Anti-Capitalist Sentiment (with some morality)

[Renton]

Interesting talk. I'm not enough of a foreign policy buff to criticize most of what he said, but I was disappointed to see some of the same old anti-capitalist fallacies being repeated (the purpose of capitalism is to concentrate wealth blah blah blah).

[a500lbgorilla]

Holy shit, renton. You were right.

http://WWW.NPR.org/blogs/money/2014/...ride-costs-192

[OngBonga]

Holy shit $192 for a taxi journey that could've been done on foot? What the fuck is wrong with people? I'm MORE likely to walk if it's snowing because SNOW IS AWESOME.

[OngBonga]

Well it looks like it can be done on foot based on that map, but I admit I have no idea what scale that map is so maybe not.

Still... fuck that.

[Renton]

Holy shit, renton. You were right.

WWW.NPR.org/blogs/money/2014/01/24/265396928/when-a-65-cab-ride-costs-192

Yeah nice article. I've heard of Uber. City taxis are mega hurtful, it would be nice to see them subverted by a better system.

Sadly, most people will see that article and just go bananas at the fact that someone paid 3x the controlled price for a ride, nevermind the fact that she probably would have had to wait hours to find a city taxi during a demand spike like that. A New Yorker's time is often worth far more than 192 dollars so this can be a tremendous waste with the public system.

[wufwugy]

I haven't followed Uber too much even though my main man Yglesias covers it from time to time. It's good stuff, and as far as I know, by far its biggest hurdle is government regulation. Silly regulations, not life-saving ones

[a500lbgorilla]

Yeah nice article. I've heard of Uber. City taxis are mega hurtful, it would be nice to see them subverted by a better system.

Sadly, most people will see that article and just go bananas at the fact that someone paid 3x the controlled price for a ride, nevermind the fact that she probably would have had to wait hours to find a city taxi during a demand spike like that. A New Yorker's time is often worth far more than 192 dollars so this can be a tremendous waste with the public system.

For me it's a proof of concept because I was already walked through the concept. For them, with no guiding principles to digest it, they've just got their gut judgement. All you can imagine is how much it sucks to have to pay 3x because of the snow. Look at the comments. Many are finding every reason why it would suck for them and how it should have never come to this. They harp on everything from legging it to how illegal 17-hour shifts should be and how it was a waste of 200 bucks to produce this excellent piece. Few have a bird's eye view of the market place and how it will evolve in reaction to the surge (and they all talk in easily ignored econo-jargon).

A presentation of the concept along side a demonstration like this should be able to move opinions. I mean, even infomercials play off that. This article didn't try to sell anything though, they just wanted to put the raw experience out there.

[Renton]

[a500lbgorilla]

Genuine LOL

[wufwugy]

I think a mistake pro-market people make is voting/supporting pro-market politicians who are also anti-social-progress. What I'm getting at is that I think that most/all pro-market changes ride on the backs of liberal social policy. Economic changes don't tend to happen unless there is a social sentiment pushing for it. Examples: gambling markets were destroyed not for economic reasons, but social reasons; marijuana markets are opening up not for economic reasons, but social reasons; the war on drugs is losing ground not for economic reasons, but social reasons; marriage markets for homosexuals open up not for economic reasons, but social reasons; even healthcare markets are opening up more than pre-ACA due to the social desire for expanded coverage.

The concept of private property is itself a social idea. The problem with the Republican party, even if it was super accurate on the economy, is that it is unable to make progress on the economy due to it being regressive on social policy. How markets change depends on what people demand, and what people demand is mostly about social policy, not economic policy. People don't understand the details that give them access to things they want (economics), but they do understand that they want access to things (social), and that's why economic freedom rides on the back of social freedom. Even if liberals don't understand economics as well as conservatives, I contend that liberals effect a stronger and freer economy inadvertently due to progress on social issues, while conservatives harm the very markets they claim they want expanded due to regressing on social issues

[boost]

Awesome post wufwugy-- I think this type of bridging the gap thinking needs to be employed far more.

And I'd like to ask, at the risk of opening a western front, what you think the social implications of an ever expanding wealth gap are? I was working my way towards this in the other thread, but we hadn't quite gotten there yet. However, it seems to fit here now.

[wufwugy]

Awesome post wufwugy-- I think this type of bridging the gap thinking needs to be employed far more.

And I'd like to ask, at the risk of opening a western front, what you think the social implications of an ever expanding wealth gap are? I was working my way towards this in the other thread, but we hadn't quite gotten there yet. However, it seems to fit here now.

I'm not sure it is expanding or if it matters. Wealth and income are far more abstract than more concrete measures like consumption. I think that much of the recent measurement that suggests inequality is increasing has cherry picked what it wants to add to the wealth measure. For example, people with lots of assets, like Bill Gates, look to be far wealthier on charts than they are IRL. If you account for all of Gates' assets, he's like a thousand or whatever times wealthier than average, but his access to technology is only like one or two times higher than average. This shows there is a discrepancy between the idea of income and what it can actualize in real value. IIRC, studies have shown that happiness levels peak at about 75k income per year. Given the consumption capacity of that compared to much higher incomes, it makes sense that higher incomes don't really improve lives.

I'm of the mind that wealth hubs are essential to innovation and advancements, yet higher than maybe 2x average income does nothing to improve individuals' lives. This suggests to me that the kind of goals we should strive for are not ones that are worried about wealth hubs, but access to mobility from poverty to middle class. That access doesn't appear to be hindered by wealth hubs at all (I think it's aided by it, honestly), but is hindered by some policy issues (like in healthcare, education, and construction) and cultural issues (let's be honest, first generation immigrant parents demand their kids get good grades, while many anglo and black Americans teach their kids that schools are lying to them and the cops are out to get them or any such nonsense)

BTW a few days ago Renton told me a fantastic point I hadn't thought of: people with "too much wealth" provide an essential service to society by being the first test subjects for new products. It's like how the first cell phones were really shitty and expensive and the only people who bought them were the rich. Well, the fact that there were people rich enough to up the demand for those inefficient yet valuable products has over a decade turned them into paradigm changers, with all sorts of new capabilities, available to most people on the planet

[Jack Sawyer]

1. Elysium
2.a. http://articles.economictimes.indiat...-dekkers-bayer
2.b. some commentary on that issue http://youtu.be/cq3S98_m5Fk

[Renton]

1. Elysium
2.a. http://articles.economictimes.indiat...-dekkers-bayer
2.b. some commentary on that issue http://youtu.be/cq3S98_m5Fk

So let me get this straight, TYT is bashing the profit-and-loss system for resulting in the development of a fantastic drug that will improve everyone's lives? How many more decades would it have taken to develop this drug if Bayer hadn't seen an opportunity for future profits, and responded? How many orders of magnitude of a cunt does the CEO of Bayer need to be in order to cancel out the amazing benefits that his company is providing to society? (Answer: 137)

As far as the whole patent stuff, you'll be pleased to know that most free-market advocates are against strict laws concerning intellectual property, and one of the reasons is that they result in monopolies like this that make things like drugs so costly to people.

