The following is a letter to Luigi Zingales and Bethany McLean after listening to Season 2 Episode 76 […]
Category: Economics
Crypto currencies have been hailed as the future of money, thanks to it’s decentralized, fast, and global nature […]
In one of my first political science lectures at university, I learned about path dependency. If it has […]
According to The Economist, it is accepted widespread knowledge, that inequality has increased. However, when looking at the data and accounting for changes in demographics (such as marital status), economic inequality has actually remained constant over the past decades (Check out the Economist’s The Intelligence Podcast from Dec 03, 2019: With allies like these: NATO’s bickering leaders hold a summit). Why has rising inequality become general knowledge, while the data is not clear on it? Because the actual inequality doesn’t matter as much as the effects of it and the effects of inequality might have actually changed significantly over the past decades.
In the past, technological change has been slow enough so that the largest part of the population could spend their career following one profession, more or less. From Benz’ first gasoline car in 1886 to Ford’s Model T in 1908, the first mass-produced car, there was enough time for all conservative horse carriage riders to retire, while the younger one’s quickly learned to drive cars instead. The impact would have been quite different if that change had happened in less than a decade, which is the speed of development we see today.
Regularly, I get asked how Uber, car sharing providers, and other mobility providers plan on making profit. How can you be cheaper than cabs, but have a similar business model? How can you make money with car sharing, when a ride only costs around 10 dollars? How is it possible to make money on scooters, that only cost one dollar per ride? But still, Uber, Mercedes, and venture capital companies keep spending millions, if not billions, on these ventures. Why? What is going to change? – Everything!
Classical Economics relies on Monopoly models, Oligopoly models, and Perfect Competition. Their predictive power and accuracy are up for discussion, but they do help (especially economics students) to illustrate and explain macroeconomic behavior. During a recent stay in Zambia, I observed the consequences of lacking alternatives for economic actors.