Optimal for who?

One of my favourite blogs posted about ‘auto malls and equilibrium‘, explaining why businesses often cluster around a perceived optimum.

Democratic governments and political parties gravitate toward their optimum chances of re-election; individual politicians toward their best grasp at power.

In both cases, the protagonist would argue they’re optimising for the customer or chance to serve, but I am unpersuaded. I paraphrase: ‘it has been said that democracy is the worst form of Government except for all those others‘. The same can be said for capitalism, in my view.

If business and politics worked more naturally toward the socially optimal solution, as expressed in the link from Rohan’s post, I’d have much more faith in the protagonists.

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