Tag Archives: Market

Markets and Morality: Why We Shouldn’t Trust Markets with Our Civic Life

About a month ago, I finished up a series about Michael Sandel’s book, What Money Can’t Buy. I really enjoyed reading through the chapters and chewing on the material. As you may recall, I also highly recommended watching Prof. Sandel’s course: Justice. A few day ago, I noticed that one of Sandel’s more recent TEDTalks was published online. After watching it, I thought I’d pass it along to you as a great way to get a quick understanding of some of the things that Sandel talks about in his book. The talk was filmed this past summer.

As I think about markets and morals, I can’t help but seem to agree with much of what Sandel is saying. I’m also aware that not everyone shares his opinion about markets and morality. Do you agree? Do you think that allowing markets to decide everything is crowding out morals? I’d be really interested to hear your opinions.

I do as best I can to take in opinions and information that is contrary to my opinions, but it can be difficult. Especially in the internet environment, it’s quite easy to get caught up in the echo chamber of your own thoughts and beliefs. That’s part of the reason that I try to write posts that provide a new perspective on issues.

On this matter in particular, I’d like to your opinions on Prof. Sandel’s idea of markets and morality. In fact, I’m hoping that some of you disagree with Prof. Sandel and you think that markets are truly the answer to everything. I’m hoping that you think that markets should operate in every part of our lives. I’m hoping that you think what Prof. Sandel is saying is wrong. Most of all, I’m hoping that you can offer a cogent response that’s at least half as well-sourced as Prof. Sandel’s book.

Twitter vs. Tweeter and the Efficient-Market Hypothesis

This past Friday, I didn’t spend much time in front of the computer, but when I happened to pop onto Twitter to see if there was any news, I noticed a couple of tweets that were rather alarming:

Some folks may look at that and laugh or think it’s funny. I don’t. I think it’s embarrassing. First, I’m hoping that “investors” doesn’t necessarily mean people who manage other people’s money. If that’s the case, I would be very sorry for those people who happened to have someone managing their money that didn’t know the different between Twitter and Tweeter. Yes, I realize they’re very close, but when you’re investing money, don’t you want to be sure you know what you’re doing? Second, how can this mistake even be happening? I could see maybe a few people making this mistake, but for the stock to be up 489%? I wonder if maybe much of that extra trading was people realizing that other people think that it’s the Twitter stock, so they start buying the stock.

That last point really doesn’t make sense, though, because Twitter’s IPO just went public.

Another disheartening thing to think about as a result of Tweeter is the efficient-market hypothesis. This is a fancy way of saying that the stock market (or financial markets) should have the most current information. Meaning, if someone hears good news about company X, they’ll begin to buy that stock (which will make the stock rise and more people will hear the news and the stock will rise some more). This process continues until, theoretically speaking, the stock has reached the price that people are no longer willing to continue buying the stock.

Well, if we think about what happened on Friday, it certainly blows the efficient-market hypothesis out of the water. So, I ask again — how could so many people get that wrong?

 

Markets Are Cyclical: Why the Internet Monopolies Don’t Matter (that much)

Survival of the biggestThere was a nice feature on Technology in this past week’s Economist. In fact, there were a number of articles I found intriguing (medical tricorders was a good one!), but I want to draw your attention to one in particular: Battle of the internet giants – Survival of the biggest. The case is made that these internet behemoths are getting too big and that their scope needs to be curbed. Okay, I understand that, but I think that the fear is a bit unfounded. Here’s why.

Remember back to when railroads were the only way to get around? Remember when all commerce and long-distance travel was done by locomotive? Now, I don’t know if this is a perfect comparison, but bear with me for a second. There were at least a few big players in the railroad game back in the 19th century (Union Pacific, Central Pacific, and Southern Pacific). I’m sure that there were people back then who were irked that there were monopolies in the railroad business and probably wanted there to be more regulation (like is being argued in the article about the internet).

However, with the turn of the 20th century, a new form of transportation was starting to emerge: the automobile. It didn’t happen overnight, but the automobile eventually became a much more preferred method of transportation.

There’s another example: television. Remember in the early days of TV, there were just a few channels? If you had a TV (and you watched it), you probably saw the same program that everyone else who had a TV was seeing. Again, I don’t know, but I imagine that some folks were pretty peeved by this monopoly. Although, slowly but surely, there came to be more and more choice of TV channels. In fact, it’s gotten to the point where we’re unlikely to ever see the most watched television program eclipsed because there’s so much choice.  Though, some would argue that there still are monopolies in television.

And now what’s starting to breach the monopolies of TV? The internet and online media. There was a slide deck that was passed around courtesy of Business Insider earlier last week that shows the future of digital. There were lots of graphs and lots of data. One of the graphs showed that the percentage of live TV watching has dropped 25% in just the last 4 years. Conversely, recorded TV watching is up over 50%! And a new category has emerged: streaming TV. Whereas there was no streaming TV watching in 2008, it now makes up 7% of primetime viewing in the US.

So, even with all of this choice in television, there is still room for newness and growth.

Tying this back into my argument about the internet behemoths: maybe we can’t see it now, but based on history, I would bet that there’s going to be something that comes along (eventually) and unseats these internet behemoths. Of course, that’s not a reason not to regulate them, but it is something to keep in mind when you see articles like the one in last week’s Economist.