Tuesday, June 30, 2009

Bernanke, job growth, healthcare, and fairness

FreeExchange voices their support of Bernanke. I think there hasn't been enough air time given to exactly what he has done and how it has helped the economy in the past year. In a similar vein, the NY Fed has provided a timeline of the financial crisis.

Michael Mandel reports on job growth over the past ten years. The graphs certainly do highlight the stark picture. Outside of healthcare, education, and the government, no sector has grown. Wow.

Donald Marron says that health is an R&D problem. There are a variety of problems with the current system, and a variety of solutions, and we're not sure how effective each solution would be. Marron seems to think we should take baby steps, and evaluate the progress of solutions as we go. An economist who wants more data? Shocking.

Fairness in economics. National economic policy isn't based solely on economic principles, nor are traditional mathematic economic principles the only factors that affect the economy. How people feel about their individual situations also affects their economic behaviors, including how fair they feel they are being treated. In short, we should take some lessons from sociology and psychology. Of course, this harkens back to a famous Keynes quote:
"The study of economics does not seem to require any specialized gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy or pure science? An easy subject at which few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature of his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician."

Monday, June 29, 2009

High School Performance, Newspapers

Mark Perry shows that high school GPAs are rising while SAT scores are falling. I think that this indicates two competing objectives. High schools want their students to have high GPAs so they can go to good colleges--which gives prestige. SAT scores are falling because they (College Board?) wants to be able to claim to have a difficult test, most capable of determining the quality of students. I wouldn't be surprised if high school students were more objectively performing about the same they always do.

Professor Becker thinks through the newspaper industry. I like the idea of newspapers being structured not unlike the BBC, if the market would otherwise not support private journalistic efforts. I think it's a pretty important service to society. Although, I think Becker underestimates the potential power of internet advertising. Google has made tons of money off of it, and newspaper companies may need a similar sort of revenue generating revolution. News sites may also become sources of analysis of news from experts, rather than just the source of the facts.

Tuesday, June 23, 2009

Finance, Scrabble, and productivity

Free Exchange challenges a Dean Baker statement in which Baker essentially claims that the current economic situation is due more in part to the housing bubble rather than the financial sector. Free Exchange points out that the two are tied together. In that vein, Mark Thoma quotes Krugman as saying that we need to get rid of so-called shadow banking.

On a lighter note, Jeff Ely applies auctions to Scrabble with interesting results.

Robert Waldeman hypothesizes that, in the 90s and naughts, the productivity increases were due to downsizing. It's an interesting idea--and quite possibly some of the story--but I think that, at best, it works in tandem with the standard theory. Who ever said that there could only be one reason for productivity increases in the 90s?

Friday, June 19, 2009

A round on healthcare

In a piece of news that no doubt highlights the need for healthcare reform, healthcare costs are expected to jump 9% for companies in 2010. More on healthcare: an interesting note in the comments section at Angry Bear on Singapore. And, some thoughts on different plans, with links to more information, from ataxingmatter. E.J. Dionne at the Washington Post would prefer to have good rather than bipartisan reform. I was recently thinking about healthcare reform--Democrats (as well as many others, including health economists) claim that they can provide more care to more people while saving a lot of money. I'm not sure what problem the Republicans have with this. So I asked around, and the answer I got was the ideological problem against the concept of socialism. Not only does the argument not apply very well, but public investment hasn't been all that bad, historically. You'd think Republicans could back a single payer option considering all the horror stories of the current state of affairs, and the prospect of saving a lot of money.

Then again, I think it's mostly politics. Republicans can get some of what they want without giving up much political capital. On the other hand, Republicans need to get their names on some successful bills if they want to have a chance of winning back more seats in the future. If Democrats can claim to have fixed the system and saved a lot of money at the same time, what can Republicans run on?

Wednesday, June 17, 2009

Batteries, aid, old experiments, macroeconomics, and taxes.

Lithium ion batteries might start getting cheaper, as we may get a mass producer in the United States. Battery news excites me.

Felix Salmon wades into the developmental economics debate of the success and failure of aid, and is plugging a new book on the subject. I wonder what Easterly would say about the book.

Tim Harford talks about old experiments, and some efforts to rethink the studies.

Steve Chapman at reasononline takes on macroeconomists saying, essentially, that the field is very politicized, and this is partially a result of it being a less definite field.

Nancy Folbre thinks about why people who support raising taxes are wealthy. I think it's more about deeply ingrained ideologies. Though, it's strange that people on the lower end of the income spectrum aren't more strongly supporting their own taxes being lowered.

