Why Is Youth So Left-Wing?

[insurgent]

We make great partners, don't we luiz?

 

[luiz]

Reading this, and other posts in the last couple of pages, it is clear there is some confusion about what efficiency means, and what advocates of the free market system claim are its benefits.

Efficiency means maximising the output from a particular amount of inputs. In the context of takeovers, which was being talked about, this is a very very different concept from having the liquid funds available to carry out a takeover. Look at the experience in the late 1990s, when some demonstrably inefficient companies were able to raise vast sums and carry out takeovers, an example here in Britain was Marconi for example, who went on an orgy of aquisition but their operations were very inefficient.

And the reasons that companies make profits are not down solely to consumer satisfaction. Market power, available liquidity, etc. all play a huge role in determining the success or otherwise of the subject. To suggest that consumers effectively vote for the products they buy is to fundementally misunderstand the psychology involved in shopping and consumption, and the evidence available on people's attitudes towards spending money.

On that subject, one of the greatest fallacies of the famous right wing economist Milton Friedman was that he made no distinction between companies who's object was to maximise profits and the companies that actually did when he likened the market to a Darwinian survival of the fittest operation.

The (extremely mainstream) Oxford University professor Nickell (who now sits on the committee that decides UK interest rates), wrote a paper in the late 80s/early 90s, which demonstrated that in a 2-firm industry, and normal economics assumptions applying, if one firm was a revenue maximiser and one firm was a profit maximiser then the revenue maximiser would make bigger profits. Friedman was wrong to assume profit maximisers automatically make the biggest profits even in the idealised world of economics. Thus the firm that doesn't maximise profits is more likely to be able to execute a takeover!

Yet this (and other) fallacies get introduced into debates like this, as if they were universaly recognisable truths, rather than things to be debated over.

Market power comes from consumption. Even the avaiable liquidity comes from consumption, and of course decennt manegement.

The consumers have indeed all the power in their hands, since the sole purpose of production is consumption, and to maximise consumption one has to please the consumers.

Why would the consumers buy a product if they like another better and the other one is cheaper, like some suggested? It of course makes no sense at all.

I think focusing on maximising profit is the way to go to maximise profit.
A comparisson between Microsoft and Boeing comes to mind. Boeing has a revenue larger then the one of Microsoft, and yet the profit of Microsoft is far superior. In fact, more often then not, smaller more efficient companies have a larger profit then larger companies with massive revenues.

All in all, there's no reason other then pure opinion to trust Oxford professor Nickell over Chicago University professor and Nobel Prize winner Friedman.
Of course Friedman may be wrong, but he has proven countless times to be a brilliant economist, and I do not expect him to make silly mistakes.

 

[luiz]

We make great partners, don't we luiz?

You bet we do

 

[jack merchant]

Why would the consumers buy a product if they like another better and the other one is cheaper, like some suggested? It of course makes no sense at all.

That's because buying things is, contrary to traditional economic theory, not necessarily the act of a rational utility-maximizing individual in the way that economists understand it. Psychology can play an equal part in it, and its role is only recently beginning to be understood.

fact, more often then not, smaller more efficient companies have a larger profit then larger companies with massive revenues.

That's not the point ! If you want to blow your competitors away by agressive low pricing, you need a big revenue base. In a price war between a supermarket and the shop on the corner, who do you think will win ? And after the cornershop's gone out of business, the supermarket can go back to a profit-maximizing pricing policy.

All in all, there's no reason other then pure opinion to trust Oxford professor Nickell over Chicago University professor and Nobel Prize winner Friedman.
Of course Friedman may be wrong, but he has proven countless times to be a brilliant economist, and I do not expect him to make silly mistakes.

Credentials-flashing doesn't make for good arguments (Chicago doesn't mean you're the best economist in the world, it tends to mean you subscribe to a particular school of thought). And in fact, the Nobel in 2002 was given to two economists who pioneered research into the role of psychology in economic decision making, so there .
I think the Chicago School has a lot to offer, but it's not infallible, and neither is Friedman. In policy & theory making on this level you don't make silly little mistakes, you make big ones.

 

[Akka]

Wow, can't let this thread just a bit of time without seeing another page more 0_o

Anyways...

What is fair?
If a group of politicians write in some paper the definition of fairness what does that really mean?

