Guys, Aphex said we should only talk about his premises right now. Let's not get into public goods and externalities and Hong Kong and whatnot just yet, per Aphex's demands, so that this discussion can be organized, instead of a bunch of random arguments. Unless, of course, Aphex changes his mind.
Market Anarchy: A Proposition
- Thread starter Aphex_Twin
- Start date
I would like to participate but I'm not sure where this is going. I've studied a fair on behavioral finance and the theory that we act rationally, especially with regards to markets, is not true.
For instance.
Relating to loss aversion, respondents were divided into two groups. The first group was asked to choose between a 100 percent chance of gaining $240 versus a 25 percent chance to gain $1,000 coupled with a 75 percent chance to gain nothing. More than three-fourths of the group went for the sure gain. (Of those opting for a sure gain: All respondents, 77 percent; Doctors, 80 percent; Attorneys, 73 percent; CPAs, 77 percent.)
The second group's choices were: a sure loss of $240 versus a 25 percent chance to lose $1,000 coupled with a 75 percent chance to lose nothing. More than two-thirds of this group opted for the latter, the chance to lose nothing. (Of those opting to lose nothing: All respondents, 68 percent; Doctors, 69 percent; Attorneys, 61 percent; CPAs, 67 percent.)
For instance.
Relating to loss aversion, respondents were divided into two groups. The first group was asked to choose between a 100 percent chance of gaining $240 versus a 25 percent chance to gain $1,000 coupled with a 75 percent chance to gain nothing. More than three-fourths of the group went for the sure gain. (Of those opting for a sure gain: All respondents, 77 percent; Doctors, 80 percent; Attorneys, 73 percent; CPAs, 77 percent.)
The second group's choices were: a sure loss of $240 versus a 25 percent chance to lose $1,000 coupled with a 75 percent chance to lose nothing. More than two-thirds of this group opted for the latter, the chance to lose nothing. (Of those opting to lose nothing: All respondents, 68 percent; Doctors, 69 percent; Attorneys, 61 percent; CPAs, 67 percent.)
Pontiuth Pilate
Republican Jesus!
All teenagers are, to a degree, selfish psychotic sociopaths.
The catch is, most people outgrow this phase of their life. The ones that don't, become Randroids and radical libertarians.
The explication of all political and economic action as the interplay of "individual interests" is transparently wrong and childish. There's not really much more to it. It's the deliberate donning of mental blinders, ones as extensive as a Communist's. There's not really one can do to "counter" an argument that EVERYTHING THAT HAS EVER HAPPENED has been an expression of class struggle except to say, take off the goggles.
So, by analogy: take off the goggles. Put down the Fountainhead. Stop reading Friedman or whoever it is that libertarians get off to these days.
The catch is, most people outgrow this phase of their life. The ones that don't, become Randroids and radical libertarians.
The explication of all political and economic action as the interplay of "individual interests" is transparently wrong and childish. There's not really much more to it. It's the deliberate donning of mental blinders, ones as extensive as a Communist's. There's not really one can do to "counter" an argument that EVERYTHING THAT HAS EVER HAPPENED has been an expression of class struggle except to say, take off the goggles.
So, by analogy: take off the goggles. Put down the Fountainhead. Stop reading Friedman or whoever it is that libertarians get off to these days.
Chandrasekhar
Determined
All teenagers are, to a degree, idealistic psychotic delusionals.
The catch is, most people outgrow this phase of their life. The ones that don't, become Communists and radical socialists.
The explication of all political and economic action as driving toward the goal of some "common good" is transparently wrong and childish. There's not really much more to it. It's the deliberate donning of mental blinders, ones as extensive as a Communist's. There's not really one can do to "counter" an argument that EVERYTHING THAT HAS EVER HAPPENED has been an expression of class struggle except to say, take off the goggles.
So, by analogy: take off the goggles. Put down the Fountainhead. Stop reading Zinn or whoever it is that socialists get off to these days.
The catch is, most people outgrow this phase of their life. The ones that don't, become Communists and radical socialists.
The explication of all political and economic action as driving toward the goal of some "common good" is transparently wrong and childish. There's not really much more to it. It's the deliberate donning of mental blinders, ones as extensive as a Communist's. There's not really one can do to "counter" an argument that EVERYTHING THAT HAS EVER HAPPENED has been an expression of class struggle except to say, take off the goggles.
So, by analogy: take off the goggles. Put down the Fountainhead. Stop reading Zinn or whoever it is that socialists get off to these days.
Pontiuth Pilate
Republican Jesus!
You think I'm a socialist? 
Chandrasekhar
Determined
You think I'm a socialist?
Naw, I just picked the most commonly recognized alternative to socialism to show that that sort of statement really doesn't prove anything. Though now you've got me curious; what exactly are you?
