Monday, December 19, 2005

Sorry for not posting in months.

I've been busy with the birth of my new baby, and with starting school. I'm doing tremendously well at the latter, I have solid A's this semester.

Academically I've been increasing my math skills so I can do more work in game theory, still have a ways to go there. I've also been studying various forms of kung-fu. I've added about 10lbs in muscle to my frame, as I've started a new diet and exercise routine.

As for my normal emphasis on politics currently I can only entirely agree with this sentiment: In short, the president has comitted a felony, approximately 30 times or more. Of course, he will not be impeached over this. But it remains incontravertable fact none-the-less.

In the sphere of economics specifically I don't have much new to offer. I've been reading Schrumpter in reguards to his theories about capitalist development. I think he's wrong in his playing down of the effects of oligopoly, I also think his "perrinial gale of creative destruction" doesn't do quite what he thought it does. Rather, quite often creative destruction does not re-arrange players in the game. The new product simply gets acquired by the largest players and replaces their previous products. Without changing their position at the top. I think with especial reguards to the modern development of corporate entities this will prove an accurate description over longer and longer periods of time. I also reject his contention that creative destruction is purely a capitalist dynamic. Likewise he seems guilty of romanticising the primitive bourgoise as much as marx villified them.

I've also thought of an interesting problem. Let us suppose that one industry is in long-term equilibrium but any given other industry is not. That would imply that economic profit in said industry is at zero. If we look at assumptions from decision theory we'd expect that long-term equilibrium to actually collapse fairly quickly, as people would move their capital investment to industries where economic profit was still possible, thus creating conditions where economic profit would be possible again in the first industry. This seems to imply that actual long-term equilibrium is only possible if ALL industries are in long-term equilibrium, which would in itself prevent zero (normal) economic profit, without any further invention, innovation, etc. One could describe the financial side of such an economy as an "economy of the permanent bubble".

Another thing as well: It seems to me that competitive markets collapse to less than perfect forms over time through a natural process. This is of course counter-intuitive to standard thinking on markets by many economists, but I believe the process is inherent even without government intervention. Essentially any time there would be a squeeze in a market which caused a mass exit from the market, or market innovation, it would behoove firms with a good position in the market to better their position and adopt a strategy of acquiring market power.

This leads to a precarious position: the only winning strategy for a firm, once other firms have adopted a strategy of acquiring market power, is to adopt a strategy of acquiring market power themselves. This results in a tendancy towards less than perfect competition, right from the get-go.

Anyways, thats what I've been up to. Ciao