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> If the market were too small, the weakest would fail, right? Right? I find it interesting that we have sayings like this, and sayings like "the market can s

by atrus 3y ago

> If the market were too small, the weakest would fail, right? Right? I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent." > why should a politician need to step in to regulate, rather than letting the market decide? Because the market doesn't price in externalities. Sure the market will figure out which car washes live. But what about the ones that don't and the people who subsequently lose their jobs. It's a fair question to ask if you're building too many of a certain service, especially when the ones that fail leave behind abandoned husks and unemployed people. Ya know, the people that the local politician is supposed to help. Local leaders should be at least thinking about these questions.

grecy 3y ago
> Sure the market will figure out which car washes live. But what about the ones that don't and the people who subsequently lose their jobs There's a lot going on in your statement to dig through. The article specifically says these car washes barely add jobs.. but let's ignore that. When a business opens and starts to hire people, there is no guarantee it will exist long term. When a person applies for a job, they need to do some due diligence researching the business to see if it sounds like something that will be around as long as they want to have a job. Are you proposing we shouldn't allow "risky" business to start and hire people because there is no certainty they will be around in 1-5 years? Of course that doesn't make any sense. If a business fails, people will lose their jobs, but that is not a reason to prevent business from starting. In fact, if we did prevent them, those jobs would have never existed!
- RussianCow 3y ago
  > When a person applies for a job, they need to do some due diligence researching the business to see if it sounds like something that will be around as long as they want to have a job. This is a nitpick as I agree with the rest of your comment, but most people are absolutely not qualified to make that assessment. (In fact, it's debatable whether anyone can make that claim with any amount of certainty. Even the most successful investors are often wrong.)
  - ipaddr 3y ago
    Most people do this. People will work for a brand or company that is well known with a history over something new with everything else being equal. People will ask friends who work if company is a good place to work. People are pretty smart.
    - throwaway2037 3y ago
      For a minimum wage job at a car wash? Seriously? Absolutely not.
      - ipaddr 3y ago
        Yes. And for fast food.. coffee shops and many other minimum wage jobs. Someone is applying to McDonalds over Big Jim's almost edible meat 9 times out of 10.
        RussianCow 3y ago
        This needs a source. If you just mean that this is happening because far more people know about McDonald's and are therefore less likely to know that Big Jim's is hiring, then sure, but I don't buy the idea that 9/10 people working low wage jobs are actively thinking about the relative stability of the employers they apply to. > People will ask friends who work if company is a good place to work. I 100% agree with this, but that has nothing to do with what we're talking about.
pjlegato 3y ago
While acknowledging the reality of those externalities, it's also fair to point out that empowering politicians to attempt to override the market and deliberately police the negative outcomes of those externalities in favor of supposed social goods (the determination of which is, in itself, problematic) has never, ever worked in the history of humanity -- though it has been tried over and over in disparate societies around the world. In practice, the politicians supposed to be looking out for the externality damage instead merely redirect outcomes to benefit themselves and their friends. The result is invariably worse than whatever damage is wrought by the open and free market. This is not a failure or shortcoming of any one particular attempt to corral the market towards social good; it is an inevitable and expected broken-by-design outcome of attempting to do so.
- fwip 3y ago
  > has never, ever worked in the history of humanity. I think you'll find that the majority of humanity (those who aren't libertarians) actually agree that policing the negative externalities of business should be part of government's function. Stuff like "we're destroying the ozone layer," "L.A's air is mostly smog," and "this factory keeps tearing children limb from limb" were effectively solved by government policing these negative externalities, not by "the market."
  - pjlegato 3y ago
    It's a long way from "this factory keeps tearing children limb from limb" to "there are too many car washes in this town." I specifically said externalities are real problems that bear addressing. The problem is that once politicians are turned loose, they never stop. They cannot stop. They can't say, "well done, problem solved, let's pack up and go home." That would mean giving up their hard-won power -- and the concominant benefits to themselves and their friends that came with it. So they must always seek yet another supposed outrage to feed their power. When they can't find one, they manufacture one, to increasingly absurd and implausible lengths, eventually wrecking the system.
