Buffett: Raise Taxes on ‘Coddled’ Billionaires

[Lord Zentei]

It doesn't strive to minimize it either. Regardless, my point stands: if you believe that centralization is bad, then obviously you want to decentralize the decision making process, and you achieve that with more competition, not less. And if you acknowledge the inevitability of scarcity, then you're not really solving anything on that particular front which the market also fails to solve.

I never said I am "solving" something. I am merely treating humans like humans, not like some sort of cashbots whose worth depends entirely on how much money he has. Every human deserves to get a shot at medical treatment. Just like every human deserves not to starve. These are not economic axioms; these are moral postulates. Economics is a tool used to achieve social welfare and nothing more. It is not a system which justifies itself.

That's certainly a worthy ideal to strive for. But for that, I posit that it's a good start to maximize production. Moreso, since I've been saying that I'm pro-welfare since I joined this thread. I'm however rejecting that it's morally repugnant to ask people to work. Wasn't it the USSR who said "he who doesn't work, doesn't eat"? I'd amend that to "he who doesn't contribute doesn't eat", since capital resources are no less essential to public welfare than actual labour.

If the labour union seeks to become a monopolist in selling labour, it obviously becomes more powerful than any single seller. That's not kosher, since then it becomes no different from the monopolistic company: i.e. repressive. But if you're arguing in favour of collective bargaining in the general sense, I can't say that I ever opposed that.

I am not arguing pro or contra collective bargaining. I am explaining how an individual in a non-collective bargain is coerced by economic conditions. Just like a union, if it becomes more powerful than the capitalist company it deals with, can actually coerce this company. You said that this is "ridiculous" to imply coercion. I see coercion in both cases.

I said that it was ridiculous to imply coercion simply because people have to work for a living. But if organized labour can coerce the company just as much as the company can coerce the workers, then presumably there's a balance to be found somewhere?

All collaboration with mutual benefit implies that each must be able to dictate to the other. That's the essence of compromise: we can't all get what we want. There is no system of humanism which negates this fact.

Competition as above ("sell your workforce/your factory/your property for X or we bankrupt you because we can") is coercive at heart. It simply not humanistic and has nothing to do with humanism at all.

I suspect that you're going to the extreme case to show that coercion can occour without force. My original objection was that it's not coercive simply to require people to work for a living nor is it coercive simply to compete.

Um, my point was that competition is NOT coercive. Moreover, social-darwinism is an example of the stolen concept fallacy at its heart: social-darwinists lifted the idea from evolutionary biology which in turn was itself inspired by Malthus and other economists. It's not coercive to go with the producer who is best at producing. In fact, it would be coercive to require that we NOT go with the best producer, because obviously the rational decision would be to do so.

The question then begs, what if the size of the producer and the economy of scale he achieved allows him to bankrupt those who are smaller? That of course ends up with individuals, too. Is he merely acting in an efficient fashion that deserves no moral examination? Are the efficiencies gained from him acting so worth the negative consequences of such acts? And please, size can be a factor of its own. The producer may not be the best, but he might be already big, and so a slight hint at a price war can ruin his smaller competitor, who might have achieved better quality, but simply failed to win in a price war and died. Your system treats anything as done purely by economic means as the rational result. It is simply a self-justifying statement then.

If a producer puts people out of business simply because he is better at producing low cost produce that people want that is NOT a problem - that's the system working to favour producers who produce things efficiently. I daresay that in command economies, you need to promote efficiency and punish inefficiency too, but in this case, no commissar or review committee is needed.

As for actual abuse of power, there's this concept known as "predatory pricing", and that's acknowledged in market economies. There's also anti-collusion regulation and similar things in place. Such abuses incidentally cost the perpetrator money, so there are limits to how much and how long he can do that in any case. Here, though, there's the difference that the prosecutor and the guilty producer are not run by the the same agency (which would be the government in the case of the command economy) which might lead to concentration of power and conflict of interest. Of course, it's debatable how much that's actually needed, especially in a highly competitive market.

Elasticity already influences the decision making process. As for your point, obviously most people would agree that it is better to feed a starving person than an already fat one (other things being equal). But that observation alone doesn't provide us with a consistent, emergent process.

Human biology is more or less consistent. It is not emergent (it has already emerged) and the long term of evolutionary changes is pretty much making sure that you can't do with more than 1800 calories (am I right?) unless you want to injure the human. That observation is more "consistent" than any market situation, any fluctuation and any other criterion you might find, it won't change overnight and it won't suddenly disappear. You can always determine calorie requirements to avoid starvation. The wage level and price levels are determined entirely by the market conditions.

I'm not talking about the observation that people need 1800 calories or more per day, but the fact that you need an emergent system of allocation in place of a market. I'm altogether not entirely clear on what you're proposing in that regard. In any case, the vast majority of first and second world citizens subsist on more than 1800 calories per day; its mainly in broken economies in the third world where people have to make do with less. That requires special handling - but the trend is towards more production lessening the shortfalls suffered by individuals.

Someone pays for it, even if the users do not. If you use advertisements, the someone who is paying money is the one providing said ads. Who expects people to work for free? Also, you still need infrastructure and energy for the internet to function. Incidentally, I'd love to see people download food, medicine, clothing and housing across the internet.

*laughs* I'd love to see the day when you could download an open-source food, medicne, clothing and housing from the internet with very little fixed cost, much like you can do with fluoride-cleaned tap water across the First and Second World nations. That would be a truly bright day for humanity. As for "someone pays" - I already said that if we take the sector and consider the value that is exchanged - information - it is exchanged freely. Starkly so with open source. Now, of course, it is a very limited application model. Fixed costs of material production, et cetera. I already agreed with all that in response to Starglider. I still think it is a worthwhile field of study. It actually allows to see how people can freely exchange value - not something value-less, but actual value - without any monetary system arising with the limited scope of the exchange.

It's more the ease of replication that permits this, not the creation of value that's limited. Value creation is done by the artist or software engineer who makes a blueprint for the product and the replicated blueprint then is the product.

And finally - some open source programs do not have imbued ads. The process of creation is a fundamentally non-monetary one. The labourers are not paid with money for this exact bit of labour they did. The users are not required to pay money for receiving the information (which is the value created by the labourer). The user and the labourer are in fact often one and the same, and they receive compensation in a non-monetary fashion, by having access to the pool of information created by other users-producers. It is a non-monetary reward.

In that case, the people who create the products are the ones paying for them. They pay be agreeing to work for free, and time is money. Also, the people who run the networks and supply energy are paying. There is no free lunch, as I'm sure you know. Even "free" stuff is not truly "free". You might as well say that volunteer emergency workers are working for free - but they face opportunity costs as does anyone who does anything - the only meaningful measure of cost. If you're talking about "masking" costs, then this - opportunity cost which is not paid for with money - is a PRIME example.

Yes, this sector (and the internet, and torrents, and god knows what) are being commercialized, and people are inveting of ways to make money there. That does not mean the fundamental principle is "monetary", it means people can make money in any additional small niche when the free service has not been good enough. In fact, fluoride-sanitized tap water is excellent and perfectly drinkable in First World nations. And yet, bottled water a 100 times more expensive is sold and it is a huge market. What the fuck, might you ask? That's the fuck. Sometimes the market makes useless shit where none is really required.

Money is only a means to an end. That end, as we all know, is:

• Medium of exchange
• Unit of account
• Store of value
• Standard of deferred payment

At the heart of all that is the concept of opportunity cost. That doesn't go away even if you don't use money.

As for the market making useless shit - I don't think someone extolling the virtues of free stuff on the internet should be making that argument. Obviously useless shit gets made once you're past the bare survival. Bottled water is a luxury. To each his own.

[Surlethe]

[calculating a] Pareto-optimal full distribution is not possible

Pareto-optimality is a desireable state (full utilization of productive capacity is always desireable), but not necessary. Pareto is a non-humanistic and non-moral criterion. What is better, a high life level for some with mass malnourishment for others in a Pareto-optimal situation, or a non-Pareto optimal situation with a modest life standard for all? <snip>

On the contrary (at least according to Wiki*) Pareto optimality is defined as a distribution of goods and services such that no transaction can occur which makes at least one individual better off without making any other individuals worse off. This definition is absolutely a moral criterion because it relies on definitions of "better off" and "worse off." This misunderstanding makes the rest of your paragraph irrelevant.

* I have some professional references which probably provide a definition, if you would like me to double-check Wiki or provide a more technical definition.

As economies become bigger and more complex, with more interactions and more goods and services, these computational issues become worse, not better

I think some followers of Stafford Beer in Russia did a computation which shows that the level of computational power of computers is growing a lot faster than the complexity of economic systems. I.e. supercomputers are becoming advanced enough to actually be able to pull it off. I can't necessarily say if it is so or not, but to say that economic systems are becoming "more complex" while treating computational means as static is preposterous. Computational means have increased their power in at a rate hitherto unseen. In the USSR, a lot of people calculated with the god damn abacus, you know. We went from the abacus to the Blue Gene in just several decades. The current economy took hundreds of years to become as complex.

First, I don't believe that "computational power is growing a lot faster than the complexity of economic systems." Second, even if true that doesn't imply that catch-up will occur; for instance, over the last century, computational power has grown much, much faster than the complexity of a molecule, but it still takes supercomputers screaming at top speed for days on end to perform detailed computations in quantum chemistry. (And that of course leaves out that innovation, by its nature, is impossible to precisely predict.)

[Surlethe]

As for actual abuse of power, there's this concept known as "predatory pricing", and that's acknowledged in market economies. There's also anti-collusion regulation and similar things in place. Such abuses incidentally cost the perpetrator money, so there are limits to how much and how long he can do that in any case.

