That's why it's up to the individuals to get an understanding of the things they are exchanging. Those who suffer losses are the ones who did not put in enough effort relative to their natural ability to perceive value.
Yes, it is a moral system. I would look into the concept of Comparative Advantage, which teaches us that voluntary exchange is a tide that raises all ships, especially in cases where one participant seems to be at an all-around disadvantage to other participants. It's also important to understand that wealth isn't a finite thing - when we exchange voluntarily, the pool of wealth keeps growing and spreading.
Well in that example there wasn't a currency used to exchange shirts - it's a simpler example of pure barter. But currencies began as barter items with broad appeal so it's not a bad exercise - it's the next lesson. Currencies solve many barter problems and allow for much easier calculation of profit or loss. It's a great innovation and a natural one in barter exchange at some point.
The best way to fulfill "public need" is through people acting independently and making voluntary transactions and agreements between each other. Allowing people to pursue their own personal desires (greed, if you want to call it that) through voluntary agreements with others is the best way for people to achieve their own personal desires.
If you've ever been to a Boy Scout Jamboree you will see an exchange system of patches self-organize in 24 hours or less. It's one of the most remarkable examples of free trade you could ever witness because it's carried out by kids that are 18 or younger.
James, Trade among rational agents results in both parties better off, (wealthier) than before the trade. This is why both agreed to trade in the first place. The reason that cookie and pickle can be worth more to one than another is because each person's life context is different. A raincoat is OBJECTIVELY worth more to a guy about to get rained on than it is to someone with a surplus of raincoats. That's why the guy needing a raincoat is willing to exchange $2 for it.
I think that you have identified the subtle point of this video: the government first needs to distribute identical boxes of goods to every citizen regularly, so that everyone has a government-guaranteed minimum standard of living. Then the people can trade with one another, which will make them even better off. You are absolutely right that if someone has nothing to trade, then that someone will not be made better off by trade. That is why government needs to step in.
Also, if you type in poverty in Sweden in Google, the first article is a Forbes article that says American has less poverty than Sweden. If you read the entire article, it makes convincing argument that poverty in Scandinavian countries is relatively the same as that in the US. The problem with using government statistic on poverty is that each country has its own standard, so they can eliminate or increase poverty just by changing the standard. But this is a good article.
Besides, this is about wants. If both people really want something that the other has, even if they both end up getting something worse than what they had (which isn't possible in 2 person exchanges, only one person can end up objectively worse off in worst case scenario), they don't know it. They wanted the other item. They got it. They assume responsibility of that trade if later on they realize they got a bad deal, because the exchange was voluntary
Definitely, as long as giving up my position doesn't weaken any of my power over you~ Positions don't come with Power~ One could continue to be the player of that position, and you be the performer. Position, Power, Perfomer, Player, Puppet, Puppeteer.
"Governments are the sole reason behind monopolies." As a general rule I agree, but I also like to be contrary so here are a few other exceptions: 1. Use of private force. This is more common in underdeveloped nations. 2. Small markets. If memory serves there is only one currency printing press maker. 3. Recently created markets. Someone has to be first. Outside of these exceptions I cannot think of a monopoly not supported by government.
Money is just an intermediary - at the end of the day exchange begins and ends with goods and services. Lucisferre's simple example was intended to illustrate the concept of Comparative Advantage.
BTW, one of the video links at the end agrees with my prior point. "Trade is made of win" tells how trade creates wealth, not merely optimizes ones situation.
Generally, I agree, but like someone said here previously, there can be a single company in a specific market, but the fact that at any point anyone can start a competing company is enough to keep the prices down.Even if someone technically has a monopoly, like in you points 1 and 2, then they would still not behave like one because they would be aware that they can be out-competed at any point.
How would one go about controlling all the resources needed? (I know it's a broad question, since it's I'm not referring to any industry) It's like saying someone can have a monopoly on all trade by controlling all the currency. Even if that ever happens, people will just start using some other scarce resource as currency.
I concur what Joseph Rissier said. Do you have any real-life example of when this sort of thing happened? I understand that sometimes a company will gain a massive majority in a market, but that is because they offer the best product. Look at TH-cam for example, you could say they kind of have a monopoly, but they don't, because any website can be competition for them, and I'm sure TH-cam is terrified that it can lose everything very quickly (especially as its services are worsening)
What was the currency used to exchange shirts? The video fails to mention that. Also, I find it ironic that the first example for exchange this video gives happens in a P.O.W camp. The duress the prisoners felt can be compared to the effect fractional reserve banking has on the world and its people. which was also not mentioned. Seems kinda sloppy considering exchange is based on it.
At 1:38, Prof Munger states that he prefers chips to cookies. This concurs with an earlier video of Prof Munger's, in which he utilised the eating of chips to prove a point about externalities.
Currency is just a store of value, a medium of exchange. Bill wants cookies has sandwiches. Bob wants Sandwiches has apple trees that will bare apples in a week. Beth wants Apples has cookies. How many switches before everyone gets what they want? How long will it be until any one of them are happy with just exchange? If you say that Bob trades future apples, you've created a note or paper currency. Now do the same thing with a cash system.
Given that description, I think my original point still holds - that monies evolved organically in the marketplace, rather than being "invented" by any centralized authority.
If making a trade or some other kind of deal decreases someone's (or some nation's) happiness then why do they make the deal? Also, could you explain what you mean by "fairness"? I have never been satisfied with any definition that I have heard. In my view, it doesn't matter if one party "wins" more than another. As long as both parties are winning I don't see a problem.
