The WSJ reports:
Starting Jan. 4, General Motors Co. plans to do something unprecedented in the U.S. car industry: It will run its assembly line here around the clock on a permanent basis.
While common in other industries, not even car-efficiency benchmark Toyota Motor Corp. operates its plants routinely with more [...]
Just went through horrendous travel via Amtrak to be part of the Keynes/Hayek rap video filming in New York. I felt like I was in a reality TV version of Atlas Shrugged. I love the train. Amtrak, not so much. They don’t really have a system to deal with delays [...]
The latest EconTalk is a conversation with James Hamilton of EconBrowser about the possibility of an explicit or implicit default by the United States. He is very clear on a very complicated topic. We also discuss his work on oil prices.
We’re building a website that will be the home for the Keynes/Hayek rap video along with interviews with leading macroeconomists and other good stuff. We are building a visually compelling set of resources of high quality intellectual and educational content for students, teachers, and everyday people who want to understand [...]
Here’s the PBS NewsHour video of Skidelsky and me arguing about Keynes along with snippets of the rap video project that John Papola and I are working on. More on the latter soon.
[...]PBS Newshour tonight: I debate Skidelsky. Plus there will be a sneak preview of parts of the hip hop macro anthem John Papola and I have created. Check those local listings.
[...]It is weird to me that some people are still worrying about deflation. Brian Wesbury writes:
The Consumer Price Index (CPI) was up 0.4% in November, matching consensus expectations. The CPI is up 1.8% versus a year ago, and is up at a 4.2% annual rate in the past six months. “Cash” [...]In this post by David Henderson on Samuelson’s passing, a commenter, gnat, says:
In “Animal Spirits” Akeroff quotes Samuelson as saying that Friedman had a point but often overstated it like a boy who learned how to spell the word banana but did not know where to stop.
I remember a [...]
Bryan Caplan dismisses Hayek’s contributions as flabby:
I’ve long since lost all patience with Hayek. His original, true ideas could have been five good blog posts, his errors and bizarre obsessions are numerous, and his writing style insults every person who ever tried to write a decent sentence.
Five blog posts, [...]
At Planet Money, I talk about why macro is just too hard and plead for honesty about the lack of science in our policy recommendations.
[...]Everything you need to know about the current state of American politics and how it affects health care is all right her in this column by Steve Chapman.
[...]Blogger extraordinaire Megan McArdle is this week’s guest on EconTalk talking about her debt and how she is escaping out from under it. We also get into the Great Depression. Of course.
[...]Mark Calabria asks the right questions. An excerpt:
The fact that Rep. Ron Paul’s bill to audit the Fed currently has 313 co-sponsors is a clear indication that Congress is unhappy with the Fed’s lack of transparency. Bernanke’s lobbying efforts against the Paul bill have had little traction. When it [...]
The consensus is that it’s still going to get worse before it gets better.
What fascinates me is that the American people, not being sophisticated in the use of the counterfactual and sophisticated statistical analysis are increasingly blaming Obama for the troubles of the economy. This may not be fair. But [...]
The Washington Post on the resignation of Henderson from the CEO position at GM:
GM said the Obama administration, which appointed several members to the automaker’s board, did not play a role in the decision and was only informed after it was official. The government owns 61 percent of the [...]
He says in an interview:
Q: In one article, you compare a disaster that befell a mountain climbing expedition on Mt. Hood to what has happened in the financial system. Could you explain that?
That was a situation where some very experienced climbers made what many considered a rookie mistake. [...]
Here. Excellent. An excerpt:
The closed-mindedness of these supposed men of science, their willingness to go to any lengths to defend a preconceived message, is surprising even to me. The stink of intellectual corruption is overpowering. And, as Christopher Booker argues, this scandal is not at the margins of [...]
They are stealing our money. They are then wasting our money while paying themselves a nice salary. This is a Ponzi scheme. It will destroy our country. It has to stop. But there’s no sign of it stopping. Something will give. Just hard to know where and when.
Tierney gives a nice summary (HT: Maggie’s Farm) of ClimateGate. Here is the EconTalk podcast on Group Think.
It is hard to know the exact scope of what was done wrong and what is dishonest. What is clear is that there was some dishonesty, some secrecy about data [...]
The AP reports:
Sen. John McCain, R-Ariz., attacked the legislation as a “monstrosity” that employs “Bernie Madoff accounting, Enron accounting” as he offered the first GOP amendment. McCain’s amendment would strip out more than $400 billion in Medicare cuts to home health providers, hospitals, hospices and others – a [...]
James Hamilton thoughtfully lays out (HT: Brad DeLong) the risks from larger federal budget deficits. Superb.
[...]Art Carden at Rhodes College is using my book, The Price of Everything, in his Econ 101 class.
