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Market failure, which I am defining here as a market not reaching the equilibrium condition where quantity supplied equals quantity demanded, is ubiquitous. Every time we walk into stores, we see market failure happening: shelves and shelves of goods sit, waiting for buyers. This is excess supply (surplus), a market failure. If the market were .. MORE
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Obituaries
I first met Gordon Wood in the late 1980s, when I was a graduate student attending a roundtable organized by the Institute for Humane Studies, an organization devoted to exploring ideas of freedom and the open society, now based at George Mason University. For a young academic, it was an important occasion, bringing together several .. MORE
Fiscal Policy
Fiscal Dominance and the Politicization of Money Much of the contemporary debate about monetary policy focuses on technical questions: whether reserves should be scarce or abundant, whether fintech companies should have master accounts at the Federal Reserve, whether those accounts should resemble the accounts held by banks, or how far the Fed’s independence should extend. .. MORE
Monetary Policy
When Winston Churchill was named Chancellor in November 1924, he is said to have assumed it was the largely ceremonial post of Chancellor of the Duchy of Lancaster and was as surprised as anyone, given his lack of interest in economics, to find that it was Chancellor of the Exchequer, constitutionally the second most powerful .. MORE
Economic Theory
Market failure, which I am defining here as a market not reaching the equilibrium condition where quantity supplied equals quantity demanded, is ubiquitous. Every time we walk into stores, we see market failure happening: shelves and shelves of goods sit, waiting for buyers. This is excess supply (surplus), a market failure. If the market were .. MORE
Spontaneous Order and Social Coordination
“Social construction” is prominent: we are told in various places that this or that is a “social construct”: think of gender, race, or money. One book that played a central role in the emergence of that concept is Peter Berger and Thomas Luckmann’s 1966 The Social Construction of Reality. That work can proudly claim more .. MORE
Entrepreneurship
Adam Smith articulated the rhetoric of the Bourgeois Deal by highlighting fundamental differences among commercial, political, and martial societies. Everyone, he argued, is always practicing oratory on others and trying to persuade them to cooperate: “give me that which I want, and you shall have this which you want.” Luke Froeb and his coauthors in .. MORE
Regulation
Mancur Olson’s The Rise and Decline of Nations doesn’t provide a particularly optimistic picture: once your nation has been stable for a while, and may even have risen to wealth, it becomes more and more vulnerable to “institutional sclerosis.” This happens because small groups are better able to overcome free-riding, resulting in their ability to .. MORE
Regulation
A recent post argued that housing affordability is not so bad as it might appear when home prices are adjusted for all relevant factors, such as size, quality, and household income growth. While houses have become more expensive in dollars, they are also significantly bigger and nicer, and the average household has significantly more income. .. MORE
Money and Inflation
Inflation began rising in 2021 due to pandemic-related supply chain disruptions and reopening dynamics. The Russia-Ukraine war that started in February 2022 intensified these pressures through a commodity super cycle (a broad and sustained surge in energy and raw material prices) that sent inflationary shockwaves to nearly all major economies, including the U.S., where CPI .. MORE
In recent years, the Arctic has returned to the center of public attention: the renewed interest in Greenland, the progressive opening of maritime routes due to ice melt, and the claims over areas like the Svalbard archipelago are clear signals that Arctic policy will remain in the public eye. Regarding the Svalbard archipelago, located in .. MORE
This essay is part of Ten Key Ideas, an occasional series on fundamental economic concepts. “We call politicians our representatives and they often claim to be fighting for us. But when we think about it, we understand that our interests are diverse and that no politician can really fight for all of us.” Sometimes it’s .. MORE
Human beings are inherently pro-social creatures. Aristotle went so far as to refer to us as political animals, driven by our nature to create associations that culminate in the broader community of the polis. And our capacity for reciprocity, trust, and cooperation has deep evolutionary origins. These big brains of ours developed, in part, to .. MORE
Every line trending upward, every drop in cost, every additional ounce of efficiency we can squeeze from a bundle of inputs is the product of deliberate effort—of thousands of workers, engineers, factory managers, and line supervisors redesigning products, rearranging factories, testing and exploring new ways to do things. —Brian Potter, The Origins of Efficiency (304) .. MORE
Really thoughtful, well-organized essay. I had not previously thought about how goods on the shelf send a message to both seller and (potential) buyer. This makes me imagine teaching an intro econ class, getting students..
nobody.really, June 9