And another economics lesson. I just can’t help myself. I am by no means an expert on the matter. But, I do have a good sense of what is right and wrong when it comes to this particular subject. The economic stimulus is all wrong. It was all wrong from the word go. In fact, it has gotten worse as the press plays with words that the shysters in Congress spew forth.
Congress is full of morons. Why do we let morons dictate what we should do? Just keep voting for them, that’ll fix ‘em.
“The purpose of capitalism, we unfortunately need to recall, is to make a profit. Low risk-taking typically results in slow and steady profits, whereas high risk-taking can produce both high profits and steep losses. By entering the business of risk protection, the government has reconfigured the economic game: in profits, we’re capitalists; in losses, we’re socialists.”
If human beings are naturally risk-averse, then what the heck happened on Wall Street?
For roughly two decades, the new science of behavioral economics has been challenging what economists call “rational choice theory.” Rational choice theory described that primate species called Homo economicus—Economic Man—as rational, profit-maximizing, and efficient in making choices. When faced with a decision, the theory held, we carefully consider the value of an outcome and make a rational decision about the most efficient course to take to maximize the utility, or profit, of that outcome.
But research in behavioral economics has revealed that many, if not most, of our economic choices are driven not by rational calculations but by deep and unconscious emotions that evolved over the eons. Among these irrational emotions is “risk aversion,” a psychological effect that is actually part of the reason that financial markets work so well. People are more averse to risk than traditional economics would dictate, and that restraint helps keep most speculative market behavior in check.
Truth, Lies and In Between 