Markets power to predict policies and assassinations

[The Idler]

What are the lessons to be learned from the Policy Analysis Market (http://en.wikipedia.org/wiki/Policy_Analysis_Market) and Assassination Markets (http://en.wikipedia.org/wiki/Assassination_market)? Is it simply that free-marketeers have total faith in the predictive abilities of markets? Is the Wisdom of Crowds (http://en.wikipedia.org/wiki/The_Wisdom_of_Crowds) correct in that free markets can make accurate predictions? I understand there is also a system called a Futarchy.

[Drace]

Can you explain what you are saying please? :)

[REVLEFT'S BIEGGST MATSER TROL]

Quite simply, the wisdom of crowds also applies to democracy...

Rather than the "democracy of the marketplace" - where one guy has 1000 "votes" to decide what is produced, and has neighbor has 1. Not to mention this situation requires the oppression, exploitation, and subjugation of the working class in the first place. And a state to maintain it and fosters imperialism and....etc

[Drace]

1000 to 1 is way too modest. :rolleyes:

[Havet]

Quite simply, the wisdom of crowds also applies to democracy...

Rather than the "democracy of the marketplace" - where one guy has 1000 "votes" to decide what is produced, and has neighbor has 1. Not to mention this situation requires the oppression, exploitation, and subjugation of the working class in the first place. And a state to maintain it and fosters imperialism and....etc

I don't really understand what kind of discussion you guys want to brew, but since nobody seems to disagree, i'll take the liberty of quoting a person who thinks otherwise:


Contrast the relationship between two men, one having an income of 10,000$ a year and one of 5,000$

Bidding for necessities, the richer man outbids the poorer; if there were only enough food on the market for one man, it would be the poorer who would starve. But when the richer man is bidding for luxuries and the poorer man for necessities, the poorer man wins.

Suppose the richer man, having bought enough flower to make bread for himself, wishes to buy the rest of the flour on the market to make papier-mâché for his children's halloween masks. The poorer man still does not have anything to eat; he is willing to use as much of his income as necessary to bid for the flour. He gets the flour, and at much less than 5,000$. The richer man already used half of his income buying flour for bread (since there too, he was bidding against the poor). His remaining income is barely equal to that of the poorer man, and he is certainly not going to spend all of it, or even a substancial fraction, for halloween masks.

Now consider the same situation with votes. The man with the larger faction votes to have the flour given to him (and his allies) for bread. Then he votes to have the remaining flour given to them for making papier-mache. He wins both times, ten to five. Since voting is much more of an all-or-nothing thing than spending, such inequalities as do exist have much greater effects. This may explain why in our society, where the poor are also politically weak, they do far worse on things provided by the government, such as schooling and police protection, than on those sold privately, such as food and clothes.

Political institutions, such as congressional "log rolling" have developed to mitigate the all-for-nothing features of voting. A congressman indicates how important his bill is to his constituents by how many votes on other bills he is willing to trade for support on his. This is an extremely crude and approximate substitute for the market - an attempt to represent, by bargaining among a few hundred men on a few thousand issues, the multitudinous diversity fo two hundred million lives.

By the time a democratic socialist has modified socialism to make its political control mechanisms as accurate and sensitive as the economic control mechanisms of capitalism, he has reinvented capitalism. As the Yugoslavs have discovered.

Probably worth mentioning: I don't agree with many things he says here. Nonetheless, he has some interesting points, which hopefully will spark the conversation.

[The Idler]

Perhaps I'm not explaining myself very well because what I'm asking is can markets accurately predict the future?

[mikelepore]

The only examples I know about of markets predicting the future are the self-fulfilling prophesies inherent in the stock market correlating with optimism and pessimism. When an increasing number of people who expect it to go up act on their belief by buying more stock, the increased ratio of buyers to sellers causes it to go up. But then they become anxious to take their profits by selling before it goes down again, and then this increased ratio of sellers to buyers causes it to go down.

The contrarian investors are the most perceptive ones. Their expectation is approximately a third of a cycle ahead of every else's. They're most euphoric when everyone else is worried. When everyone else is upset about the market recently crashing, and therefore dumping their equities, the contrarian knows that most people make the opposite of the rational choice.

[REVLEFT'S BIEGGST MATSER TROL]

I don't really understand what kind of discussion you guys want to brew, but since nobody seems to disagree, i'll take the liberty of quoting a person who thinks otherwise:



Probably worth mentioning: I don't agree with many things he says here. Nonetheless, he has some interesting points, which hopefully will spark the conversation.

I don't know whether this is because David Friedman is just stupid, or whether he is such a blind ideologue that he doesn't realise he is inserting a hidden premise, but *the rich man and the poor man would have the same number of votes.* There would be no "rich man" or "poor man."

They wouldn't be able to outbid each other! They'd have an equeal voice - so what is produced by be decided according to what the largest amount of people wanted the most.