[Closed] No triple Dip

WAHOOOOOO!

time to spend again, the only way out of this slump is to borrow loads and spend loads

(Cosmetic) relief for Osborne, no change for the rest of us. As before really....

It's the sort of thing that matters to people who like party politics IMO rather than really care about people's lives. If we'd never had a (technically accurate) recession but stuck at 0.1% growth for 5 years, the effect on people's lives would essentially be the same...

Maybe as most of the world is living on borrowed imaginary money could have something to do with. There is longer to go yet before we can have real growth, personally I'd suggest growth is the wrong thing. We should be reducing consumption and pulling away from the idea growing the economy is the way forward.

Utterly meaningless. We're looking at a decade of flatlining unless he changes course, Which he won't do on account of being a completely clueless numpty.

This is a man who's growth policy is to lend loads of taxpayers money, as deposits, to people who can't afford mortgages to re-inflate the housing [s]market[/s] bubble. Nobody use the word 'sub-prime' and we'll pretend its something different entirely

Oh and print billions more money to sit in bank vaults and not be lent to business. After all... thats worked really well the 6-7 times we've done it before, hasn't it?

I reckon the former members of JLS could probably cobble together a more credible economic policy. Shall we ask them?

[img] [/img]

I was expecting something entirely different when I read the title.....

[url= http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2013/sum-gdp-preliminary-estimate--q1-2013.html ]production & construction are in a worse state now than 2009[/url]

[url= http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_Kingdom ]list of uk recessions[/url]
one every 10 years, more or less, reckon we'll see another in a couple of years.
thing is, lots of people are doing very well out of recession, its not affecting everyone adversely, we're all in it together my ar$e!
stop their benefits!

Obviously we are all underwhelmed by this figure but take into account the truly awful weather since Xmas and the euro-zone's numerous woes... maybe this really is a "good" number

Sorry I'm a optimist.

I don't understand how we can expect to have perpetual growth? When I breathe in, as hard as I try, at some point I have to breathe out.

Well Ro5ey, no doubt better than the general level of expectations, which is a good thing, but beyond that not really much to shout about. We are still in a very low growth/flat growth environment and little sign of that changing soon.

[i]list of uk recessions
one every 10 years, more or less, reckon we'll see another in a couple of years[/i]

Interesting that they have split 2008/9 and 2011/12 into two seperate recessions. I must have been asleep during the good times of 2010.

there was some voice on the radio this morning saying something about 'bumping along the bottom'

i don't think (roughly) zero growth [i]is[/i] 'bumping along the bottom' - it's just zero growth, and what's wrong with that?

we're still a rich country, and the idea that we need growth to fix our problems is exactly the same kind of thinking that caused the whole mess in the first place.

it's just zero growth, and what's wrong with that?

I asked this on another thread. I think the issue is that we've planned our finances taking growth into accout. Like buying an expensive car on the assumption that you'll get that new highly paid job you've applied for.

and that's completely mental.

I don't understand how we can expect to have perpetual growth?

Through technological advancement which increases productivity per head. If you smooth out all the ripples, we've been had continual growth on a long term since the stone age from discovery of metals, agriculture, steam power, internal combustion engine, telecommunications etc etc.

and that's completely mental.

Well, I think all countries do it. It's a good way of investing to grow your economy, as long as you don't over-do it and get carried away. As politicians do.

However, doens't mean it's a bad idea in principle.

Growth was discussed on stefanomics FWIW on radio 4 this week
Economics for idiots basically so i am sure THM will recomend it to a number of us 😉

The defecit* is more worrying apparently his goal was to have it cut by 2015 and at current rates it will only take another 200 years to achieve this goal - Go george
Nothing he has ever done has made me think he is anything other than politically motivated and he would do this no matter what as it is not economically motivated but politically motivated and that is dangerous as it is clearly not working

* may have been structutal deficit i was not listening fully as it was danny alexander speaking and i drfited off

Nothing he has ever done has made me think he is anything other than politically motivated

Well he is a politician and Conservatives believe in enriching their friends whilst making the poor suffer for their sins, so he's behaving exactly as expected.....

