Dat inequality

[wufwugy]

Sorry for the incoming monster post. It started out tiny, I swear

Sure, but nothing changes regarding their skills and outcomes if the resources are there.

That's precisely what changes. No level of increased skill or resources produces better results if incentives are wrong. We see the evidence of this constantly. Throwing more money or more talent at fundamentally flawed systems has pretty much never worked. Governments are always in need of more resources because the additional resources they constantly get never solve the problems yet do increase costs.

And in the public sector, the potential resources are larger, and they can also be used for basic research with great long-term but no clear short-term profits, which would be much more challenging to get into in a free market.

Using government for basic research is one of the better arguments for it. However, I don't think it works. Private enterprise does way more applied research and we can't make a quantitative case for why basic research is better than applied research. Additionally, private non-profits also do basic research, of which I'm not sure isn't already higher than government funding. At the very least, the government has high monopolistic characteristics on basic research that greatly discourage others from providing for it. For example, due to government policies, universities compete for government grants. This makes government involvement in basic research look much higher than it otherwise would be if universities had a more market efficient approach that involved competing for private funds for everything they need. I suspect the amount of basic research that would be performed is much higher in a totally free market than in one of government involvement

How and in what time would the free market have dealt with the railroad, MS and IBM issues without government intervention?

They already have been and they already are. How Microsoft went from being incorrectly perceived as a monopoly in the 90s to being a major underdog today is an incredible story. Long story short: Microsoft OS was considered a monopoly because of super high market share. For the time being, let's disregard the fact that even 100% market share by one company isn't a monopoly because consumers can choose to not participate in that market (and are incentived to do so by a misbehaving company), which is behavior that churns competitive interests and ultimately reduces that market share. The government stepped in to keep MS from "being a monopoly", but it didn't do shit. Nothing changed for years, yet the consumer didn't actually experience any real monopolistic problems (because MS wasn't ever a monopoly in the first place). Then what appeared to be overnight, MS lost tons of power to the Google Uprising. It couldn't compete with Google because it didn't know how and because it had incumbent business model interests that discouraged adaption. MS did everything it could to preserve Windows-for-sale, yet was crushed by Android-for-free, and now Windows is dead. MS scrambled to win with Bing, but Google kept pace and Bing lost. MS is now scrambling to adapt Office to new platforms and become a market leader in the cloud

The market solved the Microsoft monopoly (which was never really a monopoly) in the exact way economists predict. The same stuff has happened with Amazon beating up Walmart and many others, like Uber and Tesla. Uber and Tesla are probably the two highest profile examples of companies that are having trouble defeating government enforced monopolies/oligopolies

http://www.lawyersandsettlements.com...rust-lawsuits/

So all of these are made possible by government regulations and would have been sorted in no time by the market, or not been possible in the first place? Somehow I find that hard to believe. In my opinion, if certain practices that would be beneficial for individual businesses but harmful to others were not regulated, they would be much more common. The argument is the same for regulations against individuals behaving badly, why would companies be any different?

Companies aren't different. Markets are different. They're different because consumers have free choice and companies compete for their purchases. This is the problem solving system. It breaks down when government has a legal monopoly and creates uncompetitive markets. It isn't so much that the market solves all problems, but that when problems are solvable, they're done best through markets and worst through government, to the degree that you can't find that many problems markets haven't solved when allowed to and you can't find that many problems government has solved. When we do find examples of problems government has solved (like slavery), we also find that those were problems mainly perpetuated by government and that the "solving" process was worse than the problem and that they would have been solved way easier by markets anyways

As for the topic of slavery, the worst thing that has happened in US history is the Civil War, and it's not really even close. We call Lincoln a hero for "freeing the slaves", and we don't call him a monster for sending a nation of men to their gruesome deaths. We don't talk about how slavery was already losing ground for market reasons, or how letting the markets handle the problem would very likely have solved it with far less suffering than what was caused by the Civil War. We don't talk about how the only thing the government ever does that's "good" is keeping its constituencies from living in warzones, which is ultimately the one thing a society needs in order for market forces to arise and start solving problems.

