Libertarianism (was EEL is returning)

[Amazeroth]

This is just one example of the tragedy of communos. Which is based on another example of competition, we all know real life is lot more complicated.. I just though this was a better to explain the basic theory.

I really don't in traditional agriculture, but right now, especially with corn, we are exhausting the soil.

And, we think we know what is best for ourselves. but are we really sure know it ? I think it is not true, we do not know what is best for ourselves. we do not always have all information and we are not logical, we are humans, not robots.<

So, I don't believe in any theory, because there is no logic in humanity, or not always relies on logic.

I know it's just one example, but I'd be interested if you could find one where the tragedy was indeed unavoidable (and then, as a bonus, show that a free market would be to blame for that).

Also, good theories do take human failure into consideration.

[EEL Mk2]

Also, good theories do take human failure into consideration.

OK, I'm going to go on a massive tangent here. What do you think of behavioural economics?

[Amazeroth]

It depends. I like it when it comes to respecting that people don't always have the necessary information, or even when they have don't necessarily act rationally. But I don't see that alone as a compelling evidence against economic theories that rely on a rational consumer, as long as they still apply when the consumer is only "mostly rational" - or rather, behaves rational but from a different starting point, or with different premises. That said, any theory that doesn't take human psyche into consideration, can't be good.

On a less ideological level, it yields highly interesting insights, less on a national economic level, than in business economics, especially when things like marketing, pricing, etc. are concerned.

[Darkylightytwo]

It depends. I like it when it comes to respecting that people don't always have the necessary information, or even when they have don't necessarily act rationally. But I don't see that alone as a compelling evidence against economic theories that rely on a rational consumer, as long as they still apply when the consumer is only "mostly rational" - or rather, behaves rational but from a different starting point, or with different premises. That said, any theory that doesn't take human psyche into consideration, can't be good.

On a less ideological level, it yields highly interesting insights, less on a national economic level, than in business economics, especially when things like marketing, pricing, etc. are concerned.

Theories only explain a side of humanity, but they can't explain economy because they do not relies on human factors, that is why they are simply theories and not trues

[Amazeroth]

It depends. I like it when it comes to respecting that people don't always have the necessary information, or even when they have don't necessarily act rationally. But I don't see that alone as a compelling evidence against economic theories that rely on a rational consumer, as long as they still apply when the consumer is only "mostly rational" - or rather, behaves rational but from a different starting point, or with different premises. That said, any theory that doesn't take human psyche into consideration, can't be good.

On a less ideological level, it yields highly interesting insights, less on a national economic level, than in business economics, especially when things like marketing, pricing, etc. are concerned.

Theories only explain a side of humanity, but they can't explain economy because they do not relies on human factors, that is why they are simply theories and not trues

Of course theories can rely on human factors, and every economic theory does that. To a varying measure of success, of course, but they all rely on human factors. That's almost exlusively what they rely on - without human factors, there's no echonomy.

There's also no dichotomy between a theory and a fact (which is what I think you mean by "true"). Of course theories can be wrong, but that alone doesn't make theories as a whole untrue.

[EEL Mk2]

I think that the place where behavioural science is most needed is in the financial sector. Whereas individual non-rational biases tend to cancel each other out in product markets and thus the behaviour of those markets is rational, that is not the case in the financial sector. You have so many feedback loops in the financial sector which create systemic biases, and that can be pretty disastrous. It's a shame, then, that behavioural finance is so neglected (it doesn't even have a wikipedia page).

[Amazeroth]

I think that the place where behavioural science is most needed is in the financial sector. Whereas individual non-rational biases tend to cancel each other out in product markets and thus the behaviour of those markets is rational, that is not the case in the financial sector. You have so many feedback loops in the financial sector which create systemic biases, and that can be pretty disastrous. It's a shame, then, that behavioural finance is so neglected (it doesn't even have a wikipedia page).

I'd say that especially in the financial sector, most participants are a lot closer to the rational actors of classical theories, since they're usually professionally involved (also a lot of stuff there is already done by computers, which are as unemotional as actors could be). I'd also make a case that the behaviour of the financial sector is very rational when the goals of the individual actors are considered, but they wouldn't look rational to anyone considering the "real" world of analog economics.

However, I agree that behavioural science should still be much more present in the financial sector.

[EEL Mk2]

I'd say that especially in the financial sector, most participants are a lot closer to the rational actors of classical theories, since they're usually professionally involved (also a lot of stuff there is already done by computers, which are as unemotional as actors could be). I'd also make a case that the behaviour of the financial sector is very rational when the goals of the individual actors are considered, but they wouldn't look rational to anyone considering the "real" world of analog economics.

