Economics @ ITT

Is the 1%’s Lack of Humility Is the Real Problem

Posted in economics by ittecon on September 26, 2014

[I]t’s human nature to show off, all the more so in highly unequal societies, people being the status-conscious beings that they are. It’s futile and beside the point to chide the rich for this behavior.

via Paul Krugman Dismantles the Notion That the 1%’s Lack of Humility Is the Real Problem | Alternet.

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Conspicuous Consumption: A(nother) Cautionary Tale

Posted in economics, environment by ittecon on January 27, 2014

Unfettered capitalism is a road to extinction, and, sadly, not just a metaphor.

At first the frenetic pace of the killing didn’t matter: there were so many seals.  On one island alone, Amasa Delano estimated, there were “two to three millions of them” when New Englanders first arrived to make “a business of killing seals.”“If many of them were killed in a night,” wrote one observer, “they would not be missed in the morning.”  It did indeed seem as if you could kill every one in sight one day, then start afresh the next.  Within just a few years, though, Amasa and his fellow sealers had taken so many seal skins to China that Canton’s warehouses couldn’t hold them.  They began to pile up on the docks, rotting in the rain, and their market price crashed.

To make up the margin, sealers further accelerated the pace of the killing — until there was nothing left to kill.  In this way, oversupply and extinction went hand in hand.  In the process, cooperation among sealers gave way to bloody battles over thinning rookeries.  Previously, it only took a few weeks and a handful of men to fill a ship’s hold with skins.  As those rookeries began to disappear, however, more and more men were needed to find and kill the required number of seals and they were often left on desolate islands for two- or three-year stretches, living alone in miserable huts in dreary weather, wondering if their ships were ever going to return for them.

“On island after island, coast after coast,” one historian wrote, “the seals had been destroyed to the last available pup, on the supposition that if sealer Tom did not kill every seal in sight, sealer Dick or sealer Harry would not be so squeamish.”  By 1804, on the very island where Amasa estimated that there had been millions of seals, there were more sailors than prey.  Two years later, there were no seals at all.

via Noam Chomsky is right: It’s the so-called serious who devastate the planet and cause the wars – Salon.com.

We’re Addicted to Economic Growth and It Will Be the Death of Us

Posted in economics by ittecon on October 7, 2013

I think the American people right now have been so focused, and will continue to be focused on our economy and jobs and growth, that if the message is somehow were going to ignore jobs and growth simply to address climate change, I don’t think anybody is going to go for that. I wont go for that.

via Were Addicted to Economic Growth and It Will Be the Death of Us | Alternet.

A Free (Rigged) Market is Good for Everyone Except 99% of Americans

Posted in economics by ittecon on September 16, 2013

A nice piece by Paul Buchheit.

Free-market libertarians go to outrageous exremes to convince themselves and others of the infallibility of the market. Even when opposing evidence smacks them in the face, they conjure up sound bites that seem vaguely convincing but are in reality meaningless. Here are some examples.

via A Free Rigged Market is Good for Everyone Except 99% of Americans.

Beats by Dre: More Disproof of a Rational Actors

Posted in economics by ittecon on September 13, 2013

In 2008, Monster, a tech company known for overpriced cables and zealous litigation against Rhode Island mini-golf courses, teamed up with Dr. Dre, the legendary hip-hop artist and producer who helped bring Snoop, Eminem, 50 Cent, and Kendrick Lamar to the masses. Just five years later you can look around any playground, subway train, or suburban mall to see the result, and it starts with a lower-case b: Beats by Dre headphones have locked down the market.

via Beats by Dre market share: How the headphones company conquered the market. – Slate Magazine.

Ronald Coase, Law Professor and Economist, Dies at 102

Posted in economics by ittecon on September 4, 2013

I am not a huge fan of Ronald Coase, but I do respect his insight into transaction costs. It is his further work in support of private property as a means to mitigate social costs I find lacking—and of course the necessity for zero transaction costs for his theory to apply to the real world.

Ronald H. Coase, whose insights about why companies work and when government regulation is unnecessary earned him a Nobel Memorial Prize in Economic Science in 1991, died on Monday in Chicago. He was 102.

via Ronald H. Coase, a Law Professor and Leading Economist, Dies at 102 – NYTimes.com.

Chomsky: The US Behaves Nothing Like a Democracy

Posted in economics by ittecon on August 19, 2013

The role of the PR industry in elections is explicitly to undermine the school-child version of democracy. What you learn in school is that democracies are based on informed voters making rational decisions. All you have to do is take a look at an electoral campaign run by the PR industry and see that the purpose is to create uninformed voters who will make irrational decisions. For the PR industry that’s a very easy transition from their primary function. Their primary function is commercial advertising. Commercial advertising is designed to undermine markets. If you took an economics course you learned that markets are based on informed consumers making rational choices. If you turn on the TV set, you see that ads are designed to create irrational, uninformed consumers making irrational choices. The whole purpose is to undermine markets in the technical sense.

via Chomsky: The U.S. behaves nothing like a democracy — www.salon.com — Readability.

The Myth of Competitive Markets

Posted in economics by ittecon on August 5, 2013

This blog doesn’t have much material yet, but what it does have is promising.

What [do] orthodox economists say about this lack of realism [in models of perfect competition]? Simple: they minimize it by saying that all scientific models are in some measure unrealistic. However, as already mentioned, the model of perfect competition is not a simplification of reality but rather is openly at odds with reality . But orthodox economists have an answer yet. They say: “This model is only the basis and principle of our research program. After, starting from this we will develop other models of imperfect competition more realistic, with market power, product differentiation, barriers to entry and uncertainty. The student only needs to be patient. Little by little as he progresses in his courses, will go looking models more and more realistic”. Here we have, therefore, the grand means of redemption that has neoclassical theory to its unrealism: the method of “successive approximations”.

The first thing we must say about this is that it is a big scam. In effect, during the first years of study is said to economics students that they will study models more and more realistic, but later, already explained the models of imperfect competition monopoly, oligopoly and monopolistic competition, economic theory courses become much more unrealistic and abstract.

via The Heretical Economist: ECONOMICS FOR HERETICS: EXPOSING THE MYTHS OF ORTHODOX ECONOMICS Extract from Chapter 5 – “The Myth of Competitive Markets”.

The great e-book price war

Posted in economics by ittecon on July 2, 2013

Closing arguments for the Department of Justice’s antitrust suit against Apple concluded last week, although U.S. District Judge Denise Cote is not expected to reach a decision for another couple of months. If you’ve found the case difficult to follow, you’re not alone. Still it’s worth getting a handle on the basics because the suit — or, more precisely, the business deals behind it — have changed book publishing in significant ways. Furthermore, Judge Cote’s decision could have impact well beyond the book industry.

Apple was charged with colluding with publishers to fix e-book prices. At the root of the dispute lie two different ways that publishers can sell books to retailers.

via Everything you need to know about the great e-book price war – Salon.com.

Why Should Taxpayers Give Big Banks $83 Billion a Year?

Posted in economics by ittecon on June 21, 2013

The top five banks—JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc.—account for $64 billion of the total [US government tax] subsidy [of $83 billion], an amount roughly equal to their typical annual profits see tables for data on individual banks. In other words, the banks occupying the commanding heights of the U.S. financial industry—with almost $9 trillion in assets, more than half the size of the U.S. economy—would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

via Why Should Taxpayers Give Big Banks $83 Billion a Year? – Bloomberg.