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.
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What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914!
We ask our companies to restructure; we ask employees to work more for less money because there is overproduction, but then we're unable to defend them from cheaper Chinese imports. We are insane.
Those on the downside of rising economic inequality generally do not want government policies that look like handouts. They typically do not want the government to make the tax system more progressive, to impose punishing taxes on the rich, in order to give the money to them. Redistribution feels demeaning. It feels like being labeled a failure.
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