A 2-1/2 minute video lesson, from Milton Friedman. It is based on the story I, Pencil, by Leonard Read.
Thanks to Don Boudreaux for the pointer.
A 2-1/2 minute video lesson, from Milton Friedman. It is based on the story I, Pencil, by Leonard Read.
Thanks to Don Boudreaux for the pointer.
Oct 22 2007
Moody's plotted the rate at which recent mortgages are going into default within the first 9 months of issuance, and it is quite high. Look at the graph at Calculated Risk, reproduced by James Hamilton. When I was at Freddie Mac, we presumed that any loan that defaulted within 12 months was fraud. Typical cases incl...
Oct 21 2007
I've long been skeptical of Chinese growth numbers. I don't doubt that China's economy is growing rapidly, but year after year of 10% growth seems incredible. In addition to the generic argument for doubting extreme numbers, we have the long history of Communist regimes falsifying their numbers, and Western observers...
Oct 21 2007
A 2-1/2 minute video lesson, from Milton Friedman. It is based on the story I, Pencil, by Leonard Read. Thanks to Don Boudreaux for the pointer.
READER COMMENTS
racial halfpipe
Oct 22 2007 at 10:05am
dude, you can watch the entirety of friedman’s free to choose at http://ideachannel.tv
it wails so hard.
Matt
Oct 22 2007 at 1:30pm
Uncle Milt is simply stating that, to the extent that an economy is stable, then it must be relying on markets with a two force function, price and transaction rate. These are public markets with revealed price information.
Such a theorem relies on square integrability, and that implies tails ends of the distribution where the binomial fails. Not all markets will be free.
Even as a libertarian Milt would have to agree, in large markets with only ten or so players, it is not necessary to reveal prices to the rest of us. Under most micro-economic assumptions, the wealth curve will always end up with the same percentage of un-free markets.
We are still stuck with out evolutionary instinct to keep the same herd variance.
Matt
Oct 22 2007 at 2:07pm
Here is Mllton’s problem at the quantum level.
If, say, the human is comfortable with a market variance of, say 5%, then a high valued, high wealth, free market should have, I think, at least 20 producers. Put this market to the right of the wealth curve, decomposed into markets. This market the last wealthiest thing on the right.
Now, our problem, in quantum world, is the empty spot farther to the right, there is an opportunity for evolution to better approximate the gaussian over a resource field by placing a small, wealthier market there.
So, 3 of the original 20 players collude, price fix, and they get wealthier by out predicting the market, and they form a group farther to the right. However, absent better inventory technology, all that has happened is a cyclic variation in time is induced. Ultimately the economy adjusts back to the previous state, and continues to bounce back and forth between quantum states, and linearly this is seen as cyclic variation in X and in time.
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