The Sherman Act of 1890 finished the era of truly free market in the United States of America, although, ironically, it has been directed at protecting the freedom of competition. It may seem obvious that the law that limits the competitors cannot be protecting the competition, but, nevertheless, this law became the foundation of what we know today as the American antitrust legislature.
The Sherman Act prohibits all kinds of all contracts, combinations and conspiracies in restraint of trade, and monopoly in interstate and foreign trade. On paper it seemed to be perfect for protecting smaller participants of the market from being eliminated by the larger ones; in reality everything turned out much worse. Read more »
Some economic principles (in fact, most of them) are not limited by the sphere of economics and have great influence over the other lines of human activity. The idea of opportunity cost is one of them. It means that the value of any action should be judged according to how profitable would it be to do something else? The opportunity cost of doing any action is all the other actions that could have been done instead of it but weren’t. If the action brings more profit than any of its alternative, then the decision is economically correct. If some of the alternatives can bring better results, then the decision is economically wrong.
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There are many ideas concerning the purpose of the state: why it appears, what its functions are and so on. The economical science has a simple answer to this question that is limited to one phrase: the free-rider problem.
The free-rider problem is an economical problem that is based on the fact that certain members of the society consume the resources they haven’t paid for. For example we can use the law enforcement and road maintenance. It is next to impossible to determine to what extent every particular person uses them. Read more »
Every now and then we can hear hysterical voices, threatening that the humankind will exhaust all the natural resources of our Earth in 10, 20, 100 years (the exact figure varies according to the level of anxiety of every particular doomsayer). But how much credit should we pay to such predictions?
The history itself suggests that all the predictions of the end of the world in any of its senses have been false. No matter whether it is atypical pneumonia, the Large Hadron Collider launch or the exhaustion of fossil fuels, there is, in fact, nothing any single human being can do about them but panicking. Even if we believe that the natural resources will come to an end, how this knowledge may help us?
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