Random Thoughts On The Passing Scene - Part 6
Economics
Collected over many years, attribution for the title goes to amazing Thomas Sowell based on his once regular column of the same title. Read all of those first and perhaps a second time before mine. I have to note that Art Carden beat me to this.
[Disclaimer that these might be partially or wholly, but completely unintentionally, stolen.]
Profit serves two vital functions: inducement and enablement. If we could do without it, we would. Unfortunately, we cannot. We need it to catalyze all entrepreneurs and to empower the good ones.
All good economics begins with philosophy.
Just because the market fails to bring about a world that perfectly resembles your own personal Disneyland does not mean the market has failed. It simply means that the market has succeeded in accommodating the desires of people who are not as selfish or as unrealistic as you.
Shortest formula for a successful society: Allow ideas to be plentiful, make failure cheap, and ensure that success rewarded.
Econ101: you cannot argue with preferences. Econ102: you can argue with preference inconsistencies.
A strategy of a good incentive structure dominates a strategy of a great hiring system.
Don’t argue for an economic policy solely on the basis of net job change and especially not gross jobs added. Wealth creation usually destroys jobs and job creation can be an indication of wealth destruction. Jobs are a means not an ends.
We export so that we may import, not the other way around. Exporting is the means to the ends of importing. Put more bluntly: exporting is the cost of importing and importing is the benefit of exporting.
In the marketplace of ideas hubris is packaged and sold right alongside confidence—caveat emptor.
There are no aggregate actions or actors, only aggregate statistics.
The social goal should be a society of ever-growing opportunities allowing for greater and greater abilities to reap the rewards of successes, be they by luck or design, and to recover from failures.
Prices are the mechanism by which we reconcile that which we have done to that which we would like to do.
Charities and other non-profit firms should exist only in the profit-seeking market’s gaps—the rare places where the market fails to deliver.
Many professions create or at least nourish, either by design or unplanned evolution, fiefdoms for them to rule over: Economics has an intrusive government. Law has a litigious society. Accounting has a complex tax code. Teaching has compulsory education. Religion has guilt-ridden churchgoers. Healthcare has third-party payment. Sports journalism has debatable championships. Et al.
Almost always firms don’t set prices for either outputs (e.g., retail product prices) or inputs (e.g., wages). The market does. Firms simply try to find them. In the occasional time that firms can seemingly set prices, this is most often either an illusion or fleeting oddity.
The market abhors excess profit.
All business secrets and advantages eventually are revealed or circumvented.
In a well-functioning economy all advantage is fleeting.
You think and behave at the margin, or you live and die by the avalanche.
All economies are consumption driven. Every nation is a consumer nation; some are just better at it than others.
If you don’t know the cost of the marginal unit, you’re often times better off not “knowing” anything about cost at all.
Failure by its nature tends to be a surprise event.
Public-policy poker: I see your grandiose designs and I raise you unintended consequences.
Economist is a complex psychological condition whereby one cannot predict the future yet is compelled to convince the world that he can.
An econometrician is a failed mathematician with the audacity to corrupt the elegant science of economics with the brutal crudity of statistics.