didn't say that. I did say that all communal ownership resources are subject to tragedy of the commons.
- anigbrowl 4y ago
  This would be such a beautiful world if only people were more selfish!
  - WalterBright 4y ago
    The beauty of the free market is that instead of suppressing selfish motives, it enables them in a way that benefits society. It's why Americans live the highest standard of living in the world. Socialism fails because it relies on altruistic behavior, which is in short supply in humans.
    - anigbrowl 4y ago
      > in a way that benefits society So when accusations of price gouging arise (say in the aftermath of a disaster), you're saying that it's the government interfering while the people in the disaster area area are eager to pay top dollar for suddenly-rare commodities like water or hand sanitizer? If I see regular-seeming people complaining about prices, should I assume they're covert government agents?
      - twblalock 4y ago
        Those things are often suddenly rare because people hoard them, which can be prevented by allowing supply and demand to properly work. Prices should go up if goods are in more demand. In addition, the higher prices will motivate sellers to send more products to the impacted area. That eventually leads to price stabilization at the intersection of the supply and demand curve, i.e. how things are supposed to work. Do the higher prices mean some people won't get any water? Yes! But if you artificially suppress prices, there will also be some people who don't get water, because other people will hoard it.
        anigbrowl 4y ago
        I don't need you to explain price theory to me, and also don't find your hoarding argument persuasive, for two reasons: one, much of the demand in the aftermath of a disaster is from people who need to consume a commodity and can't get any, and two, the hoarding behavior you describe is more likely to be by price gougers hoping to engage in arbitrage. > But if you artificially suppress prices, there will also be some people who don't get water, because other people will hoard it. Rationing the volume available for purchase by individual customers is the obvious solution, and seems to have worked out just fine in practice during things like the great toilet paper panic of 2020. I'm asking Walter how he explains the fact of people complaining about high prices in such a context, given his claim that it's government spoiling the price theory party. Why are the opinions of people who are priced out discounted?
- tbrownaw 4y ago
  >> ability of a large participant to drop prices to eliminate competition then raise prices, > Has never happened successfully. I thought ISPs were notorious for temporarily dropping prices whenever a competitor tries to build out? Or at least I keep hearing anecdotes from people who think they've watched it happen.
  - WalterBright 4y ago
    ISPs are often granted franchise monopoly powers.
somenameforme 4y ago
There is one issue with your argument here, an increasingly relevant one in contemporary times. You are implying that since one choice can be shown to be provably bad, it must therefore be the case that another is better by default. But this assumes that there are good choices, and that there are bad choices. Reality, unfortunately, is often not so kind, and instead leaves us to choose only between bad choices and horrible ones. And so emphasizing the flaws of one choice, says very little about the desirability of an alternative. In some ways I think game theory is most appropriate for chaotic systems. The goal is not to pick the system that works the best, under some ideal set of criteria, but the one that works the least-worst under the most hostile set of criteria.
- aeternum 4y ago
  It doesn't need to be a purely free market. I'm very much a proponent of free markets but there's also a need for some amount of thoughtful regulation. Allowing market participants to discharge toxins into the local water supply is not in society's interests but is quite possible in a purely free-market system. There's now a good amount of evidence that a hybrid system: mostly free-market, with some regulation, and some kind of social safety net is the least-bad choice.
  - WalterBright 4y ago
    > Allowing market participants to discharge toxins into the local water supply is not in society's interests but is quite possible in a purely free-market system. A pure free market system would not allow people to pollute other peoples' property.
    - AlexandrB 4y ago
      How do you define property rights for air and water? If I own a section of a stream and I dump my garbage into it, am I polluting my property or another's property? What if the consequences were unforeseen (as is often the case with groundwater contamination)? Edit: moreover how is "the free market" going to defend the property rights of others in these cases? I assume via civil litigation. But what if my victims can't afford prolonged litigation or I decide that the potential cost of a settlement is less than the cost of disposing of pollutants properly?
lliamander 4y ago
> tradgedy of the commons That has to do with diffusion of responsibility for communal property. What does that have to do with markets. > ability of a large participant to drop prices to eliminate competition then raise prices I think the market has ways to adapt to such behavior. Regulatory capture in a non-free market seems like a much more likely, and more persistent, risk. > inability of market forces to handle extreme tail risk like major natural disasters. I just don't think that's supported by the evidence.
- palmetieri2000 4y ago
  By what metric is the US market free? I find it difficult to believe that it would be considered anything other than in a state of regulatory capture.
  - WalterBright 4y ago
    > By what metric is the US market free? You can start any business you like. People do it all the time.
    - palmetieri2000 4y ago
      No you cannot... Crack, heroin, firearms, sex work. There is a massive list of things one cannot start a business doing in the US. Why would you say such nonsense?

WalterBright 4y ago

> tradgedy of the commons, Communal ownership is not free market, hence the tragedy of the commons is not a failure of the free market. > ability of a large participant to drop prices to eliminate competition then raise prices, Has never happened successfully. > inability of market forces to handle extreme tail risk like major natural disasters. The free market does very well at rushing supplies into disaster areas. At least until the government put a stop to that with anti-gouging laws. So now, disaster victims have to wait around until the government gets its act together, which takes a lot longer.