As an aside, monopolists prefer collusion to predatory pricing. Collusion permits the monopolist to buy out the competitor with a portion of the promised profit stream from the monopoly and join the competitor's capital with his own. Predatory pricing hurts both the competitor and the monopolist while it's happening, and at the end of the day the wounded monopolist has only his transient profit stream. (And then he raises prices, which attracts the competition circling 'round like hungry vultures ...)

[K. A. Pital]

On the contrary (at least according to Wiki*) Pareto optimality is defined as a distribution of goods and services such that no transaction can occur which makes at least one individual better off without making any other individuals worse off. This definition is absolutely a moral criterion because it relies on definitions of "better off" and "worse off." This misunderstanding makes the rest of your paragraph irrelevant. * I have some professional references which probably provide a definition, if you would like me to double-check Wiki or provide a more technical definition.

Yeah. Which is absolutely morally irrelevant since a Pareto distribution can have one person having 90% of food and the other having 10%. What is moral about a distribution where no transaction can change the status quo, i.e. make someone worse or better off? Nothing, since nothing is told about the actual distribution in the first place. If a transaction makes the starving agent better off and makes the non-starving one worse off, that transaction is justified, even if Pareto-suboptimality exists.

Second, even if true that doesn't imply that catch-up will occur; for instance, over the last century, computational power has grown much, much faster than the complexity of a molecule, but it still takes supercomputers screaming at top speed for days on end to perform detailed computations in quantum chemistry. (And that of course leaves out that innovation, by its nature, is impossible to precisely predict.)

Innovation is not "impossible" to predict, you're making the same error as Starglider. Hard is not impossible. Probabilities of any predicted outcome would be low, but that's not "impossibility".

Obviously useless shit gets made once you're past the bare survival. Bottled water is a luxury. To each his own.

So you agree that it is a useless luxury, and yet humanity spends resources (e.g. clean water) to make this useless luxury at the same time people are dying of thirst and hunger during droughts in Africa, and summing it up with a Jedem Das Seine? Sometimes I feel you're making my point for me - even if that is productive 'efficiency', it is only relevant to purely technical input/output relations and utilization of productive capacities. It does not tell anything at all about the moral side of the issue.

That's certainly a worthy ideal to strive for. But for that, I posit that it's a good start to maximize production. Moreso, since I've been saying that I'm pro-welfare since I joined this thread. I'm however rejecting that it's morally repugnant to ask people to work. Wasn't it the USSR who said "he who doesn't work, doesn't eat"? I'd amend that to "he who doesn't contribute doesn't eat", since capital resources are no less essential to public welfare than actual labour.

It is not morally repugnant to ask people to work. However, if said person was as powerful and independent as the company, I think he might have just denied a coercive offer. In case he lacks power, he won't turn it down. As for maximizing production, that is all well and good. But maximizing production of bottled water, luxury cars and other shit like that, even if inputs are fully utilized, achieves a peak production utilization situation, and yet it is wasteful from a moral point of view. I already said that Pareto optimality and productive efficiency are only technical concepts which signify full distribution with zero slack and maximal output/input rate; nothing more. It does not tell us anything about the nature and utility of outputs, nor whether the distribution is actually good.

But if organized labour can coerce the company just as much as the company can coerce the workers, then presumably there's a balance to be found somewhere?

Of course. Just like I said, however, it is a very rare situation when equal-leverage agents enter into a deal in the market. Most deals are between non-equals and thus carry a degree of coercion. It may be as extreme as "sell or you're bankrupt" or less extreme like "sell, or you might have problems, do you really want that?" Only when equals enter a deal and none of them can influence the decision of the other, the transaction has zero coercion. It is not coercive simply to compete or make a deal when none of the agents can actually influence another's decision, i.e. the possible transaction loss for each agent is acceptable. For example, if two workers already working for some company agree to exchange their household furniture items, none of them can coerce the other, there's no disparity. IRL market exists in a largely coercive framework; rampant oligopolization results in almost any playing field which starts from more or less pure competition. Competition and oligopolization are not contradictory processes - the latter is a result of the former when companies try to find the best place on the LRAC curve, and those who succeed weed out those who fail.

Such abuses incidentally cost the perpetrator money, so there are limits to how much and how long he can do that in any case.

Why do you classify it as an abuse? It is him using his advantage in a purely economic way. He's not erecting any artificial barriers or resorting to government pressure. And yes, there are limits. For small companies, the limits they can "play" in a price war is very small. I still remember how the introduction of superstores like Auchan, etc. basically wiped out smaller food shop chains which used to be ubiqutous.

I'm not talking about the observation that people need 1800 calories or more per day, but the fact that you need an emergent system of allocation in place of a market. I'm altogether not entirely clear on what you're proposing in that regard. In any case, the vast majority of first and second world citizens subsist on more than 1800 calories per day; its mainly in broken economies in the third world where people have to make do with less. That requires special handling - but the trend is towards more production lessening the shortfalls suffered by individuals.

Production growth is important, but if your distribution is skewed, it will only alleviate the issue which will still remain. If the growth of production is directed to other uses than feeding the malnourished people (e.g. enough of rice has been produced in Bangladesh, but a large share is exported, blam, people die - production might have been okay, it was the distribution which caused a disaster), the production growth is not helping at all. As for saying that "well, they already have enough to eat" - well, there's still plenty of room to work on. And malnourishment occurs massively in the former Second World after the USSR dismantled self, in Central Asia especially.

It's more the ease of replication that permits this, not the creation of value that's limited.

The ease of replication is important, of course. However, that ease wouldn't be really relevant if people weren't ready to make the replicated bit of information in the first place without a monetary compensation, if creativity was not a potent enough motivator. If that were so, no line of any free open-source program would get written in the first place, since no work could be done without a monetary compensation.

In that case, the people who create the products are the ones paying for them. They pay be agreeing to work for free, and time is money. Also, the people who run the networks and supply energy are paying. There is no free lunch, as I'm sure you know. Even "free" stuff is not truly "free". You might as well say that volunteer emergency workers are working for free - but they face opportunity costs as does anyone who does anything - the only meaningful measure of cost. If you're talking about "masking" costs, then this - opportunity cost which is not paid for with money - is a PRIME example.

Yeah, they are agreeing to work for free, and time is value. But it is not "money" - it is hard to monetize such a production process, because they work for free and receive products for free. Obviously everyone is spending their actual resources, and everyone receiving the value created by these resources spent - it wasn't "magically" created. However, money does not enter the transactions. You can say it is a barter system where they exchange their time for creative satisfaction or for help from other programmers with their code; thing is, none of the participants are paying. The people who run the networks and supply energy are, of course, wasting their resources as well, but fixed costs are very low (everyone has a computer, electricity consumption of a laptop is very small and internet access is also cheap relative to first and second world incomes).

At the heart of all that is the concept of opportunity cost. That doesn't go away even if you don't use money.

True. I merely said that non-monetary systems are interesting and important. Not that they get rid of opportunity costs.

[Lord Zentei]

Obviously useless shit gets made once you're past the bare survival. Bottled water is a luxury. To each his own.

So you agree that it is a useless luxury, and yet humanity spends resources (e.g. clean water) to make this useless luxury at the same time people are dying of thirst and hunger during droughts in Africa, and summing it up with a Jedem Das Seine? Sometimes I feel you're making my point for me - even if that is productive 'efficiency', it is only relevant to purely technical input/output relations and utilization of productive capacities. It does not tell anything at all about the moral side of the issue.

WTF do you mean by raising that issue? Africa and the first world are not part of a homogenous economy. That wouldn't be a relevant argument if they were both command economies either.

That's certainly a worthy ideal to strive for. But for that, I posit that it's a good start to maximize production. Moreso, since I've been saying that I'm pro-welfare since I joined this thread. I'm however rejecting that it's morally repugnant to ask people to work. Wasn't it the USSR who said "he who doesn't work, doesn't eat"? I'd amend that to "he who doesn't contribute doesn't eat", since capital resources are no less essential to public welfare than actual labour.

It is not morally repugnant to ask people to work. However, if said person was as powerful and independent as the company, I think he might have just denied a coercive offer. In case he lacks power, he won't turn it down. As for maximizing production, that is all well and good. But maximizing production of bottled water, luxury cars and other shit like that, even if inputs are fully utilized, achieves a peak production utilization situation, and yet it is wasteful from a moral point of view. I already said that Pareto optimality and productive efficiency are only technical concepts which signify full distribution with zero slack and maximal output/input rate; nothing more. It does not tell us anything about the nature and utility of outputs, nor whether the distribution is actually good.

It is good in the sense that people are willing to sacrifice their limited resources to achieve and maintain it. As for the point with the company, it seems to me that if a company is coercive if they can get away with saying "no", then they have no moral option other than being coercive or coerced in your view.

But if organized labour can coerce the company just as much as the company can coerce the workers, then presumably there's a balance to be found somewhere?

Of course. Just like I said, however, it is a very rare situation when equal-leverage agents enter into a deal in the market. Most deals are between non-equals and thus carry a degree of coercion. It may be as extreme as "sell or you're bankrupt" or less extreme like "sell, or you might have problems, do you really want that?" Only when equals enter a deal and none of them can influence the decision of the other, the transaction has zero coercion. It is not coercive simply to compete or make a deal when none of the agents can actually influence another's decision, i.e. the possible transaction loss for each agent is acceptable. For example, if two workers already working for some company agree to exchange their household furniture items, none of them can coerce the other, there's no disparity. IRL market exists in a largely coercive framework; rampant oligopolization results in almost any playing field which starts from more or less pure competition. Competition and oligopolization are not contradictory processes - the latter is a result of the former when companies try to find the best place on the LRAC curve, and those who succeed weed out those who fail.

Non-equal deal-making does not imply coercion. Willful removal of options implies coercion. A scenario with equals only is highly academic in any case. Besides which, given a command economy, the economic command agency is ipso facto NOT an equal with anyone, and definitely coercive - more so than any company could hope to be.

