Comments on: Economics 101: Incentives Matter.

By: Mark Baird

Mark Baird — Tue, 19 Feb 2013 04:25:47 +0000

I do not understand it either. It makes just as much sense as climate change. If you understand the life cycle of carbon the physics of CO2 and the various energy waves how can you ignore climate change and the affects of fossil fuels on the climate.

How can you ignore economics 101?

Are we basing economics 101 on the following assumptions:
1. All participants have perfect information about the future.
2. There is perfect competition.
3. Prices are absolutely accurate and up to date.
4. Price signals completely reflect every cost to society. There are no externalities. (This is an important one for efficiency in society.)
5. Everyone is motivated solely by maximizing personal “utility”, often measured by wealth and income.
6. At the appropriate risk-adjusted interest rate, unlimited capital is available to everyone.
7. etc…

So who’s economic theories do we want to discuss?

Thomas Sowell and his theories on taxes?

The economic theories of Hayek,or Walras and his “Theorem of Maximum Utility”, or Vilfredo Pareto and his theories on market efficiency and the Arrow-Debreu model. Or maybe the theories of the “Prisoners Dilemma” or “Rational Irrationality”. Or maybe we should talk about George Akerlof’s paper “The Market for Lemons” regarding hidden information.

Should we divide all of the economist into conservative and liberal and throw out the liberal economist so we do not hurt our brain with cognitive dissonance?

So, for climate change there are to many variables but for economics everything is very clear because markets are rational and based on simple curves such as the Laffer curve which has no numbers on either the x or y axis.

If we are to have a consensus on climate change then why not economics? What is a consensus? 51% as in this past election.

If the people are smart enough to aggregate their decisions and pick winners in the market place then have they not aggregated their decisions on tax increases by electing Obama? Or, maybe they just do not understand all of the many economics theories or game theory that is involved in the free markets? Maybe they just have not read Ayan Rand? Of course the only thing that makes sense is that these people want something just like conservatives want something from politics.

By: The Elephant's Child

The Elephant's Child — Sat, 16 Feb 2013 20:25:40 +0000

With nearly every action that Obama takes, you’re left wondering why? Economist Alan Reynolds said “Barack Obama doesn’t understand economics, and apparently he will not listen to anyone who does.” Early on, in his first term, Rahm Emanuel set up a daily economics meeting, probably because he recognized that Obama didn’ understand. Obama soon got tired of them and quit. He didn’t understand why the stimulus was not working immediately. And he has continued to believe in stimulus as the way to go.

Yes, you portray the debate quite accurately. I believe that he just doesn’t understand economics at all, isn’t particularly interested, and his ideology demands taxing the rich for “fairness.” I know others who think he knows perfectly well, and wants to bring the economy down, for his own ends.

The books that come out after his term is over are going to be very interesting.

By: Jim Yardley

Jim Yardley — Sat, 16 Feb 2013 19:44:28 +0000

When you look at the Obama obsession with raising taxes on the wealthy there are only two conclusions that leap forward to explain it:

(a) the man who has been described as the “smartest person in the room” is actually an idiot who will not or can not master simple economics

(b) Obama does understand that raising taxes will reduce overall economic activity, increase unemployment, foment civil unrest and potentially generate civil violence — and that’s exactly what he wants to have happen.

Either way Barack Obama will be remembered as the most ignorant or most duplicitous President the nation has suffered.