Colin Read

Alchian and Demsetz

As much as some spend a lifetime denying it, our heritage typically creates an indelible imprint on our nature, for better or for worse. Armen Albert Alchian’s life was formed in the wake of conflict and genocide. It is perhaps an interesting juxtaposition for a great mind who devoted a career to understanding how organizations can create symmetries and function as cohesive teams.

A Fly in the Ointment

In 1776, economics became a discipline and studies of the advantages of the corporate structure became its primary subject of analysis. Ever since Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, economics has rejoiced in and been hindered by what we now refer to as the neoclassical model.

Asleep at the Switch

Our central premise so far is one of enlightened capitalism. This notion recognizes the uncanny ability of self-interested individuals to make superior market decisions. This flow of resources to their most profitable employment is the “invisible hand” that has enamored economists since Adam Smith in 1776. If markets are so clever, why do we need regulation or government?

The Fear Factor

There is a clear link between fear, panic, and economic crises, as subsequent chapters will document. But what is the true cost of fear?

Get Your Money for Nothing and Your Kicks for Free

Financial markets have become much more volatile of late because of one looming and growing factor — debt. More specifically, the debt that is used to finance Consumer-Investor securities purchases has created fantastic profits and spectacular failures. And the fantastic debt tapped by hedge funds, sometimes 30 times their own equity investment, ups the ante even more. This debt gone wrong taps into one of our most basic human instincts — the fear of loss.

The Later Years of William Spencer Vickrey

William Vickrey shared the Nobel Memorial Prize with James Buchanan in 1996. Unfortunately, Vickrey was unable to accept his award as he died of heart failure soon after the announcement of his award. On October 10, 1996, two days after he received notice of the award, he suffered a fatal heart attack while driving to a regional economics conference.

The Legacy of Knut Wicksell

While we know Knut Wicksell for his contribution to public finance, a book he published two years after his public finance thesis received even broader attention. His Interest and Prices: A Study of the Causes Regulating the Value of Money1 had directly challenged the quantity theory of money that was first asserted by David Ricardo in response to the fears of inflation during the Napoleonic Wars, and subsequently popularized by the Great Mind Milton Friedman of the Chicago School. Ricardo’s logic was that prices could not rise if there was no increase in the money supply that would enable the additional purchasing power that fueled inflation. Ricardo had further reasoned that government could not be trusted with avoiding the temptation of monetary expansion. He proposed that this privilege be removed from civil servants and elected officials by pegging the money supply to a nation’s supply of gold.

The Paper That Spawned the Study of Optimal Taxation

While Frank Ramsey was often riddled with emotional torment, his intellectual pursuits, especially over such a brief period of productivity, are almost unparalleled. His efforts in the areas of mathematics and logic were both defining and ground-breaking. His four papers in economics, published over the course of only a year or so, were so varied and substantial that they could only be compared as the economics equivalent to the four varied papers by Albert Einstein in 1905, Einstein’s miracle year.

John Bates Clark and His Times

To understand the debate between Henry George and John Bates Clark, one must appreciate the times within which each of them lived.

Later Life and Legacy of Henry George

There are few that enjoyed a life so colorful, at times controversial, and with so many professional transitions as Henry George. George’s later life, following years of campaigning his idea of the single tax around the country and the world, were no less tranquil.