Saturday, June 16, 2012

Economic Theory of Perfect Information

     The economic theory that calls for "perfect info" needs for us to assume "perfect info." For everything else for everything else to operate, we can assume that buyers have "perfect information" about the products and the prices. That is really, really, bad. This well-known theoretical glitch is actually, Well ----- a glitch. Surely some of you know about the Stiglitz criticism, as well..
     With perfection of information capitalism would cease. It would cease altogether. Perfect information kills the whole damn system. So, this element of the theory could not be a good one.
     Each customer is a unique being, a human being with human dignity. This is a point that everyone can agree on. The way you preserve that dignity is that -- at least as far as retail sales -- you keep them ignorant of each other. For example: I might be making a 9% markup on that fur coat; I might be making a 10% markup. Why am I making that extra 1%?
     You don't know. And you never will. I might not be able to articulate it either but I still take it. A lot of information is subjective. I may get that mark-up because I am a rotten, greedy individual. It may be because I want to give a lot of money to charity, or, maybe I just wanted to send sonnyboy to a good college. You'll never know. You are not supposed to. So, info needs to be concealed. How interesting that this is the exact opposite of our academic treatises.
     Let's appreciate the way this "fuzzy" version makes better sense: My approach is that it is ignorance that is necessary. Such an approach preserves something, something that is necessary. That something is difference. If everyone had perfect information -- or even if they had any information -- difference would no longer play the vital role it does.
     "Vive le differance" seems like a pretty good slogan! It would be a gray world. If purple had perfect information on blue, and blue had perfect information on purple, look out. There would be trouble, because neither purple nor blue would survive. They'd be some in-between color. Either that, or they'd simply kill one another. What is the argument for capitalism over socialism? Capitalism has the feature that odd varieties get to exist. "Equilibrium" is a bad theory, and with perfected information the whole thing (the world) would grind to a halt.
     Any system where there is perfect "eq", or perfect information (which seems a bit similar), is not a feature of capitalism but a danger to capitalism. It is a theoretical disaster!
     Making blue and purple become the same color is not going to fix anything, believe me.
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(no doubt this posting will have something - I sure hope so - in common with the present posting

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