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25 sats \ 2 replies \ @Undisciplined 12 Oct 2023 \ parent \ on: Intercontinental energy grids. 🌎←♻️→🌍 bitcoin
markets can only be efficient insofar as the price accurately encodes the values that it purports to encode
The thing is, market mechanisms are such that "insofar as" becomes greater over time, whereas I'm not aware of any evidence that non-market forces have similar self-correcting mechanisms.
The "Something needs to be done" people may not realize it, but what they're usually advocating is that their preferences override the preferences of others by force. However, in your example, the real issue is a tragedy of the commons, which is an expected trait in non-market environments.
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117 sats \ 1 reply \ @elvismercury 13 Oct 2023
The thing is, market mechanisms are such that "insofar as" becomes greater over time.
Provocative statement. What are you basing that claim on?
whereas I'm not aware of any evidence that non-market forces have similar self-correcting mechanisms.
I don't think asymptoting to "correct" can be demonstrated at all except in a toy domain, since defining what "correct" is is the heart of the issue.
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0 sats \ 0 replies \ @Undisciplined 13 Oct 2023
What are you basing that claim on?
Price theory, in particular, and microeconomics theory, in general. Basically, markets approach an equilibrium over time and market equalibria have certain properties, like Pareto Efficiency.
I don't think asymptoting to "correct" can be demonstrated at all except in a toy domain
Since that's the only type of domain where we know what "correct" is, I also don't think it can be demonstrated in other domains. Of course, that criticism would apply to any economic system. The point is that the mechanisms are at least self-correcting in theory and that can't be said of other systems.
efficient with regard to what?
I like this question. It is often taken for granted in these discussions. Markets are efficient at meeting the various preferences of the populace with the resources available. Specifically, they lead to a state (non-unique) where there is no way to make anyone better off without making someone else worse off (Pareto Efficiency). In a way this is obvious, since all markets do is allow voluntary exchanges, which are win-win (ex-ante). Once all available voluntary exchanges occur, there could be no more win-win exchanges.
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