A passage from John Bates Clark's book, The Philosophy of Wealth: Economic Principles Newly Formulated published in 1894. Clark, an American neoclassical economist famous for developing the marginal productivity theory of distribution, was "one of one of the leading figures of the Marginalist Revolution":
CHAPTER XII. THE ECONOMIC FUNCTION [...]
Paul Krugman is unhappy with reporting on income inequality on the WSJ editorial page:
Movin' On Up, Editorial, WSJ: If you've been listening to Mike Huckabee or John Edwards on the Presidential trail, you may have heard that the U.S. is becoming a nation of rising inequality and shrinking opportunity. [...]
New estimates for the cost of the Iraq and Afghanistan wars:
'Hidden Costs' Double Price Of Two Wars, Democrats Say, by Josh White, Washington Post: The economic costs ... of the wars in Iraq and Afghanistan so far total approximately $1.5 trillion, according to a new study by congressional Democrats [...]
A colleague, Bruce Blonigen, and his co-author Alyson Ma say there's little evidence to support the view that "China extracts rents and technology from foreign competitors, thus allowing it to grow even faster and longer than most would have imagined possible." China has managed to attract considerable foreign investment, but [...]
Continuing with the subject of how to model exchange rate dynamics, this is Roman Frydman and Michael Goldberg describing how their work on imperfect knowledge economics can help us to understand exchange rate movements, and how policymakers can use this knowledge to reduce deviations of exchange rates from parity:
Robert Reich is looking past the next recession, Calculated Risk looks at residential construction employment, and Nouriel Roubini sounds the alarm:
After the Next Recession, by Robert Reich: All signs point to a recession... We may pull out of it, yet. Bernanke and company may make bigger cuts in interest [...]
Brad DeLong says the debate between David Brooks and Paul Krugman is over, it's clear Krugman was right:
Game, Set, and Match to Paul Krugman..., by Brad DeLong: It appears that Paul Krugman wins his fight with David Brooks, who had written this about Paul Krugman's invocation of Ronald [...]
I am part of a seminar at Crooked Timber on Dani Rodrik's new book One Economics, Many Recipes: Globalization, Institutions and Economic Growth. My entry is at the end of this batch, but do read the others as I'm sure they are much better, and there will be more entries [...]
This has received quite a bit of attention already, though I did try to add something new at the end with a discussion of some recent work by Bob Flood and Andrew Rose, but in case you missed it this is Menzie Chinn on modeling exchange rates. I won't repeat [...]
As the exchange rate continues to fall, illegal imports are declining. Get ready for a glut of B.C. bud in Canada, and a dry spell in Montana. Given the asymmetric flexibility in these markets - exit is much faster than entry for obvious reasons - it will take awhile for [...]
[Please feel free to add more links in comments.]
International trade produces both winners and losers, but "the winners win more than the losers lose, so governments should boost public support for trade by creating ex ante mechanisms that share the pains and gains." This research provides evidence that these types of mechanisms are actually able to reduce public [...]
George Soros calls for "new ground rules for political discourse":
Democratic politics manipulates truth: But there’s a way out, by George Soros, Project Syndicate: In his novel 1984 , George Orwell chillingly described a totalitarian regime in which all communication is controlled by a Ministry of Truth and dissidents are [...]
Poor Ronald Reagan, one innocent mistake after another has, according to David Brooks and others, left the wrong impression about him:
Innocent mistakes, by Paul Krugman: So there’s a campaign on to exonerate Ronald Reagan from the charge that he deliberately made use of Nixon’s Southern strategy. When [...]
Austan Goolsbee on what the Iraqi bond market is telling us about the chance of success in Iraq (this has come up previously, see "Is The 'Surge' Working? Some New Facts" and Jim Hamilton: Economic Indicators of Success in Iraq):
Paul Krugman corrects Robert Rubin:
Robert Rubin is wrong about the dollar, by Paul Krugman: He says,
“You could have had surpluses that affected the savings rate and would have helped the trade balance. I think you would have had more confidence in the policy framework and you would [...]
Am interview with Jared Diamond, and a response by Jerry Taylor from Cato:
How much longer can we 'overshoot'? ... Kai Ryssdal: There's a technical term for what we're doing as we eat, shop, drive and go about our daily lives. The word is "overshoot" -- when a population uses up [...]
In defense of liberal bias on college campuses:
Liberal Bias is A-OK, by J.D. Porter [senior majoring in English], Columbia Daily Spectator: Here at Columbia, as at most top universities, we enjoy belittling conservative beliefs. Even the professors are in on it, and conservatives often find their beliefs directly challenged [...]