Stop acting dumb, please. That's below you. If you have to end up pretending not understanding the principle of fairness, or pretending that the basic isn't common to most people (where do all the laws to protect people and render justice comes from ? Magical heavens ? Self-defense laws, laws against crooks, against exploitation, against everything we consider "unfair" ?), then it means you don't have good argument left and try to divert into a semantic war...

It certainly is not based on statistics. Statistics merely help us understand big pictures. Economy is purely ruled by human ambitions, it's a human science that use technical means, not a technical science that use humans.

Of course it's based on statistics. How do you think a speculator is able to make money ? It's by playing on huge amount of people and money flowing, and basing it on statistics. Demand and offer on a large scale (that is, on a scale where the average Joe can't graps or affect the economy) IS based on statistics...

Is this some joke?
They DON'T do it? In which planet do you live?
From where I'm standing, the decision of Bush to invade Iraq costed severall dozens of billions of dollars to the americans, and destroyed many lives in Iraq. What Putin does in Chechnia ruins the local economy and the people's lives, just like what the CCP does with the muslim minorities.
I ask you again, who has the real power to ruin lifes, and who is doing it right now[/i]?

I could point that Iraq war was probably more about making big deals for some companies than anything else.
But anyway, you didn't get what I meant. What I meant is that the economies, and big companies, have a PERMANENT effect on everyone. They shape the world, and the situations we all are on.
Governement have the potential power to also affect the economy in a huge way, but they usually don't do it, because it require a concerted effort and an acceptation from the population (which denies many immoral/unethical methods), while corporations are, on the contrary, constantly using their influence and power on the economy, and they don't have any accountability to morality or fairness.

The only thing the consumers must know to make the Market work properly is which good pleases them more(is cheapest with most quality).
Child labour is a matter for the government to regulate, the consumers shouldn't have to worry about it.
If certain country uses child/slave labour, then it's up for the government of the importer nation to set an embargo.

And if child labour exists, it's because it's beneficial for the companies to use it. As such, there is incentive for them to keep it running (by bribing/threatening/favoring/bullying the government of a poor country not to vote laws against it, for example). That is the real principle fo free market : use whatever means you can as long as its beneficital to you. Might makes right, in other words.

So if the governmet enforces the Law what is so wrong with the Market?
My point was that a free Market doésn't put anyone above the Law.

What's wrong is that the principle of the market push to gain whatever you can whatever the means. It means that it doesn't care for illegality if you can get away with it, morality, ethics or fairness.
So, saying that it's self-regulating is a total absurdity. It produces wealth, and that's it. It neither even the odds between competing companies, distribute wealth or anything. To do that, you have to heavily regulate it. Which is my point.

The consumers and shareholders make them accountable for the results, and the Government makes them accountable for the means. In a civilised country you can't force children to work.

Not just "civilized". Also "having the means to afford to resist economical pressure for exploitation". See the part about economical incentive for child labor above.

We reward the ones that please us more, it's hard to debate this reality. The only competition that is crushed is the inefficcient one, that was not pleasing the consumers enough.

I can only repeat myself : that's pure, total wishful thinking, just like a communist saying that the only communist state not working is the badly implemented one.
Competition can be crushed simply because the opposition is bigger and has the money to buy it out, bankrupt it or crush it under its weight. THAT is reality.

If society is not rational as you said yourself, then what makes the planning bodies accountable to society any more rational then the Market?

Because planning bodies are accountable to the wishes of the people, while the Market isn't. Seems quite obvious.

The reality is the government doesn't have nearly the ammount of neccesary information to check the work of the market. No individual or group has.

The market, by the Price Mechanism, share and synchronise an ammount of information that is way beyond the capacity of any government or planning body.

And ?
The market don't share or synchronise anything. It's simply a big arena where the opponent are thrown and the fittest survive. It works well because it simply let the companies sort their stuff themselves. Which is good to create wealth, but not to distribute it with fairness.

 

[insurgent]

Stop acting dumb, please. That's below you. If you have to end up pretending not understanding the principle of fairness, or pretending that the basic isn't common to most people (where do all the laws to protect people and render justice comes from ? Magical heavens ? Self-defense laws, laws against crooks, against exploitation, against everything we consider "unfair" ?), then it means you don't have good argument left and try to divert into a semantic war...

If you're so certain that everybody shares your definition of fairness, why don't you define it instead of avoiding the issue?