[Jack Sawyer]

So let me get this straight, TYT is bashing the profit-and-loss system for resulting in the development of a fantastic drug that will improve everyone's lives? How many more decades would it have taken to develop this drug if Bayer hadn't seen an opportunity for future profits, and responded? How many orders of magnitude of a cunt does the CEO of Bayer need to be in order to cancel out the amazing benefits that his company is providing to society? (Answer: 137)

As far as the whole patent stuff, you'll be pleased to know that most free-market advocates are against strict laws concerning intellectual property, and one of the reasons is that they result in monopolies like this that make things like drugs so costly to people.

Define everyone

Cause I assume not everyone can pay upwards of $60K to get well. Also, the situation in Elysium is eerily similar

Once they recoup their losses, will the prices automatically go down? Because I would assume no, since then it's 100% profit for them. How many orders of magnitude of a cunt does the CEO of Bayer need to be in order to cancel out the amazing benefits that his company will get from selling this drug at exactly this same price (or even an increase if it shows to be particularly effective) in the future after having already made up for their R&D investment?

[Renton]

Define everyone

Cause I assume not everyone can pay upwards of $60K to get well. Also, the situation in Elysium is eerily similar

Once they recoup their losses, will the prices automatically go down? Because I would assume no, since then it's 100% profit for them. How many orders of magnitude of a cunt does the CEO of Bayer need to be in order to cancel out the amazing benefits that his company will get from selling this drug at exactly this same price (or even an increase if it shows to be particularly effective) in the future after having already made up for their R&D investment?

Name one case in history where life supporting (or just life improving [or just playstation]) technology hasn't quickly dropped in price to be affordable to the masses after a few months?

Everyone means everyone, eventually. A new product emerges, its gonna be expensive at first. That is standard and there's no way around it, aside from not having the product at alll. You have to provide incentives for innovation, and there they are. The price always comes down. It's just a matter of time.

Actually, even with the strict IP laws, the market would solve this problem. A competitor to Bayer will inevitably make a similar formula that probably improves on the original but is enough different that it doesn't violate the patent, they'll undercut's Bayer's price, and the end result is that there will be more even cheaper and better alternatives.

[wufwugy]

TYT is wrong on virtually every non-social issue they talk about, even the non-policy political issues that Cenk boasts he understands so well. They do not make enough money to hire anybody with expertise or proper investigations, and really are just a lay commentary squad

[wufwugy]

I talk a lot about monetary policy and its power on here. A good post on it, with a key paragraph demonstrating just how important it is

http://econlog.econlib.org/archives/...ian_confi.html

Even worse, they ignored the fact that the US did roughly equal amounts of austerity as the eurozone and didn't suffer a double dip recession. Of course the only important policy difference between the US and the eurozone was the fact that the Fed adopted a more expansionary monetary policy than the ECB. The Fed did not raise interest rates in 2011, indeed it engaged in quantitative easing.

It really is true that the main difference between the US and EU right now is monetary policy. The EU is contracting like crazy and the US is expanding, despite approximately equal levels of fiscal contraction. Monetary policy is god

[d0zer]

it's rare you hear someone praising money-printing.

[wufwugy]

it's rare you hear someone praising money-printing.

And that's a shame because it's responsible for an incredible amount of good. Besides, it isn't really "money-printing" and just about everything you hear about monetary policy from non-monetarists is an egregious misunderstanding of monetary policy

[boost]

And that's a shame because it's responsible for an incredible amount of good. Besides, it isn't really "money-printing" and just about everything you hear about monetary policy from non-monetarists is an egregious misunderstanding of monetary policy

oh the ironing...

[wufwugy]

Yes a bit you would hear from me is also wrong. But I can send you in the right direction. Regardless, what I say is just reiterating material from monetarists, and I don't get too detailed because I don't understand the details

We're living in a uniquely historical time at this moment because for most of modern economic history, virtually everybody understood the role of monetary expansion or contraction for inflation or deflation in the macro economy, but over just the last couple years, there has been an upswelling, without any semblance of credible backing, about the dangers of this. The shift has permeated the professional field (but not the academic) as well.

Since WW2, there hasn't been much bickering in economics. Keynesians and monetarists agreed on almost everything (with slight variance), and they made up almost the entirety of the profession. Problems happened (like stagflation) and problems were solved (like stagflation). But then 2008 happened, and the Keynesians dropped much of what they previous believed (and derided Japan for in the Lost Decade), while the other side left monetarism for some weird fundamentalism that claims horribly inaccurate things like "inflation is theft". Today, the academic field is the same as it has always been, but everybody has forgotten the academics, and the only people who appear to have not been swayed away are called market monetarists

Fortunately for us, those who abandoned the academic views have been getting things wrong, and the effects of that are beginning to show up now. The "inflation is theft" side is held mainly by non-academics even though the views permeate the thinking of many, but for the most part, nobody listens to that side because it spouts batshit on the regular. This was the crowd that claimed the US was headed for hyperinflation. To most professionals, it's as easy as ten seconds of calculations to figure out that their math was horribly wrong. On the other side, the Keynesians have been talking a big game and making predictions, and those have not worked out for them either. The field is gradually returning to sense

Or just look at it this way: 2013 was supposed to be a BAD year for the economy. It was supposed to be bad, bad, bad according to Krugman and every left-leaning economist. Why? The sequester. There were people like Peter Schiff on the right crying bloody murder about how the sky has already fallen but nobody sees it, but he's been wrong ever since he got in front of a camera. Then there's the small handful of academics who said 2013 wasn't going to be a bad year because monetary offset the Fed was already implementing and the markets already reacted to the sequester immediately after it passed. And they were right. The only economists who don't have egg on their faces are those who espouse the standard view that only looks non-standard since everybody else abandoned the standard

[wufwugy]

I'd like to add an explanation to the inflation thing

Without monetary expansion, there can't be much growth, because RGDP growth without inflation would make holding cash more attractive, and this would reduce credit and investment and cause deflation. This is part of why before the Federal Reserve was created and stabilized monetary policy, every couple decades was just a back and forth of super high cyclical inflation and deflation. When inflation is kept stable, moderate, and on target (at about 2%), it allows sustainable RGDP growth. Inflation isn't a "hidden tax" as people like to call it. We already have ample case evidence with Japan on this issue. Their economy hasn't grown ever since they instituted effectively hard money policies, and they have even tried massive fiscal expansions that haven't worked. We're in a crummy place now because, from the right, people like Schiff preach bad policy like hard money, and from the left, people like Krugman preach ineffective policy like fiscal expansion. Fortunately for us, the Fed, while still being influenced too much by each side, is still operating in a much more sound way than the politics would suggest.

Oh also the Great Depression and the Great Recession were both caused by the Fed not sticking to its inflationary target. And the Fed isn't responsible for creating bubbles (bubbles per se don't exist in the first place)

[wufwugy]

In line with the idea that democracy isn't all that it's cracked up to be and that it's good for some people to have more say about governance than others...

http://www.theatlantic.com/magazine/...uption/357568/

He mentioned the coming McCutcheon v. FEC case. I think I might hope SCOTUS eliminates personal contribution caps. I'm not sure what my position is on campaign finance, but I see a shitload of problems with public finance that its proponents ignore, and some benefits to private finance that are also rarely addressed

[a500lbgorilla]

I am coming to consider Thinking, Fast and Slow by Daniel Kahneman to be a critical read for anyone. I found this chapter particularly worth sharing.

