Comment by NikolaNovak
2 months ago
But... They're not wrong. That IS the market. Unrestricted, gloriously free market with its historically predictable outcomes - yay!
That's not where the interesting discussion is. The interesting discussion is with the notion that free unregulated markets are universally good and will naturally lead to positive outcomes because... I don't know, I'm personally not religious, but somebody here will help me :-).
Commodities used to be proper free markets. Many suppliers and many buyers of a product that was the same regardless of the supplier.
This lead to low prices and/or differentiation with new products.
Most of these markets were too good, so in general we now have a few big companies buying up the lion share of the supply so they can set the price regardless. For example soy, just to name one
Sorry, when you say "gloriously free market", do you mean whatever it takes EU, helicopter money (or, rewinding a decade, Greenspan put) US, or factory of the world China? :)
My point is that it's not a real market economy if the risk premium -- and in China's case, the exchange rate -- is rigged. And it has been, since the 90s.
EDIT: For clarity, I'm agreeing with you, since you were being facetious.
What about even earlier? Like the petrodollar?
Absolutely! -- and we could play this game for a long time ;)
The right way of looking at it is, there was tiny little interlude of something vaguely approaching the free market -- back when Volcker was in charge.
> That's not where the interesting discussion is. The interesting discussion is with the notion that free unregulated markets are universally good and will naturally lead to positive outcomes because...
The textbook desirable outcome is that competitive markets minimize suppliers'surplus which is good for consumers.
Not that this doesn't mean unregulated markets. Monopolies and oligopolies acting like a monopoly are textbook examples of pathological markets where suppliers can maximize their surplus.
I think pretty much everyone would agree that the current situation is a failure of regulation not over regulation. Regulator and legislation have been constantly weakened in the name of international competitiveness since Reagan.
Where are these unregulated markets? Are you trading with your neighbor? If so, good, the more of that the better.
An example of unregulated market is where I come to your house and put a gun to your head and in exchange for not pulling the trigger you give me your various items of value.
That's one form of trading with your neighbor.
While you are technically correct, you are neglecting that it would a be a bad idea, because in such a market I would likely answer the door with a shotgun or I would have an agreement with my other neighbor to shoot you if you come to my door brandishing.
This is actually also how global diplomacy works. Either have big guns or big friends.
If you're relying on threats of violence to make your trades then you've become the regulator.
I think you have gone in the end of the spectrum, in a sense that even a state law's are being broken, we are talking about rules in the market itself.
An unrelated market is an oxymoron. You could come to my house and put a gun to my head, but that's not a consensual trade. That's just thuggery; the point of a market is that both sides benefit from trade.
For markets to exist, property rights also need to be respected.
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Edit: upvoted because it's true
But these markets are only "free" if you ignore the net $5.5 trillion the Fed has printed post GFC.
https://fred.stlouisfed.org/series/WALCL
Don't forget the Republican policy of starve the beast that includes Republicans happily putting the US into un-sustainable debt as a matter of policy, hoping to break the government so badly that Republicans can then enforce unpopular policy they can't get any other way.
See this is why we can't have cheap tinfoil.
What they probably mean is that it is not a fair market, that there is no balance in purchasing power, pushing small scale buyers away while supply slowly catches up (or doesn't)
I'm not disagreeing with you, but I have not frequently heard the phrase "fair market" (as opposed to a far more limited and specific term "fair market value", where "fair" I believe applies to "value" and not "market") and would be interested in hearing more of its definition and criteria.
Trivially, I would assume proponents of "free market" and "fair market" are a tiny if not zero Venn diagram, and that terms are at least somewhat opposing, but will withhold my judgement :-).
Oh I made it up on the spot, actually. It is just something to complain about.