On Mon, 5 Oct 1998, Jim Choate wrote:
If this includes lying, denying consumers information, etc. what harm is done, they have fulfilled their responsibility to their shareholders (potentialy quite lucratively)=20
While there is a sucker born every minute, the strategy you describe is for the most part unlikely to be profitable.
Then you should begin to check your daily news, example after example is presented. (currently illegal) cell phone cloning, excessive rate levels, sub-standard construction practices, etc.
Most of these are due to regulation. If you assume the Secret Service will bear the cost of enforcing anti-cloning laws, you will not spend the money to make your phones unclonable even if the technology exists. Excessive rate levels are a misnomer. The only way you can succeed in charging above market prices is if there is a law to bar entry. sub-standard construction is also a misnomer - if you paid for standard X, you simply don't pay until the construction is up to that standard. If you are talking about government projects, you introduce some distortion, e.g. where they demand to pay below-market prices. Further, if you don't want to pay for certification of the quality, you can't call it "substandard" because you aren't paying to have a standard enforced.
Not only can it happen it deos. Given that such abuse is possible in a regulated market there is no reason not to deduce it will happen in a free market economy as well. If it happens the business enjoys an increased profit if for no other reason than their costs are reduced. Since there is no regulation or other oversight the consumer will be denied this information preventing fair competition. Since a companies strategic leaders have no duty other than maximizing profit they will impliment such strategies. Hence the free-market reduces to an opportunistic anarchy.
Hardly. If you are saying consumers are stupid, you are probably right, and their ignorance may be rational, since it would be expensive to certify everything you encounter in one day. But it does not mean that business would enjoy any increased profit. Consumers would simply bid down the price where companies would compete on who could supply substandard dreck most efficiently. Nor would they really be denied information. Some people subscribe to consumer reports, some don't. If you buy a noname blackbox, it is your choice. If you buy something that is rated as being good you may pay more, but would get extra value (and consumer reports makes money by coming as close as possible to unbiased testing in the main). And you assume that men are islands and don't talk or communicate. Imagine two restaraunts. If people get food poisoning every week or so at one, people will learn not to go there, and it will fold as people go to the second. Reputation (economists include it in the term "good will") does have an economic benefit. And it does not require government to regulate. If fact government is usually the worst in determining quality - the USDA uses sniffing and appearance instead of microbiology for a very long time (until an e. coli outbreak). But they certify all infected meat as grade-A if the inspector is in a good mood. And good meat will lose points if the inspector is in a bad mood. But because of the USDA, no private concern can compete to certify healthy food (and one reason I have cut meat consumption - what the government allows or is incapable of catching can kill me in very unpleasant ways). Consumers will only be denied infomation pertaining to quality if they insist on not paying for it. And "free" information from the government in the form of certification or regulation is worth what you pay for it. Underwriters lab certified things for insurance companies. A similar organization could insure healthy food (by publishing their standards and charging for either inspection or results).
This leads to one and only one conclusion, in a free-market there is no such thing as 'fair trade' without a third party being involved. This runs contrary to the definition of a free market on two counts (at least) and therefore the free market theory (as applied to human business, not Vulcan) is a circular argument based on faulty principles and a lack of understanding of human psychology (ie assumptions such as rational purchases).
You simply may not like human psychology, but that does not make the free market any less just. In fact, most "problems" like insurance derive from human psychology. People want to beleive lies. Or want to remain ignorant. And don't want to take responsibility for their own actions. The market is completely fair and just - which are also virtues. It is not merciful or kind, but that is NOT its function. I can buy (or sell) at a given price, or I can choose not to. The offered price may not be a good value, but I will need to invest additional time and money to determine that, and that is a secondary choice, but it is still fair. If a stock is selling at $50 on the NYSE, nothing stops you from buying it from me at $250. This would be unwise but not unfair. Nor would it require any third party. If you know I take advantage of ignorance, you will not deal with me without informing yourself first. You may rationally decide not to check if I sell near market prices if it is typical that most people do. But you will acquire the information of my business practice with the purchase. You may also rationally get a second bid. No one witholds information. But no one forces information upon you. You have only to act rationally at whatever level you decide. In my earlier post, I mentioned that I think stocks are in a bubble - i.e. overvalued by 70%. Which if any government agency is saying this? Are these fair prices? You think so if you bought in when they were only overvalued by 50%. But how does the government prevent people from bidding up the price of stocks, or beanie babies? I think they are called crazes or manias for good reason. When it collapses they will call on the government, but all the information will have been there in black and white all along. But they would rather belive in a pleasant illusion than cold reality. And you can't make any regulation that will change that. Illusions also have prices. And people will gladly pay them. This is unwise (A fool and his money are soon parted), but not unfair (wisdom has riches in her left hand and long life in her right). The market enforces a foolishness tax which no government can repeal.