Unintended Consequences (October 12th, 2011) *No Lecture 10/10/11

1770- Weavers were not paid. It made it so they can advance to capitalistic products. Banning the drugs increased the way it is used because of it's availability in the United States.

Trying to regulate a complex system with simple rules.

• Limited information
• Short horizons (Politicians term time)
• Poor feedback
• Self involving incentives

When regulations push incentives, incentives tends to push back. Higher cost to hire someone with disabilities/race because it would cost more. ie. Rizzo would not hire a black person because he knows that in the long run they will cost more because they will charge for racism on the company. Who are all the interested parties that will respond to rule.

Trade is not a zero sum; "pie fallacy"
If there is a dash between both people, both sides would benefit from it.
No one plans the market system. People work together on it on their own and it's natural. Traders are not necessary. It retards Economic growth. It is going to penalize work, innovations, and payment.
"Stock" Wealth vs. Income "Flow"
Wealth is a stream of income that he can produce throughout the years.
Income is the 535 congressman that have the power with the stroke of a pen.