Bachmann and the global economy, Zimbabwe constitutions, Google's money, and currency standards

Wait... what? Who is this Michele Bachmann person and why don't she understand what 'global economy' means? Politicians confuse me sometimes.

I imagine (best as I can) that things are scary, right now, in a country that needs a new constitution. Zimbabwe has been through a lot, and it's hard to trust those who are making the new document... I doubt they have a significant number of constitutional scholars working on it. Is it a liberal American bias to demand experts be involved in decision making?

I imagine that, upon doing further research, Google discovered that you can't throw money at a problem to fix it. Also, they have less power than they think they do (I'm looking at you, Google China).

While a monetary basket might be a better standard than the dollar, any attempt to make such a basket would be highly political rather than economic in nature. Countries will likely continue making their own decisions in determining currency standards rather than deferring their sovereignty. Though, I suppose, the international lending agencies could make it a requirement of aid.

A model, Africa, well-being, and teaching hours

Let's take a brief break from unemployment news! That stuff is depressing.

How about that supermodel who vowed to stay naked until USAID gets to starving children? I'm not sure what kind of incentive she's going for.

More on development--Africa isn't looking so bad, historically speaking. It's made large gains, though there's a lot more that needs to be made. While this is true and all, I think the reason this sort of thing doesn't get spread very much is for the fear that people will miss the point. Though aid might be working, Africa still needs a lot of help.

Via Thoma, Stiglitz tells us we need a better measure of well-being. Unfortunately, he doesn't provide much insight into the discussion. How about median debt as a percentage of income? Or average savings rate? Any ideas, Joe, are you just going to complain?

A chart of hours taught by teachers around the world. Our teachers are apparently putting in a lot of work!

Wasting a recession, African aid, principles courses, housing, stock predictions, and Krugman.

Simon Johnson echoes an idea from Rahm Emanuel: Don't let a recession go to waste. The idea is, essentially, that a recession is a time where more people are willing to back big change. I'm not sure how I feel about this--I'd be happy if things changed for the better, but how do I know I can trust legislators? Should interest groups have an opportunity to push the country around, while we're down? That being said, the five points that Emanuel listed seem like good ones, and people seem to trust this administration much more than the previous one.

A FT discussion on Africa: Is Aid Working? It's an interesting discussion, and I'm of the opinion is that aid can work, but more than giving money, steps must be taken to ensure and enhance the effectiveness of aid.

Scott Beaulier relays a message from Greg Mankiw. Despite the recent events, economics principles courses won't change significantly. The groundwork that those classes lay stays the same, though graduate courses will likely see change in the fields of financial economics or public choice.

A couple on housing. Six years of housing price gains have been wiped away in three years, in real terms. CalculatedRisk has graphs on that, as well as the price-to-rent and price-to-income ratios.

And a couple (more) on the recession: Political Calculations tries to predict changes in the stock market, based on recession probabilities. It should be interesting to watch June 16-23 and September 10-16. And, Krugman is somewhat optimistic in a recent statement, as he says the world economy is stabilizing. We've avoided catastrophe! Still, he frets about the nature of the recovery. I note this isn't getting more media coverage, like Krugman's previous, less optimistic predictions.

Asia, law, international trade, and health care

Asian economies are supposed to be the first ones to recover. I suppose that's not a surprise--lesser developed countries tend to have a higher GDP growth level, so a global recession is less likely to keep their growth rates negative.

Economics is respected in law. James Kwak thinks maybe lawyers shouldn't stick so closely to economic principles, or at least they should recognize its shortcomings. I don't advocate as drastic a view as James Kwak puts forth, but I do think it's important for lawyers to understand the limitations of using the Hand formula and of traditional economic analysis.

Dani Rodrik thinks about which sorts of trade liberalization policies will have the greatest positive impact. He says that we should open agricultural trade and increase quotas for highly skilled foreign workers.

Apparently, we can pay for universal health care using sensible cost-cutting practices.