>lots of people are doing very well out of recession, its not affecting everyone adversely, we're all in it together my ar$e!
stop their benefits!<

What - just stop all 'benefits?'

The politicians making the decisions are most certainly not all in it together.

"Nothing he has ever done has made me think he is anything other than politically motivated"

Of course.... just like everyother Chancellor...this is not a defending of Osbourne, just the way it is and has to be.

You make it sound as if politics are or should be separate from economics .... but how can politics and it's goal of governance actual be anything other than a form of economics ??

[img] [/img]

I reckon the former members of JLS could probably cobble together a more credible economic policy. Shall we ask them?

STOP IT!!!!!

[img] [/img]

hang on, borrowing so much money that you're relying on a pay-rise to meet the repayments is

molgrips - Member

...a good way of investing to grow your economy...

I'm a massive thicky, could you explain that again with short words please?

(you're quite good at explaining things, i need your help with this)

You make it sound as if politics are or should be separate from economics .... but how can politics and it's goal of governance actual be anything other than a form of economics ??

ok fair enough -

Would be nice to see graph of what he predicted in his first budget and what has happened though as it must be obvious to al lthe medicine is not working.

thing is, there is no solution from any political party.

so were not going to get any real change in economic activity for years.
but I dont think we're doing that bad, it could be worse and we would all like it to be better.
but for all the money we take in taxes the government (regardless of political party) just wastes it on war, missiles, failed computer systems and generally being shit at being in government.

I'm a massive thicky, could you explain that again with short words please?

Well, I am not an economist, but when times are good you need to borrow to invest well to take advantage of it, I think.

The way I see it is this: If you come out of recession you don't have much cash lying around, so you can't invest in much. If you waited for growth to give you lots of cash, that would take a while, and other countries might outstrip you in various areas. So you borrow lots of money to capitalise on favourable market conditions. You are pretty confident that your economy will grow well as a result of this, so you know the repayments will be really easy to make and it won't look too bad on your balance sheet as its percentage of GDP diminishes.

So the economy grows well, and you can repeat that cycle. You can keep on doing this until the global economy crashes. However no-one knows when that's going to be.

It may well be that the politicans of the world have accepted that the amount of money you can make in the good times outweighs the amount you'll lose in the bad times, and just keep on doing this cos it's easier than trying to predict recessions.

It'd be like playing poker, and accepting that you're going to lose some hands, but overall you'll win enough to make a profit.

The economy has been growing overall for many decades, so I guess it works in the long run. Of course, those of us poor sods at the bottom of the ladder would rather it be more consistent...

You make it sound as if politics are or should be separate from economics

An interesting idea....

Through technological advancement which increases productivity per head. If you smooth out all the ripples, we've been had continual growth on a long term since the stone age from discovery of metals, agriculture, steam power, internal combustion engine, telecommunications etc etc.

Molgrips hits the nail on the head (edit: in an earlier post) - people (and nations) borrow against future productivity, expecting pay rises and an ever increasing quality of life. IMO we've long since reached the point where this is unsustainable without some kind of correction, and the politicians understand this but it's not politically convenient to expose people to the cold hard truth and allow things to rebalance.

i reckon below 2% growth and the average joe's/josie's standard of living is most likely declining - the zero growth figure for a recession is probably just a figure from a grad students year end paper back in the 50's that got enshrined in economic laws

unwritten rule of economics "every economic cycle is different"

that's because we've actually created stuff of value

I still don't know why stuff of value has to be physical material..?

I still don't know why stuff of value has to be physical material..?

