Wide ranging, mostly libertarian critique of political and economic trends in the US that touches on Chapter 1 (Incentive Alignment), Chapter 2 (Wealth Creation), and Chapter 3 (Benefit-Cost Analysis).
- Proponents of "diversity" don't define the term, which gives Diversity Workers remarkable freedom to claim that whatever they are doing furthers the goal.
- In-class question: how would you align the incentives of Diversity Workers with the goal of diversity?
- Positive correlation between wealth creation and inequality in the past few decades: Theil offers his take, but does not addresses the idea that incentive alignment creates inequality, as it rewards prescient, lucky, more productive, or harder workers.
- In-class question: does incentive alignment cause inequality?
- Justification by President Obama that his increased income taxes would cause people to work harder to make up for the lost income ("income effect") rather than substituting to more leisure/less work ("substitution effect").
- In-class question: do higher income taxes lead to more or less work?
- [Comment: politically, to get a policy implemented, you have to ignore any tradeoffs that might go along with it. Economists are trained to point these out, called "unintended consequences" or "hidden costs."]
- In-class question: how would you align the incentives of venture capitalists with the goal of innovation? HINT: low probability of a big payoff.
- Guilty Pleasure: comparison of Senator Elizabeth Warren to a fundamentalist Protestant preacher in her lack of forgiveness or redemption.
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