That's most likely the case if you look at the US education system. Try Finland or South Korea and it might look different,

I don't know about Korea, but I do know that Scandinavia has a far more market-oriented education system than the US. Even then, the results aren't that great. They only look great in comparison because the US is so awful. No country has an education system great relative to the amount of money thrown at it. Pick any vibrant market and you'll see the amount of money thrown at it is itty bitty and results are incredible in comparison to any education system. Today, even the best education system on the planet is wasting a shitload of time and money on things that do not matter to the students and their lives. Universities themselves are incredibly outdated and I think if we had let the markets decide for the last two hundred years, they would hardly still exist.

though education and video games are such different areas that a direct comparison between them is probably not very useful. Again, the US government is in many ways broken, I'm not advocating in any way the current US implementation of a government. What I've been talking about is "a" government, which doesn't but could, until proven otherwise, exist.

Fundamental governmental structure is the problem. Even the best and the brightest cannot succeed when incentives are not aligned for success. We live in a world where a bunch of numbskulls in a market produce far greater success than the smartest, most well intentioned people in government who never solve a single problem. The only real freedom you and I have is from what the constitutions of our governments say about what is illegal for the governments to do. We should work to expand this dynamic, not reduce it. Back when governments had legal power to do whatever they wanted, life sucked for everybody not an aristocrat. Today, the aristocracy doesn't even exist, and life is amazing for so many. I think if you compile all the things that "good" governments do, you'll find they have very little to do with what makes you life good. Food isn't cheap, abundant, and delicious because of government policies. Transportation isn't incredible because of government policy. Government creates no gadgets. The only good government does us is not allowing itself to steal from us or allowing others to steal from us. The sad part is that government is still allowed to do all sorts of crappy things.

This probably sounds ideological and pompous, but I don't know what else to say. We live in a world where chicken sandwiches cost a dollar, iphones exist, and people can get heart transplants. Where is government in creating these things? Find where government is in anything, and you'll find there is very little innovation in that thing and costs are enormous. Find where there is little government, and you'll find amazing things that we take for granted

[CoccoBill]

For example, due to government policies, universities compete for government grants. This makes government involvement in basic research look much higher than it otherwise would be if universities had a more market efficient approach that involved competing for private funds for everything they need. I suspect the amount of basic research that would be performed is much higher in a totally free market than in one of government involvement

I wouldn't call that monopolistic. It's just one supply source for universities, one they could replace with private funding if they please. It's just such a good deal for the universities that they compete for the grants. Why would there be more basic research (=research that mostly cannot directly be applied for profit) in a free market? In my opinion, the situation would be exactly the same as it is now, minus the possibility of public funding.

Microsoft OS was considered a monopoly...

That's not at all what happened. MS or any MS OS hasn't been a monopoly (the only supplier for a commodity), and they weren't sued for being one. They just abused their commanding market position:

- in 1990's they adopted a licensing scheme where PC manufacturers were required to pay for an MS-DOS license even when the system shipped with an alternative operating system, used predatory tactics to price its competitors out of the market and erected technical barriers to make it appear that competing products did not work on its operating system. They were sued in 1994 and settled in 1995.
- they bundled IE to the OS to kill off Netscape. In 2001 they were sued again and found to have breached the earlier settlement and abused their monopoly position.
- they've also been sued for similar things in 2002, 2003, and 2007.

So in a nutshell, they had been repeatedly abusing their market position, and 20 years later when they finally have started to lose market share, that's due to a shift from PC systems to tablets and smartphones. Due to litigation, they've been forced to pry out IE from the OS core, pay hundreds of millions and stop their questionable practices. The market didn't solve it in any way, the courtrooms did a somewhat better job, however the Bush jr administration decided to drop all charges based on 9/11 (makes sense right?).

