What made Friedman believe real-life markets are rational?

[dropzone]

I know little about economics in general and probably less about Milton Friedman, but what I keep hearing about him is that he believed that federal oversight of the market was unnecessary because an unregulated market will behave rationally and will regulate itself because it is in its interest to do so.

Now, like I said, I don't know much about these things, but I've been observing the US economy for many years, and while markets may, in the very longest run, appear to act rationally and self-righting, in most short to medium spans, from days to years, they appear anything but rational. Not surprising, since they are human constructs operated by humans with the very human desire to make out like a bandit, so why on earth would Friedman have conceived such a counter-intuitive concept? Especially after it is repeatedly shown to be wrong, from the Robber Barons to our current difficulty. The market seems "self-correcting" only after a few convictions.

And yeah, I know why it appealed to so many people, referring readers to my "make out like a bandit" statement. Theft is easier to justify if you have the University of Chicago behind it.

[Der Trihs]

IMHO, because it justified slashing regulations and government. Unless you openly admit to supporting being ruthless, sociopathic and amoral, claiming that everything will take care of itself is the only way to justify that.

[smiling bandit]

ALthough you did not technically violate the rules, your post, Der Trihs, was both horrifically unfounded and massively irrational. There is no adequate way to correctly respond to the vileness you have deposited here, except to say that unless openly admit to being ruthless, sociopathic and amoral, there is no reason for you to have posted that.

[elucidator]

I think it derives from the attempt to layer intellectual constructs on top of capitalism, the attempt to rationailize capitalism as though it were an ideology, rather than something that seems to have just more or less "happened".

More to the point, though, is the effort to create an intellectual rationale to preserve as much lazy fair policies as possible. They seek to pretend that they have an economic science basis for their faith in the Free Market and its wonders. Its nonsense, of course, as anyone who studies the Dutch tulip craze, hula hoops, or any other of a number of irrational market behaviors that need to be explained away under the "rational actor" model.

The chigger in the wood pile is greed. A rational capitalist might very well limit his profit for the greater good of the system, taking no more than he needs and letting the rest circulate. But all it takes is one greedy mofo with an opportunity to manifest that irrational greed, and the shit hits the fan.

There are far more Rockefellers and Morgans than there are Buffets, because, as a general rule, only rats win rat races.

[Der Trihs]

ALthough you did not technically violate the rules, your post, Der Trihs, was both horrifically unfounded and massively irrational. There is no adequate way to correctly respond to the vileness you have deposited here, except to say that unless openly admit to being ruthless, sociopathic and amoral, there is no reason for you to have posted that.
You know, that's one of the more inept slams at me I've ever seen. What are you getting at ?

And are you going to post an actual argument ?

[Captain Amazing]

It wasn't just Friedman. Standard economic thinking for most of the second half of the 20th century assumed that markets were rational. Conventional economic thinking is still that markets are rational, as far as I know. The idea is that markets are rational because people behave rationally.

Remember what rationality means...it pretty much just means that actions can be ranked in order of preference (Completeness), and that if action 1 is preferred to action 2, and action 2 is preferred to action 3, then action 1 is preferred to action 3 (transitivity).

More generally, neoclassical economics is based on three assumptions...that people have rational preferences, that they act to maximize utility/rpofit, and that they act independently on relevant information. So markets act rationally in that sense...but saying that markets are rational doesn't mean that markets are neccesarily beneficial. My rational actions can nevertheless lead to a negative result for you, or even for society.

[Captain Amazing]

A rational capitalist might very well limit his profit for the greater good of the system, taking no more than he needs and letting the rest circulate.

No...that's an irrational action. A rational capitalist tries to maximize his profit. If he's limiting his profit, he's acting irrationally. He might limit his short term profit for long term gain, but his goal is to maximize his overall profit.

[Der Trihs]

More generally, neoclassical economics is based on three assumptions...that people have rational preferences, that they act to maximize utility/rpofit, and that they act independently on relevant information. So markets act rationally in that sense...But they don't, and people aren't. People are often irrational, or act on incorrect information.

This theory that people and the markets are rational is a politically driven theory, one which ignores human nature and human limitations.

[Simplicio]

Because it's a lot harder to come up with an economic model based on irrational behavior.

(though maybe I'm just bitter since I still haven't won a Nobel for my "people just do insane crap, and there's no frickn' way to predict it" theory of economics)

[Deeg]

The markets mostly are rational, certainly more rational on average than government-directed markets. Where I disagree with Friedman is that he believes individual short-term rational decisions are almost always the best decision for the market at large. I believe that they usually are but not always (the environment and the current meltdown being two such examples.)

[BrightNShiny]

Here's an interesting article from Paul Krugman which discusses Milton Friedman. It's a good read, and I think has a good answer to your question.

http://www.nybooks.com/articles/19857

[Squink]

I think it derives from the attempt to layer intellectual constructs on top of capitalism, the attempt to rationailize capitalism as though it were an ideology...The spirit of the age; hyperrationality.

[Captain Amazing]

This theory that people and the markets are rational is a politically driven theory, one which ignores human nature and human limitations.

I don't think it isreally politically driven. It's more of a precondition to be able to make theories. Like Simplicio said, you can't get very far if you start with the assumption "people just do insane crap, and there's no frickn' way to predict it". You need to make the assumption that people act predictably, otherwise, there's no point in even studying economics. Even those economists who advocate a government interventionalist role in the economy, start out with the assumptions of rationality. Even Keynes, for the most part, assumed rationality.

Remember, too, our "economic man", who always acts rationally, is part of a model, and by their nature, models are more simple than reality. (And, remember, also, that a lot of economic models, especially the better ones, talk about "bounded rationality"...that people don't always behave optimally, but sometimes close to optimally).

[Chronos]

"Rational" is a technical term in modern economic theory, which like many other technical terms, might not quite mean exactly what you think it ought to mean from common usage. In economic terms, the desire to make out like a bandit is, in fact, rational, and is very close to being the definition of rationality.

[Der Trihs]

I don't think it isreally politically driven. I do think it's politically driven. As I said in my first post; unless you assume that people are perfectly rational and perfectly informed, they'll make bad decisions, decisions that go against their own and/or everyone else's interest or even survival. So, you need government intervention and support to keep the market and the rest of society from falling apart. This economic idea that people are all perfectly rational mainly serves as an excuse for cutting government and regulations under the claim that they aren't necessary. That the market will act in enlightened self interest and take up the slack even if you reduce the government to nearly nothing, which doesn't work.

[sailor]

I do think it's politically driven. As I said in my first post; unless you assume that people are perfectly rational and perfectly informed, they'll make bad decisions, decisions that go against their own and/or everyone else's interest or even survival. So, you need government intervention and support to keep the market and the rest of society from falling apart. This economic idea that people are all perfectly rational mainly serves as an excuse for cutting government and regulations under the claim that they aren't necessary. That the market will act in enlightened self interest and take up the slack even if you reduce the government to nearly nothing, which doesn't work. This makes no sense because what you are saying is that government bureaucrat knows what's best for me better than I do. How is a government bureaucrat more rational AND better informed AND know more about what's good for me than myself? I don't buy it. There have been countries with political systems based on this premise and the results were not good. Nobody knows what I want better than I do.

[wmfellows]

No...that's an irrational action. A rational capitalist tries to maximize his profit. If he's limiting his profit, he's acting irrationally. He might limit his short term profit for long term gain, but his goal is to maximize his overall profit.

Well, a nuance there, maximize his utility - one can imagine a rational capitalist who may trade profit for ... free time say. That is economically rational if he values the free time more than the next dollar in cash profit (and presuming that there is a trade off between the two).

[msmith537]

*sigh*

How many misinformed threads are we going to have about "markets" that start with "I don't know much about economics but.." and then degenerate into socialist/libertarian rhetoric and capitalism bashing? I've been observing the fucking sky for years. That doesn't make me an astronaut.


For the most part, markets are "rational". You generally want to sell for the most you can get and buy for as low as you can, right? And they generally are "efficient". The price of goods generally reflects what you think they are worth.

The big mistake people like Greenspan made about the residential mortgage business was to believe that the banks would self-regulate out of self-preservation. The problem is that there are really several different entities interacting in such a way as to not adequately communicate information between different markets.

Mortgage lenders not adequately screening borrowers. Rating agencies not properly quantifying risks associated with CDOs consisting of securitized mortgages. Bankers interested in short term profits. You have several different markets interacting without the right information being properly passed between them.

[robertliguori]

I think one of the problems is that the world is necessarily more complicated than models, and that one of the first actions of rational actors is to, when confronted with a scenario in reality that mirrors an economic model, find holes in the model and kick it over.

For your consideration, I submit the Southampton team's winning solution to the 20th-anniversary Iterated Prisoner's Dilemma competition, which was not by tit-for-tat, but by a single side submitting several entries, which used the first few rounds of the game to communicate their identity, then work to accumulate points for their own side while serving as spoilers for all other programs.

The problem was that no real-world situation (even one set up to model the prisoner's dilemma as closely as possible) can totally screen out external factors. When these external factors are significant enough to totally change the optimal behavior of a system, your model is not worth a great deal when it comes to predicting behavior.

So, what to do about this? Have the science of economics involve less math and more sociology, I say. If all economists analyzed transactions with the assumption that all participants would try to find a way to go off-model, I think we'd get better models.

