Paul Krugman Asks An Excellent Question

[I AM NOT THAT GUY 5,715]

The market is not perfect, and I doubt anyone is proclaiming it to be. However, it is just and fair; Unlike government schemes where some benefit at the expense of others. In this case, high cost renewable energy corporations will benefit at the expense of consumers, and those wicked carbon-emitting corporations.

I know this is a whole other topic, but I'd like to know how the market is fair and just, but outside forces on the market that come from governmental regulations is a scheme?

Think of it as a basketball game. It's a minimalistic analogy, but the basic principle remains.

What if an external force determined that one basketball team must play with one hand tied behind their back; or, if for every 4 points they score, they must give up 2 to the opposing team? This arrangement wouldn't be very fair, would it? Sure, it may be sad that without such coercive handicaps the other team wouldn't win, but the system is fair, and just; And nobody disputes it.

The same principle applies to the market.

It's easy to get clouded with the complexity of our economy, but everything boils down to the same economic axioms. Any genuine unjustness or unfairness must be layed at the doorstep of external forces; just as it would be basketball.

It's playoffs, so I figured basketball was appropriate.

The market itself sets it up that way, though. One side sets the rules and - if left alone - will set them to the disadvantage of the other team (and the nation at large) as long as it can. Manchester all over.

One side sets the rules? So the Chicago Bulls should just instate a rule, forcing the Celtic's Ray Allen to wear a blindfold, and not attempt 3-point shots? The "one side sets all the rules" is absolutely not true.

In the two sides of every market, the buyer and seller; each compete amongst each other. The buyer competes with the other buyers, bidding up the price; the seller competes with other sellers, bidding down the price.

If the seller set the rules, then a hotdog would cost 3,000 dollars; and you would be compelled by force to buy it. Clearly, that's outrageous, and untrue.

It isn't. The growing income disparity shows quite impressively that the market doesn't function all that well. A market that rewards failure (talking about them golden parachutes) as is the case in today's corporate world cannot be called functioning. It's out of whack. And it hurts the nation.

Not to be condescending, but you clearly have no idea what brought about the economic turmoil we're in.

Did these corporate executives that you so loathe have a monopolistic stranglehold on US credit creation and use it to hurt the nation? Money doesn't grow in a big pot, and it doesn't grow in executive suites. It comes from one place.

Was it these confusing derivitives that caused the credit crash or was it the underlying loans from which the derivitives derived their value?

I'll pass. Too late for a rant. Maybe in the morning.

[mRx 16]

Matt, since we're using the NBA analogy - there is a Commissioner and a governing board that determines the rules and regulations regarding game play, including salary caps. Teams can trade players to get under the cap, which they do often. So basically, the NBA does have a cap and trade system in place and they aren't singling out certain teams - all teams fall under the same regulations, which also will hold true for any cap on CO2 emissions.

I thought someone would try the referree aspect of my analogy. Again, my intent was to use the NBA analogy minimalistically. But you can think of the NBA governing body as the intangible market forces that move the market. The forces that reward Apple for creating a product that people want, and punish Chrysler for making worthless garbage.

This commissioner and governing board do not pick and choose the winners of the games, nor do they decry that a cap of only 2 layups may be performed per team/per game, and any additional layup over 2 will cost $1.8 Million dollars. Such a rule would be arbitrary, don't you think? (However, it should make perfect sense to the EPA, as the more energy your body exerts, the more CO₂ you expel. )

I think if such exorbitant additional costs were placed on the NBA teams, which would most likely lead to all NBA broadcasts being PPV-only events, it may be economically wise to view other basketball teams who don't have those wasteful, unproductive restrictions. Unlike the NBA, all teams do not fall under the same wasteful restrictions. As I've said before, unlike political boundaries, Economics has no borders.

Our utility bills could eventually be made out to Beijing Power and Lighting.

[Mr. Big Dog 10,747]

The market is not perfect, and I doubt anyone is proclaiming it to be. However, it is just and fair; Unlike government schemes where some benefit at the expense of others. In this case, high cost renewable energy corporations will benefit at the expense of consumers, and those wicked carbon-emitting corporations.

I know this is a whole other topic, but I'd like to know how the market is fair and just, but outside forces on the market that come from governmental regulations is a scheme?

Think of it as a basketball game. It's a minimalistic analogy, but the basic principle remains.

What if an external force determined that one basketball team must play with one hand tied behind their back; or, if for every 4 points they score, they must give up 2 to the opposing team? This arrangement wouldn't be very fair, would it? Sure, it may be sad that without such coercive handicaps the other team wouldn't win, but the system is fair, and just; And nobody disputes it.

The same principle applies to the market.

It's easy to get clouded with the complexity of our economy, but everything boils down to the same economic axioms. Any genuine unjustness or unfairness must be layed at the doorstep of external forces; just as it would be basketball.

It's playoffs, so I figured basketball was appropriate.

The market itself sets it up that way, though. One side sets the rules and - if left alone - will set them to the disadvantage of the other team (and the nation at large) as long as it can. Manchester all over.

One side sets the rules? So the Chicago Bulls should just instate a rule, forcing the Celtic's Ray Allen to wear a blindfold, and not attempt 3-point shots? The "one side sets all the rules" is absolutely not true.