Andrew Leonard has the details on the "Worst. President. Ever.":
Worst. President. Ever., by Andrew Leonard: If you're feeling in the mood for a stinging, biting, razor-sharp dissection of everything George W. Bush has done wrong as the keeper of the American economy, run, don't walk, to the December issue [...]
When we last heard from Richard Baldwin, I introduced his Vox EU paper with:
Richard Baldwin says we still have reason to believe that Paul Krugman's Wile E. Coyote moment where there is a sudden plunge in the dollar "is in the offing":
Richard concluded with:
In February 2007, Krugman wrote [...]
Continuing the debate on health care:
Health Care Excuses, by Paul Krugman, NY Times: The United States spends far more on health care per person than any other nation. Yet we have lower life expectancy than most other rich countries. Furthermore, ... only in America is a large fraction of [...]
The pain of gain:
The pain of globalisation, by Jared Bernstein and Josh Bivens, Comment is Free: Last February, ... a New York Times/CBS poll ... found that 51% of respondents agreed the US had "lost more than it gained from globalisation." Further, ... a recent Wall Street Journal poll [...]
Think these are mutually exclusive?
The Fed did say the inflation and recession risks were balanced after its last rate setting meeting. We are currently experiencing both negative demand shocks (through housing) and [...]
Robert Reich says bottom up:
Trickle Down or Bottom Up, by Robert Reich: ...There are only two economic philosophies in America – trickle down and bottom up. Trickle down means the rich get richer and pay less taxes. Supposedly they use their extra income to invest in America, which makes [...]
Will raising the retirement age increase the unemployment rate among the elderly? According to this the impact of an increase in the retirement age on employment is small, but the groups examined are the "elderly (age 45-55)" and "prime-age (age 35-44)", so I'm not sure how much the results tell [...]
Just after During the Enlightenment:
Cesare Beccaria: Essay on Crimes and Punishments,
18191767 [Update: Please see comments on date correction]: Cesare Beccaria applied an Enlightenment analysis to crime and punishment, and to the ugliness of the traditional legal and penal system....The torture of a criminal during the course [...]
Ken Rogoff says we shouldn't try to increase taxes on the ultra-rich because they will just find a way to avoid it:
The golden haves in the age of globalization, by Kenneth Rogoff, Project Syndicate: ...The latest Forbes list of America's wealthiest individuals showed that last year's highest nine earners, [...]
Kevin Drum on Robert Samuelson's latest column, "Recession's Hidden Virtues":
The Great Depression Really Was Great!...., by Kevin Drum: Robert Samuelson looks on the bright side of the recession that he thinks is coming our way soon:
Recessions also have often-overlooked benefits. They dampen inflation. In weak markets, companies [...]
Ricardo Hausmann with an optimistic view of the potential for biofuels as an alternative to oil:
Biofuels can match oil production, by Ricardo Hausmann, Commentary, Financial Times: Peering into the future seldom produces a clear picture. But this is not the case with bio-energy. Its long-term impacts on the global [...]
Giancarlo Corsetti says that the classic analysis by Obstfeld and Rogoff indicating that the dollar still has a long way to fall is challenged by new theory suggesting the dollar may have already fallen enough:
The anatomy of dollar depreciation, by Giancarlo Corsetti, Vox EU: It is well understood that [...]
An email suggests this article from the History News Network on charitable giving by the wealthy and attitudes toward the poor (thank you):
Why We Should Be Lucky Bill Gates and Warren Buffet Don't Take After Cornelius Vanderbilt, by Edward Renehan, HNN: A while back, Forbes Magazine ranked the richest [...]
How well has deregulation of electricity markets worked for consumers?:
Competitively Priced Electricity Costs More, Studies Show, by David Cay Johnston, NY Times: Retail electricity prices have risen much more in states that adopted competitive pricing than in those that have retained traditional rates set by the government, new studies [...]
Some of you seem to be itching to talk about immigration. Here's your chance. Tim Harford looks at new evidence on immigration and wages:
Do immigrants raise or lower wages?, by Tim Harford: The idea that "immigrants take our jobs" has always been ridiculous to economists, or anyone who [...]
I don't know a lot about this topic, it's psychology not economics, so please add anything you can in comments. This is part of the lead essay to a discussion at Cato Unbound that attempts to answer questions such as "Is intelligence a unitary, general factor — the psychometrician’s famed [...]
