economics
mikethemadbiologist | July 8, 2011Before I get into the meat of the post, if, after reading this, you end up obsessing over trade deficits too, then I've failed (just wanted to make that clear). But imagining what the possible consequences of placing the trade deficit über alles would be demonstrates why the current budget deficit fetish is absurd. Because, currently, even erstwhile progressives like Ezra Klein, have turned the budget deficit into a shibboleth (I might have more to say about that silly numerically illiterate post, but the tone and tenor are what matters for now).
If you're not familiar with the trade…
mikethemadbiologist | July 5, 2011I know that sounds like I'm channeling my inner Yogi Berra, but bear with me. A recent article by David Leonhart refuting claims that college is a waste of money has led to a further round of related posts (as you'll see, I agree). But the reason the 'college is a waste' arguments have any traction is not due to what colleges are delivering, but what students (or their parents) pay to attend college. The price of college is becoming prohibitively expensive in light of an educational model--the real benefit--that really hasn't changed much since the 1950s and 1960s. Before I get to the…
mikethemadbiologist | June 28, 2011This is another resounding success by Treasury Secretary Timothy Geithner:
Nearly nine months after its formation, a $30 billion government fund to foster small-business lending has yet to pay out a single dime, even as the nation struggles with traumatic levels of unemployment....
As of this week, 844 institutions have applied for $11.6 billion from the Small Business Lending Fund. In theory, money from the fund would free up capital so that banks could then grant more loans to companies looking to buy new equipment and hire more workers.
But vetting the financial soundness of each bank has…
mikethemadbiologist | June 26, 2011Bill Gross, the managing director of PIMCO and bond trader, sounds like Mike the Mad Chartalist (italics mine; boldface mine):
While the current administration admits that the $25 billion in Recovery Act spending on infrastructure only created 150,000 jobs, it also stabilized and improved this nation's productivity for years to come. Clean/green energy investments also come to mind, most of which require government funding and a government thrust in order to create millions of jobs. China knows this and is off and running. The U.S. needs to learn from their state-oriented model. In times of…
mikethemadbiologist | June 23, 2011I've long held that tenured professors who espouse 'free trade' or 'free markets' should have their tenure revoked--let's see how their tune changes (and I do include Krugman in this*). Ditto pundits with cushy sinecures. Let's put them in a world where they could show up at 9am and be told to pack their things and leave the building by 11am and see whether they extol its virtues (FREEDOM!!!)**.
Anyway, by way of Digby, we stumble across this brilliant essay about Robert Nozick, the Harvard philosopher who made libertarianism respectable. While the whole thing is worth a read, this section…
stoat | June 23, 2011I despair sometimes at the stupidity of our politicians. More and more it becomes obvious that the less they have to do with running the economy, the better. The latest stupidity is from Clegg: Clegg calls for RBS and Lloyds giveaway. The idea is that when the government sells its (i.e., our) stakes in RBS and Lloyds that it (i.e., we) were forced (i.e. decided) to acquire, then there should be some kind of bizarre complex free-share giveaway scheme, the biggest experiment in "shareholder democracy" since the Thatcher era of the 1980 as they put it.
There are some obvious problems with this,…
mikethemadbiologist | June 19, 2011Bill Mitchell smacks down some silliness from Peggy Noonan about the supposed looming insolvency of the U.S. (italics mine):
She [Noonan] should hang her head in shame for providing further myths that will certainly agitate all the ignorant - uneducated (despite long lists of credentials) - and high blood pressure conservative types who get wound up every day about their claims the US is facing impending bankruptcy. Leave them alone Peggy. Let them have a day off so they can calm down.
What does being bankrupt or almost bankrupt - on paper or anywhere else mean when you are talking about a…
mikethemadbiologist | June 15, 2011...but these are green shoots merely "bumps in the road." Or something. Brad DeLong posted a graph showing just how dismal the employment numbers are: as a percentage of population, employment has cratered. That's a much more revealing number as unemployment, especially the strict version ('U3') leaves out all sorts of people who would be willing to work if there were jobs.
Inspired by Delong, I decided to look at the historical male employment. I'm not a believer in the (false) notion of a 'mancession', but attitudes towards working women have changed dramatically over the last sixty…
mikethemadbiologist | June 11, 2011A constant refrain one hears when the deficit hawks let loose their piteous cries is that we are living beyond our means. Surely, our budget deficit and national debt are signs of that.
Lord, for the sins which we have committed before thee...
