Many government policies could be seen as "social engineering", be they farm subsidies, tariffs on imports, spending on things like highways, subsidized communication networks like the postal system, education for people other than those born wealthy, meals for poor kids so that they have something in their stomachs at school and can actually try and think, and so on.
And, yes, some of them get 'routed around'. Other policies, whether you agree with them or not, affect the market more than the other way around. For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways. Other social engineering experiments, such as universal education up to a certain age in most western countries, seem to have been a net positive for society, even if they are imperfect.
Also, I think that some "social engineering", such as keeping people from starving to death, and ensuring they don't freeze to death for want of a warm place to sleep, at a minimum, should not be routed around.
Import tariffs and subsidies are direct market manipulation, and the market doesn't really route around them. Rather, they tend to wreck markets, which is one reason many developing countries continue to press the US and Europe to end farm subsidies - it's wrecking their export markets and hurting their farmers.
Governments, when they want to, are perfectly capable of interfering with markets and even destroying them. I am not a libertarian and do not believe that all intervention is harmful, but disagree with your thesis that markets are able to route around governments. Yes, in some cases, but I think that governments have the upper hand: they have guns and police and stuff, like the libertarians love to say.
I think the "law of unintended consequences" is perhaps more solid ground with regards to governments and market manipulation.
Tarrifs are actually a particularly good example of markets routing around government interference. Routing around tariffs is called smuggling, and has been a huge business as long as there have been governments.
I wasn't claiming, incidentally, that markets were totally immune to government interference-- just as networks are not immune to damage. Just that markets will always find whatever room you give them.
I'd bet that smuggling is a tiny trickle compared to what the market could provide with many commodities (wheat, cotton, corn, stuff like that, not diamonds and rhino horns), meaning that the market is not effectively routing around it at all.
In Colombia, 4.5 kg of coca paste, which will yield about one kilo of cocaine, fetches about $4,500. On the streets of the United States, selling this kilogram of cocaine will earn between $200,000 and $600,000. (http://www.colombiajournal.org/colombia150.htm)
Claritin 10 mg
Consumer Price (100 tablets): $215.17
Cost of general active ingredients: $0.71
(http://www.rense.com/general54/preco.htm)
normalized to 1 kilo ... cost $71,000, value $21517000.00
Your math is off by a few orders of magniture. 100x10mg = 1g, so 1 kg should be 1000x$215.17 = $215,170.00, for an ingredient cost of 1000x$.71 = $710.
Also, I can buy 100 x 10mg Clarityn for $65, but I won't, because I can get 100 x 10mg Mildin (exact same active ingredient) for $35.
Edit: Oops, forgot to add a point.
Your point holds true, your calculations are just for 100 kg instead. Thing is, medicine isn't invented, manufactured sold or bought in a free market. Another difference between Clarityn and coke is that there is a very elaborate framework in place to make sure your pills are good - if your dealer dilutes your coke with flour or ratpoison, you're screwed and nobody cares. If there was no demand/requirement for that protection, I'm sure we could get our pills for around $1.
Ticket scalping also involves equally fun acts & regulations. Luckily the laws are changing (for the better) which is one reason why it was a good idea to invest in us :-D.
Ticketing has been a weird market. There is a strong expectation among consumers that there is a 'fixed price' (face value) and that anything else is 'unfair'. Demand is constrained completely by a venue's capacity leading to all the obvious problems for over-subscribed events.
We deal with this every day. An interesting trend is that we've seen more people buying from ticketmaster (since events are selling out & season ticket sales are down) even when tickets on the secondary market are cheaper and "below face".
It's ridiculous how obsessed people are with face value even when it's arbitrary and doesn't really mean anything; it gives them a sense of fairness.
Also, venues have incentive to sell out as higher margins are associated with concessions, alcohol sales and merchandise. Teams might tell the newspapers they hate the secondary market, but in reality, the majority of them love it. Some even cater to it.
That is incredible. I knew the feeling was strong but to actually influence buyers to pay face value over a discount wasn't what I expected. I guess I was more cynical but the instinct is very strong. It is probably a remnant from when there was no other reasonable option. Why ticket reselling became so vilified I always put down to fan enthusiasm (and therefore irrationality).
This is an important point that the author of the article seems to have not noticed. His whole argument is based on the idea that rent control leads to a decrease in supply, with a resulting hike in price due to unmet demand. But I wonder just how many apartments can really be built in Manhattan? Or in intra-muros Paris, or in the City in London...
