Blackrock, a leading shareholder/investor in industries that benefited from the pandemic and lockdowns, such as Pharmaceuticals (Pfizer, Moderna), podcast and social media firms (like Spotify, Facebook, Twitter) and real estate firms, greatly benefited from the pandemic-related inflation and easy monetary policies.
Yet the company is now against interest rate hikes which may deflate and pressure stock and housing market bubbles!
Homo economicus1 thrive on Negative Externalities. What does that term mean?
In economics, Negative Externality or External Cost refers to when the production or consumption of a product or driving a profit or benefit results in imposing a cost or risk to a third party. Air and noise pollution are commonly cited examples of negative externalities. Someone else is benefiting from building a home or partying but the noise pollution burden mostly falls on others not building or partying!
Tragically, a large part of the Homo economicus growth (as shared in my upcoming book) is built on this concept. For example, when state or federal legislators pass a budget that will tax rural farming communities to benefit a highway construction project near an urban casino resort far away from the farms, it’s a negative externality. The farming communities pay taxes for the benefit of the construction company and even the Casino and real estate owners in the Casino area whose assets appreciate (due to higher traffic).
In my book and blogs, I use this term loosely to refer to a new breed of humans whose brains are conditioned by unfettered scalable growth and quantitative expansion.
“Supply constraints”, he nails the reason why we have higher inflation, caused largely by Covid lockdowns and Covid isolation policies. He also rightly identifies another policy that’s going to raise inflation even further, and that’s chasing the insane goals of Net Zero.