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Google in Sicko Storm - Welcome to democracy google style

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Grorgy:
The major trouble with free market economic theory is that there is virtually no free market.  Oil is controlled by a few major players, pharmaceuticals by a few, and the list goes on.  On the other side governments provide various payments to those in need, in the form of welfare and rent assistance and so on, and subsidies to business for providing employment and infrastructure that the the state cannot or will not provide. 

Interestingly organisations like the world bank and IMF who at one stage demanded that help to poorer countries was dependant on their economies opening up to free trade and reducing welfare have  been forced to rethink their strategies as large multinational and transnational companies  bought up all the resources in these countries and provided grinding and worsening poverty to most of the people in these countries.  Fortunately, but after untold deaths through starvation and ill health associated with poverty the thinking has changed.  But possibly to late to save the world bank and IMF as can be seen by some South American nations setting up their own bank and removing themselves completely from the world bank.

Smith realized his invisible hand would not work even in his day as there where not sufficiently free markets then and for this to be resurrected (to keep with the religious overtones) 230 yrs later when free markets still do not exist, well it seems to me Adam Smith should be remembered for his contributions to an emerging science? and that his comment on the beauty of Irish prostitutes is the only one worth following up on today.

Jimdoria:
I think we are going to have to agree to disagree, CUWestfield. For one thing, I have a philosophical problem with regarding Economics as a science, although I can certainly see the parallels with biology. I think my issue here hinges on what you call "emergent, self-ordering systems". In nature (the realm of the hard sciences), absent a religious component, there is no inentionality. Systems do not act to organize themselves, it simply happens. This is not true of economic activity. Economic activity is always the result of intentional human activity, although the consequences may be unintended ones, and the overall complexity of the system is daunting, as you say.

Economies do not just arise. They are built. And like all human structures, they are built with particular goals and priorities.

The "science" of Economics is generally one of measurement, not of direct observation. And the method of measurement is not trivial in determining the conclusion. Currently, Economics assigns no value to anything that doesn't generate economic activity, and assigns positive value to anything that does generate economic activity. I see this as a deeply flawed approach to mirroring or even understanding human reality.

Under this scheme, a clear mountain stream has zero value unless it can can be converted to some economic activity, such as food production, energy or tourism. A polluted stream has more potential value, as there is a need to clean it up, which generates economic activity. Yet the stream's intrinsic value is immediately obvious to just about any actual human being who stands beside it, because humans instantly recognize there are kinds of value other than monetary.

Economics also exhibits scale bias. According to the rules of economics, large-scale economic activity is intrinsically more valuable than small-scale economic activity, as monetary value is generated more quickly and efficiently. But small-scale economic activity generates positive non-monetary value: good will, strong community ties, heightened political awareness, a sense of personal well-being for the participants. Economics cannot measure these and so their value is effectively assigned to zero.

The entire basis of economics is monetary value. And that's the problem: I am highly distrustful of making monetary value the final and absolute arbiter of what is good for a society and its members.

This is what's so fundamentally wrong about Ms. Turner equating advertising with democracy. Advertising is "might makes right" although it's economic might rather than brute force at work. But this is actually the opposite of democracy, where the central tenet is that the mighty cannot be allowed to simply overpower the weak if we are to have a just society.

urlwolf:
wow, good thoughts. Keep them going...

CWuestefeld:
[Natural] Systems do not act to organize themselves, it simply happens. This is not true of economic activity. Economic activity is always the result of intentional human activity...

Economies do not just arise. They are built. And like all human structures, they are built with particular goals and priorities.-Jimdoria (July 12, 2007, 09:59 AM)
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This is not generally true, and this is trivially demonstrated. Before Adam Smith gave us a framework in which to think about economies, it would have been literally unthinkable to engineer an economy. Clearly it did arise from the unorchestrated actions of the individual "organisms" working within it.

To be sure, there have existed intentionally-engineered economies. These are failures without exception: the USSR, North Korea, the P.R.C. (the only reason the latter survived to its recent point of reformation was a thriving underground market).