 

[luiz]

That's because buying things is, contrary to traditional economic theory, not necessarily the act of a rational utility-maximizing individual in the way that economists understand it. Psychology can play an equal part in it, and its role is only recently beginning to be understood.

When resources are scarse, people naturally try to optimise them. Since most people in the world have to deal with tight budgets, I do believe that buying is an act utility-maximising.
Even assuming that people don't buy rationally, a big question remains: who knows better what is best for each individual: the individual himself, or a distant mass of bureaucrats?

That's not the point ! If you want to blow your competitors away by agressive low pricing, you need a big revenue base. In a price war between a supermarket and the shop on the corner, who do you think will win ? And after the cornershop's gone out of business, the supermarket can go back to a profit-maximizing pricing policy.

If the owner of the shop on the corner is smart enough, he can survive. All he has to do is offer a different kind of service. There are plenty of small shops, even in western countries.
That said, even if the all small shops ought to go bankrupt, what I doubt, there will always be competition among supermarkets. Personally I don't shop in the supermarket closer to my home. I go shopping in Copacabana, where there is one supermarket with much better prices. So even big-business don't have a "blank-check".

Credentials-flashing doesn't make for good arguments (Chicago doesn't mean you're the best economist in the world, it tends to mean you subscribe to a particular school of thought). And in fact, the Nobel in 2002 was given to two economists who pioneered research into the role of psychology in economic decision making, so there .
I think the Chicago School has a lot to offer, but it's not infallible, and neither is Friedman. In policy & theory making on this level you don't make silly little mistakes, you make big ones.

My credential-fleshing only had the purpose to state that we can't dismiss Friedman's arguments so quickly. As I said in the original pose, he might well be wrong.
Personally I don't subscribe to the Chicago School(not entirely), but I think they have done some superb works.

I do believe that Psychology has a big impact on finances, in fact it's part of the curriculum of my course(Industrial Engineering has a discipline called "Business Psychology")

 

[Akka]

If you're so certain that everybody shares your definition of fairness, why don't you define it instead of avoiding the issue?

then it means you don't have good argument left and try to divert into a semantic war...

I'm not interested into splitting hair and endless pointless debate on if it's fair or not to let someone starve while another get richer by exploiting him.
If you're interested in avoiding the subject by derailing it on sideway semantic bickering, you can. But you'll do without me, thanks.

 

[insurgent]

Thank you for proving my point.

So you see it's not an absolute as you said, it's not as clear as when somebody kills or mugs someone else. Morals are indeed individual. And that's what you're talking about.
Saying that you want the state to enforce fairness is just unserious because fairness is very debatable - what you should say is that you want government to enforce what you think is fair.
But that doesn't sound as appealing, does it now?

 

[crystal]

Right, so you want some popular majority to dictate the choices of the minority. That is collectivism, democratic or not. And government is not always right. This has been discussed in this thread.

If it's collectivism, then prove us why it is a bad doctrine. You can't just dismiss someone's arguments saying he's a collectivist.

Seriously, that's rubbish.

Maybe Laissez-Faire capitalism is also rubbish?

 

[insurgent]

If it's collectivism, then prove us why it is a bad doctrine. You can't just dismiss someone's arguments saying he's a collectivist.

Well, read some of my posts. That is the basic point of most what I've written. Besides, I wasn't dismissing them by saying they were collectivist. I was just referring to Mise as a collectivist, which he is. It's only an insult if you think it is.

Maybe Laissez-Faire capitalism is also rubbish?

You obviously think so. I don't.

What I called rubbish was his talk about the collective conscience of the people being pooled in the government. That government decisions represent the rational decisions of all the people.

 

[Evertonian]

So the commercial pleases them...
The decision of what is good and what isn't should be up to the consumers, not you or the government.

Then

It might seem most logical to buy from the most pleasing company, but this is not nearly always possible.

That abusive company can have more money, more political clout - it can use that to undermine, out-advertise, and takeover one that is better/faster/sexier.

How did it get to have more money, or clout wasn't even necessarily through better competition - it could simply have inherited the money, it could have ripped enough people off

Then

You seem to want to discuss irrelevant semantics. If a company that does not please the consumers wins in competition, it is as a result of the conscious choice of the consumer, and thus this company must in some way or another satisfy the consumer better. Like it or not.