Maternity leave, Jamaica, Zimbabwe, the world, Venezuela, and the US federal budget

The Economic Policy Institute points out that the United States is severely lacking in maternity leave benefits. I wonder how that affects our national birth rate.

I've heard a lot about problems in Jamaica recently--I was surprised, and I think this article reflects why I was surprised. Socialism doesn't work.

The IMF provides an update on Zimbabwe. As you might expect, things aren't going so well there.

Simon Johnson reminds us that the rest of the world matters, too. Since the US economy is 20-25% of world output, they have an impact on us.

Speaking of the rest of the world, there's apparently some research showing how Venezuela's Chavez has hurt his opposition. This isn't a surprise to those who have been following Venezuela, but it's nice to see the research.

Lastly, the Obama Administration takes a jab at trimming the federal budget.

Development, crowding out, NewDeal2.0, economic terminology, and China,

Here's a nice story about a UCLA grad student making a difference in the world.

The Skeptical Optimist points out that the "crowding out" theory is bunk.

Here's an interesting website providing commentary from political scientists, economists, historians, and more. NewDeal2.0.

Uwe Reinhardt tells writes an article mostly directed at economists, I think. Some our terminology shouldn't is misleading when used in public discourse. We should be careful in using it, and others should take it with a grain of salt.

Is the Chinese economic model more effecting than the US economic model? Uh, no. Despite China's growth, models show pretty clearly that underdeveloped economies will tend to have higher growth rates than developed economies. This isn't a function of types of economic systems.

Sumner, World Bank, global recession, GDP, the auto industry, and education.

Scott Sumner with an excellent post covering macroeconomics, democrats being called socialists, soaps promoting liberal values, and Tyler Cowen. As is normal on Sumner's blog, the post is quite long, but he makes a lot of great points. Of course, I don't agree with him on the causes of the current recession, I take a more moderate view, I think.

Geo, a map of World Bank development projects. There are some very good, interesting maps there, if you're interested in international aid.

The St. Louis Fed releases some data on how the US is faring compared to other countries.

Even though Wednesday's GDP report was pretty bad, there are some silver linings. For example, the part of GDP that did the worst was the lagging indicators--the leading indicators weren't quite so bad. So, a turnaround may be in sight.

An interesting discussion: does America need the auto industry? Some pretty smart people take a stab at the question. Another NYT "debate" on education reform.

World Economic Forum on Latin America, Bernanke, charter schools

President Lula, of Brazil, calls for ethics ahead of the World Economic Forum on Latin America. Brazil has been doing much better than most countries in that region, so I'm hoping for Brazil to take the lead. Obama is there too, which will be interesting, as Chavez has spoken against the United States (well, Bush at least) for the past eight years. While reports say that Obama plans to talk about Cuba, I'm hoping for a more diverse agenda for the US president and maybe talk about problems in Venezuela.

Fed chairman Ben Bernanke has apparently been explaining his policy decisions. While it may be helpful for some, I'm not sure it's necessary. I think he's been doing a pretty good job anyways.

Why do charter schools fail? Well, at least 68% of them fail because of "finances, mismanagement, or other organizational problems." Wow. That's an impressive percent of them.

G-20, credit crisis, auto industry, and taxes

Now that the G-20 summit is over, you can imagine that a lot of people are weighing in on what they consider to be the important results. Dani Rodrik says that it was a victory for Europe. Vicky Pryce talks about the focus on trade. Free Exchange seems optimistic about most of the results. Justin Fox talks more about the IMF's cash. ... And that's just a drop in the bucket of all the commentary going around out there.

Calculated Risk provides a bunch of graphs of credit crisis indicators. We're still high on all of them, but things are looking better.

Free Exchange considers how one would separate the auto and oil industries. We don't want rising oil prices to sneak up on us again, which may happen due to rising demand in China, but there are fewer incentives for fuel efficient or electric cars while oil prices are low. Of course, this is nothing new, it's just another thought on that same old topic. The way to do it might be a tax on gas.

