Category: Money

Paul Krugman recently admitted that in some limited cases free trade is not a good idea. This an interesting admission from an economist who in the 90s was a strong proponent of globalization and free trade. I’ve thought for some time that free trade, and free flow of capital, without free immigration, leads to a…

When capitalism is working well, it unleases the creativity of everybody in society. Because capitalism specifically rewards people who do what other people want, and because it gives everybody the freedom to try and fail, the effect is that society as a whole gets steadily better at giving people what they want. Of course, that…

We’ve gotten used to floating currency, but what does it really mean? The dollar has fallen with respect to the euro. If I want to buy something from Europe, I now have to pay more dollars than I did before, and/or the seller has to receive fewer euros. In a free market, prices should always…

Inequality is increasing in the U.S. The real income of the bottom 20% is stagnant or even decreasing. The real income of the top 1% is skyrocketing. The effect is that the difference between the rich and the poor is getting steadily larger. Is this bad? Extreme disparities of wealth is common in third world…

The New York Times ran an article today pointing out that in states with competitive electricity markets, rates are higher. Standard market ideology argues that when you have a competitive market, prices will always go down. However, this often fails to happen for utilities like electricity or water. Why doesn’t the market work? First I…