Not really an exception

Markets failures are to market law as hydrogen globes are to gravity law.

We all save lives

I meet this guy and he says: "My work is to save lives. I'm a doctor". I answer: "Great! Mine too is to save lives!". He says: "Are you a doctor too?". I answer: "No, I'm an economist". He sees me frowning. I explain:

"An economist job is, for instance, to tell people how the economy is faring. This helps people to take decisions; in particular decisions related with the best way to finance colleges where medicine is taught, to finance profitable colleges and to shut down unprofitable ones. Other people decides on hiring or firing doctors, or on how to invest funds in order to pay hospital rolls.

By the way, all other people too helps in saving lives: the security officer outside the hospital, the traffic officer in the streets which helps doctors and security officers to arrive on time to their jobs, the man who sells the yachts which are the reason why some doctors decide to work at night, etc.

The fact that we only see the clock hands but not the pinions or ratchets are not an argument at all to conclude that only the hands are instrumental to allow a clock to work."

So, yes the doctor helps to save lives. He is the last part of a process not designed (and not designable!) by anyone but which nevertheless works. But as long as the doctor has a claim to say that he saves lives, anyone else has it too.

My summary of Knight's "Risk Uncertainty and Profit"

There is not such a thing as "systematic uncertainty". That's an oxymoron.

An ex-post zero sum game

The utmost feature of a forward commitment (forward, future, swap, etc.) is that ex-post if one party wins, the other party losses, ceteris paribus.

Market failure

If you find that markets fail, that's a proof of you lacking reading.

Intelligence and God

More intelligence is required to believe in God than to to be an atheist.

Time is a mere informational topic

Future is future only and as long as we are ignorant about it.

As long as we arrive at the logical mechanics of a system that system becomes for us in an eternal present.

Put another way: it is not merely that time is related to information. From the viewpoint of human thought, time is entirely an informational phenomenon. Uncertainty is not a feature of future, it is its essence. There where you don't find uncertainty, you don't have a future whatsoever.

There is not such a thing as time on the one hand and information on the other. There's only a one, un-separated, phenomenon: timeformation.

Two sorts of arbitrage

There are both commercial and productive arbitrage.

Commercial arbitrage is the typically-seen arbitrage consisting in buying cheap and selling dear commodities without incurring in transaction costs.

Productive arbitrage occurs always that there is a difference between the value of a finished good on the one hand, and a set consisting of an input plus a transaction expenditure on the other. In this sense, it is the most convenient to conceive of the set of inputs as a synthetic, such as the term is used in finance.

Since productive arbitrage is less obvious and require expectations on more issues, it is conceivable that there is easier to find businesses opportunities this way.

Productive arbitrage is the reason behind producing.

Always that the ratio between output and inputs through production is perceived as different from the price ratio between these two sets of commodities which can be expected to be achieved in the market, a decision to change the current level of production will occur.

General equilibrium never seen

The economy works, every single economic action is undertaken, precisely because and as long as the law of one price is not being accomplished.

The economy lives because there is no equilibrium.

Equilibrium and the law of one price are ultimate states. The economy always tends to them but never reach them beacause those states are themselves constantly changing due to disequilibrating forces (changes in preferences, technologies, and resource availability; and in general by our changing attitude towards resources).

Nevertheless, the market is that spontaneous order through which information flows towards entrepreneurs which then interpret them and act in order to make use of disequilibrium opportunities. By doing this entrepreneurs, this is all of us in our aim to improve our condition by buying cheap and selling dear, embody the very invisible equilibrating hand of the market, this is the economic or social manifestation of God, as it were.

Freedom

Freedom is always and necessarily, freedom to buy, which is akin to freedom to sell.

A creepy but regrettably true law on the fate of any industry in regards to its relation with government

A new industry either will be successful or not. If successful, either will be a competition for government or not. If competition for government, it will eventually be either taxed proportionately to its level of competitiveness against the government or plainly banned.

Apodicticity of theories

A theory, if correctly constructed from a logical viewpoint, can be useful or useless, but never empirically wrong. The test on a theory is exclusively on its logical correctness on the one hand, and on a useful identification of parts of the reality with concepts of the theory.

Transaction cost

1. By implication of the definition of input, any good requires more than one inputs to be produced.

2. Let's group inputs to produce a good g into two groups: on the one hand input i, and on the other hand all the rest of inputs, which we will call (composite) input j. Let's don't call it input i anymore. Since now on, let's call it good i.

3. Transaction cost from good i to good g, or good g's transaction cost from good i, or beginning with good i, is the value of input j.