A little background. In the previous chapter they improve upon Bernoulli's utility curve and introduce the concept of loss aversion. Basically that relative to what you consider the neutral point, steps back are twice as bad as equivalent steps forward. Much earlier in the book, they establish the two-systems model of the mind. System one is a massive association network that works quickly and automatically to spit out the quickest conclusion it can jump to, System two is the you you consider yourself which is lazy but capable of checking and correcting the results of the first system. It delivers the awesome observation that What You See Is All There Is or that you have a very hard time considering stuff you're unaware of.

'The concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics. This is odd, because the idea that people evaluate many outcomes as gains and losses, and that losses loom larger than gains, surprises no one. Amos and I often joked that we were engaged in studying a subject about which our grandmothers knew a great deal. In fact, however, we know more than our grandmothers did and can now embed loss aversion in the context of a broader two-systems model of the mind, and specifically a biological and psychological view in which negativity and escape dominate positivity and approach. We can also trace the consequences of loss aversion in surprisingly diverse observations: only out-of-pocket losses are compensated when goods are lost in transport; attempts at large-scale reforms very often fail; and professional golfers putt more accurately for par than for a birdie. Clever as she was, my grandmother would have been surprised by the specific predictions from a general idea she considered obvious.

(Two black pictures with the whites of eyes.)

Your heartbeat accelerated when you looked at the left-hand figure. It accelerated even before you could label what is so eerie about the picture. After some time you may have recognized the eyes of a terrified person. The eyes on the right, narrowed by the raised cheeks of a smile, express happiness - and they are not nearly as exciting. The two pictures were presented to people lying in a brain scanner. Each picture was shown for less than 2/100 of a second and immediately masked by "visual noise," a random display of dark and bright squares. None of the observers ever consciously knew that he had seen pictures of eyes, but one part of their brain evidently knew: the amygdala, which has a primary role as the "threat center" of the brain, although it is also activated in other emotional states. Images of the brain showed an intense response of the amygdala to a threatening picture that the viewer did not recognize. The information about the threat probably traveled via a superfast neural channel that feeds directly into a part of the brain that processes emotions, bypassing the visual cortex that supports the conscious experience of "seeing." The same circuit also causes schematic angry faces (a potential threat) to be processed faster and more efficiently than schematic happy faces. Some experimenters have reported that an angry face "pops out" of a crowd of happy faces, but a single happy face does not stand out in an angry crowd. The brains of humans and other animals contain a mechanism that is designed to give priority to bad news. By shaving a few hundredths of a second from the time needed to detect a predator, this circuit improves the animal's odds of living long enough to procreate. The automatic operations of System 1 reflect this evolutionary history. No comparably rapid mechanism for recognizing good news has been detected. Of course, we and our animal cousins are quickly alerted to signs of opportunities to mate or to feed, and advertisers design billboards accordingly. Still, threats are privileged about opportunities, as they should be.

The brain responds quickly even to purely symbolic threats. Emotionally loaded words quickly attract attention, and bad words (war, crime) attract attention faster than do happy words (peace, love). There is no real threat, but the mere reminder of a bad event is treated in System 1 as threatening. As we saw earlier, with the word vomit, the symbolic representation associatively evokes in attenuated form many of the reactions to the real thing, including physiological indices of emotion and even fractional tendencies to avoid or approach, recoil or lean forward. The sensitivity to threats extends to the processing of statements of opinions with which we strongly disagree. For example, depending on your attitude on euthanasia, it would take your brain less than a quarter of a second to register the "threat" in a sentence that starts with "I think euthanasia is an acceptable/unacceptable..."

The psychologist Paul Rozin, an expert on disgust, observed that a single cockroach will completely wreck the appeal of a bowl of cherries, but a cherry will do nothing at all for a bowl of cockroaches. As he points out, the negative trumps the positive in many ways, and loss aversion is one of many manifestations of a broad negativity dominance. Other scholars, in a paper titled "Bad is Stronger Than Good," summarized the evidence as follows: "Bad emotions, bad parents, and bad feedback have more impact than good ones, and bad information is processed more thoroughly than good. The self is more motivated to avoid bad self-definitions than to pursue good ones. Bad impressions and bad stereotypes are quicker to form and more resistant to disconfirmation than good ones." They cite John Gottman, the well-known expert in martial relations, who observed that the long-term success of a relationship depends far more on avoiding the negative than on seeking the positive. Gottman estimated that a stable relationship requires that good interactions outnumber bad interactions by at least 5 to 1. Other asymmetries in the social domain are even more striking. We all know that a friendship that may take years to develop can be ruined by a single action.

Some distinctions between good and bad are hardwired into out biology. Infants enter the world ready to respond to pain as bad and sweet to (up to a point) as good. In many situations, however, the boundary between good and bad is a reference point that changes over time and depends on the immediate circumstances. Imagine that you are out in the country on a cold night, inadequately dressed for the torrential rain, your clothes soaked. A stringing cold wind completes your misery. As you wander around, you find a large rock that provides some shelter from the fury of the elements. The biologist Michel Cabanac would call the experience of that moment intensely pleasurable because it functions, as pleasure normally does, to indicate the direction of a biologically significant improvement of circumstances. The pleasant relief will not last very long, of course, and you will soon be shivering behind the rock again, driven by your renewed suffering to seek better shelter.

Goals are Reference Points

Loss aversion refers to the relative strength of two motives: we are driven more strongly to avoid losses than to achieve gains. A reference point is sometimes the status quo, but it can also be a goal in the future: not achieving a goal is a loss, exceeding the goal is a gain. As we might expect from negativity dominance, the two motives are not equally powerful. The aversion to the failure of not reaching a goal is much stronger than the desire to exceed it.

People often adopt short-term goals that they strive to achieve but not necessarily to exceed. They are likely to reduce their efforts when they have reached an immediate goal, with results that sometimes violate economic logic. New York cabdrivers, for example, may have a target income for the month or year, but the goal that controls their effort is typically a daily target of earnings. Of course, the daily goal is much easier to achieve (and exceed) on some days that on others. On rainy days, a NY cab never remains free for long, and the driver quickly achieves his target; not so in pleasant weather, when cabs often waste time cruising the streets looking for fares. Economic logic implies that cabdrivers should work many hours on rainy days and treat themselves to some leisure on mild days, when they can "buy" leisure at a lower price. The logic of loss aversion suggests the opposite: drivers who have a fixed daily target will work many more hours when the pickings are slim and go home early when rain-drenched customers are begging to be taken somewhere.

Pope and Schwietzer study a huge sample size of golfers who out perform themselves for par than birdie. I ain't typing it.

Defending the Status Quo

If you are set to look for it, the asymmetric intensity of the motives to avoid losses and to achieve gains shows up almost everywhere. It is an ever-present feature of negotiations, especially of renegotiations of an existing contract, the typical situation in labor negotiations and in international discussions of trade or arms limitations. The existing terms define reference points, and a proposed change in any aspect of the agreement is inevitably viewed as a concession that one side makes to the other. Loss aversion creates an asymmetry that makes agreements difficult to reach. The concessions you make to me are my gains, but they are your losses; they cause you much more pain than they give me pleasure. Inevitably, you will place a higher value on them that I do. The same is true, of course, of the very painful concessions you demand from me, which you do not appear to value sufficiently! Negotiations over a shrinking pie are especially difficult, because they require an allocation of losses. People tend to be much more easygoing when they bargain over an expanding pie.