As for the topic of slavery, the worst thing that has happened in US history is the Civil War, and it's not really even close. We call Lincoln a hero for "freeing the slaves", and we don't call him a monster for sending a nation of men to their gruesome deaths. We don't talk about how slavery was already losing ground for market reasons, or how letting the markets handle the problem would very likely have solved it with far less suffering than what was caused by the Civil War. We don't talk about how the only thing the government ever does that's "good" is keeping its constituencies from living in warzones, which is ultimately the one thing a society needs in order for market forces to arise and start solving problems.

Slave trade was made illegal in 1808, but in 1861 when the civil war broke out, there were more slaves in the US than there ever had been. Lincoln offered to buy the freedom of the slaves from the south, but he both could not have been able to (buying all the 1.5M slaves would have cost $3bn, more than the worth of all the banks, railroads, factories etc combined), even if the southern states would have agreed to it which they didn't, since they were a profitable business. So much for the market solving the issue.

I don't know about Korea, but I do know that Scandinavia has a far more market-oriented education system than the US. Even then, the results aren't that great.

I live in Finland, and there's absolutely nothing free market about the education system. There are practically no private schools and education is basically free for everyone, even foreigners. The result is, that Finland has consistently scored at the top of the PISA rankings. Why? I'd personally say it's mainly due to the quality of teachers. They aren't paid well but they're enthusiastic and dedicated, being a teacher is respected. Whereas in some societies "those who can't do teach", in Finland some of the best choose teaching instead of working in the private sector.

This probably sounds ideological and pompous, but I don't know what else to say. We live in a world where chicken sandwiches cost a dollar, iphones exist, and people can get heart transplants. Where is government in creating these things? Find where government is in anything, and you'll find there is very little innovation in that thing and costs are enormous. Find where there is little government, and you'll find amazing things that we take for granted

I absolutely do not think that government(s) should provide any of that in the first place. Only infrastructure, safety, healthcare, regulate individuals and companies so they don't act like a douche and maybe some other things.

[wufwugy]

I wouldn't call that monopolistic. It's just one supply source for universities, one they could replace with private funding if they please. It's just such a good deal for the universities that they compete for the grants. Why would there be more basic research (=research that mostly cannot directly be applied for profit) in a free market? In my opinion, the situation would be exactly the same as it is now, minus the possibility of public funding.

Government funds crowd out private funds, and there would probably be more donations without government involvement because it would allow incentives to work. Instead of universities focusing on competing for a fixed pie that is distributed based on general rules, they would focus on competing for a much bigger pie. The concept is similar to how so many heavily traveled roads are in shoddy condition because the government is in charge of their maintenance. Their incentive for upkeep is not as much as if the owners were private, and the fact that government is responsible for upkeep, it discourages private entities from not passing the buck.

That's not at all what happened. MS or any MS OS hasn't been a monopoly (the only supplier for a commodity), and they weren't sued for being one. They just abused their commanding market position:

- in 1990's they adopted a licensing scheme where PC manufacturers were required to pay for an MS-DOS license even when the system shipped with an alternative operating system, used predatory tactics to price its competitors out of the market and erected technical barriers to make it appear that competing products did not work on its operating system. They were sued in 1994 and settled in 1995.
- they bundled IE to the OS to kill off Netscape. In 2001 they were sued again and found to have breached the earlier settlement and abused their monopoly position.
- they've also been sued for similar things in 2002, 2003, and 2007.

So in a nutshell, they had been repeatedly abusing their market position, and 20 years later when they finally have started to lose market share, that's due to a shift from PC systems to tablets and smartphones. Due to litigation, they've been forced to pry out IE from the OS core, pay hundreds of millions and stop their questionable practices. The market didn't solve it in any way, the courtrooms did a somewhat better job, however the Bush jr administration decided to drop all charges based on 9/11 (makes sense right?).

