EconLog Archive
Regulation
One More Step toward Fascism
The Wall Street Journal reports the following today: Policies that set the pay for tens of thousands of bank employees nationwide would require approval from the Federal Reserve as part of a far-reaching proposal to rein in risk-taking at financial institutions. David Kramer calls this “Bank Salary Socialism.” But the essence of socialism is government .. MORE
Macroeconomics
Kling on the State of Macro
Let me tell my story using the following table, which shows the primary causes of economic fluctuations according to different economists.: Animal Spirits,Liquidity Preference Monetary Shocks Productivity Shocks Recalculation Keynes, Akerlof-Shiller, Krugman Lucas, Dornbusch, Fischer, Blanchard Prescott Clower, Leijonhufvud, Hayek, Kling Macro practitioners (the people who report that the multiplier is 1.54) use econometric models .. MORE
Economic Methods
Tyler Cowen on Masonomics
He spoke at a lunch today. I didn’t take notes, so I may have some things wrong.Six attributes of Masonomics: 1. Signalling and self-deception 2. _____ and neuroeconomics 3. Markets always fail 4. Politics is not about policy 5. cultural relativism 6. Try to connect economics to life. As a researcher, you want your research .. MORE
Economics of Health Care
Poster Child for U.S. Health Care
A British reader forwarded this. Note that in order to get life-saving treatment, the boy apparently must go to the U.S. Overall, I am not a huge fan of our health care system, but one thing that I suspect that it does better than other systems is offer hope to people with rare or difficult .. MORE
Economics of Health Care
The Biggest Lie on Health Reform
Of the following statements made by President Obama in his speech on health reform last week, which is not true? Answer below the fold. a) “if you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the VA, nothing in this plan will .. MORE
Macroeconomics
John Quiggin on Macro
He writes, The appealing idea that macroeconomics should develop naturally from standard microeconomic foundations must be recognised as a distraction. In its place, we must accept, in the language of systems theory that macroeconomic phenomena are emergent, arising from complex interactions of behaviors we do not fully understand, but must nevertheless respond to. I am .. MORE
Labor Market
The Expected Human
The day my latest son was born, I quoted Julian Simon: One spring day about 1969 I visited the U.S. AID office on the outskirts of Washington, D.C., to discuss a project intended to lower fertility in less-developed countries. I arrived early for my appointment, so I strolled outside in the warm sunshine. Below the .. MORE
Finance: stocks, options, etc.
Audio on the Crisis
It’s here. I start about 7-1/2 minutes in, and Russ Roberts starts about 33 minutes in. Russ sounds great. Mine probably reads better than it sounds. You can read a decent approximation of what I said here. Then listen to Russ. If you listen to both of us, listen to Russ on lower volume. He .. MORE
Behavioral Economics
Posner on Personality
It almost sounds like Posner’s jumping on the personality-and-economics bandwagon: Optimism is also a personality trait, and, as it happens, one essential to human progress. As I have argued elsewhere with reference to our current economic situation, what Keynes called “animal spirits” and, alternatively, confidence or optimism are essential to entrepreneurship because of the great .. MORE
Economics of Health Care
Economics of Mandated Health Insurance
Today’s Wall Street Journal contains an interesting front-page news story about mandated health insurance, focusing on the case of Massachusetts. When Mitt Romney was governor, he pushed through a mandate, with subsidies for low-income people to buy it and taxes for those who refused. Some excerpts: “I can’t use up all of my savings just .. MORE
Economics of Health Care
Private Death Panels
Suppose it were legally safe for a private insurer to offer death panels – presumably after talking to marketing to get a better name. (By “legally safe” I mean not just the absence of contrary regulation, but a strong expectation that the death panels wouldn’t provoke lawsuits). How much would this have to reduce the .. MORE
Business Economics
Suits, Geeks, and Lehman
From a New York Times story: He recalls vividly the days in early 2007 at Lehman when his financial models began to throw up more warnings showing delinquencies and defaults, and he remembers colleagues on his desk raising questions about loan quality. But he said the firm’s ranking as the top loan originator on Wall .. MORE
Books: Reviews and Suggested Readings
Gordon Reviews Create Your Own Economy
David Gordon, possibly the world’s greatest fact checker, reviews Tyler’s new book here.
Finance: stocks, options, etc.
The Moral Hazard Story
Russ Roberts told it with great passion today. I’m hoping an audio will be available tomorrow. But he should not feel lonely. Simon Johnson and James Kwak write, creditors had only limited incentives to watch over major banks. Ordinarily, creditors should demand high interest rates on loans to highly leveraged institutions. However, the expectation that .. MORE
Austrian Economics
Why Get Insurance?
My best guess is that most insurance is bought not to reduce risk but instead to signal prudence and caring. The first life insurance companies had a terrible time selling “bets on their death,” and only succeded when they framed insurance as what a caring and prudent husband and father did to take care of .. MORE
Finance: stocks, options, etc.
What I’m Saying
If all goes according to schedule (unlikely), then about the time that this is posted, I should be in the middle of saying something along these lines:I was a kid when the Beatles came to America. Soon they were followed by the Rolling Stones, the Dave Clark Five, the Kinks, and other groups. The press .. MORE
Finance: stocks, options, etc.
The Historical Roots of the Financial Crisis
My paper has been released.
Economic History
Ohanian and His Critics
Lee Ohanian’s paper on “What – or Who – Started the Great Depression?” didn’t get a lot of love in the comments. I’m not going to reply to all the criticisms, but there are a few I’d like to address. 1. From Lord: (1) the Great Depression was the first recession where wage cuts were .. MORE
Finance: stocks, options, etc.
Me On KQED-FM
On Tuesday, September 15, at 9:00 a.m. PDT (noon, EDT), I’ll be on KQED-FM (88.5) Forum out of San Francisco, talking about the first anniversary of the Lehman Brothers collapse. The other guests will be Joe Grundfest of Stanford Law School and Peter Coy of Business Week. Joe is a lawyer whom I helped hire .. MORE
Macroeconomics
Laidler and Sumner on the State of Macro
Will WIlkinson notifies me of Scott Sumner’s essay at Cato Unbound. Self-recommending, with interesting commentators lined up. On a related note, David Laidler writes, The point of [Keynes’] liquidity preference theory was that money, whose use as a means of exchange and unit of account made coordinated economic activity feasible in the first place, also .. MORE
Economics of Education
Tea and Empathy
[BTW, I almost made it to the top of Half Dome. Last year, I was intimidated by the series of steep switchbacks just preceding the cables at the top. On Saturday, I got to the switchbacks, felt intimidated again, had a nap, woke up feeling better, and made it to the top of the switchbacks. .. MORE