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No it's not. Finance bros like to tell themselves that, so that they can justify their place in morality.
by newswasboring 3y ago
No it's not. Finance bros like to tell themselves that, so that they can justify their place in morality.
- CogitoCogito 3y agoI don’t think supply and demand has much to do with morality.
- yunohn 3y agoCounterpoint - consumption/sin taxes.
- avianlyric 3y agoNot sure what they have to do with morality either.
- yunohn 3y agoI’m not a huge fan of taxes, but they are absolutely about morality. Society as a whole deciding to discourage consumption of harmful/unhealthy things like sugar, soda, cigarettes, alcohol, etc.
- smitty1e 3y agoA moral argument can be offered, sure. However, there is copious cause/effect data showing that non-sobriety is expensive in terms of health- and societal repercussions.
- yunohn 3y agoWhat do you think morals are? > Morality is the differentiation of intentions, decisions and actions between those that are distinguished as proper and those that are improper. https://en.m.wikipedia.org/wiki/Morality https://en.m.wikipedia.org/wiki/Morality
- smitty1e 3y agoSource? Morality seems more of a subjective call, e.g. "Thou shalt marry heterosexually ahead of procreation", than a stochastic analysis, e.g. "X percent of fatal car crashes involve blood alcohol above Y concentration."
- yunohn 3y agoStraight from Wikipedia, which is an objective source for such a general topic. Religious morality is a sub-category, not all of morality itself. https://en.m.wikipedia.org/wiki/Morality https://en.m.wikipedia.org/wiki/Morality
- smitty1e 3y agoWhat I'm after is that much of the ethics by which our legal system operates, e.g. a BAC limit for legal driving, is divorced from moral questions such as: "Is drinking beer a sinful act?"
- yunohn 3y agoI think you’re gravely misguided. BAC has nothing to do with sin, it’s connected to the morality and ethics of putting your fellow citizens at risk of your impaired driving.
- newswasboring 3y agoSupply demand doesn't, but this rampant gambling is morally detrimental as it has unnecessary negative externality in society. They don't want to accept that their jobs are just a leech on society and has no other benefit than to fill their own pockets.
- CogitoCogito 3y agoI certainly agree there are many morally degenerate speculators whose presence is an overall net negative, but I think speculating on a commodity’s price is pretty much required to make any sort of long term plans involving that commodity. It all depends on the specific circumstance really.
- newswasboring 3y agoI work in manufacturing, in the high end of the tech. Our products have perhaps the most complex supply chain. I have talked to the industry best about this. I have never once heard an expert cite speculation as helpful for there 5 year or 20 year plan. But I don't want to make an argument from personal incredulity, can you cite a source on how speculation helps long term planning? Not pop sci stuff, something concrete like a trade article a manufacturing trade or something written by a supply chain engineer?
- CogitoCogito 3y ago> can you cite a source on how speculation helps long term planning Unless you lock in all commodity costs, how is long term planning even possible without speculation? If you plan to open a distribution center somewhere, the optimal location depends on e.g. fuel costs. You can’t do anything but speculate about the costs of those commodities. So I don’t even see the need to track down sources. Do you not see that you just need to guess at the (future) cost of certain things?
- newswasboring 3y agoI see you didnt reciprocate the courtesy of not making an argument from personal incredulity. These things are complex af. When the people who optimize supply chains all day every day tell me that speculation market is more of an hindrance than help, I'm not going to take your random argument to be worth anything.
- vasco 3y agoIt's nothing to do with morality or any justification, it's just what it is. Since there's an instrument to gauge supply and demand, that instrument can also be wanted, so there can be supply and demand of the thing that measures supply and demand. You can also do "bad" things on first order by hoarding the items themselves.
- newswasboring 3y agoThere is more to economics than supply and demand. This unnecessary gambling has too many negative externality and IMO no positive effects other than making some people some money with no work.
- RandomLensman 3y agoHow do you measure the amount of unnecessary vs necessary gambling?
- newswasboring 3y agoNecessary gambling is what helps the market figure out the real long term availability of something. I have not seen any necessary gambling in my years in manufacturing. So in my view all speculation on commodities seem unnecessary.
- RandomLensman 3y agoOpening a new mine is nothing but speculation, for example, and price signals from markets play a role in such decisions. More narrowly, the ability to forward sell or buy things allows financing of production but in turn it needs people willing to take the other side. Derivatives money is a thing.
- nindalf 3y ago> I have not seen any necessary gambling in my years in manufacturing. You need to manufacture a widget and it must cost no more than $5. You have a few inputs to your widget, some made with steel and some with plastic. If steel and plastic prices increase, your inputs cost more than $5 and you’re making a loss on every widget you sell. So you go to the futures market and take a bet that the input prices will increase. If you’re right, you win $, which makes your widget manufacturing profitable and you’re still in business. If prices fall you lose the bet, your profits are lower. But hey, at least you’re still in business. A responsible, well run manufacturing business benefits from the existence of such a market because it allows them to de-risk.
- rocket_surgeron 3y agoBros treat it like a law of nature. "nah brah it's just rational actors rationally acting with rationality" Supply and demand is a thing the same way the convention of shaking hands upon meeting is a thing.
- diroussel 3y agoThere are alternatives to shaking hands; no greeting, bowing, classes hands, high five, fist bump etc. If supply and demand is just a convention, they what are the alternatives? I guess I’m ignorant, but central planning is the only one I can think of.
- anticensor 3y agoThe alternative is planned supply.
- diroussel 3y agoHow do you plan how much to supply?
- agumonkey 3y ago"speculation" was a bit improper, but prices are intertwined.. demand in one sector will affect demand in other, so forecasts cause price fluctuation that reaches afar.
- puppymaster 3y agocommodities suppliers (miners, farmers, distributors) use futures market to hedge against their inventory everyday. Trade exchanges serve a very important function in this ecosystem.
- refurb 3y agoI can give you a great example of the positive aspect of speculation. Look at the futures market. Speculators are a big part of the liquidity of the futures market. Price of wheat is $60/bushel. Farmer won't harvest for another 6 months and is worried prices will drop. They can secure a future and lock in the price now. Wheat purchasers aren't on the other side of that trade, because why would they lock in a higher price? A lower price benefits them. Speculators come in and bet on the price of wheat, creating a deep pool of futures that can be bought and sold.
- dd36 3y agoThey can also drive down the price. They can also inflate prices so much that actual buyers switch products.
- akira2501 3y agoIf the commodities market can't set prices through discovery, then the government has to by fiat. Neither are great, but one is definitely preferred.
- dd36 3y agoWhen speculators were allowed into the oil markets rather than actual buyers, the price jumped to like $120 barrel in like 2007. They had to stop it because hedge funds could just drive the price up indefinitely. See Bitcoin.
- akira2501 3y agoSpeculation didn't suddenly exist in 2007. I do recall several regulations being changed at that time which _relaxed rules_ around the market. Is it possible that these regulations had more to do with the outcome than mere "speculation" in and of itself?
- dd36 3y agohttps://thinkprogress.org/leaked-documents-reveal-major-speculators-behind-2008-oil-price-shock-hedge-funds-koch-big-banks-oil-54ff4aeec90d/ https://thinkprogress.org/leaked-documents-reveal-major-spec...