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"Today, we have reached the end of the line for the Chicago view of financial deregulation. Friedman thought (a) that the central bank could exercise enough influence over the money supply to effectively control it, and (b) that banks and other financial intermediaries would be regulated tightly enough that what is now happening would be impossible. But he never resolved the tension between his view that banks need controls and the Chicago view that business must be unfettered.
Monetarism may well make a comeback — as a doctrine that is good enough for normal times. For in normal times "keep the money supply growing smoothly" does appear to be a relatively easy task, a minor adjustment to laissez-faire that can be performed by a small number of qualified technocrats. Unfortunately, not all times are normal."
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Insightful, even-handed comments on UNIDO's new Industrial Development Report. William Easterly take note.
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I still can't quite believe how bad the growth data is for Japan. I wonder if exporters of high-end (and high-cost) goods are suffering more because demand for these goods is more likely to be credit-financed …
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Much better news on the funding for aid (and other development policies) in Obama's budget.
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Classifying areas according to deprivation and patterns of in- and out-migration.
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"Of those households receiving the rebate, almost 20 percent reported that they would spend it; nearly 32 percent reported that they would mostly save the rebate, and 48 percent reported that they would mostly pay debt with the rebate. "
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Yes: "Is there an ethical basis for being concerned about global warming that does not depend upon the notion that quite generally we are radically negligent about future people? I think that there is, but this concern depends upon a rights-based notion of ethics rather than on utilitarianism. Most professional economists will at this point stop reading because they will think that rights are a quagmire. But here goes.
Natural assets such as biodiversity, and natural liabilities, such as carbon, are not owned by the current generation, because we did not create them. We have them because previous generations passed them on to us, and we are obliged to do the same. If we deplete natural assets, or run up natural liabilities, we have an obligation to compensate future generations in some other way."
links for 2009-02-27
28-Feb-09
links for 2009-02-26
27-Feb-09
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Bill Easterly makes up stuff about industrial policy in developing countries, and - in a fine example of accountability at work - gets jumped on by his commenters.
links for 2009-02-25
26-Feb-09
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See also the comments.
links for 2009-02-22
23-Feb-09
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A long-overdue decent blog on Irish economic matters
Obama’s budget - the good and the bad
22-Feb-09
This is very good:
The outline on Thursday will make clear that he intends to push ahead on promises to contain health care costs and expand insurance coverage, and to move toward an energy cap-and-trade system for controlling emissions of gases blamed for climate change.
But this is very bad:
Mr. Obama will propose cutting a variety of programs … he will scale back some promises, including his proposal to double money for foreign aid.
Obama could find the funds to double aid (currently $20bn) simply by not agreeing to expand the already insanely bloated military budget by a more than equivalent amount. And increasing aid would probably do more to make the world safer.
links for 2009-02-21
22-Feb-09
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Jon Stewart is one of the smartest political commentators out there - no wonder he's on the Comedy Channel.
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For every one person killed or injured by a cyclist there are a hundred killed or injured by a car driver.
Why conservatives lie
21-Feb-09
Ryan Avent reads George Will and asks
My question is why conservatives think it advances their purpose to continue this demonstrably wrong adherence to climate change denialism. This isn’t like, say, evolution … the planet is getting warmer, and people are going to notice. Will can talk about global cooling all he wants, but arctic ice is actually disappearing. Snowpacks are shrinking. Droughts are intensifying. Sea-levels are rising. And this isn’t going to stop.
Climate change denialism is like arguing at three that in two hours it won’t be five. However convincing you think you are, you will ultimately be revealed as a fool and a charlatan.
I’d say there’s two things to consider here.
Firstly, conservative climate change denialism should be put in the context of the wider conservative war on science, which consists of many individual crusades that don’t make a whole bunch of sense by themselves (anti-climate change, anti-evolution, virulently pro-DDT) but which as a whole are designed to undermine confidence in scientific evidence that could support policies conservatives don’t like. Very often, these policies are about regulating activities which greatly enrich one group of people while imposing significant costs on others, because conservatism at its core is basically about protecting existing structures of wealth and power. The DDT crusade, for example, was supported and funded in its infancy by Big Tobacco as a means of undermining the growing literature on environmental health hazards.
