Re: What’s the deal with conservatives, economists, and the minimum wage?
On Jan 19, 2007, at 3:05 PM, Wojtek Sokolowski wrote:
Doug:
What do you think drives anticipations of the future, if not the recent past? There’s nothing to make people think the price of an asset at time t+1 will be greater than the price at time t than the fact that the price at time t is greater than that at t-1, and t-1>t-2, etc.
[WS:] Not necessarily. Think, for example, of a piece of “railroad property” i.e. land bought in anticipation of railroad being built
next to it (which happened a lot in this country’s past.)
This is inside information. While there’s a nontrivial amount of that
around, it’s not what drives the broad financial markets from day to
day.
I would like to add that I am not trying to defend NCE, but rather
think of an argument that would save the NCE’s core assumption - the price- demand relationship - against empirical evidence.
Of course, orthodox finance theory assumes no inside information.
Obviously the price/demand relationship isn’t all wrong, but it does
have some problems.
Doug