Saturday, January 8, 2011

Mark Cuban on the Future

Here's an interesting interview that StockTwits did with Mark Cuban, who is clearly an out of the box thinker. Cuban claims to have been influenced by Ayn Rand, so he has pretty good free market instincts, but he it's obvious ha has no understanding of economics.

His dismissal of Federal Reserve monetary policy as insignificant clearly means he has no sense of the destruction that hyper-inflation has created in many countries, and the distortions that the business cycle causes.

I like his thinking somewhat on the ultimate index for a country being whether people want to leave or enter a country, but I think he has no idea how quickly that attitude can change, or what really causes people to want to leave or enter a country. The countries people want to leave are usually the countries where central planning has suffocated opportunity. The U.S. isn't there yet, but it is sure heading in that direction.

Cuban also seems to get there is something wrong with the banking sector, but doesn't seem to get that it is the protection banks get from the government against failure that is the problem. His Randian instincts appear to prevent him from condemn what is going on in the banking sector, since he sees the banking sector as just another free enterprise operation. He doesn't seem to get government's role in the sector. Indeed, he seems, across the board, to have a complete block as to the way government intervenes and distorts the economy.

His observations on personal medicine are interesting, but again he seems not to be aware that government can shape the industry in a completely different direction. I get his thinking on how science may move toward "personal medicine", but I also know there is a possibility that those advances may be suffocated by the current medical industry that has captured health regulation, if the industry sees such advances as a threat. The best thing that can happen is if "personal medicine" sneaks up on the medical establishment before they realize it is a threat. I'm not sure that can be done.


  1. Interesting interview. I always felt Cuban was a pretty annoying figure, but have always respected his business sense. He is very good at capitalizing whenever an opportunity presents itself.

    To me this is just more confirmation that EMH and the rational expectations model often used by neo-classical economists is false. Here's a billionaire that isn't figuring fed policy and inflation matters in business plans. This echoes other interviews I've seen with other business owners. There is little to no recognition of how business cycles work or where they come from, just an unwavering focus on the current business.

  2. Anon,

    I have to give qualified agreement to your statement, with the qualification being I haven't had a chance to think through all the implications and therefore say I wholeheartedly agree. I think SOME business owners are aware. But my experience is similar to yours, that most are unaware or unconcerned. There is a feeling, even amongst those who understand the business cycle and related theory, of "What can I do about it?"

    You can try to sell when the selling is good, you can try to slow down your operations and fire people ahead of the bust, but if you miscalculate, you're dead, and even in the meantime you might lose so much marketshare and reputation in the marketplace that you ultimately handicap yourself even worse.

    I think Austrian BCT accounts for all of these phenomena in identifying that the entrepreneurial response to the business cycle, informed or uninformed, will necessarily be heterogenous and have to take into account PRESENT costs and incentives as well as FUTURE anticipated but not yet (and potentially "never") realized costs and incentives.