Free markets are designed around a selfish ambition for making money. You can only make money by pleasing your customers. And hence free markets are the greatest mechanism for prosperity.
There's nothing wrong with making money that way.
Nothing is ideal. The more free market a country is, the more prosperous it is.
https://en.wikipedia.org/wiki/Ludlow_Massacre
https://en.wikipedia.org/wiki/Erin_Brockovich#Pacific_Gas_&_...
https://en.wikipedia.org/wiki/Exposure_(Bilott_book)
https://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill
https://en.wikipedia.org/wiki/List_of_accidents_and_incident...
https://en.wikipedia.org/wiki/Exxon_Valdez_oil_spill
https://en.wikipedia.org/wiki/Grimshaw_v._Ford_Motor_Co.
Right, which is why touting oversimplified economic models is likely to be contentious ;) Speaking of which:
> The more free market a country is, the more prosperous it is.
When do you think the US was at its most prosperous? Most would say somewhere in the mid 20th century, which was hardly the least regulated time in its history…
GDP growth in the 1800s is a rather dodgy time of statistics, as economic statistics were not collected then.
From 1800 to the Civil War, the US economy began to be industrialized. The Northern states industrialized, while the Southern economy stagnated.
The 1870s and 1880s are considered a very prosperous time. It was a time when industry really got in gear and was applied broadly.
I don't have hard facts, but prosperity in my life seems to have been driven by the computer industry, a pretty much completely unregulated sector of the economy.
Are you sure?
No, they are not. No matter how big your company is, if customers don't like your product, you are going bust. Small companies regularly replace large ones. See the book "The Innovator's Dilemma".
Like, say, the tragedy of the commons?
For example, we are running out of fish in the ocean from overfishing. But there's no shortage of cows and chickens, despite massive consumption of them. The former is the commons, the latter is private property.
Much like how there isn't any reason you have to pay for food in principle. It could become so cheap and easy to produce, say, bread or cheese that it is available everywhere at no nominal cost.
So yes, you should. You already do, realistically.
If that were to change, which it may, you would feel differently.
It's a fact that, right now, the dude can use whatever amount of air he feels is appropriate for his circumstances. Even if I wanted to interfere I doubt I'm even on the same continent as he is, and it isn't my business anyway.
There'd be specialist companies that do bulk oxygen supplies too, a quick search found things like https://www.dswgascylinder.com/product/liquid-oxygen-trailer.... Not a market I'm familiar with.
I suppose I'll just add in postscript; your not going to get much out of the conversation if you don't take it seriously. There are people who make great money selling oxygen. It isn't automatically priced at $0. In some hypothetical world where quality oxygen wasn't just floating around in the atmosphere, people would pay for it in the same way they pay for other essentials like food or water. Paying for water is about as crazy as paying for oxygen, they both basically just turn up out of the atmosphere. And there is precedent for a commons essential good becoming more expensive, food used to be something people just picked up off the ground for free. Or hunted down on unclaimed land.
Slightly more formally, an assertion of exclusive property rights is a sufficient condition for something to be closed access, but it isn't necessary.
Though, admittedly, that does depend on what one's definition of a free market is. Is it unfettered commerce, consumer protections and suchlike be damned? Is it a system of commerce that ensures equitable access? I'm personally of the mind that, as long as I trade with certificates that bear Caesar's face (or trade with proxies for such certificates, like a MasterCard), he gets to make the rules in exchange for my being able to lean on his legal system to protect my interests, so I find that the equitable access angle is nice.
(Likewise, trading with Bitcoin or Ethereum or whatever the in-vogue cryptocurrency is today means that the code makes the rules, and I get to pay for the privilege of having my transactions indelibly entered into the distributed ledger and for the code governing those transactions to be buggy and exploitable. I'm still scratching my head at it.)
At the risk of building a strawman here, I'll caution that it's logically inconsistent to expect the state to enforce exclusive rights while also urging that strict regulation of a shared commons is an illegitimate market intervention.
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0: That is, unless the title holder grants license, but that's a whole other conversation.
It is a minor point I suppose, but this is the other way round. Because Caesar makes the rules you trade certificates that bear his face. It takes vigour and energy on the part of law enforcement to stop people from moving to private currencies.