Phil Izzo on unethical contagion:
Unethical Contagion: The Canseco Effect, by Phil Izzo, WSJ Economics Blog: ...[I]n a new paper Eric D Gould ... and Todd Kaplan ... wonder what happens when ... productivity is based on unethical practices. The economists study the example of baseball player Jose Canseco, who [...]
Justin Fox on how Federal Reserve Governor Frederic Mishkin views the risk management approach to monetary policy in the current financial environment, and Mishkin's view of whether further rate cuts will be needed:
Rick Mishkin says the Fed is out to fight feedback loops, not bail out investors, by Justin [...]
Now that the dollar is starting to fall, it's time to play the blame game. Is it fixed exchange rate policies by foreign countries, the administration's tax-cuts and subsequent deficits, or what? Dean Baker says the dollar's problems can be traced to the strong dollar policy pursued by Robert Rubin [...]
Will big money thwart progressive change?:
Wobbled by Wealth?, by Paul Krugman, Commentary, NY Times: At just about every stop I’ve made so far on my book tour, what I’ve come to think of as The Question comes up. ... “How can you be optimistic about the prospects for progressive [...]
Tim Duy analyzes the arguments for and against further rate cuts:
It Will Only Get More Interesting, by Tim Duy: Six months ago, I doubt anyone would have believed that the Federal Reserve would be cutting interest rates 50bp during a quarter in which GDP posted 3.9% (albeit likely overstated) [...]
knzn says that making taxes more progressive acts as insurance against bad economic outcomes thereby encouraging additional entrepreneurial activity:
Incentive Effects of Progressive Taxation at the High End, by knzn: Does progressive (labor) taxation at the high end reduce the incentive to engage in high-value activities? It seems to [...]
Brad DeLong says that today, "the principal source of international economic disorder is made in China":
Alignment problem shifts to China, by J. Bradford DeLong, Commentary, Project Syndicate: Now that the dollar has dropped 43 percent from its high against the euro, the process of global financial rebalancing is seriously [...]
Have the politics surrounding the farm bill shifted to give consumers a stronger voice in negotiations that have traditionally favored the interests of producers? Michael Pollan thinks so, but don't increase your Twinkie budget just yet:
Weed It and Reap By Michael Pollan, Commentary, NY Times: ...A new politics has [...]
Greg Mankiw does his best to belittle the health care problem and sweep it under the rug:
Beyond those health care numbers, by N. Gregory Mankiw, Economic View, New York Times: Here are three true but misleading facts about health care that politicians and pundits in the United [...]
The Dallas Fed documents current conditions in energy markets, and gives forecasts of where things are headed in the future:
Soaring Oil Prices Dominate Energy Markets, Quarterly Energy Update, by Stephen P. Brown and Raghav Virmani, FRB Dallas: Oil Prices Rise Sharply Since sliding to just under $70 per barrel [...]
More on employment. This is the summary from a new CBO report on long-term unemployment:
Summary ...The flexibility of the labor market is generally considered a source of strength for the U.S. economy. Some people, however, remain jobless for many months. Those long-term unemployed workers account for a large portion of [...]
With today's employment report showing surprising strength (though there are questions), this is timely:
Labor Force Participation and the Prospects for U.S. Growth, by Mary Daly and Tali Regev, FRBSF Economic Letter: Growth in the labor force is one of two key determinants of the nation's maximum sustainable, [...]
Will the media call Rudi Giuliani on his repeated use of false claims to support is policy positions?:
Prostates and Prejudices, by Prostates and Prejudices, Commentary, NY Times: “My chance of surviving prostate cancer — and thank God I was cured of it — in the United States? Eighty-two [...]
Richard Carson raises a good point in his debate over the role of government in fighting wildfires:
Where was the Forest Service?, by Richard Carson, Commentary, LA Times: ...I could not agree with you more that (a) the federal response was disastrously slow, and that (b) the state and local [...]
Edward Glaeser says boys and girls are different, and they may need be educated and socialized separately in some cases:
Violence, learning, and the gender divide, by Edward L. Glaeser, Commentary, Boston Globe: I agree with the view that teaching math in different ways to girls and boys is pernicious [...]
Michael Tomasky reviews Paul Krugman's book. This is a small part of a much longer review appearing in the New York Review of Books:
The Partisan, by Michael Tomasky, NY Review of Books - Review of Paul Krugman's "The Conscience of a Liberal": ...Many liberals would name Paul Krugman of [...]
