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About Kosmin

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  1. Kosmin

    15,000 pound cheaper than next door

    Firstly, the expectation that they will advertise the one next door for £15k cheaper. Secondly, I don't like PDAs, especially when EAs are involved!
  2. What do you think he meant by "in many other places?" Given the final part of the sentence ("led by an invisible hand to promote an end which was no part of his intention") do you agree that the subjectivist or spontaneous-order interpretation of the invisible hand (when individuals try to be selfish in market activity, their participation leads to co-ordination) makes sense? I agree it's surprising that it only appeared once! But I don't think it follows that Smith didn't envisage an invisible hand (i.e. selfishness in producing/buying/selling, price signals, market forces) performing a co-ordinating role.
  3. The only person I've heard make this argument is Noam Chomsky. I think it's a misinterpretation. Smith wrote: "he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." Smith wrote "as in many other cases" so I think he didn't assume the invisible hand only applies in cases where people have a "home bias." If we just focus on the last part ("led by an invisible hand to promote an end which was no part of his intention") I see why subsequent writers utilised the concept of the invisible hand when arguing that the market system reconciles the public with private interest. But others argued this before (Mandeville's Fables of the Bees or, Private Vices, Public Benefits) and since (notably subjectivists like the Austrian and Virginia Schools. They often use the term spontaneous order instead anyway).
  4. In a real workplace you normally have a well-defined objective and you know how that fits into the simple objective (maximise profit) of the corporation. In politics there isn't an overall defined objective (we can say public good or something, but that doesn't help) and furthermore representing the interests of your constituents or voters (either what you think they want, or what you think is in their best interests) doesn't necessarily feed into the public good anyway (maybe what my constituents want is in opposition to what your constituents want). The utopian vision is that politicians would set politics aside after the referendum. Remain MPs would stop represented Remain voters and accept that the referendum result was more important whether Remain was in anyone's interest. Given the narrowness of the Leave victory, the fact that no party can win a majority and the disagreements on how to deliver Brexit (is no deal a problem? Can we get a better deal by playing hard-ball? Should we prioritise doing what Leavers want? Or should we prioritise what will be least disruptive/damaging?) I don't think politicians could do a better job. What do voters think? Are they happy with their MP? In particular are Leave voters happy? Millions of Leave voters voted for Labour. Why? Why didn't they pay attention to May who said this would go a lot easier if she had a big majority? I assume they thought Labour's domestic policy agenda was as important as Brexit. I approve of this. I wouldn't give them food though, or water!
  5. I think so. Most foreigners tell me they can't believe the level of trust here. A Greek friend walked passed a car with the engine left running whilst the owner was in the house and said "you wouldn't do that in Greece. It would be stolen." A Kenyan friend was surprised at how we vote here without showing ID. Maybe we're not as good as some countries and maybe there is an urban/rural difference as well.
  6. Which one-parameter solutions have failed? (In reality. I don't dispute that the theoretical demonstrations. I just don't see their application to reality)
  7. The traditional usage of invisible hand is that markets create signals and people respond to them. There is a shortage of some product (perhaps it's harder to produce, e.g. crop failure, or demand increases because of immigration), so it sells quickly. Vendors realise their sales won't decrease if they increase their prices, so they do so. They also realise they could sell more, so they increase their orders or production. New vendors spring up. Production increases and prices fall back towards where they were initially. And vice versa when demand falls. You have to try really hard not to see this. I'm sure you've observed changing patterns of demand and economic activity for various goods and services. Walras, Pareto, Arrow, Debreu etc. tried to develop a mathematical model to see whether all markets could be in equilibrium simultaneously. Their models are so restrictive that it doesn't really matter. The same way people don't think the problem with democracies are Arrow's impossibility theorems.
  8. This is the argument for markets not being stable. Yet the economy still functions. Democracies do not function perfectly. You mostly have to be rich (particularly in the USA) and well-connected (Oxbridge, woe betide someone who wants to be anti-Zionist). Democracies fail like markets fail (i.e. not really).
  9. If we apply this reasoning to alternatives, we'll get really depressed really quickly! We can't have democracy, because impossibility theorems have demonstrated that it's impossible to aggregate voter preferences. We can't have economists trying to correct for market failures (see Public Choice). We can't have monarchy, oligarchy, dictatorships, because these either exist for the benefit of a small number, or end up being corrupted so that happens. So there is no good alternative. Democracy, markets and alternatives are all bad. But they do not fail completely. So we have some combination of them.
  10. I don't think this is strictly true. We probably already had rudimentary power structures before people started trading, which would imply we never had complete freedom, and so we need lost it. But if we did ever had complete freedom and trading existed without a state, then it suggests a state isn't required. As I've said before, it's not my vision. I'm saying we don't know the extent to which markets are required, or whether they can exist without other forms of organisation. I've been quite strongly influenced by Geoffrey Hodgson, who came up with the impurity principle (he says no pure economic system can exist - neither pure markets, nor pure central planning). It's plausible, but I don't think there's an argument for it. Note that there are non-market forms of economic organisation outside of the government (families and corporations* are examples). The impurity principle could still be true without a government sector. * corporations in their current form wouldn't exist without government, but organisation which employ labour and are "islands of central planning" which reduce "transactions costs" could exist, in the absence of government and would constitute an impurity.
  11. Samuelson, Muth, Fama didn't have models of free markets, did they? I thought they were basically mathematical models, where a Walrasian "auctioneer" "barks out" prices and then "the market" chooses. Whether equilibrium is reached under these conditions a distraction for understanding the real world. Markets co-ordinate without reaching equilibrium. The Great Recession only proves something about free markets if you can demonstrate that things outside of markets (central banking, regulation, government sector) had no impact on the economy. It seems the move to deregulation from the more regulated golden era (1945-70 or so, I think) was bad, but this doesn't mean we can just say the less regulated 1980s-2000s is the same as a pure market economy, or extrapolate how a pure market economy would operate, or conclude that it simply couldn't operate at all.
  12. When I clicked this thread I wasn't expecting you to say they retired to 3rd world countries! I know people who retired early, but I don't think any of them left the country. I would have thought most people have to much connection to home (family? children, grandchildren, friends, clubs/associations/church etc.) to move far. Madagascar is one of the more difficult and expensive parts of the world to reach from what I've heard. How often will they go home?
  13. Yes, but how common is it for there to be a more moderate disparity in the same direction (e.g. low earning parents, children are the first in their family to go to university, join a profession etc.)? It must be quite common. I'm arguing that perhaps there is a trend to pay a part of inheritance early. In my family, people of all generations are fairly affluent (my siblings and I are 30s, parents are 60s and remaining grandparents are 90s). If any of us fell on hard times financially, the others could help out. If I were more successful and my parents less successful it would seem odd if they were saving in their old age, so they could provide an inheritance.
  14. This isn't true. We have a system of planning for housebuilding, of regulations for banks etc. If markets filled this function then by your argument the market would be a state. As I have said, we don't know whether the market would be sustainable. But I think it's a practical problem rather than a conceptual one. It's not my system. If you're interested read Nozick, Rothbard or David Friedman (bonus: he's still alive, so you can email him your questions!)

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