CHAPTER 8 WHY PRICES ARE GOOD Smith Versus Darwin - The Armchair Economist (revised and updated May 2012): Economics & Everyday Life by Steven E. Landsburg - #uccellodelparadiso #studenticolcodone #mancasempreunmercato #elefantialguinzaglio #venderearia #ilsoffiafoglie
CHAPTER 8 WHY PRICES ARE GOOD Smith Versus DarwinRead more at location 1209
Note: Errore classico: pensare ad un'analogia tra evoluzione biologica e mano invisibile: la prima è molto più sprecona... Esempio: la coda dell'uccello del paradiso. Come è stato possibile che l'evoluzione abbia tollerato una simile inefficienza? Semplica: in evoluzione nn esiste contrattazione e quindi neanche un contratto tra gli uccelli in cui decidere di dimezzarsi la coda. Sul mercato, invece, i contratti sono centrali... Altro esempio: immagina che a scuola i ragazzi nn imparino nulla ma i datori prediligano i laureati xchè mediamente + intelligenti. La scuola nn rende intelligenti ma l'intelligenza aiuta a scuola. Qui gli studenti sono come gli uccelli del paradiso... Non è la razionalità a salvarci da qs inefficienze ma il mercato guidato dalla Mano Invisibile... Interpretazione errata do M.I.: provvidenza. Altra interpretazione errata di M.I.: razionalità umana + selezione naturale. Interpretazione corretta: razionalità umana + prezzi + competizione. Ovvero: l'esistenza di prezzi e mercato colloca in modo efficiente le risorse. C'è un'inefficienza? È xchè manca un mercato (es. xchè i costi di transazione sono troppo alti... Il mondo è pieno d'inefficienze che molti imputano al mercato. M.I. ci dice che vanno imputate alla mancanza di un mercato. Vedi il caso dell'inqiinamento: manca un mercato dei diritti ad inquinare. Non c'è troppo capitalismo, ce n'è troppo poco... Altri esempi: elefanti e specie in pericolo. Foreste e i danni del riciclaggio. Il caso del soffia foglie... I teoremi del benessere e l'eq. generale traducono formalmente il concetto di M.I. Edit
In biology, there is no equivalent of the Invisible Hand. Survival of the fittest is a different thingRead more at location 1216
Male birds of paradise have ridiculously long tails. Evolution has cursed them with tails far too long for any practical purpose,Read more at location 1218
How could such a handicap have survived natural selection? In fact, Darwinism requires us to ask something far more perplexing: How could such a handicap have been a consequence of natural selection? Remarkably, the biologists have answers. Male birds compete for female birds, who want mates capable of fathering healthy offspring.Read more at location 1221
The bird now occupying the podium is the bearer of a particularly magnificent specimen (he needed three assistants to carry it as he ascended the stage). He rejects the radicals’ proposal out of hand but offers a grand compromise: “Let each and every one of us cut the length of his tail by half.Read more at location 1230
For birds of paradise, it is an unfortunate truth that such a compromise can never be enforced.Read more at location 1237
The outcomes of biological processes are often inefficient, for the simple reason that there is no reason why they should not be. The outcomes of economic processes can be inefficient also, but they are efficient remarkably often,Read more at location 1242
For such an example, let us make the pessimistic hypothesis that students learn nothing of any value in college. Nevertheless, employers prefer to hire college graduates, because grads are smarter, on average, than nongrads. Going to college did not make them smart; rather, being smart enabled them to survive college. Still, if employers have no other way to distinguishRead more at location 1245
In this example, students are like male birds of paradise, employers are like female birds, and getting a college education is like growing a long tail: It is an expensive way to acquire something useless that nonetheless signals your inner qualities.Read more at location 1248
Suppose that students could all agree to attend only half as much college as presently: Those who now graduate from four-year schools will attend two-year schools instead;Read more at location 1250
With this plan in effect, the employers’ ranking of the students would not change, and each student would save half his tuition costsRead more at location 1252
Rational behavior is no vaccine against inefficiency. In each of our examples, every individual acts rationally—theRead more at location 1260
If rationality cannot save us, what can? Remarkably—incredibly—miraculously—there is an answer. Under quite general conditions, when goods are produced and exchanged in competitive free markets in which people trade at market prices, economic activity leads to efficient outcomes. This fact is what economists have in mind when they talk about the Invisible Hand.Read more at location 1262
It has been said that Smith was expressing a religious sentiment, a faith that Providence oversees our affairs.Read more at location 1267
Individual rationality, coupled with competition and prices, leads to efficient outcomes;Read more at location 1271
This is so even though individual rationality and competition without prices rarely leads to such desirable outcomes.Read more at location 1273
The Invisible Hand Theorem is not at all obvious, but it is true. In the 1950s, the economists Gerard Debreu and Lionel McKenzie, working separately, successfully translated the Theorem into a statement about pure mathematics and rigorously proved that statement.Read more at location 1274
the First Fundamental Theorem of Welfare Economics, and it can be stated succinctly: Competitive markets allocate resources efficiently.Read more at location 1277
The Second Fundamental Theorem says this: No matter which of the many efficient allocations you want to achieve, you can always achieve it by first redistributing income in an appropriate way, and then letting competitive markets function freely.Read more at location 1279
I see no analogue of prices in the origin of species,Read more at location 1282
The world abounds with inefficiency, and to the untrained eye much of it seems to be the result of “cutthroat competition” or “markets run amok.” But the Invisible Hand Theorem tells us that if we seek the source of inefficiency, we should look for markets that are missing,Read more at location 1330
What is the ultimate source of this inefficiency? Some might say it is the consequence of too much market capitalismRead more at location 1338
Actually, it is the consequence of too little market capitalism: There is no market for air.Read more at location 1339
None of this is meant to imply that it would be easy to organize and maintain a market for air,Read more at location 1346
African elephants are hunted for their ivoryRead more at location 1349
The demand for beef is far greater than the demand for ivory, but cattle are not threatened with extinction.Read more at location 1351
Similarly, paper companies have every incentive to replenish the forestsRead more at location 1352
Ironically, the companies respond to the reduced demand for trees by maintaining smaller forests.Read more at location 1354
Evidence indicates that recycling causes the world to have fewer trees.Read more at location 1354
leaf blowers. He told of going for a walk on an autumn day and watching each Denver homeowner blow his leaves into the next homeowner’s yard. He concluded that the problem consists of too many markets—we’d all be better off if nobody bought a leaf blower. Perhaps his son could have told him that there are also too few markets: If there were a way to charge the neighbor for using your yard as a trash can, the problem would vanish.Read more at location 1356
The governor was onto something, though: two missing markets can be better than one.Read more at location 1360
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