Mike Mofatt talks about why value-added sales taxes are more efficient than other taxes.

Auto industry, G-20, Department of the Treasury

Justin Fox wonders if Obama is going to stick to the tough stance he's taken on the US auto industry. David Brooks says it's political suicide, Justin Fox thinks it's possible.

To keep up with the London G-20 Summit, you can follow their website. VoxEU.org announced some time ago that they were working with the summit to provide economic commentary and debate. Drea at the Business Pundit gives us pointers on who to watch during the G-20 summit. It sounds like it's going to be very, very interesting to follow.

Obama has announced a couple of new big names to his staff of advisors--Levitt and Mankiw. What an interesting surprise! I've got to give it to Obama for choosing a diverse staff of highly intellectual and respected economists.

African bloggers, financial literacy, global regulation, securitization software, car prices, and Geithner.

African bloggers have a conference. Let's hear it for continued development in Africa! May it become quicker and more widespread.

A journalist asks Felix Salmon about the importance of financial literacy. It's probably not really important for most people, says Salmon. That may be true to an extent, but I think it may be important for people to be financially literate enough to know what our government is doing to try to fix the current situation, and whether or not it's a good fix. After all, with so many commentators on current issues, shouldn't people have an idea of how their elected officials are really doing?

I have great respect for Dani Rodrik. Sometimes I agree with him, sometimes I don't, but he always makes me think. This is a thought on global financial regulation.

One of the guys who wrote some of the software turning mortgages into bonds talks about whether or not that was a good idea. I think it's a good read. He points out that securitization isn't a bad thing if it's done well.

You think housing prices are down? Well, car prices are down too! But, that's not really new.

Geithner's job performance numbers are split. The man's got a tough job! I think that it's too early to make a call on his job performance, but I'm still glad we've got such a highly qualified guy in charge at the Department of the Treasury. He was one of the favorites to get the job originally for a good reason, I think.

Macro stuff

Here's a fun new tool from the Federal Reserve. It's a dynamic map that will show you a variety of national data. You can compare states, MSAs, and more.

George Waters of Illinois State talks about the current state of macroeconomics, and how we view the current recession. (link to Thoma) I think many are becoming increasingly disenchanted with macroeconomic models, and I think that includes many macroeconomists. On a recent radio interview (I believe it was on NPR), an economist described what forcasters are doing right now as guesses. In general, they try to use past similar situations to estimate what will happen, but there aren't many past situations similar to today. Surely, if it were easy, everyone would be macroeconomists.

Over at voxeu.org, Philip Lane reminds macroeconomists not to forgot global issues. Domestic fixes to the crisis that don't take into account global imbalances may just lead to another crisis. I'm less paranoid than Lane, I think, but global imbalances are always important to consider.

Technology, the Fed, the global recession, hiring, and trade

Lynne Kiesling has some interesting posts on smart grid technology. I'm looking forward to this stuff in the future.

Ben Bernanke says that he is glad to work at the Federal Reserve. "Economics is only useful to the extent that it helps people..."--very true.

Academic hiring is down, unsurprisingly. People tend to think lawyers can still make money, but apparently law firms are laying off lawyers, too.

U.S. trade deregulation provided for around 25% of trade growth. Seem obvious? Well, maybe not to people who are advocating protectionist policies.

Global Recession Status map. On the other hand, Chavez says that the global recession has not affected Venezuela.

Christina Romer's Lessons from the Great Depression.

Another thought on the unit-root-vs-trend-stationary Krugram-Mankiw debate, this time from David Altig at the Federal Reserve Bank of Atlanta.

Research on the question: Does Money Bring Happiness? Some research says yes!

James Kwak provides Nationalization for Beginners.

Dani Rodrik on the problem with economists. He says we need to use multiple models, not just the one we believe.

Geithner starts to get some help. Geithner has been scrambling to get stuff done.

The IMF reports the costs of the financial crisis.