In the book I mention above, Friedrich Hayek's The Fatal Conceit, he devotes a fair amount of ink to describing how a society, including its economy, arises through a process of evolution. Those societies that have the traits best allowing them to thrive expand across the globe, subsuming others. Traits of these others find their way into the larger organism, and -- without knowing why -- they make the engulfing society stronger or weaker. So once again, I urge you to read that book for a fuller understanding of this.

Currently, Economics assigns no value to anything that doesn't generate economic activity, and assigns positive value to anything that does generate economic activity.
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Again, this is simply incorrect. Modern economists think in terms of "utility functions", which are sort of black boxes that give an individual's value of "utility" value for something -- that is to say, how useful the thing is to moving a person toward his goals. One need not know what the person's goals are, or how the something helps achieve those goals; only that the person perceives the relative value there. Consider this, from Ludwig von Mises' Human Action (http://www.mises.org/humanaction.asp ):
It is fashionable nowadays to find fault with the social sciences for being purely rational. The most popular objection raised against economics is that it neglects the irrationality of life and reality and tries to press into dry rational schemes and bloodless abstractions the infinite variety of phenomena. No censure could be more absurd. Like every branch of knowledge economics goes as far as it can be carried by rational methods. Then it stops by establishing the fact that it is faced with an ultimate given, i.e., a phenomenon which cannot--at least in the present state of our knowledge--be further analyzed [7].

The teachings of praxeology and economics are valid for every human action without regard to its underlying motives, causes, and goals. The ultimate judgments of value and the ultimate ends of human action are given for any kind of scientific inquiry; they are not open to any further analysis. Praxeology deals with the ways and means chosen for the attainment of such ultimate ends. Its object is means, not ends.

In this sense we speak of the subjectivism of the general science of human action. It takes the ultimate ends chosen by acting man as data, it is entirely neutral with regard to them, and it refrains from passing any value judgments. The only standard which it applies is whether or not the means chosen are fit for the attainment of the ends aimed at. If Eudaemonism says happiness, if Utilitarianism and economics say utility, we must interpret these terms in a subjectivistic way as that which acting man aims at because it is desirable in his eyes. It is in this formalism that the progress of the modern meaning of Eudaemonism, Hedonism, and Utilitarianism consists as opposed to [p. 22] the older material meaning and the progress of the modern subjectivistic theory of value as opposed to the objectivistic theory of value as expounded by classical political economy. At the same time it is in this subjectivism that the objectivity of our science lies. Because it is subjectivistic and takes the value judgments of acting man as ultimate data not open to any further critical examination, it is itself above all strife of parties and factions, it is indifferent to the conflicts of all schools of dogmatism and ethical doctrines, it is free from valuations and preconceived ideas and judgments, it is universally valid and absolutely and plainly human.-Mises
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(why do we care about some guy named Mises? He was a very influential economist; see this article: http://en.wikipedia.org/wiki/Ludwig_Von_Mises )

Economics also exhibits scale bias. According to the rules of economics, large-scale economic activity is intrinsically more valuable than small-scale economic activity, as monetary value is generated more quickly and efficiently... The entire basis of economics is monetary value.-Jimdoria (July 12, 2007, 09:59 AM)
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The above quote from Mises also demonstrates why this argument is incorrect. The amount of "monetary value" that is generated is not the only, or even the most important, sort of value that economics is interested in. As I see it, economics tries to understand (and predict) why a person, given a range of choices, will opt for a particular one.

This is what's so fundamentally wrong about Ms. Turner equating advertising with democracy. Advertising is "might makes right" although it's economic might rather than brute force at work. But this is actually the opposite of democracy, where the central tenet is that the mighty cannot be allowed to simply overpower the weak if we are to have a just society.-Jimdoria (July 12, 2007, 09:59 AM)
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Again, I'm afraid you've got it quite backwards. The "might makes right" epithet should be applied to democracy, for it is this philosophy that allows 51% of the people to choose the fate of the remaining 49%, for no better reason than the strength of their numbers. Always keep in mind that America is not a democracy. It is a constitutional republic. In our society, the thing that protects the weak from abuse is the Constitution's limitations on the government, and the guarantees of the Bill of Rights. Voting democratically has virtually nothing to do with it.