Here are some very nice questions he has given his students.
If you are using the book, I would love to see what you’re using as well.
Seekingexports comments on this post:
Mr. Roberts, when you wrote “playing with our money” did you mean TARP funds or the funds from institutional investors such as government employee 401B funds (ie. U of V retirement)?
Even though I don’t think that Lehman and Bear Stearns received rescue funds I think [...]
Bebchuk, Cohen, and Spamann show that even the losers at Bear and Lehman made a killing. They were playing with our money, taxpayer money, lending it to each other, making huge short term profits and paying themselves enormous amounts along the way. The authors argue for changes in executive [...]
He doesn’t like it. (HT: Paul Solman) I share Robb’s skepticism about drawing conclusions from empirical work that either ignores other factors or purports to control for them in the name of creating a “natural experiment.” Having been in the kitchen, I know how this dish gets cooked. [...]
I think Paul Krugman needs to get out and about a little more often. In his recent column he writes about Obama’s worries about the growing national debt:
But in a recent interview with Fox News, the president sounded diffident and nervous about his economic policy. He spoke vaguely about [...]
Here.
The narrative is more important than the facts. People like the narrative because it pleases them. Not because it’s true. Truth is elusive.
But evidence and facts do matter.
So when someone says the TARP was central to preventing disaster, don’t disagree. Don’t talk about how evil and anti-democratic it was [...]
I know. This (HT: Drudge) is how “the system” works. I’m supposed to understand it. But I don’t. It’s a lousy system.
On page 432 of the Reid bill, there is a section increasing federal Medicaid subsidies for “certain states recovering from a major disaster.”
The section spends two pages [...]
There are advantage to universal standards. The most important is economies of scale–once you learn the standard, it applies everywhere. But the disadvantages are subtle and usually much greater than the advantages.
I don’t want a single standard of health care, one standard of what’s “best.” Everyone is different and what [...]
Go here and vote if it moves you. The category is Best Education podcast. You can vote once a day for the next two weeks.
[...]This is the opening of my essay that I blogged on last week, “How Little We Know,” on the hopes for financial reform:
When an airplane crashes, expert investigators probe the cause of the crash. Their analysis can lead to changes in aircraft design, flight procedures, and regulations in hopes of [...]
Here is my take on financial reform at The Economists Voice. Other opinions by Posner, Richardson and Acharya, Hubbard , and Calomiris, here. My piece is very Hayekian as you might guess from the title.
A very illuminating story on “jobs saved.” I think the estimates and methodology reported here are not the same as the “one million jobs saved or created” discussed here. But the real importance of this story isn’t the inconsistency or the ludicrousness of claiming that exactly 12,374 jobs have [...]
My favorite perspective on the political economy of counterfactuals came from a reporter (Tom Foreman of CNN) who gave me his analysis of politicians and the economy. It went something like this:
Politicians taking credit from what they’ve done for the economy are like little kids working the controls of [...]
Krugman and DeLong have been attacking Mankiw and Meltzer for mocking the “jobs saved” metric of the Obama Administration. Here is Krugman:
Brad DeLong catches Allan Meltzer claiming that there’s something nonsensical about the Obama administration making estimates of jobs saved thanks to its policies. But it’s not just Meltzer [...]
Thomas Sowell has said that economics helps you understand that there are no solutions, only tradeoffs. In that spirit, I want to recommend Arnold Kling’s study of the financial crisis, Not What They Had in Mind. My favorite quote from the essay is a variant on Sowell’s:
The lesson is [...]
The Gallup poll has discovered (HT: Catherine Rampell) that Saturday is the day of the week that consumers spend the most money. In a brilliant policy innovation, President Obama has decreed that from now on, every day of the week will be called Saturday. The ap reports:
“This will [...]
From an article on Goldman Sachs, from a conversation with the CEO, Lloyd Blankfein:
He starts with a little humility. He understands that “people are pissed off, mad, and bent out of shape” at bankers’ actions. Goldman played its part in the meltdown that almost destroyed the global financial system. It, [...]
This week’s EconTalk is Scott Sumner on monetary policy. Sumner argues that monetary policy was too restrictive in late 2008 and turned a mild recession into a doozy. I don’t agree yet but that argument and his whole perspective is very interesting.
It’s up to 10.2%. Trouble ahead. Trouble behind. The politics is going to be very tough. More pressure to “fix” the economy. The possibility that we are in the mess we are in because of past attempts to fix the economy is very alien to most politicians and most economists. [...]
Read it. It explains how Geithner (as head of the NY Fed) gave AIG’s counterparties 100 cents on the dollar.
Why? He didn’t have to. It stinks.
