This is D's Typepad Profile.
Join Typepad and start following D's activity
Join Now!
Already a member? Sign In
Recent Activity
Lehman Brothers came quite close to collapsing an entire capitalist economy. It would have if we were practicing pure 19th century robber baron capitalism. Thankfully, we don't practice free-market capitalism any more, we have regulated markets with central banks and rules against monopolies, cartels, predatory pricing, blatantly false advertising, company towns, and many of the other defects that critics of capitalism complain about. That kind of capitalism has lost its moral power, as well. Most people by now recognize that central planning is both globally and locally inefficient, but defenders of market economies like Krugman generally fail to recognize how inefficient market economies are. The fact that the pricing mechanism is distributed among all participants provides markets with far more compute power than a Stalin-era BESM-6 to define an appropriate distribution of resources, but the computation is still globally exponential, and inefficiencies are everywhere. A market in which prices actually converge to anything close to equilibrium is incredibly rare. Just look at the prices of gasoline that you encountered in your holiday travels. In a 500-mile journey through Texas and Oklahoma, mostly on Interstate highways, I saw a range from $1.65/gal to 2.19/gal, nearly a 30% span. The price arbitrage that efficient market theory predicts isn't happening at the pump. I happen to have a car with a large gas tank, so I could stock up on the cheap stuff, and cruise past the expensive stations.
1 reply
D is now following The Typepad Team
Nov 29, 2015