[Der Trihs]

This makes no sense because what you are saying is that government bureaucrat knows what's best for me better than I do. Because, say, they have in hand a study showing that the medicine you want is poison. Thus the FDA. Or that the building you want to move into is in danger of collapse. Thus building codes. Or that regardless of your opinion and/or resources, your child should at least be literate. Thus public schools. Or that regardless of how much more it costs to dispose of safely, it's bad for everyone if you dump cyanide in your local river. Thus the EPA. Or that the business you want to buy from is a scam, or is collaborating with others to fix prices; thus business regulations. And so on.

How is a government bureaucrat more rational AND better informed AND know more about what's good for me than myself?Because they have data you don't, and can't get. And because they care about the big picture even if you don't.

I don't buy it. There have been countries with political systems based on this premise and the results were not good. False dilemma. there's a whole lot of grey area between unregulated markets and Communism.

Nobody knows what I want better than I do.Quite often you don't even know that what you want is a bad idea - just because you, for example demand a medicine to make you better, doesn't mean that the medicine actually works. And quite often what you ask for isn't what you'll get anyway, without the government keeping the predators under control.

[wmfellows]

I do think it's politically driven. As I said in my first post; unless you assume that people are perfectly rational and perfectly informed, they'll make bad decisions, decisions that go against their own and/or everyone else's interest or even survival. So, you need government intervention and support to keep the market and the rest of society from falling apart. This economic idea that people are all perfectly rational mainly serves as an excuse for cutting government and regulations under the claim that they aren't necessary. That the market will act in enlightened self interest and take up the slack even if you reduce the government to nearly nothing, which doesn't work.

Mate, you either don't understand a proper economist's use of the term rationale or don't wish to use it. Never mind you rather grossly mischaracterise Freidman. The idea of rationality in economics most certainly is not mainly about reduction of government. The concept focuses on the reasonable (if not perfect, certainly) supposition that most of the time people have coherent hierarchies of preferences, and typically speaking free exchange between rational actors [as defined] is an efficient mechanism for balancing offer with demand. While it certainly strikes a blow to the heart of command economies (although the actual failure of command economies rather does that), it does not say anything in particular about "reducing government to nearly nothing" or what level of regulation to enable the market is best.

[Der Trihs]

So, what to do about this? Have the science of economics involve less math and more sociology, I say. If all economists analyzed transactions with the assumption that all participants would try to find a way to go off-model, I think we'd get better models.I agree. I've noticed that these right wing models of economics seem to assume that everyone involved is mindless, like so many competing genes; or is ideologically committed to the free market to the point of self sacrifice; or too short sighted to, as in your example, try to manipulate & subvert the system for their own profit.

[wmfellows]

Because they have data you don't, and can't get. And because they care about the big picture even if you don't.

Worked spectacularly well in the old Sov Bloc, this ... entertaining supposition.

And Robert: there is an entire field called Behavioural Economics that has, oh more than 15 years of research ongoing to address some of the Classic rationality assumptions weak points (such as asymmetrical values assigned to loss versus gain).

I agree with Smith, these threads tend to become depressingly poorly informed ideological shouting matches. It would at least be useful for people to pay attention to different meaning attached to rational as "term of art" and rational in ordinary usage.

[wmfellows]

I agree. I've noticed that these right wing models of economics seem to assume that everyone involved is mindless, like so many competing genes; or is ideologically committed to the free market to the point of self sacrifice; or too short sighted to, as in your example, try to manipulate & subvert the system for their own profit.

Spoken like a true believer. Not that this tells us very much about actual real economic modelling or theory at all, versus the Cartoon version that the Hard Left likes to paint.

[Der Trihs]

Mate, you either don't understand a proper economist's use of the term rationale or don't wish to use it. Never mind you rather grossly mischaracterise Freidman. The idea of rationality in economics most certainly is not mainly about reduction of government. The concept focuses on the reasonable (if not perfect, certainly) supposition that most of the time people have coherent hierarchies of preferences, and typically speaking free exchange between rational actors [as defined] is an efficient mechanism for balancing offer with demand. While it certainly strikes a blow to the heart of command economies (although the actual failure of command economies rather does that), it does not say anything in particular about "reducing government to nearly nothing" or what level of regulation to enable the market is best.But Friedman was well known for wanting to do just that; to eliminate government regulations, aid programs, regulations in general, and so on. And that's been the general thrust of economic theories like his; which is, as I say, why they don't reflect reality.

[Little Nemo]

I recently read an article about Alan Greenspan that said his big mistake was to place too much faith in the rationality of the market because he believed banks and other financial institutions would do the rational thing to protect themselves from a financial collapse. But what he didn't think about was that banks don't make decisons - people employed by banks make the decisons. And these people would often put their own personal interests ahead of any interest of the bank. They would readily take a risk that would produce a big payout during their career with no concern about the possibility of a collapse in the future.

[Der Trihs]

Worked spectacularly well in the old Sov Bloc, this ... entertaining supposition. Ah, yes; the standard right wing attempt to portray any desire for government regulation as Communism.

And Robert: there is an entire field called Behavioural Economics that has, oh more than 15 years of research ongoing to address some of the Classic rationality assumptions weak points (such as asymmetrical values assigned to loss versus gain). Which isn't the kind of economic theory we are talking about here.

Spoken like a true believer. Not that this tells us very much about actual real economic modelling or theory at all, versus the Cartoon version that the Hard Left likes to paint.It's the cartoon version that tends to drive policy on the right, so that's what matters.

[BrightNShiny]

The problem is that there are really several different entities interacting in such a way as to not adequately communicate information between different markets.

Mortgage lenders not adequately screening borrowers. Rating agencies not properly quantifying risks associated with CDOs consisting of securitized mortgages. Bankers interested in short term profits. You have several different markets interacting without the right information being properly passed between them.

Ok, but this is an information problem that requires some sort of fix, and the problem in the US is that anytime some one proposes government regulations to rectify information problems, people start screaming about communism.

[RickJay]

No...that's an irrational action. A rational capitalist tries to maximize his profit. If he's limiting his profit, he's acting irrationally.
You're confusing profit with utility. Taking your statement to its logical conclusion, all people should attempt to work every waking hour of their lives, since that would maximize their profits as sellers of labour. They don't, because that would provide them with less utility than a chosen mix of work and leisure. A capitalist will not necessarily maximize profit if other means of getting utility compete with profit on one or more indifference curves.

This could become an interesting discussion but, regrettably, the thread looks like it's headed in the wrong direction.

[wmfellows]

But Friedman was well known for wanting to do just that; to eliminate government regulations, aid programs, regulations in general, and so on. And that's been the general thrust of economic theories like his; which is, as I say, why they don't reflect reality.

He believed in vastly reducing government intervention in the economy. Right or wrong - I would not agree with the extent he thought valid, your description of modern economic theory is cartoonishly distorted by your ideology (and you evidently do not have a strong grasp on the actual theory).

And

Ah, yes; the standard right wing attempt to portray any desire for government regulation as Communism.

No, not at all. I have nothing against well designed regulation, and indeed the occasional strategic intervention in the markets when things get bollixed up - bloody nationalise the banks if necessary for a bit in a crisis. The supposition, however, you trotted out of the best informed bureaucrat and the Greater Good rot is pure old Sov style thinking.

And btw, most of the Behavioural Economics lit builds on the Classic - it is indeed this kind of economics.

[sailor]

Because, say, they have in hand a study showing that the medicine you want is poison. Thus the FDA. Or that the building you want to move into is in danger of collapse. Thus building codes. Or that regardless of your opinion and/or resources, your child should at least be literate. Thus public schools. Or that regardless of how much more it costs to dispose of safely, it's bad for everyone if you dump cyanide in your local river. Thus the EPA. Or that the business you want to buy from is a scam, or is collaborating with others to fix prices; thus business regulations. And so on.

Because they have data you don't, and can't get. And because they care about the big picture even if you don't.

False dilemma. there's a whole lot of grey area between unregulated markets and Communism.

Quite often you don't even know that what you want is a bad idea - just because you, for example demand a medicine to make you better, doesn't mean that the medicine actually works. And quite often what you ask for isn't what you'll get anyway, without the government keeping the predators under control.Again, you are confusing freedom of the market with regulation of the market. And, since you keep doing it in spite of my and others' clarifications I have to assume you are doing it deliberately. Nobody is against a healthy regulation of the markets and your attempts to imply otherwise is a straw man.

To anyone genuinely interested in the topic of free markets and how prices communicate information I recommend Hayek's "The Road to Serfdom" and his article which I linked to in other threads. (I get tired of having to search for the links so often).

[BrightNShiny]

Again, you are confusing freedom of the market with regulation of the market. And, since you keep doing it in spite of my and others' clarifications I have to assume you are doing it deliberately. Nobody is against a healthy regulation of the markets and your attempts to imply otherwise is a straw man.

I don't have a cite, but I've read several places that Milton Friedman advocated abolishing the FDA, which sounds to me like a complete obliteration of regulation rather than a healthy regulation of markets.

I've never read the article in which Friedman supposedly advocated this, so perhaps he had something else in mind. Maybe someone here knows how Friedman intended to solve all the efficiency problems associated with the things the FDA regulates. But unless someone can present that argument here, then characterizing Friedman as a deregulator seems fair to me.

[IdahoMauleMan]

I don't have a cite, but I've read several places that Milton Friedman advocated abolishing the FDA, which sounds to me like a complete obliteration of regulation rather than a healthy regulation of markets.

I've never read the article in which Friedman supposedly advocated this, so perhaps he had something else in mind. Maybe someone here knows how Friedman intended to solve all the efficiency problems associated with the things the FDA regulates. But unless someone can present that argument here, then characterizing Friedman as a deregulator seems fair to me.