Politicians have many faults but I doubt very much that any of them are deliberately trying to run the country into the ground.
Their analysis of and/or solutions to our economic position may be flawed and coloured by their political beliefs but that is surely an error of judgement.Does George Osbourne or any other chancellor really want to down in history as the man who ruined the country or as the man who brought econmic prosperity?
To say that George Osbourne is just trying to help himslef and his mates out is also mistaken.Yes cutting the top rate of tax benefits them directly but many of the other decisions he has made don't. There are far more lucrative ways he could have done more for himself and his pals outside of politics with a lot less risk and hassle.
The issue is a more basic one I reckon.Arrogance and hubris,they think they know best.Some may even believe, as many Tories grandees have througout history, that they are the only ones who have the necessary skills to run the country be it through breeding or whatever.
Basic human flaws.

I still don't know why stuff of value has to be physical material..?

It doesn't, it just needs to be something that creates wealth of it's own accord and doesn't just skim off the top of others' productivity (a la some of the wizardry in financial services).

..... or artificially inflating house prices, so that a certain section of society - homeowners - can secure credit against it, then spaff all their equity on cars, and clothes, and holidays, then calling this economic growth. Like Gordon did for a decade

molgrips - Member

I still don't know why stuff of value has to be physical material..?

you're right, you can sell ideas, computer code, legal advice, etc. You can spend loads of money without needing a bag to carry your shopping home in.

But there's a limit surely? - you can't eat a cool T-shirt design, or live in a house made of java script.

i've got a plumber coming round next week, i will pay him cash to fix my leaky boiler. I won't pay him in humming for dancing a lovely jig.

(however, i have just bought 2 tickets online so i can go and listen to some people play cellos for an hour or so)

It doesn't, it just needs to be something that creates wealth of it's own accord and doesn't just skim off the top of others' productivity (a la some of the wizardry in financial services).

Hmm... but as long as someone is making physical things, surely it's valid to be making money on top of that?

I don't see the difference between say, making prestige cars out of someone else's steel, and making money trading someone else's corn.. (ok I might but this is for the sake of discussion)

And the people making money this way, with dodgy financial deals etc, will be in turn buying prestige cars and food and whatnot won't they? Thus ensuring a market for those things, which will in turn ensure someone has to continue making them...?

I don't see the difference between say, making prestige cars out of someone else's steel, and making money trading someone else's corn.. (ok I might but this is for the sake of discussion)

how about speculating on the price of the steel they're going to be using to make the car, using somebody else's money, the trousering half the profit as a bonus?

Or gambling on how much corn any given country will need for their population not to starve, then making a tidy sum on that too?

It was the governor of the Bank of England, not some rabid lefty, who said that the City of London provided no useful function to wider society. I prefer Will Huttons description of its activities "Just money talking to itself"

IMO we've long since reached the point where this is unsustainable without some kind of correction, and the politicians understand this but it's not politically convenient to expose people to the cold hard truth and allow things to rebalance.

I agree. Trouble is the seeds of the imbalance were sown 60 years ago. 'Rebalancing' now would in effect mean the impoverishment of everyone under 40 whilst allowing everyone currently retired or about to retire to sit back and enjoy their fat pensions, benefits and property based wealth. Any rebalancing would have to take this into account but I don't see any politicians queuing up to raid the pension pots and bank accounts of the over-60s.

ahwiles - Member

i don't think (roughly) zero growth is 'bumping along the bottom' - it's just zero growth, and what's wrong with that?

Reverting to zero growth when your economy's strong wouldn't be too bad. Reverting to zero growth immediately after a recession, with massive unemployment etc, is pretty bad. It's not so much the lack of growth as the position you're in when you stop.

Growth isn't a simple subject though. Obviously you can't presume to grow, but new ideas, new systems, new products all make it possible to do more with less so as long as technology isn't static it's reasonable to assume your economy won't be either. Ipod sales are way up on 20 years ago 😉

But growth at the expense of all else, or growth as the sole indicator of success, isn't a healthy mindset.

how about speculating on the price of the steel they're going to be using to make the car, using somebody else's money, the trousering half the profit as a bonus?

they really did this BTW

To a degree yes, and to a degree the financial services are necessary and provide a good service. The guy making the cars for example might need access to cash to help him fulfill a large order.