Unemployment rate, auto industry, Asia, morality, and business cycles

The unemployment rate is 8.1% nationwide, but in Houston it's--erm--"only" up to 6.5%.

James Hamilton at Econbrowser shows us some numbers on the auto industry. It looks like the industry has been faltering since June, those numbers are way down. I'm reminded of James Joyner's piece this past week celebrating the exit of manufacturing jobs. Still, I get the idea that the numbers are soft--domestic and import numbers are down. People have to start buying cars again eventually.

Sachs writes a Letter to the Editor at NYT, disagreeing with Krugman. According to Sachs, the global crisis isn't Asia's fault.

Here's an interesting discussion on the claim that morality is analogous to economics. I've been thinking about similar issues on and off--I even saw a book comparing economic and Christian principles. Although, I guess it isn't surprising that there are similarities in what different groups say will make us better off.

David Beckworth provides an industry-by-industry look at the employment numbers during the recession. Some of them have actually been growing! I don't think it's much of a surprise, but it's still worth a look.

CalculatedRisk talks about business cycle indicators, from lead to lag.

Houston Rodeo, ESE, marginal taxes, protectionism, and popular kids

The Houston rodeo is feeling the effects of the recession.

There is now an Economics Search Engine. It sounds like a very useful thing, but I haven't tried it out yet. (I'm having trouble with the link provided, so maybe you'll also have better luck with this one)

Jonathan Chait has some fun with people who believe they'll be better off by keeping their incomes under $250k.

A couple of World Bankers worry that trade protectionism is rising. I hope any trend doesn't last. (Edit: another Voxeu.org article on a similar subject, but a bit more broad)

Popular kids make more money, says some research. An extra two percent for every extra friend. I wonder what Bill Gates would say about this.

Business as usual

Michael Mandel reports that, during the recession, we're consuming less food. Strictly speaking, we're spending less money on food. This probably means that people are buying less expensive food, but you wouldn't think it's the second biggest cost cut we're making--after all, everyone has to eat.

Ed Glaeser argues that we shouldn't try to help the auto industry. This is a common economic argument, actually. After all, if a company is going under--particularly a large one--there's probably a good reason for it. They're somehow not efficient enough to survive the market, and helping them out is a waste of money.

How's this for developmental news? Over 60% of the world now uses cell phones. I expect everyone around me to have a cell phone, it's strange to me that almost 40% of people don't use cell phones. And, developed nations account for 66% of cell phone usage. That's even more weird to me!

Intel wants to push its Atom processor (which currently runs my netbook) into other devices. Hooray for low cost processors! I love it when innovation and competition drive down prices.

Going back.

A lot of these are links I've been saving for when I had time to blog about them. So... well, here they are.

A couple of economists at the University of Bristol give some recommendations for econoblogging. If you're interested in picking it up, you may want to read this as a basic guide. A Guide to Blogging in Economics

On the same train of thought, a Canadian economist talks about the value of econoblogging. I think as economies become more dependent on each other, and as they are encountered with global shocks and changes, public knowledge of what's going on, why it's going on, and what the effects are become more important. If economists claim to have a roughly decent idea of what ideal economies looks like, we should make an effort to drive the public in that direction. Even if we can't be forecasters, if we know that more open trade policies lead to greader global growth, we should have a venue to try to convince the public of that. And, if what we believe really is true, we should be able to convincingly argue our points.

Tyler Cowen remarked (some time ago, admittedly, that an economist book club would be good, and that there would be discussion on Keynes's General Theory, section by section. It seemed like a good idea, though I don't know what's come of it. Others seemed to think it was a good idea at the time.Again

Recession Announcements (the official ones, from the NBER):

http://wwwdev.nber.org/dec2008.html

http://www.nber.org/cycles.html

Many others were talking about this, of course, even though it was really not a surprise to anyone, and hardly even news. I don't remember if I linked this article before, but here's a Business Week piece on why it takes so long to official call a recession.