Happier does not equal happy. Just some level of satisfaction better than before the exchange. You may not be happy with the wages you earn at a blue collar job, but you are happier trading your labor for money (and then for food) than you would have been not eating at all. The issues with capitalism usually boil down to the exchange for necessities. An exchange makes both parties happier ONLY when the exchange is voluntary. Is there a point at which need makes it non-voluntary?
That's a risk that both parties must assume and calculate for when they make an exchange. Besides, any way you slice it, any sort of intervention on behalf of the government cannot equate for and solve this problem and will likely have unintended consequences on other sectors of private exchange.
Money simply represents that apple, and enables easier exchange for any item whenever the person wants, rather than when the apple grower wants what you have.
not at all just consider money as a commodity in and of itself, which it's not of course, and it makes perfect sense. we create money (little green pieces of paper), that other people want, so we create money in exchange for products. The point at which the analogy comes apart though isn't at international trade, but the fact that money is simply a convenient medium for which exchanges between objects of value are made and therefore only possess value equal to what can be exchanged for it.
Even if one trader starts off with more resources, both traders will still be better off. For example: Apple has much greater resources than I, but Apple and I are better off when I trade my money from an iPad.
Everyone has something to trade. The first thing we learn to trade is our labor. Most kids first skill is bartering their labor for allowance. Mowing the lawn for $2 for example. In a trade society there is no fourth person who takes a cut without doing anything. Everybody does something. The middle man handles negotiations for example. It's difficult and time consuming for a farmer to negotiate with hundreds of individuals so they sell that responsibility to a grocery store instead.
The value of wheat and chicken changes too. If people want wheat instead of chicken for their dinner (maybe because of a vegetarian trend?) then the values will change (demand); if one year there is a bird virus and many chickens die, values will change more (supply). Fiat money can change more dramatically because the supply can be created from essentially nothing. Gold as money cannot change as easily so it's value changes no differently than wheat and chicken.
Governments are the sole reason behind monopolies. Large corporations get protection from government (because they control it), while small businesses can't flourish. There's also something known as a government-enforced monopoly, such as the Royal Mail in the UK, where not only does the government carry post around, but disallows anyone else from doing so. If a monopoly does form in a free market, anyone can compete with it, therefore it really isn't a monopoly.
"Is there a point at which need makes it non-voluntary?" What so because people have desires all exchanges are non-voluntary? Even if you are starving, you are still better off with food and will trade a lot of stuff to have it.
Your realse the government incentivised and actually forced in some cases the banks into giving out loan to high risk people? The ones who were unlikely to replay their loans? That is why the bill out happened, the government promised to come in and save the banks if this went wrong. And they are still doing it, amazing really.
Yep, its all about easy entry to the market, which is the absolute most important thing for healthy Capitalism. If you own a sandwich shop and at any point in time a person next door can open a sandwich shop , even though you may be the only shop in the market, it is in your best interest to keep your prices and profits low enough to dissuade that guy to not open a sandwich shop, because if he does, you may not be able to make much profit at all.
Currency allows for the circumvention of a coincidence of duel wants. If you work as a wheat farmer and want to buy some chickens then you merely have to find any person who wants wheat and sell it to them for a form of currency. You then buy the chickens with the currency. Currency makes trade more efficient and can engage in infinitely more complex actions than a barter economy.
...and for reasons of economic growth, "free" trade is not always the best thing for all countries, there needs to be some level of protectionism esp by developing countries. Free trade only benefits the already rich Western countries.
Most European countries are moving towards market driven economies and fiscal austerity. Countries like Greece and Spain that spended without common sense had to pay the price. The US is similar - the left wants to spend on social issues, the right on the military budget both without any fiscal responsibility. You are a nation that lives on debt and you will pay.
The problem is, that the government can only get the boxes of supplies by getting them from someone else. So now, you have people paying into the government for these boxes. You have an argument over how big the boxes should be and how much tax is needed to pay for the boxes of supplies. What happens next, is two parties form and they never agree on anything. That's how government works.
If someone puts a gun to my head and says "your money or your life", it is not a voluntary exchange although we are both normally better off (I live, and he is richer), and I am happier to be alive than dead, but not much happier. I am asking if there is a point a which a NEED (basic food, clothing, or shelter to sustain life) can become the equivalent of a gun to one's head, or at least a means to exploit and distort the market. Doesn't happen in the theoretical free market, but real world?
And yet there's a plethora of hamburger franchises. Sometimes you get into a market because it's obvious people can make money doing it. And sometimes you won't touch a market because someone else has it all wrapped up. Luxottica often stacks the deck, operating LensCrafters and Pearl Vision and Sears Optical and Target Optical.
The biggest issue in health care, is that we know we will have future expenses, yet we buy insurance which nets in a loss due to administrative and profit costs instead of investing. Its also why the rich own everything. The people that get rich are the people who invest. You can't own anything if you don't buy anything. Of course, now we have Obama Care which mandates we pay into the insurance companies which ruins our chances of dealing with the issue ourselves.
Keynesians confuse 'preferences' with 'demand' and therefore conclude demand drives the economy. They don't realize without supply it's irrelevant what you want.
