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“All rational action is economic. All economic activity is rational action.”
Wrong.
As Robert Heinlein once observed, “Man is not a rational animal; he is a rationalizing animal.” Anyone who has been alive along enough to observe the every-4-or-8-year ritual of Americans either slapping on or scraping off their “Dissent Is The Highest Form Of Patriotism” bumper stickers enough times understands this.
There’s been a lot of advancement in behavioral science, game theory, psychology, etc. since 1940; and even since 1957 when “Atlas Shrugged” was published.
In fact there’s a whole field of economics that has emerged since then called Behavioral Economics — as opposed to the Classical Economics of von Mises, Hayek, Friedman, Rand, etc.
Homo Economicus is as stupid of an economic model as Homo Sovieticus was.