The Gaming Den

Kaelik wrote:

hyzmarca wrote:Ah, but then bob and Tom both quit, get a loan, and start Earthco, which puts both Dirtcorp and Soilco out of business.

And they will get that loan, there is no chance of the banks denying them, becasue Austrian School banks are perfectly rational actors with perfect information. They'll see that Dirtcorp and Coilco are failing due to their shit wages, and that Earthco would easily overtake them and gain market dominance.

How on earth does the plan: "I will secure your loan with literally nothing at all, and my business plan is to Do exactly the same thing as the industry standard, but pay my workers 2000 times what the industry standard is, but get the same work, and hire the same people" get even a single backer even if the banks where perfectly omniscient?

Because doing so would lead to the utter destruction of the price fixing cabal and give the new company monopoly control of the market for a time, until a new competitor arises.

Which is exactly why the price fixing won't occur.

In a perfectly efficient market, any attempt to artificially depress or raise prices and wages will be met by new competition, and thus prices and wages remain optimal.

hyzmarca wrote:Because doing so would lead to the utter destruction of the price fixing cabal and give the new company monopoly control of the market for a time, until a new competitor arises.

Which is exactly why the price fixing won't occur.

In a perfectly efficient market, any attempt to artificially depress or raise prices and wages will be met by new competition, and thus prices and wages remain optimal.

Uh... No. Doing so does not "lead to the utter destruction of the price fixing cabal." The best case for EarthCo is that Earthco defaults on its loan and shuts down as a company, and that Dirt and Soil raise their rates to $22 an hour. That is if there is literally no one else in the world who can perform the action of digging ditches, and no one becomes capable in the time it takes for people to quit their jobs, obtain an unsecured loan, and start a company.

The thing that happens if there are exactly two people in the entire universe who can also dig those ditches, is that once EarthCo takes out a unsecured loan to get into business, Dirt and Soil just raise their salaries to slightly higher than EarthCo can afford, hires those two people, and then EarthCo goes bankrupt and its founders don't have a job. And then because fucking EarthCo never paid back it's loan, banks never loan that money again, and Dirt and Soil go right back to price fixing.

If there are more than two people, then EarthCo hires someone at $20, Dirt and Soil hire someone at 10 cents, and then Dirt and Soil underbid on all contracts, and EarthCo gets no work, and goes bankrupt.

And in literally all of the situations, banks don't get their money back, so in fact, perfectly omniscient banks don't make a giant unsecured loan to a company who is going to default literally no matter what.

Kaelik wrote:

hyzmarca wrote:Because doing so would lead to the utter destruction of the price fixing cabal and give the new company monopoly control of the market for a time, until a new competitor arises.

Which is exactly why the price fixing won't occur.

In a perfectly efficient market, any attempt to artificially depress or raise prices and wages will be met by new competition, and thus prices and wages remain optimal.

Uh... No. Doing so does not "lead to the utter destruction of the price fixing cabal." The best case for EarthCo is that Earthco defaults on its loan and shuts down as a company, and that Dirt and Soil raise their rates to $22 an hour. That is if there is literally no one else in the world who can perform the action of digging ditches, and no one becomes capable in the time it takes for people to quit their jobs, obtain an unsecured loan, and start a company.

The thing that happens if there are exactly two people in the entire universe who can also dig those ditches, is that once EarthCo takes out a unsecured loan to get into business, Dirt and Soil just raise their salaries to slightly higher than EarthCo can afford, hires those two people, and then EarthCo goes bankrupt and its founders don't have a job. And then because fucking EarthCo never paid back it's loan, banks never loan that money again, and Dirt and Soil go right back to price fixing.

If there are more than two people, then EarthCo hires someone at $20, Dirt and Soil hire someone at 10 cents, and then Dirt and Soil underbid on all contracts, and EarthCo gets no work, and goes bankrupt.

And in literally all of the situations, banks don't get their money back, so in fact, perfectly omniscient banks don't make a giant unsecured loan to a company who is going to default literally no matter what.

Ah, but Earthco is an employee-owned company that owned by the only two ditch diggers in the world, who quit their jobs out of frustration with artificially low wages and choose instead to work for themselves.

Dirt and Soil litterally have no employees, and can't get more, because a perfectly efficient economy means full employment.

hyzmarca wrote:Ah, but Earthco is an employee-owned company that owned by the only two ditch diggers in the world, who quit their jobs out of frustration with artificially low wages and choose instead to work for themselves.

Dirt and Soil litterally have no employees, and can't get more, because a perfectly efficient economy means full employment.

Hence why I said that the best case scenario if there is literally no one else in the universe to dig ditches, is that EarthCo goes bankrupt, and Dirt and Soil start paying $22 to get Tom and whatever to leave their shit company that can't dig ditches.

Because EarthCo can't hire anyone to do literally any of the administrative stuff, and frankly in this absurd perfect use economy, can't even buy shovels, because Dirt and Soil own all the shovels.

Kaelik wrote:The thing that happens if there are exactly two people in the entire universe who can also dig those ditches, is that once EarthCo takes out a unsecured loan to get into business, Dirt and Soil just raise their salaries to slightly higher than EarthCo can afford, hires those two people, and then EarthCo goes bankrupt and its founders don't have a job. And then because fucking EarthCo never paid back it's loan, banks never loan that money again, and Dirt and Soil go right back to price fixing.

Hyzmarca's explanation here is wrong. If wages are above equilibrium, then some people will retrain as ditch diggers (which is assumed to take zero time and zero cost) to take advantage of that.

The thing that actually happens in this case (in the "spherical cows in a vacuum" sense) is that Dirt and Soil are operating at a loss (because wages are above equilibrium), so the perfectly rational and completely omniscient investors will look infinitely far into the future (or however far they need to) to see that Dirt and Soil are going to fail, and continue throwing money behind EarthCo. If investors are instead tempted to prop up Dirt and Soil's price-setting cartel in exchange for future returns in excess of what's capable at equilibrium (because Dirt and Soil will be running a profit instead of breaking even, and will be able to pay investors more), this will cause more and more people to invest (in the same way elevated wages caused people to retrain as ditch diggers) until Dirt and Soil can't possibly promise them all fat stacks of cash to not fuck up their price-setting cartel, and then the remaining investors go with EarthCo, and then at some point between now and the end of time Dirt and Soil runs out of funds and EarthCo is still going.

The Austrian ideal is internally consistent; it perfectly assumes away everything that could ever make it fail. But all of those assumptions are complete bullshit, so it's still worthless. But whatever your complaint, there is a rejoinder involving spherical cows in a vacuum.

Yeah, Austrianism runs into problems the second you do something like go shopping in the real world.

Either you are going to run into something like "loss leaders" which are real-world profitable but not Austrainist efficient or you are going to see just how far from perfect information even online shoppers are assumed to be.

Exhibit A:
0.5 Oz of 17% Salicylic Acid solution plus cushions for $4.99

0.5 Oz of 17% Salicylic Acid solution, same brand, same retailer, no cushions, $7.49

So even with the sort of government interference that Austrianists despise ensuring that the ingredients are fully disclosed on the product labeling - there's still a 50% markup to be made by changing one word on the product label here in reality.

I thought a perfectly-efficient market was supposedly to have infinitely many ditch-diggers, digging an infinite number of ditches.

Wrong thread.

Technically it is an image.

I've got the shiniest sausage bicycle!

Old, but made me think of the tome fighter

Jem was doing it before even that.

Jem is truly outrageous.

Maj wrote:Jem is truly outrageous.

Truly, truly, truly outrageous.