If only consumers had the information in front of them to understand the importance of the draught-horse as non-polluting alternative to the gasoline powered tractor!
Lack of experienced veterinary care for working farm animals in the present day; lower priced goods produced by farms that use tractors instead of horses…
Do consumers understand the importance of preserving the draught horse for traditional as well as functional reasons? Or has Big Tractor convinced people that farm animals are inefficient?
If the horse in question were as spavined, undernourished and ungainly as your analogy, it wouldn’t be able to pull a weed-whacker, never mind a plow. You should release it to a meadow, to live out it’s last hours in peaceful decrepitude.
A classic market-fundamentalist reply: “The markets are working perfectly, you just refuse to see it!”
Do you think that it is rational for people not to want easy access to reliable news about events and political institutions that affect their lives? I understand your point that some people just don’t care about such things, just as some people simply don’t care about healthy eating and exercise and some people simply don’t care whether their kids are able to read. But do you think it is a rational choice for people to make?
The market-fundamentalist ideology of “Whatever the consumer chooses in a given situation is by definition the optimal market solution” is just a way of glossing over all the structural problems that can impact consumer choice.
Assuming that “nobody wants” something just because consumers aren’t willing or able to cover its full costs in its current economic setup is fundamentally flawed. You might as well say that “nobody wants” healthcare or universal public education, because individual consumers are generally unwilling to pay the full cost of having it provided to them.
What are you claiming is “draught-horse-like” about online news journalism sites such as Ricketts’s? In what way do you think that the generation of news journalism about current events and political institutions is fundamentally obsolete or adequately replaced by different alternatives?
:dubious: Bricker, did you by any chance lose track of the discussion and somehow imagine that we were talking about the preservation of print journalism?
That seems to be based on the assumption that most people want “reliable journalistic coverage”, instead of coverage that makes them feel good. Have you not seen the recent studies that show how our brains react to news stories that confirm our biases, as opposed to those that don’t? I might tell you all day long that “want to eat healthy”, but when I go home and chow down a bag of chips, which of those two things is telling you what I actually want to do? Further, is there any way, in a free society, to stop me from eating that bag of chips?
And, is there some reason that people should be required in some way to “act rationally”? If we can even agree what it means to do that anyway.
For a web-based platform in NYC? It would seem to me that by that criterion, there is a significant market failure in restaurants catering to local tastes in Manhattan. And yet, such restaurants thrive.
Well, yeah! This is really just a repetition of your argument #1. But since we have good evidence that lots of people don’t want unbiased news coverage, what would you propose to do?
There’s that “rational choice” issue that I was discussing with Shodan.
Of course not. But are you arguing that a society in which most people are obese and unhealthy due to poor nutrition and lifestyle choices (e.g., our own society) therefore represents a successful market outcome? Is this rationally (because remember, one of the main arguments in favor of free-market ideology is that markets produce rationally optimal outcomes) a good result for the participants in this market system?
Sure, I never said that the absence of conditions required for a market to operate in accordance with free-market theory is guaranteed to wipe out all businesses. Recall that the Gothamist news organization we’re talking about in this thread, for example, was profitable before Ricketts purchased it and merged it with his long-term money-losing enterprise DNAinfo.
That’s the question I raised for discussion back in posts #25 and #114. I don’t know what the optimal solution is, although I’m pretty sure it’s not “just assume that if reliable news journalism isn’t commercially sustainable in its current business model then that must mean that it’s intrinsically unimportant and unnecessary and there’s no need to be concerned about the lack of it”.
OK, I don’t know what that means. Did I butt into something out of context?
But I don’t make that argument. I would if were having this debate on the planet Vulcan, but we’re not. Humans are semi-rational animals at best, but I’m not ready to buy into the idea that a consequence of that is that some panel of experts should be making decisions for them (I’m not saying you do, but lacking any other alternative action, that’s the most rational one to make, if rationality is the goal). So, “humans are often irrational” is an interesting observation, but what are we to do about that?