Such abuses incidentally cost the perpetrator money, so there are limits to how much and how long he can do that in any case.

Why do you classify it as an abuse? It is him using his advantage in a purely economic way. He's not erecting any artificial barriers or resorting to government pressure. And yes, there are limits. For small companies, the limits they can "play" in a price war is very small. I still remember how the introduction of superstores like Auchan, etc. basically wiped out smaller food shop chains which used to be ubiqutous.

OK, now you're comparing the competition with predatory pricing again. If the new competitor is producing goods and services at sustainable prices, then that's fair. The others couldn't cut it? Too bad, they didn't provide enough service at the given price. Ironically, you're making the same argument if you're advocating torrents, since they distribute stuff for free, sustainably, undercutting more traditional providers.

I'm not talking about the observation that people need 1800 calories or more per day, but the fact that you need an emergent system of allocation in place of a market. I'm altogether not entirely clear on what you're proposing in that regard. In any case, the vast majority of first and second world citizens subsist on more than 1800 calories per day; its mainly in broken economies in the third world where people have to make do with less. That requires special handling - but the trend is towards more production lessening the shortfalls suffered by individuals.

Production growth is important, but if your distribution is skewed, it will only alleviate the issue which will still remain. If the growth of production is directed to other uses than feeding the malnourished people (e.g. enough of rice has been produced in Bangladesh, but a large share is exported, blam, people die - production might have been okay, it was the distribution which caused a disaster), the production growth is not helping at all. As for saying that "well, they already have enough to eat" - well, there's still plenty of room to work on. And malnourishment occurs massively in the former Second World after the USSR dismantled self, in Central Asia especially.

After the USSR dismantled itself, then obviously the economy went to shit, that's only to be expected when you have political dissolution in what used to be a coherent socio-economic system. As for the case of Bangladesh - that's not a developed economy, and has numerous hurdles to overcome in its internal structure to facilitate internal trading in goods and services (including labour). I'm not really convinced that it's a great example of a Pareto-efficient economy! That kind of problem would still be faced even if it were a command economy, given current socioeconomic challenges there. In short, producing enough food isn't enough, you need a functioning system for distribution of the resource for any system to allocate things effectively.

Incidentally, as far as comparing command economies and market economies in these kinds of situations, I seem to remember the USSR being a grain exporter even during the famine of 1947. That situation was a worse than Bangladesh - and that was at a time when the USSR was a world superpower, not a developing nation.

It's more the ease of replication that permits this, not the creation of value that's limited.

The ease of replication is important, of course. However, that ease wouldn't be really relevant if people weren't ready to make the replicated bit of information in the first place without a monetary compensation, if creativity was not a potent enough motivator. If that were so, no line of any free open-source program would get written in the first place, since no work could be done without a monetary compensation.

That's because the don't make a living doing it. They still have to eat, hence they still have to work for money, since food can't be downloaded. But basing an entire economy on goodwill isn't exactly what I would consider feasible. Of course, you still have for-charity food distribution, but that's no way to run an economy either.

In that case, the people who create the products are the ones paying for them. They pay be agreeing to work for free, and time is money. Also, the people who run the networks and supply energy are paying. There is no free lunch, as I'm sure you know. Even "free" stuff is not truly "free". You might as well say that volunteer emergency workers are working for free - but they face opportunity costs as does anyone who does anything - the only meaningful measure of cost. If you're talking about "masking" costs, then this - opportunity cost which is not paid for with money - is a PRIME example.

Yeah, they are agreeing to work for free, and time is value. But it is not "money" - it is hard to monetize such a production process, because they work for free and receive products for free. Obviously everyone is spending their actual resources, and everyone receiving the value created by these resources spent - it wasn't "magically" created. However, money does not enter the transactions. You can say it is a barter system where they exchange their time for creative satisfaction or for help from other programmers with their code; thing is, none of the participants are paying. The people who run the networks and supply energy are, of course, wasting their resources as well, but fixed costs are very low (everyone has a computer, electricity consumption of a laptop is very small and internet access is also cheap relative to first and second world incomes).

It's really quite straightforward. You measure the time you use to work, and figure out what your hourly wages are. That gives you your opportunity costs. Not complicated at all.

At the heart of all that is the concept of opportunity cost. That doesn't go away even if you don't use money.

True. I merely said that non-monetary systems are interesting and important. Not that they get rid of opportunity costs.

Some other way of quantifying it would be nice, then.

[Surlethe]

Yeah. Which is absolutely morally irrelevant since a Pareto distribution can have one person having 90% of food and the other having 10%. What is moral about a distribution where no transaction can change the status quo, i.e. make someone worse or better off? Nothing, since nothing is told about the actual distribution in the first place. If a transaction makes the starving agent better off and makes the non-starving one worse off, that transaction is justified, even if Pareto-suboptimality exists.

Fine, then replace Pareto-optimality with "maximization of the sum of utility functions." (Edit: Wiki seems to be saying that Pareto-optimality can be interpreted as "no transaction can increase net utility," but I don't have time to fully parse the economic jargon. Why can't they just call a derivative a derivative, like other sciences?)

Second, even if true that doesn't imply that catch-up will occur; for instance, over the last century, computational power has grown much, much faster than the complexity of a molecule, but it still takes supercomputers screaming at top speed for days on end to perform detailed computations in quantum chemistry. (And that of course leaves out that innovation, by its nature, is impossible to precisely predict.)

Innovation is not "impossible" to predict, you're making the same error as Starglider. Hard is not impossible. Probabilities of any predicted outcome would be low, but that's not "impossibility".

"Hard enough" is pragmatically the same as "impossible."

[K. A. Pital]

In short, producing enough food isn't enough, you need a functioning system for distribution of the resource for any system to allocate things effectively.

I fully agree. In fact, my point was that even when production is maximized via full productive efficiency, the distribution issue doesn't go away. And I agree that any system that seeks to distribute resources or goods should be workable. Torrents or open source only work for information and the digital space so far, and nobody's denying that. Command and market economies also work, even if with lots of imperfections. I never said that I'm talking about bringing about some perfect system. Anything which could potentially bring a utilitarian benefit is an option that should be considered and evaluated, regardless of whether it is greater competition or greater centralization.

WTF do you mean by raising that issue? Africa and the first world are not part of a homogenous economy. That wouldn't be a relevant argument if they were both command economies either.

I am saying that producing maximum outputs at the curve of society's productive capabilities per given inputs is good, but it doesn't solve the issue of the nature, distribution, et cetera of outputs. Your productive forces are working at 100% capacity, but what they are making and to what end resources are distributed is a more complex question. There are multiple variants of having productive efficiency at peak - not all of them require skewed distribution - and there are yet many more suboptimal variants which might be not as good economically but more sound from a moral standpoint.

It is good in the sense that people are willing to sacrifice their limited resources to achieve and maintain it. As for the point with the company, it seems to me that if a company is coercive if they can get away with saying "no", then they have no moral option other than being coercive or coerced in your view.

It is also a fact that people are prone to acting in a largely irrational fashion. People with very limited resources hit by hardship start taking drugs and getting addicted, and then spend their very limited resources on drugs, creating a flourishing and powerful drug industry. Sometimes they give their last dime to 'get the shit', so it is good in the sense people spend their resources to get it, but that 'good' is merely a technical criterion. Just like with bottled water, it only shows that people are ready to do stupid shit and spend money and waste their limited resources on stupid and even potentially harmful shit. And the company is not coercive if they can get away with "no" - if the other side can also "get away" with no. For example, two equal or relatively equal-sized companies in a highly competitive or a duopolistic market make a deal, and each of them can walk away without being severly damaged. In this case, where is the coercion? None to be had.

Non-equal deal-making does not imply coercion. Willful removal of options implies coercion. A scenario with equals only is highly academic in any case. Besides which, given a command economy, the economic command agency is ipso facto NOT an equal with anyone, and definitely coercive - more so than any company could hope to be.

Willful removal of options is undeniably coercion, but non-equal dealmaking is also coercive. It can be extremely coercive (with extremes I have provided as examples) or only mildly so. However, when both agents suffer no grave damage if they decline each other's offers and their leverage and bargaining power are in balance, roughly equal - there's no coercion. Scenario with equals is as "highly academic" as perfect competition. Perfect competition implies competition without coercion between a multitude of small agents, none of whom has the leverage to severely impact others. If non-coercive deals are "academic", why do you support perfect competition, essentially the model of uncoercive competition where agents are not able to influence the market and coerce their peers? The command economy is the ultimate coercive force, and coercion is largely non-economic, purely administrative; this is why I am wary about this solution, regardless of any benefits it might have.

OK, now you're comparing the competition with predatory pricing again. If the new competitor is producing goods and services at sustainable prices, then that's fair. The others couldn't cut it? Too bad, they didn't provide enough service at the given price. Ironically, you're making the same argument if you're advocating torrents, since they distribute stuff for free, sustainably, undercutting more traditional providers.

Predatory pricing is actually fair game. It is a tactic that utilizes purely economic mechanisms - the producer suffers some temporary loss to wipe out a competitor and get greater long-term profits in the future. And yes, I understand that oligopolization and wipe-out of small agents incapable of utilizing economies of scale is a natural process, which can't be stopped by what you call "artificial barriers", i.e. government decrees.

As for the case of Bangladesh - that's not a developed economy, and has numerous hurdles to overcome in its internal structure to facilitate internal trading in goods and services (including labour). I'm not really convinced that it's a great example of a Pareto-efficient economy!

I only said that all grain produced in Bangladesh was fully distributed without slack. So the problem was not that the distribution of grain was Pareto-inefficient, but that it was fundamentally crazy and deadly.

I seem to remember the USSR being a grain exporter even during the famine of 1947. That situation was a worse than Bangladesh - and that was at a time when the USSR was a world superpower, not a developing nation.