Sigh. No need to make up one's own definition. Googling "free market":
"A free market is an economic system where prices, wages, and the flow of goods are determined by supply and demand. There is no government control or central planning telling people what to buy, sell, or make. Instead, private choices and voluntary trades drive the economy."
Henry George in his Progress and Poverty makes similar gestures toward defining a free market this way.
Part of the reason why it's important to consider other definitions (and other economic models) is that there is an important result in economics from the 1970's that, more or less, establishes the lack of a guarantee that the demand curve in an aggregate demand model (a macroeconomic model) will slope downward. This makes the aggregate demand model less than useful for a priori arguments about supply and demand in the macro context; they must instead be approached a posteriori.
It's also the big reason why I'm uninterested in a colloquial definition that is heavily filtered through von Mises and Friedman.
The government tries to repeal the Law of Supply and Demand all the time. Unsuccessfully. A while ago, a good friend of mine asked me what would happen to jobs if the minimum wage was raised. I said the number of jobs would go down. He said "aha! here's a study that proved that the jobs increased!" I said I don't need to read it, because the researchers goofed.
Some years later, the study was retracted because it was flawed.
It was like a story on HackerNews some years back that made a claim that electric cars were 90% efficient. I knew that was hokum right off the bat. But I still had people with PhD's in engineering saying it was true.
The car loses 10% just in losses in the battery, let alone anything else.
So I did some research on the author. Seems it was a person without a degree in physics or engineering who worked at a ski resort.
I'm curious. When does it not apply?
The supply and demand model only applies to analysis of microeconomic systems with perfect competition, namely of systems that lack monopoly and monopsony; that have perfect information; that lack an ability of a single economic actor to affect the price in the market; that lack externalities[0]; that lack transaction costs; that lack unknowable probability distributions of outcomes; that lack economic actors that change their behaviors based on what they expect other actors to do; and that lack non-market rules or structures that restrict prices, quantities, or entry. These assumptions are all-or-nothing, and there are a lot of them. It's also an equilibrium model, and we aren't guaranteed to have equilibrium.
For macroeconomic analysis (i.e., analysis of multiple sectors of an economy or multiple economies), it's problematic because of a theorem from the 1970's due to Sonnenschein, Mantel, and Debreu. I've stated it elsewhere, but it also has the implication that the behaviors of the actors in a microeconomic system do not carry over to the macroeconomic context. This tends to violate many of the assumptions above. (Though, if it isn't obvious how or why, please ask.) Furthermore, in the macro context, I don't think we'll ever have equilibrium; at least, I'm having a hard time thinking of an example when it exists.
Let's bring in a physics analogy. While we can look at mechanics through the lens of elementary algebra, those tools really only give us the ability to look at static force-balance problems for springs and pulleys in equilibrium. To model such a system more closely to how it behaves in the universe, with damping, inertia, and feedback (and whatever other time-dependent behaviors I may be forgetting), we are best served moving to differential equations.
Economics is no different; the supply and demand model is a lot like Hooke's law in its simplicity and its applicability. (In fact, in my modeling, I very heavily used numerical solutions of PDEs.)
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0: When the retail price of kerosene tanked by 70% between 1860 and 1880, this resulted in millions more kerosene lamps and lamps broadly being lit for longer periods of time. This had externalities in the form of more soot and particulate matter (and probably also respiratory illness, but I couldn't seem to find anything with observations from the time period).
I'm going to stop right there. Perfect competition is unnecessary. Part of perfect competition is perfect information.
No transactions have perfect information. There is always "risk" involved. And risk contributes to determining the price of something. Ever wonder why used cars lose a third of their value when you drive a new one off the lot? It's because of the risk that a person might be selling that almost-new car with a hidden expensive fault in it.
Also, risky investments come with higher returns. Safer investments come with lower returns. The lack of perfect information gets a dollar value for the amount of imperfection.
Risk is absolutely part of the free market, and absolutely a part of the Law of Supply and Demand.
Um, OK.
> Perfect competition is unnecessary.
It is definitionally a precondition to applying the supply and demand model for analysis.
> Part of perfect competition is perfect information.
This is mostly correct. It's actually a biconditional: perfect competition iff perfect information.
> No transactions have perfect information.
This is correct.
> There is always "risk" involved. And risk contributes to determining the price of something.