This doesn't negate anything I said. Individual companies act against the interests of others all the time. That is expected. Greed is a necessary facet of economics. Everybody acts in their self-interests all the time, and when those interests don't align with the interests of others, the door is open for realignment due to competition from others who will engage those interests

The market worked perfectly with Microsoft. In fact, it's likely that government intervention delayed MS's fall by cushioning the negatives the consumers experienced by Microsoft's power. There are few quicker ways to destroy a company than by giving it too much market share. Then the burden they feel from consumers for poor performance skyrockets and the incentive to compete against them for potential producers also skyrockets. The only time we see perpetual monopolies is when government creates them through laws. The only example I can think of in the private field is DeBeers, but that's a monopoly precisely because what consumers value about its product is the rarity and ultra-gouged prices.

Slave trade was made illegal in 1808, but in 1861 when the civil war broke out, there were more slaves in the US than there ever had been. Lincoln offered to buy the freedom of the slaves from the south, but he both could not have been able to (buying all the 1.5M slaves would have cost $3bn, more than the worth of all the banks, railroads, factories etc combined), even if the southern states would have agreed to it which they didn't, since they were a profitable business. So much for the market solving the issue.

Another example of making the perfect the enemy of the good. When we discuss "good" things government does, we completely wash over the enormous cost they came at. We just assume the cost was neutral. How many people had to die in the Civil War for people to say that it created more suffering than the problem it was trying to solve? Somehow I feel like that number is infinite because it always seems to go unconsidered. All we do is think "before slavery vs after slavery", not "before a million casualties vs after a million casualties".

I don't want to get into it because finding sources is the hardest thing in the world since virtually nobody ever wants to examine slavery outside the context of racism and laws, but the concept that markets would solve it is just fine and there's ample evidence of it working just about everywhere else (including slavery in other countries). All things boil down to costs and benefits and private entities bend over to them more quickly than governments because of more efficient revenue accountability. If it wasn't true that markets solve these sorts of problems, we would today see the accounting work for bringing slavery back, and we would also see things like Putin invading and holding Ukraine and not stopping unless an army stood in his way instead of what he did, which was stop because the markets were fucking him

I live in Finland, and there's absolutely nothing free market about the education system. There are practically no private schools and education is basically free for everyone, even foreigners. The result is, that Finland has consistently scored at the top of the PISA rankings. Why? I'd personally say it's mainly due to the quality of teachers. They aren't paid well but they're enthusiastic and dedicated, being a teacher is respected. Whereas in some societies "those who can't do teach", in Finland some of the best choose teaching instead of working in the private sector.

Compared to the US, state-run systems that negotiate prices are more market-oriented, as odd as that may be.

Regardless, the difference between the two are better summed up through other means than markets. In a way, it's a night and day comparison, because Finland incorporates vocational education sensibly. The US does not and this is about as stupid as using horse-drawn plows for agriculture.

I absolutely do not think that government(s) should provide any of that in the first place. Only infrastructure, safety, healthcare, regulate individuals and companies so they don't act like a douche and maybe some other things.

Why are these things different? Why do markets work for entertainment or nourishment but not for safety or transportation?

[CoccoBill]

Government funds crowd out private funds, and there would probably be more donations without government involvement because it would allow incentives to work. Instead of universities focusing on competing for a fixed pie that is distributed based on general rules, they would focus on competing for a much bigger pie. The concept is similar to how so many heavily traveled roads are in shoddy condition because the government is in charge of their maintenance. Their incentive for upkeep is not as much as if the owners were private, and the fact that government is responsible for upkeep, it discourages private entities from not passing the buck.

I don't follow your logic here. Governments dish out so much grant money that the unis don't have to compete for the much larger funds available from the private sector? Public funding just means that they don't _have to_ compete, and even if they lose, the private funding still remains a viable option, right?

The market worked perfectly with Microsoft. In fact, it's likely that government intervention delayed MS's fall by cushioning the negatives the consumers experienced by Microsoft's power. There are few quicker ways to destroy a company than by giving it too much market share. Then the burden they feel from consumers for poor performance skyrockets and the incentive to compete against them for potential producers also skyrockets. The only time we see perpetual monopolies is when government creates them through laws. The only example I can think of in the private field is DeBeers, but that's a monopoly precisely because what consumers value about its product is the rarity and ultra-gouged prices.

