LINK: Competition is toxic

I looked at what I think of as the food chain that led to the fi­nan­cial crisis, which was that you had in­di­vi­d­ual con­sumers buy­ing houses they couldn’t af­ford, sold to them by re­al­tors and prop­erty peo­ple who were com­pet­ing to sell more prop­er­ties at a higher price and so on. [...] I thought, hang on a sec­ond, clas­sic econ­omy the­ory tells you that a com­pet­i­tive mar­ket­place is su­pe­rior be­cause com­pe­ti­tion pro­vides a di­ver­sity of prod­ucts which is good for the con­sumer, and it also, there­fore di­ver­sifies risk. And yet, in this in­stance, com­pe­ti­tion has led ev­ery sin­gle one of these com­pa­nies to copy each other, which had con­cen­trated the risk. And I thought, Wow, that’s in­ter­est­ing. That’s speci­fi­cally what’s not sup­posed to hap­pen.

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