Inflation

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Physics Guy
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Re: Inflation

Post by Physics Guy »

canpakes wrote:
Sat Jan 15, 2022 4:32 pm
I haven’t seen a better basic system for the marketplace than capitalism, but it definitely can be abused.

Imagine that we’re not talking about diapers, but water. If I have enough money to drill the deepest well in my county and can pump enough water into my own reservoir to make all of my neighbor’s wells run dry, then I store it and sell it to them at increasingly greater cost as the overall supply dwindles elsewhere, at what point do questions of monopolization and ethics emerge?
I think I have the same basic view of capitalism: as Winston Churchill supposedly said about democracy, it's the worst possible system except for all the others. I was impressed once by a museum hall containing East German "Trabant" cars from over a span of decades. Over a period in which capitalist-made cars changed so much that you could easily date movies from the cars, the Trabants all stayed the same. The capitalist cars didn't just change superficially, either. They made big technological advances. Even where it worked best, the communist system just couldn't seem to provide the continuous quality improvement that people in capitalist economies take for granted—and over decades, the difference was huge.

As far as I can tell, what drives all that steady improvement is precisely the chance of getting unfairly rich. There are downsides to change; even changes that benefit most people are usually bad for some people. Before the change has actually happened, the downsides are usually easier to anticipate than the benefits. It takes quite a fat carrot to incentivise change. A merely fair return on effort likely isn't enough. I think we might need the lure of the big score. In that sense I think that capitalism's worst bug is its killer feature.

So okay, we use greed in the way we use fire. You have to let the fire burn, but not burn down your house. Greedy so-and-sos would be happy to suck the water away out from under us and sell it all back to us, but we can make that illegal.

There need to be clear principles involved, though. If governments start making profitable activities illegal in an arbitrary ad hoc fashion then there is bound to be a big chilling effect on innovation, regardless of whether the governments are serving elitist or populist interests. It has to be possible for businesses to anticipate which new schemes are legally iffy and which ones will be safe. "You're getting too rich and we're jealous" can't be a reason for cracking down with the law, it seems to me, no matter how egregiously rich some person or company gets.

Preventing monopoly is a principle, all right. We tolerate capitalist greed because competition will force it to serve us well. If the greedy so-and-sos start trying to skip out of that part of the deal, we can squelch them. It's our fire; we can put it out if it spreads to the couch.

I'm just not sure casual observation is enough to diagnose oligopoly. Sure, my little start-up isn't going to compete with the big diaper conglomerates, but aren't there a lot of other companies of comparable size that could get in on the lucrative diaper racket if it were really such a great opportunity? Wouldn't Elon Musk be offering CyberDiapers that change themselves and have three-hundred-mile range?
I was a teenager before it was cool.
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