September 08, 2003
Enjelani Overflow 2
[The following is a continuation of a conversation that started in this post over at The Last Embassy. The conversation has gotten too unwildy to be contained in a simple post, so I'm migrating some of it over here.]
A response to beefeater's claim that local monopolies merely constitute "market failure".
beefeater - "Your grocery example falls squarely within the first category [editor's note: market failure/inefficiency, as opposed to the second category which is a violation of non-interference]: It is a market failure caused by high transaction costs (one needs a car to shop effectively).] Um, no. The grocery example is not an example of high transaction costs. A high transaction cost would be something like sales tax, where some money is leaving the buyer's pocket but not going into the seller's pocket. Basically, some third party is getting a cut in each transaction. No such thing is happening in the grocery case.
What is going on is a high barrier to entry into the market itself. So high, in fact, that it is insurmountable for the poor; thus making it a local monoply for the poor. This barrier is not mere "market inefficiency". This barrier, a local monoply supported by a flawed Capitalism built on an imperfect market, 1) prevents a willing buyer and a willing seller from conducting their transaction, 2) "eliminates alternatives", and 3) is human-made (and thus in the same class as socialism, which you acknowledge as being a third party capable of violating non-interference). Thus, the grocery example should fall under your definition of interference.
- wink [September 8, 2003 01:56 AM]beefeater says:
On any particular day, John could take a bus to Richville, but it is costly in terms of time. John could take a taxi there, but it is costly in terms of money. A bunch of bananas is cheaper in Richville than it is in D'ohtown, but it ends up more expensive once you add the cost of getting there. John buys his bananas locally at a higher price, because, all costs considered, it is cheaper that way. As classic an illustration of transaction costs as I can imagine.
Your line of reasoning in the second paragraph (and elsewhere, occasionally) seems to be this: Non-interference is a human-made rule; it results in certain things not happening that interference could have made happen; therefore non-interference is interference. This is sophistry. Most people will agree, I believe, that the concept of non-interference is not as meaningless as you make it sound.
wink says:
Sigh. I'm not trying to claim that non-interference is interference. Sorry if my arguments ever went in that direction. I'll see if I can't clarify what I'm trying to say.
My line of reasoning is intended to be something along the lines of: Market realities (e.g. Local Monopolies) are human-made; These Market Realities selectively prevent willing buyers from buying from willing sellers; Thus these Market Realities constitute interference.
See...I'm not trying to define non-interference as interference. I'm just trying to show that our current Market Reality constitutes interference. Ther reason I went into the whole "natural vs human-made" thing is that you seemed to be saying that Market Principles, and by extension Market Realities, were natural and thus not capable of interference.
Your defense has typically been along the lines of: Market Principles are the definition of non-interference; Market Realities are close enough to Market Principles (they only add inefficienies, but they don't violate non-interference); Therefore, there is nothing wrong with our Market Realities. They may be inefficient or unfortunate, but not at all wrong.
I would be tempted to agree with you except that what you call "inefficiency" (and what I claim is interference) consistently only hits one group of people and never hits another (e.g. selective differential pricing). If the "inefficiency" hit everybody, or even if it hit people at random, I woupd probably accept it as being merely unfortunate. But that fact that it selectively and systematically hits one group (in this case, the poor) indicates to me that something more sinister than mere "inefficiency" is going on.
Now Market Principles might not favor one group over another, but our current implementation of it does. That implementation is definitely human-made, and I would argue that it favors one group over another. That bias that has been (most likely unintentionally) built into the system is what I consider to be interference.
The bias is subtle, or at least far more subtle than the biases built into (by its very design), say, socialism or slavery, but I think that it is still present. I'm just looking for ways to purge the system of those biases.
(The cure may be worse than the disease, in which case we should not implement the cure. But I'd still like to identify both the disease and the cure.)
says:
You summarized my argument almost exactly right: I would only clarify that Market Realities are mostly a consequence of (rather than "close enough to") Market Principles.
But the rest of your post is puzzling. First, something that is not interference does not become interference, or vice versa, simply because it hits one group of people and not another.
Second, if our implementation departs from Market Principles in a way that favors some over others, I will share your indignation. But if it follows Market Principles and in so doing puts some people at a disadvantage, that's a very different story. Your examples so far have all been of the second kind. In these cases, I would welcome an adjustment only if it still follows Market Principles, that is to say, if the adjustment is non-interfering (does not help Bob at Mary's expense).