Theories aren’t for sissies.


A world without transaction costs is the economist’s version of a spherical cow. Coase’s goal in describing a transaction-cost-free world was to focus attention on the importance of transaction costs to economic policy. …Economic policy analysts on the political right began treating “zero transaction costs” not as a heroic simplifying assumption, but as a plausible policy goal.

via The Coase Theorem is widely cited in economics. Ronald Coase hated it.

Related: “A farmer has a problem with foxes eating his hens. So he asks his physicist friend to help find a solution. The physicist spends a day thinking, then replies ‘Well, I’ve found a solution, but it will only work for spherical chickens in a vacuum.’”


Some economists are drunks.


Youre looking at a dysfunctional political economy dominated by rent-seeking in which “in the know” customers hope that other customers dont find out about high-quality options.

via Bar supply elasticity: a tragedy..



Yet influential people on both sides of the Atlantic heaped praise on the prophets of austerity, Mr. Cameron in particular, because the doctrine of expansionary austerity dovetailed with their ideological agendas.

via The Austerity Debacle. –

…merely spending more money that the government doesn’t have is hardly a solution in the absence of a broader plan, an inspiring vision, and a bigger narrative that explains how not only more spending but a rejiggering of budget priorities will help.

via Stimulus vs. Austerity: An Unsettled Debate.