Moving to another post, trying to avoid political policy issues and sticking to the science of economics:
The major trouble with free market economic theory is that there is virtually no free market.  Oil is controlled by a few major players, pharmaceuticals by a few, and the list goes on.  On the other side governments provide various payments to those in need, in the form of welfare and rent assistance and so on, and subsidies to business for providing employment and infrastructure that the the state cannot or will not provide.-Grorgy (July 11, 2007, 05:57 PM)
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As I read your argument, there are two main prongs: (1) large enterprises interfere with the workings of the market; and (2) government regulations interfere with the market.

Point #2 seems to lead to circular reasoning. You seem to want the government to wield stronger economic policy because they are already meddling. So I won't address that.

Point #1 is worth debating. Your point is certainly representative of conventional wisdom, but it's far from clear that the "common sense" point is correct here. Many modern economists would argue that monopolies are a red herring for a variety of reasons. (http://www.reason.com/news/show/29727.html )
Not that cartels necessarily hurt consumers. In line with a recent strand in economics that University of Chicago economist Lester Telser began, Bittlingmayer argues that cartels can be an efficient way of preventing ruinous competition when firms' fixed costs are very high and their variable costs are low. If you doubt that that's a problem, take a look at airline profits since deregulation. The added cost of taking another passenger is close to zero, which is why airlines get into so many price wars and are often on the verge of bankruptcy.
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In any case, governmental efforts to control monopolies generally do more harm than good. For example (same article):
Beginning in the early 1970s, economists studying antitrust found that it often created monopoly by preventing companies from pricing too low or expanding too much. Antitrust authorities, they found, often were more interested in preserving competitors than in preserving competition.

Economists also found that regulated industries often lobbied for the anti-competitive regulation in the first place. Consumers never asked for an Interstate Commerce Commission to prevent new truckers from entering the business. Nor had consumers been heard from when the federal government set up milk marketing boards to restrict the supply of milk and drive up the price. The main players were truckers and milk producers, who wanted to limit competition.
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I would encourage anyone who wants to disagree with these points to provide actual citations for their arguments. Simply asserting that "Big [insert industry name here] is too greedy" or other "common sense" arguments really doesn't add anything.

Jimdoria:
I'm not an economist either by profession or avocation, so I'm not in a position to participate in an informed debate about the finer points of economic theory. I haven't read the book you recommend, so I'm not really in a position to discuss that either.

Was it "unthinkable" to engineer an economy before Smith? I'd argue that mercantilism (which predated Smith and to which Smith's work was a reaction) was an effort to "engineer" an economy. I'd also say that government policies regarding tariffs and trade, imports and exports, the setting of interest rates by the Fed, etc. are all efforts to "engineer" an economy. The planned economies of the (so-called) Communist states are a particular approach to engineering an economy. The fact that a single approach fails does not automatically invalidate all other approaches.

Do economies arise by evolution? Well, yes and no. In any competitive system there will be winners and losers. This is "selection" but is it "natural selection" i.e. evolution? A city grows by similar processes, but I don't think this makes cities "organisms". Cities are structures built by people, partly planned and partly unplanned, partly based on the natural environment and partly in opposition to it. The same is true of economies. Also, is the biggest, strongest society that subsumes others automatically the best? This is just what I meant by scale bias. Couldn't it be that it's simply the most ruthless, or the best armed? Can we be sure it's always the best ideas that are winning out? I don't have your faith in this, and I'm not sure it can be proven.

As I see it, economics tries to understand (and predict) why a person, given a range of choices, will opt for a particular one.
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This is one of the things economics does. I think it falls short as a concise, complete definition of economics, however. Wikipedia's is "the social science that studies the production, distribution, and consumption of goods and services," a definition that seems centered on the exchange of value, and although monetary value is not specifically mentioned, I think in most modern contexts is can be inferred.

However they also give as an apt definition "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses" which hews much closer to CWuestefeld's definition. So perhaps I am being too restrictive in my understanding of economics as being primarily concerned with markets, GDP, spending vs. saving, etc. Still, I think this is the "common" conception of the term, even if it is not entirely accurate.

