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From economists.

Have you not read up on labor theories of value, intrinsic theories of value, and subjective theories of value? Economics is essentially about determining why goods and services hold the price they hold, how they come to have those prices, and how to calculate the correct price.

My wealth theories are about the *capacity* of human society for production of goods, support of population, and provision of services. I explain things like changes in labor application (technology) providing ways to produce more with less labor, thus allowing government to distribute large amounts of product and services without damaging and destroying the economic function of its population.

For example: if it takes 60% of available labor time to feed your people and 80% of available labor time to build and maintain road and rail systems, you can't do both; your society isn't at a level of technology where it can sustain overland transit infrastructure. Invent a new steel production process which produces higher-grade steel with less fuel and less labor time, and now you only need 40% of your labor time to build road and rail infrastructure--you can, theoretically, do that. Further, you can build farm tractors (steel is now cheap to produce and form), and so a good tractor design cuts back your labor time required to feed your population to 20%--now you're sinking 60% of your labor time into food and rail infrastructure, and have 40% to apply to other things. Whatever you were doing before that ate 40% of your labor time fits into that.

It's obviously more complicated than that: with 60% labor producing food, the other 40% is making other stuff. You have to slim these down in total to find time to make new things. Slimming down the cost (labor time) to make steel makes basic farm implements cheaper and better, which may cut a little time off making food and *anything* better made with cheap steel. Eventually, you get enough steel production capacity and cheap enough steel to roll out railroads in your spare labor time. With unemployment fluctuating between 4% and 10%, you've actually got a reserve labor force that can pick up things like that (look at all the jobs Keystone XL will "create"--most of them are temporary construction jobs).

Look at what makes up macroeconomics. It's all about effects of production capability--money, government policy, unemployment, employment, financial markets, supply and demand, scarcity--and how they affect the effects. In other words: they write about how market conditions affect market conditions, instead of how basic production capability gives rise to market conditions and produces supply-demand behaviors, unemployment and underemployment, welfare systems, the median and basic standards of living, income inequality, viability and impacts of progressive tax systems, trade advantages, and so forth. All of these things are just obvious effects stemming from a basic economic system of labor efficiency, not founding theories of economics or policy.

I'm writing Economics in assembly, and they're all working in PHP.

Just like any given hobby, the first small/medium sized chunk of money into gets you 90% of the ultimate potential quality, and then you can spend hundreds more to get to 95%, then thousands to get to 99%, and then possibly never get to 100% no matter how much you spend.

Also known as the law of diminishing marginal returns.

Your "marginal return" in this case is the quality per marginal (additional) dollar spent. That can actually become negative in many cases.

You'll see this concept turn up, and be ignored, in many policy debates when you have constantly increasing spending and nothing to show for it: education, health care, defense, poverty, etc.

Modern fiat money has value because it is accepted for payment of taxes. In the same way a winning McDonald's monopoly coupon good for one small drink has value because McDonalds accepts them for payment in return for small sodas.

But the coupons need not be redeemed for small sodas at McDonalds immediately.I can spend my winning coupon on a small soda at McDonalds or I can trade it to my friend for a cigarette. I can do the same sort of thing with dollars or yen or euros or whatever.

Even if I may never have the need to pay taxes in Japan, I wouldn't worry about accepting yen in payment for an item. I will be able to find someone willing to trade something I do want, ( maybe dollars ) for the yen, perhaps a Japanese person with a lot of dollars who needs to pay their taxes in yen, but more probably just someone with dollars who wants to buy something that is being sold for yen.

Legal tender just means I can pay any debt, even one denominated in say porkbellies with the legal tender currency in an amount equivalent to the value of the porkbellies at the time the debt was paid. That could be one dollar per porkbelly or one billion dollars per porkbelly, depending on the relative market values of dollars and porkbellies. But I couldn't force a creditor to accept payment of my porkbelly debt in gold, or board-feet of lumber, or winning McDonalds monopoly coupons good for one small soda, or the currency of another country - only legal tender can be foisted on a creditor.

I think this system ( the one we have ) is superior to basing currency on work units, which like other goods are subject to fluxuations of value relative to other goods. In addition to the problem of deciding what a 'work unit' is ( is this piece work or are we paid hourly? ) the increase in productivity that is called progress, will, if it continues, increase the work units available year by year in a form of work unit inflation.

The current system is fiat money with fractional reserve banking. In the US, the required reserves are 1/10. The money multiplier is 10. The need for a lender of last resort has over the course of the 20th century slowly caused the complete abandonment of the gold standard, which in my opinion is a good thing. Why mine something hard to find like gold when paper does just as good? The alternatives to fractional reserve banking are Full Reserve banking and No-Reserve Banking

In full reserve banking depositors pay the bank to keep their deposits rather than paying interest on savings, and charge fees for services. Loans are not made out of deposited funds, but rather they are the funds of investors. Investors put their money into the bank's pool of loanable funds. The bank makes the loans charging a percentage of the repaid funds for the service of making the loan to the borrower, including the labor involved in finding an eligable borrower, and collecting payments. If the loan is not repaid, then the collateral if any is sold, and the remaining funds are returned to the investor. The loss, is to the investor, with the bank making money only for charging for the labor it provides.

Under Fractional Reserve banking, the loanable funds are the money multiplier (10) times the reserves. When there is a loss of 1 dollar the reserves are reduced by 1 dollar, which means the pool of loanable funds decreases by that dollar plus 9 more dollars, reducing liquidity in the economy ten times more than if the funds lost were lost by investors.

The internet bubble was about the same magnitude ( possibly a little smaller ) as the housing bubble. However the internet bubble was funded by investors, whereas the housing bubble was funded by banks. The internet bubble, when it burst, caused a mild economic downturn. The housing bubble is forcing governments around the world to pull out all the stops to avoid another 'Great Depression'.

