Topic: Should we be trying harder to stop the BTC black market? (Read 14845 times)

That is why I wanted to say (but was hesitant) that even politicians make rational economic decisions. They may have disastrous consequences for the rest of the country, but these politicians know what they are doing, and are making rational economic choices that will benefit themselves, because they too (rightly) believe that the market will follow set predictable rules.

The part that scares me is just how many politicians are economic imbesiles, vs. how many are just playing the fool while knowing EXACTLY what they are doing and how they personally will benefit from it.


Yes, I would add "large scale" and "long time line" to my statement. A day's worth of sales won't tell me anything about the economics of Wal-Mart vs. Target, but long enough time period will and will fit a model, just as in other sciences, an hour's growth of bacteria won't tell me it's evolutionary trend in biology, or a count of a few neutrons won't tell me the half life of an element in physics/chemistry.

Sucks that I had to be so wordy to be more specific about what I meant by "economics is objective and rational." Sorry about that.

The problem is, your observation of the market affects the market and not in ways that your model can account for. The market is something of a chaotic system. However, you are generally correct at certain scales.

And it's not just that lawmakers lack the knowledge and competence to make the right decisions for millions of people. They also lack the incentives.  They don't personally experience the negative consequences of their mistakes.  In fact, thanks to things like "concentrated benefits and dispersed costs," they're frequently rewarded for their failures.

I would call that noise. The few irrational investors end up losing their money because the market remains "rational," and performs the way it's supposed to. Otherwise it would all be a gamble. Likewise for impulse buyers. You can't build a business hoping to make profits solely from impulse buyers. You can however use the market to increase advertising exposure and increase the number of customers. Perhaps, to be a bit more specific, I should have said that the market follows a set of specific and rational rules, but we may not know all the variables that are involved. Thus, for future predictions, we can make fairly good estimates for what will happen, but can be tripped up by variables we failed to take into account, but for past economic events, we can study the known variables and outcomes, and explain why whatever happened happened, with fairly good precision. Moreover, we can state that if the economic event happened again, and all the variables were the same, it would very likely transpire in the exact same way with the exact same results, and because of the same specific variables having the same "rational" effect. Taking noise into account (the few irrational people), if the noise is small enough, we will still reach the same conclusions. That would not be possible if economics was just a bunch of irrational actions and swings.
As for government and politicians, they have their own "rational" reasons and outcomes. Some they might know (high state tax on cigarettes may mean more people buying from neighboring states, but benefits outweigh the costs of smoking-related health expenses), and some they may have their own rational reasons for, but may just be totally clueless about (ignoring important variables), even as other people are yelling at them, trying to warn them about issues that inevitably transpire, because the market continues to follow it's set of rules (take your pick).

You're forgetting one important detail, hotshot. There's a bomb on that bus, and if your speed drops below 50 mph, it goes off and everyone on board dies. So what DO you do? Shoot the passengers.

Raise taxes? *shrug*

Slam the brakes as hard as you can! Isn't it obvious that you need to turn a situation where there is partial loss of control into one where there is immediate and total loss of control.

Well, the problem in the real world is that people (yes, even law makers) have to make desicions without knowing the consequences beforehand.
There are many situations in life where you cannot act rationally and just have to hope for the best.

Ok, so you're a bus driver carrying 30 people.
You drive on the highway and your steering wheel brakes off.
What is the rational thing to do?

Rationality cannot always be aquired simply because we want or need it.

{government}

Indeed. When one person makes a mistake for himself, it's a shame. When he makes it for millions, it's a calamity.

This! Why would we want to stop the very thing that is keeping our currency alive? We should be thanking SL

Well, there you have your answer!
You said you don't want to talk about these people but you were refering to 'the economy' and these people certainly are part of that.
You seem to have an incredibly narrow view of what constitutes the economy.
So sure, if you just redefine the word to only include people that act rationaly you are right.
But then again you could redefine any word and be right every time! It's so simple!
You cannot say laws are not part of the economy. If they act on it they are part of it.
It's a 'true scotsman' fallacy.
Reality really doesn't care that you want to consider only part of the economy as the only one true economy.