Manhattan could have 3x the number of apartments by increasing average building size, granted transportation would become an even larger problem. However, when you increase the cost to live somewhere you decrease the number of people who want to live there so it's probably not a problem.
IMO rent control is best when it limits how much above inflation you can increase rent per year. At 3.5% over inflation you can basically double the real cost over 20 years, but people can plain ahead and know they will not be forced out next year. The major problems seem to occur when rent suddenly goes up 20 percent with little notice or fall significantly below market.
PS: London and Paris are less developed than Manhattan, but they seem to want to maintain their historic look which limits growth. DC has started building down because they can't increase building height which is extremely expensive.
But rent control is probably not the whole story. I'm not familiar with NYC laws but I'm sure there's a lot of regulatory red tape besides rent control that keeps housing scarce and expensive.
Tarifs are indeed an excellent example. Another great example is how too much red tape forces businesses underground in the developing world.
The economist Hernando De Soto http://ild.org.pe/en/home has done studies in many different countries proving this and theorizes that this is one of the main reasons poor countries stay poor.
> For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways.
Disastrous for whom? Compared to what? Cubans have a high literacy rate, high life expectancy, low numbers of extreme poor, etc. Indeed, the country has done much better than similar Caribbean/Latin American states which followed different political paths over the past few decades. The government's actions shouldn't be whitewashed, but nor should Cuba's accomplishments be dismissed with vague platitudes about the glories of the market.
Low numbers of extreme poor? You have followed a bit too much propaganda and not enough reality it seems.
The only country that is worse off in the entire region is Haiti. Probably more than 90% of the population is in extreme poverty. Worse than this Cubans was actually better off than most Europeans before Castro. They may have more doctors per capita now a days, but there is no food and no medicine.
> The only country that is worse off in the entire region is Haiti. Probably more than 90% of the population is in extreme poverty.
This is completely false. Haiti is indeed much much worse off than the rest of the region, but Cubans have higher purchasing-power parity than Jamaicans, Guatemalans, Nicaraguans, Hondurans, Salvadorans, and perhaps a few others, and the country is generally much more equal most Latin American countries, so the bottom couple of quintiles in Cuba do better than their counterparts in Costa Rica, Panama, etc. (or I believe than poor Mexicans, for that matter)
It's still overall a poor country, and has many social, economic, and political problems—attributable to many factors, including ineffective leadership, widespread corruption, the US trade embargo, etc.—but the claim that all of Cuba's problems are the fault of the turn away from markets is so oversimplified as to just be wrong.
> Cubans was actually better off than most Europeans before Castro
This is bullshit. In the 50s, Cubans did a bit better than Southern and Eastern Europeans, but were significantly behind Western Europe.
Most Cubans were were not very well off in the first half of the century, and incomes (and equality particularly) rose substantially between 1960 and 1989. Then after the fall of the Soviet Union, there was a precipitous economic decline in Cuba between 1989 and about 1993 or 1994, which took 12 years to fully recover from. Present-day Cubans have higher real incomes than they ever did in the past, however.
Listen, I don't really want to have a protracted he-said-she-said about the state of the Cuban economy or the precise definition of "extreme" poverty. My point was merely that davidw's off-hand remarks about the topic were trivializing and unproductive.
Cubans do not have higher purchasing power parity that Jamaicans, Guatamalans and all the others you mentioned. This might be true if there was anything to purchase but there isn't. If I start paying myself with wads of Monopoly money I will also have higher income than I have ever had before, it is still monopoly money that doesn't work outside board game.
No one is starving in Jamaica and most other countries in the region. (While I have not had the pleasure of living in Cuba, I have lived in Jamaica and Panama and travelled extensively in the region. Both have very high levels of education, health etc.)
Cuba was according to 1960 ILO (The International Labour Organization) number 8 world wide for industrial salaries and number 7 for agricultural salaries. While there was not full literacy it had very high rates for the region. Health was also amongst the best in Latin America. For more about this see http://www.fiu.edu/~fcf/cubaprecastro21698.html
Castro has done a great job of selling his miracle revolution. Most of what you hear in hollywood movies and popular press is fabrication and never questioned. Don't believe it.
And, yes, some of them get 'routed around'. Other policies, whether you agree with them or not, affect the market more than the other way around. For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways. Other social engineering experiments, such as universal education up to a certain age in most western countries, seem to have been a net positive for society, even if they are imperfect.
Also, I think that some "social engineering", such as keeping people from starving to death, and ensuring they don't freeze to death for want of a warm place to sleep, at a minimum, should not be routed around.