Some stuff on negotiation tactics that imma skip.

Animals, including people, fight harder to prevent losses than to achieve gains. In the world of territorial animals, this principle explains the success of defenders. A biologist observed that "when a territory holder is challenged by a rival, the owner almost always wins the contest - usually within a matter of seconds." In human affairs, the same simple rule explains much of what happens when institutions attempt to reform themselves, in "reoganizations" and "resturcturing" of companies, and in efforts to rationalize a bureaucracy, simplify the tax code, or reduce medical costs. As initially conceived, plans for reform almost always produce many winners and some losers while achieving an overall improvement. If the affected parties have any political influence, however, potential losers will be more active and determined than potential winners; the outcome will be biased in their favor and inevitably more expensive and less effective than initially planned. Reforms commonly include grandfather clauses that protect current stake-holders - for example, when the existing workforce is reduced by attrition rather than by dismissals, or when cuts in salaries and benefits apply only to future workers. ..."

The chapter goes on to talk about loss aversion and how it affects perceptions of fairness that is a direct echo of the conversation on price gouging we had in this thread. But I'm done typing for now.

Buy the book.

[a500lbgorilla]

I suppose it's easy enough to hit the highlights of loss aversion and fairness/gouging.

If you pay a clerk 9 dollars an hour and a bunch of similar businesses move into the area and pay similar clerks 7 bucks an hour it is generally seen as unfair to cut your clerk's wage to 7 dollars an hour but totally fair should he leave for you to pay a replacement 7 bucks an hour.

This works for price gouging in the rain storm-generator example of some weeks back in that the reference point is the usual price of the generator, every dollar above is seen as a gain for the gouger and a loss for the buyer. Independent observers will be more apt to recognize the pain of loss for the buyer more viscerally than the benefit of gains for the seller and roundly denounce the practice. As can be witnessed by some reactions to the price gouging scenario in this thread (or some other thread maybe, I never checked to see I was in the right one.)

[rong]

Book looks good rilla. The golf example is particularly interesting although I'm not sure actually demonstrates the point the author thinks it does.

[a500lbgorilla]

Yeah, it's not a rare event that some example he offers up seems flimsy and sounds off my skeptical alarms, and other times I sense some seemingly inappropriate analysis, but I've picked up a lot of the books he's named dropped and burned through them and he doesn't seem to be blowing smoke.

[pantherhound]

It makes no sense for an employer to pay his employees any more than wages they would agree to. It's the same thing as paying 1.50 for a 1 dollar apple at a fruit stand. The employer owes it to his clients or customers to minimize his costs, and labor is one of those costs. This works to everyones benefit as it drives down the prices of everything and helps to spur innovation.

If the 'price of everything' is driven down, how does it benefit those at the bottom of the pay chain (since wages come down with it) any more than if they were paid a little more and commodity prices in general were proportionally higher?

[Renton]

If the 'price of everything' is driven down, how does it benefit those at the bottom of the pay chain (since wages come down with it) any more than if they were paid a little more and commodity prices in general were proportionally higher?

The prices of produced goods generally decrease over time with free market activity. This is for a bunch of reasons, mainly because innovation, emulation, and economies of scale create conditions whereby goods are produced much more efficiently and are sold competitively.

On the other hand, the prices of labor (i.e. wages) generally increase with free market activity. This reflects the scarcity of human time. Basically there are more things for people to do in the economy than there are people with time to do those things. This is especially the case in post-industrial societies with low birth-rates. Economic growth without accompanying population growth means doing more with less with regard to labor. In industrializing countries of the third world, the prosperity instead comes in the form of a population growth explosion as families finally are beginning to have access to cheap and abundant food and basic medicine. This partly explains why every developing economy seems to go through an extended period of stagnant sweatshop wages before it breaks through to becoming a modern economy; new humans are injected into the economy more quickly than the GDP grows. But it helps to have some perspective here, the GDP growth and population growth are massive in such countries (India, Indonesia, Thailand, etc) and that's a hell of a lot better than these countries were doing before.

[pantherhound]

Basically there are more things for people to do in the economy than there are people with time to do those things. This is especially the case in post-industrial societies with low birth-rates. Economic growth without accompanying population growth means doing more with less with regard to labor.

Huh? Populations are growing in pretty much all countries. Also, how do things like automation and the widespread switch to service-based economies mean more jobs?

[JKDS]

I dont understand why ”wages increase with free market activity"

Isnt the reverse shown to be true repeatedly thought history? We can follow taxes on the wealthy, for example, and see that income inequality was at its highest in times of minimal regulation, and at its lowest with heavy regulation.

The other problem I see with leaving wages to the market is that there is a huge difference in bargaining power. Anyone who has ever been unemployed knows this, to the point of accepting any wage...even at the cost of getting a second job. What history tells us though, is that conditions will progressively get worse if businesses are left to their own devices, until the people resort to violence ala the French revolution, the march on wall street, and countless other examples.

[Renton]

Huh? Populations are growing in pretty much all countries.

"First World" countries like U.S. and U.K. have positive population growth, but much smaller than poor countries, and much of it from immigration. Japan is actually depopulating. Meanwhile, developing countries like India and Indonesia are growing much more quickly. The interesting thing is that all of the population growth curves are slowing down. It's a natural consequence of the accumulation of wealth in a country.

Basically it goes like this:

1. Pre-agricultural economy: This is where we all began. Life is extreme hardship. Sustaining life is extremely labor intensive and dangerous. There's not even a concept of income or economic growth, only of basic survival. Population grows slowly if at all. (currently, some isolated tribes perhaps)

2. Agricultural economy: Eventually people discover or are shown how to cultivate land and domesticate livestock. This allows for the most basic forms of savings and trade, with the currency being food. Population begins to grow a bit more quickly, but there's little time to be devoted to anything like research or innovation. The decision to have a child is a tough cost-benefit analysis of whether the family can support another child, and whether its worth the medical risk to the mother. (currently, many African nations and rural parts of developing third world countries)

3. Industrial economy: Just enough innovation has taken place at this point that food is in a more stable abundance. Advances in basic medicine have made childbirth less risky. Where in the last stage, having children was a tough decision, now it's usually an excellent economic choice to have as many children as possible. People in industrializing countries actually have children as a form of pension program. Jobs are primarily manual labor, so the highest earning potential is when a person is young, and it diminishes as they get older. There is usually a strong culture of parental caretaking. Trade is happening on a larger scale, and this is usually the sharpest period of percentage-based GDP growth of all the stages. It's also the sharpest period of population growth. (currently, China and urban parts of India and Southeast Asia)

Also, how do things like automation and the widespread switch to service-based economies mean more jobs?

4. Post-industrial economy: After a period of industrialization, capital has accumulated to a point that one worker is capable of doing the work of many of the former industrial economy workers. Sustenance and basic healthcare is a non-issue for the vast majority of people. Population begins to curb as adequate parenting becomes more about investing time and money into a few quality children instead of creating the maximum amount. Human capital, i.e. education and training, become more valuable in this context as automation reduces the demand for the low-skill primary and secondary sector jobs and as newly developing tertiary and quaternary sectors create demand for higher-skill, higher-education jobs.

