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23 Things They Don’t Tell You About Capitalism will help you think more clearly about the economy by uncovering the hidden consequences of free-market capitalism and offering solutions that could make the world fairer for all.
23 Things They Don’t Tell You About Capitalism will help you think more clearly about the economy by uncovering the hidden consequences of free-market capitalism and offering solutions that could make the world fairer for all.
In the late 90s, two economists named Robert Merton and Myron Scholes received the Nobel Prize for their work. Centering around the idea that people always make rational financial choices, they began applying their theories in the real world. Rather than making it big, however, these two ended up broke.
While we want to think we act rationally when it comes to finances, the truth is most of us cannot. The fatal flaw in their ideas is similar and foundational to many of the assumptions of free-market economics.
In reality, making completely rational choices requires having every possible detail and taking it into account. Our best actions come when we look at all scenarios and alternative routes. Unfortunately, there’s no way that any of us can get that kind of vast information for every money decision we have to make. Thus, our choices aren’t rational but instead are limited to bounded rationality, which we’ll explain further in a moment.
If the government were to step in and limit economic choices, we could make better selections. Given only options we can understand, our ability to thrive economically would improve. It’s not such a wild idea to do this, either. The government already limits drugs and unsafe cars to help keep us safe.
The big question on everyone’s minds with this issue is whether or not the government should interfere with the economy. While a free-market economist might tell you no, they’d likely cite the failure of this pattern in the Soviet Bloc. You might hear that because it failed there, it will fail everywhere else, too. But that’s not the case.
A government can do a great job of guiding the economy if given the right amount of control. The problem in the Soviet Bloc was that they had too much authority. A little guidance from the state, who often knows more about the whole economy than individual companies, can go a long way.
Take the experience of LG in South Korea, for example. The company originally wanted to go into the textile business, but the government saw a better opportunity. Carefully guiding LG to move into the electronic market, they paved the way for the well-known and successful enterprise that the company is today.
Even in the United States, the government has already guided the market in the past. If it weren’t for their helping hand, aircraft, biotech, and internet industries might not be as successful.
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Get the complete summary in the appYour financial choices aren’t rational and businesses take advantage of that, but governmental economic planning can help fix that.
Despite fears of governmental economic planning, implementing it the right way can be wildly beneficial.
Capitalism isn’t such a bad thing, it’s how we apply it to our world that causes problems.
"23 Things They Don't Tell You About Capitalism" is a strong fit if you want practical ideas around business, economics, entrepreneurship—especially themes like your financial choices aren’t rational and businesses take advantage of that, but governmental economic planning can help fix that; despite fears of governmental economic planning, implementing it the right way can be wildly beneficial. The MinuteRead summary distills these concepts into a focused read, whether you're deciding whether to buy the book or applying its lessons at work.
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