6 ms·

Markets interpret social engineering as damage and route around it.

by pg 18y ago

Goladus 18y ago
I agree, assuming it is a reasonably efficient market where everyone has access to the relevant information.
davidw 18y ago
Many government policies could be seen as "social engineering", be they farm subsidies, tariffs on imports, spending on things like highways, subsidized communication networks like the postal system, education for people other than those born wealthy, meals for poor kids so that they have something in their stomachs at school and can actually try and think, and so on. And, yes, some of them get 'routed around'. Other policies, whether you agree with them or not, affect the market more than the other way around. For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways. Other social engineering experiments, such as universal education up to a certain age in most western countries, seem to have been a net positive for society, even if they are imperfect. Also, I think that some "social engineering", such as keeping people from starving to death, and ensuring they don't freeze to death for want of a warm place to sleep, at a minimum, should not be routed around.
- pg 18y ago
  I meant social engineering in the form of manipulating markets.
  - davidw 18y ago
    Import tariffs and subsidies are direct market manipulation, and the market doesn't really route around them. Rather, they tend to wreck markets, which is one reason many developing countries continue to press the US and Europe to end farm subsidies - it's wrecking their export markets and hurting their farmers. Governments, when they want to, are perfectly capable of interfering with markets and even destroying them. I am not a libertarian and do not believe that all intervention is harmful, but disagree with your thesis that markets are able to route around governments. Yes, in some cases, but I think that governments have the upper hand: they have guns and police and stuff, like the libertarians love to say. I think the "law of unintended consequences" is perhaps more solid ground with regards to governments and market manipulation.
    - pg 18y ago
      Tarrifs are actually a particularly good example of markets routing around government interference. Routing around tariffs is called smuggling, and has been a huge business as long as there have been governments. I wasn't claiming, incidentally, that markets were totally immune to government interference-- just as networks are not immune to damage. Just that markets will always find whatever room you give them.
      - davidw 18y ago
        I'd bet that smuggling is a tiny trickle compared to what the market could provide with many commodities (wheat, cotton, corn, stuff like that, not diamonds and rhino horns), meaning that the market is not effectively routing around it at all.
        jfoutz 18y ago
        False. In Colombia, 4.5 kg of coca paste, which will yield about one kilo of cocaine, fetches about $4,500. On the streets of the United States, selling this kilogram of cocaine will earn between $200,000 and $600,000. (http://www.colombiajournal.org/colombia150.htm http://www.colombiajournal.org/colombia150.htm) Claritin 10 mg Consumer Price (100 tablets): $215.17 Cost of general active ingredients: $0.71 (http://www.rense.com/general54/preco.htm http://www.rense.com/general54/preco.htm) normalized to 1 kilo ... cost $71,000, value $21517000.00 what did we bet again? :)
        deleted 18y ago
        [deleted]
        mseebach 18y ago
        Huh? Your math is off by a few orders of magniture. 100x10mg = 1g, so 1 kg should be 1000x$215.17 = $215,170.00, for an ingredient cost of 1000x$.71 = $710. Also, I can buy 100 x 10mg Clarityn for $65, but I won't, because I can get 100 x 10mg Mildin (exact same active ingredient) for $35. Edit: Oops, forgot to add a point. Your point holds true, your calculations are just for 100 kg instead. Thing is, medicine isn't invented, manufactured sold or bought in a free market. Another difference between Clarityn and coke is that there is a very elaborate framework in place to make sure your pills are good - if your dealer dilutes your coke with flour or ratpoison, you're screwed and nobody cares. If there was no demand/requirement for that protection, I'm sure we could get our pills for around $1.
- jacobolus 18y ago
  > For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways. Disastrous for whom? Compared to what? Cubans have a high literacy rate, high life expectancy, low numbers of extreme poor, etc. Indeed, the country has done much better than similar Caribbean/Latin American states which followed different political paths over the past few decades. The government's actions shouldn't be whitewashed, but nor should Cuba's accomplishments be dismissed with vague platitudes about the glories of the market.
  - pelle 18y ago
    Low numbers of extreme poor? You have followed a bit too much propaganda and not enough reality it seems. The only country that is worse off in the entire region is Haiti. Probably more than 90% of the population is in extreme poverty. Worse than this Cubans was actually better off than most Europeans before Castro. They may have more doctors per capita now a days, but there is no food and no medicine.