    - fwip 3y ago
bluGill 3y ago
The ones that don't get torn down and replaced with something else. no big deal so long as you allow people to try things and fail. The irrational market isn't a problem for politicians it is for investors: people with money, let them learn their lesson. As for the jobs lost, at least the rich investors paid them while the wash was running, they will move on. The jobs are not high skill so no real loss when they are gone.
- jhanschoo 3y ago
  This ignores the opportunity cost of a more productive business throughout the time period of the low efficiency business: one that may hire more workers and provide more value to potential customers in the locality it serves. Under this comparison, the foolishness of an investor has resulted in a comparative net loss for themselves and the community.
  - para_parolu 3y ago
    Who defines more productive business? Maybe car wash is a good business for people to work for in some period of live. USSR tries to optimize business from top but selecting what would be produced and how much. Didn’t work well for community or customers.
    - pixl97 3y ago
      And late stage capitalism with boom/bust cycles is good for the community and customers too? At least for the 1% it's doing great. The point is that a "Local" government deciding on how many of one kind of business shows up in one spot isn't optimizing from the top (you could consider that the state or federal government). Instead you could consider it optimizing it from the middle. The local people are electing officials and having them implement their will. Trying to call that communism would be... odd.
      - I-M-S 3y ago
        The way most municipal councillors in English-speaking countries optimize everything to retain homeowner's real estate value while keeping property taxes low doesn't exactly imbue confidence.
throwaway22032 3y ago
The entire point of working for a living instead of e.g. subsistence farming is that you can simply switch jobs if it's not going well. As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewhere - probably overcommitting to expenses based on assuming that your income is guaranteed. The mindset that someone should be stopped from even offering a job because it might not be forever is completely ass backwards. It's never forever, act accordingly.
- lostlogin 3y ago
  > As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewhere Only 64% of Americans could cover an expected bill of $400. https://www.federalreserve.gov/publications/2021-economic-well-being-of-us-households-in-2020-dealing-with-unexpected-expenses.htm https://www.federalreserve.gov/publications/2021-economic-we...
  - throwaway22032 3y ago
    Indeed. More than 36% of Americans are clinically obese. There are a _lot_ of really short sighted people out there.
    - mschuster91 3y ago
      That's due to poverty... calorie dense, highly processed food is cheap as hell due to mass production efficiencies, but high quality food? Groceries? Ain't no one got the money for that, or they live in "food deserts" [1]. For poor kids, it's even worse, because all they have other than sub-par school lunches is whatever microwave meal their parents can afford not just financially but also time-wise. Cooking for a family takes time and energy, both scarce when you gotta work two jobs to make ends meet. [1] https://www.aecf.org/blog/exploring-americas-food-deserts https://www.aecf.org/blog/exploring-americas-food-deserts
      - zeroonetwothree 3y ago
spywaregorilla 3y ago
> I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent." We don't generally say that about small businesses that need cash flow
philwelch 3y ago
Markets have failure modes, but not nearly as many failure modes as bumbling politicians thinking they can decide for the rest of society how many car washes belong in their town. Oh no, who will ever do anything about the abandoned husks and unemployed people left behind when we let people build too many car washes!? Let’s just make it borderline fucking illegal to build anything at all and let every busybody in the world get a veto before anyone sets up something as potentially hazardous as a car wash.
- Barrin92 3y ago
  The irony is that car washes are the result of regulation in the first place because if you eliminated parking requirements, ridiculously low insurance minimums etc there'd be a lot fewer cars that needed washing. It's kind of odd to frame intervention in anything car related as an intrusion on the free market when it's one of the most artificially and politically constructed sectors to begin with.
  - ghodith 3y ago
    So the fix for over-regulation is more regulation, got it.
  - philwelch 3y ago
    > ridiculously low insurance minimums This looks like a claim that car owners should be required to have even more insurance, which seems inconsistent with your claim that widespread car ownership is the product of onerous regulation. All in all I think this is a pretty glib take that I’ve seen enough times that I’m bored with it. Suffice to say that most of the regulations you’re complaining about mostly postdate the widescale adoption of cars. Nobody was instituting parking minimums or insurance mandates ahead of time in order to encourage car ownership; instead, as soon as car companies figured out how to make cars cheaply enough that even their own factory workers could afford them, governments made regulations in response to the overwhelming number of cars that everyone ended up buying. But that’s a fundamentally different mindset. Back then, living in a democracy where everybody was buying cars meant that the government’s job was to notice that people wanted to drive cars and work to accommodate that. These days, people think the government’s job is to decide for us what we should want and then shape the regulatory environment in such a way as to shape our behavior, because they know better than we do.
