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View Diary: Panic among the libertarian economists: Success with the stimulus will prove their theories wrong (57 comments)

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  •  Adam Smith argued to the allocation of capital... (3+ / 0-)
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    Clzwld, TurkeyCreek, mkor7

    If you are in the fortunate position to have accrued a heaping helping of it, and your only motivation is to grow that capital, as a Galtian rationalist, you will benevolently spread it around such that the entire economy grows.  Unfortunately, that isn't how greed and fear balance out in the human psyche.  "Greed" is what keeps people investing -- no-one (with cash to spare) wants to miss out on a good thing.  "Fear" is the flip side of this coin -- human beings have an irrational aversion to giving up accrued gains; a bird in the hand is worth two in the bush.  It doesn't matter if the actor is a grossly wealthy individual or a prudent pension fund manager with quarterly targets -- the human reaction in the face of turmoil, having a pot to sit on, is to put it out of reach of anyone who might steal or squander it.  And so as the funny money evaporates, all the "real" money is in a desperate flight for safety, to the Cayman Islands, Swiss bank accounts, most importantly Out of the Public Eye, until the whole ShitRin blows over.  Private capital isn't about growing the pot right now.  It's all about hanging onto what's mine.  Read some Game Theory in between rereading Ayn Rand.  Game thory is experimentally testable.

    Tony.

    quis custodiet ipsos custodes -- Juvenal VI, 347-8

    by golem on Fri Jan 23, 2009 at 06:55:00 PM PST

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