"A statement I commonly hear in tech-utopian circles is that some seeming inefficiency can’t actually be inefficient because the market is efficient and inefficiencies will quickly be eliminated."
There's equivocation in that statement; what market efficiency is and what people generally mean by efficiency are not the same thing. This is not an accusation of danluu, though, as I believe it is an accurate statement of an error made by a lot of people.
Market efficiency is really a rather boring statement about the difficulty of performing arbitrage in the long term. Plus, given that the market is not absolutely efficient we should expect errors to be made.
But we can do some numerical analysis here. Consider the range of possibilities. Suppose population X is paid 0% of what everyone else is paid in the market, for the same output. It would take an astonishingly-large, an implausibly large, countervailing force to prevent some company from swooping in and claiming that free labor. (Remember, even if 99.9% of the firms on the market choose not to, it just means that the .1% is going have that much easier of a time.) However, for group X to be paid 99.9% of what everyone else is paid on average doesn't take much at all; indeed, mere noise could produce that result. Rather than it being a question of "is or is not discrimination", this sort of analysis can put numbers on how much, from which you can start analyzing things like the value of certain changes vs. their costs.
No conclusion; I'm just musing here. Except that I think that people generally do a lot of binary thinking here when quantitative might be more useful.
"There's equivocation in that statement; what market efficiency is and what people generally mean by efficiency are not the same thing"
True, but: it's no coincidence that the terms are used for different things. What we really care about as humans is "market efficiency" in the ordinary English sense of the word. That's really hard to define, though, so economists redefine it in a very precise, technical, and yes, 'boring' statement. Now it is easier to see if we have it, but also not very useful. However, it can still be used to argue that any intervention in the market will be a mistake. The confusion about what the term "market efficiency" means is not just a coincidence. Redefine it as something easily proven, and then let people mistake that for a proof of what they actually care about, and you get the same political/lobbying result as the (rather more difficult, perhaps impossible) task of proving that markets are efficient in the way we actually care about as humans, rather than just economists.
The definition is easy: by market efficiency, people mean time (labor market being the only market Adam Smith concerned himself and invisible hand being a reference to how the people themselves will tacitly protect their own interests).
And right now, the sense is that we're spending a lot of our time in jobs that overwhelmingly benefit a rich minority, which is not time spent well it.
When our ability to focus on self-preservation is being expropriated, people revolt
This interpretation isn't even up for debate, IMO. It's been investigated by biologists, neuroscientists, psychologists, medical doctors, philosophers, logicians, mathematicians, physicists, computer scientists.
A curious omission: economists. Very few of re-known willfully admit their own field is being twisted into undermining the majority for the minority.
The argument that xyz can't be the case because it would be arbitraged away is called the "invisible handwave". It should be part of the list of common rhetorical fallacies IMO.
Whether something will be subject to arbitrage is sensible to a ton of factors (barriers to entry, market structure, political environment/incentives, behavioral biases) that if something is to be arbitraged or not is purely an empirical question for any instance of the problem.
"It would take an astonishingly-large, an implausibly large, countervailing force to prevent some company from swooping in and claiming that free labor."
On the other hand, "no one had ever tried it" is an unbelievably strong force.
There's equivocation in that statement; what market efficiency is and what people generally mean by efficiency are not the same thing. This is not an accusation of danluu, though, as I believe it is an accurate statement of an error made by a lot of people.
Market efficiency is really a rather boring statement about the difficulty of performing arbitrage in the long term. Plus, given that the market is not absolutely efficient we should expect errors to be made.
But we can do some numerical analysis here. Consider the range of possibilities. Suppose population X is paid 0% of what everyone else is paid in the market, for the same output. It would take an astonishingly-large, an implausibly large, countervailing force to prevent some company from swooping in and claiming that free labor. (Remember, even if 99.9% of the firms on the market choose not to, it just means that the .1% is going have that much easier of a time.) However, for group X to be paid 99.9% of what everyone else is paid on average doesn't take much at all; indeed, mere noise could produce that result. Rather than it being a question of "is or is not discrimination", this sort of analysis can put numbers on how much, from which you can start analyzing things like the value of certain changes vs. their costs.
No conclusion; I'm just musing here. Except that I think that people generally do a lot of binary thinking here when quantitative might be more useful.