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Tag Archives: 02: The One Lesson of Business

Satire of economists’ belief in markets

From the Atlantic, "The Market as God," by a Divinity professor: A few years ago a friend advised me that if I wanted to know what was going on in the real world, I should read the business pages. Although my lifelong interest has been in the study of religion, I am always willing to expand my horizons; so I took the advice, vaguely fearful that I would have to cope with a new and baffling vocabulary. Instead I was surprised to discover that most of the concepts I ran across were quite...

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Taxes destroy wealth: Uber and Lyft may exit California

From Foundation for Economic Education:On Friday, Uber and Lyft may exit California, which will leave hundreds of thousands of drivers unemployed and millions of Californians chasing more expensive cabs. ... In September of 2019, the California state legislature passed AB5, harshly restricting independent contracting (the gig economy).   ... By requiring ride-sharing apps such as Uber and Lyft to reclassify their drivers as full employees, the law mandated that the companies provide...

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Unicorns by Region

Innovation leads to growth, and growth really matters:  In the late 1950s, Nobel Laureate Robert Solow attributed about seven-eighths of the growth in U.S. GDP to technical progress. As Solow later commented: “Adding a couple of tenths of a percentage point to the growth rate is an achievement that eventually dwarfs in welfare significance any of the standard goals of economic policy.” Although the number of unicorns is a noisy measure of innovation, the relative number of unicorns in the...

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Sharing risk

In general, if one party is less risk averse than another, contracts can create wealth by moving risk from a lower-value use to a higher-value one.  The classic example is insurance which moves a lottery from consumers willing to pay to get rid of it, to an insurance company willing to assume it for a fee.Now Google sharing cancellation risk with hotels through its pay-per-stay program that charges hotels for advertising only after a guest has finished a stay.  If guests cancel, e.g., due to...

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Is it ethical to buy antibody rich blood at inflated prices?

Alex Taborrak tells it like it is:The huge demand for antibody rich blood (to develop a vaccine) has driven up the price: From March 31 to April 22, prices asked by Cantor BioConnect for its cheapest samples — always sold by the milliliter, the equivalent of less than a quarter of a teaspoon — rose more than 40 percent, to $500 from $350. QUESTION:  Is this ethical? ANSWER:  Only if you want to save lives.   “I’ve never seen these prices before,” said Dr. Joe Fitchett, the medical...

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Dying from Protection from Gouging

David DiSalvo has a write up at Forbes on his experience trying to obtain N95 masks during this pandemic. Federal and state officials say they are "scouring the globe" for PPE while some medical professionals are going without. Here is his summary. Millions of N95 masks have been available throughout the U.S., Canada and the UK during the pandemic, according to brokers trying to sell them. The high price point per mask, driven by extreme demand, has contributed to an overwhelmed reaction...

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Italy’s moral dilemma

NY Times Today, Italy has 10,149 cases of the coronavirus. [but] They lack machines to ventilate all those gasping for air. In other words, they have scarce resources and must allocate them somehow.  They follow a utilitarian ethic, a type of consequentialism: “Informed by the principle of maximizing benefits for the largest number,” they suggest that “the allocation criteria need to guarantee that those patients with the highest chance of therapeutic success will retain access to...

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Should electricity be a right?

MarginalRevolution has the answer In step 1, because electricity is seen as a right, subsidies, theft, and nonpayment are widely tolerated. Bills that do not cover costs, unpaid bills, and illegal grid connections become an accepted part of the system. In step 2, electricity utilities—also known as distribution companies—lose money with each unit of electricity sold and in total lose large sums of money. Though governments provide support, at some point, budget constraints start to bind. In...

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