Or not so much. As I've discussed before, public debt can lead to inflation when resources, human or physical, are limiting. And when resources are limiting, public deficit spending can also lead to misallocation of resources. But when they're not, we are simply holding ourselves back for want of currency. Millions of people are un- and…
mikethemadbiologist | June 9, 2011The economic malpractice by the Obama administration is shameful. A while ago, I argued that one of the few moves that Obama could make politically to jump start the economy would be a temporary elimination of the payroll tax for workers. This could increase consumer demand (although not nearly as much as a jobs program would. Today, Bloomberg reports that the Obama administration is considering a payroll cut, but on the employer side:
President Barack Obama's advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages as they debate ways to spur hiring…
mikethemadbiologist | June 2, 2011...you're poor. Previously, I discussed the effects of the de facto privatization of money:
But most of the discussion is over how large the fees should be. That's important, but ignores the larger issue: the de facto privatization of our monetary system. While it doesn't seem obvious, when you use cash there are 'fees' involved--the cost of supporting the U.S. Treasury operations (printing the money, shipping the money, preventing counterfeiting, and so on). To put this another way, the U.S. government could decide to abolish all paper and metal currency, and make all of our accounts…
mikethemadbiologist | May 23, 2011I find reading economist Brad DeLong interesting since, even though I don't always agree with him on economics, he approaches his subject with the humility that scientific disciplines brutally instill in their faithful practitioners. This was an interesting notion regarding the future of economics education:
It is the scale of the catastrophe that astonishes me. But what astonishes me even more is the apparent failure of academic economics to take steps to prepare itself for the future. "We need to change our hiring patterns," I expected to hear economics departments around the world say in…
mikethemadbiologist | May 22, 2011Nicholas Kristof has done some excellent reporting on the issues facing the developing world. But he is a case study in how reporting and analysis are not necessarily part of the same skill set. In Thursday's column, Kristof writes (italics mine):
When I was in college, I majored in political science. But if I were going through college today, I'd major in economics. It possesses a rigor that other fields in the social sciences don't -- and often greater relevance as well. That's why economists are shaping national debates about everything from health care to poverty, while political…
mikethemadbiologist | May 19, 2011The Wall Street Journal reports an estimate of the economic impact of the Human Genome Project (italics mine):
Of the $3.8 billion federal funding for the human-genome project, $2.8 billion originated at the U.S. National Institutes of Health, and the rest at the Department of Energy.
That $3.8 billion, along with subsequent capital provided by the government and the private sector, generated a total return of roughly $49 billion in direct and indirect federal tax revenues over the last two decades or so. (The $3.8 billion is worth about $5.6 billion in constant 2010 dollars.)
Over the same…
mikethemadbiologist | May 17, 2011It might come as a shock to some readers, but I actually don't mind investing--that is, long-term value investing--as long as it's not valued more than labor through the tax code (Got Capital Gains Tax?). But this isn't value investing, but surfing electrons:
The most striking periodicity involves large peaks of activity separated by almost exactly 1000 milliseconds: they occur 10-30 milliseconds after the 'tick' of each second. The spasms, in contrast, seem to be governed not directly by clock time but by an event: the execution of a buy or sell order, the cancellation of an order, or the…
mikethemadbiologist | May 14, 2011If you thought I could be critical about economics, Peter Radford, at Real World Economics, is vicious in answering the question "Do We Need Economists?":
Take, for instance, the current spat between Paul Krugman and John Taylor. Both extremely well educated and intelligent economists who have very different interpretations of the recent increase in government spending....
Two grown up and highly educate economists adding very little to anything except to display their respective ideological views. Both right in their own way. Both wrong in others.
...The point is this: economics is a giant…
mikethemadbiologist | May 12, 2011So Ezra Klein, along with many other progressives, has been offering alternatives to the Republican call for the slash-and-burn of Social Security. But what's annoying about all of this is that the prediction that Social Security revenues plus the accumulated U.S. securities (yes, the U.S. government, not China, is far and away the world's largest holder of U.S. securities) will be unable to meet its obligations in 2037*, and only pay out 78 percent of benefits. That estimate comes from a Congressional Budget Office (CBO) report (pdf). But that CBO estimate is based on an annual real GDP…
mikethemadbiologist | May 11, 2011...that's pretty good, even if you're not a wackaloon Chartalist like the Mad Biologist. Andrew Samwick writes:
The right reasoning is that with aggregate demand lower by hundreds of billions of dollars a year, there are unemployed and underemployed workers and underutilized capital whose services could be purchased on the cheap. If we have projects that add long-term value, this is the right time to be undertaking them. Plenty of those projects are to repair and maintain our seriously degraded infrastructure. Others are to make the upgrades necessary to plan for a future with different…
mikethemadbiologist | May 9, 2011Roger Lowenstein discusses the problem with the 'goldbugs', those who want to return to the gold standard (italics mine):
Let us interject that in any monetary system, some authority must fix either the price of money or the supply. McDonald's can either set the price of a hamburger and let the market consume the quantity it will -- or, it can insist on selling a specified quantity, in which case consumer demand will determine the price.
The Fed has a similar choice with money. The Bernanke Fed, which is trying to stimulate the economy, regulates the price of money -- the interest rate --…
mikethemadbiologist | May 5, 2011Part of the discussion surrounding the elimination of Osama bin Laden has taken a somewhat ghoulish turn: what does it mean for Obama's re-election chances? While I'm more of a zombies-eat-brains! type of guy, I'm certainly willing to be ghoulish, especially when it gives me the chance to discuss some interesting political science.
A couple of years ago, political scientist Douglas Hibbs published a model that describes the percentage of the vote an incumbent party will receive in a presidential election based on only two factors: disposable income and U.S. military causalities. By his…