Re: Economic Rent in Terms of Risk Free Interest Rate

>Well, the moment you allow "efficiency" to mean many things (which I
>can see), the above question becomes not fully defined.

I don't disagree.

>I noticed today that ruetheday responded indirectly to a post of
>mine on the thread "The Economics of Free Choice". I posted back
>on 23 August 2003.

Right. While I personally believe that market processes will result in
greater efficiency and equity than alternatives to market processes
(note: this is not the same as saying that they are perfectly efficient
and equitable) in _many_but_not_all_ situations, I can't stand people
who take it as a matter of faith that markets will
_always_and_everywhere_ provide the best outcome.

>In that post, I noted, correctly, that the mathematics of mainstream
>economic theory implies laissez faire will not lead to Pareto
>efficient outcomes. I continue to think one cannot expect markets,
>in general, to achieve Pareto efficiency.

Specifically, you challenged several of the assumptions that would be
required to achieve that optimality - the absence of increasing
returns, the existence of complete markets, and the absence of
externalities.

>My favorite model says they will be different, but doesn't imply
>any direction. In fact, that direction can vary, depending on the
>level of the rate of interest.

>There is a consistent bias in a certain Wicksellian model, but I
>forget the direction.

In the model you posted in the thread, "Interest Rate Unequal To
Marginal Product Of Capital" on Dec 2, 2002, you have positive price
Wicksell effects leading to the marginal product of capital being less
than the equilibrium interest rate.

>But my general line of attack is not on equity. It is that
>the theories taught and applied by many mainstream economists
>are frequently a matter of mathematical error.

Mathematical error or unsound assumptions?

>What I found annoying about your characterization of my views was
>that it made them a subjective matter of judgements about
>efficiency and equity. A positivist would say this was a matter
>of emoting.

>But I attack, correctly, neoclassical economics on logical grounds.

I honestly don't know that it's possible to discuss economics from a
purely positive standpoint. Behind every seemingly positive statement
is a mound of normative assumptions.

.

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