A Brief History of Price

216 Pages·1993·26.591 MB·English

by  John Hartwick (auth.)

A BRIEF HISTORY OF PRICE
This page intentionally left blank
A Brief History of Price
John Hartwick
Professor of Economics
Queen's University, Kingston, Ontario
M
© John Hartwick 1993
All rights reserved. No reproduction, copy or transmission of
this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or
transmitted save with written permission or in accordance with
the provisions of the Copyright, Designs and Patents Act 1988,
or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham Court
Road, London W1P 9HE.
Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
First published 1993 by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
ISBN 0-333-58737-5 hardcover
ISBN 0-333-58738-3 paperback
A catalogue record for this book is available
from the British Library
Printed in Hong Kong
For Dot, Sharon, Juanita, Vera and Angie
who made my writing pleasurable for me,
by typing and word-processing my stuff over the years
This page intentionally left blank
Contents
Acknowledgments x
Preface xi
1 NOT KEEPING UP WITH THE JONESES 1
Comparing 1991 Apples and Oranges with 1990's 2
The CPI is a Laspeyres Price Index 5
Keeping up with the Senguptas 7
How Much is a New Bridge Worth to the Joneses? 10
Value Differs from the Revenue Stream 12
Projects Live On . . . 13
Buying into Index Number Biases 14
The Sort of Law of Demand 16
Designer Tastes 17
2 FOR WHOM SHALL WE TOIL? 20
Hours Put Out and Wages Brought In 20
The Garbageman Cometh 23
Slavery and Reserve Clauses 23
Landowner: Why Are My Tenant Farmers Lazy? 25
Why Not Many Independent Contractors (Why Firms?)? 28
Keeping Long-Term Employees Eager 29
Wages Increasing with the Size of the Employer 30
The Value of an Education 33
Risky Work and the Value of Life 34
Unionizing for Whom? 35
Working to Live or Living to Work 37
3 SHARING MARKETS AND MARKET SHARES 40
Monopoly is More than a Game 42
Price Discrimination is Nothing Personal 45
Come Fly with the Free Market 46
For Whom the Bell Rings 48
A Productive Industry Structure? 50
Far-Sighted People Make No Mistakes 51
vu
Vlll Contents
WHY SHOULD THE US TRADE? 55
Hume's Attack on 'Exports are Good' 55
Adam Smith's Attack on Hoarding Gold by Exporting 57
Ricardo's Claim for International Specialization 58
Where Does the Cost Advantage Originate? 60
Wine Cost % Yards Per Bottle 62
Designing Your Own Comparative Advantage 64
Mercedes and Cocoa 66
Keeping Competitors at Bay 67
Tilted Playing Fields 70
Living Off Bananas 74
Being Caught Up 76
ECONOMIC GROWTH: HOW MUCH AND
'HOW TO' 77
Economic Growth in the Soviet Union? 79
Growth as Piling up Inputs and Outputs 81
Growth Derives from the Residual 85
Creating Growth 87
Malthus on Our Minds 89
Mega Cost Benefit Calculations 94
Converging Growth Rates? 95
NOT GETTING RICH IN THE STOCK MARKET 99
I Prefer a Sure Thing 100
The Least Challenging Portfolio 103
The Perfect Portfolio 106
CAPing the Market 109
Jack and the Beanstock as Arbitrageur 111
Value has Nothing to Do with Cost 113
Pj Today is the Best Predictor of P Tomorrow 115
{
Fleecing and Speculating 117
How Not To 118
Appendix 119
DEFICITS, INFLATION, UNEMPLOYMENT,
INTEREST RATES, ETC. 127
Persistent Depression 128
Cash is Not the Money Supply 131
Investors Do Not Have Savers on Their Minds 134
Queries About the Keynesian Model 136
Contents IX
Rational Expectations Correctly Anticipate Victory 138
Followers More Radical than the Leader 139
Inflation 141
A Deficit is a Deficit is a Deficit 141
Balancing Payments on a Tightrope 143
Keynes Fading Out 146
8 METAECONOMICS SPROUTS WINGS 150
What is One of Your Utils Worth to Me? 151
Arrow's Social Choice Bullseye 152
Stable Pairing 155
Log-rolling for Fun and Favor 156
How Much Government? 158
Your Government Disneyland 161
Self Interest and Social Self Destruction 163
Economists Caught in a Dilemma 164
Cooperation Wins Friends and Money 167
9 BEYOND IDEOLOGY 169
Long S ummer Rip-Off 170
Discounting Marx's Views on Capital 174
Cheap Water and Expensive Diamonds 176
Over-Burdened Prices 179
The Price of a Dollar (Delivered Next Year) 180
Dividing the National Pie 182
Freedom and Social Cohesion 183
Markets and the Middle Way 186
Free Markets and the Future of the Planet as
Eco-System 187
Further Reading 190
Index 193