[FRIAM] for the marketeers amongst us

[uǝlƃ ↙↙↙]

OK. But a contract-governed market isn't any more "free" than a regulated market, neither of which are maximally efficient. And in the context where all the negotiating power lies with one side or the other, those contracts may end up even *more* restrictive than government regulations. (E.g. if all the multinational corporations get together and put the same boilerplate in their contracts, like routing all breach claims through arbitrage by an AI in St Petersburg.) But even if it's not, i.e. somehow where we regulate the market so that only symmetric contracts stand, if any 1 party entangles, via contract, with multiple other parties without normalizing all their contracts, the mesh of contracts will eventually "gum up". (Anyone who's signed more than 1 non-compete NDA will know what that looks like.) Another (non-free) restriction could be to sunset all contracts at, say, 1 year. So, every entrepreneur has to go back through their mesh of NDAs and re-negotiate/re-sign them every year. But 1 year contracts won't work for everything. So, there'd necessarily be a gumming up around how long the mesh of contracts lasted.

All of this works directly against the "freedom" (including transparency and efficiency) of the market. So, contract markets are not free markets at all. Counterintuitively, a well-regulated market can be freer, more efficient, than a contract market. But if the regulators could *reduce* all the complexities of any contract into merit/outcome (instead of price), then that reductive measure could be multimodal (which price can't ... which leads to financial instruments). It might also be multidimensional. Outcome could be a vector of both some variable like [non]responder and time.

There'd have to be rules about concreteness of outcome-compliance, of course. E.g. if side effects from toxic false teeth you bought on the street corner kill you from sepsis, you couldn't claim the outcome was met just because you no longer need false teeth (because you're dead). But if the outcome were <no longer need false teeth, still alive after 2 years>, then the teeth vendor could get paid.

In effect, this is what we have already, except "outcome" is diffused through the multifarious jurisdictions and power dynamics of who can, and the RoI of, hiring a team of lawyers. If the modes and reduction to outcome were more algorithmic, it might make the markets more efficient than they can be with asymmetric contracts or deep-canon centralized regulation.


On 4/26/21 1:37 PM, Pieter Steenekamp wrote:
> No, a free market system is not limited to outcome based contracts. Free market is allowing two (or more) parties to have a valid contract on the terms and conditions both (or all) parties agree on. A patient and an oncologist may agree on a contract where the patient pays for the effort and not the outcome, that could still be 100% within the free market system. This is of course provided the authorities don't have regulations stipulating the legal bounds of the contract.
> For example, in Cape Town there are many poor people without front teeth. A while ago an enterprising man, without any medical qualifications, set up shop on a pavement to do false teeth at an order of magnitude lower price than a qualified dentist. He was shut down very quickly. In a free market system he would have been allowed to provide dentures resulting in happy poor people with front teeth who cannot afford a traditional dentist and an enterprising man making good money. With the regulations that protect people we now have an unemployed poor enterprising man and many people who are still without front teeth.  
> 
> On Mon, 26 Apr 2021 at 19:49, uǝlƃ ↙↙↙ <gepropella at gmail.com <mailto:gepropella at gmail.com>> wrote:
> 
>     Should everyone be paid based on merit/outcome? E.g. I go to the oncologist because cytometry tests show I have stage 4 lymphoma. We go through a years long treatment, at the end of which I may be a responder or a non-responder. A free marketeer *should* argue that the oncologist shouldn't be paid until an assessment of response can be made. Nonresponders shouldn't have to pay (or get a refund like you would buying, say, a blender off the internet). Responders have to foot the bill for the whole enterprise.
> 
>     Obviously, there are plenty of other options, all of which are negotiated asymmetrically between the chronically fatigued cancer patient and the battery of multinational corporate lawyers driving Teslas. But the gist of the market is merit/outcome based. Right?


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