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🔗 Environment 🔗 Economics 🔗 Philosophy

Spaceship Earth (or Spacecraft Earth or Spaceship Planet Earth) is a worldview encouraging everyone on Earth to act as a harmonious crew working toward the greater good.

🔗 Economics 🔗 Law Enforcement

The iron law of prohibition is a term coined by Richard Cowan in 1986 which posits that as law enforcement becomes more intense, the potency of prohibited substances increases. Cowan put it this way: "the harder the enforcement, the harder the drugs."

This law is an application of the Alchian–Allen effect; Libertarian judge James P. Gray calls the law the "cardinal rule of prohibition", and notes that is a powerful argument for the legalization of drugs. It is based on the premise that when drugs or alcohol are prohibited, they will be produced in black markets in more concentrated and powerful forms, because these more potent forms offer better efficiency in the business model—they take up less space in storage, less weight in transportation, and they sell for more money. Economist Mark Thornton writes that the iron law of prohibition undermines the argument in favor of prohibition, because the higher potency forms are less safe for the consumer.

🔗 Economics

In economics, the Baumol effect, also known as Baumol's cost disease, is the rise of wages in jobs that have experienced little or no increase in labor productivity, in response to rising salaries in other jobs that have experienced higher productivity growth. The phenomenon was described by William J. Baumol and William G. Bowen in the 1960s and is an example of cross elasticity of demand.

The rise of wages in jobs without productivity gains derives from the requirement to compete for workers with jobs that have experienced productivity gains and so can naturally pay higher salaries, just as classical economics predicts. For instance, if the retail sector pays its managers low wages, they may decide to quit and get jobs in the automobile sector, where wages are higher because of higher labor productivity. Thus, retail managers' salaries increase not due to labor productivity increases in the retail sector, but due to productivity and corresponding wage increases in other industries.

🔗 Mathematics 🔗 Economics 🔗 Politics 🔗 Elections and Referendums

In social choice theory, Arrow's impossibility theorem, the general possibility theorem or Arrow's paradox is an impossibility theorem stating that when voters have three or more distinct alternatives (options), no ranked voting electoral system can convert the ranked preferences of individuals into a community-wide (complete and transitive) ranking while also meeting a specified set of criteria: unrestricted domain, non-dictatorship, Pareto efficiency, and independence of irrelevant alternatives. The theorem is often cited in discussions of voting theory as it is further interpreted by the Gibbard–Satterthwaite theorem. The theorem is named after economist and Nobel laureate Kenneth Arrow, who demonstrated the theorem in his doctoral thesis and popularized it in his 1951 book Social Choice and Individual Values. The original paper was titled "A Difficulty in the Concept of Social Welfare".

In short, the theorem states that no rank-order electoral system can be designed that always satisfies these three "fairness" criteria:

• If every voter prefers alternative X over alternative Y, then the group prefers X over Y.
• If every voter's preference between X and Y remains unchanged, then the group's preference between X and Y will also remain unchanged (even if voters' preferences between other pairs like X and Z, Y and Z, or Z and W change).
• There is no "dictator": no single voter possesses the power to always determine the group's preference.

Cardinal voting electoral systems are not covered by the theorem, as they convey more information than rank orders. However, Gibbard's theorem extends Arrow's theorem for that case. The theorem can also be sidestepped by weakening the notion of independence.

The axiomatic approach Arrow adopted can treat all conceivable rules (that are based on preferences) within one unified framework. In that sense, the approach is qualitatively different from the earlier one in voting theory, in which rules were investigated one by one. One can therefore say that the contemporary paradigm of social choice theory started from this theorem.

The practical consequences of the theorem are debatable: Arrow has said "Most systems are not going to work badly all of the time. All I proved is that all can work badly at times."

🔗 Economics 🔗 Law

"The Nature of the Firm" (1937) is an article by Ronald Coase. It offered an economic explanation of why individuals choose to form partnerships, companies and other business entities rather than trading bilaterally through contracts on a market. The author was awarded the Nobel Memorial Prize in Economic Sciences in 1991 in part due to this paper. Despite the honor, the paper was written when Coase was an undergraduate and he described it later in life as "little more than an undergraduate essay."

The article argues that firms emerge because they are better equipped to deal with the transaction costs inherent in production and exchange than individuals are. Economists such as Oliver Williamson, Douglass North, Oliver Hart, Bengt Holmström, Arman Alchian and Harold Demsetz expanded on Coase's work on firms, transaction costs and contracts. Economists and political scientists have used insights from Coase's work to explain the functioning of organizations in general, not just firms. Coase's work strongly influenced the New Economics of Organization (New Institutional Economics).