I believe Friedman advocated making the FDA voluntary, much like any other private entity.

If you only want to buy drugs and food with an 'FDA' stamp on them, fine. Feel free to do so. The fees to support the FDA will be paid for by companies wishing to have the 'FDA' stamp on them.

If someone is willing to buy drugs and food without the FDA stamp, that's fine too. The companies that sell those will have a lower cost structure.

There can also be other agencies that spring up to compete with the FDA. Perhaps they would even be better at diagnosing risk and could do it more cheaply than a government agency. Food and drug companies wishing to utilize a different stamp of approval would pay the new agencies fees to come and inspect their products.

You could also apply the same logic to the Consumer Products Safety Commission.

The way it works today, the FDA has an absolute monopoly on the rules. There is no possibility for competitive agencies, because the food and drug companies must clear the FDA's bar, and no one else's. Even if the bar is too high, or costs too much, or is too restrictive. They don't have a choice, and neither do you.

[BrightNShiny]

I believe Friedman advocated making the FDA voluntary, much like any other private entity.

If you only want to buy drugs and food with an 'FDA' stamp on them, fine. Feel free to do so. The fees to support the FDA will be paid for by companies wishing to have the 'FDA' stamp on them.

If someone is willing to buy drugs and food without the FDA stamp, that's fine too. The companies that sell those will have a lower cost structure.

There can also be other agencies that spring up to compete with the FDA. Perhaps they would even be better at diagnosing risk and could do it more cheaply than a government agency. Food and drug companies wishing to utilize a different stamp of approval would pay the new agencies fees to come and inspect their products.

You could also apply the same logic to the Consumer Products Safety Commission.

The way it works today, the FDA has an absolute monopoly on the rules. There is no possibility for competitive agencies, because the food and drug companies must clear the FDA's bar, and no one else's. Even if the bar is too high, or costs too much, or is too restrictive. They don't have a choice, and neither do you.

I don't want to hijack this thread into a debate about the FDA. However, nothing you've posted here rectifies the efficiency problems (particularly the information assymetry or negative externality problems) associated with medication or food. This isn't smart regulation, this is no regulation.

And again, my recollection is that he wanted to get rid of it, not make it voluntary.

[IdahoMauleMan]

I don't want to hijack this thread into a debate about the FDA. However, nothing you've posted here rectifies the efficiency problems (particularly the information assymetry or negative externality problems) associated with medication or food. This isn't smart regulation, this is no regulation.

And again, my recollection is that he wanted to get rid of it, not make it voluntary.

Yes, I complicated the question. Sorry about that.

Getting rid of it and making it voluntary are essentially the same thing. If nobody wants to avail themselves of the FDA's services, it will go out of business like any other business.

There is information asymmetry everywhere in consumer decision-making. When you buy a house. When you buy a used car. When you flick on a TV program. When you order a hamburger at a restaurant. There are many choices a consumer can make before the decision, during the decision and even after the decision to mitigate the effects of information asymmetry. There are opinions he can solicit, substitutes he can consider, agents he can employ on his behalf, lots of things.

The presence of a government agency that 'blesses' the sale of a product gives people a false sense of security that the asymmetry problems you describe have been solved when in fact they have not. And the cure is worse than the disease.

If a consumer wishes to avail themselves of the FDA (or any other competing agency) to 'solve' the asymmetry problem on their behalf, they are free to do so in Friedman's world.

[BrightNShiny]

There is information asymmetry everywhere in consumer decision-making. When you buy a house. When you buy a used car. When you flick on a TV program. When you order a hamburger at a restaurant. There are many choices a consumer can make before the decision, during the decision and even after the decision to mitigate the effects of information asymmetry. There are opinions he can solicit, substitutes he can consider, agents he can employ on his behalf, lots of things.

The presence of a government agency that 'blesses' the sale of a product gives people a false sense of security that the asymmetry problems you describe have been solved when in fact they have not. And the cure is worse than the disease.

If a consumer wishes to avail themselves of the FDA (or any other competing agency) to 'solve' the asymmetry problem on their behalf, they are free to do so in Friedman's world.

Is this Friedman's argument? Because this argument presupposes that individuals are capable of limiting or eliminating information assymetry problems absent government regulation. And if that's his argument, then I'm going to agree that he has taken deregulation to absurd places. It may be true in some cases, but I seriously doubt it's going to be true in the case of highly complex things like medicine.

And all you have to do is look at the current financial meltdown to see why I say that. That is a case of sophisticated people (except for borrowers, but they had agents--mortgage brokers) completely unable to rectify information assymetry problems in any coherent fashion.

But perhaps Friedman didn't care about economic efficiency?

[erislover]

I think the answer is: because they generally are, to the extent they can be. What we can disagree about is what it takes to make markets work, and what are the limits of human rationality (like long-term risk assessment). Some seem to set that bar surprisingly low for the former issue. As for the latter, for the short and I think even the medium term, people are pretty damn rational. There are weird quirks like the Allais paradox and the so-called winner's curse (maybe we just lump it all in "loss aversion") but that is more of a "theory approximates reality" than "theory is worthless and dumb" argument.

People respond to incentives--this is the basis of the whole shebang.

[oliversarmy]

Markets are markets. Economists and other intellectuals try to to tell us what they will do.

However, they don't always follow the experts or common wisdom. Markets usually follow the money, despite what we expect or attempt to control. Governments and corporations can influence the markets, but they don't control the markets, despite their best or worst intentions. The market always wins.

[RickJay]

Is this Friedman's argument? Because this argument presupposes that individuals are capable of limiting or eliminating information assymetry problems absent government regulation. And if that's his argument, then I'm going to agree that he has taken deregulation to absurd places. It may be true in some cases, but I seriously doubt it's going to be true in the case of highly complex things like medicine.
Curiously, though, you don't think anything of it when buying an appliance, like a refrigerator or computer monitor, that could electrocute you or set your house on fire if it's not built right. And yet the standards and inspection regimes for such things are voluntary, provided by private organizations like UL, CSA, and the like.

I wouldn't suggest for an instant there is no place for regulation, but this "everyone who opposes my view is a Nazi" attitude Der Trihs seems to adopt in every thread is getting tiresome. There is a perfectly good argument to be made for maintaining a free market and keeping regulation at least limited to where we know it works.

[BrightNShiny]

Curiously, though, you don't think anything of it when buying an appliance, like a refrigerator or computer monitor, that could electrocute you or set your house on fire if it's not built right. And yet the standards and inspection regimes for such things are voluntary, provided by private organizations like UL, CSA, and the like.

I see you are posting from Ontario. I don't know what the laws in Canada are, but in the US, the Consumer Products Safety Commission (CPSC) regulates all consumer appliances. In a number of cases the CPSC sets minimum safety regulations explicitly, and in some cases, they require manufacturers to conform to UL specs (IIRC, automatic garage door openers are explicitly required to follow UL specs).

The CPSC also has authority to issue recalls or outright ban products from the market. Where the CPSC has not chosen to explicitly set specifications, manufacturers are still required to conform to "voluntary" guidelines--here, voluntary is a legal term of art which basically means industry adopted guidelines.

On top of this, many government agencies will not purchase appliances which do not meet industry guidelines, and UL compliance may be cited as evidence of non-negligence in civil court.

There is a whole governmental regulatory regime which pushes manufacturers into adopting UL guidelines, and if these guidelines were shown to be unsafe, the CPSC is charged with stepping and and issuing its own guidelines if it wants to.

This is typical of the American regulatory approach, which is to try to allow the private sector significant input into the development of regulatory regimes. But it's not a good example of a lack of regulation.

[sailor]

Curiously, though, you don't think anything of it when buying an appliance, like a refrigerator or computer monitor, that could electrocute you or set your house on fire if it's not built right. And yet the standards and inspection regimes for such things are voluntary, provided by private organizations like UL, CSA, and the like.

I wouldn't suggest for an instant there is no place for regulation, but this "everyone who opposes my view is a Nazi" attitude Der Trihs seems to adopt in every thread is getting tiresome. There is a perfectly good argument to be made for maintaining a free market and keeping regulation at least limited to where we know it works.I was going to mention the same examples (UL, etc).

Regulation is not intrinsically good or bad. Each regulation can be good, indifferent or bad. There are many industries and sectors which self-regulate pretty well and others which self-regulate pretty badly. There are also some which are well regulated by the government and others which are badly regulated by the government. This has ZERO to do with freedom of the market.

In general terms though I would say over-regulation tends to be bad and worse than under-regulation. The results of over-regulation tend to be inefficiencies and high costs which just continue indefinitely while the results of under-regulation can be crisis which immediately create the forces to create regulation to prevent a recurrence.

Many people believe the FDA is a case of over-regulation which just increases the costs of developing drugs. On the other hand I suppose the cost may be worth the prevention of something like the thalidomide case.

[BrightNShiny]

I was going to mention the same examples (UL, etc).

Why? A 1/2 hour before you made your post, I explained that these were not an example of free market self-regulation. UL is a an example of government-backed regulation.

[IdahoMauleMan]

Is this Friedman's argument? Because this argument presupposes that individuals are capable of limiting or eliminating information assymetry problems absent government regulation. And if that's his argument, then I'm going to agree that he has taken deregulation to absurd places. It may be true in some cases, but I seriously doubt it's going to be true in the case of highly complex things like medicine.

And all you have to do is look at the current financial meltdown to see why I say that. That is a case of sophisticated people (except for borrowers, but they had agents--mortgage brokers) completely unable to rectify information assymetry problems in any coherent fashion.

