[ExI] Greed + Incompetence + A Belief in Market Efficiency = Disaster

painlord2k at libero.it painlord2k at libero.it
Thu Jan 29 22:55:45 UTC 2009

Il 29/01/2009 19.10, Stefano Vaj ha scritto:
> On Thu, Jan 29, 2009 at 6:34 PM, Damien Broderick<thespike at satx.rr.com>  wrote:
>> Isn't the idea not that markets are perfect but that they work better, more
>> often, than other available methods such as top-down regulation?

> Markets are certainly not "perfect" even from a theoretical point of
> view, e.g., in the sense that they fluctuate, they are exposed to
> statistical drifts, they are "granular" rather than "continuous", etc.

Market are not perfect because they are run by human beings.
Like governments.
But market are adaptable and the loop is very short, so the negative 
feedback is able to function better. People doing bad choices pay for 
them so they learn to don't do them again. The same is for good choices.

With the government it is the other way around.
The loop is much more larger, so the consequences of the choices are 
felt later, is more difficult to understand the causes and it is often 
easy to do the easy thing instead of the right thing.

> But as for other non-falsifiable theories, after a fashion they are
> always "efficient" by definition in pure market terms, as their
> behaviour can always be described (after the fact, of course) as
> representing the unavoidable market response to a given scenario.

As told before, market are not perfect. But they consistently work 
better than governments. History show this.
If we look at the "stimulus" package for the US economy it is easy to 
detect pork, pork and more pork.

> What you say is that irrespective of such mythology markets may well
> be considered as, e.g., a useful computing and management tool for
> empirical purposes in certain scenarios. I think this is probably
> true, but this should be assessed on case-by-case basis IMHO.

Markets are what coordinates demand to sell and demand to buy.
When the government interfere with these the two start to decoupling.
When the decoupling become clear, there is a market correction and the 
government try to counter it because it go against their main, short 
term, interests.

My bet is that the "stimulus" will not stimulate anything apart 
inflation, government spending and government jobs.


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