5 ms·

Capitalism doesn't really reward honesty. That's why it matters to properly regulate the market.

by jokoon 2y ago

spacebanana7 2y ago
That's over simplifying. Sketching out the game theory, in markets with repeated interactions there's a great reward to honesty. A local baker wouldn't do well by giving customers food poisoning by slacking on hygiene. Even absent regulation customers would stop visiting for daily lunches after a while. However in single trade markets, there's a great temptation to be dishonest. A big city realtor selling to overseas buyers has a potentially incredible reward for being dishonest about the value of a property. And absent regulation (and enforcement) it can be very lucrative to be a liar.
- michaelt 2y ago
  > A local baker wouldn't do well by giving customers food poisoning by slacking on hygiene. Even absent regulation customers would stop visiting for daily lunches after a while. Historically this wasn't really the case, as I understand things. Obviously if your hygiene standards were so low that every customer got ill immediately every time, that would be easily detected. But if you just overlook the occasional rat droppings in the flour sack, or put the occasional handful of sawdust to bulk out the sausage filling? So one or two customers get sick per month? And they were sickly people anyway, people in good health can shrug such things off? And every food vendor is similarly bad, so it's always plausible something else got them sick? It would be pretty hard for that to get traced back to you.
  - spacebanana7 2y ago
    Yeah there're a few embedded assumptions in my example in addition to regular custom. It needs to be clear to the consumer that the baker was the source of the food poising, the baker needs to get enough revenue from regular customers to offset the temptation of cheating occasional customers by making the kitchen low hygiene, and the cost of making the place hygienic needs to be reasonable. > Historically this wasn't really the case, as I understand things A modern counterexample is the street food vendors in New Dehli, where regulatory enforcement is lax and food poising is frequent. I suspect this is because big cities have more occasional customers but other factors probably come into play as well.
- soulofmischief 2y ago
  Okay, but what happens when you inevitably end up with a conglomerate monopoly or duopoly on the majority of consumer goods in a given sector? That's the natural outcome of an unregulated market, at which point honesty fully goes out the window.
  - spacebanana7 2y ago
    Monopolies with repeated consumer interaction still want people to maintain high levels of consumption in their products. For example a tobacco monopoly wouldn't make cigarettes that are immediately sickening to their consumers because of bad filters. They'd prefer for consumers to happily buy cigarettes for a decade or two before getting unwell so they can have more sales.
    - soulofmischief 2y ago
      That doesn't mean honesty, honor, etc will ever enter the equation.
  - CalRobert 2y ago
    Annoyingly we now seem to get regulation that favours incumbents, entrenching the duopolies you fear
    - FredPret 2y ago
      Almost all regulation favors large entities who can afford the lawyers and consultants to deal with it. The exception is anti-trust regulation.
- RobotToaster 2y ago
  Historically flour being adulterated with chalk and sugar being adulterated with gypsum were big problems, so I don't think that tracks.
  - red-iron-pine 2y ago
    don't need to look at history, even recent times have lots of this. lead in Chinese produced infant formula, rampant fraud in olive / avacado / sesame oil sales, etc.
- vortegne 2y ago
