RE: Social Media 1.0 Collapse Underway - Advertisers in Revolt
Good point. What I'm thinking about, not sure if it is related to your point directly. But lets take an average grocery store that sells one gallon of milk for ten dollars. Many rich people would be willing to pay twenty if that was the price. Because it is worth that much, or a lot more, to them, given their hourly earnings. Their rich person cells need the nutrition in order for them to be productive and earn money. Because of the system and the way our economy is set up, each teaspoon of milk into the rich man's body has a higher return in terms of earnings from productive work than that which goes into the poor person's body.
Now a poor person can only lets say pay 5 dollars for it. That is how much it is worth to him/her. So if the rich person paid 20, that would make it possible for the store to sell the same milk to two poor people who are each only willing to pay five dollars. And the grocery store would still be making the same profit. And everyone is happy! Now what happens, is the two poor people can't afford milk, and the rich guy pays half price.
So the rich get richer and the poor get poorer. Can you explain your last sentence, not sure I get it: "We humans all want to be rentiers, it is the free-market that drives the profit on that behavior to zero."
I get what you are saying in the first paragraph. I watched the first part of this documentary called "Browser Wars" last Thursday. It was about how how when the Internet started Microsoft was this big giant and tried to take over the Internet browsing market and force everyone to use their browser in addition to their operating system.
Then came Netscape Navigator, and Microsoft bullied them out of the market with tactics that I think you can describe as bullying tactics akin to what you refer to here as "manipulation of market conditions" and "monopoly use of force".
For instance at this one infamous meeting, Microsoft offered Netscape one million dollars for all their technology. They said they were going to take over the market anyway so it would be a good deal for Netscape. That was Netscape's version of how the meeting went.
Microsoft, on the other hand, said it was a pleasant meeting and they talked about how they could work together. One of the weirdest or funniest things about that documentary (at least that first part) for me was how Microsoft made this huge press announcement on the same date as Pearl Harbour.
They did it on purpose, where they like outlined their strategy, or I think launched Internet Explorer, which was their response to Netscape Navigator. I still remember those days a little. I always preferred Netscape Navigator over Internet Explorer.
Another really cool thing was when they talked about Bill Gates one night wrote this legendary email to all his employees basically saying, OK, from this very moment, we are targeting Netscape. Everyone was focused on that one particular objective.
Later in the show they also said a lot about how Microsoft was sued for manipulation of the market or something, I can't remember exactly, or forcing people to buy their product.
And how he really did not know what to say in the hearings and did not come across as very convincing. It was after that that he gave the reigns of the company over to his 2IC Steve Balmer. And then he went into philanthropy as we all know. With his wife.
See my post below. You miss the fundamental problem of price paid means the signal for higher profits for producers to come in and create more supply.
Prices are information. They transmit and coordinate the structure of production moving capital to where it is most needed by the application of profit.
We all want to be rentiers... charge more for our services than our services are worth in an open market. Who wouldn't want that for themselves. The free market grinds that arbitrage between the monopoly-enforced price and the cost of production to zero.... empowering consumers while producers have to work to stay ahead of this process through the reinvestment of capital.
In your above example, Bill Gates cannot consume more milk than he needs. The law of diminishing marginal utility is always in effect.
I see what you are saying. I think discriminatory may solve that exact problem though. Because the deadweight loss in the supply and demand graph transactions are reduced to zero. Of course this already happens with most large transactions. But would be cool if this could happen in grocery stores and everything else too.
They already do it to some extent with senior citizen discounts, or discounts when you buy at certain times of the day. When you do business nowadays, it is usually with organizations or entities, and not people. So I guess what I'm saying is that prices are generally a terrible way of transmitting information, especially when it comes to items that are mass produced, because they do not fully take into account how much people are willing to pay.
Bill Gates may not be able to drink more milk, but he could substitute his milk for soya milk. Or stop drinking milk. Or only buy special milk produced by Himalayan goats at $3000 per gallon.
Plus, what about marketing? You can produce a million gallons of milk, but how do you get it to the people who need it and can pay for it. And what is the most efficient way of remunerating those people?
I think you may be referring to the bullwhip effect when you talk about prices signalling production volumes. It makes intuitive sense to our analytical minds because higher prices usually signal higher sales and demand too, otherwise how would the stores be able to raise their prices if no one wants to buy the stuff. But it is very flawed.
And then the efficient market hypothesis which says it is impossible to beat the market. Because for one thing it always allocates capital to the right projects in the right amounts at the right time. It assumes that people are rational (I doubt that) and furthermore that they make rational economic decisions. I doubt that even more.
While I am certainly not socialist, I am not really a capitalist either. I think they both have major flaws, one of which is the fact that they try to impose a certain model on all aspects of the economy. They may also not take into account these days the extent to which entire industries, and the economy as a whole possible, has become financialized.
Money itself is no longer merely a medium of exchange. It hasn't been for a long time. The only real money right now is arguably something like Etherium because it is actually backed by something fairly tangible.
USD I would say is also money, also bitcoin, just because they are considered the gold standard. But you still can't exchange them for anything if your counterparty does not believe they will be able to use it next time they want to buy something.
The main problem I have with most capitalist economic theories, which I would say is epitomized by people like Martin Feldstein and whoever was probably in charge during the Reagan administration, is that they assume people are rational. Robots may be said to be rational but not people. I think part of what makes us human is that we are often if not most of the time irrational.
The system that has been in force over the last century or so for distributing goods and services had temporary positive effects, but right now I think we may feeling the unintended negative consequences thereof. And assuming bots can take over could be a major mistake. Did you see that post about the bot hotel in Japan? It is so funny.
As with diminishing marginal utility, I think the network effects due to widespread technology adoption, including in fact social media like Steemit, have the opposite effect these days, increasing marginal utility. If not in quantity, then in quality.