The problem for me comes when people start speculating, to use your example of making money trading someone elses corn, if speculation gets out of control then the price goes up so high that people can't afford the bread it's used to make. Ordinarily this would be fine as market forces would intervene (no bread sales) and the cost of bread (and thus corn) would drop until the market could support it. Problems come when you add in a good dose of 'support' from governments for example (via central banks buying corn bonds perhaps) and you have a situation where nobody can afford to buy any bread, but those dealing it are just fine because the government is buying it from them and throwing it away.

binners +1 - I try not to get onto this topic as it makes me angry, but house price inflation has made us un-competitive as a nation. If we** didn't spend a massive proportion of our income on putting a roof over our heads then it could be spent more productively into the wider economy.

Edit: ** by we I mean those of us who haven't been lucky enough to have ridden the house price inflation gravy train.

'Rebalancing' now would in effect mean the impoverishment of everyone under 40 whilst allowing everyone currently retired or about to retire to sit back and enjoy their fat pensions, benefits and property based wealth

Surely GDP has to be above inflation to be real growth?

speculation gets out of control then the price goes up so high that people can't afford the bread it's used to make. Ordinarily this would be fine

as market forces would intervene (no bread sales) and the cost of bread (and thus corn) would drop until the market could support it.

Problems come when you add in a good dose of 'support' from governments

In this case the govt intervene because people are starving they did not cause the price to rise the "perfect" market did this. Intervention is a response to the fact the market is imperfect it is not the cause of the imperfection - by imperfection i mean starvation

Despite this we still get told its perfect if we just left it alone

I don't care for economic growth, I care for quality of life growth..........

JY - if speculation on necessities such as food and shelter weren't allowed then we wouldn't require intervention of any kind.

Junkyard - lazarus
Growth was discussed on stefanomics FWIW on radio 4 this week
Economics for idiots basically so i am sure THM will recomend it to a number of us

JY - I would indeed but not for the reason that you hint at - that would be patronising!! 😉 I am a fan of Flanders. She explains difficult economic issues with clarity especially the challenges/paradoxes/inter-relationships that make it a murky science to others. I haven't seen what she has said about this data, but I have no doubt that it would be informative and well-researched.

Nothing he has ever done has made me think he is anything other than politically motivated and he would do this no matter what as it is not economically motivated but politically motivated

I think this should be added to the paradox box along with "tolerant except with the intolerant" (or words to that effect). Osborne is first and foremost a politician. What do politicians crave most? Power. You do not stay in power by delivering weak economic performance and you certainly (sadly) do not prioritise long term benefits over short term opportunism. Hence (despite all the noise) the pretty poor attempts at tackling either the deficit and by implication the debt levels in our highly indebted nation. What does he suggest instead (despite CMD's you cant borrow more to get you out of debt crisis), more bank lending, more borrowing for houses etc.....

He is implementing the same policies that parties of many different political persuasions are implementing (without success) across Europe. so very difficult to argue the ideology case despite its attraction to headline makers.

As for, "The City is evil....serves no economic purpose" ideas, this is obvious BS. As is having a Business Secretary who cant help himself from using the term casino banking. So where does government spending come from? Two sources - taxation and borrowing. Lets leave aside the obvious tax benefit and just focus on the later. Governments need to borrow massive (and increasing) amounts of money. For this they need deep, liquid and (price) transparent markets. This required price-setters to be able to hedge positions to create the liquidity that is required to raise money sustainably at low prices. Hedging in turn requires liquidity and other players. Of course, the extent to which people are merely speculating and providing vital liquidity/ability to hedge massive risk positions does become blurred. But take this all away and the consequences for much of what we expect governments to provide would be very severe - beware the law of unintended consequences.