Again, it's not about achieving a monopoly or a commanding market position, nothing wrong with that. It's just abusing that position that's unwanted, simply because at that point the market is ill-equipped to deal with the situation, since that company already controls the market and can bar entry from others, by undercutting prices, hostile takeovers etc. That's exactly why laws regulating that kind of behavior were put into effect, since that was seen to be the only option. The court cases were delayed unnecessarily, there's nothing inherent about them that requires them to take years or decades. Developing technology trends and new usage models took care of Microsoft (in a sense, they still rule the PC/office segment), not the market (MS's competitors or customers).

Another example of making the perfect the enemy of the good. When we discuss "good" things government does, we completely wash over the enormous cost they came at. We just assume the cost was neutral. How many people had to die in the Civil War for people to say that it created more suffering than the problem it was trying to solve? Somehow I feel like that number is infinite because it always seems to go unconsidered. All we do is think "before slavery vs after slavery", not "before a million casualties vs after a million casualties".

You used slavery as an example where the market was taking care of a problem, and I think it's quite obvious that that wasn't the case. Neither governments nor free markets are perfect, neither of them alone can be even good (IMHO), but they're both needed to create something workable.

If it wasn't true that markets solve these sorts of problems, we would today see the accounting work for bringing slavery back, and we would also see things like Putin invading and holding Ukraine and not stopping unless an army stood in his way instead of what he did, which was stop because the markets were fucking him

Slavery disappeared worldwide due to legislation, not because it suddenly became less profitable. Putin already seized Crimea, just a little more subtly than by direct military invasion. He knows Russia can't risk an all out war with Ukraine (~20th largest military power in the world) with a possible involvement of the west. The stock market crashing surely also had a big effect on his popularity numbers, that's for sure.

Compared to the US, state-run systems that negotiate prices are more market-oriented, as odd as that may be.

What do you mean by [schools] negotiating prices?

Regardless, the difference between the two are better summed up through other means than markets. In a way, it's a night and day comparison, because Finland incorporates vocational education sensibly. The US does not and this is about as stupid as using horse-drawn plows for agriculture.

Yes, so we do have examples where the government runs education just fine. In fact in most of the world's top educational countries the system is mostly public, with also the private sector receiving major financing from the state.

Why are these things different? Why do markets work for entertainment or nourishment but not for safety or transportation?

Markets work great for anything highly innovation- or creativity-driven, things that I'd label other than basic necessities. I believe in equal opportunity, and I think a government is needed to provide that for everybody. Equal outcome no. Transportation isn't a necessity so I wouldn't include it, and nourishment is so abundant and available in the western world that I wouldn't label that as such either. In a 3rd world country, probably.

[wufwugy]

I don't follow your logic here. Governments dish out so much grant money that the unis don't have to compete for the much larger funds available from the private sector? Public funding just means that they don't _have to_ compete, and even if they lose, the private funding still remains a viable option, right?

Capability to do something doesn't mean the incentive is there. It's basically a cost/benefit, opportunity cost situation. With government funding the way it is, university policy is structured in such a way that pursues that funding at the expense of other sources. Additionally, incentives from other sources to provide funding are reduced. We don't know what the situation would be like without government funding, but we do know it would be different because incentives would change and universities would shift strategies

Again, it's not about achieving a monopoly or a commanding market position, nothing wrong with that. It's just abusing that position that's unwanted, simply because at that point the market is ill-equipped to deal with the situation, since that company already controls the market and can bar entry from others, by undercutting prices, hostile takeovers etc. That's exactly why laws regulating that kind of behavior were put into effect, since that was seen to be the only option. The court cases were delayed unnecessarily, there's nothing inherent about them that requires them to take years or decades. Developing technology trends and new usage models took care of Microsoft (in a sense, they still rule the PC/office segment), not the market (MS's competitors or customers).

