Someone asked me the other day about the structural flaws of capitalism, and this was the first one that came to mind, although there are quite a few more. This is inside information, but not only at the level of big finance, where knowing ten minutes before others what stock is going to go up or down can mean getting rich for three generations, and looking at others with kind condescension, because you deserved it and they didn’t make an effort.
But here we go: capitalism is based on the idea of perfect information. Everyone knows the prices of products, their characteristics, and acts accordingly, trying to maximize their utility, or in other words, to obtain the maximum possible return on their money. Until then, everything is clear, it seems to me.
What actually happens is that economic or political capacity is used to bias this information, so that the customer cannot discern the true qualities of the product, nor really know the price he is paying for it. That’s what market agents are for, and especially marketing.
The classic example is the second-hand car. The seller knows the actual kilometers it has, the breakdowns the car has suffered and its general condition. The buyer, on the other hand, only sees the appearance of it. Under these conditions, any price asked by the seller will be above its real value, and on top of that the buyer runs the risk of buying FAR above the market value of the product, if he knew all its real characteristics.
Imagine that in a second-hand car dealership there are cars for three thousand, five thousand and nine thousand euros. Among the three thousand cars there may be some that are worth three thousand and some that do not even come close to that figure; Among the five-thousand cars, there may also be some three-thousand cars that were put in the top group “just in case,” and in the nine-thousand group, there may be cars from the previous groups, in addition to the best quality ones.
This strategy is quite common in some sectors, so that low-quality products at a very high price are mixed with the most expensive and best-reputed ones. The result is that the best ones sell at a high price and give a normal profit, and the worst ones sell at a high price and give a huge profit.
The same thing happens with high-priced products. Among the expensive options it is perfectly possible to place an absolute dud, to maximize profit, trusting that there is always some fool who believes that there is an unbreakable relationship between quality and price.
There are several ways to ration information, or cut it, and depending on the system used it affects the efficiency of the markets more or less. Examples? Information intoxication, concealment, and cultural destruction of the masses. The most efficient is the last one, since the ignorant person who believes he has the right to express his opinion feeds ignorance, imposing it on others through democracy. For anyone interested in the topic, I recommend The Rebelion of the massby Ortega y Gasset.
That is why Ortega said: “The current system can afford a better educational system, but a better educational system would be detrimental to the current system.”
Do I need to say more?
Now we apply all this to the electoral market and we already have a laugh.
2024-02-13 20:10:41
#insider #hole