Problem with America, market based solution?

[Sava]

I'm not trolling If I were trolling you'd know because there would be thinly veiled references to YOURMOM in there

When are you coming downtown to have lunch with me

hmmmm
i dunno
not today
its rainy as fuck

[OneFootInTheGrave]

I am sorry, but I kind of feel bad that I made you write so much.

[Sava]

MRT made the simple comment that asking economists would be unhelpful, which is nearly identical to saying 'Cancer sucks, but we shouldn't ask doctors how to cure it."

Let me tell you why your comparison doesn't apply. Medical (and other) sciences tend to have a set of mainstream principles and methodologies based upon available data sets. Economics doesn't have quite the consensus when it comes to such things. There are many schools of thought. Some of which would almost entirely disagree on policy matters.

Yes. Amateurs and laypeople often talk about things without having a firm understanding of the principles. But they often are repeating opinions or messages derived from individuals who possess a greater understanding. I don't need to be a mechanic or automotive engineer to tell you a certain motor oil is better for your vehicle depending on certain conditions. I can possess correct information without understanding the reason why it's correct.

With regards to economics, I don't think a debate between two scholarly experts is much more productive than a debate between two forum idiots.

[snoopy369]

And that's the problem - economics is every bit as complicated as medical procedures, and has a lot of well-understood and agreed on principles; while medicine has a lot of non-consensus principles and debate between experts. You just think you understand economics better than you think you understand medicine. Economists have useful debate about economic principle all the time, and sometimes it even becomes policy (though not as often as it should).

How is repeating opinions from experts they can't even realistically evaluate in terms of 'expertness' useful or productive?

[Sava]

How is repeating opinions from experts they can't even realistically evaluate in terms of 'expertness' useful or productive?

It's not. That's why it's more fun to troll.

It's like sports. We cheer for our favorite side.

If the "you" in your statements is referring to me personally, I will say that I'm a fricken genius and probably have a greater understanding of things... more so than most field experts. I'm just not as experienced. "Experts" aren't all that great. They are intelligent people. But they are just intelligent people that have spent a lot of time doing something. That time and experience doesn't make them superhuman. It doesn't make them perfect. It also doesn't prevent them from being wrong.

I'll tend to defer to a person who has a lot of experience on a subject. But let me put it this way. Science is great because anybody can experiment and verify results. The less scientific a subject, the more opinion plays a role. Opinions aren't facts and shouldn't be treated as such just because someone claims to be an "expert".

[BlackCat]

Shareholders do pay the fines, in the sense that their stock is worth less post-fine. Imagine the theoretical case of a $15B company with 1B shares, so each share is $15, P/E of something like 7.5:1 (let's say $2B earnings). Fine them 1 year's earnings, $2B; that reduces the value of the company significantly. How much would depend on all sorts of factors (particularly, is this going to significantly affect the future earnings of the company), but either way it will reduce that value some, dropping the stock price some - in this case, a naive estimate might be reasonable, so drop $2 off each share. That happens nowadays, as long as the penalty is big enough.

That, really, is the problem; the penalties are often insufficient to be noticeable. That's a difficult line to walk, though; make it big enough to be noticed by the parent company and you might wipe out the whole division for a relatively small offense, but give appropriate penalty to the offense and the company doesn't really care. (Not speaking to Jon's specific case posted.)

BS, Yeah, just after an incident, the stock price will drop, but that is only interesting if you have to sell no matter what. Otherwise you just wait a couple of years and the value is up again, so no fine paid.

[snoopy369]

BS, Yeah, just after an incident, the stock price will drop, but that is only interesting if you have to sell no matter what. Otherwise you just wait a couple of years and the value is up again, so no fine paid.

That is exactly what I mean; you have absolutely no idea what you are talking about. If you have a $15 stock, and the value drops to $13, you've lost $2. If the stock rises again, it's because the perceived value of the company has grown, and you then earn your $2 or whatever back; but that is a distinct action from the loss. If the fine is severe, there's no reason to believe it might not drop significantly and stay dropped, unless the company does something to increase its value (which it may, or may not). You have an unrealized loss, which you may either realize (selling) or hold onto the stock hoping it will bounce back - but it's still a loss, and will cost the company stock owners money (not all of them, but some), and certainly is something companies try very much to avoid.

[BlackCat]

Except that the price may rise just because people forget why there was a loss. Stock owners doesn't take a loss when the company does something illegal if it survives.

[BlackCat]

Problem is that stock owners doesn't get a penalty if they just can wait for better times.

[MRT144]

I have no problem with complaining, or intelligent discussions, or educating onesself. MRT made the simple comment that asking economists would be unhelpful, which is nearly identical to saying 'Cancer sucks, but we shouldn't ask doctors how to cure it." I don't suggest censorship at any point - what I suggest is that if you are trying to have a reasonable debate about what to do about something, either educate yourself sufficiently to be able to have an intelligent debate, or don't try to pretend you understand the very complicated science that is economics.

If we were having a debate about how to cure cancer, there's nothing wrong with saying "Hi, I think we should try to cure cancer"; but if you start saying "I think we should start by finding the cells that are cancerous and making a device that will eat them up", you sound like an idiot, and people rightly tell you to leave that level of discussion to actual doctors or immunologists or whatnot. Economics (and to a lesser sense, political science) is something people feel like they can talk about as if they were experts without having any understanding beyond making a budget at home (if that).

Economists are not policy makers, so you're confusing things there. SOME economists are policy makers (and a lot of our problem are that more policy makers aren't economists or at least trained in it...) but there are lots of economists (ie, people with economics degrees) who don't make policy, and many who don't agree with current policy (in both directions). Painting all economists with the same brush is idiotic.

Economists wouldnt be helpful for two reasons

1. A lot of them care about reputation and heterodoxy and not rocking the boat.
2. Even if they come up with a great idea it would require a political will to implement which time and time again has been shown difficult.

[onodera]

It reminds me of when the Yes Men pulled a prank by claiming to be from Dow and saying Dow would support the victims of Union Carbide plant accident in India, Dow stock went down. The market wants companies to be dicks, there's no market-based solution.

[Jon Miller]

The issue is that economics is at the level of newton or before.

Comparing it to physics search for GUT is stupid. Even ~100 years ago non PhD physicists could meaningfully contribute. Even ~50 years ago, serious mathematics skill was the primary requirement. The field has become enormously developed (And complicated) in the last ~50 years.

I think that many economists would agree with this comparison.

JM

[Jon Miller]

The differences between austrian and keynesian/etc schools are pre-newton in nature, for example.

JM

[Sava]

speaking of stupid economists:

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[Dinner]

I honestly don't see a market based solution to a problem like this which would be politically acceptable. The only way I can think of would be to remove limited liability so that companies and investors face big loses when something like this happens but as others have pointed out that would cause a huge economic slow down.