Thank you for telling me where the money for Learnliberty comes from. Without it being pointed out I never would have guessed that the funding came from someone who has a lot of funds to spare. Now, can you refute the thesis of the video? If you cannot then I will be forced to conclude that the video makes a good point and you have no refutation.
A few years ago, the world had a chance to get rid of the corporate system, but the governments had to step in to protect national interests and the "little man" because government and corps are interdependent institutions. The main fascist economical doctrine was corporatism - a system where corporations, worker unions and government work together to benefit the nation. Sounds familiar?
As far as political parties are concerned, the main criticism of the GOP from conservative groups is that they do not support small government like they say they do. For example, under George Bush and a Republican majority in the house and senate, we actually increased government spending. The criticisms of the Democrats, is that they do not actually help the poor and actually support big business. Obamacare just forces everyone to buy insurance. Who profits from that?
But it does change in value. Twinkies value skyrocketed when Hosted closed. What people are willing and able to trade (in cash or barter) is a function of the items worth to them. Adding cash to an economy is a way store value, but so is collecting rare items, burning bumper crops, owning a piece of land or home, or holding an ownership stake of a company. All of the later could happen in a barter system.
The issue is that politicians work for those who can get them elected. That means campaign finance which means rich, powerful people. The reason why people lobby politicians is because politicians have a lot of power. Enough to go to war if they are willing. This power attracts lobbyists and gives an incentive for corrupt people to seek office. The more power you give the government, the more incentive for corruption.
The problem with all these examples is that everyone starts with an equal amount of stuff. What happens when you run a similar scenario that is more reflective of real life: where some individuals start with enormous resources, others with limited resources, and some actually owing other people their resources? When one persons enjoyment is anthers livelihood, is this really a moral system?
You live your life in a house or apartment with public water, plumbing, electricity, things that were a luxury years ago. Things that still are a luxury in some parts of the world. You probably own a cell phone, computer, TV, etc. Some things you own people didn't even imagine 30 years ago. You probably have a stocked refrigerator, a different wardrobe for each day of the week and act like someone has robbed you blind. Most people have a good life if they want it.
Nothing has "objective value" ... the value of something is determined by what people are willing to give to obtain it, whether that is via exchange of goods, or exchange of services, or exchange of money. A currency makes exchange much easier. (see what LeEternelleVie said).
We, as a people, need to vote on the fairest shirt for everyone. Tell you what, MagnusCattus.You wear a red shirt. I'll wear a blue shirt. We'll demand students vote on which of us will run the Dept of Shirt Justice. We'll pretend we're enemies, and accept fabric donations from the students who don't want to lose their shirts. Whoever wins will decide the single Fair Shirt for All. We'll be wearing tuxes made out of stolen shirts! If students don't vote in our dumbocracy, they can't complain.
The flaw in your thought process is that you assume the rich and poor are continually the same people as the years go on. The truth is that most people move up and down through the economic statistics over their lives. For example, I was a statistical “poor” person in 2005 because I was a college freshman! Of course, 4 years later, I became middle class and gained access to more innovations and technologies with my increased pay. Most begin poor and gain wealth until they hit their 50s.
Big problem with one assertion, exchange only corrects mistakes in allocation when we assume that individuals have equal starting resources of some kind. Once you introduce a power dynamic into the mix, then those with resources can profit FAR more than their trading partners. Take the apples and oranges example. If the orange person is the only person with oranges, while there are three people with one-third as many apples,The person with oranges can make sure that no one gets fruit salad unless he gets more apples than he gives oranges. This leads to the apple people trading at a rate that leaves them with less fruit salad than they could have had and the orange person with all the fruit salad he could expect plus extra fruit. The problem was not corrected, it was replaced by a new problem that cannot be solved by free markets.
The free market can easily resolve this with collective bargaining. The three apple people make a deal with each other and agree that they will only hand x number of their apples to the orange person if the orange person hands over x number of his oranges to them. Otherwise the orange person gets nothing.
***** Well, that's why the orange person and the apple person pay taxes to a policeman to stop that from happening. And then the policeman realizes he has a gun and he can just take the apples and the oranges.
helios5868 "This leads to the apple people trading at a rate that leaves them with less fruit salad than they could have had and the orange person with all the fruit salad he could expect plus extra fruit." Well, trade is volunteer, so If they think It is not good to trade, they won't do it! In this case, mistakes in allocation are not corrected for any of the sides, for there is no trade occurring. And Nor only the three apple persons loose the opportunity of eating fruit salad, but also the orange person. And what if they do trade? As trade is volunteer, they would just do that if they prefer a certain amount of fruit salad than a bigger amount of apples (values are subjective). So both sides would still be winning. I can be wrong about this, but I think what made it difficult for you to understand was that you did not took in consideration the freedom of choice individuals had and how they value goods. Each person values stuff in a different way. An example of how this could probably work: The apple person N1 likes eating apples, and not oranges, so trading would not be good to him, and he will not trade. The apple person N2 prefers to eat in a big quantity than to eat a better flavor, so he won't trade. The apple person N3 eats little food, and likes fruit salad, so It is good for him do exchange. Trade is made, and both parts are better of. "Once you introduce a power dynamic into the mix, then those with resources can profit FAR more than their trading partners." Remember, trade is voluntary! People with more resources can trade more, and the more trade is made, the better of he will be. And not only him, but people that trade with him will also win. Remember, values are subjective! "exchange only corrects mistakes in allocation when we assume that individuals have equal starting resources of some kind". Well if you believe that mistakes in allocation is one person having more than the other, than yes. But remember, one have more because he produced more, so he deserves it. With no trade at all, each one would be left with what he himself produced, and the ones who produced more would still have more.