[...]Here is the video where Obama uses the Post Office as an example of why the public option won’t hurt private competitors. His argument is that Fed Ex and UPS thrive even though there’s a Post Office. He forgets to mention that the Post Office has a legal monopoly [...]
Thought this story from Newsweek on Soros’s new economics/policy enterprising was unintentionally amusing:
Now financier George Soros is announcing a $50 million effort to speed things along. This week Soros is gathering some of the leading practitioners of the market-skeptic school, who were marginalized during the era of “free-market fundamentalism,” [...]
Here is one attempt, from ProPublica. It’s pretty good. Unfortuately it only looks at Treasury commitments and does not include the Fed. Does anyone know a better or more thorough look at what has been spent so far?
[...]Free golf carts. (HT: Paul Glashofer). Thought this was from the Onion. It’s not.
More on clunkers.
[...]The theme of this story is that a recent government report overstated (surprise!) the number of jobs “saved or created” by the stimulus spending. It turns out that the report includes double counting, giving people raises instead of creating jobs, and so on. But the real headline should be [...]
Video of my testimony on Capitol Hill yesterday, talking about executive compensation (and the financial crisis) is here. My part starts at 2:01:36 followed by William Black’s statement (interrupted by a vote) followed by Q and A. I’m very sympathetic to Black’s argument that there was looting but argue [...]
I will be testifying on executive compensation before the House Committee on Oversight and Government Reform. The hearing starts at 11 am with a session with the Special Master for TARP Executive Compensation (love that name), Kenneth Feinberg. I (the humble student of emergent order) will be in the second [...]
In response to this podcast I did with Mike Munger, listener Milli Pritchett writes:
I am a pregnant woman in Salt Lake City, Utah. This weekend our health department had a mass H1N1 flu shot clinic, with 7,000 shots to give out, in 4 clinics. It started at 7am. I [...]
The original.
Revised. (HT: Maggie’s Farm) R-rated for language.
Be sure to watch them in order.
[...]From Politico:
The Senate must soon increase the national debt limit to above $13 trillion — and Democrats are looking for political cover.
Knowing they will face unyielding GOP attacks for voting to increase the eye-popping debt, Democrats are considering attaching a debt increase provision to a must-pass bill, possibly the [...]
Unemployed scientists rejoice!
From Student Life, Washington University’s student paper:
In March of 2007, Washington University joined other top research institutions in issuing a report to Congress stating that limited funding for science research was having an adverse impact on the treatment of diseases like Alzheimer’s and cancer. In a sign [...]
This (HT: Drudge) is the weirdest story of the year:
A top White House economist says spending from the $787 billion economic stimulus has already had its biggest impact on economic growth and will likely not contribute to significant expansion next year.Christina Romer, the chair of President Barack Obama’s [...]
The latest EconTalk is a conversation with Mike Munger on using prices, particularly in the area of health care.
[...]I am pleased to announce that Don has won the 2009 Thomas Szasz Award “for Contributions to the Cause of Civil Liberties. The Szasz Award committee recognized Boudreaux for his many years of promoting freedom in all its aspects through his writing and lecturing.” Well-deserved. Always proud to share [...]
News has leaked out that I’m working on a rap video on Keynes. It’s a joint project with John Papola. It will feature Keynes and Hayek. Watch this space for more info or follow me on twitter here.
If you’re new here, this is where I blog with Don [...]
Something is happening in the field of economics when two people with pretty different worldviews say almost the same thing in their reflections on yesterday’s Nobel Prize:
There was an old tradition of economics that focused on the origins and nature of economic institutions. This tradition was very influential before World [...]
As I noted yesterday, four government agencies account for 86% of the $110 billion the government has managed to spend since the “stimulus” bill was enacted last February–HHS, Labor, Education and Social Security. This is not exactly the shovel-ready type spending that economists and politicians invoked when the Keynesian [...]
In the first eight months of the $787 billion “stimulus” package, the government has managed to spend about $111 billion, less than half of the funds that are available. What are those dollars going to? Here are the top four federal spenders:
HHS $33 billion
Labor $28 billion
Education $21 billion
Social Security [...]
Evidently, and I mean evidently, the global warming thing is still a little up in the air (HT: Drudge). What I particularly like about the article is the lack of scientific certainty about the future. It is always thus. Or should be.
[...]An interesting pairing for tomorrow’s prize would be Robert Shiller and Nassim Taleb. Wouldn’t that be entertaining? Could Taleb accept it? He has denigrated the prize in the past. But given the recent trend toward topical prizes, those two would be perfect for the committee. My next prediction would be [...]
Commenter netsp does a nice job summarizing how government rescues distort decisionmaking on Wall Street:
Lenders expect to be covered Lenders have a rational expectation that they will be covered in a worst case scenario. This is not a sure thing or an explicit promise. But, it is likely enough that [...]
