F0ul Thoughts

Mild mannered on the outside, Free thinker on the inside

Economics 101 – What is it really all about?

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I have a great interest in Money! I also hate rules. Put these two things together, and you end up with one view of economics – the Free Market Model.

The alternative is the love of rules and money. That gives you Closed Market Economics.

They are both extremes which don’t really work.

Now that you know where I stand, lets look at things in more detail.

Economics is the study of the flow of money, and by definition, how to control that flow and its effects. When people do this, they don’t really have time to study reality, so they work with theory or models. This is much easier because they control the models! πŸ™‚

Free Market economics is where everything can be sold, and anyone can do it. You can’t cheat people, but everything else is legal.

Closed Market is where the government plans who can sell what to whom.
You can’t cheat the rules or people.

The reality is that neither have ever existed in its entirety, although there are examples of both extremes. North Korea (Closed) and Hong Kong (Free) are often mentioned.

The reality is that the vast majority of countries have a kind of mix, commonly called Corporatism. This is where various interested bodies of people come together to lobby the government for rules for its industry.

The end result is where some people can sell anything to some people, while others have to follow the rules set by the government of what they can sell to whom.

This is why the vast majority of economists are always wrong because they don’t acknowledge this in their models. However, on a very focused scale, such as within an industry (be it regulated or not) they will always be able to find examples of what they claim – so they still get paid! πŸ˜‰

Personally, I like the free market – I just wish we had one! πŸ˜‰

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Written by f0ul

March 11, 2011 at 11:23 am

Posted in economics

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