Nice piece I came across in Library of Economics and Liberty.
There is not a lot to disagree with these. My one caveat about all such rules is that are a rough framework for conceptualizing the world, and are neither gospel nor a mantra. Reality does tend to intrude from time to time, making these sorts of sweeping statements much less tidy.
Regardless, I thought this a good list:
Ten Pillars of Economic Wisdom
1. TANSTAAFL: There ain’t no such thing as a free lunch.
2. Incentives matter; incentives affect behavior.
3. Economic thinking is thinking on the margin.
4. The only way to create wealth is to move resources from a lower-valued to a higher-valued use. Corollary: Both sides gain from exchange.
5. Information is valuable and costly, and most information that’s valuable is inherently decentralized.
6. Every action has unintended consequences; you can never do only one thing.
7. The value of a good or a service is subjective.
8. Creating jobs is not the same as creating wealth.
9. The only way to increase a nation’s real income is to increase its real output.
10. Competition is a hardy weed, not a delicate flower.
from David R. Henderson, The Joy of Freedom: An Economist’s Odyssey
Category: Philosophy, Rules
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
4. Deflationary
8. Not true. People working is wealth to those who benefit from their labor.
9. Hahaha….don’t tell the FOMC!
These are just folksy restatements of lessons from information theory and thermodynamics.
See also: Ferengi Rules of Acquisition
http://www.sjtrek.com/trek/rules/
11. Any cost not absorbed or accounted for by an enterprise (see #6), is passed on to society.
12. Never shit in a well — your own, or anyone else’s.
OT, but maybe up BR’s alley. Saw a few headlines about “rumor of a Microsoft and Research In Motion deal” at around 1/2 RIMM’s market cap. I think this lines up with previous BP commentary comparing Microsoft’s futile efforts in wireless relative to Apple.
I wonder, is there any value left in cell phone tech, or is it the 2005-smart-phone equivalent to the 1998-dvd-player; i.e the future margin is in content delivery, not in providing the container. Thats my home industry, and from an electronics engineering perspective the revolutionary period for cell phones is long past. Since 2004, its been nothing but processor upgrade, better screens, and application support.
Old stable software company plus old reliable phone maker equals so what?
These are all great!
I especially like #9… since all too often we equate economic health in terms of currency… which is like talking about the health of housing by discussing hammers. (money is the tool… not the economy itself).
My additional pillar though… And this applies to any economy larger than a small family business:
11. The altruism dilemma makes economic checks and balances (regulation, oversight and progressive taxation) ESSENTIAL to avoid a cycle of oligarchy, revolution and collapse.
Issues in Scaling Civilization: The Altruism Problem
http://culturalengineer.blogspot.com/2012/02/issues-in-scaling-civilization-altruism.html
Compensation and the Social Network
http://culturalengineer.blogspot.com/2009/10/compensation-social-network.html
Re: 4′s corollary (“both sides gain from exchange”) combined with 6 (“you can never only do one thing”): many exchanges have third-party consequences–not everything can be reduced to two-party interactions. A two-party exchange that makes those two parties better off may make a third party (or many third parties) worse off.
mostly agree
BUT BUT BUT amigo
knowlege and wisdom is the free lunch
knowlege wants to be free, but it can be tied up, imprisoned, kept secret, or hard to find
if you are going to tie it up like patents
you better have a damn good reason
Compare to Ghandi’s 7 Dangers to Virtue list:
1. Wealth without work.
2. Pleasure without conscience.
3. Knowledge without character.
4. Business without ethics.
5. Science without humanity.
6. Religion without sacrifice.
7. Politics without principle.
the value of all the free or nearly knowlege out there is beyond your comprehension,
its most of what humans know
its mostly knowlege MADE scarce or restricted by someone that you have to pay money for
there are some incentive arguments for doing that….i suppose….
duhh make that knowledge…that one didnt spellcheck either
11. What you measure matters.
12. Experience over ideology.
My $0.02
Economic Wisdom, I thought that was George Carlin’s line, along with Military Intelligence…
1. TANSTAAFL: There ain’t no such thing as a free lunch.
Obviously this guy doesn’t understand economics. After all the Laffer curve is a cosmic example of how by cutting taxes, tax revenue is increased, get it a free lunch. Laugh all you non-believers but we have been running the country based on increased revenue by decreasing taxes, a free lunch no????
http://www.investopedia.com/terms/l/laffercurve.asp#axzz1rwJJKQTh
Maybe this didn’t work out so well. Deficits as far as you can see, as predicted by the GAO as a result of the Bush tax cuts. But to the true believers that doesn’t matter, it is a religion and woe be to the non-believers.
@ formerlawyer – You might like this:
“Not everything that can be counted counts. Not everything that counts can be counted.” – William Bruce Cameron (citation discussion)
Interesting that the way to create wealth is to move resources (idle labor) to higher valued use (employed labor) via credit, but the way (we poor folk) accumulate wealth is to (mostly) move scarce resources (time based wages) to lower-value use (debt payment).
Edward Deming (went to Japan and taught them modern QA principals, and is a large part of why Japanese companies make better cars than US companies) said the following:
@formerlawyer- You might also be interested in Edward Deming a US citizen that taught the Japanese modern QA following WWII.
“The most important figures that one needs for management are unknown or unknowable , but successful management must nevertheless take account of them.”
http://en.wikipedia.org/wiki/W._Edwards_Deming
Deming is a national hero in Japan, but he never got much support or recognition in the US. Among many things he said were deadly sins was emphasis on short term profits. Managing for short term profits or for this quarters profits gets a lot of US companies into big trouble. He also said you get what you reward. All great points that largely have been ignored in the US. Interesting globally important guy, but largely unknown in the US.