I’m not seeing what that has to do with barriers to entry in that business. Maybe Ricketts was a lousy manager, or maybe he bought it in order to shut it down. It’s sad, but I’m not sure we could prevent that sort of thing from happening without worse consequences from the “cure”. The writers could still band together and form a new company, maybe even soliciting the capital from a white night investor. In a rapidly changing, dynamic economy the only constant is change (I thought that one up myself! )
OK, I can agree to that. But to be honest, your criteria for determining the there was a market failure or not seemed more like something cooked up to prove something after the conclusion had already been reached. I can maybe buy your reason #2, since “barriers to entry” is a quantifiable thing, but humans are not rational? Like I said: well, yeah!!
A rational outcome in the sense that markets work to match supply with demand by using pricing that can change. Not a rational outcome in the sense that any aspect of a human’s condition is optimized.
In a lot of ways that what government policy is for. The question is the balance between fundamental liberties and societal needs. I think we are too far from fundamental liberties in many ways in the US. However, I also think that the way we address societal needs could be improved and expanded.
You’re demanding that someone continue to fund a company that they no longer wish to fund. Maybe you’re confusing private industry with some government program?
Not at all, I was just lazily redirecting you to those previous posts to avoid more typing. What I meant was “Yes, I agree that the assumption of rational economic actors is a recognized condition for the efficient operation of markets that in practice often does not obtain.”
Um, but you do buy into the idea that “some panel of experts” should be making some decisions, and pretty important ones at that, for most humans.
At least, I have never seen you protesting the fact that the Pentagon and the JCS make decisions about what arrangements we need for national defense, and that the FDA makes decisions about what we can put in our commercial food products and prescription drugs, and that the local DOT makes decisions about when our roads need repairing, and so on and so forth ad infinitum.
The market-fundamentalist notion that individuals are always the best judges of their own requirements, or even that individual choice is always at least better than any other system for satisfying their requirements, is an unworkable fantasy that no functioning society comes close to implementing in reality.
Well, I think we should start by not losing sight of the fact that we often override the principle of individual consumer choice in order to avoid some of the bad outcomes inevitably produced by individual human irrationality. I agree that beyond that, though, it’s pretty complicated.
It’s an acknowledgement of the pretty obvious fact that sometimes some businesses succeed even in markets that don’t always operate efficiently, which I have no problem with conceding. My point was simply that in markets where the conditions for efficiency don’t reliably obtain, it is not valid to assume that businesses only fail because they’re bad or nobody wants them.
Um, you know that I didn’t make up these criteria myself, right?
Also, just in case it might confuse anybody, “market failure” doesn’t mean “the failure of this specific business was the fault of imperfections in the market structure instead of in this business itself”. It’s a technical term that just means “a situation where markets are not reliably efficient in allocating goods and services, generally because of not fulfilling some of the theoretical constraints on the operation of free markets”.
As I noted in my previous post, the control of consumer choice is generally shared between individual consumers and the government. (And also, as I didn’t note previously, the extra-market or distorted-market incentives of the producers of consumer goods.)
That is, government places restrictions on what can or must be offered to consumers, producers decide what will be offered, and consumers quasi-rationally choose which of those offerings they prefer. In turn, the choices of consumers can inspire changes in restriction and/or production, and so merrily on in an ever more complex system of interconnections.
I sank my teeth in and hung on grimly, right up to here, and then you lost me. A boor of little brain, I just stand here blinking. For starters, these “theoretical constraints”. If businesses fail because of them, are they still “theoretical”, or a proven reality?
And if the conversation is going to require post-grad work, could you warn me next time? I get depressed when I feel stupid.
“Theoretical” in the sense of “scientific theory”, not in the sense of “let’s suppose that this might be true”.
In other words (and IANA professional economist, so caveat elucidandus), economic theory says that markets operate by responding to certain stimuli in certain ways. Those responses depend on assumptions about the characteristics of markets, including the people participating in them. Those assumptions are the theoretical constraints.
If we remove or modify any of those assumptions (for instance, by saying that consumers make irrational choices, or that resources are restricted by external factors, or whatever), then markets don’t reliably operate the way that economic theory predicts they should.
But that doesn’t mean that a business that fails in an imperfect market system necessarily failed because of the built-in imperfections. Maybe it was just a sucky business.
Once again, right-to-work means you don’t have to join a union to work at a place. The ability to fire for any or no reason is at-will employment. Not every state is right-to-work, but every state has at-will employment (although some states have some exceptions.)