Coase's article distinguished between markets as a coordination mechanism and firms as a coordination mechanism.

🔗 International relations 🔗 Mass surveillance 🔗 Internet 🔗 History 🔗 Computing 🔗 Internet culture 🔗 Economics 🔗 Law 🔗 Business 🔗 Politics 🔗 International relations/International law 🔗 Sociology 🔗 Futures studies 🔗 Capitalism 🔗 Globalization 🔗 Google

Surveillance capitalism has a number of meanings around the commodification of personal information. Since 2014, social psychologist Shoshana Zuboff has used and popularized the term.

🔗 Economics

The Alchian–Allen effect was described in 1964 by Armen Alchian and William R Allen in the book University Economics (now called Exchange and Production). It states that when the prices of two substitute goods, such as high and low grades of the same product, are both increased by a fixed per-unit amount such as a transportation cost or a lump-sum tax, consumption will shift toward the higher-grade product. This is because the added per-unit amount decreases the relative price of the higher-grade product.

Suppose, for example, that high-grade coffee beans are $3/pound and low-grade beans $1.50/pound; in this example, high-grade beans cost twice as much as low-grade beans. Now add a per-pound international shipping cost of $1. The effective prices are now $4 and $2.50; high-grade beans now cost only 1.6 times as much as low-grade beans. This reduced ratio of difference will induce distant coffee-buyers to now choose a higher ratio of high-to-low grade beans than local coffee-buyers.

The effect has been studied as it applies to illegal drugs and it has been shown that the potency of marijuana increased in response to higher enforcement budgets, and there was a similar effect for alcohol in the U.S. during Prohibition. This effect is called iron law of prohibition.

Another example is that Australians drink higher-quality Californian wine than Californians, and vice versa, because it is only worth the transportation costs for the most expensive wine.

Colloquially, the Alchian–Allen theorem is also known as the “shipping the good apples out” theorem (Thomas Borcherding), or as the “third law of demand.”

🔗 Economics

Veblen goods are types of luxury goods for which the quantity demanded increases as the price increases, an apparent contradiction of the law of demand, resulting in an upward-sloping demand curve. A higher price may make a product desirable as a status symbol in the practices of conspicuous consumption and conspicuous leisure. A product may be a Veblen good because it is a positional good, something few others can own.

Veblen goods are named after American economist Thorstein Veblen, who first identified conspicuous consumption as a mode of status-seeking in The Theory of the Leisure Class (1899). A corollary of the Veblen effect is that lowering the price decreases the quantity demanded.

🔗 Economics 🔗 London 🔗 Energy

The oil futures drunk-trading incident was an incident in which Stephen Perkins, an employee of London-based PVM Oil Futures, traded 7 million barrels (1.1 million cubic metres) of oil, worth approximately US$520 million (£340 million) in a two-and-half-hour period in the early morning of 30 June 2009 while drunk. These unauthorised trades caused the price of Brent Crude oil to rise by over $1.50 a barrel (equivalent to $1.79 in 2019) within a short period of time, a trend generally associated with major geopolitical events, before dropping rapidly. As a result of the trading, PVM Oil Futures suffered losses of almost $10 million and Perkins was dismissed, later being banned from trading by the Financial Services Authority (FSA).

🔗 Death 🔗 Economics 🔗 Philosophy 🔗 Business 🔗 Philosophy/Ethics

The value of life is an economic value used to quantify the benefit of avoiding a fatality. It is also referred to as the cost of life, value of preventing a fatality (VPF), implied cost of averting a fatality (ICAF), and value of a statistical life (VSL). In social and political sciences, it is the marginal cost of death prevention in a certain class of circumstances. In many studies the value also includes the quality of life, the expected life time remaining, as well as the earning potential of a given person especially for an after-the-fact payment in a wrongful death claim lawsuit.

As such, it is a statistical term, the cost of reducing the average number of deaths by one. It is an important issue in a wide range of disciplines including economics, health care, adoption, political economy, insurance, worker safety, environmental impact assessment, globalization, and process safety.

The motivation for placing a monetary value on life is to enable policy and regulatory analysts to allocate the limited supply of resources, infrastructure, labor, and tax revenue. Estimates for the value of a life are used to compare the life-saving and risk-reduction benefits of new policies, regulations, and projects against a variety of other factors, often using a cost-benefit analysis.

Estimates for the statistical value of life are published and used in practice by various government agencies. In Western countries and other liberal democracies, estimates for the value of a statistical life typically range from US$1 million—US$10 million; for example, the United States FEMA estimated the value of a statistical life at US$7.5 million in 2020.