Arnold Kling explains the productivity of roundabout production. A slice:
Roundabout production means that you can get more of something by first producing something else.
You can stand in the middle of a river and try to catch fish with your hands. But you probably will have better luck using a net. This is a roundabout process. First you make the net. While you are making the net, you are not fishing. But then when you go fishing, you catch more fish.
But demand is only one side of the economic story, morning glory. For the moment at least, the Oasis reunion is limited to a handful of shows. Wembley Stadium is large but not infinitely so, and there’s no guarantee the brothers will remain on speaking terms beyond next summer. Fans understand that this may be their last chance to see the Gallagher lads together onstage. Supply is limited.
Introductory economics tells us that when supply is tight and demand is high, prices rise to an equilibrium, which is exactly what happened. Oasis reunion tickets were initially priced at £150, or about $200. This proved far too low. When the online sale went live, Ticketmaster’s “dynamic pricing” system instantly adjusted prices upward. Some ticket buyers reported paying more than £400.
Some accused the greedy brothers of ripping off their loyal fans. Many more aimed their fury at Ticketmaster, the American ticket-sales behemoth owned by Live Nation Entertainment. The furor revealed a terrible ignorance, even among the highly educated, of what prices are and how they work.
Prime Minister Keir Starmer told the House of Commons that he found it “depressing” to hear of the Oasis “price hikes.” He promised a commission to investigate what he called “extortionate price resales.” Culture Secretary Lisa Nandy told the BBC that “vastly inflated prices” would exclude “ordinary fans.”
Bollocks. In economic terms, a concert ticket is no different from a book, a bottle of wine or a house. It has no inherent value, only the price a buyer is willing to pay and a seller is willing to accept. The market-clearing price of anything is where demand meets supply. The correct and fair price is whatever the market will bear. No buyer has a right to a low price, just as no seller has a right to a high price.
Adam Thierer explains that “Biden’s move against Nvidia is a gift to China.” A slice:
Nvidia’s rise to prominence in high-performance computing is a near-perfect embodiment of the American dream. Three friends, including Taiwanese immigrant Jensen Huang, get fed-up with life at a big computer firm and decide to risk everything to compete in the crowded field of computing hardware. They hatch their plan over a meal at Denny’s in 1993, because Huang worked as a busboy at one of their diners as a youth. Huang himself thinks their pitch is an “unfundable idea” with a “0% chance of success.” After they find funding anyway, the new firm faces numerous setbacks and barely survives. It then roars back, eventually becoming a $3 trillion company now driving the artificial intelligence (AI) revolution and the U.S. stock market’s record-setting gains.
Yet, the Biden administration now plans to punish the company for this stunning success. On September 3, the Department of Justice sent a subpoena to Nvidia, deepening the agency’s antitrust-related probe into the firm’s business practices, and the AI market more generally. This comes on the heels of European officials’ raiding Nvidia’s corporate offices overseas in a separate antitrust investigation.
What is astonishing about this response is that these regulators likely weren’t even aware of the company until recently. Before a few years ago, Nvidia was just the maker of advanced 3D graphics processing units (GPUs) for gamers. Though Nvidia’s stock is riding high today, it lingered under $1 per share for many years.
But then the firm pivoted as the crypto and AI revolutions took off. It realized that it could provide a new breed of high-powered GPUs desperately needed to meet the world’s ever-expanding data-crunching demands. Over the past decade, Nvidia’s turn has helped fuel a $335 billion private-sector-led explosion of AI investment—more than three times China’s financial stake in the industry.
It should also be noted that the American Economic Association’s organizing committee greenlit some 45 sessions devoted to topics of diversity, equity, inclusion, inequality, gender, belonging, segregation, sexual harassment, discrimination, race and LBGT.
In the name of political diversity, wouldn’t it be appropriate to give some time to the contributions of Friedrich Hayek?
Benjamin Zycher isn’t convinced that Joe Biden is the “drill, baby, drill” president. Here’s his conclusion:
The increase in fossil energy production on federal lands observed during the Biden administration clearly is the result in substantial part of strong leasing and leasing acreage activity in 2019-2020. Both fell dramatically during the 2021-2023 period. The central conclusions to be drawn are that Mr. Biden is not the “drill, baby, drill” president, and that fossil energy production on federal lands is likely to decline during the next two to four years.
Jack Nicastro reports on the continued progress of California’s ‘progressive’ revolution.
GMU Econ alum Dominic Pino reports on the continued progress of Cuba’s socialist revolution.
