From: Jim Choate <ravage@EINSTEIN.ssz.com>
Date: Tue, 20 Oct 1998 13:19:46 +0800
To: cypherpunks@EINSTEIN.ssz.com (Cypherpunks Distributed Remailer)
Subject: Re: Another question about free-markets... (fwd)
Message-ID: <199810200457.XAA08867@einstein.ssz.com>
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Forwarded message:

> Date: Mon, 19 Oct 1998 15:53:45 -0400
> From: tzeruch@ceddec.com
> Subject: Re: Another question about free-markets... (fwd)

> Most of these are due to regulation.

No, they are due to a basic human trait - greed. The problem isn't a
economic one it's a people one.

  If you assume the Secret Service
> will bear the cost of enforcing anti-cloning laws, you will not spend the
> money to make your phones unclonable even if the technology exists.

Assuming of course you trust the Secret Service fully and they happen to be
honest to a fault.

> Excessive rate levels are a misnomer.  The only way you can succeed in
> charging above market prices is if there is a law to bar entry.

But that is the exact point in regards cell cloning for example. The final
cost to the purchaser of the clone is *less* than the normal market price.
In a free-market economy the obviously rational thing to do is clone, the
really bad thing is there is nobody short of Guido and his buds to help
the original maker recover those costs or prevent recurrences.

> sub-standard construction is also a misnomer - if you paid for standard X,
> you simply don't pay until the construction is up to that standard.

You've got a circular reasoning here. If we're still talking about a free
market there is no 3rd party to define standards and such to measure
against. There won't even be groups that will be able to review the various
products and compare them in an open market (review the current database
licenses in regards to doing public comparisons).

> Hardly.  If you are saying consumers are stupid, you are probably right,

No, I'm saying there is a considerable sector of the human population that
is dishonest. This won't change based on economic models.

> And you assume that men are islands and don't talk or communicate. 

Actualy I don't. My point is that such assumptions about instant
communications (as required by current economic models) is irrelevant. I
covered that aspect at one point. The fact that people communicate won't
change their base bahaviour characteristics one whit, those are a function
of long-term species survival strategies. People are social animals, the
maximum strategy in social animals is the Prisoners Delima, you play along
most of the time and cheat occassionaly. Over time this strategy will
accumulate more resources than either a pure cheating or honest strategy.
It's this transient aspect that is completely ignored by current economic
though, they recognize only the two extremes.

> Imagine two restaraunts.  If people get food poisoning every week or so at
> one, people will learn not to go there, and it will fold as people go to
> the second.

This example really doesn't fit my theory since it isn't possible for a
single (or even two) restaraunts to saturate a market. I suspect that food,
is entirely too tied to the vagaries of transient taste to behave this way.

What is more likely to happen is that as people go back and forth between
the two restaraunts from day to day (assume that one of them is dealing bad
food) both will go down. Remember there isn't a health inspector or somebody
to come and test the food, only the experiential evidence of the eaters. Now
since it takes as much as 24+ hours for symptoms to develop it is entirely
possible for a person to eat at one restaraunt on Monday at luch and get
food poisoning and it not show up until the next afternoon, *after* they've
already eaten at the second restaraunt. At that point the person is sick and
isn't going to want to go back to either.

Better safe than sorry.

> Reputation (economists include it in the term "good will")
> does have an economic benefit.

Only in certain kinds of markets. I don't believe free markets are one of
them.

> You simply may not like human psychology, but that does not make the free
> market any less just.

I'm not sure how to respond to this. Let me put it to you this way...

How do you propose a free market to operate if there aren't people (and as a
conequence their psychology) involved?

> The market enforces a foolishness tax which no government can repeal.

Again, only in certain situations - a free-market is not one of them.

You might want to look at some of the recent studies done (I was looking at
an article the other day at the bookstore but can't remember the article -
sorry) that demonstrate pretty conclusively that mediocre strategies pay off
over time nearly as well as optimal ones do.


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