How Markets Fail

What Hacker News says

1. mushufasaMar 2019
   If you are wont to read all of this, you might buy the Volume 1 of the CFA exam books instead.

   After having been through an economics degree beforehand, I was impressed at comprehensiveness and conciseness. They're written to be read, unlike a lot of academic textbooks that are written to be references for lectures.

   There are several thousands of pages in Volume I, but that's because they cover so much ground. If you're looking for a holistic understanding, and would otherwise pick up a dozen different paperbacks from some online blog list, you might do well instead to pick up the official introduction for finance by and for the financial industry.

   For a general understanding of macroeconomics, I'd recommend just Cassidy's 'How Markets Fail' and you're set.

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2. prewettFeb 2019
   Check out the book "How Markets Fail" for a discussion on how the efficient market hypothesis gained popularity (part 1) and a discussion of the many ways that real markets do not maintain the preconditions for markets to be efficient.

   In particular, the precondition that Adam Smith stated was that increasing production required linearly increased costs. However, this is frequently not the case (utilities, railroads, software, social media networks, etc.). Also, markets require a certain minimum number of producers (and consumers) in order to remain efficient. Consolidation can reduce the number of producers below the level that meets the precondition of efficiency, and then barriers to entry to prevent newcomers from joining the market.

   As far as efficient market theory applied to the stock market, I've always thought that efficient market theory was trivially disprovable: did all companies in the US lose 20% of their value all at the same time this past Nov - Dec, in the same season that they are selling all their inventory during the holiday season? And then regain 10% of it all at the same time the next month? Did Apple lose 50% of its value from between July and December, despite the fact that its revenues, costs, dividends, assets, people-capital, know-how, brand, consumer sentiment, etc. remained roughly the same? Compare to, say, PG&E during the same period.

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3. mushufasaFeb 2019
   John Cassidy's "How Markets Fail" is a must-read IMHO. I went through 4 years of an economics degree at a top tier university (top 5 globally in Econ), and Cassidy's book just happened to be the weekly assigned reading for a class my last semester.

   Everything then made sense. All the inconsistencies you hear about economics, with one camp saying one idea and another talking about something totally different, both passing it off as consensus, fit into place.

   TLDR: Cassidy's book is in 2 parts. The first part, he constructs the classical/rational model of economics through intellectual history. The second part, he deconstructs, drawing from all the critiques of inefficiency, both behavioral and mathematical. (Some of the most fascinating aspects are the beautiful mathematical models that can't be solved). It's all well written prose, no need to have a pen and calculator to follow along.

   The title is misleading IMHO, because it seems to be a populist polemical. It's not. It should be called something like "A Brief History of Economics", echoing Hawkin's Brief History of Time.

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4. rahimnathwaniFeb 2019
   If you're interested in this topic you might like:

   - Why markets fail (https://www.amazon.com/How-Markets-Fail-Economic-Calamities/...)

   - Thinking in Systems (https://www.amazon.com/Thinking-Systems-Donella-H-Meadows-eb...)

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5. stuxnet79Dec 2018
   It's a very well written book. It's obvious that Thomas Sowell skews libertarian but he doesn't brow beat you over the head with it. The focus of the book is more to provide the analytical framework for you to make your own judgements as to how things operate in an economy. Once you ready the Sowell book make sure you read "How Markets Fail" which takes a slanted, oppositional view to deregulation.
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6. philippsDec 2017
   > the only thing markets have been shown not to do well is make sacrifices for moral reasons.

   Even reading this claim in the narrow context of the article it seems too broad. John Cassidy has written an insightful book “How markets fail“ that explains when markets do not generate optimal or desirable outcomes.

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