[Link] Why don’t people like markets?
Market processes are not visible. For instance, when a government taxes its citizens and offers a subsidy to some producers, what is seen is the money taken and the money received. What is unseen is the amount of production that would occur in the absence of such transfers.
Markets are intrinsically probabilistic and therefore marked with uncertainty, like other living organisms, we are loss-averse and try to minimise uncertainty
Humans may be motivated to place their trust in processes that are (or at least seem to be) driven by agents rather than impersonal factors.
The last point reminded me of speculation from the recent LessWrong article Conspiracy Theories as Agency Fictions:
Do all theories of legitimacy also perhaps rest on the same cognitive failings that conspiracy theories do? The difference between a shadowy cabal we need to get rid of and an institution worthy of respect may be just some bad luck.
Before thinking about these points and debating them I strongly recommend you read the full article.
Markets, at least in their modern incarnation, are evolutionarily novel. According to Debt: The First 5,000 Years, hunter-gatherers traded not just by barter but by social indebtedness. We see that today; when my friends and I grab lunch, it feels natural to say “Don’t worry, I got this; you can pick up the tab next time.” There’s a definite Dunbar limit to how large these networks can grow; get beyond that and you’re in evolutionarily novel territory.
As an aside, the notion that economic inequality is evolutionary novel offers quite a bit of insight into why we treat wealth inequality vastly differently than status inequalities.
This part rubs me the wrong way:
What if someone dislikes markets because they saw markets cause unhappiness or inequality on some random occasion? Surely that would be a valid cognitive explanation. Digging deeper to find imaginary biases like “he dislikes markets because they’re driven by impersonal factors” would be wrong in such cases.
Well, one could ask why negative effects are more likely to be attributed to markets, whereas positive effects to be attributed to other factors or simply taken for granted.
Because people are better at signalling. Whenever something good happens, there is a person ready to take credit for that, deserved or not.
Markets are good at signalling about individual products or companies (advertising), but not about the concept of “market” per se.
Is it really the case? For start I’d like to have an objective and not entirely arbitrary way of measuring how much likely various effects are attributed to markets and other factors. Speculations framed as “why people dislike X” by someone who happens to like X are always suspect of tribal politics, especially when the suggested answer points to some failure of rationality. Of course, such speculations aren’t necessarily useless because of that, but one should at least be certain that one is trying to explain a real phenomenon.
It seems that many people like to approach markets by using additional data from their personal networks.
It seems likely that the reason people dislike markets is simpler than has been postulated. For every person, they will have pet issues. The market will simply ignore most of them. Thus, the people blame the market for not getting what they want. They will wish to distort the market to get their specific item, that is, to destroy the market.* They won’t agree on how to change it, but the destruction will be agreed upon.
*The market does not care about your issue unless there is an outlandish amount of money you are willing to pay, either alone or in aggregate.
**Even small distortions can vastly change the outcome in an unfavorable (to efficiency) direction. The recent quasi-depression can be blamed at least in part on such a distortion in the housing market.
From the article:
Or like how “people believe in dogs because there are dogs” obviously cannot be the answer to why people believe in dogs.
In short, I think this article is highly suspect. It assumes a lot of non-obvious stuff as “obvious”, including the very premise that people don’t like markets as much as they should.
I think a large part of the problem is that people tend to identify with their governments and thus overestimate how much government regulators will act in their interests.
On the other hand, I think many people focus only on poorly performing regulation and thus underestimate how much government regulators act in their interests.
You could say the same thing about the free market.
I could and would. People tend to both excessively lionize and vilify both depending on which affective death spiral their position on that political axis puts them closer to.
Don’t judiciaries share all these properties? Is there a comparable level of mistrust in systems of justice?
Come to think of it, don’t systems like internet infrastructure or language also share those properties? Aside from a few niche groups, I don’t think either of those have a significant amount of mistrust levied against them.
Well, there are all those lawyer jokes.
Open judiciaries seem to be agent-driven and a lot more visible than markets, though; if the American Supreme Court turns up a result you don’t like, you have a record of the way its members voted and can feel free to badmouth (say) Justice Kennedy for obviously misunderstanding the problem. In principle you can trace that all the way back to the local court level. In line with this, most of the criticism of the courts that I’ve seen takes the form of accusations of arbitrary rulings or abuses of power, both of which seem highly personal.
I think this sort of thing might break down as governmental institutions get larger than Dunbar’s Number, though, even if they remain nominally open. The criticism of legislatures I’ve seen is much more akin to the criticism of markets, treating them as amorphous masses with unclear motivations, although this is muddled somewhat by color politics—and the bureaucracy’s definitely treated like a market.
