Almost Every Market Transaction Is a Swindle
It’s opposite day, you know.
For any good or service, there is some socially just price — some price at which the buyer isn’t getting cheated, and the seller isn’t either.
The market almost never finds this price.
Why not? It’s very simple. One side always knows more about the good than the other. The side that knows more uses this information to cheat the side that knows less. Usually the seller knows more, because it’s his vocation (and often, his avocation) to make, sell, and deceive people using this particular good. Buyers have no hope of getting the better of someone like that.
Only rarely does the market hit the socially just price, and when it does so, this happens only by chance.
Even when goods are sold to a buyer who has full knowledge as to their material nature, this hardly exhausts the knowledge needed to reach the socially just price. That ton of iron may just be a ton of iron, no more and no less. But to get the just price for it, you’d have to know more about the iron market — and again, the sellers have the obvious advantage. Buyers of iron have to know about lots of other markets, too, and their attention is necessarily divided. Sellers just need to know iron, and when they do, they will cheat you.
We have several solutions to this problem, but none of them are adequate.
The first, of course, are laws against fraud. These suffer from being too narrow, because all commerce is an attempt at fraud, and because everyone knows it. If we really wanted to punish attempted fraud, we would outlaw markets, but powerful commercial interests prevent this.
The second is to buy locally, because a person selling to you in a local market is more likely to feel guilt over cheating you. Mistrust anything imported; mistrust anything from a large corporation; mistrust anything whose inner workings you would not be able to duplicate. These goods are all swindles, and none of them are worth buying.
The last solution — and by far the best — is to make everything yourself. Avoid markets entirely. That way you’ll never get cheated. Ever!
If only we weren’t so gullible, I’m sure we’d give that last one a try.