Risk (due to Frank Knight, sometimes called Knightian risk) is a term of art that refers to known probability distributions of market outcomes. My professional training is literally to build pricing models against these.
> Ever wonder why used cars lose a third of their value when you drive a new one off the lot? It's because of the risk that a person might be selling that almost-new car with a hidden expensive fault in it.
No, I can't say I've ever wondered this; I've not been around a lot of new cars. (See also: the whole Mennonite thing.) I know that it's because of the term of art that we call uncertainty (again, due to Frank Knight, sometimes called Knightian uncertainty), which refers to those unknown probability distributions of outcomes that I listed as a precondition to applying this model for analysis. I can't price against those.
A used car market is what we call an Akerlof market, which is a market with a feedback system that has a whole lot of pathologies linked to information asymmetry. This also happens to be the textbook example of adverse selection, which is itself an example of how the supply and demand model fails to predict the market due to that information asymmetry.
> Risk is … absolutely a part …
This is correct with the words written here, but I'll caution that risk as a term of art has been misused.
Other people have a demand to dump garbage in the ocean because it's cheaper than disposing of their trash properly.
How does the free market solve this? Will someone be buying the ocean any time soon?
If only it were so.
Alas, in the real world enshittification, shrinkflation, skimpflation, dark patterns, planned obsolescence, vendor/platform lock-in, rent-seeking, regulatory capture and the like absolutely rule the day, due to a host of free market failures.
I don't claim to have a better alternative. But I find your take a bit strange. Are you as a customer satisfied with how all of this is working out?
But other people are using "forced" in the colloquial sense: "I'm not offered the thing I want, I'm only offered the thing I want bundled with something I don't want", e.g. I just want a TV, but I can't buy just a TV, I'm only offered the choice between a TV bundled with advertising or nothing at all. Hobson's Choice isn't a pleasant situation to be in, but you're not forced to buy that TV; you had the choice to buy nothing at all. It's not the same concept as "buy this product or we will impose a penalty", such as how Americans are now forced to buy health insurance.
WalterBright - to your question "when was the last time you were forced to buy something you don't want?", the correct answer would have been "March 2010", when many people were forced to buy health insurance that they didn't want. Which goes to show that although many parts of the American economy are a free market, health insurance is not. "Coincidentally", prices went up once there was a lot more truly forced demand. Huh. Who ever could have predicted that when you forced more people to buy a product, its producers would be able to raise prices? Wow, so completely unexpected a result... no economists at all would have predicted that... (Yes, Friedrich Hayek, I see you screaming into your pillow. It's okay, I'm being sarcastic).
The washing machine broke after 18 years. It was a cheap model at the time, but it held up well until the end. I'm under no illusion that the 50% more expensive replacement will last anywhere as long. You know, the old "they just don't build 'em like that anymore" that even the sellers tell you freely.
I'd like to buy quality products. For example, I own a coffee machine for which the manufacturer provides spare parts for decades. But I'm not willing to spend 3x for an appliance when there's no realistic expectation to get 2-3x the use of it since it's not economically repairable. So the rational choice is to buy semi-cheap and throw it on the heap when it inevitably breaks sooner than the last one. I hate that game, but I'm not made of money either.
Then the TV died. I did some research online and then spend a very disappointing hour browsing a local electronics shop to get a hands-on feel. It's all "smart" shit the software of which will go out of support within 5 years, with dedicated remote buttons advertising streaming services I don't use, too large screens and/or bad build quality, abysmal sound all around, and, not to forget, stuffed full of surveillance and ads. Out of sheer desperation, I got alarmingly close to spending $1.900 for a premium brand 43" that did tick all the boxes - namely, just being a TV that's as good and inobtrusive as the $700 one from 12 years ago. I finally resorted to buying an 7 year old unit from the same premium brand third hand for 1/7 the price. Which in the event turned out to be a really good deal, I admit, but I don't quite think the used market is what we're talking about here.
It did not feel at all like the market for new products catered to my preferences. These may be a bit peculiar, but FWIW, I take that's a sentiment quite a few people on HN share: questions about "good dumb TVs" come up every so often, so I'm not alone in this.
And don't get me started on printers...
BTW, I see them for sale in pawn shops and thrift shops, with much much lower prices. My home theater came from the thrift store :0)