No reserve banking me

What you are describing, in economic terms, is leakage.

In Keynesian economics, there is a model called the Injection-Leakage Model that describes the circular flow of production, income, and resources between producers and consumers within a national economy.

In short, you work for a business, which pays you for making goods or services. You then use your money to then buy from other businesses. There is a circular flow of money.

Investment, government purchases, and exports inject money into the system, making more money available for everyone in the economy. Savings, taxes, and money spent overseas come out in the form of leakage, reducing the amount of money in the system for everyone.

Offshoring is just another form of leakage. And no, it is not good.

The parent is right: one precondition for an ideal market is perfect information in the hands of all parties.

That is, if each buyer and each seller are aware of all other buyers and sellers and all their preferences and prices, then no one will gain a surplus of utility by under or over paying for an item. See, e.g., http://www.amosweb.com/cgi-bin/wpd.pl?fcd=dsp&key= market

One of the things computers are beginning to provide to the economy is cheap information in useable form. Though, of course, the big players are getting this info earlier.

"I could explain it better, but I'd need charts, and graphs, and an easel." - Leon

If you can show that the big labels are colluding to offer everybody lousy terms, then you've got a case.

It's often called "tacit collusion," and it doesn't leave a paper trail.

I think there are a lot of people who for one reason or another think that competition from other countries is a bad thing.

They seem to think that it is somehow 'unfair' that people in other contries can make product X cheaper. I don't know how many times I've heard the 'rush to the bottom' argument from people who obviously have no grasp of basic economics.

If you are one of those people please read this:
http://www.amosweb.com/cgi-bin/pdg.pl?fcd=dsp&term =The+Wide,+Wide+World+Of+FOREIGN+TRADE

The reason competition is good in this particular case is because the US government is clearly not acting in its citizens best interest in regards to software patents.

The contries that have a more rational intelectual property policy will obviously benefit. This will do one of two things:

1. Businesses and citizens who create software will be forced to move to these 'enlightened' contries if they aren't there already. Basically the US will find itself locking itself out of the software market because producing software in the US will become too expensive or in some instances maybe even impossible.

2. Because of pressure from 1. the US will be forced to adopt better laws.

Basically if you can squash competition by making everyone obey your rules then you can force through productivity and creativity limiting laws such as software patents.

However in a free marketplace countries that have chosen not to incorporate such laws will naturally do better than countries that have. I'm assuming here of course that software patents stifle creativity and productivity but I think this is a pretty safe assumtption.

If you don't understand why software patents are bad please read this:

http://www.nosoftwarepatents.com/en/m/intro/index. html

In short this is good for everyone because it will garantee that consumers of software will continue to benefit from the explosion of creativity and productivity in the software industry. Also for those of us who produce software this helps by putting real pressure on our government to change its tune in regards to software patents.

Limit Pricing, for advertisers, for one.

price maker: A buyer or seller that possess sufficient market control to affect the price of the good. Price market should be compared with the alternative, price taker. From the selling side of the market, a monopoly is the best example of a price maker. As the only seller in the market, a monopoly firm has the ability to control the price. Firms operating under oligopoly and monopolistic competition are also price makers, although to a lesser degree, depending on their relative market control. From the buying side of the market, a monopsony is also a price maker. As the only buyer in the market, a monopsony firm is able to control the price. Firms operating under oligopsony and monopsonistic competition are price makers, also to a lesser degree.

If iTunes ends up dominating the online music market, I wouldn't be surprised to see one of their competitors sue them for predatory pricing, an anticompetitive practice which is illegal under U.S. antitrust laws. I doubt they'd win, but one never knows.

IANA Economist, but if I recall from my few Econ classes in college, and "economic good" doesn't necessarily mean that you pay for them. It has more to do with scarcity and "opportunity costs" than with money. Here's a definition:

ECONOMIC GOOD:
A tangible item produced with society's limited resources for the purpose of satisfying wants and needs. As a general notion, the phrase economic good also commonly includes intangible services produced with society's limited resources for the purpose of satisfying wants and needs. A synonymous term for economic good is scarce good.

So if you spend your (scarce) time setting up a server (resources) to provide email and web services for your family (satisfying their want or need), then it is an economic good. If you family uses those services, then they are consumers. So I guess that makes you the provider of an Internet Access Service.

This is a common economic confusion of production with distribution. The production of an intellectual work is not the same thing as its reproduction, but economic theories evolved in the past have no conception of this.

I don't mean to flame you, but I think you are maybe confused by how ecnonomists (ab)use common terms? When Greenspan talks about "production", I'm pretty sure what he is referring to is the amount of output, not the creation of an intellectual work. I'm assuming this because "marginal cost" is the cost of producing one more unit. (I.e. if you had a function f(x) that calculates the total costs for producing x units, the marginal cost of production would be its derivative. Google found me this definition.)

To take Greenspan's example, creation of an on-line encyclopedia, the fact that "the cost of reproduction and distribution is near zero" does not enter into the cost of actual production, i.e., the foregoing creation.

Well, yes, obviously. That's probably why Greenspan says right in the paragraph after the one that you've quoted: "For example, though the set up cost of creating an on-line encyclopedia may be enormous, the cost of reproduction and distribution may be near zero if the means of distribution is the Internet."

What economists like Greenspan are attempting to do is justify ex post facto a regime that compensates those who reproduce and distribute works, when what is really needed is an economic model that compensates the producers of intellectual works.

I believe that Greenspan realizes this. I also don't see how you can claim that Greenspan justifies the current "regime" when in fact one of the question he asks is: "How appropriate is our current system--developed for a world in which physical assets predominated--for an economy in which value increasingly is embodied in ideas rather than tangible capital?"