Ah, but what is most important is not whether or not individual actors are rational, but whether or not the system as a whole is rational. (This is not strictly 'tragedy of the commons', but it does result in a similar effect - rational actions by rational actors resulting in systemic harm.) And I think that quite clearly it is not. Certainly much irrational behaviour is encouraged by poorly thought-out government policy, but nevertheless I do think that to some degree it is an endemic problem.

[Darkylightytwo]

I'd say that especially in the financial sector, most participants are a lot closer to the rational actors of classical theories, since they're usually professionally involved (also a lot of stuff there is already done by computers, which are as unemotional as actors could be). I'd also make a case that the behaviour of the financial sector is very rational when the goals of the individual actors are considered, but they wouldn't look rational to anyone considering the "real" world of analog economics.

Ah, but what is most important is not whether or not individual actors are rational, but whether or not the system as a whole is rational. (This is not strictly 'tragedy of the commons', but it does result in a similar effect - rational actions by rational actors resulting in systemic harm.) And I think that quite clearly it is not. Certainly much irrational behaviour is encouraged by poorly thought-out government policy, but nevertheless I do think that to some degree it is an endemic problem.

Once again, the system is about you have rules or not and if you enforce them or not. then we could discuss if the rules are bad or good, but if you don't enforce, then they don't exist.

We could clearly see that in 2007-2008, the abundance of debt and the self-regulation of banks by banks themselves cause them to crazy with leverage and loan, which cause the financial, because where freely loaning to people who could not pay, but they though they could the house if they did not got the money. They made ton of loan, have people got ton of houses and those got bankrupt. so the banks had the house, whose prices started failing,... ah oops, they lose their money... but no one (saw this coming) And Greenspawn lowering the interest rate to 1% did not help.. (free) markets economics proving themselves to fail once again.

[Amazeroth]

I'd say that especially in the financial sector, most participants are a lot closer to the rational actors of classical theories, since they're usually professionally involved (also a lot of stuff there is already done by computers, which are as unemotional as actors could be). I'd also make a case that the behaviour of the financial sector is very rational when the goals of the individual actors are considered, but they wouldn't look rational to anyone considering the "real" world of analog economics.

Ah, but what is most important is not whether or not individual actors are rational, but whether or not the system as a whole is rational. (This is not strictly 'tragedy of the commons', but it does result in a similar effect - rational actions by rational actors resulting in systemic harm.) And I think that quite clearly it is not. Certainly much irrational behaviour is encouraged by poorly thought-out government policy, but nevertheless I do think that to some degree it is an endemic problem.

I'm not too sure - so far I've seen economists justifying almost anything I found curious there. Obviously it's a system that's highly vulnerable to corruption and general bad behaviour, but I'm not sure it could be said that it's irrational as a system.

I'd say that especially in the financial sector, most participants are a lot closer to the rational actors of classical theories, since they're usually professionally involved (also a lot of stuff there is already done by computers, which are as unemotional as actors could be). I'd also make a case that the behaviour of the financial sector is very rational when the goals of the individual actors are considered, but they wouldn't look rational to anyone considering the "real" world of analog economics.

Ah, but what is most important is not whether or not individual actors are rational, but whether or not the system as a whole is rational. (This is not strictly 'tragedy of the commons', but it does result in a similar effect - rational actions by rational actors resulting in systemic harm.) And I think that quite clearly it is not. Certainly much irrational behaviour is encouraged by poorly thought-out government policy, but nevertheless I do think that to some degree it is an endemic problem.

Once again, the system is about you have rules or not and if you enforce them or not. then we could discuss if the rules are bad or good, but if you don't enforce, then they don't exist.

We could clearly see that in 2007-2008, the abundance of debt and the self-regulation of banks by banks themselves cause them to crazy with leverage and loan, which cause the financial, because where freely loaning to people who could not pay, but they though they could the house if they did not got the money. They made ton of loan, have people got ton of houses and those got bankrupt. so the banks had the house, whose prices started failing,... ah oops, they lose their money... but no one (saw this coming) And Greenspawn lowering the interest rate to 1% did not help.. (free) markets economics proving themselves to fail once again.

It's quite interesting that in the same thought you critizise the government for doing something like lowering the interest rate, yet still think it's a free market. Also, a lot of people saw this coming, mostly libertarian economists - and exactly the way it happened, too, not just in a vague "it's not going to stay good forever"-kind of way.

Also, it's kind of a travesty to speak of a free market when the banks are then bailed out by the government. In a free market, there needs to be an option to fail.