    - jacobolus 18y ago
      > The only country that is worse off in the entire region is Haiti. Probably more than 90% of the population is in extreme poverty. This is completely false. Haiti is indeed much much worse off than the rest of the region, but Cubans have higher purchasing-power parity than Jamaicans, Guatemalans, Nicaraguans, Hondurans, Salvadorans, and perhaps a few others, and the country is generally much more equal most Latin American countries, so the bottom couple of quintiles in Cuba do better than their counterparts in Costa Rica, Panama, etc. (or I believe than poor Mexicans, for that matter) It's still overall a poor country, and has many social, economic, and political problems—attributable to many factors, including ineffective leadership, widespread corruption, the US trade embargo, etc.—but the claim that all of Cuba's problems are the fault of the turn away from markets is so oversimplified as to just be wrong. > Cubans was actually better off than most Europeans before Castro This is bullshit. In the 50s, Cubans did a bit better than Southern and Eastern Europeans, but were significantly behind Western Europe. Most Cubans were were not very well off in the first half of the century, and incomes (and equality particularly) rose substantially between 1960 and 1989. Then after the fall of the Soviet Union, there was a precipitous economic decline in Cuba between 1989 and about 1993 or 1994, which took 12 years to fully recover from. Present-day Cubans have higher real incomes than they ever did in the past, however. Listen, I don't really want to have a protracted he-said-she-said about the state of the Cuban economy or the precise definition of "extreme" poverty. My point was merely that davidw's off-hand remarks about the topic were trivializing and unproductive.
jhancock 18y ago
I think this applies if the definition of "markets" includes dishonest and corrupt behavior, which may well be a something you cannot remove easily. In the case of rent control, corruption occurs in both the market and the social engineering.
pelle 18y ago
I agree completely. Unfortunately the outcome is normally very different when the market has to route around it. Rent control here in SF only affects people in older buildings. One of many unintended consequences of this is the ridiculous state of Tenderloin. Back in Denmark where I own an apartment, rent control forces me to only be able to rent it out as a corporate apartment to foreigners. The official rent would pay less than quarter of the mortgage. No wonder it is hard to find a good apartment in Copenhagen. An example is the market response to the generations of social engineering started as the New Deal, which eventually led us to the very distorted issues we now see in the financial markets. Another example are the costs of health care in the US, that were caused directly by the deductions for employers created in the 40s. Instead of an efficient market, where people picked the most efficient insurance for their situation, it became an arms race of who could offer more benefits together with a bureaucracy to make sure their insured (who don't pay directly) don't abuse the system. Let Richard Branson or any other smart entrepreneur at the health system without the handicap of social engineering and it would be fixed within a year. Rather than fixing it all signs at the moment point towards further regulation and thus further distortion. The market will always route around social engineering no matter to what limits the regulators attempt to control it. The outcomes are rarely as good as if the market was just left to do its job. Of course when this happens like it has so obviously in the current crisis, people talk about it being the fault of the market run wild and want to bring in more regulation, when the regulation it self was what caused it to go wild in the first place.
- davidw 18y ago
  > Let Richard Branson or any other smart entrepreneur at the health system without the handicap of social engineering and it would be fixed within a year. Where "fixed" means that unprofitable/poor people die of or are crippled by easily and cheaply treatable diseases. That's what a pure market solution would do. Once you start including those people, it's "social engineering".
  - pelle 18y ago
    Health care is no different than any other service. If you are able to increase the availability as well as lower the price it helps everyone. Including the poor.
mhartl 18y ago
Perhaps, but the rerouting has a cost, which often lands on those least able to bear it; in the case of rent control, the cost lands preferentially on poor tenants in the form of higher rents. And even costs that land on the rich make us all poorer in the long run. Because of the harm done, it's still worth noting that rent control and other "pro-tenant" law is rarely good for tenants, or indeed anyone other than sometimes well-meaning but economically illiterate busybodies.
sayrer 18y ago
Yes, with all sorts of things. The same can be said of workplace safety regulations, minimum wage laws, child labor, drug safety, environmental laws, and on and on.