Nobel Peace Prize winner Muhammad Yunus believes social businesses can help to eliminate poverty:
'We Can Create a Poverty-Free World', by Muhammad Yunus, Spiegel: The stability and prosperity of the world are at risk ... because 60 percent of the world's population lives on only 6 percent of the [...]
The asymmetric risk inherent in Halloween is unhealthy. Which is more costly in expected value terms, running out of candy and having to turn out the lights and pretend you aren't home to try to avoid getting tricked, or having too much candy on hand and having to eat the [...]
Scott Adams seems puzzled that those who helped to make the bread might want a piece of it when it's done:
Giving Stuff Away on the Internet, by Scott Adams, Commentary, WSJ: I spend about a third of my workday blogging. Thanks to the miracle of online advertising, that increases [...]
Tim Duy is thinking about the Fed's next move:
Just Six Weeks to the Next FOMC Meeting!, by Tim Duy: Thank goodness that is over; I hope my heartburn finally eases. I appreciate the comments, and the good natured ribbing. I particularly enjoyed Ken Houghton's posts at Marginal Utility – “[...]
The Federal Reserve Open Market Committee has decided to cut the federal funds rate to 4.50%. The decision was not unanimous with Kansas City Fed president Thomas Hoenig preferring no change. Thus, the vote was 9-1 (the committee currently has two positions unfilled). Also, only six banks submitted requests to [...]
David Leonhardt lists "basic facts" about taxes "that ideology can’t change":
Plain Truth About Taxes and Cuts, by David Leonhardt, NY Times: You’re going to hear a lot about taxes over the next two years. ... There are big philosophical questions about taxes that facts alone can’t answer. ... But [...]
As soon as you read this from Pete Du Pont:
Inconvenient Tax Truths: Al Gore believes global warming is "an inconvenient truth." Here are some economic truths that America's liberal leadership finds too inconvenient to support. ... Tax rate reductions increase tax revenues. This truth has been proved at both [...]
Andrew Oswald and Nattavudh Powdthavee explain how to assess the value of losses from bereavement of loved ones, and more generally how to put "values on all sorts of things that we care for":
A New Approach to Awarding Compensations in Courts, by Andrew Oswald and Nattavudh Powdthavee, Vox EU: [...]
Wow. Another Paul Krugman post is probably overkill, but I just noticed this paper by Anna Schwartz and Edward Nelson, "The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman’s “Who Was Milton Friedman?”" cites this blog in the list of references:
Krugman, Paul [...]
Paul Krugman on the role of government:
Paul Krugman talks to Mario Cuomo, Guardian Unlimited (Video): ...Cuomo: I've enjoyed reading your book immensely... Let me be sure I have right what I think your basic premise was, ... and that is that the shifting nature of the condition of the [...]
Paul Krugman on Bill Clinton:
Paul Krugman talks to Mario Cuomo, Guardian Unlimited (Video): ...Cuomo: ...Now, when it came to Bill Clinton -and you certainly you know him well and know his work well. And I think you said in the book at one point that he didn't have any [...]
Paul Krugman on inequality:
Paul Krugman talks to Mario Cuomo, Guardian Unlimited (Video): Cuomo: What I want to ask you next is to get to equality... Warren Buffet says there's a class warfare and the rich are winning. I think that's a pretty good description, don't you?
Krugman: People like me [...]
Paul Krugman on international trade and inequality:
Paul Krugman talks to Mario Cuomo, Guardian Unlimited (Video): ...Cuomo: How about trade policies, and what level does that play in inequality? And if you talk about trade - please talk, too, about evaluation of currencies and China.
Krugman: OK. Trade is a fairly [...]
Paul Krugman on Iraq:
Paul Krugman talks to Mario Cuomo, Guardian Unlimited (Video): ...Cuomo: Of course your book does deal with Iraq, and that is a subject that divides liberals and conservatives. You believe that 2006 was a big victory for the Democrats, but in describing the reasons for the [...]
Jonathan Chait looks at Rudy Giuliani's economic policies and his ideas about freedom:
Economaniac, by Jonathan Chait, The New Republic: ...Compared to other Republican presidential contenders, Giuliani identifies himself as a "supply-sider" ... more aggressively and has mopped up more financial support from oil, gas, and other bastions of the [...]
Tim makes a bold call on the outcome of the Fed's rate setting meeting:
And So It Begins, by Tim Duy: The Fed begins a two-day meeting today, with market participants widely expecting a rate cut. I am mentally prepared to be on the wrong side of this call, joining the [...]
