Some Classic Economic Theory

Economics is on everyone’s mind these days, but it all just seems so… complicated. As a service, I offer this concise explanation of various economic systems in order to better frame the possible alternatives.

Traditional Capitalism

You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell the herd and retire on the income.


You have two cows. You give one to your neighbor.


You have two cows. The State takes both and gives you some milk.


You have two cows. The State takes both and sells you some milk.


You have two cows. The State takes both and shoots you.


You have two cows. The State takes both, shoots one, milks the other, and then throws the milk away.


You have two giraffes. The government requires you to take harmonica lessons.


You have two cows. You sell one and force the other to produce the milk of four cows. Later, you hire a consultant to analyze why the cow has dropped dead.

AIG Venture Capitalism

You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder. He sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option for one more. You sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with the release. Then the public buys your bull.

A French corporation

You have two cows. You go on strike, organize a riot, and block the roads, because you want three cows.

A Japanese corporation

You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create a clever cow cartoon image called “Cowkémon” and market it worldwide.

A German corporation

You have two cows. You re-engineer them so they live for 100 years, eat once a month, and milk themselves.

An Italian corporation

You have two cows, but you do not know where they are. You decide to have lunch.

A Swiss corporation

You have 5,000 cows. None belongs to you. You charge the owners for storage.

A Chinese corporation

You have two cows. You have 300 people milking them. You claim that you have full employment and high bovine productivity. You arrest the journalist who reported the real situation.

An Indian corporation

You have two cows. You worship them.

A British corporation

You have two cows. Both are mad.

An Iraqi corporation

Everyone thinks you have many cows. You tell them you have none. No one believes you so they launch an air strike and invade your country.

An Australian corporation

You have two cows. Business seems good. You close the office and go for a few beers to celebrate.

A New Zealand corporation

You have two cows. The one on the left looks very attractive.

Some Classic Economic Theory

About Ockham Research 645 Articles

Ockham Research is an independent equity research provider based in Atlanta, Georgia. Security analysis at Ockham Research is based upon the principle known as Ockham's Razor, named for the 14th- century Franciscan friar, William of Ockham. The principle states that a useful theory should utilize as few elements as possible, because efficiency is valuable. In this spirit, our goal is to make the investing environment as simple and understandable as possible, yet no simpler than is necessary.

We utilize this straightforward approach to value over 5500 securities, with key emphasis given to the study of individual securities' price-to-sales, price-to-cash earnings and other historical valuation ranges. Our long term value investing methodology is powered by the teachings of Ben Graham and it has proven to be very adept at identifying stock prices that are out of line with fundamental factors.

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