Two things:

(1) you keep saying the company(s) do bad things but then don't acknowledge consequences they suffer from those bad things. Where you see a company raising prices due to high enough market share as a bad thing, economists like Milton Friedman do not see it as a bad thing (as long as the market is relatively open i.e. the government hasn't regulated against competition). This is because economists view companies that abuse their customers as doing one of the main things that get their customers to choose to spend their money elsewhere

(2) I think you're viewing markets more narrowly than they should be. Saying MS has a monopoly in PC/Office isn't necessarily a meaningful distinction because that's more of a niche in the broader market than control over the market. It's like this: if you live in Chad and the only beverage you can buy at the store is Coke, you're still not suffering under a monopoly because you can choose to not buy Coke and just drink water instead. This is precisely what happens if Coke does abusive things like price-gouge. When consumers are allowed to choose to not consume something and when producers are allowed to provide a product, you're not suffering under a real monopoly. It only becomes truly problematic if there is a law that forces consumers to buy Coke or doesn't allow Pepsi or Tommy's New Jungle Brew from entering the market.

Slavery disappeared worldwide due to legislation, not because it suddenly became less profitable. Putin already seized Crimea, just a little more subtly than by direct military invasion. He knows Russia can't risk an all out war with Ukraine (~20th largest military power in the world) with a possible involvement of the west. The stock market crashing surely also had a big effect on his popularity numbers, that's for sure.

I think history was made. If this was 1960, he wouldn't have stopped until an army got in front of him. This is one of the first major events where markets, instead of guns, stopped a dictator using his guns.

What do you mean by [schools] negotiating prices?

Generally it's any method by which to keep prices down. Some are better than others, but the US pretty much uses the worst. It writes into its laws things like it's illegal for the government to negotiate with private companies (why pharmas are so expensive here), or it doesn't even attempt to address prices while it actively increases costs. Doing things like guaranteeing student loans then doing nothing else may sound more market-oriented than adding price controls, but it's not. It's a whack regulatory environment where intervention creates the need for more intervention in order to keep the integrity of the system

Yes, so we do have examples where the government runs education just fine. In fact in most of the world's top educational countries the system is mostly public,

I wouldn't say that. Beating the US system is easier than stealing candy from a baby. Other countries have better systems mainly for cultural homogeneity reasons, and secondarily because the states don't do a handful of really dumb things that the US state does. But that doesn't mean the systems are great. Even the best state system right now is likely wasting a shitload of money

I think that if the US fully deregulated education i.e. complete elimination of public institutions and funding, in 30 years we'd have a system that blows the socks off Finland. Getting into details why is more complicated, but I say this to counter the idea that some states are running great systems. I don't think they are. I think the bar is so incredibly low and if private enterprise allocated money the way state education systems do, they'd all go bankrupt.

with also the private sector receiving major financing from the state.

Which is a huge problem. This is perhaps one of the biggest problems in the US because it makes private institutions structure policy in whatever way best gets awarded those funds. This is the backbone for why US test scores have gotten so bad.

Markets work great for anything highly innovation- or creativity-driven, things that I'd label other than basic necessities.

Does not everything fall into this category? Innovation and creativity in food, shelter, clothing, healthcare, and education at just as important as in video games.

I believe in equal opportunity, and I think a government is needed to provide that for everybody. Equal outcome no. Transportation isn't a necessity so I wouldn't include it, and nourishment is so abundant and available in the western world that I wouldn't label that as such either. In a 3rd world country, probably.

It was the market that made nourishment so abundant in the first place.

People naturally look to the state for answers. But it is only in areas where the state has not allowed the market to solve the problems. Everything that we today take for granted or do not consider something the state should be involved in is something that came that way because the market made it so abundant.

The idea that the state shouldn't be involved in nourishment is a new one, because in most of history, it has been involved and nourishment has not been abundant. It's only after farming became a market thing that nourishment started skyrocketing