Yes, that was crazy as well. Russia in 1891, USSR in 1931 exported grain. During 1947, the famine was more or less tied to the Nazi mass destruction. Once again, Russia produced enough grain in all cases (well, almost enough in 1931), but allowing exports to run at the time of famine is the worst decision ever.

But basing an entire economy on goodwill isn't exactly what I would consider feasible. Of course, you still have for-charity food distribution, but that's no way to run an economy either.

Only because food is very hard to replicate. What if it were replicated as easy as OSS programs?

It's really quite straightforward. You measure the time you use to work, and figure out what your hourly wages are. That gives you your opportunity costs. Not complicated at all.

This only makes sense if you're not getting a non-monetary wage. What if you just get a ration of food? What if everything is distributed like OSS - food and shelter and clothes? How would you even "count" the price of his work-hour? By examining a market economy analogue? That only works until market economies still exist.

Fine, then replace Pareto-optimality with "maximization of the sum of utility functions." (Edit: Wiki seems to be saying that Pareto-optimality can be interpreted as "no transaction can increase net utility," but I don't have time to fully parse the economic jargon. Why can't they just call a derivative a derivative, like other sciences?)

You maximize the sum of utility functions and no transaction can increase net utility. However, utility is not a strict economic measure. Severity of suffering impacts utility.

[Surlethe]

You maximize the sum of utility functions and no transaction can increase net utility. However, utility is not a strict economic measure. Severity of suffering impacts utility.

That has been my point all along: the notion of efficiency encompasses moral judgments.

[K. A. Pital]

You maximize the sum of utility functions and no transaction can increase net utility. However, utility is not a strict economic measure. Severity of suffering impacts utility.

That has been my point all along: the notion of efficiency encompasses moral judgments.

Pareto does not measure severity of suffering. Efficiency encompasses moral judgements only if it differentiates between the suffering of a starving or homeless person and the "suffering" of someone who has 2 homes. If you take the home from him, you're impacting Pareto distribution. But the net outcome is a utilitarian benefit, since the homeless suffers more. In a strict economic sense, you have shifted from one Pareto state to another (now both people have homes, and no one can be made better off without taking from another). There are many "efficient" states on the curve, and some of them are fucking hideous.

[Lord Zentei]

Snipped a couple of points where we seem to be in agreement.

WTF do you mean by raising that issue? Africa and the first world are not part of a homogenous economy. That wouldn't be a relevant argument if they were both command economies either.

I am saying that producing maximum outputs at the curve of society's productive capabilities per given inputs is good, but it doesn't solve the issue of the nature, distribution, et cetera of outputs. Your productive forces are working at 100% capacity, but what they are making and to what end resources are distributed is a more complex question. There are multiple variants of having productive efficiency at peak - not all of them require skewed distribution - and there are yet many more suboptimal variants which might be not as good economically but more sound from a moral standpoint.

Maximization of production doesn't solve the distribution issue per se, but optimization of total utility does that, at least by one measure thereof (this being consumer benefit). I'll be the first to admit that consumer benefit is not the only measure of utility, hence my support for welfare. But consumer benefit is more important than many others for the most part, particularly since the system which grants it (the market) is also the system which optimizes production.

It is good in the sense that people are willing to sacrifice their limited resources to achieve and maintain it. As for the point with the company, it seems to me that if a company is coercive if they can get away with saying "no", then they have no moral option other than being coercive or coerced in your view.

It is also a fact that people are prone to acting in a largely irrational fashion. People with very limited resources hit by hardship start taking drugs and getting addicted, and then spend their very limited resources on drugs, creating a flourishing and powerful drug industry. Sometimes they give their last dime to 'get the shit', so it is good in the sense people spend their resources to get it, but that 'good' is merely a technical criterion. Just like with bottled water, it only shows that people are ready to do stupid shit and spend money and waste their limited resources on stupid and even potentially harmful shit. And the company is not coercive if they can get away with "no" - if the other side can also "get away" with no. For example, two equal or relatively equal-sized companies in a highly competitive or a duopolistic market make a deal, and each of them can walk away without being severly damaged. In this case, where is the coercion? None to be had.

Well, I can't say that any useless shit implies irrationality implies coercion. If people enjoy something, then they have a right to buy it, where's the coercion in that? As for drugs, these things are addictive and thus actively remove the person's ability to make decisions by their very nature. Even in spite of this, legalization of drugs works better at limiting harmful socio-economic effects of drug use than prohibition does, as history shows us.

Non-equal deal-making does not imply coercion. Willful removal of options implies coercion. A scenario with equals only is highly academic in any case. Besides which, given a command economy, the economic command agency is ipso facto NOT an equal with anyone, and definitely coercive - more so than any company could hope to be.

Willful removal of options is undeniably coercion, but non-equal dealmaking is also coercive. It can be extremely coercive (with extremes I have provided as examples) or only mildly so. However, when both agents suffer no grave damage if they decline each other's offers and their leverage and bargaining power are in balance, roughly equal - there's no coercion. Scenario with equals is as "highly academic" as perfect competition. Perfect competition implies competition without coercion between a multitude of small agents, none of whom has the leverage to severely impact others. If non-coercive deals are "academic", why do you support perfect competition, essentially the model of uncoercive competition where agents are not able to influence the market and coerce their peers? The command economy is the ultimate coercive force, and coercion is largely non-economic, purely administrative; this is why I am wary about this solution, regardless of any benefits it might have.

Non equal deal-making is not inherently coercive (which is fortunate, since in reality, no two agents can be truly equal). By contrast, if you reject the scenario where non-equals make deals on moral grounds, then you are willfully removing their options, hence coercing them. In particular, you're coercing the less powerful agent, because he can less afford the reduction in options. By providing an option to the lesser player, the greater player can just as easily be empowering him, not coercing him.

Though you're coming out against command economies now. I must confess myself confused, since earlier you were questioning the need for a competitive market. Where do you stand, exactly?

OK, now you're comparing the competition with predatory pricing again. If the new competitor is producing goods and services at sustainable prices, then that's fair. The others couldn't cut it? Too bad, they didn't provide enough service at the given price. Ironically, you're making the same argument if you're advocating torrents, since they distribute stuff for free, sustainably, undercutting more traditional providers.

Predatory pricing is actually fair game. It is a tactic that utilizes purely economic mechanisms - the producer suffers some temporary loss to wipe out a competitor and get greater long-term profits in the future. And yes, I understand that oligopolization and wipe-out of small agents incapable of utilizing economies of scale is a natural process, which can't be stopped by what you call "artificial barriers", i.e. government decrees.

Predatory pricing is not fair game if you're underperforming in the short term only to raise prices later, especially if an industry has high entry barriers. With low entry barriers, then such behaviour is ultimately self-destructive, in that case I agree with you. Though I find it funny that you're now indirectly speaking for a practice that takes place in an unregulated environment, while I'm criticizing it.

As for the case of Bangladesh - that's not a developed economy, and has numerous hurdles to overcome in its internal structure to facilitate internal trading in goods and services (including labour). I'm not really convinced that it's a great example of a Pareto-efficient economy!

I only said that all grain produced in Bangladesh was fully distributed without slack. So the problem was not that the distribution of grain was Pareto-inefficient, but that it was fundamentally crazy and deadly.

It was fundamentally crazy and deadly to be sure, but my point was that if it wasn't efficient, then I'm not sure that it can be used as evidence for or against any system.

But basing an entire economy on goodwill isn't exactly what I would consider feasible. Of course, you still have for-charity food distribution, but that's no way to run an economy either.

Only because food is very hard to replicate. What if it were replicated as easy as OSS programs?

Opportunity cost would still exist. I remain to be convinced that the OSS model can be used for an entire economy rather than a niche sector.

It's really quite straightforward. You measure the time you use to work, and figure out what your hourly wages are. That gives you your opportunity costs. Not complicated at all.

This only makes sense if you're not getting a non-monetary wage. What if you just get a ration of food? What if everything is distributed like OSS - food and shelter and clothes? How would you even "count" the price of his work-hour? By examining a market economy analogue? That only works until market economies still exist.

And in other news, if we destroy all measuring tape and scales, then objects no longer have height or mass. The fact that you can no longer measure a thing doesn't mean that it doesn't exist. The thing being measured in this case is opportunity cost. That still exists. It's just that one useful yardstick has been removed from our inventory. I don't see that this is an advantage in and of itself.

[Surlethe]

Pareto does not measure severity of suffering. Efficiency encompasses moral judgements only if it differentiates between the suffering of a starving or homeless person and the "suffering" of someone who has 2 homes. If you take the home from him, you're impacting Pareto distribution. But the net outcome is a utilitarian benefit, since the homeless suffers more. In a strict economic sense, you have shifted from one Pareto state to another (now both people have homes, and no one can be made better off without taking from another). There are many "efficient" states on the curve, and some of them are fucking hideous.

I may have been misusing "Pareto" -- but, in my understanding, taking a home from one and giving it to the other is, if the homeless man is indeed more better off than the wealthy man is worse off, a Pareto improvement. Hence the initial state could not have been Pareto-optimal.

[Lord Zentei]

Pareto does not measure severity of suffering. Efficiency encompasses moral judgements only if it differentiates between the suffering of a starving or homeless person and the "suffering" of someone who has 2 homes. If you take the home from him, you're impacting Pareto distribution. But the net outcome is a utilitarian benefit, since the homeless suffers more. In a strict economic sense, you have shifted from one Pareto state to another (now both people have homes, and no one can be made better off without taking from another). There are many "efficient" states on the curve, and some of them are fucking hideous.

I may have been misusing "Pareto" -- but, in my understanding, taking a home from one and giving it to the other is, if the homeless man is indeed more better off than the wealthy man is worse off, a Pareto improvement. Hence the initial state could not have been Pareto-optimal.