4. The fact that the term "transaction cost" is mostly used when the value of good i is much dearer than the value of good j doesn't introduce anything analytically relevant to the analysis.

Market is the most efficient mechanism

The interaction of the information of agents with, in principle, different plans is the very definition of what a market is. It is true that a market could incorporate not all conceivable information, but markets do incorporate all possible information. If information is not already in the market, nobody (in particular, not the government authorities) can incorporate further information.

A market reaches all possible efficiency. There is no further informational, operating, or allocative efficiency beyond the market. In that sense, if you accuse the market of being inefficient, automatically you neglect the possibility of any further possibility whatsoever of improving that inefficiency.

If you do find a possibility of improving efficiency, you automatically become part of the market, not something beyond it.

There is, for instance, no way of reflecting new information faster than through the market. To put another way, the quickest way in which new information can be reflected is precisely what a market is.

No choice

By having to pick some currency in which to charge taxes, and by having to pick to pick some language in which to record information, the government cannot not choose a currency and a language for the territory whereas it rules.

No risk free assets

If

1) A security's risk is defined as the variability of return, and
2) US government T-bills' return is not fixed, and
3) a risk-free asset is defined as one with zero risk,

then

T-bills are not risk-free assets.

Governance versus profit

No failure in corporate governance disproves the apodictic axiom of aiming at profit maximizing in every and all properly defined firm or entreprenurial project. What a failure in corporate governance demonstrates is merely the coexistence within the company of several differenciated firms, at least one of which exerts what from the ownership's point of view of the other firms is seen as coercion. This coercion, just to be clear, is different from market competition.

Planned or spontaneous?

Picture 1

Look at the first picture. Can you say, just by seeing this Rubik's cube, whether that combination is purposeful or not?

Picture 2

Now, take a look at the second picture. Is it sorted? Is there order in it?

After seeing the second picture, take another look at the first one again and answer again the first question. Did your opinion change?

Picture 3

Now an (apparent) easy one. Take a look at the third picture. Is the cube on it solved?

Picture 4

Now, observe the fourth picture; this is: for God sake, take an actual look at the damn color disposition of the sub-cubes!

Does this fourth picture somehow change your answer to the question with respect to the third photo? (Once again, compare the third and fourth pictures.)

How many "disordered" cubes there are out of the two?


Is one of them already solved? If so, can you say which one?

Can it be that both are already solved?

Can it be that none is already solved?

Picture 5

Finally (we're almost done), take a look at the fifth picture. Is there a chance that the cube depicted there is disordered? Is there a chance that the cube in Picture 3 is more "ordered" than the cube in Picture 5?

To believe or not to believe

It seems incredible to me that some people believe in God, but it seems even more incredible that some people don't.

A manifesto on the epistemology of economics

1. The prime cause of economic phenomena is purposeful behavior. Economics qua economics doesn't have any more to explain once it arrives at this prime cause.

2. Every economic phenomenon is caused ultimately caused by the prime cause. Something not linkable to the prime cause is, ex definitione, not economic.

3. Through logic, it is possible to develop explanations about economic phenomena whose logic concatenation could not be obvious at first sight.

4. The interaction of the purposeful behavior of different agents or of the same agent through time or of the same agent with regard to different goals could generate the emergence of spontaneous orders which are themselves purposeless.

5. The method of economic logic is useful to explain economic orders and, through this, to arrive at pattern predictions, empirically falsifiable.

6. Economic logic is logically falsifiable in the sense that the chain of reasoning can be proven wrong by not obeying the logic method.

7. Economic logic is empirically falsifiable in principle, in the sense that its primitive assumptions can be proven not to be present in a factual situation.

8. Economic logic is often empirically not falsifiable in practice, in the sense that there is empirically impossible sometimes or always to falsify some primitive assumptions. For instance, it is impossible to empirically falsify that an assumed agent is not such. At the end, the attribution of some assumptions to facts is often a matter of faith. For instance, there is an ultimate impossibility for you to falsify whether this text is the work of an agent (i. e. the external successful fruit of a will) or just characters randomly disposed. Under a model which assigns equal chance to a list of characters to be randomly disposed in each position for a string of some positions, the chance that this exact text be the fruit of pure chance is higher than zero. So, at the end there is an inextricable, this is a necessary, portion the faith, even if small, in your hypothesis that this text is a fruit of some will, a purposeful behavior, an economic phenomenon.

9. Whichever which is not logically and therefore generally modelable is history, is particular.

10. The particular can be approached through statistics, but this, to be sure, is not economic logic.