Wednesday, March 7, 2012


The ongoing expansion in housing units square footage per person and acres per housing unit is usually justified using the 'Economistic' idea that humans are rational self-interest maximizers, capable of gauging the marginal value of an additional increment. In reality, humans are not rational optimizers, but rational satisficers and irrational maximizers. People make decisions on the basis of meeting perceived needs. Once those perceived needs are met, they act to maximize any offered considerations, regardless of their desirability.

High Tech Development

The race for high tech industry as an economic development plan has a political component. High tech industry is (ironically) most sought in towns that lack anything resembling it. Thus, high tech firms are the beneficiary of the largest public largess in places where it is least suited. High tech industry felt to be desirable, but because no similar local firm exists to contest the distribution of that largess to a competitor. Likewise, existing manufacturing do not contest the public subsidy, because the subsidy is not directed toward an industry that would compete the the existing or historic industries.

Ironically, the same mechanism which provides for this political acceptability ensures the economic failure of 'high tech' industry in that locality. Lacking competitors, any high tech firm that does move in cannot draw on the an existing 'ecosystem' of suppliers, nor hire from an existing pool of skilled workers, and so must import both. This high degree of imports ensures that the impact of 'high tech' on the local economy will be minimal, and that local high tech firms will be at a competitive disadvantage to high tech firms located in more suitable contexts.

Economic Growth

Begs the question--why is economic growth important? The traditional explanation is that their must be continued economic growth to match population growth. Even without economic growth, the population will continue to grow, thus resulting in a rising unemployment rate and a falling quality of life. However, this presumes that the distribution of the benefits of economic growth remains constant... Let no one doubt that the distribution of the benefits of economic growth are grossly unequal.

Tuesday, March 6, 2012


"Competitive firms do not scruple to savage their competitors". Instead, they limit the entry of new firms into the market by imposing high-start up costs, or by imposing 'compliance costs' through burdensome regulation.