Markets interpret social engineering as damage and route around it.

by pg 18y ago

Markets interpret social engineering as damage and route around it.

Goladus 18y ago

I agree, assuming it is a reasonably efficient market where everyone has access to the relevant information.

davidw 18y ago

Many government policies could be seen as "social engineering", be they farm subsidies, tariffs on imports, spending on things like highways, subsidized communication networks like the postal system, education for people other than those born wealthy, meals for poor kids so that they have something in their stomachs at school and can actually try and think, and so on. And, yes, some of them get 'routed around'. Other policies, whether you agree with them or not, affect the market more than the other way around. For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways. Other social engineering experiments, such as universal education up to a certain age in most western countries, seem to have been a net positive for society, even if they are imperfect. Also, I think that some "social engineering", such as keeping people from starving to death, and ensuring they don't freeze to death for want of a warm place to sleep, at a minimum, should not be routed around.

pg 18y ago
I meant social engineering in the form of manipulating markets.
- davidw 18y ago
  Import tariffs and subsidies are direct market manipulation, and the market doesn't really route around them. Rather, they tend to wreck markets, which is one reason many developing countries continue to press the US and Europe to end farm subsidies - it's wrecking their export markets and hurting their farmers. Governments, when they want to, are perfectly capable of interfering with markets and even destroying them. I am not a libertarian and do not believe that all intervention is harmful, but disagree with your thesis that markets are able to route around governments. Yes, in some cases, but I think that governments have the upper hand: they have guns and police and stuff, like the libertarians love to say. I think the "law of unintended consequences" is perhaps more solid ground with regards to governments and market manipulation.
  - pg 18y ago
    Tarrifs are actually a particularly good example of markets routing around government interference. Routing around tariffs is called smuggling, and has been a huge business as long as there have been governments. I wasn't claiming, incidentally, that markets were totally immune to government interference-- just as networks are not immune to damage. Just that markets will always find whatever room you give them.
    - davidw 18y ago
      I'd bet that smuggling is a tiny trickle compared to what the market could provide with many commodities (wheat, cotton, corn, stuff like that, not diamonds and rhino horns), meaning that the market is not effectively routing around it at all.
      - jfoutz 18y ago
        False. In Colombia, 4.5 kg of coca paste, which will yield about one kilo of cocaine, fetches about $4,500. On the streets of the United States, selling this kilogram of cocaine will earn between $200,000 and $600,000. (http://www.colombiajournal.org/colombia150.htm http://www.colombiajournal.org/colombia150.htm) Claritin 10 mg Consumer Price (100 tablets): $215.17 Cost of general active ingredients: $0.71 (http://www.rense.com/general54/preco.htm http://www.rense.com/general54/preco.htm) normalized to 1 kilo ... cost $71,000, value $21517000.00 what did we bet again? :)
        deleted 18y ago
        [deleted]
        mseebach 18y ago
        Huh? Your math is off by a few orders of magniture. 100x10mg = 1g, so 1 kg should be 1000x$215.17 = $215,170.00, for an ingredient cost of 1000x$.71 = $710. Also, I can buy 100 x 10mg Clarityn for $65, but I won't, because I can get 100 x 10mg Mildin (exact same active ingredient) for $35. Edit: Oops, forgot to add a point. Your point holds true, your calculations are just for 100 kg instead. Thing is, medicine isn't invented, manufactured sold or bought in a free market. Another difference between Clarityn and coke is that there is a very elaborate framework in place to make sure your pills are good - if your dealer dilutes your coke with flour or ratpoison, you're screwed and nobody cares. If there was no demand/requirement for that protection, I'm sure we could get our pills for around $1.
jacobolus 18y ago
> For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways. Disastrous for whom? Compared to what? Cubans have a high literacy rate, high life expectancy, low numbers of extreme poor, etc. Indeed, the country has done much better than similar Caribbean/Latin American states which followed different political paths over the past few decades. The government's actions shouldn't be whitewashed, but nor should Cuba's accomplishments be dismissed with vague platitudes about the glories of the market.
- pelle 18y ago
  Low numbers of extreme poor? You have followed a bit too much propaganda and not enough reality it seems. The only country that is worse off in the entire region is Haiti. Probably more than 90% of the population is in extreme poverty. Worse than this Cubans was actually better off than most Europeans before Castro. They may have more doctors per capita now a days, but there is no food and no medicine.
  - jacobolus 18y ago
    > The only country that is worse off in the entire region is Haiti. Probably more than 90% of the population is in extreme poverty. This is completely false. Haiti is indeed much much worse off than the rest of the region, but Cubans have higher purchasing-power parity than Jamaicans, Guatemalans, Nicaraguans, Hondurans, Salvadorans, and perhaps a few others, and the country is generally much more equal most Latin American countries, so the bottom couple of quintiles in Cuba do better than their counterparts in Costa Rica, Panama, etc. (or I believe than poor Mexicans, for that matter) It's still overall a poor country, and has many social, economic, and political problems—attributable to many factors, including ineffective leadership, widespread corruption, the US trade embargo, etc.—but the claim that all of Cuba's problems are the fault of the turn away from markets is so oversimplified as to just be wrong. > Cubans was actually better off than most Europeans before Castro This is bullshit. In the 50s, Cubans did a bit better than Southern and Eastern Europeans, but were significantly behind Western Europe. Most Cubans were were not very well off in the first half of the century, and incomes (and equality particularly) rose substantially between 1960 and 1989. Then after the fall of the Soviet Union, there was a precipitous economic decline in Cuba between 1989 and about 1993 or 1994, which took 12 years to fully recover from. Present-day Cubans have higher real incomes than they ever did in the past, however. Listen, I don't really want to have a protracted he-said-she-said about the state of the Cuban economy or the precise definition of "extreme" poverty. My point was merely that davidw's off-hand remarks about the topic were trivializing and unproductive.

