My friend Marty sent me this along with the note “I’m sure a thousand people sent you this today, but I figured I would pass it along nonetheless.” From Saturday Morning Breakfast Cereal:
Hmph. It’s funny because it’s true…no wait, it’s funny because I dare you to find me something that would legitimately qualify as an “economics show.” (And no, Jim Cramer does not count in this category.)
Actually, Marty’s note was more interesting to me than the comic itself. It reminded me of the joke about the economist and the efficient markets hypothesis:
A financial economist and passionate defender of the efficient markets hypothesis walks down the street with a friend.
The friend stops and says, “Look, there is a $20 bill on the ground!”
The economist turns and coolly replies, “Can’t be. If there was a $20 bill on the ground, somebody would have already picked it up.”
The efficient markets hypothesis posits that it’s impossible to consistently beat the market without inside information, since all available information is already baked into market prices. Now, the context of this clearly relates to financial markets, but Marty’s statement shows the logical gap in the hypothesis’ reasoning, at least when it’s taken to an extreme. If everyone assumed that markets were instantaneously efficient, no one would look to take advantage of profit opportunities…but if people didn’t compete away these profit opportunities, markets wouldn’t actually be efficient and there would instead be a huge coordination failure. In the case of my comic, if everyone assumed that a thousand people already sent me the comic, then no one would actually send me the comic, and I would be sad and without material. See how that works?
Here is another coordination failure comic, if you haven’t gotten enough for now already.
4 responses so far ↓
1 j3sus // Jun 16, 2010 at 6:30 pm
I dunno, but its not fun as a “Mankiwist” make fun from people who makes “models” such as effecient markets.
Maybe if its some kind of making fun of yourself, that would be nice
2 Andrew // Jun 16, 2010 at 10:45 pm
Jodi - I thought your ad for EDIWMs t-shirts was your market coordination failure comic as it appears directly below your statement. I hope that’s not the case.
3 Marty Q // Jun 17, 2010 at 9:44 am
Yaaaay I’m helping!
4 Vic // Jun 22, 2010 at 5:38 pm
The wise economist turns and coolly replies, “Can’t be. It’s a typical scam where I grew up: an unsuspecting victim notices a bill on the ground and picks it up. In a few seconds a crook approaches, claims it was his bill, and the bill was actually $100, and demands it back. A “witness” appears out of nowhere, confirming the story. The victim offers to show he has no 100s at all. A small altercation ensues (usually, one of the crooks pushes the victim from behind onto another). The crooks take the wallet and run or walk away, depending on the victim’s condition”.
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