Reply To: Boron availability

[Rezwan]

Aeronaut, “multipliers” looks like an interesting read.

Breakable wrote: I think the government thinks it is easier to transfer wealth in large quantities, so instead of millions of transactions a few thousand each (supporting the entrepreneurs) it likes to do a few transactions in thousands of millions (support the banks) and the banks that receive this low interest government guaranteed loans just re-loan it at much-higher rates to stupid projects that they don’t care about pocketing the difference. So it is a very lucrative middle man position. I think in this age of technology we should have the means to eliminate it, but the question is how hard it is. My computer should explode any second now….

This is the “transaction cost” problem. Per Webster and Lai (“Property Rights, Planning and Markets”):

Order emerges in cities as individuals seek to avoid the costs of private transaction, or more generally, the costs of voluntarily co-operating over production and consumption activities (transaction costs). Transaction costs explain the patterns that arise in market-driven cities. In particular, they explain organizational order; institutional order; proprietary (ownership) order,; spatial order; and public domain order.

Also

Institutions emerge to reduce transaction costs and more generally, the costs of voluntary co-operation. Markets are institutions that reduce the costs of organizing a multitude of individual transactions. Government edicts, policy and regulations are institutions that reduce the costs of collective transactions.

And then;

Resource values, transaction cost, exclusion costs, institutions, property rights and public domain-private domain boundaries constantly shift within cities. They are all interrelated and spontaneously co-evolve. They do so with local interactions (for example, a plot of land changes use because a neighboring plot has changed use); and global interactinos (for example, government or an entire industry adapts its behavior and rules). Interactions happen in space and in time, thus making cities complex systems in which the outcome of any planned action is largely unpredictable.

Actually, I will pursue this theme in a new post on Gov 2.0.