Free trade is voluntary, we choose to participate in trade because it benefits both parties. I'm interested in seeing arguments that attack SV/society but start from this principle?
This may be done out of fradulent desires, but more commonly it's done because we as a society are too efficient. We have too many goods produced, so the only way to differentiate many products is through "intangibles" which obscure the actual benefits provided, and instead sell things based on irrational factors like sexiness, virility, image associations, and identity.
The customer often is forced into asymmetrical deals due to this, because of the relative quality of actual benefits provided. You don't sell cheese any more, you sell artisanal cheese. This is because if we were honest, artisanal cheese is close enough to regular cheese to be hard to differentiate, so they sell the intangibles of artisanal qualities, and people pay more for pretty much the same benefit.
I think the article shows that if you take that kind of intangible differentiation too far, you get things that end up harming the benefit to customers and society.
If people are willing to pay significantly more to derive greater enjoyment from a basically identical product, then there may be a case to be made that they are deriving greater benefit.
Tragedy of the Anticommons https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons
Unscrupulous diner's dilemma https://en.wikipedia.org/wiki/Unscrupulous_diner%27s_dilemma
The usual solution to these problems is regulation by government.
The more general question was how free trade, where both trade partners voluntarily participate, can lead to bad outcomes. The answer is that a non-trading third party can be harmed and the environment can be harmed. Those Wikipedia links provide many examples.
Meanwhile, the startup is trying to capture enough market share so that it can then raise rates and lower wages with less competition down the road. In other words, the traditional free trade model can be distorted by the effects of VCs who can operate with extraordinary scale of time and geography.
I'll posit: the answer tells us whether we live in a competetive marketplace or monopolistic hell-zone.
In the housing market, there are regulations put in place by NIMBYs to protect their own investments. These limit the supply of housing in popular areas, driving up prices. Nothing a rentee can do but pay up or move elsewhere.
In most job markets, the employer has more knowledge (about compensation plackages) and the job-seeker needs a job ASAP to avoid starving.
In the case of Juicero, the toothbrush subscription, etc? Closer to a textbook-pure market, for sure.
Econ 101 includes analyzing the effects of market interference, and in this case its predictions are exactly correct.
Better?
Except all the times when it isn't.
Housing isn't really voluntary. Water isn't voluntary. Internet access isn't really voluntary. Electricity isn't voluntary.
Free trade requires the option to walk away without catastrophic problems occurring in your life. Increasingly, that option doesn't exist.
When the alternative is homelessness, or joblessness, or starvation, you can't honestly claim a choice was voluntary.
In most cases the alternative is perfectly fine. Making trade more free makes the alternative better. If it is as trivially costly to find a new job or a different appartment as finding another restaurant, then consumers have a better bargaining position.
Tell that to all the malnourished people, all the homeless people, all the unemployed people, and most especially the families of everyone who literally died because they couldn't pay medical bills.
I don't now where you live, but where I do the next restaurant doesn't have 30-100+ people[1] competing for the same seat, the hostess doesn't run a credit check, and I'm not asked for a multiple of my meal-cost as a deposit.
It would appear to follow that
> then consumers have a better bargaining position
doesn't happen.
And...
> The alternative is not homelessness, starvation, or joblessness
We have homeless folks, we have jobless folks, and while I don't think many people outright starve to death in the U.S., we do have chronic malnourishment.
I'd like to ask you to consider how that evidence from the real world should provide feedback to your economic model of the reality in question.
This is one of my biggest frustrations with econ[2]. People mistake the map for the terrain in every field, but econ seems to positively fetishize doing it.
[1] I have personally witnessed over 100 people at an open house for a single apartment. Amazingly to me, my then-partner and I got it.
[2] Actually, it isn't all of econ - one school, in particular, seems to be highly susceptible to this mistake.
If so, that assumes that both parties are going into the trade negotiations on equal footing. I don't think I'm the only one who would argue that's not the case in a great many rentseeker:rentee or owner:employee relationships. Even discarding any social or economic pressures in the current climate, the power of the rentseeker and owner allows them to shape the environment into one that benefits them more (see: lobbying and politics in the USA).
Trade is voluntary. Free trade is an agreement between two parties. But free trade does not benefit 'both parties' unless you vivisect -for example- the American people into those that actually benefit from free trade and those that do not, largely.
This is borne out by the reality we live in: that income and wealth inequality is increasing and doing so at an increasing rate and capital is accumulating due to public policies both domestic and international in nature that disproportionately favor the rentiers.
The US has a lower rate of individual participation in the economy now than before NAFTA. That's a major failure in my opinion.
The notion of free trade sounds good at an individual level but does it really exist at a societal level? I think it's like libertarianism. It's sounds plausible at the micro level but doesn't scale well.
I think the starting point you seek is itself worthy of criticism.
The good news is "society" isn't buying and selling houses, or negotiating rental agreements. Individuals are.
That's not really true. If you define "society" as "large groups of people", then they absolutely are buying and selling houses, and negotiating rental agreements.
In my hometown, over 50% of single-family houses are owned by major corporations. And some of those corporations are listed and traded, their stock exists in part inside wealthy and upper-middle-class people's 401Ks.
"Society" is absolutely buying up houses, and negotiating rental rates.
I'm curious as to what town this is, and how many are bank-owned properties that haven't been unloaded yet. This sounds like an unusual situation, considering the places I have lived.
From 2013, 25% of acquisitions made by funds:
http://archive.azcentral.com/business/realestate/articles/20...
edit: no shortage of For Sale & empty homes up here, too. Multi-million dollar homes are stagnating on the market for years, and subsequently, plenty are for rent, too.
That number is slightly higher than average, but the situation isn't uncommon. In fact, it's common enough that the Federal Government itself is doing it too, in a dozen or so major markets (Atlanta, Seattle, Chicago, Los Angeles, Minneapolis, etc)
http://www.cnbc.com/2017/01/25/governments-fannie-mae-will-b...
> I'm curious as to what town this is,
These are the stats from my small hometown specifically :
http://michiganradio.org/post/winners-and-losers-grand-rapid...
And yes. It probably is like libertarianism. I am a libertarian, and I don't take that as an insult.
Unsurprisingly, these dynamics differ from those found in isolated, individual humans.
In plain terms, everyone acting selfishly does not necessarily lead to everyone getting what they need.
Free trade used to be between roughly equal parties. You wanted juicer, someone sold you a juicer.
Today, free trade has evolved into a transaction between you and the rest of humanity where you are expected to yield your information to an entity so that they can use it to better serve you and the rest of the world.
For many scenarios, this symbiosis was a net benefit. Recall Nest and the promise to reduce your electricty bills by 10-15% by harnessing big data.
Over time, Silicon Valley got addicted to the promise and possibility of making you yield data to it so that they could "somehow" help you live a better life.
They tried to extend the idea into areas where it had no business being - a juicer or a coffee maker. And since the average human knows a bad bargain when they see one, they had to sex up the juicer or coffee maker with beautiful design, empty slogans, and beautiful models.
..which is pretty much the author's entire point if you read between the lines.