To answer your question, automation doesn't kill jobs. It contracts the primary (agriculture/mining) and secondary (manufacturing) low-paying jobs into a smaller number of higher-paying jobs. In the old economy, a guy lugs boxes of stuff from point A to B one at a time and makes a low wage, since his job can be done by anyone with muscles. In the new economy, the guy needs to be trained on the forklift so he can do five times as much work in the same amount of time, for which he is compensated more. He gets a pay bump, the other 80% of box-lugger-guys are let go. Thankfully, there are new sectors of the economy developing for those people to specialize in as well. Basically as people get higher incomes, they take on more needs and desires, creating demand for entirely new goods and services that poorer people wouldn't have been able to afford, or in some cases, even conceive of. For example, in the U.S., almost everyone now has high speed internet and uses online services constantly. The provision of those services must come from new jobs.

The problem is that the transition can be jarring. An entire generation of people raised in an industrial economy finds themselves at age 30-45 laid off from their obsolescent jobs with little marketable skill do do anything else. It's unavoidable though, and in the long run there is cause for great optimism. This is all happening because our lives are getting better in general. It is great that the lower sectors of the economy become more productive for less invested human time. It's merely temporarily bad for a relatively small slice of the population.

[wufwugy]

I dont understand why ”wages increase with free market activity"

Isnt the reverse shown to be true repeatedly thought history? We can follow taxes on the wealthy, for example, and see that income inequality was at its highest in times of minimal regulation, and at its lowest with heavy regulation.

The other problem I see with leaving wages to the market is that there is a huge difference in bargaining power. Anyone who has ever been unemployed knows this, to the point of accepting any wage...even at the cost of getting a second job. What history tells us though, is that conditions will progressively get worse if businesses are left to their own devices, until the people resort to violence ala the French revolution, the march on wall street, and countless other examples.

Income inequality and wages are two entirely different things. Inequality doesn't tell us anything. Here's one easy example why: triple everybody's income and you have eliminated poverty but increased inequality. The media's obsession with inequality does not come at the behest of most economists.

History has shown that markets are what increase wages. This happened in every western nation, including the US, and East and Southeast Asia have been demonstrating this for the last few decades. China's growth is entirely about pro-market reforms and it has been growing mind-bogglingly fast. The western media has no idea how to cover China, and we're sorely left in the dark about exactly how rapidly its wages have risen. They've gone up so quickly that China is now losing out some industry to poorer places that are pursuing their own market reforms, like Cambodia.

Employees have a lot of bargaining power in the market too. In fact, regulations like minimum wage are one of the main things that detract that bargaining power. The intellectual and policy backing of "pro-labor" reforms like the minimum wage have always been unions with the goal to kick their competition out of the market. Irony.

The French Revolution was a disaster and wasn't about rebellion from markets and businesses.

The US is the most regulated entity in world history. By a lot. Banks are regulated about six million times more than the media or those who march on Wall Street realize. The most consistent way to keep the powerful in power and keep the powerless out of power is regulations. Besides, I think if everybody knew what many of these regulations are or who are giving them, everybody would be against them. They mostly work in the shadows and have nothing to do with who or what people vote for.

[wufwugy]

The issue of how markets create bargaining power for employees is quite counter-intuitive. If you would like we can go into how it works.

[rong]

This is pretty interesting :http://www.theguardian.com/society/2...e-conservative

[wufwugy]

Given economic performance under the Tories, it looks like people voted with their wallets. Everybody talks jobs jobs jobs and then the UK government develops policies that make a uniquely robust jobs recovery.

[rong]

Well that's the opposite of what that article is saying. It's saying people who will actually lose out from likely and previous policies have voted for them anyway.

[wufwugy]

Well that's the opposite of what that article is saying. It's saying people who will actually lose out from likely and previous policies have voted for them anyway.

I know. The claim is common.

It's hard to say in what ways it's true, but I think the claim that conservatives vote against their economic interests by voting conservative is not supported by what economists say.

I suspect that what's really going on is that people of all sorts regularly vote against their interests, but on the margins they vote with their wallets. That doesn't mean that everybody votes on economics, because individuals can vote for programs that are bad economically but good for them over the short run.

[rong]

I think it's more a case of people not really having a clue what best for them individual or the country when it comes to any government policy, economic or otherwise, but more so economic.

[jackvance]

The main demographic problem western european countries and places like Australia face is that while the indigenous population is reproducing at below the replacement rate, large immigration is being coupled with welfare which gives the maximum pay-out when these families have 6-7 children. I really don't get this because it sets future generations up for a very big problem as in a few decades most of europe will have a majority population of third worlders who never integrated into society. This has become a very hot topic in recent years. When this comes up in conversation people will say "yeah this is a time bomb that's going to burst at some point". The official rationale is that we need to import people to maintain a young workforce to pay for the elderly's pensions but in practice welfare has proven to be just an extra tax on society, not in the least become a substantial portion of the people who flee their country for a better life in western nations are those that have been spit out by their own society, ie criminals.

[Renton]

The main demographic problem western european countries and places like Australia face is that while the indigenous population is reproducing at below the replacement rate, large immigration is being coupled with welfare which gives the maximum pay-out when these families have 6-7 children. I really don't get this because it sets future generations up for a very big problem as in a few decades most of europe will have a majority population of third worlders who never integrated into society. This has become a very hot topic in recent years. When this comes up in conversation people will say "yeah this is a time bomb that's going to burst at some point". The official rationale is that we need to import people to maintain a young workforce to pay for the elderly's pensions but in practice welfare has proven to be just an extra tax on society, not in the least become a substantial portion of the people who flee their country for a better life in western nations are those that have been spit out by their own society, ie criminals.

Yes, the welfare state causes a lot of problems like this. If the benefits were contracted and immigration were relaxed, people would have the best of both worlds: the indigenous people would keep more of their money and generally have more and better jobs, and the immigrants would still be able to have a better life working in the primary/secondary sectors albeit with fewer perks and below currently imagined minimum wages. It would be a more income inequal society, but almost everyone would be better off. There's nothing inherently wrong with income inequality.

[jackvance]

t would be a more income inequal society, but almost everyone would be better off. There's nothing inherently wrong with income inequality.

That's basically how countries like UAE/Qatar do it.

[boost]

That's basically how countries like UAE/Qatar do it.

Well.. there's also the slave labor..

[rong]

If I had a slave or two if definitely feel wealthier.

[rong]

Isn't Renton ok with slave labour. Not if their forced physically, but he's ok with paying them next to nothing because their desperate. I think that's an integral part of capitalism.

[Renton]

As it is, the welfare state necessitates harsh immigration policy. There's a strong correlation in the U.S. with the decrease in the employment of blacks and young people and the increase in immigration (illegal and otherwise). Basically the U.S. government policies cause huge incentives for immigration from Mexico:

1. Drug war is destroying Latin America, resulting in millions of would be emigrants who must seek a better life, often at great personal risk.

