Rationale for a Sheep Dog

Greg Mankiw attempts to point out the three most important Concepts in Economics. I first must say I like Ricardo, find Demand and Supply fascinating, and discover that externalities have less interest for me than expected. On the other hand, I cannot find Opportunity Costs to be a God, as does John Palmer. Am I being particularly quarrelsome, or can I actually find some fault with it all?

I must say I have never found Markets to be terribly efficient. Markets are a mixture of Knowledge levels, always set to fleece the Suckers. The relative level of inefficiency in the Markets can best be judged by the degree of Commitment Contracts covering what quantity of a Resource or Product; the greater quantity given over to Contracts, the more inefficient is the Market. The allocation mechanism of the Market also remains a poor medium, one where devotional purpose is discarded to be replaced with Profit Motive. Best allocation is not guaranteed by a greater Profitability shown. A Case in Point is the huge devotion of resources to the Health industry, where long-term Outcomes are universal Failure, and intermediary Outcomes are probably mediocre by comparative industry standards. Worry about Markets and their ability to support Business formats which are obviously deficient.

Externalities are an excellent Study reference, but consider the relative impact of them. No matter what Externality which you examine in its economic context, invariably One-Quarter of the damage of any economic practice has already been done, and industry’s major Concern is avoidance of the Cost of continued damage awards. Business spends significant funds to extending litigation of Externalities to as great a length as possible, and stands entirely resistant to efforts to pay for previous damages (any Point prior to active Agreement). It is an wonderful variation of Three-Card Monte.

Opportunity Costs create an oasis for Pirates. Business, without Regulation, invade any sector and every resource in the Economy, reaping (or raping as is your preference) any Profit which can be pried from the Woodwork. There is also serious distortion created by the philosophy of realizing Immediate Profits, to the detriment of long-term Productive Gain. Unregulated Comparative Advantage fairs as poor Henhouse, unless limited to strictly Productive ease. All other Outcomes evolve into starving Labor, or defrauded Consumers. Economic theory in adorable in construct, but Business corruption of its principles quickly develops an economic Cost of its own. lgl