Wrt to the railroad example, it is the the mainspring of two of the greatest weirdest Western movies, Nicholas Ray's Johnny Guitar, a semi-feminist attack on McCarthyism (Joan Crawford being More Of A Man than Sterling Hadyn, Mercedes MacCambridge doing a credibly obsessive Joe McCarthy in funeral black, theme sung song by the immortal Peggy Lee). For people who like their Westerns on powerful hallucinogenics, there is Once Upon A Time In The West, by Sergio Leone, the greatest spaghetti Western (and one the greatest films) of all time, Henry Fonda as a cold-eyed psychopathic killer-rapist (Henry Fonda!), Charles Bronson, Jason Robards, and one of Ennio Morricone's greatest, most haunting scores -- Leone was some sort of Italian Marxist, so there the anticapitalist theme of the railroad baron who symbolizes the Capitalist Class ("Mr Choo-choo," Robard's Outlaw Cheyenne calls him) with tuberculosis of the bones.
Anyway, enough art, back to pseudoscience. Or law and biz. "Inside information" may just be information that is the product of market research; it not necessarily the sort of "insider tip" that can land you in jail if you trade on it. The later reflects information that one has as, or coming from, one of the parties to a deal, and the law has determined use of such information to be so unfair as to constitute a crime, insider trading. Doug and Judge Easterbrook think that this is nor as it should be, be, but that is what Congress has set forth. However, knowledge that is the result of lawful research into a deal is not really "insider" information at all. If I go to the records office at the county courthouse, notice based on my third party research that the railroad has bought up all the land around "Sweetwater" (the key site in Once Upon A Time In the West), and infer that the railway is going to go by Sweetwater, I'm just a better and more careful investor than most.
All that said, I agree with Doug, despite our sneers the "law" of supply and demand or the theorems of price theory (raise price, lower sales and vice versa) has some truth to it. But like all science scientific generalizations (except the one that At The Crucial Moment The Democrats Will Cave In) it's riddled with ceteris paribus clauses, exceptions, and based on idealizing assumptions so much that it can only be treated as a rule of thumb.
--- Doug Henwood <dhenwood at panix.com> wrote:
>
> On Jan 19, 2007, at 3:05 PM, Wojtek Sokolowski
> wrote:
>
> > Doug:
> >
> >
> > What do you think drives anticipations of the
> future, if not the
> > recent past? There's nothing to make people think
> the price of an
> > asset at time t+1 will be greater than the price
> at time t than the
> > fact that the price at time t is greater than that
> at t-1, and
> > t-1>t-2, etc.
> >
> >
> > [WS:] Not necessarily. Think, for example, of a
> piece of "railroad
> > property" i.e. land bought in anticipation of
> railroad being built
> > next to
> > it (which happened a lot in this country's past.)
>
> This is inside information. While there's a
> nontrivial amount of that
> around, it's not what drives the broad financial
> markets from day to
> day.
>
> > I would like to add that I am not trying to defend
> NCE, but rather
> > think of
> > an argument that would save the NCE's core
> assumption - the price-
> > demand
> > relationship - against empirical evidence.
>
> Of course, orthodox finance theory assumes no inside
> information.
>
> Obviously the price/demand relationship isn't all
> wrong, but it does
> have some problems.
>
> Doug
>
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