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 Price System, Property Rights on Feb 19th, 2010
One of my bright students asked me a question that roughly goes like this: “What is the true definition of compulsory?”
What could he possibly mean by that? Isn’t it obvious? Perhaps not. Consider two strategies a government can use to deal with a situation where lots of customers want to use a resource, but there [...]
Posted in Price System on Feb 2nd, 2010
Not really.
A student of mine forwarded this Yahoo finance piece to me:
Are you infuriated every time you open your cell phone bill? Livid when you buy a snack at the movies? These are some of the rawest deals around.
…
Movie Theater Popcorn — 900% Markup
A medium bag of popcorn costs just 60 cents to make but [...]
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 for [...]
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 Price System on Dec 23rd, 2009
I once worked at a place that spent a considerable sum of money (I’ll guess over $1,000) on a rock. Oh sure it was a lovely rock, and sourced locally as well. But really, we purchased a rock with our logo on it and rolled it out front of our building. This, I would remind [...]
Posted in Price Controls, Price System, You Can't Have it Both Ways on Dec 4th, 2009
Here’s another twisty pretzel anti-market zealots get themselves caught in. Many “progressives” are ardent supporters of anti-trust policy. One part of anti-trust policy is that firms can be doing a “bad thing” by offering prices to the consumers that are “too low.” You read that correctly. So not only (as we have explored in earlier [...]
Posted in Price System on Nov 17th, 2009
What follows is a slightly edited version of an e-mail exchange I had with a former colleague of mine. I learn more economics by talking to him and thinking about his questions than I do from virtually any other source.
Here is an e-mail a former colleague of mine sent me recently:
Finally, I was at UNC [...]
Posted in Price Controls, Price System on Oct 30th, 2009
Worst Economic Reasoning, Ever. These are the sorts of folks that think they know best how to run your economic lives.
The two most egregious points are these:
(1) We really are hoping people go on the honor system and let us immunize people in the priority groups,” Southern Nevada Health District spokeswoman Stephanie Bethel said. “I [...]
Posted in Price System, Unintended Consequences on Oct 12th, 2009
There might be some empirical gymastics here (I did not read the paper), but this kind of study is one reason I find economics fun.
We find that reductions in traffic congestion generated by E-ZPass reduced the incidence of prematurity and low birth weight among mothers within 2km of a toll plaza by 10.8% and 11.8% [...]
Posted in Environment, Price System on Oct 6th, 2009
A popular criticism of capitalism and freedom (even among folks sympathetic to the ideas) is that “The Free-Market Allowed Global Warming to Happen.” The common argument goes something like, each of us (rationally) pursued our self-interest in driving cars and producing oil, and none had the foresight to take into account the external costs that [...]
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