The 9 Laws Of Markonomics

The 9 Laws Of Markonomics

While understanding the economy and the political economy seems like an enormous and complex undertaking. it is not.  Students spend years only to learn very little of practical value,  but the topic itself is very intuitive and can be explained in such a way that even a high school dropout can understand it.  We’ve created the 9 laws because they take anyone paying attention from a place of bewilderment to an actual intuitive understanding.

First Law:  It’s Always About the Money, NOT the Principle

To describe anything as “Priceless” is to not understand the basic function of Money, which is to quantify the RELATIVE  and ABSOLUTE value of everything by a common denominator: the Dollar, the Euro, Gold or even Bitcoin. NOTHING is “Priceless”, even a human life. Courts and juries routinely assign a Dollar value to injuries, death, and even emotional “pain”.

 

Second Law: The “Economy” is the Aggregate of all the “Mutually Beneficial Transactions” (MBTs), combined with the amount of Financial Benefits to each party and Society, but LESS the costs borne by each party and Society.

No transaction would occur if they were not, at a minimum, mutually beneficial to two parties. The types of MBTs include: 1) The exchange of one’s time and effort for compensation (also known as “work”), 2)  The Purchase of  goods such as hammers or pillows, and 3) the purchase of services such as massages or an UBER ride.   Every grocery trip is a transaction. Every bill paid is a transaction.   Since Mutually Beneficial Transactions only occur when there is financial benefit to both parties, more Transactions translate directly into a  bigger and better economy.  However, some transactions  known “zero sum”, create absolutely NO VALUE and in facts are net negative to society. in that no gain occurs from them.  These include pure wealth transfer of all kinds where one party’s gain is another party’s loss including theft, litigation, a gift, an inheritance, a divorce and government assistance.

 

Third Law: More Choice=More Prosperity

Choice is the key determinant in both the Number of Transactions as well as their net benefits to each party and  Society.
If you had the choice of one color in the car you intended to purchase, you would be far less likely to buy that make than if that model came in 10 shades.  Choice is synonymous with Freedom,  There is no wonder why Countries that promote freedom have healthier and more vibrant economies than those than do not.

 

Fourth Law: Greed is Necessary

Individuals are primarily motivated by their narrow financial self- interest, pejoratively referred to as “GREED”.

Greed is a hard-wired and a natural aspect of human nature. But, as a motivator of behavior, it is so powerful that an individual’s actions can be drastically altered through financial incentives. If money is enough for murder, surely it can be use to motivate people to do the “right thing”.

Greed is neither good nor bad, it simply is.    It is so powerful in altering human behavior that its value can not be understated.

Without Greed, they would  be no internet, no competitive markets, and the quantum leaps in technology would may never have occurred.  Would new life saving drugs be developed? No.   We may wish that “Greed be not part of the human software, but it is.  As a society, we can punish it or we can HARNESS it.

Harnessed properly, Greed can be a force for Good.

 

Fifth Law: Benefits to Parties of A Traction Will Determine How Transactions Occur

The most beneficial Transactions are those in which each party benefits on the same par as the others.  If the benefits are lopsided, the possibility of the Transaction being consummated are drastically reduced.  If the Incentives or benefits for each individual party to a Transaction (including Society) are not properly aligned with those of each of the other parties, the resulting Transactions will be Fewer in number and Less beneficial to all of the parties collectively.

The more concentrated the net benefits are to any of the parties, the less the inducement and likelihood for another party to participate in the transaction.

Sixth Law:  Individuals’ Financial Self-Interest CAN be Aligned With That of Society

Individuals respond with enthusiasm to rewards and tend to avoid situations that may entailr punishment. If that weren’t enough, punishment entails some form of enforcement mechanism which is not only costly but coercive in nature. Since we know that Choice is correlated positively to the Economy, restricting Choice through punishment Can only be a less effective means of altering human behavior than rewards.

Such a system is called Incentivism.  It’s definition is;

Incentivism is a type of economic system whose philosophy emphasizes the use of financial reward rather than punishment to alter an individual’s personal self-interest to make it consistent with that of society.

As an example, would more trash be picked up if picking up trash were paid for instead of a punishment.  The answer is self evident.

Seventh Law:  Establishing a Government is Preferable to Anarchy and Chaos. This Benefit is Offset by the Conflict of Interest between the collective-Interest of Society with the self-interests of those who serve in Government, pejoratively and accurately referred to as “Career Politicians”

A Career Politician has the following characteristcs:  1) NON STOP campaingning and money raising for additiona terms of the same office or different offices, 2) seeks office even after one or more electoral defeats, 3) has had limited to no experience in the private sector (possibly never having actually held a paying job), 4) is primarily motivated by power and influence, 5) believes themselves to be “elite” or distinct from the constituency they represent, 6) believe the ends always justify the means, 7) says one thing but does another. (If you’re a psychologist, what personality disorder shares many of these types of traits?)

Eighth Law:  Career Politicians’ self-interest is to hold and retain office. Their self-interest is completely at variance with the collective-interest of Society.

Politicians’ self interest is to maintain their stranglehold on office  either through election or re-election. This incentive is so counterproductive to “Society”, that it results in a variety of adverse effects such as corruption, incessant lying without repercussions, campaign funding from sources whose interest are detrimental to society, the passage of detrimental legislation, regulation, and tax laws and a variety of dirty tricks.

 

Ninth Law:  The only way to materially improve the efficiency, transparency and honesty of Government is to replace the existing Incentive structure of Career   Politicians with one that is aligned with Society’s Collective-Interest.

Rather than promote legislation that will be beneficial to Society, re-election odds are increased by using legislation to “transfer wealth” from one group of the electorate to another, with the beneficiary being the group more likely to add to the Career Politicians odds of retaining office. Wealth transfers are typically nothing more than the attempt “buying votes”.

 

 

 

 

 

 

 

 

These 9 Laws with cover economic, politics and human behavior go a long way to explain the dire straights the country finds itself in.  Can it be fixed?  YES, and we will  present solutions so revolutionary yet so SIMPLE, that you’ll have yourself shaking your head wondering why you didn’t think of it.

 

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Comments (2)

  1. Jul 08, 2018 at 11:39 am

    Great, insightful piece.

    • Jul 08, 2018 at 3:30 pm

      Thank you!

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