[OPE] Ironies of competition

From: Jurriaan Bendien <adsl675281@tiscali.nl>
Date: Wed Dec 03 2008 - 15:39:56 EST

Sore eyes today, had to fork out for some specs, but I was able to read Nouriel Roubini aka Dr Doom who summarizes the downside of deflation in one sentence:

"Deflation is dangerous as it leads to a liquidity trap, a deflation trap and a debt deflation trap: nominal policy rates cannot fall below zero and thus monetary policy [in the sense of manipulating interest rates] becomes ineffective." ("How to avoid the horrors of 'stag-deflation'", FT December 2 2008). http://www.ft.com/cms/s/0/0fe65a48-c0a9-11dd-b0a8-000077b07658.html?nclick_check=1

What's left is what they call "fiscal expansion" but that really goes against neoliberal theory, because the theory said, that the state was supposed to get out and stay out of the economy, it only caused harm in markets which, if left alone, would be self-equilibrating. Well, where's the equilibrium state then? All of a sudden the theorists fell silent. Not a word anymore about the wonders of competition.

For three decades, the refrain from economists was that inflation needed to be contained, by unleashing price competition in deregulated markets, competition was viewed as the lifeblood of the economy, everybody was supposed to have free reign to compete and this would stimulate growth. Indeed Michael Porter declared "Competition has intensified dramatically over the last decades, in virtually all parts of the world" ("On Competition", 1996, p. 1).

Then as the economic news soured, there was a whole discussion about whether interest rates should be higher or lower, and whether inflationary pressures would blow over from Asia and OPEC. But now that intense price competition starts to break out for dwindling demand in a deflating economy, competition is no longer such a popular theme. Price competition was previously theorized as advantageous, because it benefits the consumer, but now it puts workers and capitalists out of business. Then you don't have a market at all, and then economists have nothing to do, because they need a market in order to be able to theorize about the market, and what the market is going to do.

That is just to say that if you are in a favourable market position, the economic theory will say that competition and free trade is beneficial, but if you are in an unfavourable position, competition is harmful and you need protection from it. Which really reduces the theory of competition to a massive tautology, surely. Presumably the only theory of competition that's any good, is one which can consistently explain it both for the good times and the bad times.


Johnnys in the basement
Mixing up the medicine
Im on the pavement
Thinking about the government
The man in the trench coat
Badge out, laid off
Says hes got a bad cough
Wants to get it paid off
Look out kid
Its somethin you did
God knows when
But youre doin it again
You better duck down the alley way
Lookin for a new friend
The man in the coon-skin cap
In the big pen
Wants eleven dollar bills
You only got ten

Maggie comes fleet foot
Face full of black soot
Talkin that the heat put
Plants in the bed but
The phones tapped anyway
Maggie says that many say
They must bust in early may
Orders from the D.A.
Look out kid
Dont matter what you did
Walk on your tip toes
Dont try no doz
Better stay away from those
That carry around a fire hose
Keep a clean nose
Watch the plain clothes
You dont need a weatherman
To know which way the wind blows

Get sick, get well
Hang around a ink well
Ring bell, hard to tell
If anything is goin to sell
Try hard, get barred
Get back, write braille
Get jailed, jump bail
Join the army, if you fail
Look out kid
Youre gonna get hit
But losers, cheaters
Six-time users
Hang around the theaters
Girl by the whirlpool
Lookin for a new fool
Dont follow leaders
Watch the parking meters!

Ah get born, keep warm
Short pants, romance, learn to dance
Get dressed, get blessed
Try to be a success
Please her, please him, buy gifts
Dont steal, dont lift
Twenty years of schoolin
And they put you on the day shift
Look out kid
They keep it all hid
Better jump down a manhole
Light yourself a candle
Dont wear sandals
Try to avoid the scandals
Dont wanna be a bum
You better chew gum
The pump dont work
cause the vandals took the handles

- Dylan, "Subterranean homesick blues"

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Received on Wed Dec 3 15:41:57 2008

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