Coolthin.gs

Thoughts and commentary from a young brash economist/philosopher.

No recovery yet but...hey look a squirrel!

This is where people I disagree with on economics would say "Well obviously it didn't work, there wasn't enough stimulus!" which is a "head I win tails you lose" trap. Of course those people willfully remain ignorant of 70 years of rebuttals to their Keynesian ideas so I can call them delusional. 

If you'd like a recent rebuttal to and a keynesian's comments then you can check out Krugman in Wonderland. The blog is by Professor William L. Anderson who also writes for the Ludwig Von Mises Institute. His writing's are available here.

Hey Auto Insurance Companies!

Here is an idea. Offer a optional insurance plan that has a really low rate but in order to be insured applicants are required to take a drivers test every three years. Should they fail the applicant would be put on a provisional plan with an expiration date and the full plan would not be reinstated until they complete 48 hours of a drivers education program, test again, and pass. You maintain a higher standard of driver competency which leads to a lower rate of at fault accidents by your customers. You profit from having to pay fewer claims thanks to few accidents and your customers have the benefit of lower rates in exchange for mandatory review periods. Now if all the car insurgence agencies were to compete with plans like this you would have even fewer accidents which makes a wining situation for everyone. 

And none of this would require government involvement. 

Lessons from Adam Smith

The following post is a comment I made to Tom Retterbush's post Good People but Bad Americans

Now lets take a second to walk though some basic micro economics. People seek to maximize utility with their given resources as well as expected future resources. Example, you think you'll buy something now because you get your paycheck next week. Expected future income.

You also have expected future expenditures such as bills or that vacation you've been saving up for and you also take these into account when you try to maximize utility with you purchases. 

Both you current and future resources along with your current and future expenditures play into your decision making process. So when you look at the prices of the goods you take into account the value you expect to receive from the good and the costs associated with it both short and long term. If you value the location of where the good was produced that gets included in your expected value.

Whether someone values the location of where a good is produced is left to the individual and they are entitled to hold their own opinions, values, and beliefs. The idea of an individual's freedom to choose is the very foundation of the United States of America and capitalism. You of course are free to disagree with their decisions.

But next time before you jump to decrying individuals take a second to think about positive effects from their decisions.

Example: I recently purchased a kayak that was not made in the US but I would not have been able to purchase one made here because it was prohibitively expensive given my budget. Now that I have the kayak though I take trips to West Virginia to use the states rivers. I stay at camp sites, I shop at stores, I purchase river tour tickets, and more, all which goes to local businesses of the state. You argue that I should have instead have purchase one American made kayak which I would have been forced to leave in my garage because I wouldn't have the money to take it anywhere. The net economic gain for more Americans is greater with my purchase of an imported kayak, not to mention the money going to the American shipping industry with it's docks, dock workers, trucks, truck stops, and teamsters.

Greed has economic benefits, to quote the father of the science of economics Adam Smith from his book the Wealth of Nations written in 1776, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."