But perhaps Friedman didn't care about economic efficiency?

I'm probably getting farther and farther away from my knowledge of what Friedman said at one time or another. So I'll have to stop here.

But the last sentence of your first paragraph - and the first sentence of the second paragraph - is a bright, shiny example of the logic that explains why so many citizens choose to disempower themselves in today's society. Which is distressing to many libertarians.

It's too complicated for me to understand. Therefore, I want to toss the keys to a government bureaucrat with absolute power, completely different incentives than me, no accountability for poor performance, and who will be a target for special interests to make unilateral decisions for me. And for everybody else. Even if the other people don't want it.

And Banking Failure = Information Asymmetry is a new one for me. Why isn't it a failure of government oversight and regulation?

[wmfellows]

But the last sentence of your first paragraph - and the first sentence of the second paragraph - is a bright, shiny example of the logic that explains why so many citizens choose to disempower themselves in today's society. Which is distressing to many libertarians.

It's too complicated for me to understand. Therefore, I want to toss the keys to a government bureaucrat with absolute power, completely different incentives than me, no accountability for poor performance, and who will be a target for special interests to make unilateral decisions for me. And for everybody else. Even if the other people don't want it.

Well, that is the market in operation mate, a rational choice on the part of consumers to delegate painful, time consuming and irritating and/or expensive processes to government.

Best not to be a purist libertarian, insofar as the reality of mass preferences do not meet the political (versus economic) precepts of said philosophy. And likely never, ever will. Recipe for constant grinding disappointment, sort of the photo negative of the Bolshies in the end.

Of course, it does seem you overstate the negatives on bureaucrats, however. Lighten up.

And Banking Failure = Information Asymmetry is a new one for me. Why isn't it a failure of government oversight and regulation?

Depends on one's analysis in the end. Much of the crazy credit stuff was going on the unregulated "parallel" credit sector, or in the very lightly regulated reaches of the regulated areas, such as the I-Banks.

While one can advance an argument that somehow regulation incented banks to play games to reduce regulatory capital costs, that really doesn't seem terribly satisfying in the end insofar as the players that blew up seem to have largely taken on excessive risk in a ill-advised short term search for maximum yield, and much of the failure in the risk management was on excessive reliance on market based models that had been pushed well beyond where their assumptions actually stood up.

I frankly don't find a terribly colourable argument that this was the "fault" of regulators.

Information asymmetry really looks rather more colourable in the end here, as the regulatory argument smells of ideology and one has to advance 3rd and 4th order effects, whereas the information assymetries between the market segments pretty much stand out, and don't need reaching behind the head to scratch the ear arguments.

[IdahoMauleMan]

Well, that is the market in operation mate, a rational choice on the part of consumers to delegate painful, time consuming and irritating and/or expensive processes to government.

Lighten up.


They are welcome to delegate such things if they want to. They can call up, or email, the FDA every morning and ask them for their advice on products if they choose to do so.

It crosses the line when they also want to delegate those things for me.

I'm lighter than you think. :-)

[wmfellows]

The presence of a government agency that 'blesses' the sale of a product gives people a false sense of security that the asymmetry problems you describe have been solved when in fact they have not. And the cure is worse than the disease.

Emphasis added:
I rather question such a bold assertion. Sometimes yes, sometimes no.

In the instance of drugs and food, given the understand aversion of the average consumer to death, permanent loss of health, etc (perhaps a bit of the generic bias against loss versus gains), asserting the cure is worse than the disease strikes me as rather ideological.

[wmfellows]

They are welcome to delegate such things if they want to. They can call up, or email, the FDA every morning and ask them for their advice on products if they choose to do so.

It crosses the line when they also want to delegate those things for me.

I'm lighter than you think. :-)

Representative Democracy mate, afraid its what you have to live with. Not as good perhaps as purist theory, but the human condition is imperfect.

Now, I know some entirely unregulated markets for you to try out your drug preferences in. They're not holiday destinations, but should you want to be free of the perceived evils of the US FDA, etc., well, they're there.

[ralph124c]

Friedman was correct about most markets for goods and services, and those markets function pretty rationally. But consider the financial markets 9like the onces for derivatives and "swaps"): information is hard to find, and there are few sellers. Because of this, the value of the product is hard to asess. this is what ultimately caused the collapse (of the mortgage-backed securities markets). What was being advertised was not what was being sold.

[msmith537]

I believe Friedman advocated making the FDA voluntary, much like any other private entity.

...
The way it works today, the FDA has an absolute monopoly on the rules. There is no possibility for competitive agencies, because the food and drug companies must clear the FDA's bar, and no one else's. Even if the bar is too high, or costs too much, or is too restrictive. They don't have a choice, and neither do you.


The problem with that idea is that markets are, in fact, rational and amoral. There would develop a perfectly rational conflict of interest that would drive the FDA to define ratings based on what maximizes their revenue, not on what is best for society.

This is similar to what happened with the mortgage backed CDOs. These financial instruments are all rated by private companies - Standard & Poor's, Moody's or Fitch Ratings. Their ratings are often clouded by client relationships.

[Strassia]

IMNAE, but it seems to me that there are two major things missing from the classical model:

It breaks down once emotions get involved. Markets are usually very efficient, but one emotions get going (good or bad), they become more complex and the model breaks down. Panic or euphoria cause agents to lose their rationality. Which brings up my second point:
Most actors in the market are agents. A "direct" market (e.g. hungry people buying apples from orchard owners) are very rare. Not only do you have bankers and brokers, but CEOs and boards are also agents. Consider a CEO with a contract that gives huge bonuses for quarterly profits and golden parachute. His rational decision would be to drive up the quarterly numbers however he can for a few years and then when if the whole thing comes tumbling down, exit with his gains. That him significantly more than if he bases his decisions on the best interests of the company.

[Strassia]

One other thing to consider is that while regulations can warp markets, so can other things. For example, our current tax policy rewards buying and selling stock over the middle period over either holding stock or selling in the short term. Capitol gains of over a year are taxed lower than dividends or gains of less than a year. This encourages companies to do things to raise stock prices (e.g. stock buy backs) instead of paying dividends. This has shifted stocks from sources of long term income to medium term bets. Stockholders rational interest is for stock prices to rise in the next few years, not steady profits.

Disclaimer: I know that profits and stock prices are linked, but the link is not unbreakable as the dot com bubble showed us.

[dropzone]

Yeah, I don't know much about economics. Think of this as a chance to edumacate me and others. Lemme see if I get this right:

We should not confuse the Big-M Market and the actors who make it up. Actors are acting rationally when they say, "The devil take the hindmost! I'm grabbing all I can." Makes sense, and that is how a reasonable person would expect a bunch of Type As to behave. But that rational actor is not acting in an altruistic manner and can only be balanced by other actors grabbing as much as they can from him and each other to leave the Market stable, or appearing stable when it is a seething pack of hyenas tearing apart a kudu carcass and each other. But it is obvious that the system is not actually stable and can be easily knocked off balance if some hyenas get bigger or there is a dip in the amount of kudu carcass available. A stable system would have smaller spikes and troughs.

My understanding of Friedman's model of the Market is that it is stable as long as internal and external forces stay stable, and self-correcting as long as the changes in those forces remain small. However, it does not take into account either large changes in the forces, like wars or changes in commodity prices, or actors who, acting completely rationally, find a way around the ecology of the stable system for short term gain. Either can take kudu from the rest of the hyenas, or make the rest think there is less kudu, scaring them into irrational behavior, like selling off stock in Kudu Inc and other companies that, in a rational world, should not be that cheap. This feeds on itself and the Market spirals downward until Kudu Inc really is as worthless as the hyenas thought it was. The Market behaves like a living creature, not a gyroscope, and uncertainty, such as which and how many of the mortgages backing mortgage-backed securities really are bad, can make its actors, acting seemingly rationally to minimize their individual, short term damage, cannibalize the system.

Sure, eventually the Market may stabilize on its own, but since its behavior affects everybody, including people who do not realize how much they depend on its stability and cannot wait for a natural recovery, a government that does not wish to be overthrown in a revolution will attempt to prevent complete collapse.* So the needs of the many force an abandonment of the Friedman model in real life because the Market cannot practically be allowed to follow its "natural" course.


* - I understand this goes against the beliefs of true libertarian free-marketers, but most people who give it any thought dismiss them as sociopaths.

[erislover]

Yeah, I don't know much about economics. Think of this as a chance to edumacate me and others. Lemme see if I get this right:

We should not confuse the Big-M Market and the actors who make it up. Actors are acting rationally when they say, "The devil take the hindmost! I'm grabbing all I can." Makes sense, and that is how a reasonable person would expect a bunch of Type As to behave.This point is quite questionable. The real question is one of marginal utility. People do not really want to be infinitely rich, because they want to use some of their time for other things they value, like spending time at the beach, blogging, or whatever. The value of their next moment might be much, much larger than anyone can reasonably provide; this is called "playing video games," though it goes by other names as well. ;)

What I think personally ruins the issue is people acting on behalf of corporations. Corporations do not have leisure activities. Corporations don't play golf or Halo 3, they don't climb mountains or vacation in Europe. People acting on behalf of a corporation, therefore, would not make the same estimations as a prototypical rational man. People may be greedy, but desire is for more than dollars. This is far less true of fictions like corporations, and the incentives that drive their proxies.
My understanding of Friedman's model of the Market is that it is stable as long as internal and external forces stay stable, and self-correcting as long as the changes in those forces remain small.I don't know what you mean by small. You can plan for some things, to some extent, like buying insurance on your house. If a house fire happens, this will be a "big" force. A company might account for the risk of foreign nationalization, but this doesn't mean that it won't take a massive hit anyway when Che gives Chevy to the Chicos. Big things really happen in real life, even when you try to hedge your bets.
However, it does not take into account either large changes in the forces, like wars or changes in commodity prices, or actors who, acting completely rationally, find a way around the ecology of the stable system for short term gain.It absolutely takes these things into account to the extent it can. Obviously it is a world of limited information, but perfect information is not necessary for stable strategies.

