Subject: Re: In defense of the market
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Sun, 14 May 2000 17:28:55 +0900 (JST)

>>>>> "Ian" == Ian Lance Taylor <ian@airs.com> writes:

    Ian> In a country like Sweden, with very high tax rates, the
    Ian> market is less efficient, and there is arguably less wealth,
    Ian> and money is more evenly distributed across the population
    Ian> than it is in the U.S.  That is, the gap between the
    Ian> wealthiest citizens and the poorest is smaller.  It's smaller
    Ian> on both sides, in fact; the poor in Sweden are richer than
    Ian> the poor in the U.S., and the rich in Sweden are poorer than
    Ian> the rich in the U.S.

And in Sweden there is no race issue, nor immigration, etc.  It would
be nice if we could do Sweden, but look at the botch Japan has made of
it with less than 3% minorities (and tax rates not much higher than
the U.S.)  I don't think Sweden is a feasible model for the U.S.,
whose politicians can't even agree that a boy belongs with his father,
at least if he's of the wrong nationality.

    Ian> It's plausible that an efficient market, regulated to prevent
    Ian> the development of monopoly control, creates the most wealth.
    Ian> What's not clear is whether that is what society should
    Ian> optimize for.

What's even less clear is what the alternative optimand is.  ;-)  You
certainly aren't going to find much agreement across poor just folks
and rich greens.  What we can say, though, is that wealth is the
closest approximation to freedom that you can represent in a `long
long int'.

    Ian> And there are of course considerations beyond bin-packing,
    Ian> like very long-term resource management, which the efficient
    Ian> market is not particularly good at.

That's unfair; the (competitive) market has never been tried.  Even in
the U.S. you have Strategic Petroleum Reserves, Microelectronics and
Computing Consortia, and Desert Storm when things seem to be getting
away from the government's preferred path.

More seriously, it's only in the last few decades that we have started
to get a handle on how to apply market mechanisms to the kind of
problems that arise in a world whose economy grows at more than 1% a
year, which is a phenomenon at most 250 years old.  In fact, the
problems of long-term resource management have been successfully dealt
with in the market, if undemocratically and with great pain---I'm
thinking of the Enclosure Movement in Britain.

The problem is figuring out how to get the market techniques which
probably (admittedly, it's not 100% certain that they are the best,
but they are surely the leading candidate now) will be used applied in
a democratic way (and that means restraining both unrepresentative
"Big Business" and the even less representative NGOs whose power flows
from the mouth of a T1).

    Ian> I personally think
    Ian> people tend to severely discount the value of resources to
    Ian> future generations and thus to seriously underprice
    Ian> irreplaceable resources.  Future generations are notoriously
    Ian> short on present day cash, and few people are willing to wait
    Ian> a hundred years to get paid.

Malthus is long dead and the world has no global shortage of food yet,
only local ones.  Betting against technology so far has been a better
way to lose money than playing roulette.

As for "people tend", it only takes one George Soros to be willing to
bet a few billions on a sure thing to get the arbitrage mechanism
working.  If the market "seriously underpriced" the future value, you
wouldn't have to wait a hundred years to make billions on the
arbitrage.

I have a lot of sympathy for greenery and for the poor---it's just
that so far history has shown that the best thing for both in the long
run is freedom, which almost certainly means more wealth as a corollary.

-- 
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