EppsNet Archive: Economics

There Are Four Ways You Can Spend Money

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40%… Read more →

Teaching Computer Science: Incentives (or Lack Thereof)

According to this article on TechCrunch, “Every California high school must establish computer science courses as part of its core curriculum.” From the same article: “Most California teachers have little or no training to teach computer science.” Do you see the problem there? I’ve been a programmer for many years . . . I’d be glad to teach computer science to students, teachers or anyone who wants to learn it if there were even a modest incentive to do so. Which there isn’t. One way to measure how much people want something is how much they’re willing to pay for it. There’s no shortage of people talking about teaching programming and computer science, which is free (the talking, that is), but without the incentives ($$$) very little is going to actually happen. Read more →

‘I Am a Marxist’ Says Dalai Lama

The Dalai Lama identified himself as a Marxist on Tuesday while addressing capitalism, discrimination and violence at a lecture on world peace in Kolkata, India. This is not the first time that the 14th Dalai Lama has spoken about his political leaning – in 2011 he said: “I consider myself a Marxist…but not a Leninist” when speaking at a conference in Minneapolis . . . The Tibetan spiritual leader partly blamed capitalism for inequality and said he regarded Marxism as the answer: “In capitalist countries, there is an increasing gap between the rich and the poor. In Marxism, there is emphasis on equal distribution,” he said. — Newsweek Hello, Dalai? An emphasis on equal distribution is not the same thing as equal distribution. In practice, there never seems to be equal distribution, because whoever gets to be in charge of actually distributing the goodies equally acquires a dictatorial level of… Read more →

Most of Economics

Most of economics can be summarized in four words: “People respond to incentives.” The rest is commentary. — Steven Landsburg, The Armchair Economist Read more →

Thinking, Fast and Slow by Daniel Kahneman

The notion that we have limited access to the workings of our minds is difficult to accept because, naturally, it is alien to our experience but it is true: You know far less about yourself than you feel you do.   A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth.   It is the consistency of information that matters for a good story, not its completeness. Indeed, you will often find that knowing little makes it easier to fit everything you know into a coherent pattern.   The exaggerated faith in small samples is only one example of a more general illusion — we pay more attention to the content of messages than to information about their reliability, and as a result end up with a view of the world around us that is simpler and more coherent than… Read more →

The Hedgehog and the Fox

Hedgehogs “know one big thing” and have a theory about the world: they account for particular events within a coherent framework, bristle with impatience toward those who don’t see things their way, and are confident in their forecasts. They are also especially reluctant to admit error. For hedgehogs, a failed prediction is almost always “off only on timing” or “very nearly right.” They are opinionated and clear, which is exactly what television producers love to see on programs. Two hedgehogs on different sides of an issue, each attacking the idiotic ideas of the adversary, make for a good show. Foxes, by contrast, are complex thinkers. They don’t believe that one big thing drives the march of history . . . Instead the foxes recognize that reality emerges from the interactions of many different agents and forces, including blind luck, often producing large and unpredictable outcomes. . . . They are… Read more →

A Spectacularly Bad Job of Rigging the System

If you nevertheless believe that the capitalists have been busily rigging the system in their own interest, you’ve got to admit they’ve done a spectacularly bad job of it. How else to explain the quintuple taxation of capital income, where you can invest a dollar that was taxed the day you earned it, then pay corporate income taxes, dividend taxes, capital gains taxes and inheritance taxes on the income it throws off? Surely any concern that the rich are calling the policy shots should melt away in the face of actual policy. — Steven Landsburg Read more →

I’ve Solved the Problem of Economic Inequality

Instead of “economic inequality,” let’s call it “economic diversity.” Then it’s a good thing, right? Read more →

The Single Greatest Source of Economic Error

But the underlying fallacy — the failure to notice that things must add up — is, in my experience, the single greatest source of economic error. Politicians routinely promise to make medical care or housing or college educations more widely available by controlling their prices; economists routinely scratch their heads and ask where the extra doctors or houses or classrooms are going to come from. You can no more speed up the line for medical care by lowering prices than you can speed up the deli line by handing out tickets. — Steve Landsburg, The Big Questions Read more →

Minimum Wage Proposal: $0.00

You can’t make ends meet on 8 bucks an hour? I can see where that would be a problem. When did fast food jobs become jobs for family breadwinners? Fast-food jobs are for high-school kids. You want to make $15 an hour? Simple: get a job that pays $15 an hour. What’s stopping you? Other than your lack of skills, education, motivation and accomplishments? If no employer is willing to pay you $15 an hour, then guess what? You’re not worth $15 an hour. You need to do something about that. Why is $15 an hour the magic number? Why not $16? Or $17? Why not $50 an hour? At $50 an hour, everyone would make a nice 6-figure income and poverty would be a thing of the past, right? If you raise the price of a product or service, the demand for the product or service goes down —… Read more →

