How could economics not be behavioral? If it isn't behavioral, what the hell is it?
Charlie MungerRead
A banker who is allowed to borrow money at X and loan it out at X plus Y will just go crazy and do too much of it if the civilization doesn't have rules that prevent it.
Interpretation
Bankers will exploit the opportunity to lend money irresponsibly if not regulated.
Charlie Munger highlights the potential dangers of unregulated banking practices. He suggests that without appropriate rules in place, bankers, incentivized by the difference between borrowing and lending rates, may overextend themselves, leading to financial instability and negative consequences for society at large.
In practice
This quote could be used in a lecture about the importance of banking regulations in an economics class.
How could economics not be behavioral? If it isn't behavioral, what the hell is it?
The world of derivatives is full of holes that very few people are really aware of. It's like hydrogen and oxygen sitting on the corner waiting for a little flame.
I believe in the discipline of mastering the best that other people have ever figured out. I don't believe in just sitting down and trying to dream it all up yourself. Nobody's that smart.
Economics is in many respects the queen of the soft sciences. It's expected to be better than the rest. It's my view that economics is better at the multi-disciplinary stuff than the rest of the soft science. And it's also my view that it's still lousy.
Look at this generation, with all of its electronic devices and multitasking. I will confidently predict less success than Warren, who just focused on reading.
Economics profession, they've been - they've been confident in various formulas, but economics is not physics. The same formula that works in one decade doesn't work in the next. Economics is a difficult subject.
Addressing the weaknesses of capitalism will require us, above all, to do two things: first, to take a long-term perspective, and second, to re-set the priorities of business.
The budget should be balanced not by more taxes, but by reduction of follies.
Unless we understand what it is that leads to economic and financial instability, we cannot prescribe -- make policy -- to modify or eliminate it. Identifying a phenomenon is not enough; we need a theory that makes instability a normal result in our economy and gives us handles to control it.
As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.
The gap in India has always been between the promise and the execution.
What Asia's postwar economic miracle demonstrates is that_x000D_ capitalism is a path toward economic development that is potentially_x000D_ available to all countries. No underdeveloped country in the_x000D_ Third World is disadvantaged simply because it began the growth_x000D_ process later than Europe, nor are the established industrial powers_x000D_ capable of blocking the development of a latecomer, provided_x000D_ that country plays by the rules of economic liberalism.
Subscribe for the occasional hand-picked quote. No noise.