Category Archives: Profit and loss

Marxism 101 Debunked

Marxist error is being actively and persuasively peddled by Dr. Richard Wolff, professor of economics at emeritus U Mass Amherst. In this post at the Learn Liberty blog, I debunk the important claim that those who make profit in a free market don’t earn that profit, rather they exploit their workers. A slice: Wolff: …Continue Reading

Profits in “Perfect” v. Actual Competition

“I learned in economics that in ‘perfect competition’ profits are zero, so any actual profits come from some kind of monopoly power. So how could profits be good?” This question was asked of me by a student at a recent economics seminar hosted by the Institute for Humane Studies. The simple explanation is that whileContinue Reading

How Free Market Forces Would Regulate Banks

One of my numerous smart and interested students at Towson University (yes, I’m fortunate), a non-economics major named Kristin, has sent me the following question in response to my recent post, “One Reason Governments Should Not Regulate Banks“: How would you rely on free market forces to better regulate banks? Here is my reply: Kristin,Continue Reading

Inequality Comes With Making Others Better Off

John Steele Gordon contributes to the current debate over income inequality—and Thomas Piketty’s recommendation of high income taxes and a two percent wealth tax to reduce it—with a fine op-ed in Tuesday’s Wall Street Journal, “The Little Miracle Spurring Inequality.” Gordon shows that large fortunes, and hence income inequality, are a consequence of entrepreneurs’ puttingContinue Reading

Let Market Forces Regulate – High-Speed Trading

Government regulation does not work as well as regulation by market forces. Government regulators have neither adequate knowledge nor good incentives to regulate effectively. The regulated parties always try, often successfully, to capture the regulatory process or game the system to their own advantage. Profit and loss in a system of private ownership and free exchange,Continue Reading

What’s Wrong With ObamaCare, in Seven Words

From the standpoint of its economic consequences—not the intentions of those creatures in Washington who wrote and passed it, but its consequences—the “Affordable” Care Act now going into effect is a destructive, retrograde, pernicious piece of legislation. American healthcare and health insurance have been badly in need of reform for decades, but the Affordable CareContinue Reading

Let Market Forces Regulate – Mortgage Standards

Part II of Free Our Markets argues that regulation by market forces outperforms government regulation. One of several reasons why governments make bad regulators is that two or more of the government restrictions, prohibitions, or mandates that bear on a particular kind of business may conflict with one another. That conflict can make it difficult,Continue Reading

Misallocation of Resources: Ghost Cities in China and Quantitative Easing in the US

Guest post from my former student Jim Vinoski: Free Our Markets explains how investment can quickly turn to waste when it’s shielded from market incentives and market feedback.  With government spending in particular, this non-market “investment” often results in continued allocation of capital that could be used for much better purposes toward less valuable ends. Continue Reading

Excerpt of the Day

The bound, proof copy of my book arrived via UPS today for my final okay before publication. Very exciting. Leafing through, I came across another passage I thought would go well here. It’s from the end of Chapter 2, “Profit and Loss Guide Innovation”: The main job of free-market profits and losses is not toContinue Reading

Excerpt of the Day

In the final proofing of my book, Free Our Markets, I noted some passages I thought might go well here on the blog of the same name. Here is one from Chapter 2, “Profit and Loss Guide Innovation”: We could fill many books with such examples, but these three illustrate the point: We should endorse andContinue Reading

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