From the WSJ:
The Obama administration’s pay czar is planning to clamp down on compensation at firms receiving large sums of government aid by cutting annual cash salaries for many of the top employees under his authority, according to people familiar with the matter.
Instead of awarding large cash salaries, Kenneth [...]
From the BLS:
Since the start of the recession in December 2007, payroll employment has fallen by 7.2 million. In September, construction employment declined by 64,000. Monthly job losses averaged 66,000 from May through September, compared with an average of 117,000 per month from November to April. September job cuts were concentrated in the industry's nonresidential' [...]Krugman insults Arnold Kling (HT: THM)
But what none of the participants in the debate seem to realize is that Arnold is basically reinventing 1934 macroeconomics.
What could be more insulting? Arnold is going back to 1934!!!! Haven’t we learned anything in the last 75 years?
No doubt we have. It is [...]
If you ask people the three hardest words in the English language to say all in a row, “I love you,” would probably win the survey. But I think the three are “I was wrong.”
For example, I was wrong about the subprime crisis. When people started to mention that subprime [...]
The latest EconTalk episode is Gary Stern talking about his book, Too Big to Fail and the role government rescues played in the financial crisis.
[...]Macro is too often ex-post story-telling. Arnold Kling wonders if a small stimulus is just “a big stimulus that failed.” I love that. He then observes:
Given how difficult it is for government to spend money both quickly and efficiently, I would hope that those who wish to see more [...]
According to Seeking Alpha which cites Bloomberg, here are Richard Fuld’s stock sales of his Lehman stock. The point being that even though he “lost” a billion dollars as the price fell, he did manage to capture some of the gains—over five hundred million dollars—during the good times. If [...]
Joshua, in the comments to this post, asks the excellent question:
My understanding is that the Wall Street guys had large fortunes in the stock of their companies. If Richard Fuld of Lehman lost a billion dollars, how much more skin in the game would he have needed to [...]
I’m looking for some help from anyone with knowledge of life in the investment bank world. Please read on.
Peter Weinberg writes in the WSJ that the problem with Wall Street is that they didn’t have enough skin in the game. He explains how it used to be when investment [...]
Bryan writes over at EconLog:
Counterintuitive claim: Free trade makes countries richer, even if the other countries have big advantages like cheaper labor or more advanced technology.
Intuitive version: We’d be better off if other countries gave us stuff for free. Isn’t “really cheap” the next-best thing?
I use versions of this [...]
This is taken from the latest Zogby poll. The headline is:
47% Believe Bush Policies to Blame for Recent Job LossesBut look at the breakdown by party. Democrats blame Bush more than Republicans blame Obama. That’s interesting. But the independents are the real story. They are disenchanted with Obama on [...]
The WSJ reports:
The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials.
The move would further cement the government’s role in propping up the housing market even [...]
The latest EconTalk is William Cohan, author of the fascinating House of Cards talking about the book, which covers the life and death of Bear Stearns.
[...]Tyler Cowen recently gave a talk on what is distinctive about George Mason economics. It was nicely summarized by Arnold Kling (who got the whole thing started with this superb essay) then attacked by Pete Boettke for giving insufficient respect to GMU’s Austrian roots.
I think Tyler and [...]
The Keynesian argument for government spending is that when people are scared of the future, they put their money in their mattress instead of spending on consumption goods or investment goods. So, goes the Keynesian story, the government needs to step in and stimulate aggregate demand. So, the story [...]
The post office will be taking a few billion dollars of money.
The Fed is going to keep propping up the price of houses.
Is there any budget constraint? They act as if it’s a free lunch. How can this end well?
Remember your Bastiat:
Everybody wishes to live at the [...]
Richard Posner has read Keynes’s General Theory so you don’t have to. He does a superb job of summarizing (HT: Greg Mankiw) what Keynes actually said. Other than pointing out the opaqueness of the work, Posner says little against it. The title of the piece is “How I [...]
The paradox of markets is this: there is no single price even for apparently homogenous products, yet transactions by others, buying and selling similar goods, affect the price I pay or can charge. An extreme version of this is that every house is unique, yet as a seller of a [...]
The Secretary of Energy gives us his view of Americans (HT: Drudge):
When it comes to greenhouse-gas emissions, Energy Secretary Steven Chu sees Americans as unruly teenagers and the Administration as the parent that will have to teach them a few lessons.
Energy Secretary Chu: A teaching [...]Bryan Caplan quotes Herman Daly who was reviewing Julian Simon:
A further reason adduced by Simon for population growth is the “genius argument.” With 4,000 births there is a better chance of getting an Einstein or a Mozart than with only 40 births. Inept as this argument is in ignoring [...]
