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 Environment, Price System on Jan 27th, 2012
That’s my name for the theory that proponents of natural capital accounting use about how economics works. In a recent paper discussing the value of natural environmental amenities and how free-markets are totally predisposed to reducing these stocks to zero over time, the following argument come up twice. It is that when market priced goods [...]
Posted in Price System on Jan 13th, 2012
Here is a piece from today’s journal on the Death of Kodak: The population of Rochester, N.Y., peaked in 1950 at 330,000 … in a small city like Rochester, whose population is now at 210,000 plus. … If Kodak’s looming bankruptcy closes the book on this storied company, much will be written about the company’s [...]
Posted in Macroeconomics, Price System on Jan 10th, 2012
Something of a blogosphere explosion occurred last week. What caused it? A largely correct post by Paul Krugman that had the gist of arguing that the amount of US federal government debt is a misleading indicator of how serious the US debt problem is. Here is my colleague Steve Landburg illuminating and buttressing the point. [...]
Posted in Price System, ethical foundations on Jan 3rd, 2012
The following is a guest post by my friend Michael Stahlman. Profit (and loss) is an amoral market signal that guide economic transactions. It works automatically within the price system to direct goods and services to the persons most willing to pay for them, and this usually reflects society’s collective demand for scarce goods and [...]
Posted in Price System on Dec 1st, 2011
One of my favorite Christmas cartoons (claymations) was the Year Without a Santa Claus. That’s the one with this guy in it: His brother Snow Miser is also in the show. I got to thinking about their names while hanging some Christmas lights the other night and you know what? They’re incredibly stupid! Calling these [...]
Posted in Economic Illiteracy, Price System, You Can't Have it Both Ways on Nov 22nd, 2011
We just learned that the post office is losing another $5 billion this year. This is on top of a $10 billion loss and a long history of destroying resources. Among the many problems with the post office (aside from bureaucracy serially allergic to entrepreneurship and serving customers) is that it has way over-capitalized itself [...]
Posted in Entrepreneurs, Environment, Price System on Nov 7th, 2011
One of my favorite essay questions assigned to students in my environmental economics class requires them to think about how government ownership and management of National Parks differs from alternative arrangements. I do not wish to write my version of the essay here. I do want to make a few observations. First, you would be [...]
Posted in Central Planning, Market Failures, Price System, Property Rights, You Can't Have it Both Ways on Oct 28th, 2011
Among the avalanche of policies that has been enacted in the name of igniting a green economic revolution (taxes, subsidies, loan guarantees, tariffs, …) include mandates for use of particular technologies. Good economists will understand the basic problem with mandates (they are a classic input standard, which is theoretically and empirically inferior to output standard [...]
Posted in Price System, Ultimate Resource on Oct 27th, 2011
I was walking around a local market not too long ago and overheard someone speaking about he virtues of “fresh food” and in particular the food that goes “from farm to table” – you know, the stuff grown locally and then eaten in season. I hate that I have to preface everything I say with [...]
Posted in Price System, You Can't Have it Both Ways on Oct 3rd, 2011
It is sometimes thought that certain major exporters of important materials such as oils and rare earth metals have what amounts to a “weapon.” It is sad that such language is regularly used. Why, for instance, might Saudi Arabia have an oil “weapon?” Well, the idea is that they have something we want, oil, and [...]
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