I’ll be the first to admit that I know absolutely nothing about money or how it works. Well, maybe not the first. But, I’d chime in once a few other people did. Anyway, I think that all of us secretly know nothing about money. Even people who are paid to understand money. Or paid to give awards to people who are paid to understand money.

It’s like “Meteorology”. Money has become a natural force in the world just like the weather and people are making money by talking about money and understanding money and doing long mathematical equations related to money. And economists are like “meteorologists” in that they get a ton of money for pretending to understand money.

“A British-Cypriot and two Americans, including one nominated by U.S. President Barack Obama to the Federal Reserve board, won the 2010 economics Nobel on Monday for work helping explain unemployment and job markets.

The work honored is highly topical since many countries with developed economies, including the United States, are worried about future job growth after the worst global crisis since the Depression.

The Royal Swedish Academy of Sciences awarded the 10 million crown ($1.5 million) prize to U.S. professors Dale Mortensen and Peter Diamond, the 70-year-old nominee to the Fed, as well as British-Cypriot Christopher Pissarides, 62.” – Reuters

First of all, I don’t know what the hell a “British-Cypriot” is or how many hit points it has but it sounds dangerous. Secondly, I always hate it when old people win the lottery. There’s something that seems unnatural about it. 62, maybe. 70, no way. But, what gets me is that the economics community would dish out cash to three guys who actually had to do years of research in order to explain unemployment. Perhaps it’s understandable given that mainstream economic theory holds that unemployment is a choice you make.

“The problem with unemployment is that, theoretically, it shouldn’t exist. Efficient market theory says unemployed workers should always be able to find a job if they just lower their standards enough, just as all employers should be able to find workers if they just lower theirs.

By this theory, all unemployment is voluntary.

Diamond, Mortensen and Pissarides reject that theory, arguing that it’s costly to find just the right job — that is, one that matches your skills and abilities and pays you what you are worth. From the employer’s point of view, it’s just as costly: All the applicants look pretty much the same at first; it’s not easy to tell beforehand if they can do the job, or whether you can find someone who’ll do the job for less. Searching, in sum, is costly.

The upshot of this research is that this searching — they called it “friction” — can make markets inefficient. Taking the first job offered, or hiring the first applicant would mean the economy wouldn’t work as well as it could. We’d get Ph.D.’s driving cabs, and high-school dropouts running nuclear plants.” – WSJ

I could get laid constantly if I just lowered my standards. And committed adultery. I could also be filthy rich if I lowered my standards with regard to not robbing people at knifepoint. That’s actually a really cool mantra for life in general. Ya’ know, just lower your standards.

I’m glad that these guys finally unraveled this puzzle. And I’m even happier that they made serious bank. The world needs more wealthy people who understand money. What’s ironic is that I bet none of them have ever been unemployed in their lives. So that would be like me winning a prestigious award and getting some fat cash for writing a paper on what it’s like to have wings or a uterus.



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