Along with half of everyone else who works at a University, I’m starting my Thanksgiving break a little early. I’ll see you all after the holiday weekend, hoping to find you well fed, healthy, and reflective of your blessings.
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The following link may be of interest (if you haven’t seen it).
Steve Keen addresses the original work on expected utility by von Neumann and Morgenstern here:
http://www.debtdeflation.com/blogs/2010/11/11/my-lectures-on-behavioural-finance/
http://www.news.com.au/business/economist-steve-keen-loses-housing-bet-against-rory-robertson/story-e6frfmbi-1225793985120
For your break, heres a beguiling blog post that really needs a refutation from the The Weekly Sift by Doug Muder.
“But if all the restaurants have it, it’s just shuffling customers around… Open Table’s [voluntary] fees are just siphoned out of the restaurant system without providing any systemic value.” – My Reservations About the Market Economy
http://weeklysift.blogspot.com/2010/11/blessings-and-privileges.html#11222010third
This is funny. The conservative economists fraction discharge itself into a “well fed” Thanksgiving Break while 17.4 million US households are food insecure. You can’t charge these guys to be humorless.
He’s not supposed to enjoy Thanksgiving because some American households are “food insecure”? What an interesting, amusing thought! “Shame on you, Mr. Landsburg, for being thankful for your good fortune!”
@David
Everybody is supposed to enjoy Thanksgiving. No problem with that. I don’t know about you, but if I hand over my car to a self-claiming automobile expert and he returns a wreck I’m annoyed. The same is true for conservative economists we handed over the economy 30 years ago.
Landsburg seems to think it is a good idea to associate with Austrian economics. Another one lost to the dark side of the force. In this regard I can only quote Galbraith about the economic miracle after the 2nd world war in my country of birth Austria:
BTW: Great Thanksgiving picture in the NYT. Welcome back to the 1860s.
Have a great holiday.
Stephan, what is a “conservative economist” and how would I test the hypothesis that conservative economists have been directing economic policy for the last 30 years?
@Matt – a network effect acts as a barrier to entry. Barriers to entry contribute to reduced competition. Reduced competition can lead to a breakdown in the market. Muder’s point about network effects is valid IMHO, but the resulting monopoly and their high profits are not a consequence of a the workings of a freely operating market, rather they are the consequence of the quite natural breakdown of a freely operating market.
I think it’s more or less a given that “free markets lead to economic efficiency”. Has anyone ever said that free markets are self-sustaining?
It is an interesting example, the Open Table. Free markets lead to efficiency. Monopoly is not a free market. So we should aim for a large number of competing suppliers. But for Open Table to work well, it must have a significant portion of the restaurants, i.e. it must approach a monopoly. One solution is to have restaurants listed on many sites at once, and the customer can use whichever they like. I can only see this working if the customer pays for the service, rather than the restaurant. It is another example of the seen and the unseen. The customer does not see the higher prices he must pay to restaurants using Open Table, but they do see an up-front booking fee, and would avoid it.
Thank you for the well wishes, Professor Landsburg. I find it absurd that anyone would ridicule you for this.
Evidently, some people believe it is more righteous to have poverty and oppression in the name of fairness than to have wealth and freedom in the name of liberty.