The central idea of economics is that there is always a catch, a trade-off that must be faced in choosing any alternative. The technical term for this is “opportunity cost.” In the strictly economic sense it describes money trade-offs. If…
Principal-agent problems plague U.S. in Iraq
Gen. David Petraeus’ Ph.D. is in international relations, not economics, but he clearly understands the microeconomic phenomenon known as the “principal-agent problem.” Overcoming it is the key challenge in successful counterinsurgency warfare. It is clear from “Field Manual 3-24 –…
Absolute or relative numbers? It depends
Is an absolute number or a relative one more illuminating? The issue arises as frequently in everyday life as in economics. A short, overweight person drops from 130 to 120 pounds. A tall one goes from 320 to 300. Who…
Tax fairness is in the eye of the beholder
Fairness is a key question in taxation. Nobody likes taxes, but nearly everyone wants some level of government services. Yes, a few Libertarians would leave everything but public safety and national defense to private markets. Most other people, however, also…