Hacker News Reader

Comment by ancap | Hacker News Reader

I disagree. I think in a lot of cases buyers should or would demand transparency (ie. has this house ever been flooded?), but I don't think it's a strict requirement in the broad sense you may be implying.

Transparency can be subjective. For example, a person sells 100 shares of ACME stock to a savvy buyer. A short time later the stock triples in value, and the seller sues the buyer because they were not "completely transparent" about their knowledge that the stock would rise.

Of course, in all of this I am not talking about deliberate fraud which would be strictly forbidden in a free market.

View on HN

I was talking about market transparency; it's more like the person selling the shares sells them to one person at a discount and another person at a high price. For a free market to function, the buyer would need to know the other prices people have paid for the same goods.

If you don't have that, a free market can't work well.

When you buy something in a free market, you should know its quality, characteristics and the price on the market. You should also know its provenance, relative supply and transport/marketing cost. That's transparency. It lets you buy things and make the most efficient choices, which is why it's fundamental for a free market.

>...That's transparency

The criteria you specify for transparency is subjective and I don't agree that all of those criteria are strictly necessary. Specifically, I don't agree that knowledge of "provenance, relative supply and transport/marketing cost" is required of a buyer at all in a free market, though they may personally have an interest in those things. I would venture that most consumers know and care very little about those things.

>If you don't have that, a free market can't work well.

>which is why it's fundamental for a free market

What's important is the principle of subjective value--that the buyer and the seller value what they are getting more than what they are giving up--and that can happen without the various criteria of transparency you outline. Certainly there are cases where market actors will demand some of those (and many cases they will not), but I wouldn't state it's a foundational requirement the market must be built upon.

We don't currently have a free market, and most customers definitely do not know the provenance, relative supply or transport/marketing cost of almost anything they buy. They trust food, for example, because the government secures it and regulates it.

>What's important is the principle of subjective value--that the buyer and the seller value what they are getting more than what they are giving up--and that can happen without the various criteria of transparency you outline.

No, that's important to a market period. A free market is a specific thing.

You need the other things to move away from the necessity of government regulation (transparency, for example.) If you don't know what's in that apple and nobody is going to make sure it's safe, you can't buy or sell it efficiently.

Even absent government regulation, I still don't see consumers being terribly concerned about the source of their apple. Why? Because the quality of it is reflected by the reputation of the seller. But even if I were to concede the argument for the particular case of food, that does not mean that knowledge of provenance is a prerequisite for a free market.

>You need the other things to move away from the necessity of government regulation

I guess this is the crux of the matter. You are suggesting that transparency must pre-exist a free market, I am suggesting that a free market pre-exists transparency, and when necessary transparency will be demanded by the consumers.

>You are suggesting that transparency must pre-exist a free market, I am suggesting that a free market pre-exists transparency, and when necessary transparency will be demanded by the consumers.

The issue, I think, is that we have a different definition for a free market. A free market, by the definition I am using, functions at peak efficiency and is free from monopoly and large stakeholder or government intervention/regulation. For that to occur, the kind of transparency I'm talking about must theoretically be present.

If transparency came afterward, what happened prior would not be perfectly efficient and would be vulnerable to monopolization, intervention or unbalanced deals and so would not, by definition, be a free market.

Reply on news.ycombinator.com