That is if you consider that economics is the study of incentives.
I have been writing over the past two weeks about the current phenomenon called "inversion."
The subject of inversion has to do with American tax rates on corporations, which are among the highest in the developed world, and the movement of United States firms to buy companies in another country and then move their headquarters out of the United States into the home of the acquired firm.
[Read: Hedge Funds Hate These 5 Stocks – Should You?]
The incentives for doing this -- the high corporate tax rates -- make it difficult for the American firms to be competitive in a world market. Thus, by moving its headquarters to another country with a lower corporate tax rate, the company returns to a more competitive position in the marketplace.
But, there is another incentive. "Hedge funds are wagering billions of dollars on companies they believe will benefit from a wave of takeover deals designed to lower taxes for U.S. acquirers." This is from The Wall Street Journal.
This is the whole essence of macro-trading efforts. In many cases, the government creates a situation that establishes incentives for people to make lots and lots of money. The government does not plan to do this. In fact, the exact opposite is usually the case. The government sets out to do something good -- and then finds out the incentives that have been created do pretty much the opposite of what they had hoped.