TOASTEngineer - "Well, that's why the orange person and the apple person pay taxes to a policeman to stop that from happening." That doesn't make sense. Why would the orange person "pay" a "policeman" to stop him from stealing apples? Instead let's say that the apple person teams up with the pear person. Together they hire a policeman to prevent the orange person from stealing apples & pears. Why should the orange person obey their policeman that enforces their laws? According to the laws of the orange person they are his apples & pears. Only by means of superior force can the apple/pear policeman enforce their law.
"The most successful companies just eliminate their competitors" Well even if true it does not mean necessarily that those companies will become monopolies. As Israel Kirzner pointed out a single company in a market is not necessarily a monopolist, as even potential competition can keep prices competitive. See /watch?v=DFq05Z7_Dyk
I commend your uncle for working so hard, and for being a CEO who is worthy of the title. But I will bet that he is not in the top 1%. The CEOs of large corporations do NOTHING for their company. That's why they aspire to being CEO: to pay themselves hundreds of million$ for doing no work. If they run their company into the ground, they either get bailed out, or they get a golden parachute -- the free market at work, folks! I want an America where hard work is rewarded, not psychopathic greed!
I agree that government should finance essential services (like education and healthcare), but should it provide them? Do you support nationalising private schools, hospitals and clinics? I think the private sector should play a greater role in these sectors, not the other way around. The government should finance the treatment of patients and they will choose the best doctors. They are moving in that direction in Canada.
"Only the ignorant wage slaves can be happy in the current market." What if someone is naturally a happy person that is not so envious that the fact that another person has something makes them sad? Just because the world does not meet your personal standard of perfection, does not mean that trade does not benefit both parties. I don't care if one party wins slightly more than the other, they both still win. Otherwise the poor person would have kept what he had.
If, by your own estimation, an exchange makes your life worse, why do it? To suggest that human beings are actively engaged in behaviors that they themselves deem to be reducing their happiness / satisfaction / well-being, is to display a bizarre understanding of human psychology. If I exchange the shirt off my back for a sandwich to keep myself alive, it's because I value staying alive more than the shirt - I benefited from this exchange because I got something I value more than what I gave up.
and what if one of them is made in China, another is a LV, and there are just too many other brands. Can you make sure ppl can still maintain a sense of fairness in the same game? why is it that only shirts get traded. And when the game is so limited, it merely remains as a game. although it might illustrate the function of exchange, many more are hidden from what is really going on in the real world.
For the millionth time, its easier to manage small countries. Each one of those countries is like the size of a state in the US. Its easier for the citizens to know what is going on, because the national issues are also the local issues. Also, there is less incentive for corruption from foreign powers, because none of those countries mean anything on a global scale.
I disagree with one thing Professor Munger says - he says that "gifts are nice, but only the person receiving the gift is better off." In a purely material sense, this may be true, but if the satisfaction of giving the gift is more valued by the giver than anything else he/she might've done with the item, then the giver is also better off.
People who had their property taken away from them by court order because a developer wanted to build a shopping center and they didn't want to sell wouldn't agree. Property rights should be protected because they are fundamental just as personal inviolability and freedom of expression.
Too simplistic a description of how real trade happens among countries. The problem with mainstream theories of trade is that they leave out a lot unexplained. Trade is not just about exchange, but also about production, the productive capacity of countries to produce competitively tradable goods; its about fairness in the trade system- its not always the case that a party is happier after an exchange of goods; its about power relations btwn the trading partners - there are losers and winners.
And, how, pray tell, would private business "create big government for its own benefit"? Private businesses operate under voluntary contracts and exchanges. Therefore, It would be impossible to impose any form of "government" on unwilling people. If you then say that corporations would obtain weapons and hire thugs to intimidate people into getting what they want, you will have just admitted that the defining behavior of government is violence and coercion - and you'd be correct.
There are CEOs that are crooked and CEOs that do not work according to their pay, but I'm sure the lion share of CEOs actually aren't that way. If they were, every company in the US would fail all the time. Its good for a CEO to make more than he is worth, but its not good for the company and companies that over pay CEOs go bankrupt without government interference. That's where bailouts come in, subsidizes come in, and regulations designed to squash competition rather than encourage it.
Now this is one of THE BEST learn liberty videos I have ever seen. Thank you for this precious knowledge!
That's why it's up to the individuals to get an understanding of the things they are exchanging. Those who suffer losses are the ones who did not put in enough effort relative to their natural ability to perceive value.
Yes, it is a moral system. I would look into the concept of Comparative Advantage, which teaches us that voluntary exchange is a tide that raises all ships, especially in cases where one participant seems to be at an all-around disadvantage to other participants. It's also important to understand that wealth isn't a finite thing - when we exchange voluntarily, the pool of wealth keeps growing and spreading.
Well in that example there wasn't a currency used to exchange shirts - it's a simpler example of pure barter. But currencies began as barter items with broad appeal so it's not a bad exercise - it's the next lesson. Currencies solve many barter problems and allow for much easier calculation of profit or loss. It's a great innovation and a natural one in barter exchange at some point.
The best way to fulfill "public need" is through people acting independently and making voluntary transactions and agreements between each other. Allowing people to pursue their own personal desires (greed, if you want to call it that) through voluntary agreements with others is the best way for people to achieve their own personal desires.