y1n0 3y ago
It sounds like you are saying it would be better for those people to have never been employed (i.e. some of the carwashes never being built) than employed for a while and then losing their job if the carwash goes out of business.
- acdha 3y ago
  Consider whether the alternative to a car wash being built is leaving the land idle or some higher-value business using it. Part of the problem is that failed businesses often leave a durable footprint - if your car wash fails, in many places it’s just going to sit idle while the land owner tries to find another car wash or someone with enough budget to demolish the old buildings and clean up any dumped chemicals. It probably will happen unless the local economy has completely cratered but it might take a decade and in the meantime it’s just sitting there dragging down the value of adjacent properties.
- dymk 3y ago
  It would have been better for a business that provides more societal value to have been built.
themadturk 3y ago
We have five or six car washes in town (I think...we're pretty spread out, so there might be a few I've never noticed). One is fully automated, no humans touch it. One is low-staff: a couple of guys running wet mops over the exterior before the car goes through. One is pretty full service, with a squad of guys pre-cleaning, minor detailing, hand waxing. The last two (and part of the full-service wash) is four or carport-like stalls with hoses and soap, the driver does all the work. As the article says, automated or even semi-automated car washes don't provide much employment or sales tax revenue. On sunny days, some of these washes have vehicles sitting in line, waiting their turn...most with their engines idling. I live in an apartment so managing my own washing is impractical, and is actively discouraged by the landlord. My 15-year-old car goes through the wash three or four times a year, and it's finish is still fine, thanks.
zeroonetwothree 3y ago
> > If the market were too small, the weakest would fail, right? Right? > I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent." To be fair "market" is referring to two different things in those two sentences. Different markets can have different characteristics.
raincole 3y ago
Yeah, car washing, a business that is infamous for its enormous externalities...
- gwd 3y ago
  Having a slab of asphalt in the middle of a city instead of something more useful, like an office building, shops, or a block of flats, is a negative externality.
  - guappa 3y ago
    You can only have so many cafes in an area… People won't drink more or buy more.
Gormo 3y ago
> I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent." How can the market be irrational? People either are purchasing enough of these services to make the business viable, or they are not. > Because the market doesn't price in externalities. Legal liability for harmful externalities factors directly into the market for insurance and other operating expenses. Preemptive regulation is usually unnecessary, and often entails its own deleterious effects.
- lesuorac 3y ago
  Business are in general not solvent in their first years. Even some business such as Uber took 15 years to generate a profit [1]. However, the saying about "the market can stay irrational longer than you can stay solvent." is that even if you can point out that say Enron / Wirecard / FTX are fraudulent, good luck making any money on that. Michael Burry nearly messed up his timing for '08 and could've lost to an investor revolt [2]; but he has messed up timing for Tesla (peak 400, current 200) and many other stocks causing him to exit those positions before making money. [1]: https://www.theverge.com/2024/2/8/24065999/uber-earnings-profitable-year-net-income https://www.theverge.com/2024/2/8/24065999/uber-earnings-pro... [2]: https://en.wikipedia.org/wiki/Michael_Burry#Investment_career https://en.wikipedia.org/wiki/Michael_Burry#Investment_caree...
  - Gormo 3y ago
    > Business are in general not solvent in their first years. Even some business such as Uber took 15 years to generate a profit [1]. This is true, but it's not clear to me how it relates to either the discussion of whether markets are rational or the discussion of whether common-law liability is more effective than preemptive regulation. Can you explain the connection? If the implication is that people choosing to bear risk in the expectation of achieving a long-term profit is irrational, then I'm not sure how to respond, because this seems almost axiomatically false to me. In fact, given that we live in an observably stochastic universe, where cause-and-effect is best represented by probability models and not deterministic logic, I'd regard that rationality itself includes probabilistic decision-making, and that attempting to preempt all risk is itself highly irrational.