As a side note, I'm not that much of a libertarian. I recognize that a purely free market tends to consume itself, but I tend to advocate something more libertarian than most people do.
My opinion on Aphex's points: (trying to keep the thread on subject)
Concerning assumption 1: (next post is about 2)
First, I'm an ~75% libertarian.
I see the matters raised in the OP through the analogy of Physics. In Physics, everything eventually boils down to an interaction of separate sub-atomic particles. So that only individual particles can act and influence other particles. If you want to describe some system in the most pure, exact fashion, you must describe each and every particle in it and the interaction between all these particles and all the other particles in the universe.
As anyone who understands even a bit of physics knows, no one ever does that. Not only that doing so is impossible, it's also incredibly inefficient. If I have to describe the movement and properties of a falling brick, all I need is it's height, original speed and data on air resistance. The result will be within one trillionth of a percent from the correct one.
The same goes for people. If you want to describe society in the most pure and exact fashion, you have to look on individuals, their wants and their actions. But groups do exist, and they do have similar interests and often they do act in unison. So I'll change your claim to:
"All collective action, to be perfectly understood, must be reduced to actions of individuals."
But as in Physics, perfect understanding is not necessary in most situations. When a group of workers is on strike, I don't have to spend hours talking with each and every one of them to understand what they want, a ten minutes talk with their representative is usually enough.
Concerning assumption 1: (next post is about 2)
First, I'm an ~75% libertarian.
I see the matters raised in the OP through the analogy of Physics. In Physics, everything eventually boils down to an interaction of separate sub-atomic particles. So that only individual particles can act and influence other particles. If you want to describe some system in the most pure, exact fashion, you must describe each and every particle in it and the interaction between all these particles and all the other particles in the universe.
As anyone who understands even a bit of physics knows, no one ever does that. Not only that doing so is impossible, it's also incredibly inefficient. If I have to describe the movement and properties of a falling brick, all I need is it's height, original speed and data on air resistance. The result will be within one trillionth of a percent from the correct one.
The same goes for people. If you want to describe society in the most pure and exact fashion, you have to look on individuals, their wants and their actions. But groups do exist, and they do have similar interests and often they do act in unison. So I'll change your claim to:
"All collective action, to be perfectly understood, must be reduced to actions of individuals."
But as in Physics, perfect understanding is not necessary in most situations. When a group of workers is on strike, I don't have to spend hours talking with each and every one of them to understand what they want, a ten minutes talk with their representative is usually enough.
And as for assumption 2:
That's an unfair dichotomy. People do usually reason and make sense, but there are clear and identifiable situations in which they don't. For example, even the most radical anarchist will agree that violence is almost always a pure loss for everyone. And all people, except idiots who watched too much Fight Club, if told that later today they'll have to fight someone, will really try to find a way of it.
But let's look on what's going on every Friday night in the night clubs in Israel, and I'm bringing this example because I'm most familiar with it. People who are not looking for violence and who usually reason and make sense, after a few drinks and with lots of girls around which the inevitable rise in machismo, end up fighting with each other. And so, almost every weekend it's one dead, five stabbed and a few more wounded.
In this case and many others(Jericho's externalities), we know with 100% certainty that people do not reason and do not make sense.
That's an unfair dichotomy. People do usually reason and make sense, but there are clear and identifiable situations in which they don't. For example, even the most radical anarchist will agree that violence is almost always a pure loss for everyone. And all people, except idiots who watched too much Fight Club, if told that later today they'll have to fight someone, will really try to find a way of it.
But let's look on what's going on every Friday night in the night clubs in Israel, and I'm bringing this example because I'm most familiar with it. People who are not looking for violence and who usually reason and make sense, after a few drinks and with lots of girls around which the inevitable rise in machismo, end up fighting with each other. And so, almost every weekend it's one dead, five stabbed and a few more wounded.
In this case and many others(Jericho's externalities), we know with 100% certainty that people do not reason and do not make sense.
Ayatollah So
the spoof'll set you free
In a society based on an ideology of voluntary interaction, property rights as we know and -
love - them would not exist.3) definition of 'the common good': anything that a number of people can see is both in their own interests and easier to achieve while working in a group.
Choose your group so that no-one who loses out is in it and the people can safely ignore this thread.
Nailed it!
JerichoHill
Bedrock of Knowledge
Uh Whomp, Buddy, what about the cost of risk? Risk preference? What that means is that the shadow price of risk amongst in each? Factoring that in makes it rational, doesn't it?
JerichoHill
Bedrock of Knowledge
What are you talking about? Why are you labeling something as childish without pointing out its flaws, clearly? You're engaging in name-calling.
Why put down Friedman? Sure seems he got a few things right. Why not believe in the supremacy of the individual? What's wrong with positive freedom (a Friedman concept)? Is micro-economics somehow flawed?
