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
Posted in Extended Order on Jan 13th, 2010
I ask my students the following question: Briefly characterize why the argument that “we are dependent on foreign oil” as a justification for developing alternative energy sources is a poor one. You could attack this issue in one of three ways: (1) Understanding the extended order of human cooperation will lead you to understand that [...]
Posted in Environment, Property Rights on Jan 12th, 2010
The states are also eroding the tradition of respect for private property, just like their Uncle Sam has been doing for centuries. This Mitchell Ditch case in Montana just came to my attention: The Montana Supreme Court ruled here recently that the 16-mile-long stream, Mitchell Slough, is open to the public and that the landowners [...]
Posted in Price System on Jan 11th, 2010
So, you think you can beat the market? A friend of mine (HT: John B) sends me the following chart: What is this chart telling us? It is a reminder that current market prices tend to capture any relevant and publicly relevant information about a product, company, sector, or industry. This is the simple foundation [...]
Posted in Price System on Jan 10th, 2010
When men are sufficiently free, you never know what they might accomplish. HT to Scott Strenger.
Posted in trade on Jan 9th, 2010
A loyal reader and commenter Harry referenced Bastiat’s Negative Railroad. It is worth quoting nearly the entire passage: There should be a break in the railroad from Paris to Bayonne at Bordeaux; for, if goods and passengers are forced to stop at that city, this will be profitable for boatmen, porters, owners of hotels, etc. [...]
Posted in Behavior, Institutions on Jan 8th, 2010
Fortunately there are some good things that come with age. I understand that it does not make any sense to try to make everyone happy. I also am becoming better at ignoring static noise. But these things nonetheless still feel like fingernails scratching on chalkboards. In several conversations with current and past students and seeking [...]
Posted in Environment, Taxation on Jan 7th, 2010
A popular argument in the “environmentalist” community is that pollution is a moral wrong. By extension this belief holds that using “market-type” instruments such as taxes and tradable permits to control pollution are no different than allowing burglars to pay for the privilege of burgling houses. What is wrong with this analogy? Pollution is a [...]
Posted in Fun Facts, Standards of Living on Jan 6th, 2010
I was perusing the U.S. Geological Survey publications and came across this: At the time of the U.S. Civil War, 3,000 workers produced over 225,000 tons of salt in the United States. Today, there is a third more workers, but they produce 100 times more salt. In other words, each salt worker in 1865 was [...]
Posted in Resources on Jan 5th, 2010
Look at what has happened to the scarcity of industrial diamonds over the past 100 years. The top chart adjusts nominal diamond prices to account for the general rise in prices since 1900 using a measure of the CPI’s broad inflation index. The bottom chart takes a different approach to adjust the diamond data. It [...]
Posted in Resources on Jan 4th, 2010
Look at what has happened to the scarcity of salt over the past 100 years. The top chart adjusts nominal salt prices to account for the general rise in prices since 1900 using a measure of the CPI’s broad inflation index. The bottom chart takes a different approach to adjust the salt data. It looks [...]
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