It Is A Good Day To Die

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Finally got the email from somebody “defending” the free market system I’ve been looking for.

The consumer *MARKET*, not Nividia, killed the S3, 3dfx, etc. competition by
buying the hell out of TNT and GeForce cards. And now the market has to live
with higher pricing from a dominant player in the graphics market. Nvidia is
going to make a lot of money. And, as with Intel, Nvidia will eventually
rest on its laurels. And in a little while another competitor will play the
AMD role, step up, and do it better and cheaper. Then they’ll become
dominant, and the cycle will continute.

This is called capitalism, and it works.

Obviously not too well at times. Especially in the case of Intel. Took a long, long time for any real competition to emerge. During that time, Intel made billions and billions of dollars more than it would have if there had been some real competition. Very good for Intel shareholders, not so good for the US or world economy. Just how well did free markets work there during the 1980’s and 1990’s? The market didn’t work too well for all that time, did it?

The point is not to suggest that capitalism is bad, or that alternatives would generally be better, but rather to suggest it is not perfect, and sometimes can be the lesser evil, not always a tremendous good.

If you don’t like it, buy ATI, and
live with the inferior performance and buggy drivers.

Or maybe move to Cuba and feel good about the fixed prices.

No, sir. Show me where I suggested price fixing or even buying from ATI.

Rather, I took the free-market approach by suggesting that people not buy the product until it became more reasonably priced, and explained why within a reasonable period of time, they should be able to get most of the same performance for a fraction of the cost. I appealed to market forces, which work two ways, you know. Do you have a problem with that? If you do, then you are not as committed to free markets as I.

NVidia does not have the right to make as much money as they like. They have the right to try to make as much money as they can in the marketplace. There’s a big difference between the two.

_____________________________

The problem I have with most of the letters I’ve gotten from what I’m calling “the Free Marketeers” is that they think capitalism is perfect. It isn’t.

Adam Smith (and I had to read ALL of “The Wealth of Nations” in college) never suggested that capitalism or capitalists were perfect or wonderful. Quite the opposite. He presumed they were generally rotten and greedy (buyers as well as sellers).

The idea behind a free market was that if you took all these rotten, greedy buyers and sellers, and let them fight it out, on the whole, over time, you’d ironically end up with a better result than if some political power tried to dictate a “fair price.”

Better than the alternatives. I perfectly agree with that. Not perfect. I’ll never agree to that so long as human beings are involved.

While one can certainly criticize certain particular results of capitalism at any one moment, one had better be very, very careful that the “cure” to a particular problem is not worse than the “disease.”

For instance, during the nineteenth century, at least in America, many food products were watered down or otherwise adulterated to increase the sellers’ profits. This caused a lot of illness and death, especially among poor urban children. I don’t think anybody would argue that the establishment of minimal standards and regulation of the food industry has been a terrible thing.

On the other hand, going back to Intel, I don’t believe the government setting prices on Intel processors would have been a good idea at all. I would think that even a worse idea in the case of NVidia.

However, a market is not just products or prices, it is also information.

If Intel makes a product range of CPUs of the same quality, pretty much arbitrarily rates them at various speeds, and adopts a lopsided pricing scheme, it is fully within the spirit of the marketplace to make it known (with all necessary caveats) that they can be overclocked.

Intel obviously doesn’t like that, but beware of those who claim to love the free market until it applies to them. Market forces work both ways, both for buyer and seller. When somebody only wants them to work when it benefits them, that person is not a real believer in free markets. When they want relevant information withheld, they are no friends of free markets.

AMD doesn’t like overclocking, either, but what did they do about it? They flattened the price structure and took out most of the economic (though not hobbyist) motive for overclocking. They’re using market forces, and do you know what? It’s working.

This person obviously didn’t like what I had to say, but if he truly believed in free markets, he should have congratulated me for how I went about it.

I did not say, “we should have fixed prices.” I did not say, “this video card should only cost $100.” I did not even say, “Buy from another company, no matter what.”

Instead, I said, “Don’t buy at this outrageous price,” then provided some information suggesting that much better values were bound to become available down the road from this company. That is a direct and pure appeal to market forces (i.e., you), but our “free marketeer” didn’t like that.

A free market is an eternal tug-of-war between buyers and sellers, except that nobody wins if somebody completely “wins.” Beware of anybody who claims that only one side has the right to do the tugging.

Email Ed


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