Comment by HWR_14
3 years ago
Theoretically, the societal benefit of lettings randos buy and sell contracts is that there is (a) better price discovery and (b) better liquidity. There are probably theoretical counterarguments to both of those points, but it's hard to see alternative systems that provide either or both those features.
At a basic level, obviously thee needs to be someone assuming the price risk from the farmers, and those people will obviously need to be compensated.
I buy that there's some benefit, but I don't buy that it's significant. And I don't see any reason why I should believe this provides a net benefit to society. Sure it saves the original parties some money, but then a bunch of unrelated parties come in and siphoning money from the existing parties. Why should I believe this is net-benefiting society?
Your viewpoint here is kinda weird?
The more something trades, the more likely we will have the right price. When things don't trade as much, we don't actually know what that thing is worth.
This concept is a benefit to society as many things are interconnected and correlated, so the more accurate we can quickly find the current price (and expected future price) the more we can evaluate value.
(Also, they aren't "siphoning money" really it's "value" because the contract isn't actually money)
Just because you've improved the accuracy of a price for something, that doesn't mean whatever you're doing to achieve this is a net benefit to society, right? Surely the idea that this logic doesn't follow isn't weird?
Is the idea that society gets a net benefit from price distortions like minimum wage, subsidies, taxes, etc. also "weird"? These also make it hard to discover the "right price" for goods, therefore it's... weird to have them?
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If it "saves the original parties some money" than how is it "unrelated parties... siphoning money from the existing parties"?
But what's the negative to society? You seem really bothered about this and it's not clear why.