Consumer and producer rationality and the real world.

[Imperialism Inc.]

This post is going to be a bit disorganized but, I thought that this is as good a place as any to write down some ideas that came up in a discussion I had with a friend of mine. The ideas were about the differences in levels of rationality in producers and consumers. Making rational choices is a necessary prerequisite for people to be able to maximize the utility or gratification of their purchasing choices and for producers to maximize their profit. However, we will notice that end consumers and producers are very different entities. Consumers tend to be individuals and producers large corporations. How does this effect levels of rationality?

Consumers tend to be individuals. They are biological entities whose rationality is bounded by their biological blueprint (their brains). Their rationality is also constrained by time. This is actually true of both producers and consumers. In order to make rational choices one has to process data. That takes time. The larger the set of personal preferences a consumer is trying to satisfy the more time it will take.

Producers (in the real world) tend to be medium to large corporations. They are artificial legal constructions. Since they are not biological they can be constructed in any way deemed appropriate to the task. They also have many more resources than a human. These two facts combined means that a producer has the ability to greatly exceed the rationality of a consumer. Entire divisions can be created to deal with the task of figuring out what are the rational choices to make. High tech equipment such as computers can be dedicated to the task. Large sums of money can be dedicated to undermining the rationality of consumers (this is known as advertising).

A stray piece of information is that producers can and do conceal information from consumers. So if one of the consumer's preferences is for producers to behave in certain ways (not use poverty level wages in 3rd world countries or not harm the environment), it can be difficult to impossible for consumers to even get the required data to make their decisions or, if they can, it may take a lot of time to do so.

The conclusion is that markets in the real world are heavily biased toward producers. Also, that trying to satisfy anything beyond a small set of preferences places an undue burden on the consumer (if he can even satisfy those preferences at all). It would seem that markets are indeed a poor choice for satisfying moral and values based preferences. This may all seem obvious but let's not forget that right wingers of all stripes often argue that markets are the place to satisfy moral preferences. "If you want to save the environment then vote with your dollar," we are told. The response is "one man one vote" is the ideal and not "one dollar one vote". This is argument shows another reason "one dollar one vote" does not work.

[Cleita]

1. Yes, the dollar vote doesn't work.

Look at our compromised MSM. Turning off the TV and radio and refusing to buy the newspaper anymore hasn't changed the RW complicit and tabloid contents that they are spewing today.