Downvoting this as too political, but:
The “driven by agents rather than impersonal factors” is spot-on.
If your preferred system centralizes power, then when it doesn’t give you a desired result you can always defend the system by diagnosing the problem as a failure to put The Right People in charge.
But who do you blame if a market doesn’t give you a desired result? E.g., after the hurricane hits, when portable generators are going for a 500% markup, it’s hard to rationally blame “the price gougers” when that term could be expanded out as “the people who are offering you the lowest price of anyone in the world”. A hundred times as many sellers would be willing to deliver you a generator at 5000% markup, and surely any ire aimed at the former group shouldn’t spare the latter. So if you realize (even subconsciously) that you can’t get mad at everyone in the world, but you still want to get mad, you have to conclude that somehow “the system” itself (perhaps embodied by some “middleman minority” surrogate) deserves your anger.
This is highly relevant to lesswrong—markets are one of the best information aggregation mechanisms available and so understanding why people oppose markets is useful.
Understanding why people oppose markets is very useful, but I’ve already got many redundant sources of information helping me at that task. Having a forum where discussion isn’t infected by “Why do all those wrong-thinking people oppose our truth?” would also be very useful, but there I’m mostly out of luck. I can split my time between the liberal (conservatives and libertarians are so heartless!) and conservative (liberals and libertarians are so evil!) and libertarian (liberals and conservatives are so stupid!) sites instead, but a diverse selection of people talking past each other is much less valuable than a diverse selection talking to each other.
For example, many of those sites that should otherwise know better are incapable of discussing futurist ideas without pigeonholing them politically. For a recent example: “There is a rottenness at the heart of the transhuman project … mythology of the smugly self-satisfied hypercapitalists who have unintentionally done so much to destroy so many of the moral and interpersonal values of post-Englightenment civilization.” If Charlie Freaking Stross can no longer discuss the singularity without digressing into anti-free-market ranting, that suggests it might be particularly valuable to maintain futurist discussion forums in which economic liberals can participate without being treated like ignorant specimens in need of re-education.
Oppose markets is useful if your are proposing some kind of institutional reform, and the traditional dynamics are not optimal. The author of the article apparently assumes less disagreement only because some groups, like intellectuals, are not sufficient rewarded.
The problem with libertarianism is that it all too often takes for granted the products of highly sophisticated system of government regulation. The typical young highly privileged person’s libertarianism is an incredibly disgusting sight. I do believe we need more harmonized free trade though. Right now some types of resources (natural resources, the processing of natural resources) is freely traded worldwide, while other type of resources (human labour on-site) is not freely traded, resulting in a situation whereby in the countries with largest per capita resource consumptions (‘developed countries’) it is cheaper to build on-site a poorly thermally insulated shack and put aircon on it, than to build better thermally insulated housing. This is rather bad for environment. Furthermore the taxes go to support the citizens of same country, not those most in need, and a non-nationalistic person can’t really support that either.
Do people “oppose markets” in a way that this classification is useful? If not, a priveleged hypothesis could lead down a blind alley.
If not then it is even less political.
Walk me through that.
If it isn’t even useful to describe markets being opposed then there isn’t much of a political battle happening, is there?
The label can still have political use even if it doesn’t have practical use.
For an example, let’s go with Wiggins, people with green eyes and black hair. Wiggins are untrustworthy, and put too much ketchup on their fries, everyone knows that. A minor political party could even sprout up in Australia on a Wiggin-centric platform. But then some statisticians raise the point that we don’t have strong evidence differentiating Wiggins from other people. What does the political party in Australia do? “If you’re not with us, you’re with the Wiggins! How can they say there’s no difference between you and a Wiggin, when we can so clearly see the difference? Remember to vote to protect Australia from the Wiggins!”
Sure, at some point reality will become inconvenient. But it takes more than mere evidential neutrality to stop the Australian Anti-Wiggin Party—all it means is people have to use their intuitions.
O.o
Downvoting your comment.
I think you need to reread this article. It doesn’t go as far as you seem to think it does. I very much dobut many people on LessWrong are mindkilled by talking about markets. I mean seriously we talk economics and cognitive bias with potential political implications all the time. Indeed it would be impossible to do otherwise.
Looking at some of the comments citing politics as the mindkiller and comparing it to the article Eliezer wrote, this norm has clearly mutated beyond reason. It has now been applied to everything from biology, sociology, sexuality and even recently to religion.