aeternum 4y ago
>Communal ownership is not free market, hence the tragedy of the commons is not a failure of the free market. Ah yes so in this free-market utopia shall we purchase bottled air from Nestle for our breathing needs? Shall all aerospace companies pay a toll to the estate of Yuri Gagarin whenever they launch a rocket? He was the first in space so must have the most logical claim to the ownership rights. His estate could then help us avoid Kessler syndrome.
- WalterBright 4y ago
  Isn't climate change the result of communal ownership of the air? As for space, the orbits are full of dangerous space junk. A classic tragedy of the commons.
  - aeternum 4y ago
    Much of the most heavily polluted land in the US is privately owned, so I don't see how that eliminates the issue. I'd be much more concerned with issues like groundwater contamination, seeping gasses, and toxic waste dumping.
    - WalterBright 4y ago
      > groundwater contamination, seeping gasses, and toxic waste dumping Are all not allowed in a free market. A free market does not condone damaging other people or their property. BTW, US military bases are on some of the most polluted ground because they polluted it.
      - aeternum 4y ago
        How would aviation, water-rights, or even building a railroad/tunnel work in your pure free market society? Can factories actually exist without 'damaging' the air or water runoff to other people's property?
  - tdeck 4y ago
    So your definition of a free market is one in which there is no possible resource that isn't owned and commodified?
    - WalterBright 4y ago
      No, I didn't say that. I did say that all communal ownership resources are subject to tragedy of the commons.
anigbrowl 4y ago
This would be such a beautiful world if only people were more selfish!
- WalterBright 4y ago
  The beauty of the free market is that instead of suppressing selfish motives, it enables them in a way that benefits society. It's why Americans live the highest standard of living in the world. Socialism fails because it relies on altruistic behavior, which is in short supply in humans.
  - anigbrowl 4y ago
    > in a way that benefits society So when accusations of price gouging arise (say in the aftermath of a disaster), you're saying that it's the government interfering while the people in the disaster area area are eager to pay top dollar for suddenly-rare commodities like water or hand sanitizer? If I see regular-seeming people complaining about prices, should I assume they're covert government agents?
    - twblalock 4y ago
      Those things are often suddenly rare because people hoard them, which can be prevented by allowing supply and demand to properly work. Prices should go up if goods are in more demand. In addition, the higher prices will motivate sellers to send more products to the impacted area. That eventually leads to price stabilization at the intersection of the supply and demand curve, i.e. how things are supposed to work. Do the higher prices mean some people won't get any water? Yes! But if you artificially suppress prices, there will also be some people who don't get water, because other people will hoard it.
      - anigbrowl 4y ago
        I don't need you to explain price theory to me, and also don't find your hoarding argument persuasive, for two reasons: one, much of the demand in the aftermath of a disaster is from people who need to consume a commodity and can't get any, and two, the hoarding behavior you describe is more likely to be by price gougers hoping to engage in arbitrage. > But if you artificially suppress prices, there will also be some people who don't get water, because other people will hoard it. Rationing the volume available for purchase by individual customers is the obvious solution, and seems to have worked out just fine in practice during things like the great toilet paper panic of 2020. I'm asking Walter how he explains the fact of people complaining about high prices in such a context, given his claim that it's government spoiling the price theory party. Why are the opinions of people who are priced out discounted?
tbrownaw 4y ago
>> ability of a large participant to drop prices to eliminate competition then raise prices, > Has never happened successfully. I thought ISPs were notorious for temporarily dropping prices whenever a competitor tries to build out? Or at least I keep hearing anecdotes from people who think they've watched it happen.
- WalterBright 4y ago
  ISPs are often granted franchise monopoly powers.

somenameforme 4y ago

There is one issue with your argument here, an increasingly relevant one in contemporary times. You are implying that since one choice can be shown to be provably bad, it must therefore be the case that another is better by default. But this assumes that there are good choices, and that there are bad choices. Reality, unfortunately, is often not so kind, and instead leaves us to choose only between bad choices and horrible ones. And so emphasizing the flaws of one choice, says very little about the desirability of an alternative. In some ways I think game theory is most appropriate for chaotic systems. The goal is not to pick the system that works the best, under some ideal set of criteria, but the one that works the least-worst under the most hostile set of criteria.

aeternum 4y ago
It doesn't need to be a purely free market. I'm very much a proponent of free markets but there's also a need for some amount of thoughtful regulation. Allowing market participants to discharge toxins into the local water supply is not in society's interests but is quite possible in a purely free-market system. There's now a good amount of evidence that a hybrid system: mostly free-market, with some regulation, and some kind of social safety net is the least-bad choice.
- WalterBright 4y ago
  > Allowing market participants to discharge toxins into the local water supply is not in society's interests but is quite possible in a purely free-market system. A pure free market system would not allow people to pollute other peoples' property.
  - AlexandrB 4y ago
    How do you define property rights for air and water? If I own a section of a stream and I dump my garbage into it, am I polluting my property or another's property? What if the consequences were unforeseen (as is often the case with groundwater contamination)? Edit: moreover how is "the free market" going to defend the property rights of others in these cases? I assume via civil litigation. But what if my victims can't afford prolonged litigation or I decide that the potential cost of a settlement is less than the cost of disposing of pollutants properly?

lliamander 4y ago

> tradgedy of the commons That has to do with diffusion of responsibility for communal property. What does that have to do with markets. > ability of a large participant to drop prices to eliminate competition then raise prices I think the market has ways to adapt to such behavior. Regulatory capture in a non-free market seems like a much more likely, and more persistent, risk. > inability of market forces to handle extreme tail risk like major natural disasters. I just don't think that's supported by the evidence.

palmetieri2000 4y ago
By what metric is the US market free? I find it difficult to believe that it would be considered anything other than in a state of regulatory capture.
- WalterBright 4y ago
  > By what metric is the US market free? You can start any business you like. People do it all the time.
  - palmetieri2000 4y ago
    No you cannot... Crack, heroin, firearms, sex work. There is a massive list of things one cannot start a business doing in the US. Why would you say such nonsense?