[IdahoMauleMan]

Representative Democracy mate, afraid its what you have to live with. Not as good perhaps as purist theory, but the human condition is imperfect.


Which is where all of these arguments eventually circuit-to-ground. And spark a good, useful discussion of citizen's rights under the Constitution.

I do not believe that 51% of the voting public, even if acting via Congressional authority, should be able to incrementally take away rights and freedoms that are protected by the Constitution.

We've gone around a bit on the FDA in this thread, but it also applies to many other threads on the SDMB. Taxation. Free trade. Public education. Licensing for guilds such as doctors, plumbers, elevator and fire-extinguisher inspectors. Bailouts of horribly-run auto companies.

You can toss aside each argument with 'Representative Democracy' and assert that as long as 51% votes for something via referendum, or Congress asserts their authority to do X, the rest of us have to go along with it.

I would disagree. Take a look at what is happening with Prop 8 right now in California and see what slightly-less-than-50% of the public feels like when they think some of their basic rights have been taken from them.

And as long as nobody puts up too much of a fight, things will continue to go this way. And we will all get what we deserve if that is the case.

[wmfellows]

Which is where all of these arguments eventually circuit-to-ground. And spark a good, useful discussion of citizen's rights under the Constitution.

I do not believe that 51% of the voting public, even if acting via Congressional authority, should be able to incrementally take away rights and freedoms that are protected by the Constitution.

We've gone around a bit on the FDA in this thread, but it also applies to many other threads on the SDMB. Taxation. Free trade. Public education. Licensing for guilds such as doctors, plumbers, elevator and fire-extinguisher inspectors. Bailouts of horribly-run auto companies.

You can toss aside each argument with 'Representative Democracy' and assert that as long as 51% votes for something via referendum, or Congress asserts their authority to do X, the rest of us have to go along with it.

I would disagree. Take a look at what is happening with Prop 8 right now in California and see what slightly-less-than-50% of the public feels like when they think some of their basic rights have been taken from them.

Well, I am not terribly interested in American Constitution Fetishes, but in any case, I think a comparison between the mere existence of your FDA and the banning of marriage for same sex couples borders on absurd.

[Voyager]

Worked spectacularly well in the old Sov Bloc, this ... entertaining supposition.

And Robert: there is an entire field called Behavioural Economics that has, oh more than 15 years of research ongoing to address some of the Classic rationality assumptions weak points (such as asymmetrical values assigned to loss versus gain).

Thaler prides himself on not being as mathematical as the average Chicago economist. He's in GSB, not the Economics department, by the way.

Equating a regulatory system, which is what DerTrhis was discussing, with a command economy is rather absurd. Drug regulation is not the first step on the slippery slope to Communism.

Supporters of rational markets misuse the term rational as much as opponents do. sailor is implying that each player has full information, coming from having the time, resources, and intelligence to collect information on each purchase decision. That's a common right wing fantasy.

I don't think Friedman was politically motivated, but it seems that assuming rational players to make the models work soon becomes the contention that regulation is unnecessary because there are rational players.

[Voyager]

Let's consider what would happen with a privatized drug regulatory system.

First, even among honest regulators, requirements for proving efficacy will diverge. It's plenty expensive getting FDA approval today - doing it for n regulatory agencies will make it even more so.
Second, the companies wanting to maximize profits will quickly form their own "regulatory" agency, which will rubber stamp approvals for their drug, with no doubt authentic looking tests.
In the deregulatory fantasy world, each consumer will check on ratings of each private regulatory agency and make decisions accordingly. Unfortunately, consumers actually have to work and are not likely to have the time, especially when the bogus ones are cheaper. Even if they read the details, will they understand them? I can see the holes in the claims by the fake boner pill company ads, but how many people have a science education? I doubt I could read and understand the full report.
When we start, people will assume that medicine is safe in the future because it was in the past. I worked for AT&T during deregulation, and about a year after you were able to buy a phone our sales went up again. The reason was that the average consumer assumed that all phones would work forever, and thus bought on price. They soon discovered that cheap phones were junk, and came back. That's fine for telephones, not so fine for medicine that will either prevent a heart attack or won't. Not all companies who will sell problem drugs will do it out of malice. Plenty of drugs get rejected when submitted with the best of intentions and with total scientific honesty. There is no way of telling, without expensive and time consuming clinical trials, if a drug is safe or not.

So many of our problems come from people deregulating and saying "what can go wrong." See Greenspan's testimony. And I might remind you that the Preamble talks about "promote the general welfare." Privatizing drug approvals will not do that.

[Voyager]

What I think personally ruins the issue is people acting on behalf of corporations. Corporations do not have leisure activities. Corporations don't play golf or Halo 3, they don't climb mountains or vacation in Europe. People acting on behalf of a corporation, therefore, would not make the same estimations as a prototypical rational man. People may be greedy, but desire is for more than dollars.
That's a good point, and , to add to it, corporations can distort the economic climate for its employees. It appears that brokers were incented by their employers to drive people to risky loans - bad for the borrower, but profitable in the short term for the broker and the lender. Every person in the chain that led to this disaster, operated on a basis of improving their short term interests.

I'm curious about how the fans of deregulation propose that this situation could have been averted without effective regulation. When a good regulatory regime is in effect, there are no problems, and so it is reasonable that those philosophically opposed to regulation claim it should be relaxed. After all, you don't need to spend money fixing your roof when it isn't raining.

[sailor]

sailor is implying that each player has full information, coming from having the time, resources, and intelligence to collect information on each purchase decision. That's a common right wing fantasy.
The "full information"argument is a straw man. I do not believe *anyone* has "full information", much less some government bureaucrat. I am not against regulation; I am against misrepresenting the concept of "free market" as "unregulated market".

[wmfellows]

Thaler prides himself on not being as mathematical as the average Chicago economist. He's in GSB, not the Economics department, by the way.

Equating a regulatory system, which is what DerTrhis was discussing, with a command economy is rather absurd. Drug regulation is not the first step on the slippery slope to Communism.

Supporters of rational markets misuse the term rational as much as opponents do. sailor is implying that each player has full information, coming from having the time, resources, and intelligence to collect information on each purchase decision. That's a common right wing fantasy.

I don't think Friedman was politically motivated, but it seems that assuming rational players to make the models work soon becomes the contention that regulation is unnecessary because there are rational players.

No mate, Der Trihs was saying much more than merely regulation can be useful, he was making old school Sov style claims about greater knowledge on the part of the Bureaucrat, etc. That is thinly disguised command economy thinking.

I'm not in any way equating regulation, even extensive regulation with Sov style economy. I do see in [b]his/b] thinking such thinking, including the parodic presentation of free market.

[wmfellows]

That's a good point, and , to add to it, corporations can distort the economic climate for its employees. It appears that brokers were incented by their employers to drive people to risky loans - bad for the borrower, but profitable in the short term for the broker and the lender. Every person in the chain that led to this disaster, operated on a basis of improving their short term interests.

I'm curious about how the fans of deregulation propose that this situation could have been averted without effective regulation. When a good regulatory regime is in effect, there are no problems, and so it is reasonable that those philosophically opposed to regulation claim it should be relaxed. After all, you don't need to spend money fixing your roof when it isn't raining.

I am not personally an advocate of deregulation (nor regulation), but in this instance, yes, the unregulated (or poorly regulated) entry point, the mortgage brokers probably could stand for some standard setting.

However, to write "when a good regulatory regime is in effect there are no problems" is bollocks. A good regulatory regime can certainly reduce excessive risk taking and bad players bollixing things up, but eliminate problems, a foolish expectation. Every regulatory regime introduces perverse incentives and costs. They may be (and in this instance probably are) outweighed by gains, but that does not eliminate probelms.

[Voyager]

The "full information"argument is a straw man. I do not believe *anyone* has "full information", much less some government bureaucrat. I am not against regulation; I am against misrepresenting the concept of "free market" as "unregulated market".

A totally free market would be unregulated, but I'm not implying that anyone is in favor of a totally free market. The question is what is the proper balance between the advantages of the free market (which isn't well defined) and the disadvantages of deregulation in many instances. Considering regulation the equivalent of a command economy is not helpful. Consider China. They are certainly more of a command economy than we are, but less regulated, certainly in terms of product quality. It is certainly possible to specify prices and production levels of a product while not saying anything about the products efficiency or safety.

And, btw "government bureaucrat" is a loaded term here. You seem to be wanting to give the impression that those making decisions in the FDA are a bunch of pencil pushers. They are far more likely to be trained statisticians, biologists, or doctors, who can read and understand the research reports.

Do you deny that a doctor at the FDA spending full time evaluating clinical trials has a lot more information - and can process it better - than Joe English major or Jill Haircutter looking at a product on drug store shelves? Not every person is qualified to make medical judgments. just like not every person is qualified to be president.

[Voyager]

No mate, Der Trihs was saying much more than merely regulation can be useful, he was making old school Sov style claims about greater knowledge on the part of the Bureaucrat, etc. That is thinly disguised command economy thinking.