Then

My point is that I HAVE OBSERVED a number of efficient companies whose customer records indicates high satisfaction overtaken by another company that was, literally, abusive to it's customers, and actually provided a more expensive and lower quality product.

Seriously, you seem very confused. In free and legal competition, the company that satisfies the consumer wins. That is the only relevant measure of efficiency. Whether you consider it "fair competition" or not.

Look at the experience in the late 1990s, when some demonstrably inefficient companies were able to raise vast sums and carry out takeovers, an example here in Britain was Marconi for example, who went on an orgy of aquisition but their operations were very inefficient.

And I might add they didn't satisfy there consumers even by insurgent and luiz's measure, since they weren't raising the money for the takeovers by sales to consumers, they were raising capital by convincing stupid greedy bankers that a move to dot com industries would make them a fortune

insurgent and luiz, I respect your tenacity in this debate but your stance on this issue is just becoming untenable

 

[jack merchant]

When resources are scarse, people naturally try to optimise them. Since most people in the world have to deal with tight budgets, I do believe that buying is an act utility-maximising.

Well, scarcity is the basic underpinning of economics theory, certainly, but that doesn't explain why people choose brand A over brand B even when brand B can be demonstrated to be superior/ more durable/ otherwise of higher quality. The concept of utility here is useless because we can't measure it (in its practical application, it's a qualitative rather than quantitative concept), and just because someone has consumed something doesn't mean it was a rational act.

Even assuming that people don't buy rationally, a big question remains: who knows better what is best for each individual: the individual himself, or a distant mass of bureaucrats?

That depends on which level you're talking about. However, it is clear that the fact that you cannot assume people are utility-maximizing individuals with rational expectations and (another common assumption) perfect foresight has all sorts of implications for policy, and I'm frankly more interested in those than in debating libertarianism .

If the owner of the shop on the corner is smart enough, he can survive. All he has to do is offer a different kind of service. There are plenty of small shops, even in western countries.

I'm sorry, but that's just assertion.

That said, even if the all small shops ought to go bankrupt, what I doubt, there will always be competition among supermarkets. Personally I don't shop in the supermarket closer to my home. I go shopping in Copacabana, where there is one supermarket with much better prices. So even big-business don't have a "blank-check".

But that's a different argument ! Sure, there will still be competition between these stores who are large enough to survive, but my example showed how a revenue-maximizing firm could outcompete a profit-maximizing one, or rather, a firm with large revenues could outcompete a small one. Now if this were theory, the small firm would be able to get a bank loan and hire a ton of people to compete as long as its long-term prospects were sound, but that's not how it works in practice.

My credential-fleshing only had the purpose to state that we can't dismiss Friedman's arguments so quickly. As I said in the original pose, he might well be wrong.
Personally I don't subscribe to the Chicago School(not entirely), but I think they have done some superb works.

So they have ! However, Friedman was state-of-the art in the 1970s, and insights have progressed since then. No economic theory is set in stone; in fact, the nice thing about economics is there isn't even an absolute truth in there.

 

[insurgent]

And I might add they didn't satisfy there consumers even by insurgent and luiz's measure, since they weren't raising the money for the takeovers by sales to consumers, they were raising capital by convincing stupid greedy bankers that a move to dot com industries would make them a fortune

And what happens if the companies don't satisfy the consumers? What happens if they don't sell any products or can't get someone to see their commercials?

 

[Evertonian]

Marconi failed and went into administration taking with it the good companies it had taken over with the money the bankers gave them.

 

[Akka]

Thank you for proving my point.

So you see it's not an absolute as you said, it's not as clear as when somebody kills or mugs someone else. Morals are indeed individual. And that's what you're talking about.
Saying that you want the state to enforce fairness is just unserious because fairness is very debatable - what you should say is that you want government to enforce what you think is fair.
But that doesn't sound as appealing, does it now?

No. Proved mine. There is countless laws that have been passed about fairness on major points (murders, thefts, sexual abuse) and on much less clear point (exploitation, psychological abuse, crookery...).
In fact, I already pointed it :

(where do all the laws to protect people and render justice comes from ? Magical heavens ? Self-defense laws, laws against crooks, against exploitation, against everything we consider "unfair" ?)

Which prove :
1) That a governement, not only CAN regulate about fairness, but it's even one of its most basic raison d'être.
2) That we both know and understand this, but you still pretend not to and ask for semantic definitions, bringind to the infamous splitting hair contest which lead to nothing.