There needs to be some counter push to this norm creep.
Biology, sociology, sexuality, and religion are near-completely dominated by political thinking, especially religion which is basically the same thing as politics. (E.g., I have serious doubts about the standard Darwinian account of complex adaptations, but I can’t talk about those doubts for the same reasons I can’t talk about my opinions on climate science.) Given what I’ve seen of your comments I’d have thought this would be obvious to you. LessWrong doesn’t seem to recognize it. I don’t care whether anti-politics norms are praised or demonized, but I do wish they were applied reflectively and consistently in any case.
Yeah I guess you are right. At the end of the day I just want talking about markets to be OK on LessWrong.
Sorry. (^_^)
Sure, me too.
While I’m at it, I have other implausible wishes I’d love to have granted.
In the meantime, I generally assume that whenever an organization has a “let’s not talk about X because that always leads to unproductive/unpleasant discussions” norm (which is usually), there’s a space of privileged positions about X implicit in the resulting conversations which cannot be challenged.
The problem, one thinks, occasionally, in the abstract of Far mode, is that some kinds of politics tend to drag our identities into them, such that if we were wrong about something, then we were the wrong person, and that is absolutely unacceptable. This does not seem to actually happen with biology or sociology so much. So I guess the REAL policy is against one of discussing politics you identify with?
The fact that “Politics is the Mind-Killer” doesn’t call for a blanket ban on political discussion doesn’t mean that a community norm against nonessential political discussion is necessarily a bad idea. Now, I would say that roystgnr’s jumping the gun a bit here—the OP’s tied pretty closely to heuristics and biases research, and avoids explicit color politics—but I’d rather we engage the norm on its own terms rather than in terms of its relation to Eliezer’s post. After all, we’re hardly bound to take Eliezer’s word as gospel.
Ok sure I can agree with this, even if I think Overcoming Bias/LessWrong used to be more interesting when we stuck to EY’s proposed norm. But come now you must know of what I’m talking about when I say:
There has been overreach. Worse politics as the mindkiller is now being used as a political tool.
Yeah. There are a number of meta-level concerns here that complicate the problem, but at the object level the difficulty is that our present attitude towards politics creates an unstable equilibrium: there are politically charged topics that can and should be discussed with the LW toolkit, but there’s a pretty strong tendency to go beyond those tools and into unproductive sparring, and no good way to stop it.
I’m for the mind-killer meme insofar as it provides a way to put on the brakes before discussion gets to that point. But I don’t think it’s actually very good at that, especially since there’s the potential for it to be used as a bludgeon against political viewpoints individual posters don’t agree with (those they do, of course, register as common sense rather than ideology). Banning politics altogether is one way to deal with this, hence the norm creep; and it really does need to be dealt with. But I’d like to see a better approach.
I wouldn’t have thought this to be a mindkilling subject, but I am seeing evidence of it.
Politics is the mindkiller is the mindkiller.
“Politics is the mindkiller” is politics.
Yes I guess I can agree with that.
No, I meant the subject of markets. I’d think of it as a mindkilling subject IRL, but not here.
It never was so far. Maybe we should start encouraging new posters to find good ways of coping with such feelings instead of shielding them from more and more “political” subjects?
We used to be stronger as a community.
In the real world the inability to avoid mindkilling will cripple anyone’s rationalist dojo.
A while ago I made a suggestion for a poll which interrogated LW users’ beliefs in subjects deemed to be mindkilling. There were two reasons for this: to map the overall space of ideas where it takes place, and to look for areas which turned out to be overwhelmingly one-sided.
I go to great pains to think dispassionately about things, (as, I imagine, do a lot of LWers), but there are still some subjects which I know I can’t think about objectively. More worryingly, I wonder what subjects I don’t notice I can’t think about objectively.
One warning sign is attributing disagreement with your views on a subject to “bias”, and then engaging in armchair speculation about the psychological defects that must be responsible for this bias. For an example, see the article linked in the original posting, and almost the whole of this thread.
An especially egregious variation on this theme is evolutionary psychological speculation. I speculate that people do this because in the ancestral environment your audience wouldn’t call you out on it if you came up with a fully general explanation of something and asserted it confidently as long as your audience already agreed with your conclusion.
Or for that matter most of the sequences.