Secondly, we should not assume that conservatives think there is some long-term benefit to be gained from climate change denialism and their other crusades. The most important thing is that it serves to get them money and influence in the here and now. These are not people who care much about the long term.
links for 2009-02-20
21-Feb-09
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Something to look forward to: "If National Express goes to the government, it will not get more money but it may be allowed to go over to a management contract. But if that happens, there will be queue at the door for similar arrangements from the other franchisees. That will mean the effective collapse of the franchising system. Clearly new franchises will no longer be able to be let on the basis of private companies taking the revenue risk, which negates much of the point of the whole system. As I have written several times already, 2009 is going to be the most eventful year in the rail industry since privatisation."
links for 2009-02-18
19-Feb-09
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Ryan Avent reminds us that yes, incentives mattered to the nature and extent of the housing boom: "The obvious stumbling block here is that nothing was done to ensure that originators would act in good faith. This set up a problem. Suddenly originators had access to new capital without an increased incentive to maintain high standards. This fundamentally changed the dynamic of mortgage markets and created a nationwide housing boom, which set the stage for epic failure"
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Brad DeLong: "The most important thing about asset prices, I think, is that even in booms and bubbles they don't reach their "fundamental" values. The first-order fact about asset markets is that they currently do and historically have done a really lousy job of mobilizing the long-run risk-bearing capacity of the global economy. The risk tolerance of those who participate in financial markets is a remarkably low fraction of the true fundamental global risk tolerance, the horizon of those who participate in financial markets is a remarkably low fraction of the true social investment-planning horizon, and in addition the views of those who participate in financial markets are extraordinarily more volatile than can be generated by the variation in rational expectations of future growth rates and appropriate fundametnal discounts."
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Major pwnage here as Mark Easton debunks Professor Andy Parrott's rubbish claims about the dangers of ecstasy. How refreshing it is to see a journalist willing to go to the original source material.
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"This paper studies household beliefs during the recent US housing boom. The first part presents evidence from the Michigan Survey of Consumers. To characterize the heterogeneity in households' views about housing and the economy, we perform a cluster analysis on survey responses at different stages of the boom. The estimation always finds a small cluster of households who believe it is a good time to buy a house because house prices will rise further. The size of this "momentum" cluster doubled towards the end of the boom. The second part of the paper provides a simple search model of the housing market to show how a small number of optimistic investors can have a large effect on prices without buying a large share of the housing stock. "
links for 2009-02-17
18-Feb-09
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David Henderson appears to be arguing that the richer someone is, the lower their marginal tax rate should be. Which is certainly a fresh perspective.
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Useful list of GIS and visualization tools of the 'Web 2.0' variety
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Possibly the single best hour of documentary programming I've ever seen. Absolutely fucking brilliant.
links for 2009-02-16
17-Feb-09
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"One of the big points to emerge from the collapse of the investment banking industry is that sky-high salaries for CEOs and star performers in banking aren’t just immoral and unjustified; they are an indication of unsound risk management practices. Such reward systems create an incentive for one-way bets with other people’s money. If high risk investments pay off, the genius who advocated them gets the rewards of stardom. If they go wrong, the worst that can happen is the loss of a job, and there may well be another one waiting."
links for 2009-02-13
14-Feb-09
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Wow, we've actually got a minister for railways who wants to expand and improve the railways. Shame he probably won't be in the job for long.
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Incentives work!
"Two US judges charged with taking more than $2m (£1.4m) in kickbacks from a privately-run detention centre have pleaded guilty to fraud.
Prosecutors say Judges Mark Ciavarella and Michael Conahan took the money in return for giving young offenders long sentences to serve in the centre.
The deal allowed PA Child Care LLC and a sister company to receive extra government funds, they say."
links for 2009-02-09
10-Feb-09
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"I would contend that cycling in London is becoming more unpleasant and more dangerous. The rapid decline in traffic policing has resulted in a massive flouting of road traffic regulations by drivers. The invention of the mobile phone and the reluctance of the government to criminalise use of a mobile while driving with an instant ban has created a greatly increased risk for all road users, especially the most vulnerable. Lastly, road design is becoming progressively more hostile to cycling … I’m getting more and more tired of this crap, and more and more tired of the everything-is-fabulous-for-cycling-in-London message. Not where I live and cycle it isn’t. "
links for 2009-02-08
09-Feb-09
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But since when do facts matter in football punditry?
links for 2009-01-31
01-Feb-09
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"The real threat in this country is not from the far right itself, it's from mainstream political parties flirting with "the immigration issue" and playing around with "Very Real Concerns Of The White Working Class" rhetoric in the hope of peeling off a few cheap votes from them."
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"The world's marine ecosystems risk being severely damaged by ocean acidification unless there are dramatic cuts in CO2 emissions, warn scientists."