O.K., so you ARE saying that "efficient" is perfectly consistent with erratic, unstable and socially irrational and thus implies no normative value. It's just whatever happens. We call that a tautology. As for a double dip "bringing government to its senses" that's wishful thinking.
-- Sandwichman On 7/11/10, Keith Hudson <[email protected]> wrote: > At 23:01 11/07/2010 -0700, Sandwichman wrote: >>Seriously though, Keith, are you calling the French intersubjectivist >>economists "naive"? Are you calling the recognition of uncertainty >>"naive"? > > I have no idea who these "French intersubjectivist economists" are or what > they say so I'll pass on this one. > >>Here's a very brief summary. People confronted with radical >>uncertainty (say about the direction of the market) can fall back on >>social convention or mimesis. It is individually rational for someone >>to copy the behavior of someone they believe to be better informed >>than they are. > > All that is now out-of-date. The stock markets have gone up repeatedly > (despite underlying conditions) since about 2000 because small investors > (in individual stocks) have been dropping away fast to be replaced by big > institutions (unit trusts, insurance companies, pensions funds) which have > simply got to invest their money somewhere. > >> Collectively, such mimetic behavior can become a >>self-fulfilling prophecy regardless of fundamentals -- the market goes >>up because a consensus is buying that stock. > > Yes, but it's now desperation by the major investors rather than mimesis > because there's hardly any other place to park their money, other than > governments bonds (poor returns) or corporate bonds (risky). > >> The only "information" >>anyone needs is that everyone else is doing it. > > "Everyone" now being mostly large investing institutions, not individuals. > >> Such a market is >>"efficient" in the sense that it is performing on the basis of a >>minimum of information. But the allocation of resources that results >>from such efficiency is not itself "efficient" in any meaningfully >>human terms. >> >>Cosmologically, a market that misallocates resources could be >>considered perfectly efficient. It is only from the very subjective >>perspective of individual's hopes, dreams, morals and fears that an >>erratic market would be deemed to be "inefficient". Similarly a car >>crash would be "efficient" from a particle physics standpoint. The >>forces would all be deployed nicely according to the principle of >>least effort. Too bad that the passenger whose head is efficiently >>sailing through the windshield, efficiently distributing bone and >>flesh and blood over the car's hood and the pavement according to the >>law's of physics doesn't have the composure to contemplate the >>mechanical efficiency of the events that are unfolding. It would be >>naive to think of a car crash as anything other than a manifestation >>of the principle of least effort! > > And that's the way it will happen when the double-dip actually occurs -- > this being the most efficient way of bringing governments to their senses. > > Keith > > _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