Precisely. E.g. the charity diversification disagreement I ran into here several times (even before I formed an opinion on AI stuff). I said, on several occasions, that the non-diversification result in larger rewards for finding and exploiting deficiencies in charity ranking algorithms employed, I even provided a clear example from my area of expertise of how the targets respond to aiming methods. Nobody has ever even tried to refute this argument, or even state that the effect of such is not strong enough, or something. Every single time someone just posts a reference to some fallacy which is entirely irrelevant to my argument, and asserts that it is the cause of my view, repeatedly (and that typically gets upvotes). One gets more engaging discussion simply asserting that you guys are wrong (no explanation given), than providing a well defined argument, because the argument itself doesn’t make a damn difference unless it is structured in the format of ‘assert a bias’ game (whenever I get upvotes being contrarian, that’s usually really shitty arguments following the assert a bias format rather than there is such and such mechanism format)
That’s quite a sensitive test, though. I’m trying to make my views unbiased. If I succeed, someone who still exhibits a greater amount of bias will either disagree with me, or I’ll disagree with their reasoning.
Well, you might have different priors, leading to different posterior beliefs from the same data; or you might have different values, leading to different decisions or policy prescriptions from the same descriptive beliefs.
(One might expect that a person raised in a large close-knit extended working-class immigrant family might have different values regarding economics than a person raised in a small individualistic nuclear middle-class ethnic-majority family, for instance.)
Note that I said someone who is more biased in an arena will disagree with me, not that someone who disagreed with me in an arena was exhibiting more bias.
In the real world a dojo (rationalist or otherwise) that anyone can walk into at any time and join in any of the exercises without any filtering or guidance or partnering is pretty much guaranteed to end up crippled.
The anti-capitalistic mentality is a worthwhile read if you find this avenue interesting. (warning: Austrian econ) http://mises.org/etexts/anticap.pdf
I was so happy when I saw the section on general objections, specifically “happiness.” Great, I thought! He’s going to take on the argument that capitalism makes people less happy than a social democracy! Nope. “Critics level two charges against capitalism: First, they say, that the possession of a motor car, a television set, and a refrigerator does not make a man happy. Secondly, they add that there are still people who own none of these gadgets.” The first sentence is turned into a strawman by making it an absolute, the second sentence is a strawman from the start. The rest is just like that. I was so disappointed.
Overall, I feel like Mises just doesn’t understand the people who disagree with him, and doesn’t try to do charitable arguing.
Have you ever read Deep Economy, by Bill McKibben? Now there’s some anti-capitalistic mentality.
I don’t really care about the happiness of the first world. Markets are urbanizing china at a rate of a los angeles every year. The rate of increase in SoL worldwide right now is breathtaking.
Some people like them, and some don’t. Those who don’t do so for various reasons.
I won’t go into the economic arguments. Or even the moral ones.
I’ll just observer that some people wish to be slaves. You may think that’s harsh, but I think it’s just an accurate observation. Some people have a will to servitude. They wish to find someone or something to obey.
And if they’re going to obey, you damn well will too. Whether one is a slave to God, The Church, Society, or The Party probably is largely a matter of happenstance, of where you happened to grow up . Some people want to live in a world of obedience.
A market transaction means someone, somewhere got to make their own choice, to decide for themselves, instead of merely obey. That’s why some people don’t like markets—they don’t want people free to chose.
What are markets that people dislike? If it is that people dislike large unregulated markets. there are some more reasons...
First, large markets encourage forming monopolies. Many people have personal gripes of ths kind: there was a relatively small company or a niche company that produced a product that was a good fit. It got bought by a larger company and now produces utterly unusable product in order to avoid competing with low-quality offering of the buying company. Also, any anti-trust case you have heard of is enabled by large-scale markets: you need national market for an antitrust case to make national news. Availability heuristic adds to the perception that “large markets = large and abusive monopoles”, which is sometimes true and sometimes not true.
Second, markets are not simply “inherently probabilistic”. Large-scale high-liquidity markets produce randomness that they call volatility. Price changes in exchanges do not change drastically more on Monday than on Wednesday, although on Monday there are two days worth news without to incorporate into prices (even if we are speaking about some natural-events-depending commmodity like agricultural produce where there are more weather predictions than mergers). News mentioning markets do not try to hide this.
Why exactly should people like the system that is the closest thing we have to unfriendly intelligence, paperclip maximizer style, and which is probably the best example in favour of the SI’s beliefs? This is weird.
Also, the markets are all too closely approximated by a system of very simple agents betting on random, few ending up rich, most ending up poor, and distribution ending up very similar to reality (power law distribution). I don’t see why we should like a system that would produce power law distribution on identically skilled agents.
