
There’s No Escaping Competition: People Need a Way to Decide Who Gets What - nkurz
http://fee.org/freeman/there-s-no-escaping-competition
======
asgard1024
This article reminds me of theologians who use argument from ignorance to
justify their own beliefs in one true god (basically an attempt to impose some
absolute moral framework on society).

OK, there is always competition, no problem here. But there are nonetheless
many other systems than market decision-making, and there is no clear winner
from the moral point of view. Just one example can be democratic voting about
economic allocation. I would love to see him show that this is not socially
optimal, without showing the same about the market system. (To simplify
things, we can consider market system to be one where you can accumulate
votes.)

In fact, we don't even know if "socially optimal" solution exists or is
unique!

Also, a minor point. It's been shown that price signals work only in the
environment with perfect information and rational actors, but then the price
is superfluous! This well-known counterargument is not addressed at all.

Someone put it nicely here on HN, once economics stopped calling itself
_political economics_ , it became much more ideological.

P.S. Downvoters, please, leave a comment. I will happily have a discussion
with you.

~~~
danbruc
Not one of the downvoters, but a voting scheme seems totally unrealistic to
me. Just think about the sheer number of economic decisions occurring every
day. Going to store A instead of store B. Picking brand A over brand B.
Walking two kilometers instead of calling a taxi. Picking your holiday
destination. Researching suppliers for components for a new product.
Cancelling a no longer profitable product. Doing market research. Changing the
price of a product. And the list goes on forever.

How could you ever faithfully reconcile all those decisions into a manageable
number of votes? If you stranded with five people on a remote island you could
probably pull this off, but in any realistic setting this seems totally out of
reach to me.

I am totally not happy with capitalism as we have it, but the thing that
actually works really well are markets. Surely markets can fail if there are
monopolies, if actors collude, if there are externalities not reflected by the
price and so on and this can lead to socially suboptimal or plain bad outcomes
but often they work really well. That is why I am against laissez-faire
economics because well working markets are not something that necessarily
arises out of the blue, sometimes it requires intervention.

~~~
lujim
Replacing markets with central planners requires that you find planners that
are

1) 100% impervious to corruption 2) Able to predict the weather or any other
complex chaotic system with 100% accuracy. 3) Never sleep or take vacations.
4) Completely concerned with the needs of others and completely uninterested
in their own needs (no family or friends)

Once we can get 10 or 15 of those people, central planning would finally work
better than imperfect markets.

~~~
coldtea
> _Replacing markets with central planners requires that you find planners
> that are 1) 100% impervious to corruption_

Not necessary, since markets have been proved to be quite prone to corruption
themselves.

> _2) Able to predict the weather or any other complex chaotic system with
> 100% accuracy._

Not necessary, they can just take quick actions. Markets can't predict the
weather either.

> _3) Never sleep or take vacations._

Markets actually sleep too -- e.g. stock exchanges close. And shops,
especially pre-internet, close, all at the same time, around 8-9pm (with small
exceptions like your local diner).

And who said 24/7 planning is required in the first place? The whole idea
about planning is that you do it in advance of some bigger or smaller period
of time. Again, this "requirement" presupposes what it has to prove is needed.

> _4) Completely concerned with the needs of others and completely
> uninterested in their own needs (no family or friends)_

Not necessary, since the market has proven that it's doesn't result in any
100% perfect arrangement regarding needs either.

The needs of a huge percentage are ignored (to the point that they can even
die homeless and sick), 0.1% controls 80% of the wealth, and even individuals
are taught and conditioned to make bad decisions all the time for their own
needs, destroying themselves in the process (e.g. having easy credit pushed
upon them, etc).

All those arguments presume the market is 100% perfect, or even if they don't
presume that, they still ask that the "planning system" should be 100% perfect
(instead of just better than the market which would be a more logical demand).

~~~
lucio
I believe central planning was already tested in the USSR, and in Mao's China.

~~~
coldtea
One version of central planning and in quite specific initial conditions not
quite favorable -- and with dictatorship like power structure to boot. And of
course without modern information propagation, like with the internet, etc.

There are many more versions of central planning, including in the US in
various segments, western Europe etc, that have done quite well for
themselves.

Besides, the market has also been tested, many more times, and I wouldn't call
it any great success either.

~~~
ArkyBeagle
I don't claim to know the answer, but it may be that the ISIS phenomenon is
what happens when you have that sort of revolution with more networking. Oh
boy. Beheading videos.

Markets are fine. The things they do just become furniture we don't notice any
more. Most of the "evil" things capitalists get accused of are actually just
not very capitalist. There are handful of Rand-influenced firms out there (
Cypress Semi comes to mind ) and they generally just aren't noteworthy.

I would not defend Rand on her best day, but she at least had a mechanism that
can be used - with modification - as an operating principle - don't trade
greater value for lesser. Don't sell your soul.