Sorry to butt in, but Pareto-efficiency is a rather stronger criterion than you suggest, and it requires that all parties involved in the transaction are better off after the transaction (or at worst remain unchanged in utility). If anyone is worse off, then it's not a Pareto-efficient transaction.

The strength of the Pareto-efficiency criterion is that regardless of what the prior distribution was, if you apply a Pareto-change to it, the new distribution is always preferable to the old one. That's not always the case with other distribution schemes, which might conceivably employ arbitrary evaluation between gains and losses in some cases, but such a prospect does not arise in a Pareto-exchange, by it's very nature.

You're probably thinking of the gains from free trade between formerly isolated economic agents. Here, there are gains and losses in both sides of the trade, but the gains also outweigh the losses on both sides. Each country is regarded as a collective unit when assessing whether it's beneficial for them.

I'd like to point out, though, that taking a house from one person and giving it to another may very well not lead to a Pareto-efficient situation. In this case, the poor man may not be able to maintain the house, and thus sells it to gain spending money, and simply rents a room somewhere. Thus, re-allocation may shake the system out of one Pareto-efficient distribution which represents a suboptimal condition with respect to some criterion other than Pareto efficiency *, but I maintain that after you do that, you're still morally required to permit Pareto-exchanges, and for that the market is a key instrument. Hence, the benefits of a market with welfare.

(*) i.e. if some kind of a composite criterion could be devised it moves the system out of a "local maximum".

[K. A. Pital]

Maximization of production doesn't solve the distribution issue per se, but optimization of total utility does that, at least by one measure thereof (this being consumer benefit). I'll be the first to admit that consumer benefit is not the only measure of utility, hence my support for welfare. But consumer benefit is more important than many others for the most part, particularly since the system which grants it (the market) is also the system which optimizes production.

Consumer benefit is more important than ensuring nobody dies? Sorry, but we differ here. Ensuring a minimal life standard is the number one moral task. After that - consumer benefit, why not?

Well, I can't say that any useless shit implies irrationality implies coercion. If people enjoy something, then they have a right to buy it, where's the coercion in that? As for drugs, these things are addictive and thus actively remove the person's ability to make decisions by their very nature. Even in spite of this, legalization of drugs works better at limiting harmful socio-economic effects of drug use than prohibition does, as history shows us.

Stupid shit doesn't imply coercion. It implies that the criterion of "people are willing to spend their limited resource on X, therefore X is rational" is pretty fucking stupid. Bottled water is a stupid luxury. People are diverting resources to make it. It is an irrational application of resources, although from an economical standpoint, the very fact that people are ready to buy it makes producing it "rational". Ergo my comment. It was not about coercion, it was about the fact that you consider anything which is sold in the market a "rational" use of resources, since people are ready to pay for it.

Non equal deal-making is not inherently coercive (which is fortunate, since in reality, no two agents can be truly equal). By contrast, if you reject the scenario where non-equals make deals on moral grounds, then you are willfully removing their options, hence coercing them. In particular, you're coercing the less powerful agent, because he can less afford the reduction in options. By providing an option to the lesser player, the greater player can just as easily be empowering him, not coercing him. Though you're coming out against command economies now. I must confess myself confused, since earlier you were questioning the need for a competitive market. Where do you stand, exactly?

I said "roughly equal", which is more common than you might think (e.g. people exchanging minor-cost items, where nobody would suffer serious losses that might influence his decision one way or the other, or companies entering deals in a perfect or highly competitive market where no company among the parties to the deal is big enough to influence the other company). Providing options is all nice and well, but when you use your power to provide an option that aims to strong-arm the other person into the deal by implying that losses (unemployment or bankruptcy in case of small companies) are going to be worse than the "option" you're offering - and you're the one who'll cause him to go unemployed or bankrupt - that's not really "providing options", that's issuing an ultimatum - do as I say, or else. As for me coming out against command economies - I think I pretty much acknowledged that the benefits realized by the command economy are enormously condition-dependent. A command economy's leadership might be as callous as market agents, for example, exporting grain at the height of famine. Therefore, there's no inherent advantage. A command economy might give something I find nice - 100% employment, equal access to education with competition based purely on brains instead of money, et cetera. It is, however, a highly coercive mechanism, and it always carries the danger of gross damage. That's like atomic power, coal and oil plants. They might make me awe because they give so much energy, but I always remember that they carry risks of catastrophic destruction and contamination, and oil and coal plants contaminate the world daily. I may support command economy or elements of it, but that doesn't mean I can't be at the same time deeply critical of the whole thing. Damn, I think Simon supports markets to a great extent and yet he remains critical of them.

Supporting is not blindly worshipping something or justifying any action of that system by virtue of "efficiency" or whatever. Command economies rely on a lot of coercion. It takes a lot of benefits and utilitarian good to justify applicating such a system. And not just as a declaration - you must actually achieve these benefits and utility increases, as opposed to merely talking about them.

Predatory pricing is not fair game if you're underperforming in the short term only to raise prices later, especially if an industry has high entry barriers. With low entry barriers, then such behaviour is ultimately self-destructive, in that case I agree with you. Though I find it funny that you're now indirectly speaking for a practice that takes place in an unregulated environment, while I'm criticizing it.

Well, from the beginning I was a bit surprised that you consider state limitations and regulations an "artificial barrier" on the market, and yet you're perfectly fine with artificially breaking up companies that grow too large or "forcing" the market to be more competitive using state law and state enforcement. That is me wondering why you don't oppose other natural market processes (e.g. outpricing) or at least consider them tolerable, or not bad enough to actually abolish the markets, and say that artificial barriers should be created to prevent such events, but you oppose oligopolization, even if it occurs naturally. You can say that artificial barriers erected in the face of market laws (e.g. artificial barriers to entry) will inevitably breed corruption once people try to overcome them. And yet in the next sentence you demand the state to 'enforce' greater competition. Once you put that law of competition in place, you artificially limit oligpolization that can occur in an unregulated market. That is also a potential point for corruption. There will be companies - undeniably! - that will grow to the limits of what your competition law allows them to be, get as much as they can and still want more, perhaps at the expense of other market players. And these companies, if the legislation was not there, could perhaps engage in brutal practices such as price wars, agressive acquisitions and the like. But a state "artificial barrier" prevents them to do so. Do you really think they will not try to bribe officials? Do you really think these barriers, much like other barriers that stand in the way of natural market processes, won't become focal points where corruption is growing?

It was fundamentally crazy and deadly to be sure, but my point was that if it wasn't efficient, then I'm not sure that it can be used as evidence for or against any system.

It is a very primitive example, but from what I gather, productive efficiency in a sector occurs when inputs are fully utilized and maximum output is achieved with given inputs. Therefore, if you produced the maximal amount of grain with the given inputs, your system achieved productive efficiency - however the distribution of created output (grain) might be completely crazy. Your productively efficient system might be good, but without distributive efficiency (and not just a Pareto one where nobody can be made better without making another one worse off, but a distributive efficiency with moral criteria in it) the system will just be hideous no matter how you look at it.

Opportunity cost would still exist. I remain to be convinced that the OSS model can be used for an entire economy rather than a niche sector. ... And in other news, if we destroy all measuring tape and scales, then objects no longer have height or mass. The fact that you can no longer measure a thing doesn't mean that it doesn't exist. The thing being measured in this case is opportunity cost. That still exists. It's just that one useful yardstick has been removed from our inventory. I don't see that this is an advantage in and of itself.

Surprisingly, me too. However, if there is progressively fewer and fewer monetized sectors (if we imagine a gradual spread of such models from the digital to the material world), that doesn't mean we're "losing" a useful instrument (e.g. money). That means (if money is driven out from transactions by a natural process without state influence) that money is losing importance and usefulness due to ease of replication, low costs and meaninglessness of savings. If money does not naturally dissappear from a transaction, that means this exact economic transaction still needs money to proceed. To make an analogy with your scales, imagine a man who had to ration his consumption since he could only take 1 kg of water from a rationing point, and he had to carry scales everywhere, because only that way he could measure how much water he could get. He had to carry money. However, water production expanded, the ease of extracting and delivering water increased significantly. Suddenly the person no longer needed to carry the scales. Why? Because his "bying power" related to water just became infinite. Water still weighs, and scales can still technically measure the weight, but what is the point of doing so? For the person, that is.

Thus, re-allocation may shake the system out of one Pareto-efficient distribution which represents a suboptimal condition with respect to some criterion other than Pareto efficiency

You're right as usual, Z, I just didn't want to add the suboptimal points into the mix (in fact, I spoke of their existence earlier with Surlethe, they're far more numerous than the number of Pareto-optimal solutions - Pareto solutions are a curve, the suboptimal ones fill the entire area inside the curve). If both men retain their houses and don't ruin them, though, the new distribution will be Pareto-optimal.

P.S. By the way, that's the shit I've been missing since you left the board, Zentei.

[Simon_Jester]

Just to address this specifically:

Damn, I think Simon supports markets to a great extent and yet he remains critical of them.

I think markets work, but I view them very unromantically- they're tools, means to an end, not an end in and of themselves. I am deeply, deeply cynical about any attempt to make a market into an end in its own right. What's good for business is not necessarily good for America, in other words, and I get very suspicious about those who say it is.

Because I see markets as tools, I feel that everything which happens as a result of a market must be judged on its own merits, not by the standard of some abstract "is this the most market-like way to do things."

A carpenter may use screwdrivers, may consider them great tools, but he'd be foolish to try to use a screwdriver to put a nail into a plank simply because that's the most "screwdriver-like" way to go about the job. Nor would he be wise to spend much time or energy trying to think of ways to use a screwdriver instead of a hammer when a nail is the most practical way to do the job. Just hammer in a nail and have done with it, and if that means not being able to rely on screwdrivers to do everything, so be it.

As I see it, the Enlightenment ideal of decentralized power demands restraints on the market, because a lightly regulated market will predictably sprout oligopolies, just as unmaintained machinery rusts. Oligopolies are bad for decentralization of power, so you have to have checks in place to block them from getting much control.

