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Economics Links

Posted by david.fiore Expert Jul 9, 2014

At the core, our product harnesses market forces to solve a very real and very complex problem: how to coordinate disparate bits of knowledge into action with the goal of optimal resource allocation (resources going to their highest valued good).  There has been an ongoing debate in the field of economics and in our country as to how to answer this question.  Some would say that the solution is to have wise governors act as knowledge clearinghouses, whose job it would be to allocate resources in the most efficient way possible. This approach may be called the Central Planning approach, which in its most extreme form is socialism or communism.  Others say the knowledge is too vast and too widely dispersed for any group of people to harness it effectively for the larger society.  Instead, resource allocation happens best when free markets are allowed to flourish and autonomous individuals, acting in their own best interests, compete for resources.

Here is an entertaining video which outlines some of the big themes of both positions.

Our software, much like the world we live in, operates on the principles of the free market (The Market), with some regulation (policies, constraints) thrown in.  Just like in the real world, we would have better resource allocation if it weren't for the political constraints that hamper the free market and, we must take those political factors into account or we won't be able to act at all.

For those who would like to get an introduction to economics, I have a few resources to recommend, listed below.  I recommend taking them in order:  Try I, Pencil first.  If that whets your appetite for more, go on to Economics In One Lesson, and so on.

For those who prefer to learn by listening rather than by reading, may I suggest the Econtalk podcast.  My favorites are the ones where his guest is Mike Munger, but there are lots of great episodes out there.  Here are a few to get you started:

This one is a little tongue-in-cheek: