Benko wrote:
moda0306 wrote:
I don't think the profit motive always yields best-results, though, and if the conditions are right, profit motive actually yields worse results than other models.
I can think of:
1. Private enterprise creates what it wants and it succeeds if people pay for what it creates
2. The everpopular solyndra "greengraft" (TM) model
3. Gov't decides what needs to be done and private enterprise does it. This works by awarding of prizes ONLY UPON COMPLETION e.g. you want a 75 MPG car, gov't will award 1 million dollars to 1st company to demonstrate a car which gets 75 MPG as determined by
Harry Reids uncle independent testers. (I read about idea from Pournelle). NO MONEY IS AWARDED UNTIL THE END RESULT IS COMPLETED.
"if the conditions are right,"
What conditions are you talking about? What other models?
Central planning usually fails and fails spectacularly.
Usually, two people on equal economic footing meet to exchange to their own economic benefit. Simple examples of this are paying for a haircut. You know what you want, and the maximum risk is a bad haircut (or, I suppose, a bloody earlobe).
Some economic transactions don't look like this at all. There are a lot of unknowns. Some areas would be the FIRE industry, healthcare, and infrastructure. Also, I think capitalism's strength (competition) can devour itself through the development of monopolies and collusion. Some theories state that these don't develop naturally. I simply disagree with those theories. We can get into that if you wish. I think monopolies are the natural result of complete economic freedom (attached to a capitalist property norm model), not an animal of government... though government can certainly (and has) work for the wrong side of that balance, instead of the side promoting competition in the private sector.
I think a huge amount of profit motive not working for people can be summed up in the areas of informational asymmetry (especially when there is a power asymmetry associated with it), monopolistic tendancies, and externalities. Obviously, government holds a monopoly on our road system, but because the profit-motive has largely been removed, and replaced with the "reelective motive" if you will, it doesn't result in the same effect as if we had Globocorp running roads in a certain area. Once again, this is my opinion, and up for further debate. Obviously, government also pollutes, but a lot of what government does is, as I mentioned, at the behest not just of luny lefties, but republicans and consumers, who want things to work... and productivity demands pollution. Also, government can also be on the benefitting side of informational assymetry, however, once again, the will to get reelected and removal of the profit motive means that they won't necessarily use that asymmetry to the same level that the private sector would.
And the worst part is, all of these things compound on each other. Informational asymmetry is inefficient, but when combined with monopolistic tendencies in a marketplace, becomes FAR more toxic, because you don't get held nearly as accountable as you would if you screwed someone over in a more efficient marketplace. Same goes with externality production. If 1 of 100 companies pollutes, an economy can choose to not buy their products without an effect on the overall economy's profitability. If a company with 40% market share pollutes, the economy can't simply squeeze them out of their market share without very likely experiencing shortages or huge price increases due to the lack of productive capacity of their competition to meet the new aggregate demand for their product.
All these things compound with each other (IMO). Admittedly, too often, government is in the wrong side of that compounding, awarding rich contracts to polluters and not taxing/regulating externalities, limiting economic liabilities of wrong-doers, encouraging economic markets that encourage rather than discourage monopolies, polluting themselves, etc.
So I guess that's my mini-assessment of certain flaws in the profit motive. I believe in a lot of what HB says about it, though. Don't think me a mad socialist. Everyone seeks to profit. The only difference is those who do so efficiently, and those who spin their wheels trying to point the finger at everyone else. The role of government, in my opinion, is to limit the race to the bottom in certain areas that I believe the profit motive is actually destructive to prosperity and productivity (and equality).
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
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