Comments on: Why People Hate Economics http://theunbrokenwindow.com/2009/11/23/why-people-hate-economics/ The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. - F.A. Hayek Wed, 08 Feb 2012 16:43:18 +0000 hourly 1 http://wordpress.org/?v=3.0.3 By: azmyth http://theunbrokenwindow.com/2009/11/23/why-people-hate-economics/comment-page-1/#comment-10884 azmyth Wed, 25 Nov 2009 14:35:24 +0000 http://theunbrokenwindow.com/?p=1745#comment-10884 Sanket: Cartels do reduce output. However, the only way to make an action by another sovereign state illegal is to invade. Cartels are difficult to maintain and frequently fall apart on their own. As long as there is free entry into the market, entrepreneurs will be tempted to enter and compete away the excess profit. When you see long term cartel-like profit, ask yourself - "Why isn't there entry?" Adam Smith was right to point out that businesses can be self interested and greedy, but he also demonstrated the power of competition to constrain them. Wintercow20: Great post. Basic supply and demand analysis is very powerful, and it is a pity that economists aren't more fluent in it. Confusing supply and demand shocks is tragically common. Sanket: Cartels do reduce output. However, the only way to make an action by another sovereign state illegal is to invade. Cartels are difficult to maintain and frequently fall apart on their own. As long as there is free entry into the market, entrepreneurs will be tempted to enter and compete away the excess profit. When you see long term cartel-like profit, ask yourself – “Why isn’t there entry?” Adam Smith was right to point out that businesses can be self interested and greedy, but he also demonstrated the power of competition to constrain them.

Wintercow20: Great post. Basic supply and demand analysis is very powerful, and it is a pity that economists aren’t more fluent in it. Confusing supply and demand shocks is tragically common.

]]> By: Sanket http://theunbrokenwindow.com/2009/11/23/why-people-hate-economics/comment-page-1/#comment-10872 Sanket Wed, 25 Nov 2009 02:49:26 +0000 http://theunbrokenwindow.com/?p=1745#comment-10872 My macroeconomics textbook tells me the reason why oil prices were so high in the 70s is because of a coordinated price increase by OPEC. And in a world of properly functioning property rights, shouldn't cartels be banned because they raise or stabilize prices against market forces, therefore mis-allocating goods from those who value it the most to those who might not value it as much? "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." - Adam Smith My macroeconomics textbook tells me the reason why oil prices were so high in the 70s is because of a coordinated price increase by OPEC.

And in a world of properly functioning property rights, shouldn’t cartels be banned because they raise or stabilize prices against market forces, therefore mis-allocating goods from those who value it the most to those who might not value it as much?

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” – Adam Smith

]]> By: Harry http://theunbrokenwindow.com/2009/11/23/why-people-hate-economics/comment-page-1/#comment-10839 Harry Mon, 23 Nov 2009 21:15:41 +0000 http://theunbrokenwindow.com/?p=1745#comment-10839 Hahahah. Hahahah.

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