Comments on: We know the price of everything and the value of nothing. http://blogs.geniocity.com/friedman/2010/02/we-know-the-price-of-everything-and-the-value-of-nothing/ The ways law rules creative endeavors and the ways law itself is a creative endeavor Sat, 11 Feb 2012 13:08:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: pfriedman http://blogs.geniocity.com/friedman/2010/02/we-know-the-price-of-everything-and-the-value-of-nothing/comment-page-1/#comment-3181 pfriedman Tue, 02 Feb 2010 08:03:39 +0000 http://blogs.geniocity.com/friedman/2010/02/we-know-the-price-of-everything-and-the-value-of-nothing/#comment-3181 Thank you, Mike. You're right, of course, but the problem from my perspective is precisely how influential the cartoony version of the efficient market hypothesis is in law. Not to mention how influential it is in politics, but at least I know that "cartoony" is a good way to describe the level of almost all discourse in politics. Thank you, Mike. You’re right, of course, but the problem from my perspective is precisely how influential the cartoony version of the efficient market hypothesis is in law. Not to mention how influential it is in politics, but at least I know that “cartoony” is a good way to describe the level of almost all discourse in politics.

]]> By: Mike Masnick http://blogs.geniocity.com/friedman/2010/02/we-know-the-price-of-everything-and-the-value-of-nothing/comment-page-1/#comment-3180 Mike Masnick Tue, 02 Feb 2010 07:30:13 +0000 http://blogs.geniocity.com/friedman/2010/02/we-know-the-price-of-everything-and-the-value-of-nothing/#comment-3180 I'd argue that those who think that price is an indicator of value didn't do very well in their economics classes. :) I think lots of people *misinterpret* economics in this manner, but we shouldn't blame basic economic principles for how people misinterpret them. In economics, price is the intersection of supply and demand. Value is a component of the demand curve. People will buy if the value is greater than the price. The price itself is not the final indicator of price. The problem here isn't free market economics, it's those who believed in a cartoony version of the efficient market hypothesis. And it's really bizarre that anyone would/should believe in such a hypothesis, because one of the first things you learn in econ 101 is how you need a perfectly competitive market to make a perfectly efficient market. But I guess a lot of people simplified things and forgot to take that assumption into account. But I wouldn't blame fundamental economics. Just a lot of people misinterpreting it. Unfortunately, many of those people were setting policy. I’d argue that those who think that price is an indicator of value didn’t do very well in their economics classes. :) I think lots of people *misinterpret* economics in this manner, but we shouldn’t blame basic economic principles for how people misinterpret them.

In economics, price is the intersection of supply and demand. Value is a component of the demand curve. People will buy if the value is greater than the price. The price itself is not the final indicator of price.

The problem here isn’t free market economics, it’s those who believed in a cartoony version of the efficient market hypothesis. And it’s really bizarre that anyone would/should believe in such a hypothesis, because one of the first things you learn in econ 101 is how you need a perfectly competitive market to make a perfectly efficient market. But I guess a lot of people simplified things and forgot to take that assumption into account.

But I wouldn’t blame fundamental economics. Just a lot of people misinterpreting it. Unfortunately, many of those people were setting policy.

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