Posted 1 year ago on Aug. 10, 2012, 11:54 a.m. EST by agkaiser
from Fredericksburg, TX
This content is user submitted and not an official statement
“This perverse dynamic has a name that is well known among good economists, white-collar criminologists, and financial regulators – a “Gresham’s dynamic.” That phrase was used in the economics literature over forty years ago in a famous 1970 article that led to the award of the Nobel Prize in Economics to George Akerlof in 2001.
'[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.' “Akerlof’s 1970 article discussed control frauds aimed against customers. His title used the term 'lemons' because he explained the fraudulent sale of poor quality cars passed off as high quality cars as his most famous example. Perceptive observers recognized the same perverse dynamic centuries ago. 'The Lilliputians look upon fraud as a greater crime than theft. For, they allege, care and vigilance, with a very common understanding, can protect a man’s goods from thieves, but honesty hath no fence against superior cunning. . . where fraud is permitted or connived at, or hath no law to punish it, the honest dealer is always undone, and the knave gets the advantage' (J. Swift, Gulliver’s Travels). “Read more at http://www.nakedcapitalism.com/2012/08/bill-black-eduardo-porters-folly-why-we-must-end-the-race-to-the-bottom.html
For more on dysfunctional economy and culture see: How Does That Work? https://www.createspace.com/3852916