Dennis Wingo asks a question that I often pose:

…we need to focus on what our

I’d love to see what Mindles and Jane, and Tyler Cowen, think about this:

A model that assumes stock market traders have zero intelligence has been found to mimic the behaviour of the London Stock Exchange very closely.

However, the surprising result does not mean traders are actually just buying and selling at random, say researchers. Instead, it suggests that the movement of markets depend less on the strategic behaviour of traders and more on the structure and constraints of the trading system itself.

Oil prices are below forty bucks a barrel.

I continue to blame George Bush.

…had their single biggest one-day drop in three years today. And the Dow was up a hundred and fifty points.

I blame George W. Bush.

He says they’re way too small.

…on “price gouging” (otherwise known as the law of supply and demand) in the wake of Hurricane Charley. The Mises Institute preemptively responded to this, but it never slows down the economic ignoramuses at the New York Times:

Janet Snyder, a pharmacy technician in Cape Coral, said several men in two pickup trucks spotted her roof damage and offered to lay down a temporary covering of plastic sheeting. They wanted $600, about four times what she figured was the right price, based on 15 rolls of plastic that usually sell for $10 each.

OK, so Janet is clearly no business major, but how dumb is the reporter to pass this on without comment? She seems to think that the men’s labor should be free, and that she should only have to pay for materials. In the real world, even with no hurricane, she wouldn’t get free labor. She certainly can’t expect it when there is so much to be done.

…on “price gouging” (otherwise known as the law of supply and demand) in the wake of Hurricane Charley. The Mises Institute preemptively responded to this, but it never slows down the economic ignoramuses at the New York Times:

Janet Snyder, a pharmacy technician in Cape Coral, said several men in two pickup trucks spotted her roof damage and offered to lay down a temporary covering of plastic sheeting. They wanted $600, about four times what she figured was the right price, based on 15 rolls of plastic that usually sell for $10 each.

OK, so Janet is clearly no business major, but how dumb is the reporter to pass this on without comment? She seems to think that the men’s labor should be free, and that she should only have to pay for materials. In the real world, even with no hurricane, she wouldn’t get free labor. She certainly can’t expect it when there is so much to be done.

…on “price gouging” (otherwise known as the law of supply and demand) in the wake of Hurricane Charley. The Mises Institute preemptively responded to this, but it never slows down the economic ignoramuses at the New York Times:

Janet Snyder, a pharmacy technician in Cape Coral, said several men in two pickup trucks spotted her roof damage and offered to lay down a temporary covering of plastic sheeting. They wanted $600, about four times what she figured was the right price, based on 15 rolls of plastic that usually sell for $10 each.

OK, so Janet is clearly no business major, but how dumb is the reporter to pass this on without comment? She seems to think that the men’s labor should be free, and that she should only have to pay for materials. In the real world, even with no hurricane, she wouldn’t get free labor. She certainly can’t expect it when there is so much to be done.

So says David Brown.

He’s right.

Stories like this, about how much owners of intellectual property are losing to piracy, always bug me, because the industry press just accepts the figure without criticism or comment.

They claim that they lost almost thirty billion dollars last year to pirated software. They derive this number by estimating the number of pirated software installations, and multiplying by the price of the product. But it’s almost certain that their losses aren’t that high. The only amount of money that they’re out is the amount that the people using the software would have been willing to pay if they hadn’t been able to get it for free.

This kind of disingenuous story occurs because people don’t understand the difference between price, cost, and value. For software, the marginal cost (resources required of the seller to produce it) for the software is almost zero, while the price (the amount asked by the seller) may be very high relative to its actual value, which varies from individual to individual. No rational person will pay more for a product than they value it, so if they can’t get it for free, the only amount of money that the vendor is out is the sum of the value of it for all potential buyers. Clearly, it wasn’t worth the full price to many of those individuals, or they would have paid it, and I think that the amount of loss is vastly overstated–many of them would have simply gone without, rather than pay full price, so the revenue in that case would still be zero.