jhancock 18y ago

I think this applies if the definition of "markets" includes dishonest and corrupt behavior, which may well be a something you cannot remove easily. In the case of rent control, corruption occurs in both the market and the social engineering.

pelle 18y ago

I agree completely. Unfortunately the outcome is normally very different when the market has to route around it. Rent control here in SF only affects people in older buildings. One of many unintended consequences of this is the ridiculous state of Tenderloin. Back in Denmark where I own an apartment, rent control forces me to only be able to rent it out as a corporate apartment to foreigners. The official rent would pay less than quarter of the mortgage. No wonder it is hard to find a good apartment in Copenhagen. An example is the market response to the generations of social engineering started as the New Deal, which eventually led us to the very distorted issues we now see in the financial markets. Another example are the costs of health care in the US, that were caused directly by the deductions for employers created in the 40s. Instead of an efficient market, where people picked the most efficient insurance for their situation, it became an arms race of who could offer more benefits together with a bureaucracy to make sure their insured (who don't pay directly) don't abuse the system. Let Richard Branson or any other smart entrepreneur at the health system without the handicap of social engineering and it would be fixed within a year. Rather than fixing it all signs at the moment point towards further regulation and thus further distortion. The market will always route around social engineering no matter to what limits the regulators attempt to control it. The outcomes are rarely as good as if the market was just left to do its job. Of course when this happens like it has so obviously in the current crisis, people talk about it being the fault of the market run wild and want to bring in more regulation, when the regulation it self was what caused it to go wild in the first place.

davidw 18y ago
> Let Richard Branson or any other smart entrepreneur at the health system without the handicap of social engineering and it would be fixed within a year. Where "fixed" means that unprofitable/poor people die of or are crippled by easily and cheaply treatable diseases. That's what a pure market solution would do. Once you start including those people, it's "social engineering".
- pelle 18y ago
  Health care is no different than any other service. If you are able to increase the availability as well as lower the price it helps everyone. Including the poor.

mhartl 18y ago

Perhaps, but the rerouting has a cost, which often lands on those least able to bear it; in the case of rent control, the cost lands preferentially on poor tenants in the form of higher rents. And even costs that land on the rich make us all poorer in the long run. Because of the harm done, it's still worth noting that rent control and other "pro-tenant" law is rarely good for tenants, or indeed anyone other than sometimes well-meaning but economically illiterate busybodies.

sayrer 18y ago

Yes, with all sorts of things. The same can be said of workplace safety regulations, minimum wage laws, child labor, drug safety, environmental laws, and on and on.