Rizzo talked about how when regulations push against incentives, incentives push back. The American disabilities act at first caused a sharp decrease in employed disability people. This is because owners didn’t want to be sued for discriminating people if he fired them so employers didn’t take them in the first place to avoid the situation.
The reason that unintended consequences occur is from a change in incentives. You need to identify all of the parties whose costs will change from the rule and possible changes that they make.
Trade is not zero sum. One side doesn’t win at the expense of the other. It isn’t the “pie fallacy” where a person gets a slice of pie making there less pie for someone else. Most of the stuff in the market place are from gains in trading. A successful transaction benefits both people. If it doesn’t then it’s exploitation and does no good for society.
People won’t deal with you if you have a reputation for not making good trades.
Consequences of the pi fallacy are that it stops economic growth. It provokes the action of power. Store front have to persuade you to come in. Many times it is done through false advertising.
Wealth vs. income
Bill Gates’s wealth is a stock measure. He has $50 billion. He didn’t take money away from me to get this but produced it. The US controls $6 trillion a year. This is a flow measure. Bill Gates has to persuade people to get money. Congress gets money by taking it. No business has power over us. Congress does. Money that Tiger Woods and Bill Gates have is less than what they actually produce. Give more value to consumers than what they make in return. Rockafellar is the richest person to ever walk the face of the earth. Most rich people today started off without money, and got their wealth by providing a wanted service to us.
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