More People I’m Sick Unto Death Of: Angela Davis

I still believe that capitalism is the most dangerous kind of future we can imagine. — Angela Davis Alternatives to capitalism have resulted in shortages, famine, mass murder and societal collapse (cf., Nazi Germany, Fascist Italy, the Soviet Union, Communist China, North Korea, Cuba, Libya, Venezuela … I could go on and on but I think we both get the point). Can anyone list a few capitalist countries where this has occurred? If not, what does the word “dangerous” mean in this context? Angela Davis is now 70 years old. Can anyone list a few well-known Angela Davis-style radicals who lived a long life in any of the aforementioned countries? Read more →

The War on Poverty is 50 Years Old

The New York Times has an update from McDowell County, West Virginia, on how the War on Poverty is going after 50 years . . . Of West Virginia’s 55 counties, McDowell has the lowest median household income, $22,000; the worst childhood obesity rate; and the highest teenage birthrate. It is also reeling from prescription drug abuse. The death rate from overdoses is more than eight times the national average. Of the 115 babies born in 2011 at Welch Community Hospital, over 40 had been exposed to drugs. . . . Many in McDowell County acknowledge that depending on government benefits has become a way of life, passed from generation to generation. Nearly 47 percent of personal income in the county is from Social Security, disability insurance, food stamps and other federal programs. . . . The poverty rate, 50 percent in 1960, declined – partly as a result of… Read more →

Get Rich Making Dumb Decisions

The people on the short side of the subprime mortgage market had gambled with the odds in their favor. The people on the other side — the entire financial system, essentially — had gambled with the odds against them. Up to this point, the story of the big short could not be simpler. What’s strange and complicated about it, however, is that pretty much all the important people on both sides of the gamble left the table rich. . . . The CEOs of every major Wall Street firm were also on the wrong end of the gamble. All of them, without exception, either ran their public corporations into bankruptcy or were saved from bankruptcy by the United States government. They all got rich, too. What are the odds that people will make smart decisions about money if they don’t need to make smart decisions — if they can get… Read more →

Childish Economics

I have a very difficult time imagining the economic ‘theory’ that motivates proposals such as this one by Pres. Obama [to “streamline” the Fair Labor Standards Act so that more white-collar employees would be eligible for overtime pay]. The best that I can do is to imagine how a two-year-old child would respond if asked to propose a way to raise workers incomes. — Don Boudreaux Read more →

Regulating Markets

The arguments for regulation of the market for goods and the regulation of the market for ideas are essentially the same, except that they’re perhaps stronger in the area of ideas if you assume consumer ignorance. It’s easier for people to discover that they have a bad can of peaches than it is for them to discover that they have a bad idea. — Ronald Coase Read more →

A $15 Minimum Wage is Not Going to Help You

Fast Food Workers Will Strike On Thursday In L.A. : LAist Fast food workers staged a one-day strike for “living wages.” More specifically, they want the federal minimum wage to be raised from $7.25 an hour to $15. You want to make a living wage? I’ll tell you how to make a living wage. I’ve had a lot of jobs and this method has never failed me. Here it is: Before accepting a job offer, you always ask yourself, “Does this job pay enough for me to live on?” And if the answer is no, then you don’t take that job. If you want to earn $15 an hour, do what I do: get a job that pays $15 an hour. Who’s stopping you? If no one’s willing to pay you $15 an hour, it’s because the skills, intelligence and motivation that you bring to the table don’t allow you… Read more →

EppsNet Book Reviews: The Big Short by Michael Lewis

I worked in the information technology department of a mortgage bank in the run-up to the 2007 implosion of the subprime mortgage market . . . Given that it was fairly evident at the time that complicated financial instruments were being dreamed up for the sole purpose of lending money to people who could never repay it, it’s remarkable that very few people foresaw the catastrophe and that even fewer actually had the nerve to bet on it to happen. Long story short, the major rating agencies — Standard and Poor’s and Moody’s — were incompetent in their rating of subprime mortgage bonds, giving investment-grade and, in some cases, triple-A ratings to high-risk instruments. A lot of people took the ratings — which implied that subprime mortgage derivatives were no riskier than U.S. Treasury bonds — at face value and acted accordingly. But there were also some interesting psychological factors in play, not… Read more →

Well, there are fewer limits on what you can promise than on what you can deliver. — Milton Friedman

Ronald Coase, 1910-2013

To ignore the government’s poor performance of its present duties when deciding on whether it should or should not take on new duties is obviously wrong. — Ronald Coase Read more →

A Tradeoff

If female employment rates matched male rates in the U.S., the GDP would rise by 5%. This stat & more: http://t.co/XsBVJW1xtE — Harvard Biz Review (@HarvardBiz) August 25, 2013 Okay . . . but who would be raising our kids? Or is that not important? Read more →

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