Ten Key Principles of Economics

1. Everything has a cost. There is no free lunch. There is always a trade-off.
2. Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.
3. One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).
4. Incentives work. People respond to incentives.
5. Open for trade. Trade can make all parties better off.
6. Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.
7. Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)
8. Concentrate on productivity. A country’s standard of living depends on how productive its economy is.
9. Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.!!
10. Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.



Saturday, July 17, 2010

Free Speech As An Economic Stimulant


Iceland was one of the major victims of the 2007-08 global financial crisis betting the proverbial farm on the derivatives market and losing badly. Now, in an attempt to remake itself, the country's Parliament is proposing sweeping reforms to establish a safe haven for free speech in an attempt to draw the world's media organizations to headquarter in this tiny island nation. The legislation known as the Icelandic Modern Media Initiative is meant to attract organizations into publishing online from Iceland, by adopting the strongest press and source protection laws from around the world. This could be especially debilitating to Britain where the laws make it quite easy to bring suit against journalists and publications.
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