I will admit I was imprecise in my language when I used the word democracy. I was referring to specifically to American democracy (and similar modern forms of democracy) which includes the concept of human rights and personal freedoms. Again, I believe that this is the common understanding of the term, just as "communism" is generally assumed to refer to Marxist states, rather than Shaker communities or Benedictine monasteries. But if you were seeking to ding me just for the extra semantic points, you did it. ;)

There is quite a leap taking place in the bit about cartels/monopolies. It's the necessarily that bugs me. This is one example of one kind of cartel that may not be bad for consumers. Quite a far cry from providing evidence for a general rule that "monopolies aren't bad for consumers"! And a very, very shaky foundation upon which to base a broader assertion, which seems to be that common wisdom about monopolies is wrong. (And don't think I haven't noticed that we've slipped into discussing "consumers" rather than "citizens" or "people", linguistically flattening the individuals in question into just their marketplace activity.) Anyway, some more succint questions might be:

* Is competition required for a free market?
* Does price fixing among supposed competitors interfere with a free market?
It may be true that governmental efforts to control monopolies generally do more harm than good, but is this really relevant? The fact that response to a problem is incorrect has no bearing on whether a problem is real or not. 18th century medical efforts to control infectious disease generally did more harm than good. It doesn't follow, however, that infectious disease was therefore not a problem in the 18th century.

CWuestefeld saw 2 prongs in Grorgy's post. I saw two examples in support of his main claim: There is virtually no such thing as a free market. I'd agree with this. Free markets are ideal forms and as such do not, and I'd go so far as to say cannot, exist in the real world. The real questions are: "why would we want them to?" and "how much control do we want the marketplace to have over the rest of our society?" I just don't get the whole "power in the hands of a big government is to be greatly feared, but power in the hands of big corporations is to be much desired" school of thought. (Although somehow it always calls to mind that old Bob Dylan lyric "you just want to be on the side that's winning.") The marketplace is responsive and has its efficiencies. But it's got equally large pitfalls and blind spots as well. Also, speaking of circular arguments, the logic behind this ideology seems to be that our elected officials are not accountable enough to the citizenry, so we must turn the reins of power over to entities that are even less accountable. Huh? :huh:

To bring things back to the original point, it's clear people must first understand issues in order to act on them in an enlightened way. What's not so clear is the rest of CWuestefeld's equation. The "finite amount of bandwidth" is kind of a bizarre claim, IMHO. I see it as an attempt to justify Google's tactics by taking the old false scarcity created by broadcast journalism and applying it to the Internet, where no such scarcity exists. And let's be clear, we're not talking about charging for the delivery of objective information, we're talking about rates for advertising - the delivery of highly biased information with the specific purpose of promoting a particular agenda.

BTW, Sicko is not advertising. It is propaganda. Propaganda is highly biased and persuasive information with a political intent. Advertising is propaganda with a commercial intent. And Ms. Turner's battle cry is simply "Fight propaganda with advertising!"

Also, CWuestefeld later said:
If Google does act unethically, then it's certainly our prerogative to take business elsewhere, but we can only do so if we debate the issue.
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I'd say we can only do so if a viable alternative to Google exists. And there's the danger of a monopoly. A monopoly is to the marketplace what an autocratic government is to the political space. Absolute power concentrated in too few hands. Millenia of human experience tell us that absolute power is always abused sooner or later, leading to corruption and injustice. The only way to prevent the creation of absolute power in a system is to rig the system so that such power is checked before it arises. In the U.S. we have three branches of government that act (so far, mostly) to prevent absolute power from occurring in the government. There is no such mechanism in place in the free market, except for perhaps the "invisible hand" which I don't believe in. That's why I don't think the free market by itself is sufficient to ensure a just society, and why I'm so leery of turning over the functions essential for the functioning of democracy to the marketplace.

Finally, sorry, but I'm not going to do citations. This isn't a thesis paper or a peer-reviewed journal, it's a discussion (in the Living Room, remember?) My opinions are my own, based on logic and my observations and experience. I try to abide by the rules of reason and civil discourse (no ad hominem attacks, straw-man arguments, etc.) but I'm not going to start adding bibliographies to my posts. :-[

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