Tuesday, June 16, 2009

Graphs, Krugman/DeLong, inflation, and psychology

The recession in graphs. Felix Salmon points us to a bunch of graphs comparing the current recession to previous recessions. It's nice to see all of these together.

Krugman thinks about some notes from DeLong. I think they're interesting reads, though a bit rough.

The Fed is not concerned about falling inflation due to too much slack in production. This seems like a very AD/AS argument, and one that supports the idea of a prolonged recovery. I wonder what they think about the possibility of dipping into another recession.

There's an argument for psychology to be as accurate a science as medicine. I can't say I'm surprised, though I think psychology gets a bad rap. The story here is that psychological correlation coefficients were considered weak, when values of .3 were given, when this is actually a stronger value than "good" values in medical experimentation.

Monday, June 15, 2009

The internet, market design, and Clive Granger

A recent report tries to capture the economic impact of the internet in the United States. In short, $300 billion and 3.1 million jobs. That doesn't take into account the social aspect, either, and how the internet has shaped the job market. As massive as the reported number is, it possibly understates the real impact of the internet.

In a similar vein to a past article on Varian, David Warsh thinks about economic engineers in the field of game theory and market design. The boom of auction theory combined with the economic impact of the internet makes for a large impact of relatively recent economics. There are a lot of really interesting examples of market design in the real world, and I think more recent events will only serve to highlight practical and empirical applications of economics.

I apparently recently missed the death of econometrics giant Clive Granger.

Friday, June 12, 2009

Krugman's history, South Africa, rational markets, HDMI cable, and crime trackers

Also from Newmark's Door, Krugman gets history wrong. Both people on the left and the right disagree with him, though I think that's kind of an empty statement.

Relatively good news for HIV/AIDS in South Africa. The infection rate has leveled off, with reductions in certain age groups. Still, South Africa has 5.5 million HIV-positive people.

Justin Fox gives a quick summary of the history of rational markets in the last 80 years, which is also a summary of his books.

Ezra Klein and Tyler Cowen seem to think that some traditional brick-and-mortar stores are not lowering their prices in their competitive markets. HDMI cable seems to be very expensive in stores, but online is available for next to nothing. Klein further comments that online shopping is a wealth transfer from those not comfortable with online shopping to those who are comfortable with online shopping. It seems to me that those comfortable with online shopping are in larger, more competitive markets. Brick-and-mortar stores cater to a different demographic than online stores. Moreover, I think that particularly in the case of 80% and 90+% discounts, online stores sell excess stock or used stock, rather than stock just recently received from a manufacturer. I admit these are conjectures, though.

ThinkMarkets provides some links to crime tracking websites, and neighborhood information websites.

Wednesday, June 10, 2009

Inflation, scalping, 100 resources, protectionism, and development

Free Exchange discusses the possibility of inflation as recovery comes. It seems to me that the argument is that once the recession starts to lessen, the effects of loose monetary policy will start to show, though I'm not sure why inflation will rear without the usual corresponding GDP growth. Typically, you'd think that banks spreading money around would boost GDP growth, and it'd be pretty hard to get around that.

Ticketmaster is trying to stop scalping, using paperless tickets.

Here are 100 useful resources.

Wow, this is pretty cool. The Global Trade Alert. It supposedly keeps track of all protectionist policies, worldwide.

Continuing on a previous story, Sachs v Easterly. Easterly seems to have the more nuanced position, while I feel Sachs is approaching the subject of aid money from a more political point of view. Specifically, Sachs is worried that an anti-aid position will lessen the amount of money that will go towards development goals. On the other hand, Easterly isn't against aid money, but sees it as ineffective due to problems in the field.

Tuesday, June 9, 2009

Finding a job, human rights, and Mish's Google talk

Barbara Kiviat tells us how we can find jobs using social networking sites. Essentially, if more people knowing you're looking for a job helps, then social networking sites get the word out quickly to a lot of people who can vouch for you. I don't usually blog on this sort of article, but I think it's interesting how technology affects the job market.

On another issue I don't usually blog about--here, particularly--the SCSU Scholars argue that a problem with poverty being called a "human right violation" is that such a claim requires identifiable violators to violate rigid laws. One violates a right, or one does not violate a right, there is no inbetween. In the case of poverty, the so-called 'poverty line' is unclear, and there are no clear violators. It's an interesting argument, but my first thoughts are that prejudice also comes in degrees (arguably, a reason that it still exists in places where we consider ourselves to have moved past that), and that institutionalized corruption is largely to blame for poverty in developing nations. Institutionalized corruption is difficult to fight, though, especially when they're, almost by definition, better financed than those who would fight.