Hi. We're from the government, and we don't want to help:
Bigger Budget? No, Responds Safety Agency, by Stephen Labaton, NY Times: The nation’s top official for consumer product safety has asked Congress in recent days to reject legislation intended to strengthen the agency, which polices thousands of consumer goods, [...]
Dean Baker is amazed:
The End Is Near! Post Publishes Column Defending Social Security, by Dean Baker: Is that a trumpet I hear in the distance? Why are the rivers flowing backwards? And who are those four guys on horses?
Yes, the Washington Post has published a column arguing against the [...]
Fear the fear mongers:
Fearing Fear Itself, by Paul Krugman, Commentary, NY Times: In America’s darkest hour, Franklin Delano Roosevelt urged the nation not to succumb to “nameless, unreasoning, unjustified terror.” But that was then.
Today, many of the men ... with a significant chance of receiving the Republican nomination [...]
Larry Summers on the falling dollar:
How America must handle the falling dollar, by Lawrence Summers, Commentary, Financial Times: ...The dollar’s decline may provoke anxiety but it should not be a surprise... There is nothing very new about a decline in currency of a country running a large current account [...]
Tyler Cowen responds to a comment:
Should we use mercenaries at all?, by Tyler Cowen: Over at Mark Thoma's, Bernard Yomtov asks a very good question:
Why should there be mercenaries at all, given the existence of a large and well-trained Army? The mercenaries are former soldiers. Their functions are military and [...]
Tyler Cowen:
To Know Contractors, Know Government, by Tyler Cowen, Economic Scene, NY Times: Allegations of misbehavior by employees of Blackwater USA in the shooting deaths of 17 Iraqis have brought the military’s use of private contractors into question. But whatever the possible sins of the Blackwater firm, the overall [...]
New results on the impact of environmental change on the world's agricultural economy:
Human-generated ozone will damage crops, Nancy Stauffer, MIT Energy Initiative: A novel MIT study concludes that increasing levels of ozone due to the growing use of fossil fuels will damage global vegetation, resulting in serious costs to [...]
This is part of an interview with Paul Krugman on the relationship between the right-wing and the media, and other matters:
Where Does the Right-Wing End and the Media Begin? By Rory O'Connor, AlterNet: I had the opportunity to sit down this week with ... Paul Krugman... He certainly pulled [...]
Should anthropologists help the military in Iraq?:
A True Culture War By Richard A. Shweder, Commentary, NY Times: ...A few weeks ago this newspaper reported on an experimental Pentagon “human terrain” program to embed anthropologists in combat units in Iraq and Afghanistan. It featured two military anthropologists: Tracy (last name [...]
Continuing with today's housing bubble theme (Krugman, Leijonhufvud), here's the latest Economic Letter from the San Francisco Fed reviewing research that tries to explain the existence of asset price bubbles:
Asset Price Bubbles, by Kevin J. Lansing, FRBSF Economic Letter: Nowhere does history indulge in repetitions so often [...]
Axel Leijonhufvud on the linkages between monetary policy and financial instability. He argues that "Inflation targeting might mislead us into pursuing a policy that is actively damaging to financial stability":
Bubble, bubble, toil and trouble, by Axel Leijonhufvud, Project Syndicate: Editors’ note: This is shortened version of the author’s Policy [...]
The causes and consequences of ineffective regulation of financial markets:
A Catastrophe Foretold, by Paul Krugman, Commentary, NY Times: “Increased subprime lending has been associated with higher levels of delinquency, foreclosure and, in some cases, abusive lending practices.” So declared Edward M. Gramlich, a Federal Reserve official. ...
Mr. Gramlich said [...]
Andrew Gelman has some interesting graphs:
Some cool graphs of rich states and poor states, by Andrew Gelman: I'll take advantage of Paul Krugman's recent link to our paper on income and voting by putting up some cool scatterplots that we made recently. It started with our maps of [...]
Chris Hayes on the use of email to spread rumors and the difficulty people have debunking the rumors once they have gone this route:
I’ve got a cover story in the latest issue of the Nation about the hidden but potent institution of the right-wing email forward. Here’s the first [...]
Robert Reich says "the case for substantially raising marginal income tax rates on the rich" is clear:
Who Pays the Dollars that Finance Bush's War? More on a Fair Tax Burden, by Robert Reich: President Bush has just sent Congress an “emergency” request for an extra $46 billion in expedited [...]
