3 ms·

Economy is a prime example of a field where a bit of knowledge is worse than no knowledge, and nothing is more deranged than someone who has completed Econ 101,

by Epa095 2y ago

Economy is a prime example of a field where a bit of knowledge is worse than no knowledge, and nothing is more deranged than someone who has completed Econ 101, and thinking they now understand the world.

snapplebobapple 2y ago
[flagged]
- Epa095 2y ago
  I invite you to think about how your argument would look like if you actually wrote it out to completeness. It would probably include one or more of the following assumptions: - Infinite(or unlimited amount) of both homogeneous employeers and employees. - Unlimited information about... everything. - Changing jobs is cost-free for everyone (employeers, employees, and society at large). - No participant in the market is large enough to influence any prices (for goods or wages). - Everyone is perfectly rational. - No barriers to entry for anyone. - That all utility-spaces are convex and compact - No externalities. The perfect market is the "spherical cow in a vacuum" of economy. Not to say that game theory, and economy at large, is not usefull! But there are major steps from theory to practice, and to actually do that step you need impossible assumptions about how much the "imperfection of reality" influences the conclusions you make. (Sorry about spelling misstakes, take it as proof that GTP was not involved;-)
  - snapplebobapple 2y ago
    As I have already said a few times, the corner cases where a union might make things better involve correcting other market failure like monopsony (which is usually caused by the barriers to entry item you listed, which in turn causes the participant size problem). None of these apply to the specific case in the article we are talking about (i.e. this specific union is bad for society) because everyone is already highly paid relative to similar work elsewhere in the economy. Of course there are assumptions in the theory, those drive the corner cases (of which I mentioned the most relevant one in my first post) and is also present in the theory you are relying on to say what the corporations are doing is bad. You can't like the stuff that says monopoly is bad when it applies to corporations and then turn around and think it's good when it is clearly happening in labor via unions, that's utterly illogical. It's either clearly bad in both cases, or the theory is worth nothing and we have no justification for any market intervention, which is obviously not true. We need market interventions (arguably a lot more than we are currently doing, but likely less than we used to do pre Rhenquist supreme court) to correct market power abuse and there are no sacred cows. It is largely bad both when capital and when labor does it.
Der_Einzige 2y ago
[flagged]
makomk 2y ago
The basic reason this happens is that people's wages are only worth what they can buy, and in order for them to be able to buy those things they need to be produced and shipped. Sure, you could argue that this doesn't actually matter in practice because the corporations will always have enough excess profit to just pay people higher wages and employ more people to do less when the unions demand it, and that they'll have to do so rather than increasing prices, and that these cuts in profits will somehow always come out of the pockets of unsympathetic billionaires rather than ordinary workers' pension funds. That requires a lot more about the world to work out just right compared to the economics 101 version though.

by Epa095 2y ago

snapplebobapple 2y ago

[flagged]

Epa095 2y ago
I invite you to think about how your argument would look like if you actually wrote it out to completeness. It would probably include one or more of the following assumptions: - Infinite(or unlimited amount) of both homogeneous employeers and employees. - Unlimited information about... everything. - Changing jobs is cost-free for everyone (employeers, employees, and society at large). - No participant in the market is large enough to influence any prices (for goods or wages). - Everyone is perfectly rational. - No barriers to entry for anyone. - That all utility-spaces are convex and compact - No externalities. The perfect market is the "spherical cow in a vacuum" of economy. Not to say that game theory, and economy at large, is not usefull! But there are major steps from theory to practice, and to actually do that step you need impossible assumptions about how much the "imperfection of reality" influences the conclusions you make. (Sorry about spelling misstakes, take it as proof that GTP was not involved;-)
- snapplebobapple 2y ago
  As I have already said a few times, the corner cases where a union might make things better involve correcting other market failure like monopsony (which is usually caused by the barriers to entry item you listed, which in turn causes the participant size problem). None of these apply to the specific case in the article we are talking about (i.e. this specific union is bad for society) because everyone is already highly paid relative to similar work elsewhere in the economy. Of course there are assumptions in the theory, those drive the corner cases (of which I mentioned the most relevant one in my first post) and is also present in the theory you are relying on to say what the corporations are doing is bad. You can't like the stuff that says monopoly is bad when it applies to corporations and then turn around and think it's good when it is clearly happening in labor via unions, that's utterly illogical. It's either clearly bad in both cases, or the theory is worth nothing and we have no justification for any market intervention, which is obviously not true. We need market interventions (arguably a lot more than we are currently doing, but likely less than we used to do pre Rhenquist supreme court) to correct market power abuse and there are no sacred cows. It is largely bad both when capital and when labor does it.

Der_Einzige 2y ago

[flagged]

makomk 2y ago

The basic reason this happens is that people's wages are only worth what they can buy, and in order for them to be able to buy those things they need to be produced and shipped. Sure, you could argue that this doesn't actually matter in practice because the corporations will always have enough excess profit to just pay people higher wages and employ more people to do less when the unions demand it, and that they'll have to do so rather than increasing prices, and that these cuts in profits will somehow always come out of the pockets of unsympathetic billionaires rather than ordinary workers' pension funds. That requires a lot more about the world to work out just right compared to the economics 101 version though.