2/4/2018 Intermission




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The Nature of Economics (7)

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The Nature of Economics (7) Neoclassical economics does not consider efficiency of the whole economy because the production function and utility function are exogenously given. Since I do not think that this point is made clear in books or papers, I would like to discuss it in some detail. Consider two economies E1 and E2. The workers in E1 are more cooperative and hard-working. Those in E2 are selfish and lazy. Hence, the labor productivity in the firm in E1 is higher for equally given levels of physical inputs. However both economies are efficient in neoclassical economics! Both E1 and E2 are efficient as far as all firms maximize their profits subject to exogenously given (different) production functions! It is obvious that E1 is more affluent than E2. I would like to emphasize that efficiency differs from affluence in neoclassical economics. Next consider two economies E3 and E4. The people in E3 are more harmonious and other-regarding within the household. Those in E4 ar...
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16/12/2017 How to quit smoking

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              From my experience I can teach you how to succeed in quitting smoking. I smoked more than twenty years, but I quit twenty years ago and have not smoked even one cigarette since then. I discovered that quitting smoking has something to do with number ‘3’. My method has no monetary cost. It is the following: (1)   Choose three consecutive holidays. (2)   Quit smoking three hours before the supper of the day just before the first holiday. (3)   Do not work but do what you like in the three holidays. When you feel painful (or uncomfortable) from withdrawal symptoms, lie in bed or sofa for a while, then the pain will disappear. If you do not smoke in these days, you are approximately 50% successful in quitting permanently. (4)   In the following three weeks you will experience strong pain about five times, although the degree of pain is less than in (3). Relax for a few minutes by taking a seat, having coffee or te...
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The Nature of Economics (1)

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The Nature of Economics (1) Many people believe that economics is a science that promotes the welfare of all human beings. However it is actually used to justify strategies of particular groups as in the case of free trade. Today’s economics is an ideology. The basis of an ideology is formed first intuitively and then the whole is justified by cleverly applying logic. A widely used method of clever application of logic is to use only facts or assumptions that are convenient for justification. Neoclassical economics or mainstream economics is an ideology that justifies individual freedom or individualism to the maximum. Because of its mathematical nature, we can easily know what assumptions are used in it. We can know further that it ignores many inconvenient facts. One of the most important assumptions of neoclassical economics is contract completeness, which means that all transaction contracts are sufficiently detailed. Otherwise it cannot justify Western individualism. But...
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