Rent, Debt, and Power
In 2009 Rolling Stone published an article by Matt Taibbi about Goldman Sachs. Taibbi writes: โThe worldโs most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.โ The statement is rather unfair to vampire squids, but aside from that detail the characterization is quite appropriate and, moreover, equally applicable to the finance, insurance, and real estate (FIRE) sector as a whole. A revised version of this article is part of chapter 15 of A Buddha Land in This World (Punctum Books, 2022). In Killing...
A Toy Model of Production Costs and Supply
In Economics as Malignant Make Believe I showed that the derivation of the supply curve in mainstream (neoclassical) economics is nonsense because production costs are nothing like they are assumed to be. This made me wonder, however, what would happen if youโd use a more realistic model of production costs โ What would production and supply look like then? This isnโt that hard to model, so I built a simulation model on a free afternoon. In the following, I will first explain the model and after that I will discuss the results of running the model at different settings as...
On Free Trade Ideology
According to conventional โwisdomโ free trade leads to prosperity. Usually the idea is based on a version of David Ricardoโs (1817) theory of โcomparative advantageโ which is taught in most high-school economics classes. There is, however, a fundamental problem with that theory, as was shown by Frank Graham in 1923, and unfortunately that problem tends to be ignored. In the following, I will briefly summarize Ricardoโs theory and Grahamโs correction thereof, and discuss why the latter is ignored and the effects and implications of that neglect. A revised version of this article is part of chapter 15 of A Buddha...