the ghost of iceberg past

I just found an old post of mine-- okay it's not that old, but old enough that I didn't recognize the authorship as my own until I reached the end of the post.

"...Governments shouldn't attempt to regulate markets because they cannot. To the extent that they try to, they exaberate the problem on hand, and must seek to correct their earlier correction.

Secondarily, governments shouldn't attempt to "correct" markets, because to say a market has failed is a normative statement, and cannot be proven. In fact, the market is never "right" nor "wrong", as all a market consists of is billions of individuals trading property rights, and who is to say what two or more consenting adults agree to is incorrect?

Last, it's actually a joke to think that government "regulate" a market, because only markets can regulate themselves. The "regulation" that the government deems to provide is a poor substitute, and in fact in most times the regulatory bodies are captured by the special interests themselves, in a process known as regulatory capture. That's why our energy and telecommunication sector lags behind the world, and the biggest firms within that field are typically those that were granted monopolies by the same regulatory crew. And to think you call that "regulation".

As for suggesting that Wal-Mart must take their business elsewhere is to say that government has the right to dictate when, where and which private individuals are permitted to exchange goods. They are not "free" to take their business anywhere, as the word free implies that they have an un-interfered choice. Otherwise it is like saying that a person being mugged is "free" to choose his money or his life.

As for empirical observations, they are invalid as far as economic theory is concerned, since it is impossible to control for every variable. Economic theory can only be deduced from a axiomatic, a priori logic. To the extent that your observational data differs from theory, you must either admit that your data is incomplete or simply wrong."

think different

A Gizmodo commenter with the handle OMG-PONIES has a lot to say on the subject of 'consumerism' when it comes to Apple's iPhone. Not having the questionable benefit of a formal education in economics, I'm quite curious to learn if the opinions expressed are what exemplifies the contents of a mainstream education in the dismal science.

"That's not "highway robbery"; it's a sound price point. If the price was egregiously high, people would not buy it because it would be too much of a sacrifice. If the price was too low, it would lose its cachet as an aspirational good and people would not buy it. [Veblen's status goods?]

Compare it to the Freakonomics example of Magnolia Bakery in the West Village. Magnolia sells cupcakes for a couple bucks a pop. They're decent cupcakes, but each one only costs a quarter to make. They were featured in an episode of "Sex & The City", were written up in the New York times, and mentioned in a popular SNL short. As a result, at any given time, there is a line out the door for Magnolia cupcakes.

Logic says that Magnolia can raise the price even higher because there are people willing to wait 1/2 an hour for a cupcake at that price. Theoretically, there is excess demand. However, by raising the price, fewer people will be willing to wait in line. The line adds to the cachet of the product. If they lowered the price, the cupcake would become a bargain and lose its cachet. It would not be a distinctive product.

It's about finding a balance. The buyer should feel a bit of sting in the wallet to convince him/her that s/he is getting value for the money. Too much and it becomes too painful. People shouldn't worry about their rent payment to buy the iPhone; let them charge the cost and pay it off over 10 years time. By the same token, you don't want every schmo to be able to get one because then the iPhone loses its distinction.

Consumerism isn't driven by a desire to conform; it's driven by a desire to be different."

It kind of reminds me of the pointless argument of whether human action is spurred because of the actors' desire to improve his situation, or his desire to remove uneasiness as much as possible. Either way, we know action is purposely driven, and the science of economics, cannot render a valid scientific opinion as to what constitutes the psychological factors behind any action.

As such, the unscientific topic of 'Consumerism' can only be said to represent the fulmination of the collectivist creed of hubris, ostensibly lending an opponent of freedom a scientific soapbox from which he launches a diatribe against other people doing what they believe serves their best interests.

FWIW, he also thinks that "The lead proponent of free-market theory is the Chicago School of Business, which believes in absolutely no controls on the market and advocates, to a large extent, an abolition of consumer protections."

'Nuf said.

capitalism, misdefined

A couple of days ago, I commented on a post at lowercase liberty in regards to R.A.W. and his knowledge of economics as I understood from his writings.

I then realized that my initial comment was harshly imprecise; while R.A.W. could have been knowledgeable in economic theory (although I'm convinced he wasn't), he certainly was sloppy in confusing normative ethics prescriptions with economic systems.

Please witness this one egregious abuse:

"When Playboy fired him, Shea endured terrible anxiety about keeping his house, and dashed off a few novel outlines while looking for another job. He sold his first novel before finding a job and never stopped writing again. I still treasure his comment on why the Bunny Warren cast him out. "I worked hard and was loyal to the company for ten years," he wrote. "I guess that deserves some punishment." I treasure that as the best comment I have ever heard about capitalist ethics."

Erggh!!! I'm certainly not sympathetic to the "bosses are evil" definition of capitalism, and to say what social behaviors are prescribed by capitalism is bunkum.

As far as I know, capitalism is a description of economic system in which individual rights and ergo, property rights are respected, and while some may seem to have better bargaining power, at the end of the day, its the little guy, the consumer who is unforgiving, disloyal, tough to please and is always punishing those soon-to-be non-producers who aren't serving their desires adequately. So no hard feelings dude, its not personal.

Inigo Montoya's timeless words are thus suitable for this misdefintion of capitalism -- "You keep using that word. I do not think it means what you think it means."