Economic Myths

[Terri]

By Walter E. Williams
August 19, 2008

By taking a couple of courses in economic theory, we could immunize ourselves from nonsense spouted by politicians and pundits, but in the meantime check out Professor John R. Lott's "Freedomnomics: Why the Free Market Works."

His first chapter is "Are You Being Ripped Off?" It addresses myths about predation where it's sometimes alleged that corporations will charge below-cost prices to bankrupt their rivals and then charge unconscionable prices. There's little or no evidence that corporations would choose predation as strategy; there are too many pitfalls. A major one is that in order to recoup losses from charging low prices to bankrupt rivals, the predator would later have to charge higher-than-normal prices. That would attract new rivals who might have purchased the bankrupt assets of the predator's prey and be able to undercut the predator's prices.

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[FlaJim]

The predatory practices of government raises the question of just how efficient and costly our health/medical system would be if they were running it.

Then comes to mind when the government mandated that the big phone companies break up and suddenly, people became aware that the Big Bells were overcharging on long distance to subsidize local service. The Dem geniuses in DC were outraged.

The market runs best when government is concentrating on what the Constitution has charged them to do. And that doesn't include wasting time on investigating drug use by athletes, for crying out loud, or setting artificially high prices for protected commodities.

[mikemo]

Unlike the Ivies, no one ever accused anyone on the George Mason Faculty of being anywhere except spot on!
Save the USA, close Yale Law School!