4 ms·

Exactly, wage fixing is fine in a free market, that directly follows from the definition of an unregulated market, every market participator is free to do any m

Exactly, wage fixing is fine in a free market, that directly follows from the definition of an unregulated market, every market participator is free to do any market decision they want. This is a nice example why free markets are not optimal, zero regulation is not the best amount of regulation.

icebraining 13y ago
This collusion happened in a regulated market, though.
- nicolasp 13y ago
  The market being regulated doesn't necessarily prevent collusion from happening, but makes it illegal when it does happen.
  - icebraining 13y ago
    The point is that we can't take a market with N regulations, see what happens with (N-1) regulations being followed, and then say "see, that's what would happen without any regulations!" Kill the regulations helping the capitalists, not just the ones giving a hand to the worker, and then we can talk.
    - adventured 13y ago
      The 19th century in the US is probably the largest data set when it comes to extremely low regulation markets. Hong Kong is a more recent example. The point being, there is a lot of actual real world data on each side of the fence.
      - icebraining 13y ago
        Well, it depends on what you consider regulation. If you take a broader view, like Benjamin Tucker did, you'll see they were in fact very regulated.
        nickik 13y ago
        Well let me give you the simplest market argument I know. Look at corrulation between economic freedom and economic size and growth. http://www.freetheworld.com/2013/EFW2013-complete.pdf http://www.freetheworld.com/2013/EFW2013-complete.pdf (Page 22)
        icebraining 13y ago
        I'm not sure why have you decided to reply with that; if anything, by referring to Benjamin Tucker, I'm taking a position in the defense of free markets, not attacking them. And in any case, if my position was opposed to yours, that argument wouldn't convince me anyway, since I find "economic size" and particularly "growth" to be little more than fetishes of mainstream ideologues. I'm much more easily convinced by what the economists call "consumer surplus", though I'd rather know the "worker surplus".
        nickik 13y ago
        I was adressing everybody in the discussion. Like I said, its just the thing that I start with, just this statistic would not convince me either.
    - lmm 13y ago
      > The point is that we can't take a market with N regulations, see what happens with (N-1) regulations being followed, and then say "see, that's what would happen without any regulations!" That seems like the sort of evidence that's actually useful when making policy decisions about whether we should increase or decrease regulation. Abolishing all regulations is not practical, so what political theorists think would happen in a complete absence of regulation is irrelevant to any real-world issues.
      - icebraining 13y ago
        It's only relevant when making policy decisions about that particular rule. Regulations aren't commodities, and the fact that eliminating a certain regulation would destabilize the system is no evidence that removing any other regulation would do the same. But in any case, if you think what would happen by abolishing all regulation is irrelevant to the real world, then you should be replying to RivieraKid, who was the one drawing such irrelevant (and, in my opinion, unsupported) conclusions.
- RivieraKid 13y ago
  That's true, but I'm not sure I get the point.
  - icebraining 13y ago
    I stated it in the other thread: https://news.ycombinator.com/item?id=7176384 https://news.ycombinator.com/item?id=7176384
WalterBright 13y ago
Regulation is often used as a tool to fix prices, as price fixing agreements in a free market tend to be unstable and unenforceable.
- icebraining 13y ago
  Is there empirical evidence of that?
  - adventured 13y ago
    Yes, there is a large amount of recorded history of attempted price fixing from 1830 > 1920x or so, and the results of such efforts. Given it wasn't illegal for the most part, companies & individuals didn't work very hard to hide their schemes from the history books (although sometimes from competitors). The efforts tended to be constantly in flux, subject to rapid shifts in loyalty and dedication, and the agreements were typically without any formal contractual requirement. There are numerous excellent economic accounts of the 19th century US market that covers this, and many good books for companies and persons that do so as well (eg covering the Pennsylvania Railroad, the Vanderbilts, Rockefeller, JP Morgan, Carnegie, and on it goes).
  - WalterBright 13y ago
    A few cases come to mind. 1. The government froze wages in WW2, and companies got around that by offering free health insurance. 2. Unions often got the government to force workers to join the union, because otherwise workers would undercut the union. 3. There were numerous attempts to fix wages of black laborers artificially low after the Civil War, they would constantly fall apart because individual farmers would pay more under the table to attract better workers. See "The Strange Career of Jim Crow". 4. Government "price supports" are there because of the consistent failure of farmers to voluntarily comply with price fixing agreements.
    - WalterBright 13y ago
      I forgot to add - anti-dumping, unfair competition, and predatory pricing laws. Those are just a way to use regulation to fix prices because voluntary price fixing fails.
smsm42 13y ago
If you have a pre-determined goal in mind - like maximizing your revenue - of course free market is not optimal for you! For you, the optimal market would be one in which the rules are skewed in your favor. In general, free market can not be optimal if you have predetermined outcome in mind as "optimal", because if the outcome were predetermined, the market of course would not be free! The question to ask here is why do you think your preferred outcome is better than mine and what gives you right to force it on me.