I find news about other economies interesting, in particular when different economies interact. Edward Hugh at Bonobo Land is an interesting source of economic analysis of different countries. I've also been reading a bit about Spain in particular, so I found this piece of Edward's interesting. Lawrence Lux comments on the same blog post.

This bailout comic is, I think, more poignant today than it was when it was first published. And, it relates to a recent blogpost of mine (pardon the self-reference).

A recent defense of Wal-Mart. People who oppose high corporate taxes and support small businesses over large ones confuse me.

A smoking ban in Holland has an interesting effect: smokers merely pay the owner to be able to smoke, so the owner can pay the resulting fine. Sounds pretty efficient to me! "Just paying my Pigouvian tax, thanks."

GM CEO being driven 9 hours from Detroit to DC. Seems like a silly way to support your own business to me.

Crises and protectionism. Leading scholars compile their essays into an e-book every world leader should read.

As bad as the 80s, not the 30s. Time remarks that the talk of the current recession is a bit overdramatic. If this recession becomes even remotely comparable to the Great Depression, it hasn't gotten there yet.

Hey, I didn't know the Economist had a free audio/video page. Neat!

Sweatshops

I often find articles like this one from Nicholas Kristof interesting, in support of sweatshops. The idea is this: people who work in sweatshops have the option to do so. They decide to work in sweatshops because it's better for them to do so. People in developing countries want to work in sweatshops, and when developed countries make sanctions try to prevent sweatshops from cropping up, they're actually unintentionally hurting the countries. Sweatshops pay better and have better work conditions than working in a field.

Of course, the reasoning no longer applies when people are coerced or forced into working in sweatshops, as is the case in some places.

Just a few more things on my mind.

This mention of growth of the Chinese hat industry sticks out at me, only because I happen to know a guy who heavily invested in hat factories in China, buying up a few factories back in May or June. He must be doing very well, now!

Here's an interesting article pointing out that helping developing countries (in particular, countries to the south of us) is beneficial to the United States, due to positive impacts on trade. It's a point that most people outside of Economics haven't understood, it seems.

While I don't agree with everything the Economic Policy Institute believes, I think their post-election letter, Wall Street rescue plan, and their agenda for "Shared Prosperty" are interesting reads.

Moving onwards.

I've created a page on my website that includes links to some of the best commentary about the financial crisis around. With so much opinions on the matter, it's difficult to keep up with it all, difficult to figure out what's useful, and it kind of crowds out other interesting pieces of information. I'll keep that page updated with information or links to information, and try to keep this blog for other stuff (though, chances are there will be interesting financial crisis news I'll want to mention on here as well).

Robert Waldmann, on the Angry Bear, refutes the claims of the previously mentioned physicist. While Waldmann brings up good points, I don't think he refutes all of the claims with satisfaction. In a similar vein, a University of Houston physicist writes "What Economists should learn from Econophysics."

Now for a few links from Dani Rodrik. He's a Harvard professor specializing in developmental issues. He points to a useful site for development data. But, he's sometimes silly, such as linking this economics rap (I'm kind of impressed). He also sometimes takes on fellow Harvard professor Greg Mankiw. He also has a number of posts pointing out that subsidies can lower prices, not raise them (depending on whether the country is a net importer or a net exporter). MyC4 looks like a Kiva-type site. That's good stuff. And, a ranking of econoblogs, updated with data from the past 90 days. The other common ranking I knew of is here.

Here is a video archive of London School of Economics lectures. Nice stuff. I'll eventually make a webpage with economics podcasts and videos.

Phil Izzo at the Wall Street Journal tells us that most lawmakers don't have economic educations. Well, I think we all knew that already, but it's particularly pertinent when they're trying to fix a financial crisis.

It's interesting to note the net present value of a JD. I wish I could also find the study that shows the incidence of JDs in various countries.

I Bits is an interesting blog, and Laura Holson tells us that wireless broadband boosts economies.

Lastly, a couple of Slate articles I meant to post on here a long time ago. A discussion about automobile subsidies, and a commentary on Obama's law exams he used to give.

Enjoy!