And I don't really sympathize with arguments that such restraints will wreck competition or lead to corruption, because all human institutions are corrupt and all powerful people seek to eliminate competition. The best you can do is have a legal mechanism in place, regularly used, to punish people for being corrupt and for trying to eliminate competition at the general public's expense. However much outside-the-market intervention it takes to make that happen, it's still necessary intervention.

[Lord Zentei]

Maximization of production doesn't solve the distribution issue per se, but optimization of total utility does that, at least by one measure thereof (this being consumer benefit). I'll be the first to admit that consumer benefit is not the only measure of utility, hence my support for welfare. But consumer benefit is more important than many others for the most part, particularly since the system which grants it (the market) is also the system which optimizes production.

Consumer benefit is more important than ensuring nobody dies? Sorry, but we differ here. Ensuring a minimal life standard is the number one moral task. After that - consumer benefit, why not?

We're misunderstanding each other. Obviously it's more important to ensure minimal survival, but the GDP per capita in first and second world countries is very much greater than the minimum survival requirement for a human. Thus, only a small part of the overall GDP is needed to ensure such survival. It was not a statement on prioritization, but on scale. Incidentally, the long term concern is to maximize the production of survival-essential goods and services, so economic efficiency is actually important here too - in addition to a minimal level of allocation to each citizen.

Well, I can't say that any useless shit implies irrationality implies coercion. If people enjoy something, then they have a right to buy it, where's the coercion in that? As for drugs, these things are addictive and thus actively remove the person's ability to make decisions by their very nature. Even in spite of this, legalization of drugs works better at limiting harmful socio-economic effects of drug use than prohibition does, as history shows us.

Stupid shit doesn't imply coercion. It implies that the criterion of "people are willing to spend their limited resource on X, therefore X is rational" is pretty fucking stupid. Bottled water is a stupid luxury. People are diverting resources to make it. It is an irrational application of resources, although from an economical standpoint, the very fact that people are ready to buy it makes producing it "rational". Ergo my comment. It was not about coercion, it was about the fact that you consider anything which is sold in the market a "rational" use of resources, since people are ready to pay for it.

Ah, OK. But all luxuries are "stupid" in a sense. Do we really need Star Wars, Warhammer 40K models or MLP stuff? Probably not. But these things imply that people can exceed the minimum survival requirements, and afford to be silly, which is a hopeful thing, IMO. Should people be smarter about how they invest? Probably. But at the end of the day, economics is not about teaching people how to act or how to be. It can of course chart the means to such and end, as provided by moral philosophy (or sociology, perhaps).

Non equal deal-making is not inherently coercive (which is fortunate, since in reality, no two agents can be truly equal). By contrast, if you reject the scenario where non-equals make deals on moral grounds, then you are willfully removing their options, hence coercing them. In particular, you're coercing the less powerful agent, because he can less afford the reduction in options. By providing an option to the lesser player, the greater player can just as easily be empowering him, not coercing him. Though you're coming out against command economies now. I must confess myself confused, since earlier you were questioning the need for a competitive market. Where do you stand, exactly?

I said "roughly equal", which is more common than you might think (e.g. people exchanging minor-cost items, where nobody would suffer serious losses that might influence his decision one way or the other, or companies entering deals in a perfect or highly competitive market where no company among the parties to the deal is big enough to influence the other company). Providing options is all nice and well, but when you use your power to provide an option that aims to strong-arm the other person into the deal by implying that losses (unemployment or bankruptcy in case of small companies) are going to be worse than the "option" you're offering - and you're the one who'll cause him to go unemployed or bankrupt - that's not really "providing options", that's issuing an ultimatum - do as I say, or else. As for me coming out against command economies - I think I pretty much acknowledged that the benefits realized by the command economy are enormously condition-dependent. A command economy's leadership might be as callous as market agents, for example, exporting grain at the height of famine. Therefore, there's no inherent advantage. A command economy might give something I find nice - 100% employment, equal access to education with competition based purely on brains instead of money, et cetera. It is, however, a highly coercive mechanism, and it always carries the danger of gross damage. That's like atomic power, coal and oil plants. They might make me awe because they give so much energy, but I always remember that they carry risks of catastrophic destruction and contamination, and oil and coal plants contaminate the world daily. I may support command economy or elements of it, but that doesn't mean I can't be at the same time deeply critical of the whole thing. Damn, I think Simon supports markets to a great extent and yet he remains critical of them.

Supporting is not blindly worshipping something or justifying any action of that system by virtue of "efficiency" or whatever. Command economies rely on a lot of coercion. It takes a lot of benefits and utilitarian good to justify applicating such a system. And not just as a declaration - you must actually achieve these benefits and utility increases, as opposed to merely talking about them.

I see... I think that we agree in general here, and only disagree on details of when it's appropriate to object. I'm willing to tolerate more aggressive competition without considering it "coercive". See next point for clarification.

Predatory pricing is not fair game if you're underperforming in the short term only to raise prices later, especially if an industry has high entry barriers. With low entry barriers, then such behaviour is ultimately self-destructive, in that case I agree with you. Though I find it funny that you're now indirectly speaking for a practice that takes place in an unregulated environment, while I'm criticizing it.

Well, from the beginning I was a bit surprised that you consider state limitations and regulations an "artificial barrier" on the market, and yet you're perfectly fine with artificially breaking up companies that grow too large or "forcing" the market to be more competitive using state law and state enforcement. That is me wondering why you don't oppose other natural market processes (e.g. outpricing) or at least consider them tolerable, or not bad enough to actually abolish the markets, and say that artificial barriers should be created to prevent such events, but you oppose oligopolization, even if it occurs naturally. You can say that artificial barriers erected in the face of market laws (e.g. artificial barriers to entry) will inevitably breed corruption once people try to overcome them. And yet in the next sentence you demand the state to 'enforce' greater competition. Once you put that law of competition in place, you artificially limit oligpolization that can occur in an unregulated market. That is also a potential point for corruption. There will be companies - undeniably! - that will grow to the limits of what your competition law allows them to be, get as much as they can and still want more, perhaps at the expense of other market players. And these companies, if the legislation was not there, could perhaps engage in brutal practices such as price wars, agressive acquisitions and the like. But a state "artificial barrier" prevents them to do so. Do you really think they will not try to bribe officials? Do you really think these barriers, much like other barriers that stand in the way of natural market processes, won't become focal points where corruption is growing?

OK - to clarify: I don't oppose "natural" oligopolies where economies of scale would make it impossible to run smaller companies even in the absence of any interaction between companies. That would in effect be to deny such markets the right to exist at all, since small providers couldn't work under those conditions. I don't even oppose situations where in a formerly competitive market a single company can outperform its rivals due to having perfected a manufacturing technique which they lack and are unable or unwilling to implement. To oppose such things as these would be to undermine the product-maximization effects of the market, and thus deny society the gains of increased productivity.

However, I object to "artificial barriers" erected by government to prevent competition - by this I mean regulations which increase entry costs for new competitors or deny them the right to entry outright, or grant some company or other monopolistic or oligopolistic status by legal fiat, as enforced by government authority. I also don't approve of regulations that play favourites with companies - i.e. the same rules should apply to everyone.

When I speak of predatory pricing, I'm talking about practices where companies in markets with high entry costs or in the case of natural oligopolies* lower their prices or collude with others in the market to specifically remove rivals in a manner which is cost-ineffective for them individually. In other words, they invest some resources in creating conditions which replicate the effects of bad regulations, while not raising productive efficiency. In a competitive market, this is impossible, of course (except very temporarily in the form of promotional sales, and such). Of course, when this is attempted in natural oligopolies, it isn't a stable situation either, as members of the cartel can make more money in betraying it. But it causes damage, thus it is to be avoided. I acknowledge that there are numerous opponents of any intervention of this sort who would rely on the instability of cartels and inefficient monopolies to undermine such behavior, and if entry costs were low in all markets, I would probably be inclined to agree with them. But that's not always the case, unfortunately, so new competitive agents emerging to challenge inefficiency isn't always a given.

* Keep in mind that even though most markets are dominated by few producers, that does not make them natural oligopolies.

It was fundamentally crazy and deadly to be sure, but my point was that if it wasn't efficient, then I'm not sure that it can be used as evidence for or against any system.

It is a very primitive example, but from what I gather, productive efficiency in a sector occurs when inputs are fully utilized and maximum output is achieved with given inputs. Therefore, if you produced the maximal amount of grain with the given inputs, your system achieved productive efficiency - however the distribution of created output (grain) might be completely crazy. Your productively efficient system might be good, but without distributive efficiency (and not just a Pareto one where nobody can be made better without making another one worse off, but a distributive efficiency with moral criteria in it) the system will just be hideous no matter how you look at it.

Depends on how you define "crazy". Market economies with proper rule of law tend to reward providers (of labour, capital or land *) in due proportion to the marginal market value of their contribution. Those who don't contribute aren't rewarded. I guess that's not terribly humanistic, but then, that's where welfare comes in.

* Knowledge, OTOH is more often an externality, being open source, hence the unfortunate need for patents.

Opportunity cost would still exist. I remain to be convinced that the OSS model can be used for an entire economy rather than a niche sector. ... And in other news, if we destroy all measuring tape and scales, then objects no longer have height or mass. The fact that you can no longer measure a thing doesn't mean that it doesn't exist. The thing being measured in this case is opportunity cost. That still exists. It's just that one useful yardstick has been removed from our inventory. I don't see that this is an advantage in and of itself.

