T. S. Eliot wrote about the bottoms of trousers worn rolled. He could have meant being on a quiet bay, on a single outrigger. In this blog, I contemplate how social order and the economy interact. Often, it is simply an up-and-down thing. Much like Cycles as written by Gayle Caldwell and sung by that lone definitive Frankie. The trick is not to be blinded by “blackboard knowledge.” There is something of Zen in economics but one must go outside it for reality checks. One important reality check is the recurring abundance of “snake oil” in finance.
Economics is dismal because it holds up inherent limitations (the “production possibility curve” or because abnormal profits are subject to the Tragedy of the Commons) and because the concept of opportunity cost has no truck with artificial privilege and self-delusion. Unless of course you can pull a legal ponzi because of investor fear/greed. But fair advantage is essential: Either you can or can’t, comparatively, as David Ricardo might say.
More importantly, the economics of such public goods as knowledge and know-how suggests that scarcity is becoming less and less of a problem. In short, there is a non-dismal economics of “free.” This means that oligopolies in increasing-return sectors are likely not good long-run investments. But start-ups who can think through a way to “cut them up” are. Finding such start-ups is of course like finding needles in the haystack of Schumpeter’s Creative Destruction.
I once worked for the IMF as staff. There I learned some about how exchange and gold markets work, how central banks manage reserves, how the IMF’s voting and capital structure is determined, and how country economists operate.
I did graduate work in economics at Brown (1971-74) and George Mason (2003). I have taught introductory economics and history of economic thought at Silliman University.
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I maintain another blog, Timeless economics, on the history of economic thought. It contains posts from my students.
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My email: firstname.lastname@example.org
My snail mail: College of Business Administration, Silliman University, Dumaguete City, Philippines.
– Orlando Roncesvalles