Economic Theory in Action

Mark Maremont lists the glories of the ‘Golden Coffin’. When is Enough enough? The trouble is not simply that Executives want the Operating Profits coming from their leadership, they also want the Operating Profits past their own death. The article clearly expresses this is not singular incidents of Family greed, but systemic throughout the Corporate world. No good young Economist has yet developed a model of how great a Percentage of the Operating Profits are directed to such types of CEO payments, but reading through the array listed soon notices multi-billions coming from Dividend checks to pay for the benefits. The Move I find most entertaining is the Stock Options granted to heirs to exercise, so they do not even have to pay any kind of Inheritance tax. Stockholders may come to discover that Corporate Income taxation has been replaced by Death Benefits for Executives.

Some of the reasons why elements of Economics and Journalism can be considered Short-Sighted. Mark Gilbert thinks that a 3.6% Inflation rate is beneficial, if it allows ease in writing more bad Paper; suggestive that he finds it easy to ignore a negative Interest rate and loss of Savings, so We can hide a loss in Unemployment and Real Estate values. Chris Farrell and Daniel Gross cherish the blush of Bubbles, denying notice of choked industries who lack fundamental Cash as they cannot declare the imagined Cash of Bubble industries; said imagined Profits, by the definition of Bubbles, which never materialize. Dani Rodrik presents some accolades for the Spence Report, which basically concludes that Model form will not work as well as Individual response to local conditions. It could have just said We need competent Businessmen on the ground.

Tyler Cowen notes that ebay auctions are in decline. People are looking for Fixed prices on Goods. Tyler does not extrapolate the data with an economic assessment, so I will rationalize a Scenario of possible impact. Auctions do wonderfully well within Periods of low Inflation–especially if that Inflation is relatively consistent. Auctions, though, integrate an unstable or high Inflation rate by a drop of Participation. Why? Inflation is affecting personal Incomes are altering rates, and Incomes which have not internalized the Inflationary pressures by higher Wages or Profits, find disadvantage in Bidding at auction with Incomes which have already generated higher Income. This inability to compete effectively creates a double-tier for every Product at auction. It seems inconsequential, but will destroy the auction format over time. lgl