[paphillips]

One of my favorite economics professors called the second one 'OBSCENE PROFITS!'. His vocal delivery of those two words in front of the class was always highly animated and packed full of energy.

It is intuitive that, as soon as enterprising individuals catch wind of high profits being made somewhere, there will be an inrush of competitors looking to seize their share, which then continues until until some type of equilibrium is reached.

The fundamental breakdown in this type of efficient market mechanism is that it requires a reasonably level playing field: referees and rules. Complex systems without adequate regulation may result in local optima one or a few participants, who achieve regulatory capture, externalize costs, or achieve monopoly, oligopoly, or similar advantage to the disadvantage of all others. Regulation is required to achieve the global optimum for the wider group (i.e. society).

Cancer is an a example of a biological system exhibiting high growth with broken mechanisms of regulation. Similar outcomes can be observed when there is a disruption to a predator population, leading to an explosion of prey species, resulting in an ecosystem that is overrun and exhausted until balance returns.