  The US FDA literally exists because bread was sold full of sawdust and other garbage.
- have_faith 2y ago
  A local baker doesn’t have to poison anyone while being dishonest. History is full of examples: https://en.m.wikipedia.org/wiki/Making_of_Bread_Act_1757 https://en.m.wikipedia.org/wiki/Making_of_Bread_Act_1757
- consteval 2y ago
  This only works IF you work under the assumption consumers know, or even have the ability to know, if they're being lied to. Well... they don't. Cars are incredibly complex machines, 99% of consumers do not have the knowledge to properly understand how a car works. They have jobs, they have a family, they have better things to do. So they rely on the car manufacturer to be honest. You'll never see a consumer pop the hood and count the pistons to make sure their V6 is actually a V6. They just believe the manufacturer. Your poisoning example only works because it's obvious. Imagine another food analogy. Imagine there is no FDA. How do you know what goes into the food you eat? Could you even find out? If you strived to find out the ingredients and nutritional content of your average grocery haul, how long will it take? A few tens of thousands hours, perhaps. Right after you work like a dog to buy the equipment to burn the food. And then hire private investigators to stake out the factory. And then fly to Mexico to view what pesticides they use.
tomohawk 2y ago
Lying about everything is a hallmark of societies under the thumb of autocrats or socialists. It's a survival skill.
- wholinator2 2y ago
  Are you implying Modern society is one of these?
- deleted 2y ago
  [deleted]
- consteval 2y ago
  Evidently not, because the US is neither autocratic or socialist
FredPret 2y ago
This notion of regulation is just the desire to offload your duties as a responsible and intelligent market participant to a third party. It’s intellectually lazy, and it should be blindingly obvious that, in a universe with more than one mind in it, the principle of caveat emptor will always be needed regardless of economic system. In fact, you need caveat emptor for daily life, not just economic decisions. Here’s why: who does the regulating? The government? Neither politics nor the civil service rewards honesty. These occupations have feedback loops that stem from popularity with the public or with one’s union and are thus not reality-based. In fact capitalism comes closest to rewarding honesty in that consumers go on forums such as this one and then make informed choices. For example, I once bought an AWD car knowing full well it’s not 4WD. It’s still 100x better than 2WD on snow and gravel. I liked my AWD car - money well spent.
- immibis 2y ago
  Companies have one responsibility: to make money. This is by design in the system known as capitalism. Giving companies additional responsibilities is either called adding regulations or it's called ending capitalism. Guess which one is easier.
  - FredPret 2y ago
    Companies make their offers and people are free to choose. I’m saying the people should have more power to choose, more options to choose from, more disposable resources to choose with. This will lead to better outcomes than if the regulators try to create a situation with more limited but better-in-their-eyes options.
- jltsiren 2y ago
  > Here’s why: who does the regulating? The government? The people. Politics is also a market. New regulations arise when there is sufficient demand for them, as determined by the way the society is governed. If businesses don't want more regulations, they can always act in ways that don't create demand for regulations. But they often don't, because the market can reward defection better than cooperation. The market just works the way it works, and regulations are one of the consequences.

