4 ms·

Actually, the government doesn't fail that much more than the market. If you want to talk small scale, the government makes little mistakes every day. But the

by tsally 18y ago

Actually, the government doesn't fail that much more than the market. If you want to talk small scale, the government makes little mistakes every day. But the market fails every day too. Any transaction in which one party has incomplete information is a tiny market failure. Large scale, neither fail that often. But when either does, it has drastic implications. Honestly the idea that the market works the vast majority of the time is misguided.

anamax 18y ago
> Actually, the government doesn't fail that much more than the market. If govt doesn't fail much more often than the market, why would one want the govt to be responsible for all essentials? > Honestly the idea that the market works the vast majority of the time is misguided. It's just better than govt. I note that very few markets have set up death camps or waged significant wars. (The exceptions being folks dealing in illegal goods.) Markets don't try to throw me in jail for saying the wrong thing, markets not having jails and all.
- tsally 18y ago
  > If govt doesn't fail much more oftenI note that very few markets have set up death camps or waged significant wars. than the market, why would one want the govt to be responsible for all essentials? The article addresses this; because the government can be more consistent. Hence the need for them to be in charge of essentials. > I note that very few markets have set up death camps or waged significant wars. You're mixing apples and oranges here. How about a market that stops human rights violations?
  - meterplech 18y ago
    It sounds like a great idea to let government regulate food. A very successful country did just that, the USSR. Where people stocked up on such nonessentials as butter when the factories finally could produce it. Point being, arbitration and market forces will always ensure there are more resources available because the government is a monopoly with no challengers. In any markets with competition prices are lower, and more output is available. Besides, does anyone really think that governments can better judge and hedge the risk of various crop failures etc than the market?
    - tsally 18y ago
      > It sounds like a great idea to let government regulate food. A very successful country did just that, the USSR. Where people stocked up on such nonessentials as butter when the factories finally could produce it. No one is proposing "regulation" on the level of the USSR. > Does anyone really think that governments can better judge and hedge the risk of various crop failures etc than the market? Does anyone really think the government can better judge and hedge the risk of mortgages than the market?
      - newt0311 18y ago
        No, and the evidence backs this up. Guess who wanted the most to increase home ownership and pressed for subprime loans through stunts like the community re-investment act? Congress. Guess whose legally protected rating agencies gave AA+ ratings to massive CDOs? Congress. Guess who managed to figure out that subprime was going to blow and tried to guard against it? Goldman and assorted hedge funds. Funny the double standards that we hold markets and government to.
        newsycaccount 18y ago
        Using Goldman as a representative of the market is insane--if it were the market wouldn't look anything like it does now.
        newt0311 18y ago
        Of course not. But thats still better than the government where nobody figured it out.
      - anamax 18y ago
        > No one is proposing "regulation" on the level of the USSR. Why not? We're told that govts must be in charge of essentials because markets fail. > Does anyone really think the government can better judge and hedge the risk of mortgages than the market? The recent mortgage crisis pretty much proves that govts are worse at judging mortage risk than the market. After all, it was the subprimes, pushed by govt, that caused the problem. And, it was govt that provided incentives to invest in Fannie and Freddie. And, it was govt's backing that gave Fannie and Freddie the ability to borrow money that their assets couldn't pay back.
  - anamax 18y ago
    > The article addresses this; because the government can be more consistent. Govts have no more inherent ability to be consistent than markets. And, if change is required, consistency isn't a good thing. It's interesting that you keep comparing the platonic ideal of one alternative with the messy reality of another. > How about a market that stops human rights violations? Since markets create far fewer human rights violations than govts, markets are better here as well.
    - tsally 18y ago
      > Govts have no more inherent ability to be consistent than markets. Not so. Being consistent requires a redundant system. A redundant system is not the most efficient one. > Since markets create far fewer human rights violations than govts, markets are better here as well. I will venture a guess and say that just as many human rights violations have been committed in the name of the free market than any government. Sweatshops anyone? But my point with that comment was not to argue semantics. It was to point out that you were arguing apples and oranges.
      - dgordon 18y ago
        170 million murdered in genocides. Armenia, the Gulag, Auschwitz, the Great Leap Forward. Rwanda. Littler, still stark things like Varosha. World wars. In the 20th century alone. Can the market match that?
anamax 18y ago
> Large scale, neither fail that often. But when either does, it has drastic implications. Large scale market failures are less common because there's almost always some diversity in a market. Govts and regulation have no diversity. When the US govt's banking regulation fails, all regulated US banks are at risk. That's why govts are especially prone to black swans.
startingup 18y ago
Government and market are both human institutions. Market is really a convenient shorthand for "distributed, decentralized, uncoordinated economic transactions between consenting parties with an interest in the outcome", while government is shorthand for "centralized decision making made by disinterested economic actors". Please note that "disinterested" is a value-neutral term - it implies that the decision makers don't personally & directly benefit from the outcome. Once you have the definitions right, you can see the benefits and pitfalls for both approaches. If you believe in maximizing human freedom, it is very clear that leaving people free to transact as they wish is the best path for all but those rare edge cases.
- anamax 18y ago
  > government is shorthand for "centralized decision making made by disinterested economic actors". Please note that "disinterested" is a value-neutral term - it implies that the decision makers don't personally & directly benefit from the outcome. Govt decision making is not done by disinterested actors. The interests may not be immediate or the benefits may be indirect, but they exist.
- tsally 18y ago
  Agreed, the edge cases being the things that people absolute require: the essentials.
  - anamax 18y ago
    Why do you think that a govt decison maker is more likely to decide on the right mix of corn vs wheat (and where) than folks who directly benefit from making the right decision?
    - tsally 18y ago
      To ask this is missing the point; essentials are not about efficiency, they are about consistency. As I have said before, the article addresses this point. Did you read it? "The problem is that, while this system is undeniably more efficient, it’s also much more fragile."
anamax 18y ago
> Any transaction in which one party has incomplete information is a tiny market failure. That's an absurd definition because no one has complete information. However, if we're going to use it to criticize markets, it should be noted that it applies at least as much to govt actions. It's an odd sort of comparison when one points to a problem with one alternative while ignoring the same problem with at least the same magnitude for the other alternative.
- tsally 18y ago
  > That's an absurd definition because no one has complete information. Not really. Markets depend on complete information. Else, how can someone accurately judge the value of something? If I buy a candy bar that's actually only worth $1.00 to me for $2.00, there is a market failure. I might think it was worth $2.00 because of the ingredients on the back. Little do I know that the candy bar is actually made with cheaper ingredients. There is a market failure. Now apply this analogy on a large scale and you can see how incomplete information causes market failures.
  - anamax 18y ago
    > > That's an absurd definition because no one has complete information. > Not really. Feel free to cite anything about which you have complete information. > Markets depend on complete information. Else, how can someone accurately judge the value of something? There are no guarantees, so you act based on perceived value. When you're right, you're better off. When you're wrong, you're worse off. Note that the lack of complete information applies to govt decison making as well, but govts lack diversity and apply force. > If I buy a candy bar that's actually only worth $1.00 to me for $2.00, there is a market failure. Huh? If that candy bar is only worth $1.00 to you, why did you pay $2? Ah, because you think that ingredient cost matters. That's a failure of end-to-end thinking. Note govts fail in analogous ways, and often with greater ill effect, yet you don't mention that possibility.
    - tsally 18y ago
      > Feel free to cite anything about which you have complete information. You are proving my point valid; pure free market theory doesn't work because you never have complete information.