2. Farm subsidies, especially corn, allow the U.S. to export products so cheaply that it can be sold in Mexico for less than the local farmers can produce it. Basically we're destroying Mexico's primary sector, so where before those people were merely fucked because of gang violence, now they're fucked and unemployed. Not to mention the subsidies create more farming jobs in the U.S. than there would be in a free market, and immigrants from Mexico of course seek those jobs. They reduce the demand for labor, and thus, the price. Low-skill indigenous workers in the U.S. suffer lower wages and higher unemployment.

3. Welfare benefits create added incentive for this flow of low-skill workers into the country, and for the currently low-skill workers to remain having low skills, exacerbating every one of the above problems.

[Renton]

Isn't Renton ok with slave labour. Not if their forced physically, but he's ok with paying them next to nothing because their desperate. I think that's an integral part of capitalism.

It's an insult to actual slaves to refer to willing participants in commerce as slaves or even as similar to slaves. The existence of choice is a pretty black-and-white distinction.

It is not an integral part of capitalism that people be paid next to nothing. Incidentally people will be paid next to nothing when there is very low demand for their productive use of time. It's obviously an unfortunate situation to be so desperate for work that you will take almost any job at any wage, but capitalism has better answers for those people than socialism does. And in any case, it is not slavery, not even close.

I really wish all socialist intellectual types would visit an actual poor country to see what actual poverty is like. I live in Cambodia, and basically all people here want to do is to incrementally improve their lives. Often this means taking a 90 dollar a month job. In fact, if a new garment factory (a.k.a. sweatshop) opens up, people line up around the block to work there. The NGO's trying to shut down the sweatshops or boycott the products are not doing these people any favors. They're just increasing the sweatshop owners' risks and costs which lead to fewer factories being built. This leads to lower wages in a country where there are ten people vying for every job opening.

The other thing is the working conditions and child labor issues, which usually go with the "modern-day slavery" hyperbole. I guarantee if you went to any sweatshop worker in Cambodia and asked him "would you rather have safer, more comfortable working environments, or more money?", that they would say they want the money. Some families here are so poor that they might not have enough money to eat, let alone to send their children to school, so it often makes perfect sense for a 13 year old to generate income for the family. There are not easy solutions to this, but allowing people to make their own choices to improve their lives is generally going to be better than moralizing and crusading.

[rong]

So we exploit the desperate and needy to make a profit. That's a major part of capitalism. If we all had enough to feed, clothe, shelter and educate our family this wouldn't be an issue.

I understand what you're saying and don't have an answer on how to do it better. But that doesn't mean the exploitation you refer to should just be considered acceptable. Just because I can't find a better way doesn't mean the current way is right. You must at least acknowledge it leaves a bad taste in your mouth that sone are so rich they have 5 Ferraris and others can't afford to feed their kids.

I don't know the answer. But I know I don't like what you described and I'd happily try an alternative.

I guess we'd get less growth. If we were in a position where we simply didn't have the resources to feed everyone then you'd have to accept that growth should be the priority. But as we already can, we could accept a slower rate of growth for the sake of better distribution.

[Renton]

So we exploit the desperate and needy to make a profit. That's a major part of capitalism.

What, how did you glean that message from my post?

There is no exploitation. Everyone in the system acts voluntarily and in self-interest and attempts to improve his situation. Everyone who works a job is "desperate and needy" for that job, by your definition, because they are accustomed to a lifestyle that wouldn't be possible unless they worked at that job. The difference for the ultra-poor is that the stakes are life and death for them. It isn't merely a choice between a better lifestyle and a worse one, like it is for a middle class person deciding whether to get a second job or take on overtime hours. Making it as easy as possible for the truly poor to get a job is the best thing that can be done for them. Sweatshop owners do more to alleviate poverty than all NGOs put together.

If we all had enough to feed, clothe, shelter and educate our family this wouldn't be an issue.

There is no "enough." There is only the making of the best of the situation given the circumstances. Every person at every level of income strives for a higher standard of living. There will always be more needs than there are fulfillments of those needs. If there was an infinite amount of everything, there would be no need for economics.

I understand what you're saying and don't have an answer on how to do it better. But that doesn't mean the exploitation you refer to should just be considered acceptable. Just because I can't find a better way doesn't mean the current way is right. You must at least acknowledge it leaves a bad taste in your mouth that sone are so rich they have 5 Ferraris and others can't afford to feed their kids.

The rich people are not the problem. In a free market, people are rich because they made a lot of money for a lot of people. Many of the people with five ferraris made that money by pulling thousands out of poverty in the third world. Income inequality is only a problem when the wealth concentrates as a result of political power. Heavily taxing the rich punishes the risk taking behavior that leads to economic growth, because the taxes do not take into account the unseen people that went bankrupt from their ideas instead of getting rich from them. Heavily taxing corporations is an even bigger disaster because is a direct drain on the resources that would be otherwise used in expansion or investment into risky new projects that spur innovation and job creation.

I guess we'd get less growth. If we were in a position where we simply didn't have the resources to feed everyone then you'd have to accept that growth should be the priority. But as we already can, we could accept a slower rate of growth for the sake of better distribution.

If we distributed all of the resources to feed everyone, they would just multiply and produce more needy people. Incentives affect behavior. The most distributive countries are the ones with the highest unemployment and national debt. Economic freedom and the growth that results is the only consistently demonstrated cure for world poverty.

[rong]

Yeah there's an issue with people not taking responsibility for themselves and their families and breeding themselves into poverty. That also leaves those that have with guilt. The only way to remove that is to provide the minimum requirements to survive free to everyone and then let them move from there on their own.

But that's a little too left wing for even my tastes.

[rong]

I guess we could neuter everyone at birth and only allow people to breed once they can demonstrate an ability to provide for their offspring. I think that idea may prove unpopular though.

[jackvance]

I guess we could neuter everyone at birth and only allow people to breed once they can demonstrate an ability to provide for their offspring. I think that idea may prove unpopular though.

That would violate some of the basic human rights laid out in UN's charter. Short of a revolution, not gonna happen.

[rong]

Well we could add minimum child care standards to it making not being able to feed your child a crime.

[jackvance]

The powers that be are completely leftist though. You'd be violating the reigning dogma which states that if anyone's at fault for people being hungry, it's the west for not helping them enough.

Unless Elon Musk succeeds in making us an interplanetary species real soon, something gotta give though. We're ravaging and overpopulating the planet pretty badly.

"After what will henceforth be known as the Great Outage of 2018, the internet and the global media are finally back online after one year of shutdown. By universal decree the events that transpired shall never be investigated but we are pleased to announce that the world population is now back down to a comfortable 800 million. Please proceed with your lives as normal. Jobs are now voluntary, if you do not wish to work, funds are made available and please register for your personal AI drone to take care of you. If you have not yet received your DNA regulating chip implant, you have 3 weeks time to comply. All hail your Corporate Overlords."

[Renton]

This reminds me of something that always bugs me in debate with left-wing people.

One of the things that sucks so much about the state is that many of its tyrannies are necessary in light of its other tyrannies. It's the doctor that prescribes you one drug where the side effects are worse than the cure, then needs to give you more drugs to counter those side effects which contraindicate with the first drug, and on and on.

