In 'The Darwin Economy,' Robert H. Frank challenges the traditional libertarian view of economics by arguing that Charles Darwin's principles of natural selection provide a more accurate model for understanding economic competition. Frank contends that the 'invisible hand' of Adam Smith often fails in cases where the value of goods is relative rather than absolute, leading to collective action problems and market failures. He proposes policy changes, such as consumption taxes and 'sin taxes,' to address these issues and promote a more equitable distribution of wealth. The book highlights examples of 'positional consumption' and how individual self-interest can harm the community as a whole, drawing parallels with biological phenomena like runaway sexual selection[2][4][5].
In 'The Darwin Economy,' Robert H. Frank challenges the traditional libertarian view of economics by arguing that Charles Darwin's principles of natural selection provide a more accurate model for understanding economic competition. Frank contends that the 'invisible hand' of Adam Smith often fails in cases where the value of goods is relative rather than absolute, leading to collective action problems and market failures. He proposes policy changes, such as consumption taxes and 'sin taxes,' to address these issues and promote a more equitable distribution of wealth. The book highlights examples of 'positional consumption' and how individual self-interest can harm the community as a whole, drawing parallels with biological phenomena like runaway sexual selection[2][4][5].
In this episode, the ReSolve team is joined by Dr. Robert Frank, the Henrietta Johnson Lewis Professor of Management Emeritus and Professor of Economics at the Samuel Curtis Johnson Graduate School of Management at Cornell University. They delve into the role of luck in success, the myth of meritocracy, and the dynamics of free markets. They explore various topics, including:
Topics Discussed
• The approach to both microeconomics and macroeconomics in the textbooks co-authored with Dr. Ben Bernanke
• The impact of behavioral economics on the understanding of microeconomics and macroeconomics
• The role of luck and meritocracy in success and how policy is informed by this understanding
• The concept of 'smart for one, dumb for all' in the context of competition
• The implications of the Darwin Economy and the interplay between individual self-interest and societal outcomes
• The effects of tax structures on entrepreneurial initiative and economic growth
• The need for effective human coordination to solve major problems and improve the future
This episode is a must-listen for anyone interested in understanding the complex dynamics of economics, the role of luck in success, and the impact of policy decisions on societal outcomes. It provides valuable insights into the intricacies of economic theories and their practical implications.
*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.
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