by atrus 3y ago

grecy 3y ago

> Sure the market will figure out which car washes live. But what about the ones that don't and the people who subsequently lose their jobs There's a lot going on in your statement to dig through. The article specifically says these car washes barely add jobs.. but let's ignore that. When a business opens and starts to hire people, there is no guarantee it will exist long term. When a person applies for a job, they need to do some due diligence researching the business to see if it sounds like something that will be around as long as they want to have a job. Are you proposing we shouldn't allow "risky" business to start and hire people because there is no certainty they will be around in 1-5 years? Of course that doesn't make any sense. If a business fails, people will lose their jobs, but that is not a reason to prevent business from starting. In fact, if we did prevent them, those jobs would have never existed!

RussianCow 3y ago
> When a person applies for a job, they need to do some due diligence researching the business to see if it sounds like something that will be around as long as they want to have a job. This is a nitpick as I agree with the rest of your comment, but most people are absolutely not qualified to make that assessment. (In fact, it's debatable whether anyone can make that claim with any amount of certainty. Even the most successful investors are often wrong.)
- ipaddr 3y ago
  Most people do this. People will work for a brand or company that is well known with a history over something new with everything else being equal. People will ask friends who work if company is a good place to work. People are pretty smart.
  - throwaway2037 3y ago
    For a minimum wage job at a car wash? Seriously? Absolutely not.
    - ipaddr 3y ago
      Yes. And for fast food.. coffee shops and many other minimum wage jobs. Someone is applying to McDonalds over Big Jim's almost edible meat 9 times out of 10.
      - RussianCow 3y ago
        This needs a source. If you just mean that this is happening because far more people know about McDonald's and are therefore less likely to know that Big Jim's is hiring, then sure, but I don't buy the idea that 9/10 people working low wage jobs are actively thinking about the relative stability of the employers they apply to. > People will ask friends who work if company is a good place to work. I 100% agree with this, but that has nothing to do with what we're talking about.

pjlegato 3y ago

While acknowledging the reality of those externalities, it's also fair to point out that empowering politicians to attempt to override the market and deliberately police the negative outcomes of those externalities in favor of supposed social goods (the determination of which is, in itself, problematic) has never, ever worked in the history of humanity -- though it has been tried over and over in disparate societies around the world. In practice, the politicians supposed to be looking out for the externality damage instead merely redirect outcomes to benefit themselves and their friends. The result is invariably worse than whatever damage is wrought by the open and free market. This is not a failure or shortcoming of any one particular attempt to corral the market towards social good; it is an inevitable and expected broken-by-design outcome of attempting to do so.

fwip 3y ago
> has never, ever worked in the history of humanity. I think you'll find that the majority of humanity (those who aren't libertarians) actually agree that policing the negative externalities of business should be part of government's function. Stuff like "we're destroying the ozone layer," "L.A's air is mostly smog," and "this factory keeps tearing children limb from limb" were effectively solved by government policing these negative externalities, not by "the market."
- pjlegato 3y ago
  It's a long way from "this factory keeps tearing children limb from limb" to "there are too many car washes in this town." I specifically said externalities are real problems that bear addressing. The problem is that once politicians are turned loose, they never stop. They cannot stop. They can't say, "well done, problem solved, let's pack up and go home." That would mean giving up their hard-won power -- and the concominant benefits to themselves and their friends that came with it. So they must always seek yet another supposed outrage to feed their power. When they can't find one, they manufacture one, to increasingly absurd and implausible lengths, eventually wrecking the system.
  - fwip 3y ago

bluGill 3y ago

The ones that don't get torn down and replaced with something else. no big deal so long as you allow people to try things and fail. The irrational market isn't a problem for politicians it is for investors: people with money, let them learn their lesson. As for the jobs lost, at least the rich investors paid them while the wash was running, they will move on. The jobs are not high skill so no real loss when they are gone.