I don't, maybe some substance to the slander would help?
JerichoHill
Bedrock of Knowledge
People DO APPEAR to act rationally. The problem is that, to a fully informed observer, their action appears irrational. That's because no one has full information on something to make a perfectly rational, unbiased, decision. Rational? Always. Unbiased? Hardly ever. Bias results from a lack of perfect information.
Ok. How does that differ from what I said?
JerichoHill
Bedrock of Knowledge
Just a little more microscopic in its scope. Same thing, really.
I like to use big words. Economist, ya know?
I like to use big words. Economist, ya know?
When you're talking about intangibles (or money) people act irrationally.
How is it rational that two groups of similar background were more than willing to accept the high probability of high loss ($1000) versus small loss ($240) but unwilling to breakeven even though there was an opportunity to make $1000? It's because investors put different weights on gain and loss. The vast majority of people are more distressed by losses than happy with equivalent gains. People hate admitting mistakes.
They also tend to use the rearview mirror to determine the future (not rational). When growth stocks (Russell 1000 Growth) were rolling money was piling into the area in '98-00. When prices declined they were huge sellers at the bottom in 2002. Just the opposite behavior they should have.
When you buy products at the store do you pay a premium price or look for a discount? Rationally, you buy them when the are the cheapest however when it comes to personal capital people do the opposite because of their emotional irrational thinking. Instead of investing like Robin Hood they invest like lemming. IE How would you explain that tulipmania was rational thinking?
Another trait that fails humans to act rationally is too much confidence. Most people will tell you about their winners but not their losers. It's why day traders have a 80% failure rate.
History_Buff
Deity
- Joined
- Aug 12, 2001
- Messages
- 6,529
Well, I think you should start with how such a society would maintain property rights, or somehow do without them (but this leads us into public goods, and communistic kind of place). At some point, it becomes in my best interest to rob my neighbor, before he robs me.
It's another free rider problem. The whole society would be better off if nobody robbed anyone else. But since people can't think in collectives in this society, there is no guarantee that my neighbors won't attempt to rob me, and so it is in my best interest to rob them first. Classic game of Civ really
Pontiuth Pilate
Republican Jesus!
Actually imo you proved that communism is just as irrational and blinkered as Objectivism.
I'm teh "welfare capitalist." Whatever that means.
I don't know, maybe you've dealt with fewer Randroids than I have? Or maybe you're just more patient.
In Megatrends 2000, John Naisbitt coined your philosophy "free market socialism". One of the 10 dominant trends through the balance of the 90's.
JerichoHill
Bedrock of Knowledge
I think what I am talking about is how people value risk. In different situations, risk is valued differently. We can't price risk, and yes, one's risk aversion / love is an intangible and therefor can't be readily quantified (though we do try with shadow pricing.
Aphex_Twin
Evergreen
- Joined
- Sep 7, 2002
- Messages
- 7,474
Thank you all for your good feedback.
I will use the third post to add definitions as we move along.
Of course, this model is far from perfect, but it is perfectible.
To WillJ, Whomp and Eli:
Even with patterns of irrationality (i.e. inconsistent risk taking or matters like religion), the dominant behavior must be rational so long the individual can recognize himself, his world and the causality that connects him to it.
As a matter of fact, it doesn't make much sense to even engage in conversation with someone we don't deem responsive to arguments. At least the people participating in this thread satisfy the criteria.
We also can't engage in conversation with "society" or abstract groups, only individual people.
As for the labor union example, the representative must carry the recognition of all members to speak in all their names. If there is one dissenting member, the leader cannot speak in his name.
Yes, but we are talking about human beings here. We can go into animal rights, but maybe in another thread.WillJ said:
I will use the third post to add definitions as we move along.
By "connected" I mean the capacity to understand reality and to manipulate it, recognizing and following the laws of causality. An individual is capable of constructing an analogue, a model of the world in his mind. Model that includes not just his exterior world, but also his own person. So, intelligence, awareness of the self and the environment are the key ideas.
Of course, this model is far from perfect, but it is perfectible.
To WillJ, Whomp and Eli:
Even with patterns of irrationality (i.e. inconsistent risk taking or matters like religion), the dominant behavior must be rational so long the individual can recognize himself, his world and the causality that connects him to it.
As a matter of fact, it doesn't make much sense to even engage in conversation with someone we don't deem responsive to arguments. At least the people participating in this thread satisfy the criteria.
We also can't engage in conversation with "society" or abstract groups, only individual people.
I'm not saying that we can't use principles that apply to groups to describe society, just that we can't ascribe consciousness, action (and implicitly, responsibility) to groups, in and of themselves.
As for the labor union example, the representative must carry the recognition of all members to speak in all their names. If there is one dissenting member, the leader cannot speak in his name.
