Politics Increases Time Preference

Since we discussed politics yesterday, this tweet by Per Bylund is interesting.

Channeling my inner Christopher Hitchens, I am tempted to say that “politics poisons everything” but I channel my inner James Buchanan and recognize that politics is useful when it is considered as a form of exchange. Continue reading “Politics Increases Time Preference”

What Should Governments Do?

What is the proper role and function of a government is an important question. Should the government intervene in the economy to help the poor, to provide education, healthcare, produce public goods, reduce inequality, and a few hundred different activities?

That question has been asked and answered variously by a variety of people. As a classical liberal economist, my position is quite simple to state: I don’t want the government to intervene in the economy at all.

I believe that we should have something analogous to the “wall of separation between the state and the church” (see the 1st Amendment to the US constitution) in the constitution which expressly prohibits the government from interfering in the economy. Continue reading “What Should Governments Do?”

What do Economists do?

In a comment, Nithya asked what do economists do. What economists do is hard to define precisely. Just as one may ask what do doctors do. Clearly they provide medical services. But that could mean a lot of things: internal medicine, surgery, pediatrics, primary medical care, etc., etc.

Economists also come in a variety of forms. Some work on broad big questions such as why are some nations rich, some work on narrow issues like what are optimal subsidies and taxes, some on macroeconomic matters like inflation, unemployment, banking and finance, and so on.

The subject matter of economics, in the ultimate analysis, is people. Therefore everything that humans do — everything — falls into the purview of economics. Continue reading “What do Economists do?”

What is the Government?

We all have some conception of what the “government” is and consequently what we think the government should do. In the next session we are going to focus on this. What or who is the government and what function each of us expects it to do? This is an important question not in some abstract sense but it matters in the way the world works.

Each one of us is part of various collectives. The range is from our nuclear families to neighborhoods to the big nation states. How we in the collective think about the nature and role of the state matters enormously.

Do reflect on this question — What’s the nature of the state and what is its role? — and we will have a discussion the next time.

Price Control

It’s really very natural that if the price for something is high, the poor would not be able to afford it. And if that something also happens to be a necessity and not a luxury, it makes sense for someone to make sure that the price is made low. The question then is who is that entity, and how will that entity succeed in lowering that price.

Please think about that and if you would put a comment to this post. I would also like to point to an old blog post of mine: The Unbearable Silliness of Controlling Prices from December 2014.

Technology and Productivity

One of the core concepts that we have discussed is the role of technology in human progress. We invent and discover — through directed search but very frequently accidentally — ways to getting things done more efficiently. As more people spend more time figuring out cheaper processes of producing stuff, and also producing new sorts of stuff, we end up with the modern world.

This is just one of those random videos on YouTube which illustrate the point above. I’m not sure if it will play for you, though. It could be behind a pay wall. If it is, let me know in the comments and I will figure out a way for you to watch it.

The Economic Story so Far

We are done with around half the course so far. In trying to understand how the world works, we looked at the world as it exists today through the lens of economics. There are multiple ways of looking at the world — historically, socially, culturally, geographically, scientifically, and so on. Why the focus on economics then? The trivial reason is that economics is the primary tool I have to explain the world.

The less trivial reason is that economics is the singular discipline that comprehensively explains how the world of humans works and why it works this way and not another. The hard sciences do a great job of explaining the world of inanimate matter. Economics explains the way the world of humans works. Continue reading “The Economic Story so Far”