From: T
Sent: Tuesday, September 10, 2019 8:43 AM
To: [email protected]
Subject: Tendency of profits of equalize across industries
Dear Dr Block:
Could you briefly explain what you mean by profits having a tendency equalize across industries in the economy?
Could you also please suggest any readings on this specific topic?
Thank you, T
Dear T:
Suppose there are three industries, A, B, and C. Profits in the first are 50%, in the second 10% and in the third, – 5%. Resources will flow toward A and away from C. This will lower profits in A and raise them in C. If the process continues long enough, and nothing else changes, and we ignore risk, eventually profits will be the same in all 3 industries: zero.
A good reading:
Hazlitt’s economics in one lesson.
Best regards,
Walter
2:38 am on October 4, 2019