I'll let him speak for himself, but I've never seen him advocate a command economy. Like I said above, stating that a doctor or statistician working full time evaluating clinical trials of a new drug knows more than Joe Common Guy seems rather obvious, and says nothing about command economies. Unless you're one to see statists under every bed, that is.

BTW I am not and have never been a federal bureaucrat. I did deliver mail one summer, that's about as close as I've ever come. My wife is a medical writer, and worked for about a year for a drug company on preparing the application, so I'm somewhat aware of these issues.

[sailor]

A totally free market would be unregulated, I disagree and so does F. Hayek. This is like saying the USA is not a free country because you are not free to drive on the left side of the road or drunk. In fact regulation is supposed to enhance, not diminish, freedom. When economists use the term "free market" they do not use it the way you imply. Again, see Hayek.

I have explained in other threads what is meant by the term "free market" so I am not going to repeat it here.

[Voyager]

I disagree and so does F. Hayek. This is like saying the USA is not a free country because you are not free to drive on the left side of the road or drunk. In fact regulation is supposed to enhance, not diminish, freedom. When economists use the term "free market" they do not use it the way you imply. Again, see Hayek.

I have explained in other threads what is meant by the term "free market" so I am not going to repeat it here.

That's why I modified "free market" with the word "totally" - which you obviously missed. The rest of that sentence reads "but I'm not implying that anyone is in favor of a totally free market.". Do try to respond to what I actually wrote, not to your fantasy of what I might write.

[Voyager]

I am not personally an advocate of deregulation (nor regulation), but in this instance, yes, the unregulated (or poorly regulated) entry point, the mortgage brokers probably could stand for some standard setting.

However, to write "when a good regulatory regime is in effect there are no problems" is bollocks. A good regulatory regime can certainly reduce excessive risk taking and bad players bollixing things up, but eliminate problems, a foolish expectation. Every regulatory regime introduces perverse incentives and costs. They may be (and in this instance probably are) outweighed by gains, but that does not eliminate probelms.

I should have probably said "disasters" instead of problems.
There have been a few stories on Marketplace about regulated regional banks, who are doing just fine in this crisis, making money and loans as if nothing were happening. Regulation seems to have been effective at keeping people from going off a cliff, though it does keep them from eating that good grass near the edge (to mix metaphors a bit.)

[BrightNShiny]

But the last sentence of your first paragraph - and the first sentence of the second paragraph - is a bright, shiny example of the logic that explains why so many citizens choose to disempower themselves in today's society. Which is distressing to many libertarians.

It's too complicated for me to understand. Therefore, I want to toss the keys to a government bureaucrat with absolute power, completely different incentives than me, no accountability for poor performance, and who will be a target for special interests to make unilateral decisions for me. And for everybody else. Even if the other people don't want it.

The purpose of regulations to correct information assymmetry problems is to push maximum information into the marketplace so that individuals can make rational decisions about their choices. It's not so people can make decisions for you.

Now, I'll grant that the FDA does other things than solely correct information problems, but if libertarians equate all attempts to reduce economic inefficiencies with some sort of "unilateral" decision making authority, then it's no wonder the majority of people reject libertarianism over and over again. Perhaps you can stop being hyperbolic for a minute and engage in useful economic arguments.

And Banking Failure = Information Asymmetry is a new one for me. Why isn't it a failure of government oversight and regulation?

Yes, there is an information problem, because proper information to value the mortgages was not being passed through from beginning point to end point. That's not the only problem, but it is one of the problems. And the way you correct that problem is by setting down oversight and regulation.

[Captain Amazing]

How did a discussion about rationality turn into one about regulation? Can't regulation make markets more rational, by dealing with the information problem?

[IdahoMauleMan]

Yes, there is an information problem, because proper information to value the mortgages was not being passed through from beginning point to end point.

Then why were people buying them, without all of the information they needed?

[IdahoMauleMan]

But if libertarians equate all attempts to reduce economic inefficiencies with some sort of "unilateral" decision making authority, then it's no wonder the majority of people reject libertarianism over and over again. Perhaps you can stop being hyperbolic for a minute and engage in useful economic arguments.

I would like to market and sell beer that I make in my basement. Maybe on a stand in front of my house. I cannot, for risk of being arrested. Not by the FDA, of course, but it's possible they might get involved along the way. How is that anything other than unilateral decision-making authority?

Large drug companies spend between $500 million to $1 billion to get a drug through the pipeline to approval, which takes many years. I'm sure they would prefer not to spend that much money, and take much less time to get their products to market. They cannot. How is that anything other than unilateral decision-making authority?

[Standup Karmic]

Can't regulation make markets more rational, by dealing with the information problem?

I do not believe there is any such animal as "more rational." There is rational, and there is irrational.

In my estimation, all people are rational at all times. That is, they make the best decision they can with the information that they have at the moment that they make it. Even those who one might think is making an irrational decision (a former alcoholic bending to stress and having a drink, for example), are, in their own experience, making a rational decision based upon the information they have.

Regulation that deals with information asymmetry does not create a market that is any more rational than a market that has greater asymmetry. There is simply a new rational decision because of greater availability of information.

[Beware of Doug]

How did a discussion about rationality turn into one about regulation?We are on the Dope, after all. GD threads are supposed to unravel into shoving matches over facts tangential to the original issue.

[The Second Stone]

Mate, you either don't understand a proper economist's use of the term rationale or don't wish to use it. Never mind you rather grossly mischaracterise Freidman. The idea of rationality in economics most certainly is not mainly about reduction of government. The concept focuses on the reasonable (if not perfect, certainly) supposition that most of the time people have coherent hierarchies of preferences, and typically speaking free exchange between rational actors [as defined] is an efficient mechanism for balancing offer with demand. While it certainly strikes a blow to the heart of command economies (although the actual failure of command economies rather does that), it does not say anything in particular about "reducing government to nearly nothing" or what level of regulation to enable the market is best.

It is more that economists do not understand the proper use of the term "rational". Individual people are not rational in pursuing their own interests. Groups of people do not "average out" that rationality, they act like mad mobs. People don't understand what their own interests are and misunderstand when they think that they do because people are fundamentally emotional beings, not rational beings. Rationality is an afterthought to our daily survival instincts and pursuits of pleasure.

Modern economics is severely hampered by Friedman's economic tautology, which is really more like a religion than a science. While thinking about economies may be useful, the tools that are used are poorly understood and not open to improvement.

[RickJay]

It is more that economists do not understand the proper use of the term "rational". Individual people are not rational in pursuing their own interests. Groups of people do not "average out" that rationality, they act like mad mobs. People don't understand what their own interests are and misunderstand when they think that they do because people are fundamentally emotional beings, not rational beings. Rationality is an afterthought to our daily survival instincts and pursuits of pleasure.
Define "Rational." Why is it irrational to pursue pleasure?

Modern economics is severely hampered by Friedman's economic tautology, which is really more like a religion than a science. While thinking about economies may be useful, the tools that are used are poorly understood and not open to improvement.
What "tautology"? How is a tautology a religion? What is "modern economics" and how is it hampered by Friedman? What tools do you feel aren't open to improvement?

This doesn't read like an attempt to discuss any issues, but rather reads like the usual "All economics is crap because I don't understand it" baloney we get here a lot.

[erislover]

It is more that economists do not understand the proper use of the term "rational". Individual people are not rational in pursuing their own interests. Groups of people do not "average out" that rationality, they act like mad mobs. People don't understand what their own interests are and misunderstand when they think that they do because people are fundamentally emotional beings, not rational beings. Rationality is an afterthought to our daily survival instincts and pursuits of pleasure.It has already been mentioned but apparently bears repeating: economic rationality implies only having ordered preferences, and acting accoring to those preferences. What the preferences are is a matter of taste, not economics. If I value sitting on a beach at a million dollars a year, all the rational man assumptions suggests is that--in that case--I would not take a job for $750,000 a year instead of sitting on a beach.

[The Second Stone]

Define "Rational." Why is it irrational to pursue pleasure?


What "tautology"? How is a tautology a religion? What is "modern economics" and how is it hampered by Friedman? What tools do you feel aren't open to improvement?

This doesn't read like an attempt to discuss any issues, but rather reads like the usual "All economics is crap because I don't understand it" baloney we get here a lot.

Economics is circular reasoning, and economics is mostly crap. There is very little there to understand. The assumption of a rational man is crap and it is the basic underlying assumption of Friedman's economic theory. While a few points of Friedman's theories have been borne out by experience, economics is in no sense a science in the way that physics is a science. It is slightly more a science than common "political science", but not much. Economics is a way of thinking. I'm going to repost BrightNShiny's link above to Krugman's NYT article http://www.nybooks.com/articles/19857 because he points out some of the problems Friedman created with monetarism. I find Krugman far more cautious in his economic prescriptions and pronouncements and a better explainer of the economic way of thinking than Friedman. Friedman embodied everything wrong with economists: he knew his ideas were correct, when it was all based on erroneous suppositions such as rational people. When that is what you've got for a foundation, you cannot build theoretical structures that will withstand great economic stresses. Friedman (and Greenspan) was certain that deregulation was wonderful. Millions around the world will starve because of this current economic crisis that could have been avoided if the acolytes of the "free market" and deregulation had not been so arrogantly certain and mortgaged our futures on it. The debt swap market should have been regulated, but the entire government apparatus had been cowed by the deregulation propaganda and it was not politically possible.

[Sam Stone]

Let's consider what would happen with a privatized drug regulatory system.

