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Tag Archives: 02: The One Lesson of Business

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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Why is real estate market so inefficient?

The US real estate market is really inefficient: For decades the market has been characterized by low volumes and extortionate transaction costs (sales commissions, taxes, and mortgage fees total about 10% of the sales price). [As a result,] just 7% of American homes change hands each year (down from 20% in the 1950's). PropTech firms are trying to take advantage of the inefficiency, helped by my former employer, the Antitrust Division of the Justice Department: ...in 2008 the Department of...

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Is this underlying cause of rising inequality?

From David Brooks' Atlantic article, If you want to summarize the changes in family structure over the past century, the truest thing to say is this: We’ve made life freer for individuals and more unstable for families. We’ve made life better for adults but worse for children. We’ve moved from big, interconnected, and extended families, which helped protect the most vulnerable people in society from the shocks of life, to smaller, detached nuclear families (a married couple and their...

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No institutions are seen as both competent and ethical

WSJ survey shows mistrust of all major institutions, but particularly Government.  Business seems to be responding.   When it comes to looming societal challenges, 92% of people said it was imperative for their employers’ CEOs to speak out on issues from the ethical use of technology to climate change, and three-fourths said they believed chief executives should be the drivers of change, rather than waiting for government intervention.  Some CEOs have picked up on this already. Lawrence...

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Old people taking from the young

WSJ has an interview with Prof Ed Glaeser on how old people are using government to enrich themselves at the expense of the young: Consider the housing market. “In the 1960s and earlier,” Mr. Glaeser says, “America basically had a property-rights regime that meant that anyone who had a plot of land could pretty much put up anything reasonable on that plot of land.” Since then, cities and towns have circumscribed the areas where homes can be built, capped numbers of units, and imposed strict...

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Switzerland vs Sweden

NY Times on Sweden: Die-hard admirers of Scandinavian socialism overlook the change of heart in countries such as Sweden, where heavy government spending led to the financial crises of the 1990s. Sweden responded by cutting the top income tax rate from nearly 90 percent to as low as 50 percent. Public spending fell from near 70 percent of G.D.P. to 50 percent. Growth revived, as the largest Scandinavian economy started to look more like Switzerland, streamlining government and leaving...

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