Free market ideas always sounded like cartoon level intelligence to me. Some kind of a perfect world where everyone acts morally and people are well informed and chooses the right companies etc.
its really absurd. it becomes even stupider when considering that many of these assumptions allow mathematical models to be built on top of them, and then those models are treated with such importance and authority. but then they sometimes also get the math wrong. i remember learning a while back that part of the 2009 housing crash was caused by faulty mathematics laid ontop of these weird economic assumptions.
the part im talking about is:
The paper, generally referred to as the Dahlem report, condemns a growing reliance over the past three decades on mathematical models that improperly assume markets and economies are inherently stable, and which disregard influences like differences in the way various economic players make decisions, revise their forecasting methods and are influenced by social factors.
the first part refers to a kind of “smoothness assumption”, where they approximate the bumpy, jagged graph with a “smooth” curve that is easier to analyze. but it turned out the bumps were there for a reason. oops! the second part of the quote then says that in addition to the faulty smoothness assumption, there were quite a few important things the model flat out ignored
It doesn’t require people to act morally, it requires them to act according to their long term self interest, assuming they are… immortal. And we all know human beings are omniscient and immortal. So no problem. /s
But it doesn’t, it just requires people to act in their short term self interest, and government’s role should be to ensure the long term costs are included in current market prices. So things like Pigouvian taxes and regulations should increase short term costs for things with long term costs.
The problems we see aren’t problems with capitalism (capitalism is working as expected in serving short term interests), the problem is with governments not doing their job in accounting for longer term costs.
But that’s not how it works. Free market ideas don’t expect a perfect world, they instead expect an imperfect one. You don’t need everyone to make food decisions, you just need enough people to make good decisions so the market caters to them.
It’s the same idea as democracy, you don’t need every voter to make a good choice, you just need a plurality. As long as enough people make decent choices enough of the time, democracy works. The free market is just democracy, but with money instead of votes.
In both cases government has a role. I think governments should add in longer term costs to the market, but in a way that preserves choice as much as possible (i.e. carbon taxes instead of carbon limits). I think governments should educate the population to increase the chances that they’ll make good decisions at the polls.
In the specific case of Microsoft, things were competitive until the government looked the other way WRT antitrust law. There’s a lot of shady stuff that happened in the first couple decades that Microsoft existed, yet they largely got a free pass.
All the big corps get a free pass because of money and power, and this is why free market doesn’t work.
Democracy doesn’t work either since media is owned by big corps as well. People can only know what they are allowed to know. If you are rich and powerful, you manipulate the media and you manipulate entire elections and decisions.
Free market ideas always sounded like cartoon level intelligence to me. Some kind of a perfect world where everyone acts morally and people are well informed and chooses the right companies etc.
its really absurd. it becomes even stupider when considering that many of these assumptions allow mathematical models to be built on top of them, and then those models are treated with such importance and authority. but then they sometimes also get the math wrong. i remember learning a while back that part of the 2009 housing crash was caused by faulty mathematics laid ontop of these weird economic assumptions. the part im talking about is:
the first part refers to a kind of “smoothness assumption”, where they approximate the bumpy, jagged graph with a “smooth” curve that is easier to analyze. but it turned out the bumps were there for a reason. oops! the second part of the quote then says that in addition to the faulty smoothness assumption, there were quite a few important things the model flat out ignored
It doesn’t require people to act morally, it requires them to act according to their long term self interest, assuming they are… immortal. And we all know human beings are omniscient and immortal. So no problem. /s
But it doesn’t, it just requires people to act in their short term self interest, and government’s role should be to ensure the long term costs are included in current market prices. So things like Pigouvian taxes and regulations should increase short term costs for things with long term costs.
The problems we see aren’t problems with capitalism (capitalism is working as expected in serving short term interests), the problem is with governments not doing their job in accounting for longer term costs.
And yet they call communism is too utopia
But that’s not how it works. Free market ideas don’t expect a perfect world, they instead expect an imperfect one. You don’t need everyone to make food decisions, you just need enough people to make good decisions so the market caters to them.
It’s the same idea as democracy, you don’t need every voter to make a good choice, you just need a plurality. As long as enough people make decent choices enough of the time, democracy works. The free market is just democracy, but with money instead of votes.
In both cases government has a role. I think governments should add in longer term costs to the market, but in a way that preserves choice as much as possible (i.e. carbon taxes instead of carbon limits). I think governments should educate the population to increase the chances that they’ll make good decisions at the polls.
In the specific case of Microsoft, things were competitive until the government looked the other way WRT antitrust law. There’s a lot of shady stuff that happened in the first couple decades that Microsoft existed, yet they largely got a free pass.
All the big corps get a free pass because of money and power, and this is why free market doesn’t work.
Democracy doesn’t work either since media is owned by big corps as well. People can only know what they are allowed to know. If you are rich and powerful, you manipulate the media and you manipulate entire elections and decisions.