joshuago’s economics Bookmarks

The marketplace in which most commerce takes place today is not a pre-existing condition of the universe. It's not nature. It's a game, with very particular rules, set in motion by real people with real purposes.

Imagine the economic value of knowing, with mathematical certainty, exactly what the law is. If organizations could calculate legal risk as efficiently as they can now calculate financial risk (recession notwithstanding), millions of dollars in legal fees could be rerouted toward economic growth.

In his first interview since the world financial crisis, Gao Xiqing, the man who oversees $200 billion of China’s $2 trillion in dollar holdings, explains why he’s betting against the dollar, praises American pragmatism, and wonders about enormous Wall Street paychecks. And he has a friendly piece of advice.

Since Bernie Madoff has put Ponzi schemes back onto the front pages, it's worth considering whether we are all complicit in the biggest Ponzi scheme of them all, the idea that the global economy can grow indefinitely. One hopeful view is that we will reach a steady state economy, which remains approximately the same size in terms of aggregate quantity, but enjoys a qualitative dynamism within the constraints of that size.

A horror story about one company's ordeals with the city of Los Angeles. LA classified them in a lower tax bracket in 1994 and then arbitrarily bumped them up in 2007, ignoring its own ruling. Explains why business is fleeing LA and why one would think twice about establishing a business in Los Angeles.

Just like an extremely lethal virus dies out, terrible business practices also never quite see the light of day. It is these stealthy, annoying, nasty, creepy, sneaky, and irritating, pains-in-all-sorts-of-bodyparts practices that tend to persist. They don't kill instantly, but gradually wear a firm down.

Given the realities of America's debt situation and the trajectory of spending, a value-added tax (VAT) seems more and more likely as the only solution. Income taxes won't cover the shortfall.

Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.

Spending real money on things that don’t exist still sounds “fringe-y and aberrant” to many American consumers. Yet it has been going on for years in elaborate games like World of Warcraft or Everquest, as players buy tools, weapons and the like for digital characters.