Libertarian Pudding Tastes Good!!

The market only labels when we approach the monopolistic ideal. By definition we're talking about market failure here. There's no need for any come-back, except perhaps limiting the extent of managerial influence (e.g. impacting on their extent to lower investment hurdles as part of a personal 'growth maximisation' policy)

Its steeper in the private sector because of the nature of the labour market. We're more likely to refer to over-manning in the civil service.

 

You're confusing "socialism" for command economies. The calculation problem does not apply to anarchist models for socialism, or market socialism.

This is merely a critique of command economies, not socialism generally. Democratically organized firms can also receive and respond to demand signals.

So, how would a company owned by its workers not be able to react to changes in demand? Because that's a socialist firm; more socialist than a state-planned industrial agency, to be sure.

Not practical; it would shift attention to higher profile agencies, but cut funding from low-key but well-operating agencies.

So what? That is literally an irrelevant consideration. The government's role is not to react to the demands of individuals.

 

I don't agree, during the .com boom lots of disparate companies went under very far from approaching a monopoly.

But that's not what's happening at all, if anything power is rapidly consolidating, it'd be humorous to even refer to it as democratic at this point.

 

Ouch, basic error on your part. I referred to monopolistic competition, not monopoly. We only need market power to be a significant issue for your argument to fall flat.

Again, you're ignoring the nature of the planning. Overmanning isn't consistent with steeper hierarchies

 

I flubbed some terminology, but I still disagree, since firms are beholden to the consumer, their preferences will seldom align with the firms desire to achieve market power, further regulating this concentration is an option in the market, it's not for the state.

We fretted on IBM in the 80's for this, but that turned out to be much to do about nothing.

 

But it was an important error. We're referring to something quite alien to the notion of normal profit, the primary means for the market to 'punish'. The best you have is the rejection of the neoclassical 'long time', whereby errors can have drastic consequences. However, you'll find that is primarily focused on making the correct decisions (such as investments in organisational knowledge to exploit economies of scale created in the 2nd industrial revolution)

 

My main point and the one that I still adhere to is that planning isn't the same in the firm vs. the state. That feedback is more accurate and more rapid in the market is a matter of fact. The state simply can't learn as quickly from it's mistakes.

It's really tangential to the thread.

 

And you continue to exaggerate! The impact of the hierarchical practices used in the private sector makes such feedback 'pie in the sky' (there you go, thread link!)

 

It's not an exaggeration, it's a statement of fact. It's feedback vs. no or little feedback, that firms react at all to this feedback is all I need to be right on this one.

 

There isn't feedback. You'd need the price mechanism to operate for that. That price mechanism isn't operating as we have the visible hand twinned with asymmetric information (encouraged by the steep hierarchy) and abnormal profits

 

Price, while typically the most important indicator isn't the only one, so far the sake of argument that price signals aren't working as their supposed to.

Market share, competitor profits, new adopters, repeat business and several other aspects of business intelligence are measurable and because of the dynamism and the (mostly) correct incentives adjustments can be made both on the fly and without having to appease apathetic and/or ignorant parties.

And all of this goes without even mentioning that often politicians have incentives to act against the feedback they receive, they either won't get, won't understand or worse... ignore. It's worse than just an asymmetric information problem, the actors themselves have almost not motivation to A) be an expert in whatever their planning or B) care about the outcome. Therein lies a huge difference, CEO's frequently come from technical experts at whatever their in the business of, the state is a bunch of lawyers bickering mostly over language with very little understanding of the topics being governed.

 

You're just repeating the erroneous comment. You haven't factored in the consequences of the hierarchy, nor the abnormal profit in the face of asymmetric information. The idea that there are clear-cut feedback mechanisms is bobbins. Crikey I have to deal with managers that don't even realise that they are bleedin useless!

 

Better the useless manager who at least has the correct incentives than the bureaucrat who's incentives are often unclear or worse.

 

Correct incentives? No such beast! The manager will merely be a utility maximiser. That utility maximisation is quite independent of any of these make believe feedback mechanisms you think are in play

 

Anikdote and Not Amused!

All three of us agree on the basic concepts. If you guys get a chance I'd appreciate hearing your thoughts on allowing taxpayers to directly allocate their taxes. Why not apply market principles to the public sector? Is there a demand for public goods? Yes. Is there a supply of public goods? Yes. All that is missing is to give taxpayers the freedom to chose which government organizations they give their taxes to.

