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Tag: economics

Your work is non-essential, according to coronavirus

Some of my observations about coronavirus and economy. It’s striking how FEW people we need to sustain many. More than a billion people are in physical isolation, BUT utilities (electricity, water, internet) working perfectly. Really a marvel of innovation and automation that shows how well technology and infrastructure in most places has been built. On the flipside, many people’s work…

Broken Window Fallacy — Still Relevant?

Do we really need more broken windows? There is a fallacy within broken window fallacy. I will now explain this argument. Essentially, the fallacy (by the classic French economist Frederick Bastiat) argues that “breaking windows”, although brings work for window repairers and thus adds to economic activity, is sub-optimal because of the opportunity cost of using the work to build…

About moral hazard and banking crises

Introduction The struggle against moral hazard in banking is constant and real. There’s no turn-key solution for eliminating it, but it must be kept in mind at all times by policy makers. Consider the following citation from Wikipedia: “The role of the lender of last resort, and the existence of deposit insurance, both create moral hazard, since they reduce banks’…