When you have a situation where wealth concentrates due to political influence (crony capitalism), it makes sense to have wealth distribution to the poor. When you have a system that gives money to the poor, it makes sense to make immigration difficult. When you have free government healthcare, it makes sense to meddle in people's business to make sure they don't do risky things with their own bodies. When you have a high minimum wage, it makes sense to give everyone free post-secondary education since there otherwise will be no jobs for them. When you give everyone free college, it makes sense to control who goes into what field so you don't waste billions of dollars on people who will be in the same predicament as having no education at all. It also makes sense to control the content in public universities when taxpayers are footing such a massive bill.

[Renton]

We're ravaging and overpopulating the planet pretty badly.

I don't agree. I think overpopulation is only a problem in local areas. Pollution is necessarily a big problem but a higher population might have a counter-intuitive effect on pollution. I believe the more human minds that are born, the more chances there are for great people who will have ideas about how to solve our big problems. Also, the more population there is, the more incentive there will be to have an agricultural revolution. We have ways of producing food and energy in sustainable ways, there just isn't yet enough economic pressure for those ways to compete with the dirty methods.

[wufwugy]

When you have a situation where wealth concentrates due to political influence (crony capitalism), it makes sense to have wealth distribution to the poor. When you have a system that gives money to the poor, it makes sense to make immigration difficult. When you have free government healthcare, it makes sense to meddle in people's business to make sure they don't do risky things with their own bodies. When you have a high minimum wage, it makes sense to give everyone free post-secondary education since there otherwise will be no jobs for them. When you give everyone free college, it makes sense to control who goes into what field so you don't waste billions of dollars on people who will be in the same predicament as having no education at all. It also makes sense to control the content in public universities when taxpayers are footing such a massive bill.

Fantastic way of putting it.

[rpm]

This reminds me of something that always bugs me in debate with left-wing people.

One of the things that sucks so much about the state is that many of its tyrannies are necessary in light of its other tyrannies. It's the doctor that prescribes you one drug where the side effects are worse than the cure, then needs to give you more drugs to counter those side effects which contraindicate with the first drug, and on and on.

When you have a situation where wealth concentrates due to political influence (crony capitalism), it makes sense to have wealth distribution to the poor. When you have a system that gives money to the poor, it makes sense to make immigration difficult. When you have free government healthcare, it makes sense to meddle in people's business to make sure they don't do risky things with their own bodies. When you have a high minimum wage, it makes sense to give everyone free post-secondary education since there otherwise will be no jobs for them. When you give everyone free college, it makes sense to control who goes into what field so you don't waste billions of dollars on people who will be in the same predicament as having no education at all. It also makes sense to control the content in public universities when taxpayers are footing such a massive bill.

i have to say this all makes a hell of a lot of sense and is a perspective i've failed to appreciate or even access in my own private ruminations on these kind of topics. i'm confused as to the the context though. why do these points you mention bug you about debating with left-wing people?

ps interesting thread. keep discussing shit you impassioned internet strangers

edit: pps, except you wufuwgy, you just keep quoting renton. or otherwise perhaps dig up some of your material on the woes of the state and the godliness of the economy from other completely unrelated threads and quote that in the unlikely event that you make a divergent point or express something as efficiently.

ppps juuuust kiddin' brah

[CoccoBill]

This reminds me of something that always bugs me in debate with left-wing people.

One of the things that sucks so much about the state is that many of its tyrannies are necessary in light of its other tyrannies. It's the doctor that prescribes you one drug where the side effects are worse than the cure, then needs to give you more drugs to counter those side effects which contraindicate with the first drug, and on and on.

When you have a situation where wealth concentrates due to political influence (crony capitalism), it makes sense to have wealth distribution to the poor. When you have a system that gives money to the poor, it makes sense to make immigration difficult. When you have free government healthcare, it makes sense to meddle in people's business to make sure they don't do risky things with their own bodies. When you have a high minimum wage, it makes sense to give everyone free post-secondary education since there otherwise will be no jobs for them. When you give everyone free college, it makes sense to control who goes into what field so you don't waste billions of dollars on people who will be in the same predicament as having no education at all. It also makes sense to control the content in public universities when taxpayers are footing such a massive bill.

I agree with pretty much everything you say, the problems of regulation are obvious. My point is, and has been all along, that I find it hard to be convinced that the alternative you propose can work any better as long as its whole premise is based on rational choice theory, which I find flawed. Voting, for example, is a market activity, and people are disastrous with their choices. People act rationally in the economic sense as much as they only do +EV choices in poker.

https://msu.edu/course/aec/810/bond-rat.htm

[Renton]

i have to say this all makes a hell of a lot of sense and is a perspective i've failed to appreciate or even access in my own private ruminations on these kind of topics. i'm confused as to the the context though. why do these points you mention bug you about debating with left-wing people?

Sorry I lost my train of thought with that post. I bugs me because it makes it difficult to argue against what socialists want. They're not totally incorrect, if you argue in the mindset of "well the governments already doing this shitty thing, so we have to do that shitty thing." Basically the more entrenched the state is, the more alluring socialism becomes.

[Renton]

I agree with pretty much everything you say, the problems of regulation are obvious. My point is, and has been all along, that I find it hard to be convinced that the alternative you propose can work any better as long as its whole premise is based on rational choice theory, which I find flawed. Voting, for example, is a market activity, and people are disastrous with their choices. People act rationally in the economic sense as much as they only do +EV choices in poker.

https://msu.edu/course/aec/810/bond-rat.htm

I think maybe yours (and rilla's) problem is that you're not interpreting rational choice theory correctly. Or maybe I'm not. My view of capitalism is that when people make their own decisions they are doing so based on subjective value. I don't believe anyone has a right to apply value judgments to the decisions of others as long as those decisions aren't hurting anyone. And how can you assess the correctness of another's choice without being aware of their value system which is entirely different from yours?

[rong]

Meh.... Poker example is good. They value money but make stupid decisions. Between ignorance, distraction and stupidity people can't be expected to get that many big decisions right. And those decisions effect other people. Do you think it's ok for people to have kids living on poverty simple because their parents are idiots? I don't.

[wufwugy]

I agree with pretty much everything you say, the problems of regulation are obvious. My point is, and has been all along, that I find it hard to be convinced that the alternative you propose can work any better as long as its whole premise is based on rational choice theory, which I find flawed. Voting, for example, is a market activity, and people are disastrous with their choices. People act rationally in the economic sense as much as they only do +EV choices in poker.

https://msu.edu/course/aec/810/bond-rat.htm

Rational choice theory is flawed. I'm not sure to what degree economists use it, but they spend a lot of time not using it. Rationality is intro-econ stuff. Irrationality is what they cover after they establish rationality. It's similar to how the physical sciences establish some things early in the education that are wrong with the purpose of giving a base to understand the more complex material and why the intro-models aren't perfect.

[Renton]

Meh.... Poker example is good. They value money but make stupid decisions. Between ignorance, distraction and stupidity people can't be expected to get that many big decisions right. And those decisions effect other people. Do you think it's ok for people to have kids living on poverty simple because their parents are idiots? I don't.

Poker example is not good, because economics isn't a zero sum game, and because there isn't a unanimously agreed-upon scoring system for decisions. And yes, of course, I believe it is okay for stupid poor people to have children if they want. What I don't believe is that those people should be supported by the state and given warped incentives for child-rearing by the state.