On the other hand...the only explanation for congress allocating 150 million people's taxes is because in 1215 a bunch of barons got together and forced the king to hand over the power of the purse. The king only had the power of the purse in the first place because people believed that he had a divine authority. There's absolutely no economic explanation for believing that a king...or a committee....can efficiently allocate 150 million people's limited resources.

Everybody makes mistakes which is exactly why we shouldn't put so many eggs in one basket...

 

Nope, I understand the differences and also understand that the only people that would disagree with my use of the word would be people who would already understand the different possible meanings. Everybody else would just correctly assume, given the context, that I was referring to command economies.

See Tax Choice - A Strategy for the Occupy Movement. I have no problem with democratically organized firms...and nothing in my post indicates otherwise.

However you spin it...you suffer from a "fatal conceit" if you second guess the resource allocation decisions of 150 million self-interested, utility maximizing taxpayers. Unfortunately, you are not exceptional in this regard...Unglamorous but Important Things.

Actually...it's unfortunate because it prevents this proposal from being seriously considered....but clearly it would be fortunate if the proposal were to be implemented. It provides clear evidence that people would not forget to fund unglamorous but important things.

LOL...sure...if you believe that kings have divine authority and congresspeople are superior to us...

In a pragmatarian system people would still be able to give their taxes to congress. So if you believe that congress is superior to you then you would certainly have the freedom to give them all of your taxes. In my opinion though, the average taxpayer shouldn't have to watch C-Span for more than an hour or two to realize that congress is certainly not superior to them. Unfortunately, people erroneously believe that congress is superior to other taxpayers.

When it comes to the efficient allocation of resources...we're not looking at averages...we're looking at millions and millions of people's unique perspectives. A discussion on scarcity only makes sense in terms of unique perspectives. What in the world can I do with a gold nugget? But if I sell it to a goldsmith then he can "magically" transform it into something that people demand. That's creating value.

It's the same thing with taxes. Money, outside of the context of millions and millions of unique perspectives, has no meaning. But if I give my money to the EPA then they can use that money to create value. But that value only has any meaning for those of us that value protecting the environment.

To say that the government's role is not to react to the demands of individuals is like saying its not the EPA's role to react to our demands for environmental protection. If nobody demands environmental protection...then what the F is the government doing spending our taxes on protecting the environment? The government might as well spend our hard-earned taxes on clogging toilets...

 

There's clearly where the incentives of ownership and management not being aligned, but particularly in smaller enterprises the two are one in the same and as such, their goals aligned.

Profits don't fall anymore when firms make horrible PR decisions? Feedback exists.

Sounds like a recipe for free rider issues and under provision.

 

Smaller enterprises aren't economic planners! They're reliant on the invisible hand.

One can be stupid, such as the classic case of Ratners. That one still makes me laugh. But such catastrophic mistakes will impact on both sectors.

 

You can be small and still have significant market power, the cases are rare but the exist. Especially true for innovators in the tech field.

The deli?

 

But you'd be market focused. There is no vertical integration after all!

Jewellery company that killed itself when the boss mentioned he sold crap

 

?!? How small?

 

But I'm not advocating that we lower the tax rate...so the free-rider problem wouldn't apply. "Under" provision implies that you somehow know the "optimal" level of funding. But the "optimal" level of funding can only be determined by demand. Demand and concern and priorities are all the same thing. Given that people would have to pay taxes anyways....why wouldn't they use their taxes to satisfy their demands for public goods?

The only way we can know demand is by observing how people spend their money. So given that government organizations would be optimally funded...aka...supply would meet demand....when you say "under" provision...it sounds like you're saying that a government organization should receive more money than society values it. Should PETA or the NRA receive more money than society values those organizations?

In other words...why would you want public funds to be misallocated? Why would you want your money spent on things that you do not value?

 

If you went with Coase it would be any enterprise that doesn't exhibit any vertical integration

 

You ignored my question.

I'll ask again, clearly this time. how small is an enterprise before it doesn't do economic planning?

How does economic planning differ from normal business planning? Investopia doesn't have a definition.

 

No, you didn't understand the answer. Any firm that doesn't exhibit vertical integration. That isn't a static figure, but we can lump in most SMEs

Read some Coase (try and get past misinterpreting the theorem this time!)