jhanschoo 3y ago
This ignores the opportunity cost of a more productive business throughout the time period of the low efficiency business: one that may hire more workers and provide more value to potential customers in the locality it serves. Under this comparison, the foolishness of an investor has resulted in a comparative net loss for themselves and the community.
- para_parolu 3y ago
  Who defines more productive business? Maybe car wash is a good business for people to work for in some period of live. USSR tries to optimize business from top but selecting what would be produced and how much. Didn’t work well for community or customers.
  - pixl97 3y ago
    And late stage capitalism with boom/bust cycles is good for the community and customers too? At least for the 1% it's doing great. The point is that a "Local" government deciding on how many of one kind of business shows up in one spot isn't optimizing from the top (you could consider that the state or federal government). Instead you could consider it optimizing it from the middle. The local people are electing officials and having them implement their will. Trying to call that communism would be... odd.
    - I-M-S 3y ago
      The way most municipal councillors in English-speaking countries optimize everything to retain homeowner's real estate value while keeping property taxes low doesn't exactly imbue confidence.

throwaway22032 3y ago

The entire point of working for a living instead of e.g. subsistence farming is that you can simply switch jobs if it's not going well. As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewhere - probably overcommitting to expenses based on assuming that your income is guaranteed. The mindset that someone should be stopped from even offering a job because it might not be forever is completely ass backwards. It's never forever, act accordingly.

lostlogin 3y ago
> As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewhere Only 64% of Americans could cover an expected bill of $400. https://www.federalreserve.gov/publications/2021-economic-well-being-of-us-households-in-2020-dealing-with-unexpected-expenses.htm https://www.federalreserve.gov/publications/2021-economic-we...
- throwaway22032 3y ago
  Indeed. More than 36% of Americans are clinically obese. There are a _lot_ of really short sighted people out there.
  - mschuster91 3y ago
    That's due to poverty... calorie dense, highly processed food is cheap as hell due to mass production efficiencies, but high quality food? Groceries? Ain't no one got the money for that, or they live in "food deserts" [1]. For poor kids, it's even worse, because all they have other than sub-par school lunches is whatever microwave meal their parents can afford not just financially but also time-wise. Cooking for a family takes time and energy, both scarce when you gotta work two jobs to make ends meet. [1] https://www.aecf.org/blog/exploring-americas-food-deserts https://www.aecf.org/blog/exploring-americas-food-deserts
    - zeroonetwothree 3y ago

spywaregorilla 3y ago

> I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent." We don't generally say that about small businesses that need cash flow

philwelch 3y ago

Markets have failure modes, but not nearly as many failure modes as bumbling politicians thinking they can decide for the rest of society how many car washes belong in their town. Oh no, who will ever do anything about the abandoned husks and unemployed people left behind when we let people build too many car washes!? Let’s just make it borderline fucking illegal to build anything at all and let every busybody in the world get a veto before anyone sets up something as potentially hazardous as a car wash.

Barrin92 3y ago
The irony is that car washes are the result of regulation in the first place because if you eliminated parking requirements, ridiculously low insurance minimums etc there'd be a lot fewer cars that needed washing. It's kind of odd to frame intervention in anything car related as an intrusion on the free market when it's one of the most artificially and politically constructed sectors to begin with.
- ghodith 3y ago
  So the fix for over-regulation is more regulation, got it.
- philwelch 3y ago
  > ridiculously low insurance minimums This looks like a claim that car owners should be required to have even more insurance, which seems inconsistent with your claim that widespread car ownership is the product of onerous regulation. All in all I think this is a pretty glib take that I’ve seen enough times that I’m bored with it. Suffice to say that most of the regulations you’re complaining about mostly postdate the widescale adoption of cars. Nobody was instituting parking minimums or insurance mandates ahead of time in order to encourage car ownership; instead, as soon as car companies figured out how to make cars cheaply enough that even their own factory workers could afford them, governments made regulations in response to the overwhelming number of cars that everyone ended up buying. But that’s a fundamentally different mindset. Back then, living in a democracy where everybody was buying cars meant that the government’s job was to notice that people wanted to drive cars and work to accommodate that. These days, people think the government’s job is to decide for us what we should want and then shape the regulatory environment in such a way as to shape our behavior, because they know better than we do.