 

[insurgent]

Marconi failed and went into administration taking with it the good companies it had taken over with the money the bankers gave them.

Right. And what kind of companies do you find on the market today? Companies that make a profit, right?

No. Proved mine. There is countless laws that have been passed about fairness on major points (murders, thefts, sexual abuse) and on much less clear point (exploitation, psychological abuse, crookery...).
In fact, I already pointed it.

We both know you're not talking about murders, psychological abuse, or even crookery. You're talking fair competition and business regulations. You still haven't defined what is fair and what is not.

In the style of Evertonian ( ), let's see how this fairness issue came into play:

It's like saying that mob rules is a just trial by society, as it reflect the sum of the judging action of everyone.
Economy is much more than the "people". It's a system of its own, with its own rules, that completely escape the grasp of the common man, and where the decisions of a selected few can outweight entire countries.

The market rewards information, the people who have information have more power. Call it mob rule if you will, but fact is it will make the best decisions because it has more information.
And if all society is part of the mob making the rule, then certainly it's a trial by society, even if an unfair one. But individual rights exist exactly for that case.

If it's unfair, then it's worth nothing as a trial.
And it's not only information, it's also the weight you have in the market.

Now, obviously you are talking about the unfairness of people/capitalists dominating the economy. Because of inequality in information and capital. Now, I don't see you being able to provide some universally agreeable moral code about what is fair when it comes to equality on the market.

Murder is wrong. Stealing is wrong. Is lowering prices to muscle out competition unfair? Of course not. Is working for your own profit unfair? Of course not. Is exercising your property rights over an amount of money to buy and thus influence the market wrong? Of course not. Is reading more than someone else to have more knowledge and thus gain more profit, dominating the market wrong? Of course not. Would it be fair to redistribute the means of production to gain what you consider a "fair" society? Of course not.

 

[Evertonian]

Right. And what kind of companies do you find on the market today? Companies that make a profit, right?

But I can't buy the products of the companies that got taken over by Marconi

 

[Akka]

Insurgent : I'll be all right to discuss about moral implication in another thread. Morality is something big for me, and I'm ready to have a good debate about it.

But for this thread, which is about why young are leftists, and the further explanation (because they are more idealistic, and right-wing with its market mentality is opposite to idealism of fairness), the point is that the market is simply unfair, favour the big fishes over small ones, and is simply might makes right. So, at the risk of repeating myself, I WILL NOT enter the splitting-hair-what-is-really-fair contest with the "we both understand each other but I'll pretend not to for the sake of the argument". Ok to do it in a purely theorical/philosophical context, not here where it will only drown the debate.

The point here is : the market require, to work by the book, that everybody act rationnally and has full knowledge of the situation, and the reality, the plain cold facts, are that people don't necessarily act rationnally (at least not fully), and that they never have full insight of the situation.

Which mean : the dreamed free market that works and bring wealth to everybody and is self-regulated, DOESN'T EXIST. It's a dream, like communism, but at least communism has an ideal, while the free market has only utilitarianism and inhumane machinery working without conscience as objectives.

No wonder than people having a bit of dreams and ideals are rather leftists when they're young...

 

[insurgent]

Evertonian: What did they produce? And I'm sure, if there's a demand for the products in question, you won't have to wait long till someone else makes it for ya.

Akka: Ah, I see that discussion actually stemmed from something on topic. I thought we had long ago drifted far away from the original topic... My bad.
But I do think that the market mentality is fair and moral. And I do think that rightists can be idealists. For us it's all about protecting individual rights. That's an ideal too, isn't it? I'm certainly an idealist.
But I would concede that youthful idealism is an important deciding factor when it comes to youth leftism. Simply because this is the predominant morality of modern society. Living for your own sake in freedom and seeking profit is sneered upon today, and the morality that all should somehow be made equal according to some faction's vision of the perfect society does probably appeal much to the youth. Leftist ideals are easier to promote, they are simpler and have a wider appeal.

But believe me, even though I am young and a liberal, I am an idealist. I envision a much better society that is fundamentally different from ours. I used to be conservative, but I've drifted away from collectivism, and I believe very much in the ideals of freedom.
These ideas and concepts are desirable in themselves without further justification, and that is an idealist view in my book.