Mish gives a talk at Google on the state of the economy. Among other things, he predicts we'll dip into another recession. I've heard some people predict a second or a third dip into recession, but I haven't heard a lot of explanation for it. I think he's off base at times, but it's an interesting talk.

Monday, June 8, 2009

Education, Google monopoly, racism, and behavioral economics

CalculatedRisk has graphs on unemployment rates and wages for different education levels. That things are tough for everyone isn't a surprise, nor is it a surprise that lower education levels are worse off. The degree is pretty striking, though.

Donald Marron lists three defenses Google can use in anti-trust cases. Not only is being a monopolist legal, but Google has a claim on not being a monopoly (in my opinion, the first and third reasons are the strongest ones).

David Henderson argues that free markets reduce racism by making the discriminators bear the cost of their prejudice. That is, if you refuse to do business with a certain type of person, then you're limiting the scope of your own business. On the other hand, if you're willing to do business with anyone, then you can make more money.

Geoff Riley offers his introduction to behavioral economics.

Friday, June 5, 2009

Clintonomics, macroeconomics, market research, and my search engine

An interview with Bill Clinton was too long, so the section on the economy was cut. Economix has it. It's pretty interesting to see Clinton's take on the situation, and he addresses the different arguments pretty well. Many have remarked that not only is this an interesting read, but it's also strange to hear an ex-president critique himself.

Matthew Yglesias continues the discussion of what's wrong with macroeconomics, mentioning that model which don't contain micro foundations are not considered. The microeconomic foundations provide a lot of useful ways to think about macroeconomics, I think, such that it seems logical that there should be a strong relationship between the two.

Rosengren, the head of the FRB-Boston, is calling for more research in markets, and their relationships to the economy as a whole. He points out that regardless of predicting the crisis, once the crisis was upon us, many forecasters mispredicted the size and length of the recession. This recession was of a different nature of those in the past, and we need to understand it better.

Oh, and I put together a custom Google search of economics blogs, with a few foreign policy ones thrown in. Not only is it accessible at that link, but it's also on my sidebar here now. Enjoy!

Wednesday, June 3, 2009

Michigan, foreign policy, Varian and Google, and food prices.

Might business be okay in Michigan? The Grand Rapids Press reports good news in Michigan for a machinery/furniture company, an AHL team, an advertising company, and a construction company. Michigan isn't all about cars--maybe some of those displaced auto workers will be able to find other work.

Obama makes the country a safer place, says National Security Advisor James Jones. New strategies in Afghanistan and Pakistan, as well as strategically pulling troops out of Iraq are good policies, he reports, as opposed to Guantanamo, which created more enemies than were detained. He also says that North Korea isn't an immediate threat, and that Obama's "team of rivals" is working out well so far, with everyone being heard.

Wired highlights Varian and Google auctions. I've heard a lot about these auctions in the past year or two--maybe the idea is spreading? Hal Varian certainly has a cool job.

David Leonhardt shows us price changes in certain foods over time. Looks like healthy foods are getting relatively more expensive (though, fish and meat is doing okay!).

Monday, June 1, 2009

Africa, college gards, unemployment and stocks, children, and cheap condos.

William Easterly challenges Sachs in development issues, pointing out problems with Sachs's arguments, and problems in aid money. I think Easterly's position is often overstated by others--Easterly doesn't think that we shouldn't provide aid to Africa, necessarily. Easterly, instead, recognizes that much aid to Africa is wasted, and helping Africa requires some non-monetary reform.

Mike Shedlock tells us how hard the job market is for new college graduates. This isn't anything new, I think, but it is important. We know the job market is bad, Mike just tells us that it's also bad for recent college grads.

Felix Salmon shows us that unemployment and stocks are more coincident than we may have thought. I'd like to see more historical data, though it'd be understandable for unemployment to be more coincident with large changes in stock markets, unemployment being a less sensitive indicator, and both potentially being affected by other economic phenomena. Still, I'm not sure I buy it. The decline in the stock market from 2007 - 2008 alone seems within normal fluctuations and doesn't quite justify the rising unemployment rate.

Nancy Folbre warns us that kids may be the most severely effected by the recession. Parents' job loss can lead to instability in the home, which hurts education and hurts physical health due to lower quality food.

The amazing Tata is making $8000 condos. I wonder if this sort of thing will catch on in other parts of the world, as land becomes more scarce. Certainly, I would think this sort of thing would be popular among college students.