In our last post, we explored how the 2008 financial crisis happened because policymakers thought they could manage the economy like a machine—setting interest rates, guiding lending, engineering outcomes. They couldn’t. The knowledge problem meant they were making decisions based on information they simply didn’t have and couldn’t have. But there’s another piece to this puzzle, one that’s just as important for understanding what went wrong: moral hazard. The term sounds technical, but the concept is straightforward. Moral hazard happens when someone gets to make decisions but doesn’t have to live with the full consequences of those decisions. When the …

“If we could just get the right people in charge, we could fix this.” It’s tempting, isn’t it? When the economy tanks and people lose their jobs and homes, wouldn’t it be better if smart, well-intentioned experts could just… manage things? Set the right interest rates, guide money to the right places, make sure loans go to people who can actually pay them back, stop bubbles before they get too big? This idea—that economies work like machines you can tune and adjust—shaped pretty much every decision that led to the 2008 financial crisis. There’s just one problem: economies aren’t machines. …

In our last post, we explored how the Great Depression didn’t happen because capitalism failed, but because government intervention in monetary markets created distortions that made a necessary correction catastrophic. But the story doesn’t end with the 1929 crash. What followed reveals an even more important lesson about how government solutions can turn a temporary downturn into a decade-long disaster. Most of us learned in school that Franklin Roosevelt’s New Deal programs softened the Depression’s worst effects, and that World War II’s massive government spending finally ended the economic nightmare. It’s a comforting narrative that positions the government as the …

Unfettered capitalism. That’s usually how the story goes. Greedy speculators run wild, markets spin out of control, and eventually the whole system collapses under the weight of its own excess. Then the government steps in heroically to clean up capitalism’s inevitable mess. It’s a tidy narrative that fits our intuitions about boom-and-bust cycles. But what if the real story is far more complicated? What if the Great Depression happened not because markets were too free, but because well-intentioned government policies created a web of distortions that made the eventual crash both inevitable and far worse than it needed to be? …

“We need to break up Big Tech!” “These corporations are too powerful!” If you’ve followed political discourse over the past few years, you’ve heard variations of these complaints countless times. The underlying assumption is always the same: once a business gets big enough, it becomes permanently entrenched, immune to competition, and capable of exploiting consumers indefinitely. But what if this assumption is completely wrong? What if the natural tendency in free markets isn’t toward permanent monopolies but toward constant change, disruption, and renewal? What if the businesses that seem invincible today are actually more vulnerable than they appear? Let’s start …

Robber barons. The term conjures images of cigar-chomping industrialists exploiting workers, crushing competitors, and amassing obscene wealth through ruthless tactics. It’s a narrative we’ve all heard—probably in high school history class. These men, we’re told, built their fortunes by robbing the common people, hence the name. But what if this entire story is backward? What if the real story of the Gilded Age isn’t about exploitation and robbery but about capitalism creating the greatest period of rising living standards in human history? What if these robber barons actually made ordinary people’s lives dramatically better—so much better, in fact, that for …

“We need more cooperation and less competition in our economy.” You’ve probably heard variations of this sentiment from politicians, pundits, and well-meaning friends who worry that market competition creates a harsh, uncaring society. The underlying assumption is clear: competition and cooperation are opposites. If we want people to work together harmoniously, we need less of the brutal dog-eat-dog competition that capitalism supposedly encourages. This framing presents a false choice that fundamentally misunderstands both competition and cooperation. In our last post, we explored how competition in capitalism differs completely from zero-sum contests. Business competition isn’t about defeating opponents. It’s about creating …