Coordination Problems for Lobster Fishermen
Victor Niederhoffer writing at Daily Speculations, has a deft description of the business cycle for lobster fishermen.
"During the boom of 2004-2006, many lobstermen expanded their equipment and territory and operations.
Many new boats were completed.
Most were financed with readily available bank debt.
There was a great deal of searching for lobsters and the catch went down considerably as did the price, about 20% each.
The cost of fuel ate into the already meager profits, and bank credit is no longer available.
Thus, a recession in the lobster business, and all activities in towns associated with it."
There is some special fallacy or blindness that afflicts groups engaged in commercial activity which drives them to believe that they and not consumers will be the beneficiaries of new technologies.
Bigger boats, bigger operating costs - and the benefits of the improved search for lobsters will fall to the consumers.
