The visible hand in economics

Archive for the ‘Quotes’ Category

Ed Prescott has written some pretty brainy stuff in his time. I’m particularly a fan of his work on dynamic inconsistency in economics with Finn Kydland. But, here we see why you should not make heroes of people. Read the rest of this entry »

John Maynard Keynes again 😉

The market can stay irrational longer than you can stay solvent.

An apt quote given current extreme uncertainty, and the talk about stock being “cheap”.

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Michael Lewis:

He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

Found in the December 2008 portfolio magazine (ht Robbie Allan).

Although I don’t agree with all Thomas Sowell has to say, this quote is brilliant:

The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics

I think this quote is apt following an election. All political parties prefer to ignore trade-offs – they just focus is ability in different policy areas 😛

Joan Robinson (*):

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.

Training to be an economist does not tell you the answer to any economic question – it gives you the tools with which to determine answers for yourself, given your own set of value judgments.

Robert Solow:

Everything reminds Milton Friedman of the money supply. Everything reminds me of sex, but I try to keep it out of my papers. (*)

This quote is Solow’s humourus way of reminding us that the study of inflation isn’t the whole purpose of economics.

John Maynard Keynes:

The long run is a misleading guide to current affairs. In the long run we are all dead

More commonly written as “in the long-run we are all dead” putting the quote in wider context makes it more reasonable.  Fundamentally all this tells us is that the long run (when prices can all clear and agents have responded to a shock) differs intrinsically from the short run.

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