Surprisingly, me too. However, if there is progressively fewer and fewer monetized sectors (if we imagine a gradual spread of such models from the digital to the material world), that doesn't mean we're "losing" a useful instrument (e.g. money). That means (if money is driven out from transactions by a natural process without state influence) that money is losing importance and usefulness due to ease of replication, low costs and meaninglessness of savings. If money does not naturally dissappear from a transaction, that means this exact economic transaction still needs money to proceed. To make an analogy with your scales, imagine a man who had to ration his consumption since he could only take 1 kg of water from a rationing point, and he had to carry scales everywhere, because only that way he could measure how much water he could get. He had to carry money. However, water production expanded, the ease of extracting and delivering water increased significantly. Suddenly the person no longer needed to carry the scales. Why? Because his "bying power" related to water just became infinite. Water still weighs, and scales can still technically measure the weight, but what is the point of doing so? For the person, that is.

OK, I guess that's fair enough too. But I don't see money dependent sectors as necessarily a bad thing, I guess that's where we misunderstood each other. Moreover, I'm skeptical of the future of economy without money (notably the internet is becoming more commercialized, though there's still a lot of free stuff around).

Thus, re-allocation may shake the system out of one Pareto-efficient distribution which represents a suboptimal condition with respect to some criterion other than Pareto efficiency

You're right as usual, Z, I just didn't want to add the suboptimal points into the mix (in fact, I spoke of their existence earlier with Surlethe, they're far more numerous than the number of Pareto-optimal solutions - Pareto solutions are a curve, the suboptimal ones fill the entire area inside the curve). If both men retain their houses and don't ruin them, though, the new distribution will be Pareto-optimal.

Yeah, though I was more thinking of additional criteria for evaluation; in other words, that if you judge the set of possible resource distributions according to criteria X, then you would fill the sample space S with a patchwork of optimal points O and suboptimal points P. Along any Pareto efficient curve, there would be some points in O and some in P. Shaking the system out of a Pareto-efficient point in P could permit the market to subsequently apply Pareto-efficient changes to move it to a different point in O, also on the Pareto-curve. The need for this assumes that you're right that it might be possible to find two Pareto-efficient solutions A and B, where one is "humanistic" and the other is not, and such that it's impossible to move the system from the one to the other with Pareto-efficient moves only.

P.S. By the way, that's the shit I've been missing since you left the board, Zentei.

D'awww.

[Lord Zentei]

As I see it, the Enlightenment ideal of decentralized power demands restraints on the market, because a lightly regulated market will predictably sprout oligopolies, just as unmaintained machinery rusts. Oligopolies are bad for decentralization of power, so you have to have checks in place to block them from getting much control.

And I don't really sympathize with arguments that such restraints will wreck competition or lead to corruption, because all human institutions are corrupt and all powerful people seek to eliminate competition. The best you can do is have a legal mechanism in place, regularly used, to punish people for being corrupt and for trying to eliminate competition at the general public's expense. However much outside-the-market intervention it takes to make that happen, it's still necessary intervention.

At the risk of getting another wall-of-text response, I'm going to address this.

There are different kinds of situations where only a few provides might exist in a market. On the one hand you have natural oligopolies and/or markets with high entry barriers. These are markets where it's possible to abuse power in the way you describe. On the other hand, when you have competitive markets and/or markets with low entry barriers it's much harder to do this (without harming yourself in the long run), even if you have high market share. In the latter case, if there is a provider who has a large share of the market, that's probably simply because people prefer his stuff. If there are shenanigans in such a scenario anyway, it's probably being done with the collusion of government, and not due to its absence, since the difference between the two situations is defined by the microeconomic structure of the production, not by market share.

*Actually, in the former scenario (high entry barriers and small-provider hostile economies of scale) you might have government helping to do bad things too. While microeconomics distinguishes a competitive market from a less competitive one, bad regulations can mimic the effects of economies of scale.

[K. A. Pital]

We're misunderstanding each other. Obviously it's more important to ensure minimal survival, but the GDP per capita in first and second world countries is very much greater than the minimum survival requirement for a human. Thus, only a small part of the overall GDP is needed to ensure such survival. It was not a statement on prioritization, but on scale. Incidentally, the long term concern is to maximize the production of survival-essential goods and services, so economic efficiency is actually important here too - in addition to a minimal level of allocation to each citizen.

Yeah, that is true. However, one could wonder whether general efficiency is required, or only sector-specific efficiency (i.e. maximum food produced w/ inputs). And yes, I understand that the industrialized world usually* has solved minimum survival tasks for itself.
* - with obvious exceptions in places under severe economic degradation in post-Soviet Central Asia

Ah, OK. But all luxuries are "stupid" in a sense. Do we really need Star Wars, Warhammer 40K models or MLP stuff? Probably not. But these things imply that people can exceed the minimum survival requirements, and afford to be silly, which is a hopeful thing, IMO. Should people be smarter about how they invest? Probably. But at the end of the day, economics is not about teaching people how to act or how to be. It can of course chart the means to such and end, as provided by moral philosophy (or sociology, perhaps).

Yeah. But luxuries become more stupid when minimum survival tasks have not been solved on a global scale, and when inequality is growing between the poor and the rich. It is tremendously idiotic that our mega-efficient food producing industry cannot supply the entire world with food at the same time as obesity becomes a huge problem in the First World.

When I speak of predatory pricing, I'm talking about practices where companies in markets with high entry costs or in the case of natural oligopolies* lower their prices or collude with others in the market to specifically remove rivals in a manner which is cost-ineffective for them individually. In other words, they invest some resources in creating conditions which replicate the effects of bad regulations, while not raising productive efficiency. In a competitive market, this is impossible, of course (except very temporarily in the form of promotional sales, and such). Of course, when this is attempted in natural oligopolies, it isn't a stable situation either, as members of the cartel can make more money in betraying it. But it causes damage, thus it is to be avoided. I acknowledge that there are numerous opponents of any intervention of this sort who would rely on the instability of cartels and inefficient monopolies to undermine such behavior, and if entry costs were low in all markets, I would probably be inclined to agree with them. But that's not always the case, unfortunately, so new competitive agents emerging to challenge inefficiency isn't always a given.

Heheh. I was kind of making that point - if all markets were perfectly competitive, sure, "competition itself" would discourage such behaviour. However, reality differs a lot. Relying on "instability of cartels" and "inefficiency of monopolies" means that you're waiting for the oligopoly or monopoly collapse on itself. But if it has enough resources to bankrupt or acquire any new challenger with potentially better offer, that day will simply never come. I oppose oligopolies from a left-wing point of view, in that they are power structures which derive power from the market, and however have little responsibility and feedback mechanisms (since their primary feedback - the market, is actually supporting their power, since they make good products). The oligopoly is not to be destroyed, but it has to have some constraining mechanisms of democratic influence from below. Otherwise the efficiency of Coca-Cola's productive machine won't be punished for sucking out freshwater in India. After all, Coke is a good product, and so hoping that people will "vote with their dollar" and punish Coke for bad acts is just pie in the sky. Same with many other large companies. Mind you that Coke is in a competitive market of drinks, hardly a monopolist, and the market is fairly competitive and entry costs are low. So it is not a natural monopoly, and it does not rely on entry barriers.

Depends on how you define "crazy". Market economies with proper rule of law tend to reward providers (of labour, capital or land *) in due proportion to the marginal market value of their contribution. Those who don't contribute aren't rewarded. I guess that's not terribly humanistic, but then, that's where welfare comes in.

Yeah, part of the problem is that sometimes observed behaviour of actual market economies defies marginalist theories about how it should behave. And yes, that is not terribly humanistic. That's like saying because agriculture is a very small sector, value-wise, compared to industry in industrialized nations, peasants should fuck off and be the poorest members of society Or applying the same to industrial workers if their share is less than that of the service industry.

OK, I guess that's fair enough too. But I don't see money dependent sectors as necessarily a bad thing, I guess that's where we misunderstood each other. Moreover, I'm skeptical of the future of economy without money (notably the internet is becoming more commercialized, though there's still a lot of free stuff around).

I'm not sure the Internet is becoming "more commercialized". Costs of accessing the Internet are rapidly going down and the volume of free information is growing at a staggering pace. Open source education is a booming sector - a decade ago the Internet was here, but to get MIT education materials from there for free? Crazy! Or stuff like Khan's Academy? Forget it, that was just not there. Internet had Amazon and e-trade shit like that a decade ago, but it did not have the enormous wealth of education info like it does today. I think the free propagation of valuable information will increase.

Yeah, though I was more thinking of additional criteria for evaluation; in other words, that if you judge the set of possible resource distributions according to criteria X, then you would fill the sample space S with a patchwork of optimal points O and suboptimal points P. Along any Pareto efficient curve, there would be some points in O and some in P. Shaking the system out of a Pareto-efficient point in P could permit the market to subsequently apply Pareto-efficient changes to move it to a different point in O, also on the Pareto-curve. The need for this assumes that you're right that it might be possible to find two Pareto-efficient solutions A and B, where one is "humanistic" and the other is not, and such that it's impossible to move the system from the one to the other with Pareto-efficient moves only.

It is of course preferrable to move from one Pareto state to another one without entering any sub-optimal points along the route. However, I find it highly unlikely Why, might you ask? Well, the nature of Pareto - everyone has all he can have and to change the state, you'll have to actually take from someone and give to another person. In general, real economy looks more like interest groups trying to push the scales one way or the other, change Pareto distribution to their own favor, not like a static Pareto-optimal situation where nobody loses anything and no distribution-changing transactions occur.

[Lord Zentei]

We're misunderstanding each other. Obviously it's more important to ensure minimal survival, but the GDP per capita in first and second world countries is very much greater than the minimum survival requirement for a human. Thus, only a small part of the overall GDP is needed to ensure such survival. It was not a statement on prioritization, but on scale. Incidentally, the long term concern is to maximize the production of survival-essential goods and services, so economic efficiency is actually important here too - in addition to a minimal level of allocation to each citizen.