There's just no way to unequivocally state that someone's choice is bad. There are smart people who smoke cigarettes. It's obviously a life -EV decision for them to do, but life is fucking stressful and if that eases the tension a little and allows them to live more productive and enjoyable lives, then they are making a fine decision to smoke. But the state shouldn't take care of their lung cancer treatment after they chain smoke for thirty years. And insurance companies should jack up their premiums out the ass.

[CoccoBill]

I may totally be wrong, actually it wouldn't even surprise me much if I had something about the concept totally backwards. Still, what I meant with my criticism of it is that it assumes that people make the decisions that are best for them, to maximize their personal utility. If all humans were vulcans with godly intellect and complete information related to their decisions (that is, enough information and understanding to be able to not only weigh in all the factors, but also identify all false and deceitful information given to them) then yes, I'm sure free markets would work perfectly and all superficial regulation would only be a hindrance. This is hardly the case though, people have very incomplete and often misleading information available to them, limited capabilities to assess the data and a poor understanding of the effects of their choices. It's not (only) about the correctness of their values, but people regularly act against their values, either through ignorance or deceit.

[CoccoBill]

Let's say we live in Renton's utopia. I come up with tobacco and in a couple years I got a few million people hooked. We're still a couple decades from learning about the long term health consequences. What's your move?

[Renton]

I may totally be wrong, actually it wouldn't even surprise me much if I had something about the concept totally backwards. Still, what I meant with my criticism of it is that it assumes that people make the decisions that are best for them, to maximize their personal utility. If all humans were vulcans with godly intellect and complete information related to their decisions (that is, enough information and understanding to be able to not only weigh in all the factors, but also identify all false and deceitful information given to them) then yes, I'm sure free markets would work perfectly and all superficial regulation would only be a hindrance. This is hardly the case though, people have very incomplete and often misleading information available to them, limited capabilities to assess the data and a poor understanding of the effects of their choices. It's not (only) about the correctness of their values, but people regularly act against their values, either through ignorance or deceit.

I think you're using the traditional definition of rationality, and not the one used by rational choice theory, which is more of a subjective rationality. Either way, it is not vital to functioning capitalism that people make max-utility choices. Capitalism applies economic pressure to everyone in the system to TREND toward higher utility choices, and it does so much better than laws do.

[wufwugy]

I may totally be wrong, actually it wouldn't even surprise me much if I had something about the concept totally backwards. Still, what I meant with my criticism of it is that it assumes that people make the decisions that are best for them, to maximize their personal utility. If all humans were vulcans with godly intellect and complete information related to their decisions (that is, enough information and understanding to be able to not only weigh in all the factors, but also identify all false and deceitful information given to them)

This is how it is. Economists try to understand this.

then yes, I'm sure free markets would work perfectly and all superficial regulation would only be a hindrance. This is hardly the case though, people have very incomplete and often misleading information available to them, limited capabilities to assess the data and a poor understanding of the effects of their choices. It's not (only) about the correctness of their values, but people regularly act against their values, either through ignorance or deceit.

Keep in mind that regulation are every bit as much a facet of rationality/irrationality and economics as markets are. If you claim people act irrationally in markets, you also need to claim they act irrationally with regulations. Really, the underlying reason markets work is because they don't solidify irrational behavior like regulations do.


Outside of that, rationality has a ton of applicability that isn't seen from the lay. For example, financial markets react about as rationally as possible to behavior of central banks. None of this stuff makes sense on the individual level, and it's more related to the wisdom of the crowds type of thing.

[Renton]

Let's say we live in Renton's utopia. I come up with tobacco and in a couple years I got a few million people hooked. We're still a couple decades from learning about the long term health consequences. What's your move?

I don't see any issues with this example yet. Does it have a part 2?

Is it your point that people shouldn't be allowed to engage in risky behavior, even where the risks are entirely unknown?

People have been putting cell phones next to their heads for a period of time not-long-enough to definitively study the cancer risks of microwave radiation. Should all cell phones be banned?

[wufwugy]

Let's say we live in Renton's utopia. I come up with tobacco and in a couple years I got a few million people hooked. We're still a couple decades from learning about the long term health consequences. What's your move?

My move as a policy director is to allow people as much freedom as possible to counter. The inventive and constructive capacity of free people is far greater than that of central command. The people would be free to conduct their own research, campaign against tobacco, invent alternatives, etc. This is basically what happened to tobacco in the first place. It became so vilified that the masses accepted mass bans on consumption in overreaching ways. The sad part of is that the bans were wholly unnecessary since tobacco was already being pushed out of most places by choice. All the bans did was reaffirm central legal authority on nuances of peoples' lives, and further the idea that the true owner of all things is the government.

[CoccoBill]

I don't see any issues with this example yet. Does it have a part 2?

Is it your point that people shouldn't be allowed to engage in risky behavior, even where the risks are entirely unknown?

People have been putting cell phones next to their heads for a period of time not-long-enough to definitively study the cancer risks of microwave radiation. Should all cell phones be banned?

So to put it another way, you see no issue with me marketing tobacco as a harmless habit that makes you look cool?

I'm in no way endorsing regulations for the consumers, I'm endorsing regulations for the producers. I've got a feeling in your utopia there would be no way to know cigarettes are harmful, and (without the judicial branch, I assume?) no way to sue them even if you did find out.

[CoccoBill]

My move as a policy director is to allow people as much freedom as possible to counter. The inventive and constructive capacity of free people is far greater than that of central command. The people would be free to conduct their own research, campaign against tobacco, invent alternatives, etc. This is basically what happened to tobacco in the first place. It became so vilified that the masses accepted mass bans on consumption in overreaching ways. The sad part of is that the bans were wholly unnecessary since tobacco was already being pushed out of most places by choice. All the bans did was reaffirm central legal authority on nuances of peoples' lives, and further the idea that the true owner of all things is the government.

There are no policies nor policy directors, are there? I on the other hand, as a tobacco tycoon, possess pretty deep pockets to stymie most attempts to campaign against me. I put out my own research and buy off competition.

What happened to tobacco was a class action suit in the 50s after 2 doctors from the UK Medical Research Council, a government agency, published a study about the link between smoking and cancer. It only took 12 years from that for the first health warnings to appear on cigarette packages, and the tobacco companies to acknowledge their products may not in fact be completely harmless.

[wufwugy]

So to put it another way, you see no issue with me marketing tobacco as a harmless habit that makes you look cool?

I have a huge problem with it. Almost everybody has a huge problem with it.

But what I have an even bigger problem with is getting government involved in it because government has an incredible track record of making these things far worse. It doesn't solve the actual problem as well as it creates the unintended consequences like what Renton laid out earlier.

There are plenty of ways people acting freely solve these sorts of problems. Governments, well, kinda never solve them. The data and theory both bear this out. The data against government solving problems is overwhelming. The theory is solid. Everybody agrees with the theory too. It's just that once people start thinking in terms of macro, they start providing one exception for that theory: government. We think it's absolutely ridiculous for government to tell us who we're allowed to be friends with, but we love government telling us who are allowed to be our doctors. The theory for why it is wrong for government to choose peoples' friends is exactly the same when applied to choosing doctors, but society at large has rejected this reality.

[CoccoBill]

There are plenty of ways people acting freely solve these sorts of problems.

Such as?