Two people come out of the badly today IMO. The first is the IMF. They have promoted/rejected/promoted/rejected etc the same policies for the UK through the crisis. Their latest volte-face into rejection mode based on the idea that private demand is too weak looks particulalry ill-advised today since the only flicker of a bright light hidden away in these GDP numbers is the recovery in private demand. The second is Ed Balls (biased here as I only heard him on the radio and missed Osborne and Alexander). But his breathtaking BS continues, especially (1) the idea that he left the economy and government finances in good shape, (2) that his policies would be radically different and (3) ignoring that he was trained in a school of economics that teaches exactly the opposite treatment of government financed to the ones he supported while in power. In balance, Balls deserves credit for his insistence on using the correct term to describe the economy at present - flatlining!

It is obvious that the statistics were, ahem, 'massaged'. I knew what was going to happen from the moment I heard Radio 4 speculate that the statistics would be worse than expected. "Ah!" I thought, "the statistics are bound to be better than anyone dared hope for the week before local elections..." And I was right.

So in this land of milk and honey we'll have no economic problems at all, at least none worth mentioning...

That might be harsh Ohnohesback, given the ONS is an independent non-minister department with statutory responsibilities. They may make mistakes but quite an accusation, given the statutory bit, to suggest skulduggery here!

Thank goodness for Flanders. Anyone else who tries to blather on about this stuff bores the shit out of me.

Chapeau DD, better than normal and really quite inspired. Still not Messi but more Scholes than Hunter. Keep it up!

Chapeau DD, better than normal and really quite inspired. Still not Messi but more Scholes than Hunter. Keep it up!

As I asked the other day thm, WTF are you on about with these football metaphors? You need some fresh air again or something?

I will leave it with you, really not that difficult. (edit Scholes in a bit unfair for such a step up. Should have been Arjen Robben at least. Skilful if predictable these days)

I will leave it with you, really not that difficult.

Nah, you've lost me.

if speculation gets out of control then the price goes up so high that people can't afford the bread it's used to make. Ordinarily this would be fine as market forces would intervene (no bread sales) and the cost of bread (and thus corn) would drop until the market could support it.

This illustrates the wider point I think about ideology. Unfettered capitalism would result in starvation for these reasons. That's why people talk about various kinds of 'nice' capitalism, where important things are protected and people are free to make tons of cash elsewhere.

I don't care for economic growth, I care for quality of life growth

The two are SOMEWHAT linked, but of course not entirely.

dazh
"I agree. Trouble is the seeds of the imbalance were sown 60 years ago. 'Rebalancing' now would in effect mean the impoverishment of everyone under 40 whilst allowing everyone currently retired or about to retire to sit back and enjoy their fat pensions, benefits and property based wealth. Any rebalancing would have to take this into account but I don't see any politicians queuing up to raid the pension pots and bank accounts of the over-60s."

No one will be immune from the "rebalancing" anyone with any hard earned (some do you know)savings (pension (public, private,state) , isa, whatever) in any sort of financial institution of any type will be major losers. Most peoples savings will be wiped out, the government will not be able to afford most of its commitments. Anyone banking (ho ho) on using any equity in property will lose because prices will crash, massively. The whole of the financial system is a giant pack of cards waiting to fall. In the UK it's going to be pretty serious. We are running out of afforadable credit like we are running out of cheap fossil fuels. Its happening we all know and hardly anyone dare take notice. Watch what happens when Portugal or Italy default. Beer anyone, cheers.

I tend to agree 100% with binners on threads of this nature!

if speculation on necessities such as food and shelter weren't allowed then we wouldn't require intervention of any kind.

I am a fan of Flanders. She explains difficult economic issues with clarity especially the challenges/paradoxes/inter-relationships that make it a murky science to others

people are free to make tons of cash elsewhere.

Well the volume of say bike chains is so low compared to bread that the market is unlikely to be hijacked by speculators. As for most luxury goods. It's not like you'll die if you don't get one within a couple of days. So market forces will come in eventually and there will always be chains available at a sensible price... well.. mostly sensible anyway.. I remember Sedis chains at £6 each though...

Its a reference to Karl Marx/Engels Molly in the communist manifesto

Workers of the World, Unite. You have nothing to lose but your chains!

it was not as literal as you took it but i can see why my use of bike parts caused the confusion Sorry

How can a market be accused of being moral or immoral? Its a economic system and is amoral, surely? Its participants (buyers and sellers) my well be moral or immoral as is the case at the other end of the spectrum (planned economies).