icebraining 13y ago

This collusion happened in a regulated market, though.

nicolasp 13y ago
The market being regulated doesn't necessarily prevent collusion from happening, but makes it illegal when it does happen.
- icebraining 13y ago
  The point is that we can't take a market with N regulations, see what happens with (N-1) regulations being followed, and then say "see, that's what would happen without any regulations!" Kill the regulations helping the capitalists, not just the ones giving a hand to the worker, and then we can talk.
  - adventured 13y ago
    The 19th century in the US is probably the largest data set when it comes to extremely low regulation markets. Hong Kong is a more recent example. The point being, there is a lot of actual real world data on each side of the fence.
    - icebraining 13y ago
      Well, it depends on what you consider regulation. If you take a broader view, like Benjamin Tucker did, you'll see they were in fact very regulated.
      - nickik 13y ago
        Well let me give you the simplest market argument I know. Look at corrulation between economic freedom and economic size and growth. http://www.freetheworld.com/2013/EFW2013-complete.pdf http://www.freetheworld.com/2013/EFW2013-complete.pdf (Page 22)
        icebraining 13y ago
        I'm not sure why have you decided to reply with that; if anything, by referring to Benjamin Tucker, I'm taking a position in the defense of free markets, not attacking them. And in any case, if my position was opposed to yours, that argument wouldn't convince me anyway, since I find "economic size" and particularly "growth" to be little more than fetishes of mainstream ideologues. I'm much more easily convinced by what the economists call "consumer surplus", though I'd rather know the "worker surplus".
        nickik 13y ago
        I was adressing everybody in the discussion. Like I said, its just the thing that I start with, just this statistic would not convince me either.
  - lmm 13y ago
    > The point is that we can't take a market with N regulations, see what happens with (N-1) regulations being followed, and then say "see, that's what would happen without any regulations!" That seems like the sort of evidence that's actually useful when making policy decisions about whether we should increase or decrease regulation. Abolishing all regulations is not practical, so what political theorists think would happen in a complete absence of regulation is irrelevant to any real-world issues.
    - icebraining 13y ago
      It's only relevant when making policy decisions about that particular rule. Regulations aren't commodities, and the fact that eliminating a certain regulation would destabilize the system is no evidence that removing any other regulation would do the same. But in any case, if you think what would happen by abolishing all regulation is irrelevant to the real world, then you should be replying to RivieraKid, who was the one drawing such irrelevant (and, in my opinion, unsupported) conclusions.
RivieraKid 13y ago
That's true, but I'm not sure I get the point.
- icebraining 13y ago
  I stated it in the other thread: https://news.ycombinator.com/item?id=7176384 https://news.ycombinator.com/item?id=7176384

WalterBright 13y ago

Regulation is often used as a tool to fix prices, as price fixing agreements in a free market tend to be unstable and unenforceable.

icebraining 13y ago
Is there empirical evidence of that?
- adventured 13y ago
  Yes, there is a large amount of recorded history of attempted price fixing from 1830 > 1920x or so, and the results of such efforts. Given it wasn't illegal for the most part, companies & individuals didn't work very hard to hide their schemes from the history books (although sometimes from competitors). The efforts tended to be constantly in flux, subject to rapid shifts in loyalty and dedication, and the agreements were typically without any formal contractual requirement. There are numerous excellent economic accounts of the 19th century US market that covers this, and many good books for companies and persons that do so as well (eg covering the Pennsylvania Railroad, the Vanderbilts, Rockefeller, JP Morgan, Carnegie, and on it goes).
- WalterBright 13y ago
  A few cases come to mind. 1. The government froze wages in WW2, and companies got around that by offering free health insurance. 2. Unions often got the government to force workers to join the union, because otherwise workers would undercut the union. 3. There were numerous attempts to fix wages of black laborers artificially low after the Civil War, they would constantly fall apart because individual farmers would pay more under the table to attract better workers. See "The Strange Career of Jim Crow". 4. Government "price supports" are there because of the consistent failure of farmers to voluntarily comply with price fixing agreements.
  - WalterBright 13y ago
    I forgot to add - anti-dumping, unfair competition, and predatory pricing laws. Those are just a way to use regulation to fix prices because voluntary price fixing fails.

smsm42 13y ago

If you have a pre-determined goal in mind - like maximizing your revenue - of course free market is not optimal for you! For you, the optimal market would be one in which the rules are skewed in your favor. In general, free market can not be optimal if you have predetermined outcome in mind as "optimal", because if the outcome were predetermined, the market of course would not be free! The question to ask here is why do you think your preferred outcome is better than mine and what gives you right to force it on me.