You cannot make a rational decision if you do not know all the variables.
So in almost any case rationality is an ideal.
And there are various levels of closeness to this ideal.
Hence most people cannot make a rational decision and in fact a lot of the times have no way of knowing how close they are to the ideal with the decision they take.
So rationality is also a relative measure.
A choice can be considered more or less rational given the quality of information it is based on.
Maybe someone rationalized their choices based on the tooth fairy.
Maybe someone bases their choices on what they read in the paper?
Maybe someone bases their choice on what their financial advisers tell them to chose?
Maybe someone wants to take a gamble?

So in reality there is no perfect rationality and economy consists of various relative rationales competing on the world markets.


A perfect example of irrational economic behaviour is anyone buyig on impulse.
These people are not driven by ratio in their choice but by instinct triggered by advertisement (some yummy cakes in a shop window, for instance).
There is also a lot of economic activity simply from greed. People who are too overwhelmed by the posibility of profit to see the chance of winning is almost non existant.
Lotteries would not exist on this scale if people only chose rationally in their economic decision making.

Perhaps you can provide some examples of irrational economic activity? I'm not talking about investment decisions made by scared people who don't understand the market, which then kills their investments because it performed the way it's supposed to. Laws that are passed are not "economics," either; they are attempts at controlling parts of an economy, passed for either informed or misguided reasons, with specific or unintentional consequences, which can also be deduced if the economy follows its rules.

E.g. raise minimum wage because poor people = higher unemployment due to supply of jobs not being able to afford the price of employees, but also less need for employment, because people who used to work two jobs can now afford to live on one. Rational, or at least purposeful decision, with known outcomes. Only question is the variables involved, which could make the outcome a range of possible but specific options.

AHAHAHAHAAHAHAHAHAHAHAHAHAHAHAHA.

It seems you have absolutely no idea whatsoever about how a typical human being works.
Saying that all people participating in an economy act rationally is the biggest nonsense claim i've ever heared about anything human.
In most cases it is irrational to think you can make a rational choice.

Well, sure, nothing is perfect.
Just saying that we would not have been where we are without such initiatives.
And i too think that a change is needed for the future.
But i also feel that it should be a central effort so that everyone can benefit.
I also think that a commercial replacement on that scale would fail in that it would become super-efficient at delivering only that which industry asks for. That would seriously streamline our world for serving multinationals and i think we as a species would lose a little of ourselfs.
So what are the options for changing the system?

And he would be right. Economics follows a set of logical rules, based on the rational choices of the people that participate in an economy. True, you can't calculate exact numbers for solutions in most cases, simply because there are too many variables, but the choices made by participants in an economy are rational, or at least are done with a specific reason, and thus their choices can be explained, and the outcomes can be logically deduced, just as the more precise numbers can be deduced in physics for things we can never measure on our own.

In fact, maybe that's the problem. Maybe he believes that economics are subjective, that you can't have a valid theory without prior proof, such as his claims that the free market is not possible because it was never existed (false, but irrelevant), while I believe that it is objective, and the outcomes of various theories can be deduced and "proven" as thoroughly as the physics around black holes.

The problem is, Rassah, that he likely doesn't view Economics as subjective but something that can be fully quantified like chemistry or physics.

Actually, it's quite a hell of a lot more complex. I've found that, with this crap, what might seem obvious doesn't actually work when you think things through logically. But, regardless...
We are both men of business and economics, both with substantial education and understanding of the topic as well, so why don't we discuss this as such? I'll understand whatever terms you throw at me, as I'm sure you will as well.
The free market idea is based on the theory that the power will stay with the customers, not the business owners, and that centralized business power can't exist, not even monopolies, because people will either find a reasonable substitute for whatever is being pushed on them, or businesses will realize that serving their customers is more financially beneficial than extorting them.
You say you like science and evidence. You know evidence in economics is scant at best, and is full of close approximations at most. It's all logical theory. So, please explain to me, using science or logical economic reasoning why you believe a free market society will fail. I would love to discuss this with someone on my level, especially since I'm still convinced that I haven't figured out everything about this.

Please do a search for and read a paper called "Somalia After State Collapse: Chaos or Improvement?" It will probably make you think a bit differently about the place (in short, compare Somalia's state of poverty and economic development to other distressed African nations. It's doing way better despite your claims about free markets leading to chaos).