"It seems like magic, but it is just markets" - great line!
one of the only ad's i have actualy watched im glad i did, you found a new sub
Always nice to find a supporter of Lysander Spooner. His arguments for self-employment are fairly interesting to read about.
One of the best advertisements I've ever seen on youtube.
one of LearnLiberty's best. Instant classic.
If you've ever been to a Boy Scout Jamboree you will see an exchange system of patches self-organize in 24 hours or less. It's one of the most remarkable examples of free trade you could ever witness because it's carried out by kids that are 18 or younger.
He would be an awesome professor to have.
James, Trade among rational agents results in both parties better off, (wealthier) than before the trade. This is why both agreed to trade in the first place. The reason that cookie and pickle can be worth more to one than another is because each person's life context is different. A raincoat is OBJECTIVELY worth more to a guy about to get rained on than it is to someone with a surplus of raincoats. That's why the guy needing a raincoat is willing to exchange $2 for it.
I think that you have identified the subtle point of this video: the government first needs to distribute identical boxes of goods to every citizen regularly, so that everyone has a government-guaranteed minimum standard of living. Then the people can trade with one another, which will make them even better off.
You are absolutely right that if someone has nothing to trade, then that someone will not be made better off by trade. That is why government needs to step in.
How could anyone dislike this?
Also, if you type in poverty in Sweden in Google, the first article is a Forbes article that says American has less poverty than Sweden. If you read the entire article, it makes convincing argument that poverty in Scandinavian countries is relatively the same as that in the US. The problem with using government statistic on poverty is that each country has its own standard, so they can eliminate or increase poverty just by changing the standard. But this is a good article.
Well this is something people will factor when trading. This reinforces that resources will travel more directly to where they are needed.
These videos are great.
Besides, this is about wants. If both people really want something that the other has, even if they both end up getting something worse than what they had (which isn't possible in 2 person exchanges, only one person can end up objectively worse off in worst case scenario), they don't know it. They wanted the other item. They got it. They assume responsibility of that trade if later on they realize they got a bad deal, because the exchange was voluntary
Definitely, as long as giving up my position doesn't weaken any of my power over you~ Positions don't come with Power~ One could continue to be the player of that position, and you be the performer. Position, Power, Perfomer, Player, Puppet, Puppeteer.
Thank's for the links. I will read more on this when I am off next week. Regards
When are you guys putting up the courses?
"Governments are the sole reason behind monopolies."
As a general rule I agree, but I also like to be contrary so here are a few other exceptions:
1. Use of private force. This is more common in underdeveloped nations.
2. Small markets. If memory serves there is only one currency printing press maker.
3. Recently created markets. Someone has to be first.
Outside of these exceptions I cannot think of a monopoly not supported by government.
Money is just an intermediary - at the end of the day exchange begins and ends with goods and services. Lucisferre's simple example was intended to illustrate the concept of Comparative Advantage.
BTW, one of the video links at the end agrees with my prior point. "Trade is made of win" tells how trade creates wealth, not merely optimizes ones situation.
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Generally, I agree, but like someone said here previously, there can be a single company in a specific market, but the fact that at any point anyone can start a competing company is enough to keep the prices down.Even if someone technically has a monopoly, like in you points 1 and 2, then they would still not behave like one because they would be aware that they can be out-competed at any point.
How would one go about controlling all the resources needed? (I know it's a broad question, since it's I'm not referring to any industry)
It's like saying someone can have a monopoly on all trade by controlling all the currency. Even if that ever happens, people will just start using some other scarce resource as currency.
I concur what Joseph Rissier said. Do you have any real-life example of when this sort of thing happened?
I understand that sometimes a company will gain a massive majority in a market, but that is because they offer the best product. Look at TH-cam for example, you could say they kind of have a monopoly, but they don't, because any website can be competition for them, and I'm sure TH-cam is terrified that it can lose everything very quickly (especially as its services are worsening)
What was the currency used to exchange shirts? The video fails to mention that. Also, I find it ironic that the first example for exchange this video gives happens in a P.O.W camp. The duress the prisoners felt can be compared to the effect fractional reserve banking has on the world and its people. which was also not mentioned. Seems kinda sloppy considering exchange is based on it.
Why do you think this only applies to a currency-less system?
At 1:38, Prof Munger states that he prefers chips to cookies. This concurs with an earlier video of Prof Munger's, in which he utilised the eating of chips to prove a point about externalities.
Currency is just a store of value, a medium of exchange. Bill wants cookies has sandwiches. Bob wants Sandwiches has apple trees that will bare apples in a week. Beth wants Apples has cookies. How many switches before everyone gets what they want? How long will it be until any one of them are happy with just exchange? If you say that Bob trades future apples, you've created a note or paper currency. Now do the same thing with a cash system.
this video is awesome!
Given that description, I think my original point still holds - that monies evolved organically in the marketplace, rather than being "invented" by any centralized authority.
If making a trade or some other kind of deal decreases someone's (or some nation's) happiness then why do they make the deal?
Also, could you explain what you mean by "fairness"? I have never been satisfied with any definition that I have heard.
In my view, it doesn't matter if one party "wins" more than another. As long as both parties are winning I don't see a problem.
