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Even within the dominant school of economics, that is, the neo-classical school, which provides much of the foundation for free-market economics, there are theories that explain why free markets are likely to produce sub-optimal results. These are theories of 'market failure' or 'welfare economics'…

The economics of Herbert Simon and his followers has really changed the way we understand modern firms and, more broadly, the modern economy. It helps us break away from the myth that our economy is exclusively populated by rational self-seekers interacting through the market mechanism. When we und…

Thus, exactly because finance is efficient at responding to changing profit opportunities, it can become harmful for the rest ef the economy. And this is why James Tobin, the 1981 Nobel laureate in economics, talked of the need to 'throw some sand in the wheels of our excessively efficient internat…

Yes, in theory, a shoeshine boy from a poor provincial town in Peru can go to Stanford and do a PhD, as the former Peruvian President Alejandro Toledo has done, but for one Toledo we have millions of Peruvian children who did not even make it to high school. Of course, we could argue that all those…

[...] Why should people who have worked hard and obtained a university degree against all odds be rewarded in the same way as someone, coming from the same poor background, who goes into a life of petty crime?

This argument is correct. We cannot, and should not, explain someone's performance onl…