Category: Economic Fallacies

Market Failure: Revenge of the Commons?

So, we define the market as that system containing everything that is (apparently) part of the market. However, the counterargument here would be that things outside of the market system, unlike the pot and flame, do effect what is in the system. That is, the “commons” outside of the market (into which things may be dumped or extracted) apparently play a role. To the extent such commons are artificial in nature (“public” spaces) and thus through state coercion the market’s efforts to allocate and economize those resources via private property are frustrated, we cannot say then that any abuse of such spaces is a market failure. The state itself is setting up the very situation that opens them up to abuse. The state is not part of the market. The market is peaceful voluntary trade where both parties “win”; the state is violent involuntary trade where one side wins and one side loses.

Removing all doubt

Poor Bernie, he went and opened his mouth and thusly removed all doubt that he has no grasp of economics. Such ignorance from an internet troll might be expected and can be amusing in the same way that a child’s explanation of something can be so. But when such breathtakingly inane statements emanate from a candidate for President of the United States, well, what can one do but weep for the future. To what perplexing attempt at pontification do I refer? None other than this Dec 26 Tweet from @SenSanders: “You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”

Now most people would probably look at this statement and not find it particularly outrageous. We as a society have been conditioned to accept the notion that interest rates are arbitrarily set from time to time by some talking head in government. The assignment of these rates is apparently disconnected from any external factors. They are like lotto numbers plucked from the ball machine. We assume other lenders (banks, credit cards, etc) set their rates in a similar pattern.

December 28 / 2015

Do no harm?

Mere “harm” cannot be the nebulous standard by which we invoke the necessity of state intervention. If five people apply for a job then the four that did not get the job are arguably harmed, so, should the state step in and penalize the person who got the job by making him or her share it with the others? When two sports teams play each other is not the losing team “harmed”? Upset fans, potential decreased ticket sales, lower potential ad revenue – all these things constitute types of harm, yet no one is (yet) screaming for the state to step in.

Paddling in Circles

[Trump’s view] presumes trade is a zero-sum game where one side always “wins” and the other side “loses” in the exchange. Indeed this mindset would mean every time we buy groceries the store has “won” and we have “lost.” Trade is always a win-win game; both parties have gained more than they gave up, otherwise they would not have made the exchange.

You can lead a horse to a carousel, but you can’t make him eat a free lunch

Like the static animals and chariots of a carousel, the unchanging bureaucracy provides support to our elected officials, who come and go like so many children believing they are driving when in fact they are merely passengers. … [DOL mandates] do not require a new law or public debate. Only a handful of bureaucrats need to simply decide “ok, let’s just change this” and that’s it.

Paddling Upstream

Like a talent sieve there is nothing to retain or attract the more productive employee when it is need, and not effort, that is rewarded. Likewise, like an anti-talent magnet only those with the lowest drive and skillset will be attracted, for where else could they have any hope of earning such a high wage?

August 03 / 2015

Boulders in the Stream

Supposedly this [law] would help the underdogs: small booksellers and new authors. Ironically it does the exact opposite. It is the unknown author that has the greatest incentive to discount heavily in order to entice someone unfamiliar with their work. It is small book sellers that are most likely to haggle or “make a deal” when someone makes a substantial purchase.

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