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Ultimately the more centralized the power the less efficient the system is. Markets are great because they push decision making down to the fringes, closer to

Ultimately the more centralized the power the less efficient the system is. Markets are great because they push decision making down to the fringes, closer to where the ground truth is. With highly centralized systems there is a bottleneck both in getting information to the decision makers, but also in overwhelming those decision makers with too much detail and losing fidelity. The flipside is that markets are only efficient at distributing things that can have a price on them. They're mostly blind to externalities (pollution!) and to problems that can't be solved by distributing the goods most efficiently. This is why both pure command (Communist) and pure market (Capitalist) solutions fail. You need to decide which system is best for each problem and use the one that works. Consumer goods are absolutely best handled by markets. Healthcare is far more efficient in a command system, because the demand curve is a total mess so markets can't price it efficiently. Utilities are another example where markets are typically worse.

shmageggy 4y ago
> Consumer goods are absolutely best handled by markets. But what about the previous paragraph where you said > markets are... mostly blind to externalities (pollution!) What about the externalities from consumer goods? (And everything else we value via markets, which is nearly everything else)
soperj 4y ago
> Ultimately the more centralized the power the less efficient the system is. Markets are great because they push decision making down to the fringes, closer to where the ground truth is. With highly centralized systems there is a bottleneck both in getting information to the decision makers, but also in overwhelming those decision makers with too much detail and losing fidelity. Wouldn't this point to CEOs not being super effective?
- ozmodiar 4y ago
  I think it's a careful balance. You need the ability to take decisive action, but at the same time the decisive action might just kill the company. I think the solution is supposed to be that you have multiple companies and when one dies off due to stupid missteps another is there to take its place. Unfortunately it appears that companies keep consolidating and gobbling each other up, which I don't think is healthy for society.
- jandrese 4y ago
  Sometimes the best action for a company to take is the one that doesn't maximize short term profit. That's where a CEO can shine. Markets are like genetic algorithms, they are prone to getting hung up on local maxima.
georgn 4y ago
No disagreement with your post in particular. Just pointing out that the C-suite is also a kind of centralized power. Unsure why these kinds of stories always devolve into some kind of ism-vs-ism in the comment section because it almost always missed the point. CEO pay is held up as a symptom of something. My interpretation of that symptom is that it represents a shift in capital over a period of decades. The interesting discussions are around what changed? how did that happen? is it ok? if not, what should be done? Me? I happen to think it's not ok but like most, don't have a coherent set of suggestions about a path forward. [edited for grammar]

shmageggy 4y ago

> Consumer goods are absolutely best handled by markets. But what about the previous paragraph where you said > markets are... mostly blind to externalities (pollution!) What about the externalities from consumer goods? (And everything else we value via markets, which is nearly everything else)

soperj 4y ago

> Ultimately the more centralized the power the less efficient the system is. Markets are great because they push decision making down to the fringes, closer to where the ground truth is. With highly centralized systems there is a bottleneck both in getting information to the decision makers, but also in overwhelming those decision makers with too much detail and losing fidelity. Wouldn't this point to CEOs not being super effective?

ozmodiar 4y ago
I think it's a careful balance. You need the ability to take decisive action, but at the same time the decisive action might just kill the company. I think the solution is supposed to be that you have multiple companies and when one dies off due to stupid missteps another is there to take its place. Unfortunately it appears that companies keep consolidating and gobbling each other up, which I don't think is healthy for society.
jandrese 4y ago
Sometimes the best action for a company to take is the one that doesn't maximize short term profit. That's where a CEO can shine. Markets are like genetic algorithms, they are prone to getting hung up on local maxima.

georgn 4y ago

No disagreement with your post in particular. Just pointing out that the C-suite is also a kind of centralized power. Unsure why these kinds of stories always devolve into some kind of ism-vs-ism in the comment section because it almost always missed the point. CEO pay is held up as a symptom of something. My interpretation of that symptom is that it represents a shift in capital over a period of decades. The interesting discussions are around what changed? how did that happen? is it ok? if not, what should be done? Me? I happen to think it's not ok but like most, don't have a coherent set of suggestions about a path forward. [edited for grammar]