Daily Clips: March 9, 2017
In the 1950s, Arrow and others proved a theorem that, many economists believe, put a rigorous mathematical foundation beneath Adam Smith’s idea of the invisible hand. The theorem shows — in a highly abstract model — that producers and consumers can match their desires perfectly, given a particular set of prices. In this rarified atmosphere of “general equilibrium,” economic activity might take place efficiently without any central coordination, simply as a result of people pursuing their self-interest. It’s an insight that economists have used to argue for de-unionization, globalization and financial deregulation, all in the name of removing various frictions or distortions that prevent markets from achieving the elusive equilibrium.
Yes, stocks are up. But 80 percent of the value is held by the richest 10 percent: Important to remember.
Even the three best-known “sharing economy” companies have found there are limits to peer-to-peer sharing. Asking early adopters to share is a great way to bootstrap a new online business. But beyond a certain point, continued growth often requires professionalization.
Tweet of the day:
— Mary Bruce (@marykbruce) March 9, 2017