Happier does not equal happy. Just some level of satisfaction better than before the exchange. You may not be happy with the wages you earn at a blue collar job, but you are happier trading your labor for money (and then for food) than you would have been not eating at all. The issues with capitalism usually boil down to the exchange for necessities. An exchange makes both parties happier ONLY when the exchange is voluntary. Is there a point at which need makes it non-voluntary?
That's a risk that both parties must assume and calculate for when they make an exchange. Besides, any way you slice it, any sort of intervention on behalf of the government cannot equate for and solve this problem and will likely have unintended consequences on other sectors of private exchange.
No, This acutally applies to the current system too, Money just shortens the hands between which the t-shirts have to travel.
I'd be interested to hear it.
Is a market that uses currencies doomed to regulation? In a world of modern technology can we bypass the spoilability fallacy within a barter system?
They won't monopolies based on force and can be competed with no matter how small you are.
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Challenger gang😎
ur ugly
@@rudy-ti5yw ok ruderanch dont remember asking
@@suvan4583 lmao
hi
lol
Money simply represents that apple, and enables easier exchange for any item whenever the person wants, rather than when the apple grower wants what you have.
not at all just consider money as a commodity in and of itself, which it's not of course, and it makes perfect sense. we create money (little green pieces of paper), that other people want, so we create money in exchange for products. The point at which the analogy comes apart though isn't at international trade, but the fact that money is simply a convenient medium for which exchanges between objects of value are made and therefore only possess value equal to what can be exchanged for it.
who here from chally?
It's an oversimplification because it's only addressing one issue: trade. It's not addressing how fiat currency affects trade.
Even if one trader starts off with more resources, both traders will still be better off. For example:
Apple has much greater resources than I, but Apple and I are better off when I trade my money from an iPad.
Everyone has something to trade. The first thing we learn to trade is our labor. Most kids first skill is bartering their labor for allowance. Mowing the lawn for $2 for example. In a trade society there is no fourth person who takes a cut without doing anything. Everybody does something. The middle man handles negotiations for example. It's difficult and time consuming for a farmer to negotiate with hundreds of individuals so they sell that responsibility to a grocery store instead.
The value of wheat and chicken changes too. If people want wheat instead of chicken for their dinner (maybe because of a vegetarian trend?) then the values will change (demand); if one year there is a bird virus and many chickens die, values will change more (supply). Fiat money can change more dramatically because the supply can be created from essentially nothing. Gold as money cannot change as easily so it's value changes no differently than wheat and chicken.
Governments are the sole reason behind monopolies. Large corporations get protection from government (because they control it), while small businesses can't flourish.
There's also something known as a government-enforced monopoly, such as the Royal Mail in the UK, where not only does the government carry post around, but disallows anyone else from doing so.
If a monopoly does form in a free market, anyone can compete with it, therefore it really isn't a monopoly.
this made me happy, and i dont know why
feelings :)
How so? Would you exchange money for a good or service, or vice-versa, if you didn't think you would be better off after the exchange?
"Is there a point at which need makes it non-voluntary?" What so because people have desires all exchanges are non-voluntary? Even if you are starving, you are still better off with food and will trade a lot of stuff to have it.
Your realse the government incentivised and actually forced in some cases the banks into giving out loan to high risk people? The ones who were unlikely to replay their loans? That is why the bill out happened, the government promised to come in and save the banks if this went wrong.
And they are still doing it, amazing really.
Yep, its all about easy entry to the market, which is the absolute most important thing for healthy Capitalism.
If you own a sandwich shop and at any point in time a person next door can open a sandwich shop , even though you may be the only shop in the market, it is in your best interest to keep your prices and profits low enough to dissuade that guy to not open a sandwich shop, because if he does, you may not be able to make much profit at all.
Currency allows for the circumvention of a coincidence of duel wants. If you work as a wheat farmer and want to buy some chickens then you merely have to find any person who wants wheat and sell it to them for a form of currency. You then buy the chickens with the currency.
Currency makes trade more efficient and can engage in infinitely more complex actions than a barter economy.
...and for reasons of economic growth, "free" trade is not always the best thing for all countries, there needs to be some level of protectionism esp by developing countries. Free trade only benefits the already rich Western countries.
Me too, I found it to share it.
Most European countries are moving towards market driven economies and fiscal austerity.
Countries like Greece and Spain that spended without common sense had to pay the price. The US is similar - the left wants to spend on social issues, the right on the military budget both without any fiscal responsibility. You are a nation that lives on debt and you will pay.
The problem is, that the government can only get the boxes of supplies by getting them from someone else. So now, you have people paying into the government for these boxes. You have an argument over how big the boxes should be and how much tax is needed to pay for the boxes of supplies. What happens next, is two parties form and they never agree on anything. That's how government works.
If someone puts a gun to my head and says "your money or your life", it is not a voluntary exchange although we are both normally better off (I live, and he is richer), and I am happier to be alive than dead, but not much happier. I am asking if there is a point a which a NEED (basic food, clothing, or shelter to sustain life) can become the equivalent of a gun to one's head, or at least a means to exploit and distort the market. Doesn't happen in the theoretical free market, but real world?
And yet there's a plethora of hamburger franchises. Sometimes you get into a market because it's obvious people can make money doing it.
And sometimes you won't touch a market because someone else has it all wrapped up. Luxottica often stacks the deck, operating LensCrafters and Pearl Vision and Sears Optical and Target Optical.
