Markets

Lotte grocery store in Fairfax VA, a favorite market. Click to embiggen

The economy is too important for it to be left to the impersonal machinery of markets. Economics only cares about money and profits, and totally neglects to consider that people matter.

The problem with capitalism is that it neglects the human being and instead deifies profits, productivity and efficiency, and it completely ignores humanity. Socialism, by contrast, cares about people. It’s there in the very word — socialism has social in it. Therefore, it must be good.

Markets are by construction amoral, if not immoral. Therefore, markets must be regulated by the government, and whenever markets fail to work out the socially optimal outcome –which is perennially and everywhere because markets are heartlessly driven by pure greed — the government must intervene and set things straight. Continue reading “Markets”

AMA – the Personal Library edition

The reading room in one of UC Berkeley’s libraries.

Libraries are one of the best inventions by humanity. They go back a long way but the modern libraries found in all the advanced industrialized nations are incredibly large. For example, the University of California has 100 libraries.[1]

Now of course, thanks to the digital revolution, we can not only have a very large personal library, we can in fact carry thousands of books in our pocket. My personal collection is not as large as the Library of Congress (established in 1800 and which has 171 million items) but it is still impressive by pre-digital age standards. My grandfather owned perhaps 20 books; my digital collection has around 20,000 books. Continue reading “AMA – the Personal Library edition”

Fixed Costs

The adage “no pain,  no gain” is broadly true with two main exceptions. One is that some people put in the pain but because of misguided effort (which is only evident ex post, not ex ante) or being simply unlucky, end up with no gain. The other being that some people put in little effort but with sheer good luck or cunning criminality end up with big gains. Unsuccessful entrepreneurs who are uncountably many belong in the first category, and politicians and gangsters (but I repeat myself) belong to the second.

A different formulation of the adage is perhaps more in accord with reality: no expectations of gain, no investment in pain. If people cannot be confident that they’d be secure in their property rights — that they would not be dispossessed of what they have worked hard for — they’d have little incentive to put in the effort to create wealth. Continue reading “Fixed Costs”

Bitcoin

I am not against cryptocurrencies. In fact, I am all in favor of alternative currencies, private currencies, LETS, etc. I believe that people should have the freedom to choose what assets they want to hold, and what to use as a medium of exchange for their market transactions. But I have never been in favor of Bitcoin. I think it is a stupid ponzi scheme.

I am broadly ignorant of what’s happening around the world since I don’t follow news. Thus it was that I learned from my friend Veer that cryptocurrencies were crashing today. That was interesting news to me. I looked up some sites to see what was happening. Here’s a graph of bitcoin prices over the last few months: Continue reading “Bitcoin”

Twitter and Musk

Liftoff of the 4th Falcon 1 which did not crash and burn (click on image for credit.)

A non sequitur in a recent comment[1] caught my attention: “And then there’s Elon Musk, who has earned much more than all deeshaa readers combined, whose respect for his “hard-earned” money is demonstrated by buying … Twitter!”

Elon Musk earned much more than the all the readers of deeshaa combined!? That surely wins the understatement of the year award hands down. Try “Musk earned more than all the readers of all blogs ever combined.” That’d be closer to the truth.

Let’s reflect on the fact of Musk buying Twitter. It’s his money. He earned it. He gets to do whatever he wants to do with his money. Smoke ’em if you got ’em, is the principle. Continue reading “Twitter and Musk”

Democracy – Part 2

The Stanford Encyclopedia of Philosophy, in its definition of democracy notes that it “refers very generally to a method of collective decision making characterized by a kind of equality among the participants at an essential stage of the decision-making process.” It goes on to detail four aspects of this definition, which I reproduce here for completeness:

“First, democracy concerns collective decision making, by which we mean decisions that are made for groups and are meant to be binding on all the members of the group. Second, we intend for this definition to cover many different kinds of groups and decision-making procedures that may be called democratic. So there can be democracy in families, voluntary organizations, economic firms, as well as states and transnational and global organizations. The definition is also consistent with different electoral systems, for example first-past-the-post voting and proportional representation. Third, the definition is not intended to carry any normative weight. It is compatible with this definition of democracy that it is not desirable to have democracy in some particular context. So the definition of democracy does not settle any normative questions. Fourth, the equality required by the definition of democracy may be more or less deep. It may be the mere formal equality of one-person one-vote in an election for representatives to a parliament where there is competition among candidates for the position.” Continue reading “Democracy – Part 2”

