Tuesday, May 6, 2008

Sports and musical chairs: Competition vs. Cooperation

One of the big issues I see with wide-eyed college students who have *GASP* actually paid attention in Econ 130 (basic micro and basic macro) is the same issue a lot of people see: they tend to become overly confident in market forces. It's the trend of new students becoming heartless libertarians after they learn about supply and demand!

Heck, anyone who spent time in my Management 350 class knows exactly what I am talking. Almost every single day, an arrogant, confident libertarian would argue with our socialist professor about topics that had nothing to do with the class (it was a class about law and business...they talked about everything under the sun).

The biggest problem is a problem with tools. These students get their basic tools (supply and demand graphs) and they try to apply it to everything. A kid that runs away hammering away on stuff with his new rubber mallet, basically. It's pretty funny, but it doesn't make for good solutions.

That's why most Macroeconomists are Democrats (not me, though)

The biggest problem is the obsession with competition. What's the solution to any market? More competition. What's the problem with any malfunctioning market? Too little competition (probably because of the government. They forget things like fixed costs)

But, the entire economy doesn't revolve around competition and market forces. Who here among us really thinks that markets are the best way to distribute babies? And if you show up to your place of employment, do you think that marketing is going to bid with procurement to use you for that particular day?
Heck no. Both examples are examples of command economies. Every business is an example of a command economy: it's why a lot of socialists think regulation can work, since almost half of the largest 100 economic entities on this planet are corporations.

An example about cooperation vs. competition: Sports. Any sports team where the players are not working together is bound to fail. The best teams are teams where players sacrifice and compliment each other's talents.

And what do people enjoy more? Consider a scenario: we have two groups of people playing two separate games. The first game is musical chairs. There is one less chair than there are people, and the people circle the chairs until music stops playing. The players then try to sit on a chair. The one who doesn't sit on a chair is eliminated.

The other game is a "stack game." All the players try to build a pyramid so that everyone is standing on the chair. Which game do you think people will have more fun with?

This scenario occurred in my high school communications class, and we enjoyed the stacking game a lot more than musical chairs.

On the other hand, it's false to make the assumption that, since cooperation makes people happier and improves productivity, we should all just say "screw the market" and roll out the welcome mat for the commies. Markets support cooperation, too. They support "intelligent" cooperation, namely that we will cooperate as long as you pay me enough.

It's a brilliant combination the market is able to perform. And it's just like a sports team: they have no motivation to work hard unless they have a team to play against.

It just doesn't necessarily work all of the time.

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