The biggest issue in health care, is that we know we will have future expenses, yet we buy insurance which nets in a loss due to administrative and profit costs instead of investing. Its also why the rich own everything. The people that get rich are the people who invest. You can't own anything if you don't buy anything. Of course, now we have Obama Care which mandates we pay into the insurance companies which ruins our chances of dealing with the issue ourselves.
Keynesians confuse 'preferences' with 'demand' and therefore conclude demand drives the economy. They don't realize without supply it's irrelevant what you want.
Thank you for telling me where the money for Learnliberty comes from. Without it being pointed out I never would have guessed that the funding came from someone who has a lot of funds to spare.
Now, can you refute the thesis of the video? If you cannot then I will be forced to conclude that the video makes a good point and you have no refutation.
but how come they can get their shirts for free in the first place？
A few years ago, the world had a chance to get rid of the corporate system, but the governments had to step in to protect national interests and the "little man" because government and corps are interdependent institutions.
The main fascist economical doctrine was corporatism - a system where corporations, worker unions and government work together to benefit the nation. Sounds familiar?
As far as political parties are concerned, the main criticism of the GOP from conservative groups is that they do not support small government like they say they do. For example, under George Bush and a Republican majority in the house and senate, we actually increased government spending. The criticisms of the Democrats, is that they do not actually help the poor and actually support big business. Obamacare just forces everyone to buy insurance. Who profits from that?
But it does change in value. Twinkies value skyrocketed when Hosted closed. What people are willing and able to trade (in cash or barter) is a function of the items worth to them. Adding cash to an economy is a way store value, but so is collecting rare items, burning bumper crops, owning a piece of land or home, or holding an ownership stake of a company. All of the later could happen in a barter system.
couldn't have said it better myself.
Thumbs up
What are you talking about the US was colony of England
challey gon be doin yt vids from now on for that ad revenue
make someone happy. trade with them.
The issue is that politicians work for those who can get them elected. That means campaign finance which means rich, powerful people. The reason why people lobby politicians is because politicians have a lot of power. Enough to go to war if they are willing. This power attracts lobbyists and gives an incentive for corrupt people to seek office. The more power you give the government, the more incentive for corruption.
Only the tiniest fraction of our society has nothing to trade. If you don't have assets, then you trade your time in the form of labor of some kind.
The problem with all these examples is that everyone starts with an equal amount of stuff.
What happens when you run a similar scenario that is more reflective of real life: where some individuals start with enormous resources, others with limited resources, and some actually owing other people their resources? When one persons enjoyment is anthers livelihood, is this really a moral system?
You live your life in a house or apartment with public water, plumbing, electricity, things that were a luxury years ago. Things that still are a luxury in some parts of the world. You probably own a cell phone, computer, TV, etc. Some things you own people didn't even imagine 30 years ago. You probably have a stocked refrigerator, a different wardrobe for each day of the week and act like someone has robbed you blind. Most people have a good life if they want it.
Nothing has "objective value" ... the value of something is determined by what people are willing to give to obtain it, whether that is via exchange of goods, or exchange of services, or exchange of money. A currency makes exchange much easier. (see what LeEternelleVie said).
We, as a people, need to vote on the fairest shirt for everyone. Tell you what, MagnusCattus.You wear a red shirt. I'll wear a blue shirt. We'll demand students vote on which of us will run the Dept of Shirt Justice. We'll pretend we're enemies, and accept fabric donations from the students who don't want to lose their shirts. Whoever wins will decide the single Fair Shirt for All. We'll be wearing tuxes made out of stolen shirts! If students don't vote in our dumbocracy, they can't complain.
dual wants, not duel wants :)
The flaw in your thought process is that you assume the rich and poor are continually the same people as the years go on. The truth is that most people move up and down through the economic statistics over their lives. For example, I was a statistical “poor” person in 2005 because I was a college freshman! Of course, 4 years later, I became middle class and gained access to more innovations and technologies with my increased pay. Most begin poor and gain wealth until they hit their 50s.
Big problem with one assertion, exchange only corrects mistakes in allocation when we assume that individuals have equal starting resources of some kind. Once you introduce a power dynamic into the mix, then those with resources can profit FAR more than their trading partners.
Take the apples and oranges example. If the orange person is the only person with oranges, while there are three people with one-third as many apples,The person with oranges can make sure that no one gets fruit salad unless he gets more apples than he gives oranges. This leads to the apple people trading at a rate that leaves them with less fruit salad than they could have had and the orange person with all the fruit salad he could expect plus extra fruit.
The problem was not corrected, it was replaced by a new problem that cannot be solved by free markets.
The free market can easily resolve this with collective bargaining. The three apple people make a deal with each other and agree that they will only hand x number of their apples to the orange person if the orange person hands over x number of his oranges to them. Otherwise the orange person gets nothing.
Voluntaryist
Why doesn't the orange person simply take the apples?
*****
Well, that's why the orange person and the apple person pay taxes to a policeman to stop that from happening.
And then the policeman realizes he has a gun and he can just take the apples and the oranges.
helios5868
"This leads to the apple people trading at a rate that leaves them with less fruit salad than they could have had and the orange person with all the fruit salad he could expect plus extra fruit."
Well, trade is volunteer, so If they think It is not good to trade, they won't do it! In this case, mistakes in allocation are not corrected for any of the sides, for there is no trade occurring. And Nor only the three apple persons loose the opportunity of eating fruit salad, but also the orange person.