by tsally 18y ago

anamax 18y ago

> Actually, the government doesn't fail that much more than the market. If govt doesn't fail much more often than the market, why would one want the govt to be responsible for all essentials? > Honestly the idea that the market works the vast majority of the time is misguided. It's just better than govt. I note that very few markets have set up death camps or waged significant wars. (The exceptions being folks dealing in illegal goods.) Markets don't try to throw me in jail for saying the wrong thing, markets not having jails and all.

tsally 18y ago
> If govt doesn't fail much more oftenI note that very few markets have set up death camps or waged significant wars. than the market, why would one want the govt to be responsible for all essentials? The article addresses this; because the government can be more consistent. Hence the need for them to be in charge of essentials. > I note that very few markets have set up death camps or waged significant wars. You're mixing apples and oranges here. How about a market that stops human rights violations?
- meterplech 18y ago
  It sounds like a great idea to let government regulate food. A very successful country did just that, the USSR. Where people stocked up on such nonessentials as butter when the factories finally could produce it. Point being, arbitration and market forces will always ensure there are more resources available because the government is a monopoly with no challengers. In any markets with competition prices are lower, and more output is available. Besides, does anyone really think that governments can better judge and hedge the risk of various crop failures etc than the market?
  - tsally 18y ago
    > It sounds like a great idea to let government regulate food. A very successful country did just that, the USSR. Where people stocked up on such nonessentials as butter when the factories finally could produce it. No one is proposing "regulation" on the level of the USSR. > Does anyone really think that governments can better judge and hedge the risk of various crop failures etc than the market? Does anyone really think the government can better judge and hedge the risk of mortgages than the market?
    - newt0311 18y ago
      No, and the evidence backs this up. Guess who wanted the most to increase home ownership and pressed for subprime loans through stunts like the community re-investment act? Congress. Guess whose legally protected rating agencies gave AA+ ratings to massive CDOs? Congress. Guess who managed to figure out that subprime was going to blow and tried to guard against it? Goldman and assorted hedge funds. Funny the double standards that we hold markets and government to.
      - newsycaccount 18y ago
        Using Goldman as a representative of the market is insane--if it were the market wouldn't look anything like it does now.
        newt0311 18y ago
        Of course not. But thats still better than the government where nobody figured it out.
    - anamax 18y ago
      > No one is proposing "regulation" on the level of the USSR. Why not? We're told that govts must be in charge of essentials because markets fail. > Does anyone really think the government can better judge and hedge the risk of mortgages than the market? The recent mortgage crisis pretty much proves that govts are worse at judging mortage risk than the market. After all, it was the subprimes, pushed by govt, that caused the problem. And, it was govt that provided incentives to invest in Fannie and Freddie. And, it was govt's backing that gave Fannie and Freddie the ability to borrow money that their assets couldn't pay back.
- anamax 18y ago
  > The article addresses this; because the government can be more consistent. Govts have no more inherent ability to be consistent than markets. And, if change is required, consistency isn't a good thing. It's interesting that you keep comparing the platonic ideal of one alternative with the messy reality of another. > How about a market that stops human rights violations? Since markets create far fewer human rights violations than govts, markets are better here as well.
  - tsally 18y ago
    > Govts have no more inherent ability to be consistent than markets. Not so. Being consistent requires a redundant system. A redundant system is not the most efficient one. > Since markets create far fewer human rights violations than govts, markets are better here as well. I will venture a guess and say that just as many human rights violations have been committed in the name of the free market than any government. Sweatshops anyone? But my point with that comment was not to argue semantics. It was to point out that you were arguing apples and oranges.
    - dgordon 18y ago
      170 million murdered in genocides. Armenia, the Gulag, Auschwitz, the Great Leap Forward. Rwanda. Littler, still stark things like Varosha. World wars. In the 20th century alone. Can the market match that?