y1n0 3y ago

It sounds like you are saying it would be better for those people to have never been employed (i.e. some of the carwashes never being built) than employed for a while and then losing their job if the carwash goes out of business.

acdha 3y ago
Consider whether the alternative to a car wash being built is leaving the land idle or some higher-value business using it. Part of the problem is that failed businesses often leave a durable footprint - if your car wash fails, in many places it’s just going to sit idle while the land owner tries to find another car wash or someone with enough budget to demolish the old buildings and clean up any dumped chemicals. It probably will happen unless the local economy has completely cratered but it might take a decade and in the meantime it’s just sitting there dragging down the value of adjacent properties.
dymk 3y ago
It would have been better for a business that provides more societal value to have been built.

themadturk 3y ago

We have five or six car washes in town (I think...we're pretty spread out, so there might be a few I've never noticed). One is fully automated, no humans touch it. One is low-staff: a couple of guys running wet mops over the exterior before the car goes through. One is pretty full service, with a squad of guys pre-cleaning, minor detailing, hand waxing. The last two (and part of the full-service wash) is four or carport-like stalls with hoses and soap, the driver does all the work. As the article says, automated or even semi-automated car washes don't provide much employment or sales tax revenue. On sunny days, some of these washes have vehicles sitting in line, waiting their turn...most with their engines idling. I live in an apartment so managing my own washing is impractical, and is actively discouraged by the landlord. My 15-year-old car goes through the wash three or four times a year, and it's finish is still fine, thanks.

zeroonetwothree 3y ago

> > If the market were too small, the weakest would fail, right? Right? > I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent." To be fair "market" is referring to two different things in those two sentences. Different markets can have different characteristics.

raincole 3y ago

Yeah, car washing, a business that is infamous for its enormous externalities...

gwd 3y ago
Having a slab of asphalt in the middle of a city instead of something more useful, like an office building, shops, or a block of flats, is a negative externality.
- guappa 3y ago
  You can only have so many cafes in an area… People won't drink more or buy more.

Gormo 3y ago

> I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent." How can the market be irrational? People either are purchasing enough of these services to make the business viable, or they are not. > Because the market doesn't price in externalities. Legal liability for harmful externalities factors directly into the market for insurance and other operating expenses. Preemptive regulation is usually unnecessary, and often entails its own deleterious effects.

lesuorac 3y ago
Business are in general not solvent in their first years. Even some business such as Uber took 15 years to generate a profit [1]. However, the saying about "the market can stay irrational longer than you can stay solvent." is that even if you can point out that say Enron / Wirecard / FTX are fraudulent, good luck making any money on that. Michael Burry nearly messed up his timing for '08 and could've lost to an investor revolt [2]; but he has messed up timing for Tesla (peak 400, current 200) and many other stocks causing him to exit those positions before making money. [1]: https://www.theverge.com/2024/2/8/24065999/uber-earnings-profitable-year-net-income https://www.theverge.com/2024/2/8/24065999/uber-earnings-pro... [2]: https://en.wikipedia.org/wiki/Michael_Burry#Investment_career https://en.wikipedia.org/wiki/Michael_Burry#Investment_caree...
- Gormo 3y ago
  > Business are in general not solvent in their first years. Even some business such as Uber took 15 years to generate a profit [1]. This is true, but it's not clear to me how it relates to either the discussion of whether markets are rational or the discussion of whether common-law liability is more effective than preemptive regulation. Can you explain the connection? If the implication is that people choosing to bear risk in the expectation of achieving a long-term profit is irrational, then I'm not sure how to respond, because this seems almost axiomatically false to me. In fact, given that we live in an observably stochastic universe, where cause-and-effect is best represented by probability models and not deterministic logic, I'd regard that rationality itself includes probabilistic decision-making, and that attempting to preempt all risk is itself highly irrational.