First, even among honest regulators, requirements for proving efficacy will diverge. It's plenty expensive getting FDA approval today - doing it for n regulatory agencies will make it even more so.
Second, the companies wanting to maximize profits will quickly form their own "regulatory" agency, which will rubber stamp approvals for their drug, with no doubt authentic looking tests.
In the deregulatory fantasy world, each consumer will check on ratings of each private regulatory agency and make decisions accordingly. Unfortunately, consumers actually have to work and are not likely to have the time, especially when the bogus ones are cheaper. Even if they read the details, will they understand them? I can see the holes in the claims by the fake boner pill company ads, but how many people have a science education? I doubt I could read and understand the full report.
When we start, people will assume that medicine is safe in the future because it was in the past. I worked for AT&T during deregulation, and about a year after you were able to buy a phone our sales went up again. The reason was that the average consumer assumed that all phones would work forever, and thus bought on price. They soon discovered that cheap phones were junk, and came back. That's fine for telephones, not so fine for medicine that will either prevent a heart attack or won't. Not all companies who will sell problem drugs will do it out of malice. Plenty of drugs get rejected when submitted with the best of intentions and with total scientific honesty. There is no way of telling, without expensive and time consuming clinical trials, if a drug is safe or not.

So many of our problems come from people deregulating and saying "what can go wrong." See Greenspan's testimony. And I might remind you that the Preamble talks about "promote the general welfare." Privatizing drug approvals will not do that.


These are all variations on the same straw-man argument - you imagine the worst possible way in which the market could adapt, then use that to argue against deregulation.

Perhaps you should pay more attention to how the market works in areas where there is currently no regulation guaranteeing efficacy and quality. Or in areas where the market has decided that the government regulations are inadequate.

If people have to learn the specifics of every drug they take, and do all this research on their own to avoid being screwed, how come they don't have to do the same when buying cars? Or computers? The answer is because the market develops many intermediaries and mechanisms to transmit the essential information to the customer. They include brand value, review magazines, trusted sources of advice (i.e. your doctor, or TomsHardware.com), the media, insurance companies, a product's competitors, standards agencies with real reputations (ISO certification, industry certifications, NAUI and PADI for divers, etc) or myriad other ways that quality information gets to people. Different industries evolve their own mechanisms.

Your average computer buyer knows nothing about computers. And yet, they rarely accidentally buy computers made out of styrofoam, or old 286's advertised as the latest uber-Pentium. They get enough information about the product just through Osmosis and the reliance on trusted intermediaries (i.e. buying from Dell instead of from Ivan's Crazy Computer Emporium in Russia).

I see no reason whatsoever that a functioning market in drugs could not exist without FDA approval. There would still be regulations - transparency laws, mainly, forcing companies to be held accountable for risk studies and to make them public, for example.

The biggest advantage of this is that drug prices would plummet.

[Hellestal]

Economics is circular reasoning, and economics is mostly crap. There is very little there to understand. The assumption of a rational man is crap and it is the basic underlying assumption of Friedman's economic theory. While a few points of Friedman's theories have been borne out by experience, economics is in no sense a science in the way that physics is a science. It is slightly more a science than common "political science", but not much. Economics is a way of thinking. I'm going to repost BrightNShiny's link above to Krugman's NYT article http://www.nybooks.com/articles/19857 because he points out some of the problems Friedman created with monetarism. I find Krugman far more cautious in his economic prescriptions and pronouncements and a better explainer of the economic way of thinking than Friedman.Krugman is pretty much correct about Friedman, of course. But he's still an economist.

If I actually took the beginning of your post seriously, then I'd be forced to discount Krugman's opinions. He could still be right about Friedman, but if economics is mostly crap, then he'd be right for the wrong reasons. Nonsense. Krugman isn't correct just by chance. He's earned just as significant a reputation as Friedman in theoretical matters, while simultaneously being more honest in his popular writings (at least with respect to matters of economics). Krugman doesn't demolish Friedman's ideas with sociology or psychology or some other off-topic social science. Rather, he uses his profound knowledge of economics, both theory and history, to pick apart Friedman's various short-comings.

This is a distinction that you lose in your blind haste to dump on the subject. You're more than eager to discount the science entirely when you think you're making a cheap rhetorical point, but later on you trust Krugman for the same reason that all intelligent people would do so: he knows his shit, which means he's worth listening to. And this would not be the case if economics were so circular as you falsely claim.

[ralph124c]

A geffen good is an inferior product, which because it is priced relatively cheaply, has a market. Friedman's market analysis explains these goods very well..do they really exist?

[Captain Amazing]

Regulation that deals with information asymmetry does not create a market that is any more rational than a market that has greater asymmetry. There is simply a new rational decision because of greater availability of information.

I'm willing to be proved wrong on this, because it's been a LONG time since I'e studied economics and rational choice theory, but I thought true rationalitiy assumed complete information. With incomplete information, the best you have is bounded rationality (bounded by the limits of your knowledge).

[erislover]

The biggest advantage of this is that drug prices would plummet.The biggest advantage I see is the increased number of drugs coming to market, the cost of which would be radically decreased consumer confidence in drugs because the drugs would be slightly riskier (more people die or are adversely affected). Personally, I think that would be a net benefit (with some caveats, next ¶). We're fighting illness, after all, not knots in kitten hair. The alternative for much of these applications is death. I think we err too much on the side of caution with the FDA, which means companies waste time treating easier things and less time treating hard things when we really want it the other way.

Nevertheless, I wish you were more evenhanded in your assessment of costs, rather than examining just the benefits. Ditching the FDA would 100% definitely without question mean more deaths from drugs. If tort law were not tweaked as well, this could be a massive problem and would result in a net decrease in benefits IMO. It's not as simple as carfax.com.

[Captain Amazing]

A geffen good is an inferior product, which because it is priced relatively cheaply, has a market.

You're thinking of a Giffen good, which is a product where demand increases when price increases. A product that has a market only because it's priced cheaply is an "inferior good".

[The Second Stone]

Krugman is pretty much correct about Friedman, of course. But he's still an economist.

If I actually took the beginning of your post seriously, then I'd be forced to discount Krugman's opinions. He could still be right about Friedman, but if economics is mostly crap, then he'd be right for the wrong reasons. Nonsense. Krugman isn't correct just by chance. He's earned just as significant a reputation as Friedman in theoretical matters, while simultaneously being more honest in his popular writings (at least with respect to matters of economics). Krugman doesn't demolish Friedman's ideas with sociology or psychology or some other off-topic social science. Rather, he uses his profound knowledge of economics, both theory and history, to pick apart Friedman's various short-comings.

This is a distinction that you lose in your blind haste to dump on the subject. You're more than eager to discount the science entirely when you think you're making a cheap rhetorical point, but later on you trust Krugman for the same reason that all intelligent people would do so: he knows his shit, which means he's worth listening to. And this would not be the case if economics were so circular as you falsely claim.

I am extraordinarily skeptical of the value of economics and it is largely because people like Friedman should have predicted and avoided the problems of the 1980s, Enron, constant gas gouging and our current deep recession and probable recession. (And yes, I know he died a year or two ago and wasn't working before that. I did hear a very light lecture he gave a two or three years ago, he seemed like a very nice man). Krugman has some value to me because he points out why in detail why the people chanting "free markets" all the time are vastly oversimplifying a complex system. OPEC and oil prices are another example of their group think. According to classic economic theory oil should be dirt cheap because of increased production after 35 years of intense cartel activity. The price is still volatile. There are excuses for why this hasn't worked out, such as inelastic demand, etc. that I find to be circular. Given fancy names, such as inelastic demand, this is elevated to a religion. Are some economic insights useful? Yes, in a very limited sense. The fact of the matter is that economics is a supremely complex system that depends of every other factor available: weather (which can only be predicted 5 days in advance), human psychology (which is weakly understood at best and not at all in groups), sun flares, etc. The factors that we do understand: making highly risky lending illegal, short selling in a panicked market prohibited, golden parachutes and enormous top executive pay we are told we cannot regulate because it interferes with "free markets" strikes me also as stupidly religious without adequate backing. Recently short sales were suspended and that halted an incredibly fast slide. They have been unsuspended and we are in a long term depression like slide. It strikes me that the study of mob mentality would be more productive than the worship of free market religion.

Now at the risk of being accused of being a commie or something, free marketism is the prevailing way of thinking and might be better than substituting something less well understood. But I do think that we should be prepared and very accepting of using exceptions to free marketism when we have good reason to believe it will work. I'm not prepared to put a high presumption on the good of the free market when there is need and reasonable evidence that something will offer an improvement. Government intervention is merely another actor in the system and should not be treated as it is an inherent evil. Government is better than anarchy, which is substantially worse than government.

Economics as a tool isn't worthless, but its limits are much greater than its practitioners will admit.

[Voyager]

These are all variations on the same straw-man argument - you imagine the worst possible way in which the market could adapt, then use that to argue against deregulation.

That's because regulations are all about preventing worst case situations. A command economy would have the government ordering a drug company to work on drug X. That would be bad. A regulatory economy says that if a drug company has developed drug X, the drug must do what it claims and not have inordinate side effects that are more harmful than its benefits.

Perhaps you should pay more attention to how the market works in areas where there is currently no regulation guaranteeing efficacy and quality. Or in areas where the market has decided that the government regulations are inadequate.