I kind of think that if we could vote our way to nirvana we'd have done it by
now.

~~~
coldtea
> _I don 't claim to know the answer, but it may be that the ISIS phenomenon
> is what happens when you have that sort of revolution with more networking.
> Oh boy. Beheading videos._

I don't think ISIS has anything to do with that -- and they don't particularly
thrive on modern networking either, they're just a crude group who seized
power in a power vacuum in an isolated area. They could have happened 30 or
100 years ago. Of course they use some modern means, but that's not what
defines them.

Besides, the ISIS guys are mostly savages in sophistication (maybe not some
heads, but the ground people sure).

But to put their actions in contrast there had been tons of beheadings,
torture and mass murder from colonial powers from UK to France up to the late
1950s -- and those countries were supposedly the pinnacle of civilization. And
not some isolated incidents either: widespread, matter of policy, and official
arranged and covered up when needed.

This is not to defend the former -- just to disgrace the latter the same.

> _Markets are fine. The things they do just become furniture we don 't notice
> any more. Most of the "evil" things capitalists get accused of are actually
> just not very capitalist._

The same can be said (and has been said) for "really existing socialism" like
central planning -- that most of the "evil" things communists get accused of
are actually just not very communist.

The thing is, what's really "capitalist" is better determined by widespread
actual observation on how "really existing" capitalist societies behave --
including the horrors of slavery, colonialism, segregation, military-
industrial complex, wars and such -- and not by some idealistic pure
"capitalism".

Likewise for the communist version -- though, as I said for that we have far
fewer samples, and from worse starting conditions.

Even so, compared to where countries like "capitalist" Nigeria is now for
example, "socialist" Czechoslovakia was paradise. And then there's the various
degrees of socialism that done very well in both Western Europe and the nordic
countries and the US itself (New Deal).

~~~
ArkyBeagle
I dunno - maybe I'm wrong, but I got the vibe from all the reports of the Arab
Spring that it was largely built on social media for coordination. Well, the
Arab Spring was a precursor to ISIS. Throw in de-Baathification policies in
Iraq, and...

Slavery, colonialism and to an extent militarism are hallmarks of
_mercantilism_. And the Military Industrial Complex in the US was because
people like Eisenhower saw the huge drawdowns after WWI and because now the US
was left as some sort of world leader. I don't think this was mostly sought -
it happened _to_ us more than it was consciously chosen. And we were terrible
at it, and some say we still are. But we had our moments.

I won't pooh-pooh Nordic "socialism". It works for them. The version Canada
has seems reasonable as well.These places are poorer than the US as things are
measured, but it's not like they're awful places to live.

What I'm doing is to an extent a "no true Scotsman" mess, but if you read Adam
Smith, that's what you're left with. It's just that the ethical challenges of
being transparent are difficult. People regress to wanting something more akin
to Mercantilism, power by fiat.

------
amelius
This doesn't seem to hold for big corporations, who will just buy out the
competition when they feel like it.

And that is a fundamental problem with the economy: it is not about who offers
the best products (and who has the best "genes" for doing so), but it is about
who has the deepest pockets. The company with the most cash can buy the best
advertisements. And that company can afford even to buy marketshare in a
market in which it is not even active (and crush the competition there).

~~~
lujim
Maybe in the short run, but think about some (at the time) tiny companies like
Apple, Google, Amazon that nabbed ideas or market share from sleeping giants
like Xerox, Yahoo, or IBM. Sure in 1978, 2000, or 2003 I would have rather
owned stocks in the second list respectively, but those small nibble guys in
the first list were the winners by 2015.

~~~
amelius
I'm not sure. Companies are much more protective now. For instance, imagine
that IBM, back in the 80s, locked up its PC ecosystem the way Apple is doing
now. We would probably not have Linux now (and no BSD either), and no Google
or Apple.

------
em3rgent0rdr
excellent points. Indeed, the socialists don't get rid of competition, but
simply cause it to reappear in other less-productive manners.

------
known
Your Beliefs Don't Make You A Better Person, Your Behavior Does.

------
littletimmy
This is not an either/or proposition.

We can definitely have capitalism to decide who gets what many washing
machines, or laptops and so on. We do not need capitalism to decide that
everyone gets enough food, shelter, healthcare, education etc.

Have socialism for the basics, and have capitalism for affluence. That way you
keep efficiency without being inhumane.

~~~
lujim
What if I want filet, the shelter on the ocean, the yearly checkup at the mayo
clinic, and the Harvard education? Are you ok taking the ramen noodles, drab
inner city apartment, va clinic, and community college if the buraeucratic
equivalent of the rude lady at the dmv says that's what she considers fair?

~~~
littletimmy
Buy it. We can agree on basics, which is a yearly stipend of $30,000 from the
state. Then you can work to buy what you need over and above that.

~~~
lujim
Where does your 30k come from? Do we decrease spending from other areas,
increase taxes, increase debt, increase GDP, or print money? The answer is
usually decrease defense spending, but that's not a free lunch either. You
kill a lot of middle class jobs and consumer spending noticeably drops in some
regions. The same spending that supports something like 2/3 of the GDP.

Basic income is a zero sum game, it redistributes without creating
productivity. Now if you gave everyone that wants to attempt to start a small
business 30k to survive the first 3-5 years now your talking about something
that could drive GDP.

