Re: Keynes and competition

["John O'Donnell" <jackodonnell@xxxxxxxx>]

Bruce McFarling wrote:

<<SNIP>>

> However, it is not surprising of the New Keynesians fall
> into logical traps and empirical absurdities under perfect
> competition, since the inability to spot fallacies of
> composition seems to have spread through the profession
> like a slow working flu, while the empirical absurdities
> are built in from the start.

It is not just an error of composition, it is an obvious
error of definition. No matter how small the difference from
other things, everything that is is uniquely itself. A
monopoly exists for each and every item owned or otherwise
controlled, however trivial that monopoly may be.

Consider the difference of a gallon of water in the middle
of the desert and a comparably specified gallon located in
the middle of a community reservoir. The composition may be
the same, but the price that can be successfully demanded is
quite different. Most such monopolies are trivial, but they
are monopolies none the less.

Recognize this obvious truth and the certainty that monopoly
is not in itself detrimental to economic analysis, it is
essential. Only when the privileges granted to monopolists
are used to the detriment of others and the extensiveness of
the monopoly is sufficient to affect peoples opportunities
does the monopoly become of concern to society at large.

"Monopoly" represents a state of being while "competition"
is a process that affects the economic value of a monopoly.
Neither can be "perfect" and, because they are different
economic attributes not opposite conditions, neither can
they be rationally compared.

Set aside your prejudicial perceptions and come learn to
analyze economic concepts with an open mind at:
http://www.geocities.com/jackodonnell.geo/c00r4.html

--
			-- jbod

		Tax Privilege, Not People
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