You focus on the bad aspects of markets (they make some people rich, using some randomness) and ignore the good aspects (many people have their needs satisfied better than if they had to do everything for themselves). Maybe this is what most people do—we take the good parts for granted and complain about the bad parts.
An analogy would be an unfriendly intelligence (powerful but not FOOMing; sometimes creating food, sometimes paperclips) that would make many people say: “intelligence is bad, we should destroy all computers, and hope that the next generations of humans have less IQ so this problem will not happen again”. -- The hate makes sense, the solution does not.
Hm, interesting. So, with the analogy, you’re agreeing with what PM did say, but disagreeing with what they didn’t say. :)
How exactly is not having this extremely speculative stock and currency trading running at the timespan of milliseconds became ‘having to do everything for themselves’? Or are we speaking of the market where i buy groceries?
This needless back-and-forth trading can be immediately eliminated with 5% tax on those operations (i.e. you sell stock or currency worth $1000, you pay $50). Hell, 1% would cut much of crap out (5% may be too severe). Would it make everyone ’have to do everything for themselves”? Let’s look, I pay sales tax whenever I sell anything I make for actual consumption, it’s way more than 5% , and it didn’t force anyone to do everything by themselves.
Both are parts of one continuum. Somewhere in the middle is e.g. a possibility of making billions by creating Google.
A proper tax can make a part of this continuum mostly unprofitable. We just better be careful not to remove unnecessarily big part. Good luck finding a rational solution for such politically charged topic!
Well, one percent tax would eliminate very huge fraction of needless back and forth speculative trading, while doing nothing to hurt Google.
I think you need to justify the “needless” in your description of such back-and-forth speculative trading, as it a) has gone unquestioned b) is not self-evident, and c) otherwise begs the question about whether we need to actually do anything about it at all.
Seems generally correct at the first sight, but to be more sure about it, I would like to read an analysis by an economist who is able to consider more side effects than I am aware of.
The specific impact on society could also depend on many small details, like how exactly is the tax specified, what exceptions are there, how exactly the tax must be documented and paid, in international business how is it decided which government will get the tax, etc.
For example if A must pay 1% tax when selling something to B, and then B must pay 1% tax when selling the same thing to C, would it be possible to create some arbitrage system that would convert it to only one transaction from A to C, thus avoiding paying half of the tax? What if people only did business with virtual dollars, and once in a month converted those virtual dollars to the real dollars, paying the 1% tax only for real dollars that change hands? Would such system allow to replicate the current nanosecond stock trading, making this tax mostly meaningless?
On the hand, if the law would tax every virtual currency, it could end with World of Warcraft players having to include every XP gained for killing a murloc into their tax report. Perhaps a tax expert would be required to estimate the value of LW karma in dollars, too.
I am not an economist, nor do I play one on TV. My current studies (mostly maths, modelling and statistics) do contain a sizeable econ component, however, so I pay attention to these things.
I also have plenty of other things I could be doing with my time. Would you appreciate me talking at length about the pros and cons of financial transaction taxes?
Yes, please!
I would, if you have something interesting to say.
This back-n-forth trading can probably only exist if the rules of it are actively enforced by governments acting against own interest on money of third parties (taxpayers). I don’t think that this system can be recreated by bunch of self interested agents. Let the virtual currency be, my taxes won’t be paying for stability of that currency or for enforcement of any kind of rules on it. For the libertarian dream there must be a big badass government enforcing zillion laws and regulations against it’s own interest. Take that out and the dream evaporates.
What is the problem with high-speed trading in your opinion? I see a lot of people wanting a Financial Transactoons Tax, but I have yet to see étaples of what it would accomplish or prevent?
http://www.economist.com/node/21525456 for the starter.
The arguments in favour of speculation, in general, rest on assumption of intelligent trading and diversity of strategies. The short term range, however, is entirely up to software tools, whose decisions are stupid and have identical systematic errors. I think the short term trading is going to go out with a bang first time there’s any interesting software-level exploitation—either a direct hack or adoption of one bot whose decision theory makes non-trivial use of understanding of other instances of itself. Bang as in, a millisecond level bubbles and crashes followed by decision to roll it back and regulate or prohibit.
Wow, sorry about the stupid autocorrects above.
As have been pointed out on e.g marginalrevolution.com, one reason HFT is so popular is because the minimum stock price increment is one cent. HFT might conceivably lose much of its allure if this lower bound is changed to, say, .01 cent.
I’m not convinced trading must be intelligent to provide beneficial information to the market. I’m also not convinced all HFT systems have identical systematic errors. Can you give some examples?