Happy Birthday, Friedrich August von Hayek

Friedrich August von Hayek was born 123 years ago on March 8th, 1899 in Vienna. His profile at Mises.org says that “Born to a distinguished family of Viennese intellectuals, Hayek attended the University of Vienna, earning doctorates in 1921 and 1923. Hayek came to the University at age 19 just after World War I, when it was one of the three best places in the world to study economics (the others being Stockholm and Cambridge).

“Like many students of economics then and since, Hayek chose the subject not for its own sake, but because he wanted to improve social conditions—the poverty of postwar Vienna serving as a daily reminder of such a need. Socialism seemed to provide a solution.” Continue reading “Happy Birthday, Friedrich August von Hayek”

Happy Mother’s Day

Happy Mother’s Day, all. May all beings be happy, may all beings be free of suffering, may all beings become enlightened.

With that benediction taken care of, I should get back to being a curmudgeon. First, I think the whole idea of one day in a year being dedicated to one’s mother is needlessly restrictive. If one values being born[1], then one must revere one’s mother every single day. Surely, marking only one day in a whole year to express one’s love and gratitude to the one person who was most directly involved in bringing one into being is not enough.

Second, I resent the MacDonaldization of the world, part of which is the adoption of American traditions as if one’s own tradition is somehow inadequate and inferior. It is undignified. To use an Americanism (I know, the irony), it is cringe-worthy. Continue reading “Happy Mother’s Day”

Democracy – Part 1

Democracy is a sacred word in India. As a concept, it is poorly understood (not just in India but across the world) but like people’s attitude towards their own religion, they uncritically subscribe to it without bothering to understand what it is, what it implies, what its premises are, whether or not those premises are true, whether it delivers what it promises, what its track record is, what the alternatives to it are, and whether or not they would be better off without it.

Democracy has a quasi-religious status in India (though not exclusively so) that places it beyond any scrutiny or criticism. The general attitude in India is that democracy and what’s the public good are synonymous. From that arises the comforting syllogism for Indians which says that since (1) democracy is good; and (2) India is the largest democracy; therefore (3) India is the best. QED.

In my view, democracy is not all that it’s cracked up to be. In fact, I think it is seriously flawed and, although in certain limited contexts it is better than the alternatives, people who get ecstatic at the mention of the word democracy are seriously deluded and what’s worse, their delusion is not harmless. That delusion has pernicious effects, the most serious of which is its negative impact on individual freedom. Democracy, as practiced, is contrary and antagonistic to freedom, and therefore inconsistent with human flourishing. Continue reading “Democracy – Part 1”

Money

Oscar Wilde in his play Lady Windermere’s Fan has Lord Darlington describe a cynic as “a man who knows the price of everything, and the value of nothing.”

Economists have frequently been accused of that character flaw, and that all that they care about is money. “For the love of money,” says the Christian bible, “is the root of all evil.” Unfortunately, many non-Christians also subscribe to that tripe.

Here’s a joke. An American and a Russian were boasting about their respective countries. The Russian says, “You Americans only care about money. We Soviets care about people.” The American says, “That’s true. That is why we lock up our money and you lock up your people.”

I am happy to note that ancient Indian tradition did not suffer from that delusion. See, for example, how the Panchatantra approached the matter of money in this post here. But people rarely understand what money actually represents, what it signifies and why. Ayn Rand provides a spirited defense of the importance of money in her book Atlas Shrugged. She had a character, Francisco, say:

“Let me give you a tip on a clue to men’s characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it.

“Run for your life from any man who tells you that money is evil. That sentence is the leper’s bell of an approaching looter. So long as men live together on earth and need means to deal with one another – their only substitute, if they abandon money, is the muzzle of a gun.”

The extended excerpt follows. Continue reading “Money”