Markets are extremely effective means of allocating scarce resource and to suggest otherwise is to ignore centuries of history. Many work without intervention and many/some fail because of intervention (as was the case in the current crisis - partially). But they have failings that are well recognised (normally 8 well known reasons that an A level student will need in an essay) which is why most mature economies combine free markets with government intervention.

The current mess in the financial services industry is an excellent case study in the problems of regulating to remedy market failures as much as a failure of the market itself IMO!

BTW - Flanders write up on the GDP data is v good as usual!!

How can a market be accused of being moral or immoral? Its a economic system and is amoral, surely?

Markets are extremely effective means of allocating scarce resource and to suggest otherwise is to ignore centuries of history

Worked well with slavery iirc
Suffice to say I dont agree - marketing is wasteful for example - some aspects of competition are wasteful as you know

Many work without intervention and many/some fail because of intervention (as was the case in the current crisis - partially). But they have failings

The current mess in the financial services industry is an excellent case study in the problems of regulating to remedy market failures as much as a failure of the market itself IMO!

Markets are extremely effective means of allocating scarce resource and to suggest otherwise is to ignore centuries of history.

Eh?

That depends very much on what you mean by 'effective'.

It would be more accurate to say that 'Markets are an extremely effective way of exploiting scarce resources if by effective we mean 'able to make large profits for relatively few people'...

While we're not 'ignoring centuries of history', lets not ignore the extent to which guns, warships and above all slavery seem to be being left out of the equation; free markets have proven immoral for many, many years.

JY, is is simply untrue to argue that the result will always be unfair. I agree that people are amoral, but lets assume that we have two moral people. One has something to sell and one has something to buy. How should that exchange happen? Should another body (a government) state whether it should be allowed and at what price or should the two be allowed to decide for themselves if there is a price at which one is happy to sell and the other is happy to buy? Which would be moral and which would be immoral?

I do not accept that it is a flawed system. Under certain circumtances markets can fail but those circumstances are not universal, certain or pre-determined. To repeat at the risk of labouring the point, this is exactly why we combine markets and state planning in most mature economies.

Crickey, you analysis ignores the fact that competitive markets prevent large profits being made through time. Imagine what would happen to the price of most goods and services without competitive markets?

Crickey, you analysis ignores the fact that competitive markets prevent large profits being made through time.

Again, Eh?

[b]Competitive markets prevent large profits being made through time[/b]

Have you really thought that through?

Yes, why do governments intervene to prevent markets becoming uncompetitive?

Such regulations may, no doubt, be considered as in some respects a violation of natural liberty. But these exertions of the natural liberty of a few individuals, which might endanger the security of the whole society are, and ought to be, restrained by the laws of all governments. The obligation of building party walls, in order to prevent the communication of fire, is a violation of natural liberty, exactly of the same kind with the regulations of the banking trade which are here proposed. ~ Adam Smith in The Wealth of Nations

Because when faced with doing the right thing or getting filthy rich, people often choose to get filthy rich.

That may be true but how does that link to our previous points? If anything that fact explains why governments actively promote competitive markets.

I think it shows why the market is flawed and the solution is not more market any more than more petrol is the solution to fire
Take microsoft - do they exploit their market position? Court cases would suggest Yes. Can someone really compete with them - really can they? Theoretically yes but in reality not reall. It is aslo worth noting that "more market" may mean us all having different programmes and different Operating systems which may not actually be advantageous - see trains having different sized tracks for example. I fail to see hwy anyone thinks the market gets ideal solutions tbh as we all accept it is so flawed it needs regulation

Should another body (a government) state whether it should be allowed and at what price or should the two be allowed to decide for themselves if there is a price at which one is happy to sell and the other is happy to buy?

