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Violent Orders
What do all governments have in common? Some are ruthless dictatorships, and some are benign democracies. Some are large, and control the majority of the economy and some are small, leaving businesses alone to do what they like. Douglas North defines government as “an organization with a comparative advantage in violence, extending over a ( Read more... ) -
Writer's block
I know I have a couple "to write" topics already picked, but I got about a quarter of the way through a post on game theory and lost interest. I suppose I should find real world problems and walk through how I use economics to address them. It might be a nice change of pace from pure theory. Game theory actually is quite useful in explaining how ( Read more... ) -
That's 10!
I have finished 10 econ essays so far. I am not including the more philosophical ones, or social commentary. I think that with another 10, I will have covered most of the critical ideas needed to understand economics. Perhaps I should start to focus more on examples and stories to illustrate how it all fits together. I like macro a lot, and I ( Read more... ) -
unintended consequences
Intentions do not equal results. People have goals and act to fulfill those goals, but that does not mean they are successful. The world is a complex place and even simple actions can affect many people. According to Wikipedia (which is rather good on this issue), "Any intervention in a complex system may or may not have the intended result, but ( Read more... ) -
Spontaneous Order
Spontaneous order is the phenomenon whereby complex social phenomena emerge from the independent actions of a group of people, without the direction of a central planner or grand design guiding them. It is the social science version of complexity theory, which explains how complex results can emerge from simple rules. Spontaneous order is an ( Read more... ) -
When is trade beneficial?
The presumption among economists is that markets for things are generally beneficial for both parties. Each person trading will only do so if they think that they will be better off after the trade than before. Suppose Alice has apples and Bob has bananas. Alice will only give up an apple in exchange for a banana if she thinks she will be better ( Read more... ) -
Comparative advantage (basic microeconomics)
Imagine you had to produce all the goods you wanted to use yourself with no help or raw materials from others. Everyday would be a fight for survival as you tried to find enough food to eat. Your clothing, if any, would be simple animal skins. Any tools would be made of stone and sticks. Your standard of living would be horrible, even in ( Read more... ) -
Google Buzz
I think I might move to posting on Google Buzz, for the simple reason that I can access it at work. The move might be temporary, and I'll probably double post in both places. -
Inflation (basic Macro)
Inflation is a process of continuous increase in the overall level of prices. Relative price shifts (one good's price goes up, but another's goes down by a similar magnitude) are not inflation. The average price of all goods must go up to qualify. Inflation is caused by too much money chasing too few goods. If the value of goods produced ( Read more... ) -
Default or Inflate? (intermediate/advanced macroeconomics)
The news is full of stories about Greece. Their government spending has long been out of control and now their debt is causing real problems for them. Before long, Spain, Ireland and Portugal may join them from the E.U. and Japan is not too far behind. Financial crises hit in an instant, even though they take decades to build up. When a country' ( Read more... )