anamax 18y ago

> Large scale, neither fail that often. But when either does, it has drastic implications. Large scale market failures are less common because there's almost always some diversity in a market. Govts and regulation have no diversity. When the US govt's banking regulation fails, all regulated US banks are at risk. That's why govts are especially prone to black swans.

startingup 18y ago

Government and market are both human institutions. Market is really a convenient shorthand for "distributed, decentralized, uncoordinated economic transactions between consenting parties with an interest in the outcome", while government is shorthand for "centralized decision making made by disinterested economic actors". Please note that "disinterested" is a value-neutral term - it implies that the decision makers don't personally & directly benefit from the outcome. Once you have the definitions right, you can see the benefits and pitfalls for both approaches. If you believe in maximizing human freedom, it is very clear that leaving people free to transact as they wish is the best path for all but those rare edge cases.

anamax 18y ago
> government is shorthand for "centralized decision making made by disinterested economic actors". Please note that "disinterested" is a value-neutral term - it implies that the decision makers don't personally & directly benefit from the outcome. Govt decision making is not done by disinterested actors. The interests may not be immediate or the benefits may be indirect, but they exist.
tsally 18y ago
Agreed, the edge cases being the things that people absolute require: the essentials.
- anamax 18y ago
  Why do you think that a govt decison maker is more likely to decide on the right mix of corn vs wheat (and where) than folks who directly benefit from making the right decision?
  - tsally 18y ago
    To ask this is missing the point; essentials are not about efficiency, they are about consistency. As I have said before, the article addresses this point. Did you read it? "The problem is that, while this system is undeniably more efficient, it’s also much more fragile."

anamax 18y ago

> Any transaction in which one party has incomplete information is a tiny market failure. That's an absurd definition because no one has complete information. However, if we're going to use it to criticize markets, it should be noted that it applies at least as much to govt actions. It's an odd sort of comparison when one points to a problem with one alternative while ignoring the same problem with at least the same magnitude for the other alternative.

tsally 18y ago
> That's an absurd definition because no one has complete information. Not really. Markets depend on complete information. Else, how can someone accurately judge the value of something? If I buy a candy bar that's actually only worth $1.00 to me for $2.00, there is a market failure. I might think it was worth $2.00 because of the ingredients on the back. Little do I know that the candy bar is actually made with cheaper ingredients. There is a market failure. Now apply this analogy on a large scale and you can see how incomplete information causes market failures.
- anamax 18y ago
  > > That's an absurd definition because no one has complete information. > Not really. Feel free to cite anything about which you have complete information. > Markets depend on complete information. Else, how can someone accurately judge the value of something? There are no guarantees, so you act based on perceived value. When you're right, you're better off. When you're wrong, you're worse off. Note that the lack of complete information applies to govt decison making as well, but govts lack diversity and apply force. > If I buy a candy bar that's actually only worth $1.00 to me for $2.00, there is a market failure. Huh? If that candy bar is only worth $1.00 to you, why did you pay $2? Ah, because you think that ingredient cost matters. That's a failure of end-to-end thinking. Note govts fail in analogous ways, and often with greater ill effect, yet you don't mention that possibility.
  - tsally 18y ago
    > Feel free to cite anything about which you have complete information. You are proving my point valid; pure free market theory doesn't work because you never have complete information.