FWIW I am not saying a market can bring no good either I am just syaing it is not universally good

JY, neither of your choices are examples of a market working so cannot comment*. Why would you overcharging my son be a perfect market? If you are correct that no markets can deliver ideal outcomes, then we should have a completely planned economy. And we have plenty of examples of how successful that model is. Just another reason why we continue to mix both systems where appropriate and generally encourage competition rather than discourage it. I am sure that every day you are involved in market transactions of some sort from which you are happy with the outcome.

* can you reconcile your point that Microsoft's dominant market position prevents a free market in software working with the idea that the thing that is being prevented from happening (a free market in software) is a bad one. The logic escapes me.

JY, neither of your choices are examples of a market working so cannot comment.

Eh? for the third time...

Give us an example or two of a 'market working' then.

the effectively take resources from the many and give to the few so we have the rich and the poor..they are indeed excellent at this

Name one instance in history where that hasn't happened in a modern economy. And don't quote communist Russia as an example.....

Take microsoft - do they exploit their market position? Court cases would suggest Yes. Can someone really compete with them - really can they?

Of course! They are far from market leaders in lots of things they do, and Apple managed to take a huge chunk out of the prestige desktop market.

And how did they get to a dominant position in the first place? There used to be a fair few operating systems for PC. In fact, there still are, but people don't want them. Market = working.

Limited resources is a different thing, and you mention water. As far as I can see - someone who knows economics (ie THM) please correct me - the market fails when there is a big disparity of wealth. People in the USA can buy corn with which to fill its luxury SUVs, when Mexicans can't afford to buy it to eat.

The market works, in that the corn goes to those with the most money, but it doesn't work in a humanitarian sense.

The logic escapes me

Name one instance in history where that hasn't happened in a modern economy.

the market fails when there is a big disparity of wealth

The market works, in that the corn goes to those with the most money, but it doesn't work in a humanitarian sense.

I shall let THM decide which one of knows least /is the most confused 😉

Well it depends what you mean by 'work' doens't it?

I think we are starting to mix markets at the macro and micro level here. On the one hand it doesn't matter since pure free markets (macro) or perfectly competitive markets (micro) do not exist in reality. They both represent theoretical situations at the end of a spectrum where reality lies in between this and the other extreme.

Microsoft is a good example. In a free market, is is possible that firms become increasingly dominant in their chosen industry. In MS's case these appears to be the result of being good at what it does and, if the courts are correct, behaving in an illegal manner. But the reasons do not matter for now. But at the industry level, a firm like MS "can" get so powerful that it becomes a monopoly. This "can" (but not necessarily) lead to higher prices and lower output. What economists refer to as a loss of welfare. This happens exactly because competition is restricted ie the market forces cease to work. Now look at the hardware side, at the industry level the market is more competitive and we see the benefits in more choice, more and better output and lower prices ie higher welfare. Just think of the computer that you are reading this on!

Defending systems that work against welfare and whether this is moral or immoral is another debate altogether!

Anyway back to 24 box set and a glass of wine!

Which comes back to crikey's earlier question - no I cannot think of a free market at either the macro or industry level. Can you?

THM, I am amazed that you have the patience to continually teach STW elementary economics, but I really appreciate that you do 🙂

This "can" (but not necessarily) lead to higher prices and lower output.* What economists refer to as a loss of welfare. This happens exactly because competition is restricted ie the market forces cease to work

* I cannot name a free market nor can I name a company that does not exploit a monopoly.

People in the USA can buy corn with which to fill its luxury SUVs, when Mexicans can't afford to buy it to eat.

This is a classic case of where government intervention causes the problem, there were significant tax breaks for converting crops into fuel in the US. This meant such conversion companies were willing to pay more for the crop as they were still profitable because of the subsidy, which led to greater demand for a finite supply.

Yes.. but then the lack of regulation.. NAFTA maybe, I'm a little hazy and cba to google.. allowed people to buy up the corn and raise the price across the continent

The price rose because of increased demand, why was there increased demand? Because of the subsidy. The market reacted to the subsidy, a free market would have been one without a subsidy.