And what if they do trade? As trade is volunteer, they would just do that if they prefer a certain amount of fruit salad than a bigger amount of apples (values are subjective). So both sides would still be winning.
I can be wrong about this, but I think what made it difficult for you to understand was that you did not took in consideration the freedom of choice individuals had and how they value goods. Each person values stuff in a different way.
An example of how this could probably work: The apple person N1 likes eating apples, and not oranges, so trading would not be good to him, and he will not trade. The apple person N2 prefers to eat in a big quantity than to eat a better flavor, so he won't trade. The apple person N3 eats little food, and likes fruit salad, so It is good for him do exchange. Trade is made, and both parts are better of.
"Once you introduce a power dynamic into the mix, then those with resources can profit FAR more than their trading partners."
Remember, trade is voluntary! People with more resources can trade more, and the more trade is made, the better of he will be. And not only him, but people that trade with him will also win. Remember, values are subjective!
"exchange only corrects mistakes in allocation when we assume that individuals have equal starting resources of some kind". Well if you believe that mistakes in allocation is one person having more than the other, than yes. But remember, one have more because he produced more, so he deserves it. With no trade at all, each one would be left with what he himself produced, and the ones who produced more would still have more.
TOASTEngineer - "Well, that's why the orange person and the apple person pay taxes to a policeman to stop that from happening."
That doesn't make sense.
Why would the orange person "pay" a "policeman" to stop him from stealing apples?
Instead let's say that the apple person teams up with the pear person. Together they hire a policeman to prevent the orange person from stealing apples & pears.
Why should the orange person obey their policeman that enforces their laws?
According to the laws of the orange person they are his apples & pears.
Only by means of superior force can the apple/pear policeman enforce their law.
"The most successful companies just eliminate their competitors" Well even if true it does not mean necessarily that those companies will become monopolies. As Israel Kirzner pointed out a single company in a market is not necessarily a monopolist, as even potential competition can keep prices competitive. See /watch?v=DFq05Z7_Dyk
I commend your uncle for working so hard, and for being a CEO who is worthy of the title. But I will bet that he is not in the top 1%. The CEOs of large corporations do NOTHING for their company. That's why they aspire to being CEO: to pay themselves hundreds of million$ for doing no work. If they run their company into the ground, they either get bailed out, or they get a golden parachute -- the free market at work, folks!
I want an America where hard work is rewarded, not psychopathic greed!
I agree that government should finance essential services (like education and healthcare), but should it provide them? Do you support nationalising private schools, hospitals and clinics? I think the private sector should play a greater role in these sectors, not the other way around. The government should finance the treatment of patients and they will choose the best doctors. They are moving in that direction in Canada.
"Only the ignorant wage slaves can be happy in the current market."
What if someone is naturally a happy person that is not so envious that the fact that another person has something makes them sad?
Just because the world does not meet your personal standard of perfection, does not mean that trade does not benefit both parties. I don't care if one party wins slightly more than the other, they both still win. Otherwise the poor person would have kept what he had.
If, by your own estimation, an exchange makes your life worse, why do it? To suggest that human beings are actively engaged in behaviors that they themselves deem to be reducing their happiness / satisfaction / well-being, is to display a bizarre understanding of human psychology. If I exchange the shirt off my back for a sandwich to keep myself alive, it's because I value staying alive more than the shirt - I benefited from this exchange because I got something I value more than what I gave up.
and what if one of them is made in China, another is a LV, and there are just too many other brands. Can you make sure ppl can still maintain a sense of fairness in the same game? why is it that only shirts get traded. And when the game is so limited, it merely remains as a game. although it might illustrate the function of exchange, many more are hidden from what is really going on in the real world.
This guy looks like Patrick.
For the millionth time, its easier to manage small countries. Each one of those countries is like the size of a state in the US. Its easier for the citizens to know what is going on, because the national issues are also the local issues. Also, there is less incentive for corruption from foreign powers, because none of those countries mean anything on a global scale.
I disagree with one thing Professor Munger says - he says that "gifts are nice, but only the person receiving the gift is better off." In a purely material sense, this may be true, but if the satisfaction of giving the gift is more valued by the giver than anything else he/she might've done with the item, then the giver is also better off.
People who had their property taken away from them by court order because a developer wanted to build a shopping center and they didn't want to sell wouldn't agree. Property rights should be protected because they are fundamental just as personal inviolability and freedom of expression.
Too simplistic a description of how real trade happens among countries. The problem with mainstream theories of trade is that they leave out a lot unexplained. Trade is not just about exchange, but also about production, the productive capacity of countries to produce competitively tradable goods; its about fairness in the trade system- its not always the case that a party is happier after an exchange of goods; its about power relations btwn the trading partners - there are losers and winners.
School brought me here...T~T
And, how, pray tell, would private business "create big government for its own benefit"? Private businesses operate under voluntary contracts and exchanges. Therefore, It would be impossible to impose any form of "government" on unwilling people. If you then say that corporations would obtain weapons and hire thugs to intimidate people into getting what they want, you will have just admitted that the defining behavior of government is violence and coercion - and you'd be correct.
There are CEOs that are crooked and CEOs that do not work according to their pay, but I'm sure the lion share of CEOs actually aren't that way. If they were, every company in the US would fail all the time. Its good for a CEO to make more than he is worth, but its not good for the company and companies that over pay CEOs go bankrupt without government interference. That's where bailouts come in, subsidizes come in, and regulations designed to squash competition rather than encourage it.