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Posts tagged with economics

Who's the Job Creator?

See also Nicholas Kristof on “The Value of Teachers” (both via Wisconsin Forward):

What shone through the [Chetty, Friedman, and Rockoff] study was the variation among teachers. Great teachers not only raised test scores significantly — an effect that mostly faded within a few years — but also left their students with better life outcomes. A great teacher (defined as one better than 84 percent of peers) for a single year between fourth and eighth grades resulted in students earning almost 1 percent more at age 28.


“  The asymmetric nature of the bonus (an incentive for success without a corresponding disincentive for failure) causes hidden risks to accumulate in the financial system and become a catalyst for disaster. This violates the fundamental rules of capitalism; Adam Smith himself was wary of the effect of limiting liability, a bedrock principle of the modern corporation.” — Nassim Nicholas Taleb

“  In the fourth quarter of 2008, our economic inputs were wrong. So forecasts using those inputs to make predictions about the future produced answers that were also wrong. That says nothing about whether the stimulus worked or failed. It’s like questioning modern medicine because a case of pneumonia initially presented as strep throat. The recession could have been more than twice as deep as anyone thought in late-2008 and, separately, stimulus is a failed policy idea. But the fact that the initial projections were wrong can’t form the basis for your case.” — Ezra Klein

Small Business is Small in the U.S.

And (wait for it) Big Business is big.


“  Fiscally, however, an anti-Keynesian, budget-balancing immediacy imparts a constrictive noose around whatever demand remains alive and kicking. Washington hassles over debt ceilings instead of job creation in the mistaken belief that a balanced budget will produce a balanced economy. It will not. The president and Congress must recognize that an AA-plus country, to remain AA-plus, must focus on growth, not debt reduction, in the short term. We have a debt problem — but primarily a crisis of aggregate demand. A 21st-century Keynes would have recognized this and sounded the alarm, pointing out that policymakers from a fiscal perspective are pointing us toward recession and the destructive 1930s instead of a low-growth but still breathing U.S. economy of the 21st century.” — Bill Gross (Pimco co-founder)

Dumping

John Gruber points to Paul Thurrott’s argument that Android resembles anticompetitive behavior from Google. I’m a little pissed that predatory dumping didn’t occur to me before. I must be getting to comfortable with monopolists.


Against Democratic Representation

David Wessel (or some guy as Gruber might say) summarizes a National Academy of Sciences lecture from Paul Romer:

Congress should tie its own hands more often, retaining power to investigate and vote proposals up or down but avoiding the detailed crafting of legislative provisions that influence the flow of money.

To Romer, good institutions are created and maintained by philosopher kings. See him here on charter cities. But I’d offer up the continual wrangling over the Consumer Financial Protection Bureau as a case study in how semi-autonomous insulated from Congress institutions actually get built. A creation reality that Romer might find less than appealing.

Filed under normative economics (WSJ link via Met’s Fan #1).


Unbreakable Bonds

Iris J. Lav:

The leading rating agencies estimate the default rate on rated municipal bonds of any kind at less than one-third of 1 percent; in contrast, the default rate on corporate bonds reached nearly 14 percent during the recession and hovers around 3 percent in good times.

Run government like a business indeed.


The Normative Science that is Economics

Ari, you chose the wrong field. See also Edward Glaeser.


The Invention of Money

This American Life Episode #423 (via Tim Hartford by way of MR). Suitable for the classroom. Or the virtual online classroom as the case may be.