If people have to learn the specifics of every drug they take, and do all this research on their own to avoid being screwed, how come they don't have to do the same when buying cars? Or computers? The answer is because the market develops many intermediaries and mechanisms to transmit the essential information to the customer. They include brand value, review magazines, trusted sources of advice (i.e. your doctor, or TomsHardware.com), the media, insurance companies, a product's competitors, standards agencies with real reputations (ISO certification, industry certifications, NAUI and PADI for divers, etc) or myriad other ways that quality information gets to people. Different industries evolve their own mechanisms.

I don't know that much about auto regulations, but I do know that you can't drive a car without headlights or brakes. So there are regulations to the extent that they are necessary to preserve the health and safety of the drivers and others. There are different drugs for the same ailment, just as there are different cars. Driving a Yugo won't kill you, so it is legal.

Even for drugs, doctors are not enough. Ever browse through the PDR? You think that every doctor knows what is in there. And the information in there is reasonably accurate thanks to regulations. If you look at computer review sites, you'll find that about any model has good reviews and bad. If you have a heart problem, you want to depend on that level of filtering?

Your average computer buyer knows nothing about computers. And yet, they rarely accidentally buy computers made out of styrofoam, or old 286's advertised as the latest uber-Pentium. They get enough information about the product just through Osmosis and the reliance on trusted intermediaries (i.e. buying from Dell instead of from Ivan's Crazy Computer Emporium in Russia).

If they did, they could sue for false advertising - there's that nasty regulation again. And they could return it with no great harm. Not quite so easy if my blood thinner is a phony and I die of a stroke, is it?

I see no reason whatsoever that a functioning market in drugs could not exist without FDA approval. There would still be regulations - transparency laws, mainly, forcing companies to be held accountable for risk studies and to make them public, for example.

The biggest advantage of this is that drug prices would plummet.

So, you're okay with a company publishing that there is a 10% chance of dying if you take their drug, but advertising it heavily? And those who die from not being clever enough to find the data, what of them? Is the drug company not liable since they followed the law? Or is everything fine since the drugmaker will get sued - and no doubt go bankrupt before paying the settlements.

If you want cheap drugs, there is a nice alternative medicine section in your supermarket, filled with all sorts of "drugs" that claim to cure your ills. They won't do shit, but who cares - they aren't expensive like real drugs.

[Voyager]

The biggest advantage I see is the increased number of drugs coming to market, the cost of which would be radically decreased consumer confidence in drugs because the drugs would be slightly riskier (more people die or are adversely affected). Personally, I think that would be a net benefit (with some caveats, next ¶). We're fighting illness, after all, not knots in kitten hair. The alternative for much of these applications is death. I think we err too much on the side of caution with the FDA, which means companies waste time treating easier things and less time treating hard things when we really want it the other way.

That's a totally different problem - one lying in the details of the pluses and minuses of regulation. I think there is a good case for approving drugs early when the alternative is death, but I can agree with that while not disputing the benefit of regulation in general.
Every drug has side effects. How to balance the negatives from the side effects with the positive of the cure is done on a case by case basis.

[Voyager]

How did a discussion about rationality turn into one about regulation? Can't regulation make markets more rational, by dealing with the information problem?

Regulation deals with the basic irrationality (or imperfection) of participants in the market. It's not just the amount of information out there, it is the ability of people to interpret the information. Instead of turning in your clinical studies to the FDA, you can publish all 10,000 pages of them on the web. How many people will be able to make informed decisions with that information? Of those few, how many people are going to have the time to sort through the information and extract what they need to know in time to treat their illness. Sure, websites will pop up with analyses of this, but how do you know the site you're visiting isn't secretly sponsored by the drug company?

The benefit of the FDA is to be a trusted and unbiased filter of this information, so that when you see a drug on the shelves, you can buy it with confidence, and not have to spend a month figuring out the probability it will work and not kill you. Sure the FDA isn't perfect, but given the complexity of the problem, it is pretty good.

[erislover]

That's a totally different problem - one lying in the details of the pluses and minuses of regulation. I think there is a good case for approving drugs early when the alternative is death, but I can agree with that while not disputing the benefit of regulation in general. Perhaps. But then this really does get into a sticky place where the FDA decides what's important enough to warrant special treatment, and lobbying efforts distort your otherwise quite reasonable notion. Which is not to say that there aren't distortions available if we banished the FDA. My comment was not so much that I agree the FDA should be banished as it was to say, "There's costs to both plans, not just benefits." It's impossible to discuss which way is better without both sides of the picture.
Every drug has side effects. How to balance the negatives from the side effects with the positive of the cure is done on a case by case basis.But this is definitely not an area where I want a government bureaucracy in place. The problem is I don't know that I want a corporate bureaucracy in place here, either.

Anyway, I think getting rid of the FDA could result in a net benefit, if other issues were dealt with; or would be a net cost, if they weren't. That's all. A very wishy-washy position.

[Voyager]

But this is definitely not an area where I want a government bureaucracy in place. The problem is I don't know that I want a corporate bureaucracy in place here, either.

So you want the average person to do it? We've already found that the average person can't figure out that he or she can't afford certain mortgages - and you want them to decide on the safety and efficacy of a drug? That takes a lot more than junior high algebra! Not to be an elitist, but I don't think a country where over half the people don't accept evolution is one where I want them to interpret clinical studies. I mean, it would probably raise the average IQ, but come on ...

[erislover]

So you want the average person to do it? We've already found that the average person can't figure out that he or she can't afford certain mortgages - and you want them to decide on the safety and efficacy of a drug?Hmm. I'm not really drawing that conclusion. I think people responded to easy money by taking easy money. But if you're asking me whether Pharmaceutical Consumer Reports or DrugFax.com could work out, the answer is "I don't know, but I think it could, if other problems were addressed." I don't think medicine is a magic product that spontaneously produces market failures, basically, no.
That takes a lot more than junior high algebra! Not to be an elitist, but I don't think a country where over half the people don't accept evolution is one where I want them to interpret clinical studies. I mean, it would probably raise the average IQ, but come on ...I have no idea how to build an engine or start a semiconductor fabrication plant. So what? I still buy cards and design circuit boards.

[sailor]

That's why I modified "free market" with the word "totally" - which you obviously missed. The rest of that sentence reads "but I'm not implying that anyone is in favor of a totally free market.". Do try to respond to what I actually wrote, not to your fantasy of what I might write. So when you say "totally free market" you mean "totally unregulated market"? So why not use the accepted terminology rather than a rather confusing one? What is the point if not creating confusion?

[Little Nemo]

One question for the advocates of an unregulated free market: who regulates it? Obviously the most economically advantageous marketing startegy for me to follow is to sell cheap and shoddy merchandise and put a fraudulent "FDA approved" label on them. Aren't you going to need some agency with the enforcement power to prevent this type of fraud?

[Voyager]

Hmm. I'm not really drawing that conclusion. I think people responded to easy money by taking easy money. But if you're asking me whether Pharmaceutical Consumer Reports or DrugFax.com could work out, the answer is "I don't know, but I think it could, if other problems were addressed." I don't think medicine is a magic product that spontaneously produces market failures, basically, no.

I'm not worried about market failures. I'm worried about kidney failures. Sure, some people bought houses on false assurances that they could refinance before the rates reset. You think some people won't dump expensive treatments for cheap ones they're assured are just as good. Who do you think buys the fake boner pills advertised on late night TV? Certainly no one who did any research. Those are fine, since they won't hurt anyone and just separate chumps from their change. I'd be a bit more disturbed about kids losing their father because he was convinced the $10 pill could cure his cancer.

I have no idea how to build an engine or start a semiconductor fabrication plant. So what? I still buy cards and design circuit boards.
Knowing evolution is more like knowing that you to supply power to your board. I've been involved in chip design, and I don't know how to design a fab. I bet you know how to read a data sheet and a timing diagram, though. You also probably know not to buy processors from Xu's processor depot in China, especially if "Intel" is written in in magic marker.

[Voyager]

So when you say "totally free market" you mean "totally unregulated market"? So why not use the accepted terminology rather than a rather confusing one? What is the point if not creating confusion?

You can have a totally unregulated market which isn't free - for instance if there are lots of tariffs. The terms are not equivalent, and we had been talking about free markets. Now a totally free market I think has to have total regulation, but that is necessary and not sufficient.

[sara999]

;)Have any of you been using a new science called Behavioral Response Forecasting to predict the behaviour of the Dow Jones? There is a company called Mightyz, you can find them on the web, which predicts human behaviour 7 days in advance. It seems that this behaviour is also reflected in the markets.
So far it seems to be farily consistent with the Dow Jones closing higher/lower. It basis it's forecasting on scientific studies that show human emotions are governed by earth's geomagnetic field. This makes sense in that pigeons and other animals use this same field for navigation, why couldn't this same force be used in influencing human emotion?

Thoughts anyone?

[tomndebb]

Thoughts anyone?My thought is that there are a lot of people who either:
a) want to believe that the world has secret mysterious forces the understanding of which will unlock all sorts of complex problems with simple solutions
or
b) would like to make a lot of money by convincing other people that the world has secret mysterious forces the understanding of which will unlock all sorts of complex problems with simple solutions and that they have, indeed, unlocked those secrets.

[Voyager]

My thought is that there are a lot of people who either:
a) want to believe that the world has secret mysterious forces the understanding of which will unlock all sorts of complex problems with simple solutions
or
b) would like to make a lot of money by convincing other people that the world has secret mysterious forces the understanding of which will unlock all sorts of complex problems with simple solutions and that they have, indeed, unlocked those secrets.

and
c) oddly enough passed up the opportunity to become immensely rich from their system instead of selling it to the masses. How generous these guys must be! :)

(I wouldn't have responded to this zombie if you hadn't!)