Quote from: coinrevo on February 03, 2014, 01:26:52 PM

Quote from: Gavin Andresen on February 03, 2014, 01:11:18 PM

I've put "On Transaction Fees, And The Fallacy of Market-Based Solutions" on my to-think-about-deeply list.

..which is this article
http://blog.ethereum.org/2014/02/01/on-transaction-fees-market-based-solutions/

Be very careful about non market pricing mechanisms. The problem with price determination is about discovering the price. While you can set the price, ala a Pigovian tax, you are doing so without knowing the actual value of the item being assessed.

There is much more going on here than the simplistic models being proposed. I'm reminded of Bastiat's "Seen and unseen". The market possess many methods that enforce discipline. Such things are the emergence of practices of what is proper. Things like common law (written and unwritten) emerge from propriety. The complexity contained within these relationships greatly affects the price and value of action within that market.

Satoshi was very wise to leave as much up to the market and the individuals that comprise each market. Here he accessed one of the greatest information aggregators humanity ever devised. For the Etherum developers I suggest you read an article by Hayek, "The Use of Knowledge in Society". You can get a copy here: http://www.econlib.org/library/Essays/hykKnw1.html

Here is an amusing and informative video by Mike Munger explaining the information problem in externalities: http://www.learnliberty.org/videos/externalities-when-is-a-potato-chip-not-just-a-potato-chip

I am from the energy field and have dealt a great deal with understanding the impact of externalities on the production and consumption of energy. I found that invariably any policy that is founded on presuming to know the social value ALWAYS creates a net social harm. I now appreciate the Coasian approach to resolving these externalities through the creation of proerty rights (markets) even this approach is not fail proof. Please look at the work of Coase and Hazzlet. There are two parts to Coase's theorem about externalites. Both need to be understood before effective policy is developed.

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