In the two sides of every market, the buyer and seller; each compete amongst each other. The buyer competes with the other buyers, bidding up the price; the seller competes with other sellers, bidding down the price.

If the seller set the rules, then a hotdog would cost 3,000 dollars; and you would be compelled by force to buy it. Clearly, that's outrageous, and untrue.

It isn't. The growing income disparity shows quite impressively that the market doesn't function all that well. A market that rewards failure (talking about them golden parachutes) as is the case in today's corporate world cannot be called functioning. It's out of whack. And it hurts the nation.

Not to be condescending, but you clearly have no idea what brought about the economic turmoil we're in.

Did these corporate executives that you so loathe have a monopolistic stranglehold on US credit creation and use it to hurt the nation? Money doesn't grow in a big pot, and it doesn't grow in executive suites. It comes from one place.

Was it these confusing derivitives that caused the credit crash or was it the underlying loans from which the derivitives derived their value?

Not to be condescending but to worship free unfettered markets the way you do, you must not have paid attention in history class, my friend. A free market is unable to create even a close resemblance to stable and sustainable growth and prosperity.

Besides, your "counterpoint" doesn't even begin to address what I was talking about.

[mRx 16]

The market is not perfect, and I doubt anyone is proclaiming it to be. However, it is just and fair; Unlike government schemes where some benefit at the expense of others. In this case, high cost renewable energy corporations will benefit at the expense of consumers, and those wicked carbon-emitting corporations.

I know this is a whole other topic, but I'd like to know how the market is fair and just, but outside forces on the market that come from governmental regulations is a scheme?

Think of it as a basketball game. It's a minimalistic analogy, but the basic principle remains.

What if an external force determined that one basketball team must play with one hand tied behind their back; or, if for every 4 points they score, they must give up 2 to the opposing team? This arrangement wouldn't be very fair, would it? Sure, it may be sad that without such coercive handicaps the other team wouldn't win, but the system is fair, and just; And nobody disputes it.

The same principle applies to the market.

It's easy to get clouded with the complexity of our economy, but everything boils down to the same economic axioms. Any genuine unjustness or unfairness must be layed at the doorstep of external forces; just as it would be basketball.

It's playoffs, so I figured basketball was appropriate.

The market itself sets it up that way, though. One side sets the rules and - if left alone - will set them to the disadvantage of the other team (and the nation at large) as long as it can. Manchester all over.

One side sets the rules? So the Chicago Bulls should just instate a rule, forcing the Celtic's Ray Allen to wear a blindfold, and not attempt 3-point shots? The "one side sets all the rules" is absolutely not true.

In the two sides of every market, the buyer and seller; each compete amongst each other. The buyer competes with the other buyers, bidding up the price; the seller competes with other sellers, bidding down the price.

If the seller set the rules, then a hotdog would cost 3,000 dollars; and you would be compelled by force to buy it. Clearly, that's outrageous, and untrue.

It isn't. The growing income disparity shows quite impressively that the market doesn't function all that well. A market that rewards failure (talking about them golden parachutes) as is the case in today's corporate world cannot be called functioning. It's out of whack. And it hurts the nation.

Not to be condescending, but you clearly have no idea what brought about the economic turmoil we're in.

Did these corporate executives that you so loathe have a monopolistic stranglehold on US credit creation and use it to hurt the nation? Money doesn't grow in a big pot, and it doesn't grow in executive suites. It comes from one place.

Was it these confusing derivitives that caused the credit crash or was it the underlying loans from which the derivitives derived their value?

Not to be condescending but to worship free unfettered markets the way you do, you must not have paid attention in history class, my friend. A free market is unable to create even a close resemblance to stable and sustainable growth and prosperity.

Besides, your "counterpoint" doesn't even begin to address what I was talking about.

Well then, history class has failed you, my friend, because you apparantly know very little about the market. The market, that you so flippantly take for granted, provides you with everything that you love. From the food in your refrigerator, to the keyboard you type on.

I understand the axioms of the economy and the effects of controls and restraints placed upon it, and if that makes me a worshipper of unfettered markets; then so be it.

Oh and the rhetorical questions in my counterpoint completely addressed your point; but apparantly, you didn't connect the dots. C'est la vie.

[mendeleev 68]

I already have an unknown component in my budget - property taxes. I don't need another.

A person who imagines he his property taxes are the only unknown component in his budget out to 2050 (when Krugman estimates that Americans might consume 2% less than in the absence of cap and trade (and in the unlikely event that costs of unmitigated climate change are zero) ... has a rather different experience of household budget than any living person I've ever heard of.

[mendeleev 68]

Perhaps the following quote, from the current issue of Nature, will add an additional uncertainty to Randomizer's budget.

"The bottom line? Dangerous change, even loosely defined, is going to be hard to avoid. Unless emissions begin to decline very soon, severe disruption to the climate system will entail expensive adaptation measures and may eventually require cleaning up the mess by actively removing CO2 from the atmosphere. Like an oil spill or groundwater contamination, it will probably be cheaper in the long run to avoid making the mess in the first place."

Expensive adaption measures and expensive remediation don't sound cheap. As Benjamin Franklin said, "An ounce of prevention is worth a pound of cure."