Modern Economics

Its used to highlight the importance of transaction costs. Enforcing property rights only provides a solution if those costs aren't substantial. We only need, for example, asymmetric information and we encounter problems: i.e. bargaining becomes too burdensome, particularly with the moral hazard enabled by the information problems.

You're therefore underestimating the problem!

Economic theory is rarely used to establish the 'best' economy. Its mainly motivated by understanding actual phenomena (and then sometimes offering police repercussions). Consider, for example, the impact of risk on firm creation (and therefore self-employment). We can understand why there is such a significant difference between those who want to be self-employed and those where it is a practical option.

 

Above it's noted that "asymmetric information" can produce a problem but this problem does not need to exist. If a person doesn't have adequate information to become involved in a contract then they shouldn't become involved in the contract. Not becoming involved in a contract costs no one anything and no one's rights are violated.

Of note "morality" is subjective and is not a criteria that is acceptable related to the economy and enterprise. Only individual inalienable Rights matter because they are not subjective. If I find a piece of driftwood floating on the ocean and make a cane or walking stick out of it that is my property and no one has a Right to take it away from me. If I trade it for something else that someone else created in a voluntary exchange then that which I obtain belongs to me and no one has a Right to take it away. That is the Right of Property and it is an inalienable Rights.

In the second paragraph the term "police repercussions" is use but who are the police and what authority do they have? As noted in the US the Congress is incompetent to make decisions related to the economy and the US government is the greatest negative influence to the American economy today. I question the "police" when their actions represent the actions of the ignorant.

While there is a role for government in protecting the inalienable Rights of the People that should be the only role it plays related to the economy of the nation.

 

This is a red herring. You’re referring to a specific aspect within the moral hazard problems generated by asymmetric information (and then assuming it refers to all of the multitude of problems that do exist). This sub-set would include, for example, the notion of ‘hold-up’. Given imperfect contracting (and asset specificity) firms have an incentive to avoid market transactions. That then encourages other problems: e.g. more hierarchical firms that can explore ‘market power’ behavior and inefficient human resource management practices (such as discrimination in order to increase economic rents from labour)

 

This ignores that government is incapable of addressing or correcting the problem. Inequality is inherent and cannot be resolved even by government tyranny. The tyranny of government only makes the problem worse.

 

No it doesn't. It merely shifts away from utopianism. Coase informs us that its a comparison between types of costs. To ignore the failure of the market is not rational

 

Before we can say that the market is a "failure" we must first get the government out of the market because the government by it's actions is the greatest corrupter of the market. The market is failing because of government interventionism currently so we don't have a measuring stick of what the market would be like without the corruption of government.

 

Laissez faire is neither achievable or desirable. You're allowing your dogma to cloud your understanding of economic outcome

 

you have no ability to predict economic outcome, despite devoting your career to studying it.
Rather pointless and sad.

How does it feel to be the lapdog for government regulators ?

 

Why would I want to predict economic outcome? I'm not working for the Bank of England you know. I only need to highlight inefficiency, waste and irrationality.

You're not making sense. That's probably done on purpose though

 

The belief that laissez fair capitalism is not attainable is false. Whether it is desirable is an opinion. What we do know is that we don't have Keynesianism in the United States and, in fact, have no recognizable economic theories being applied in the United States. What we have is a mixture of corruption and government monopolies.

The Federal Reserve bank, a private banking monopoly authorized by the US government, is the most corrupting influence in the US economy today. It's sole interest is self-interest and it has broad authorizations from government that violate contract law and the government supports the fraud and corruption it engages in.

 

Is there anything inherently wron with inefficiency, waste or even irrationality? That is a personal value judgment is it not?

As I've repeatedly noted the greatest inefficiencies, waste and irrationality are generated by government interventionism in the market. If we eliminate that don't we improve efficiency, reduce waste, and become more rational? It won't be perfect but perfect is not the goal. If the goal is to improve efficiency, reduce waste and become more rational then laissez faire capitalism does that so why is there a bigoted opposition to it?

 

No, its based on a non-dogmatic understanding of the nature of capitalism (together with an appreciation of economic history where government coercion has always played a key role in creating capitalist market)

Of course Keynesianism has been the norm in the US (we just have to refer to the military sector for that). Are there substantial influence costs? Of course. However, Keynesianism was never based on some utopian view of economic relations

 

It was a reference to my occupation!

 

I guess if you live in an isolated system, you wouldn't

only if you don't want your views to be applicable outside of narrowly defined single variable systems.

 

Again you're not making any sense. I'm sorry that economics isn't consistent with your dogma though. It must be rather horrid

 

that was weak, even for you.

 

Again you don't make sense. Try some economics!

 

try facing the fact that you can't predict what an economy will do.

 

Again, you're not making sense. I have no need to predict what an economy will do. I could use VAR analysis to help understand how specific regional factors are likely to change. However, that is purely about filling in the disaggregation gaps when deriving background information.

Are you trying to make a comment over macroeconomic modelling? If so you've asked the wrong person (or you're deliberately spamming)

 

That is obvious.

 

Have you decided what your argument is yet?

 

yes, and you have played into it quite well. thank you.

 

Again you're not making sense and you're not making any economic argument. It might be nice if you put that right. Why, for example, have you mentioned whether "I" can predict the economy? Do you believe I'm the Chancellor or somebody of that ilk? It just lacks sense!

 

I would agree with this. I'm not much a fan of just randomly apply mathematical concepts to economics for no reason though. It's totally fine if it help use understand and justify the intuition behind an idea. The problem is more when the maths goes trying to find intuition to justify it.

The problem is that rational choice isn't really falsifiable. Thus when rational choice is or isn't applicable is primarily a value judgement. I do however, believe that any train of thought or concept will become ridiculous if taken to extremes e.g. I find some Marxists a little over reliant on conflict theory and such. Should it be considered? Absolutely! Does mutually beneficial exchange exist? Of course!

 

no, I believe you make a good living advising clients how to best profit from government market manipulations in the short term, despite the fact that those regulations might not be in the best interests of your clients or the general economy in the long term.
Further, knowing that you have no ability to project future economic conditions, you know that you will always be there to bilk your client again, helping him adapt to further government market manipulations.