Pretty ridiculous line of argument IMHO. You don’t have to be a ‘market-fundamentalist’ to recognize the difference between an arbitrary opinion by one person or group of what consumers ‘should’ want to pay for v what they really are willing to pay for. By your definitions pretty much every company you like which can’t make a profit, can’t because of ‘market failure’.
And some of the bolded categories you offer are just made up as sources of ‘market failure’. The existence of barriers to entry for example doesn’t make it a ‘market failure’ for a company which has surmounted though barriers to go belly up. And in this case it’s pretty obviously the wrong way around anyway. The central problem for journalism in the internet age is lower barriers to entry for competitors than the days of print/broadcast dominance.
Nor is it correct to say that market function depends on all consumers being rational: no such requirement.
We live in a mixed capitalist/socialist system. So yes some decisions are made for individuals by the collective ‘we’. But the idea it’s limited to ‘market failure’ is a joke. The boundary line is drawn somewhere in a grey area where an only semi-rational voting public* cannot see obvious harm in a little more or less collectivism.
Back to the root of this discussion, very hard to see the rational argument that a person who funds a media outlet out of their pocket wouldn’t be free to quit for any reason.
An increase in public funding for ‘quality’ journalistic media might be conceivable if the lowered barriers to entry in journalism were causing similar disruption in a society with a high degree of political consensus. In the US now it’s obviously hopeless. Much as some people might like to view the left leaning type NPR POV as ‘the truth’ it’s not. It’s worldview based on certain assumptions and beliefs a large mass of Americans don’t share (besides a lot of the rest of the world). There’s nothing objectively wrong with it. It’s just hopeless to think it can be imposed with public money on a public around half of which rejects it at a basic level.
*people are no more rational as voters than consumers, but voting introduces the additional temptation to dictate to other people at (ostensibly) no cost to oneself.
Uh, no. Remember, part of what we’re discussing here is the nature of the goods and services involved. AFAICT, nobody has yet made (or even tried to make) a cogent argument that it should rationally be considered a good thing, or even an unimportant thing, for consumers to have no access to reliable local journalism about news and political institutions.
This isn’t like arguing that the free market has failed because the Acme Chocolate Cola Company or whatever went belly-up. This is a question about what’s required to provide an important public service that most people and organizations claim to believe is a good thing.
Where in the name of wonder are so many (okay, two) posters getting this idea that I “made up” the theoretical conditions on the operation of free markets? Here, for example, is a description of classic entry barriers (including one I specifically mentioned, high setup costs) as one of the sources of market failure.
And I repeat, the technical term “market failure” is not equivalent to the statement “a particular business in a particular market has failed because of imperfections in the market”. I don’t know how to explain this more clearly than I already have done (twice): anybody else want to have a go?
That doesn’t mean that entry barriers in the industry don’t still affect its markets. You’re also overlooking the fact that a lot of other market conditions have shifted in the journalism industry in the internet age.
As I pointed out before, I’m not claiming that market systems can’t function at all unless all consumers are rational. But yes, consumer rationality is one of the assumptions underlying models of market efficiency. Don’t blame me, I didn’t make it up.
AFAICT, nobody is trying to argue otherwise. In fact, the whole point of the current discussion is that because it is rational for owners to stop funding money-losing enterprises, this business model for journalism is not currently working.
If we want continued access to the public good of journalistic reporting on news (especially local news) and institutions, then we have to figure out what alternatives to the “billionaire’s pocket” model might be feasible.
Perhaps not, but we’re not talking here about “reliable” news; we’re discussing news outlets that were very comfortable in putting liberal spin on news.
Do you want to talk about some other news outlets that were not biased?
In days past, when draught horses pulled plows and farriers had a prized and necessary skill, the press was free to tell us anything that fit their desired political model; the consumer had little choice in the matter. More recently, the publications under discussion felt they had the same impunity: the model of journalism that Gothamist offered included, for instance, such gems as inveighing against the fact that prison inmate workers are not permitted to form unions. You’ll hopefully forgive me for not regarding this as serious reliable news. The idea that publications can simply say stuff and people will still consume it because they have no choice is long gone, buried next to the draught horse.
What are you claiming is “draught-horse-like” about online news journalism sites such as Ricketts’s? In what way do you think that the generation of news journalism about current events and political institutions is fundamentally obsolete or adequately replaced by different alternatives?
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