Economics is a subject which is not very exciting for the rest of us. There are two main kinds of economists, Austrians and rubbish. Friedrich von Hayek was an Austrian who wrote The Road to Serfdom. He tells us that central planning is not and cannot be effective because planners cannot know what people want. Even if the planners did know they might well prefer to enforce their own preferences. Herr Professor Hayek also told us that the Communists were worse than the Nazis. Given that he wrote his book in 1942 it sounds prescient.
Another good economist is Sean Gabb. Doctor Gabb is for free enterprise which allows people to have ideas and put them into practice. Then they profit - if they happen to get it right. He tells us in A Defence of Free Enterprise: Part Two—The Cost of Bad Economics that:-
The Government is right. This country does need a culture of enterprise. If only it could understand that this is more than the regulatory equivalent of growing ivy on a garden trellis—allowing growth in one direction, positively encouraging it in another, and ruthlessly forbidding it in others. Real enterprise is a natural growth, and flourishes best when left to its own directions. This is an insight of the Austrian school of economists......... But let us end with this chapter with the words of the free trader Richard Cobden, speaking in Parliament back in 1846:
You may, by legislation, in one evening, destroy the fruits and accumulations of a century of labour; but I defy you to show me how, by the legislation of this House, you can add one farthing to the wealth of the country. That springs from the industry and intelligence of the people of this country. You cannot guide that intelligence; you cannot do better than leave it to its own instincts. If you attempt by legislation to give any direction to trade or industry, it is a thousand to one that you are doing wrong; and if you happen to be right, it is a work of supererogation, for the parties for whom you legislate would go right without you, and better than with you.
Is another name for Free Trade, a policy advanced by Adam Smith, the author of The Wealth of Nations.
Friedrich von Hayek
A good economist which makes him a rare beast.
By Professor Hayek. Economists are, in the main dangerous idiots.
John Maynard Keynes
Fool or rogue? Take your pick. At all events he was an economist, an influential economist which made him dangerous then and now.
An American explains.
Keys To Development
But this misses the broader point. The Harvard historian Niall Ferguson, who has just written a book, Civilization: The West and the Rest, puts things in historical context: "For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps — competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization."
To this historical challenge from nations that have figured out how the West won, add a technological revolution. It is now possible to produce more goods and services with fewer and fewer people, to shift work almost anywhere in the world and to do all this at warp speed. That is the world the U.S. now faces. Yet the country seems unready for the kind of radical adaptation it needs. The changes we are currently debating amount to rearranging the deck chairs on the Titanic.
Europeans developed these ideas using their own brains. Foreigners are catching up. How do we keep up? More science sounds good. This does not mean numbers; it means quality. It also means a certain amount of redundancy. Men following their own interests, making connections are not always going to find the Next Big Thing. Telecommunication along with the Internet, games computers etc. depend on just three key inventions, the transistor, solid state laser and fibre optics. Another development could drive a lot more progress. One crucial point is nurturing talent, the top of the best one percent. The American answer for decades has been to buy it in when they want it. Fools they are not.
Was a good economist, a decent man and an Austrian. He believed that it was people that mattered. He was not a fan of Capitalist Swine.
David Ricardo And Free Trade
David Ricardo brought us the idea of Comparative advantage, the idea that some countries are better at doing certain things. Thence mutual trade helps both. This is the intellectual underpinning for Free trade.
Pareto 80-20 Rule
The Pareto principle (also known as the 80-20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.
Business-management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas.
It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients". Mathematically, where something is shared among a sufficiently large set of participants, there must be a number k between 50 and 100 such that "k% is taken by (100 − k)% of the participants". The number k may vary from 50 (in the case of equal distribution, i.e. 100% of the population have equal shares) to nearly 100 (when a tiny number of participants account for almost all of the resource). There is nothing special about the number 80% mathematically, but many real systems have k somewhere around this region of intermediate imbalance in distribution. The Pareto principle is only tangentially related to Pareto efficiency, which was also introduced by the same economist. Pareto developed both concepts in the context of the distribution of income and wealth among the population.In software
In computer science and engineering control theory such as for electromechanical energy converters, the Pareto principle can be applied to optimization efforts. For example, Microsoft noted that by fixing the top 20% of the most reported bugs, 80% of the errors and crashes would be eliminated [ so they did not bother with the rest - Editor ].
Microsoft is totally greed driven but then the head man today is a Jew, which is not to say that Gates did have unlimited greed along with a ruthless attitude to rival operations.
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Updated on 24/12/2014 22:43