~~~
jaimeyap
Basic income is absolutely _not_ zero sum!

The people who would benefit from it the most would have the freedom to invest
their time and money raising their children, bettering themselves, or taking
risks and starting businesses.

Also, money repeatedly changing hands itself generates tax revenue, as well as
personal wealth. Again, not zero sum. Giving these people purchasing power can
also spur innovation from businesses who would offer them services that
otherwise wouldn't be easily monetizeable.

As more jobs get replaced with automation, basic income will become
increasingly attractive.

~~~
lujim
I think raising your children and bettering yourself is a great thing, but it
doesn't tangibly generate revenue. Starting a business might if it's
successful, but there are small business loans. Money changing hands (money
velocity) is one of the ingredients to inflation along with high demand for
goods and services. Detaching the expectation of some level of productivity
from income is a recipe for big inflation

~~~
jaimeyap
The inflation argument is a little misleading. We have been printing money to
offset historically low and increasingly declining money velocity. The money
velocity is declining precisely because wealth is being aggregated in silos
and not being spent. Money velocity is essential to a healthy economy. And
quite frankly, we could do with a little inflation to encourage spending and
not hoarding by the uber wealthy.

Thinking that properly raising children and investing in bettering oneself
doesn't tangibly generate revenue is a bit short sighted.

In 15 years when machines are cheaper and better at driving, manufacturing,
and doing most unskilled labor (or even some knowledge worker type jobs).
Would it have been a bad economic investment to have all the kids growing up
today have parents with the financial freedom to go back to school or focus on
giving their kids a proper childhood (so they can grow up and be productive
citizens)?

Do you genuinely think that we are better off as a society sticking to "you
have to work to live" when the machines are outperforming an entire class of
people at their jobs? Not everyone can or wants to be an engineer. At some
point our populations will stabilize, and technology will make it so that we
have enough food and basic essentials for everyone.

We are all in it together.

~~~
lujim
>The inflation argument is a little misleading. We have been printing money to
offset historically low and increasingly declining money velocity. The money
velocity is declining precisely because wealth is being aggregated in silos
and not being spent. Money velocity is essential to a healthy economy. And
quite frankly, we could do with a little inflation to encourage spending and
not hoarding by the uber wealthy.

We have been printing money for quantitative easing, but it isn't released
into circulation. The Fed sets short term interest rates directly, but once
those hit zero, the only alternative is QE. QE uses Fed cash (printed if you
will) to buy US Treasuries thereby increasing the demand for them and driving
down long term interest rates. The goal is to avoid the contraction of credit
and the deleveraging of the US economy. If that much cash was just dumped into
circulation you would see inflation on a large scale.

As for the rest of it I'm going on opinion which you and I have no chance of
agreeing on (which isn't the end of the world, everyone has their own
opinion). Yes I think child care and self improvement are great in the long
run, but it can be tricky to measure exactly how much they contribute directly
to GDP (quantitative measurement). Yes I also think work to live is better for
society. I think work helps people stay out of trouble and even when I was
making next to nothing it felt good to make my own way.

------
6d0debc071
Poor approximations of heaven will suffice for poor approximations of infinite
greed.

~~~
ArkyBeagle
Greed is at best an incoherent standard. For it to be bad, it has to be
pathological.

~~~
6d0debc071
I don't really disagree.

For the strongest form of the author's argument; that no other system will
suffice, ever; it has to be pathological. If I offered you a nice existence
with entertaining leisure activities, would your response honestly be to spend
the next ten years of your life lobbying for more of the pie? That's a lot of
effort to expend - probably without any significant payoff since the return on
happiness in terms of extra money drops off - when you could be enjoying
yourself instead.

You don't need heaven if people aren't that greedy, (and in my experience - UK
based - most people aren't.) Some finite set of resource will suffice.

~~~
ArkyBeagle
It's reasonably clear that the people who do go beyond are either just lucky
or they just like that process more than enjoying the fruits of their labor.

Charles Koch was interviewed recently, and he apparently believes strongly
that creating consumer surplus is more moral than not working.

------
vcdimension
The article presumes that peoples purchasing choices are made rationally and
without coercion, but in a capitalist society the implicit competition between
consumers and advertisers can subvert rational decision making.

Every day we are bombarded by advertising designed to seduce us into spending
more money on products which we don't need. For example, is it really worth
splashing out on a new power drill that will probably only be used to drill a
few holes? Will a 2 week luxury cruise holiday bring me more enjoyment than 40
nights out with friends?

Websites such as which.co.uk, uswitch.com and moneysavingexpert.com help
consumers make better decisions, but they don't address financial decision
making in the wider sense of personal utility. It would be nice to see some
websites/apps to help with this, and I think it would be an interesting and
challenging task...