Yeah, that is true. However, one could wonder whether general efficiency is required, or only sector-specific efficiency (i.e. maximum food produced w/ inputs). And yes, I understand that the industrialized world usually* has solved minimum survival tasks for itself.
* - with obvious exceptions in places under severe economic degradation in post-Soviet Central Asia

I'd say that general efficiency should be preferred - other things being equal - as once you have ensured survival, it helps to maximize general well-being. Foolish or not, luxury markets are tied to such. Of course, one should also take externalities (such as impact on environment) into consideration when assessing such optimization.

Ah, OK. But all luxuries are "stupid" in a sense. Do we really need Star Wars, Warhammer 40K models or MLP stuff? Probably not. But these things imply that people can exceed the minimum survival requirements, and afford to be silly, which is a hopeful thing, IMO. Should people be smarter about how they invest? Probably. But at the end of the day, economics is not about teaching people how to act or how to be. It can of course chart the means to such and end, as provided by moral philosophy (or sociology, perhaps).

Yeah. But luxuries become more stupid when minimum survival tasks have not been solved on a global scale, and when inequality is growing between the poor and the rich. It is tremendously idiotic that our mega-efficient food producing industry cannot supply the entire world with food at the same time as obesity becomes a huge problem in the First World.

Well, that's back to the point I made in the earlier thread. On a global scale, the economy isn't fully integrated yet. International barriers and regulations inhibit free flow of benefits from trade while rewarding select countries. Moreover, domestic policies and rule of law are often lacking in third world countries. Command economies and market economies alike would not be able to achieve good distribution in an environment like that, so that's a universal condition, until the third world countries develops internally. Fast growth leads to growing pains, of course, and often it feels like taking one step forward and two back, but...

When I speak of predatory pricing, I'm talking about practices where companies in markets with high entry costs or in the case of natural oligopolies* lower their prices or collude with others in the market to specifically remove rivals in a manner which is cost-ineffective for them individually. In other words, they invest some resources in creating conditions which replicate the effects of bad regulations, while not raising productive efficiency. In a competitive market, this is impossible, of course (except very temporarily in the form of promotional sales, and such). Of course, when this is attempted in natural oligopolies, it isn't a stable situation either, as members of the cartel can make more money in betraying it. But it causes damage, thus it is to be avoided. I acknowledge that there are numerous opponents of any intervention of this sort who would rely on the instability of cartels and inefficient monopolies to undermine such behavior, and if entry costs were low in all markets, I would probably be inclined to agree with them. But that's not always the case, unfortunately, so new competitive agents emerging to challenge inefficiency isn't always a given.

Heheh. I was kind of making that point - if all markets were perfectly competitive, sure, "competition itself" would discourage such behaviour. However, reality differs a lot. Relying on "instability of cartels" and "inefficiency of monopolies" means that you're waiting for the oligopoly or monopoly collapse on itself. But if it has enough resources to bankrupt or acquire any new challenger with potentially better offer, that day will simply never come. I oppose oligopolies from a left-wing point of view, in that they are power structures which derive power from the market, and however have little responsibility and feedback mechanisms (since their primary feedback - the market, is actually supporting their power, since they make good products). The oligopoly is not to be destroyed, but it has to have some constraining mechanisms of democratic influence from below. Otherwise the efficiency of Coca-Cola's productive machine won't be punished for sucking out freshwater in India. After all, Coke is a good product, and so hoping that people will "vote with their dollar" and punish Coke for bad acts is just pie in the sky. Same with many other large companies. Mind you that Coke is in a competitive market of drinks, hardly a monopolist, and the market is fairly competitive and entry costs are low. So it is not a natural monopoly, and it does not rely on entry barriers.

I'm not really going to debate how dastardly Coke is in such shenanigans, and how much of it is natural competition, though I understand the reason for a left-wing point of view holding to that. I'm not one to support waiting for all cartels to collapse in on themselves (which is why I'm probably "moderate right"), but my concerns would be first directed at markets with both economies of scale and high entry barriers (like the energy industry). Moreover, if cartels can collapse on their own, it's potentially a waste of government resources to go after too many targets at once. Other than that, we seem to disagree more on at what point to draw the line.

Depends on how you define "crazy". Market economies with proper rule of law tend to reward providers (of labour, capital or land *) in due proportion to the marginal market value of their contribution. Those who don't contribute aren't rewarded. I guess that's not terribly humanistic, but then, that's where welfare comes in.

Yeah, part of the problem is that sometimes observed behaviour of actual market economies defies marginalist theories about how it should behave. And yes, that is not terribly humanistic. That's like saying because agriculture is a very small sector, value-wise, compared to industry in industrialized nations, peasants should fuck off and be the poorest members of society Or applying the same to industrial workers if their share is less than that of the service industry.

Wait, what? No it doesn't. Marginal contribution is not the same thing as total contribution, any more than comparative advantage is the same thing as absolute advantage.

Yeah, though I was more thinking of additional criteria for evaluation; in other words, that if you judge the set of possible resource distributions according to criteria X, then you would fill the sample space S with a patchwork of optimal points O and suboptimal points P. Along any Pareto efficient curve, there would be some points in O and some in P. Shaking the system out of a Pareto-efficient point in P could permit the market to subsequently apply Pareto-efficient changes to move it to a different point in O, also on the Pareto-curve. The need for this assumes that you're right that it might be possible to find two Pareto-efficient solutions A and B, where one is "humanistic" and the other is not, and such that it's impossible to move the system from the one to the other with Pareto-efficient moves only.

It is of course preferrable to move from one Pareto state to another one without entering any sub-optimal points along the route. However, I find it highly unlikely Why, might you ask? Well, the nature of Pareto - everyone has all he can have and to change the state, you'll have to actually take from someone and give to another person. In general, real economy looks more like interest groups trying to push the scales one way or the other, change Pareto distribution to their own favor, not like a static Pareto-optimal situation where nobody loses anything and no distribution-changing transactions occur.

You have to reduce the overall benefit of the one person to violate the Pareto criterion. That's not the same as not taking anything away from him. For instance, if Mr A has two electric heaters and Mr B has two electric power generators, then obviously they both gain by exchanging one object each. Nonetheless, I don't reject in principle the idea that it may well be possible to envision a scenario where a set of Pareto-exchanges cannot move a system from some arbitrary Pareto condition A to another Pareto condition B. This is why I support welfare, after all. If that were actually possible, and it were also somehow possible to encourage the trend from non-humanistic to humanistic Pareto conditions by such means, then welfare would most likely have become obsolete.

[K. A. Pital]

Wait, what? No it doesn't. Marginal contribution is not the same thing as total contribution, any more than comparative advantage is the same thing as absolute advantage.

Oh, marginal contribution is not the same as total contribution, that is true. You just phrased it as "those who don't contribute are not rewarded", and I sort of went from there. As for IRL observations not falling in line with marginalist predictions, I think I already brought up an example or two in prior discussions, and quite probably with you. I don't feel any need to repeat them.

I'm not really going to debate how dastardly Coke is in such shenanigans, and how much of it is natural competition

It doesn't really matter, what matters is that people won't punish Coke for the act via the market. Just like Union Carbide wasn't punished for the Bhopal Disaster, but the market gave a real crap on Dow's shares when a fake spokesperson said Dow Chemicals will compensate the victims. Sometimes the market just can't punish bad acts. In case the product is good, boycotting it would require a lot of awareness. Volkswagen giving death lists to Brazil's dictatorship did not impact the quality of their cars. Only I would maybe feel morally enraged enough to stop short of buying one if I had the funds. Other people wound't even give two shits about it, and most probably they wouldn't even want to know.

Fast growth leads to growing pains, of course, and often it feels like taking one step forward and two back, but...

In case of advanced developed economies, I would actually say that growth par se is no longer a primary objective. Instead, they should focus on equality. Once you produce enough to ensure a good standard of living, you can't keep the inequality high, that is simply not justified.

[Lord Zentei]

Wait, what? No it doesn't. Marginal contribution is not the same thing as total contribution, any more than comparative advantage is the same thing as absolute advantage.

Oh, marginal contribution is not the same as total contribution, that is true. You just phrased it as "those who don't contribute are not rewarded", and I sort of went from there. As for IRL observations not falling in line with marginalist predictions, I think I already brought up an example or two in prior discussions, and quite probably with you. I don't feel any need to repeat them.

Fair enough, I meant marginal contribution, should have specified it. As for exceptions that can be brought up... they are, well, exceptional. But as you say we've covered it already.

I'm not really going to debate how dastardly Coke is in such shenanigans, and how much of it is natural competition

It doesn't really matter, what matters is that people won't punish Coke for the act via the market. Just like Union Carbide wasn't punished for the Bhopal Disaster, but the market gave a real crap on Dow's shares when a fake spokesperson said Dow Chemicals will compensate the victims. Sometimes the market just can't punish bad acts. In case the product is good, boycotting it would require a lot of awareness. Volkswagen giving death lists to Brazil's dictatorship did not impact the quality of their cars. Only I would maybe feel morally enraged enough to stop short of buying one if I had the funds. Other people wound't even give two shits about it, and most probably they wouldn't even want to know.

That's why rule of law is so vital. The third world's problems largely stem from a lack of such, particularly in cases such as the one you cite. Naturally, if you internationalize trade, you need to be able to prosecute such things too. For all that the the pro-corporation lobbies may object to the notion, neo-classical theory doesn't support the idea of unaccountability of that sort.

Fast growth leads to growing pains, of course, and often it feels like taking one step forward and two back, but...

In case of advanced developed economies, I would actually say that growth par se is no longer a primary objective. Instead, they should focus on equality. Once you produce enough to ensure a good standard of living, you can't keep the inequality high, that is simply not justified.

That's probably true to an extent; inequality is ridiculously high in much of the third world. But as for ways to achieve a reduction in that problem, we should be wary of methods that might have the side effect of causing the third world to fall further behind the first world in production. On a related note for improving conditions, see previous point.