Capitalism doesn't really reward honesty. That's why it matters to properly regulate the market.

by jokoon 2y ago

Capitalism doesn't really reward honesty. That's why it matters to properly regulate the market.

That's over simplifying. Sketching out the game theory, in markets with repeated interactions there's a great reward to honesty. A local baker wouldn't do well by giving customers food poisoning by slacking on hygiene. Even absent regulation customers would stop visiting for daily lunches after a while. However in single trade markets, there's a great temptation to be dishonest. A big city realtor selling to overseas buyers has a potentially incredible reward for being dishonest about the value of a property. And absent regulation (and enforcement) it can be very lucrative to be a liar.

michaelt 2y ago
> A local baker wouldn't do well by giving customers food poisoning by slacking on hygiene. Even absent regulation customers would stop visiting for daily lunches after a while. Historically this wasn't really the case, as I understand things. Obviously if your hygiene standards were so low that every customer got ill immediately every time, that would be easily detected. But if you just overlook the occasional rat droppings in the flour sack, or put the occasional handful of sawdust to bulk out the sausage filling? So one or two customers get sick per month? And they were sickly people anyway, people in good health can shrug such things off? And every food vendor is similarly bad, so it's always plausible something else got them sick? It would be pretty hard for that to get traced back to you.
- spacebanana7 2y ago
  Yeah there're a few embedded assumptions in my example in addition to regular custom. It needs to be clear to the consumer that the baker was the source of the food poising, the baker needs to get enough revenue from regular customers to offset the temptation of cheating occasional customers by making the kitchen low hygiene, and the cost of making the place hygienic needs to be reasonable. > Historically this wasn't really the case, as I understand things A modern counterexample is the street food vendors in New Dehli, where regulatory enforcement is lax and food poising is frequent. I suspect this is because big cities have more occasional customers but other factors probably come into play as well.
soulofmischief 2y ago
Okay, but what happens when you inevitably end up with a conglomerate monopoly or duopoly on the majority of consumer goods in a given sector? That's the natural outcome of an unregulated market, at which point honesty fully goes out the window.
- spacebanana7 2y ago
  Monopolies with repeated consumer interaction still want people to maintain high levels of consumption in their products. For example a tobacco monopoly wouldn't make cigarettes that are immediately sickening to their consumers because of bad filters. They'd prefer for consumers to happily buy cigarettes for a decade or two before getting unwell so they can have more sales.
  - soulofmischief 2y ago
    That doesn't mean honesty, honor, etc will ever enter the equation.
- CalRobert 2y ago
  Annoyingly we now seem to get regulation that favours incumbents, entrenching the duopolies you fear
  - FredPret 2y ago
    Almost all regulation favors large entities who can afford the lawyers and consultants to deal with it. The exception is anti-trust regulation.
RobotToaster 2y ago
Historically flour being adulterated with chalk and sugar being adulterated with gypsum were big problems, so I don't think that tracks.
- red-iron-pine 2y ago
  don't need to look at history, even recent times have lots of this. lead in Chinese produced infant formula, rampant fraud in olive / avacado / sesame oil sales, etc.
vortegne 2y ago
The US FDA literally exists because bread was sold full of sawdust and other garbage.
have_faith 2y ago
A local baker doesn’t have to poison anyone while being dishonest. History is full of examples: https://en.m.wikipedia.org/wiki/Making_of_Bread_Act_1757 https://en.m.wikipedia.org/wiki/Making_of_Bread_Act_1757
consteval 2y ago
This only works IF you work under the assumption consumers know, or even have the ability to know, if they're being lied to. Well... they don't. Cars are incredibly complex machines, 99% of consumers do not have the knowledge to properly understand how a car works. They have jobs, they have a family, they have better things to do. So they rely on the car manufacturer to be honest. You'll never see a consumer pop the hood and count the pistons to make sure their V6 is actually a V6. They just believe the manufacturer. Your poisoning example only works because it's obvious. Imagine another food analogy. Imagine there is no FDA. How do you know what goes into the food you eat? Could you even find out? If you strived to find out the ingredients and nutritional content of your average grocery haul, how long will it take? A few tens of thousands hours, perhaps. Right after you work like a dog to buy the equipment to burn the food. And then hire private investigators to stake out the factory. And then fly to Mexico to view what pesticides they use.

tomohawk 2y ago

Lying about everything is a hallmark of societies under the thumb of autocrats or socialists. It's a survival skill.

wholinator2 2y ago
Are you implying Modern society is one of these?
deleted 2y ago
[deleted]
consteval 2y ago
Evidently not, because the US is neither autocratic or socialist

FredPret 2y ago

This notion of regulation is just the desire to offload your duties as a responsible and intelligent market participant to a third party. It’s intellectually lazy, and it should be blindingly obvious that, in a universe with more than one mind in it, the principle of caveat emptor will always be needed regardless of economic system. In fact, you need caveat emptor for daily life, not just economic decisions. Here’s why: who does the regulating? The government? Neither politics nor the civil service rewards honesty. These occupations have feedback loops that stem from popularity with the public or with one’s union and are thus not reality-based. In fact capitalism comes closest to rewarding honesty in that consumers go on forums such as this one and then make informed choices. For example, I once bought an AWD car knowing full well it’s not 4WD. It’s still 100x better than 2WD on snow and gravel. I liked my AWD car - money well spent.

immibis 2y ago
Companies have one responsibility: to make money. This is by design in the system known as capitalism. Giving companies additional responsibilities is either called adding regulations or it's called ending capitalism. Guess which one is easier.
- FredPret 2y ago
  Companies make their offers and people are free to choose. I’m saying the people should have more power to choose, more options to choose from, more disposable resources to choose with. This will lead to better outcomes than if the regulators try to create a situation with more limited but better-in-their-eyes options.
jltsiren 2y ago
> Here’s why: who does the regulating? The government? The people. Politics is also a market. New regulations arise when there is sufficient demand for them, as determined by the way the society is governed. If businesses don't want more regulations, they can always act in ways that don't create demand for regulations. But they often don't, because the market can reward defection better than cooperation. The market just works the way it works, and regulations are one of the consequences.