Friday, March 30, 2012

Willful Ignorance

This is one of the key differences between Dems and Repubs. Republicans believe that the playing ground is already fair.

Willful Ignorance

Wind Map

Wind Map

Privatization is license to Steal

Hearings | Homeland Security & Governmental Affairs Committee

Grieving survivors describe Afghan massacre

Grieving survivors describe Afghan massacre – This Just In - Blogs

Quote of the day.

Noahpinion: Thursday Roundup (3/29/2012):

"He fails to mention, however, the hypothesis that the old Confederacy lives on as a cancerous tumor within our body politic that has metastasized during a moment when America's immune system was weak, and that this is what is strangling our institutions..."

Skills Mismatch, Construction Workers, and the Labor Market

There is no structural unemployment. The problem is cyclical.

Skills Mismatch, Construction Workers, and the Labor Market - Liberty Street Economics

There’s more to life than money

Rich or poor, it’s always nice to have money”

There’s more to life than money (for some) | vox - Research-based policy analysis and commentary from leading economists:

We offer three hypotheses:
Hypothesis 1: People with relatively low financial wellbeing have relatively low risk-aversion.
Hypothesis 2: People with relatively low financial wellbeing have relatively low loss-aversion.
Hypothesis 3: Competitive and status-seeking people are less risk-averse and less loss-averse than people who are less competitive and less status-seeking.

The dating game

When will China overtake US in GDP?

Daily chart: The dating game | The Economist

Broccoli and Bad Faith

Broccoli and Bad Faith -

Wednesday, March 28, 2012

Brad DeLong: Quote of the Day: March 28, 1942

Brad DeLong: Quote of the Day: March 28, 1942: "

Once people commit to a belief, the smarter they are the better they are at rationalizing those beliefs. Thus: smart people believe weird things because they are skilled at defending beliefs they arrived at for nonsmart reasons."

U.S. Political Polarization

Open Thread: U.S. Political Polarization | The Big Picture

The rules of Road Runner and Wile E. Coyote

There are no rules.

The rules of Road Runner and Wile E. Coyote cartoons

Afghan villagers live in fear of another massacre

Meanwhile the Pentagon reports that night raids do no harm.

Afghan villagers live in fear of another massacre | Asia | DW.DE | 23.03.2012

Red States See Massive Public Sector Job Losses

Elections matter

Red States See Massive Public Sector Job Losses | The Nation

No, Greg Mankiw, We're Not, and You Know It

It is always sad when you see people that you respect lie in public. 

Twenty-Cent Paradigms: No, Greg Mankiw, We're Not, and You Know It

Saturday, March 24, 2012

Country's Biggest Spy Center

The NSA Is Building the Country's Biggest Spy Center (Watch What You Say) | Threat Level |

Worldly Philosophers in 30 words or less

Two alternative views of big names in economics

Adam Davidson's 'Why Some Countries Go Bust' Needs A Rewrite | Politics And Regulation |


Federal Reserve Economic Data - FRED - St. Louis Fed

All the difference in the world

All the difference in the world - MIT News Office:

Twin experiment shows that it is not about geography nor culture, growth is about institutions.

 Take North and South Korea, two countries with a common history, culture, climate and natural resources. Since their split in 1948, North Korea has become one of the poorest countries in the world, while South Korea is rich; there is now a tenfold gap in wealth between the states. Why? Because South Korea, Acemoglu and Robinson assert, despite political turmoil of its own, has evolved into an inclusive political system. The Korean peninsula, Acemoglu says, is a classic example of “two countries with very different institutions, but not because the people wanted it. That gives you a window into the long-term consequences of an institutional divergence.”

Can Americans Trust Government Again?

Can Americans Trust Government Again? � TripleCrisis

Friday, March 16, 2012

Share the Wealth?

When Do Humans <i>Want</i> to Share the Wealth? | Angry Bear - Financial and Economic Commentary:

Very insightful reason about why there is no agreement on tax rates or expenditures.

The losers know the game is rigged, so their innate intution tells them that the winners should share.

The winners refuse to know that the game is rigged — deny it vehemently — so they think the losers are unreasonable in their expectations of sharing.

Sunk Cost in War

Sunk Cost in War, David Henderson | EconLog | Library of Economics and Liberty:

 "But then all that blood and treasure would be wasted." Peters answered, "But you can't get it back by spending more blood and treasure."

What Happened to Goldman Sachs?

What Happened to Goldman Sachs? - Justin Fox - Harvard Business Review:

Nothing happened to GS:

"...Goldman (and other Wall Street firms) were always about ripping customers off."

Trends continue until they don't

That was quick.

For the Knicks, Linsanity Has Left the Building -

Wednesday, March 14, 2012

Innovation: Institutions and the new new thing

Innovation: Institutions and the new new thing | The Economist:

 Companies and businessmen, like politicians (or anyone, really) aren't angels. If a society wants to channel their energies in useful ways, it must be diligent in making sure that the incentives created by the economy's institutions are right. Recklessly throwing around goodies for the already rich and powerful is probably not a good way to proceed.

The Other Glass Ceiling

The Other Glass Ceiling

Israel, Iran and America: Masters of their fate?

Safety: Blow-ups happen

Safety: Blow-ups happen | The Economist:

The below quote highlights the issue with models and stated probabilities.

Modelling based on experience with previous plants suggests that the risk of a significant radiation leak from generation I reactors was between one in 1,000 and one in 10,000 per reactor year. For generation II it is between one in 10,000 and one in 1m. For generation III it should be between one in 1m and one in 100m. These calculations do not reflect the absolute risks as experienced in the real world; there have been five major releases of radioactivity (Three Mile Island, Chernobyl and the three reactors at Fukushima) in only 14,000 reactor years of operation. But the trend towards safety seems to be real.

“Spending” isn’t consumption

TheMoneyIllusion � “Spending” isn’t consumption:

Why does everyone else get this wrong?� Perhaps it’s nothing more than confusing the terms ’spending’ with ‘consumption.’� One can spend on either consumer or investment goods.� When you spend on investment goods, it’s called saving.

Who Hates Treasuries? Everybody!

Investors have hated JGB's since 1994

Who Hates Treasuries? Everybody! | The Big Picture

Who’s a Freeloader?

"Entitlements" are really insurance or pensions. The debate would be different if the semantics were more correct.

Who’s a Freeloader? | The Baseline Scenario

How the Tractor Explains the Middle Class Crisis

The tractor does not explain the middle class crisis. The tractor actually explains why the middle class got richer, much richer since 1910. Increased productivity is good for workers if their wages are increased proportionally. The problem is that wages have been capped by management due to the weakness of unions.

How the Tractor (Yes, the Tractor) Explains the Middle Class Crisis - Derek Thompson - Business - The Atlantic

Why I Am Leaving Goldman Sachs

It took him twelve years to realize this?

Why I Am Leaving Goldman Sachs -

Monday, March 12, 2012

David Stockman on Crony Capitalism

Losing Ground, The Bell Curve, and Coming Apart: A Reconciliation,

CRIC Cycle

6 Things Rich People Need to Stop Saying

Ken Griffin should have read this before writing his article.

6 Things Rich People Need to Stop Saying |

Sterilized quantitative easing

Econbrowser: Sterilized quantitative easing:

 More fundamentally, one might ask what good does it do for the Fed to borrow short and lend long? The net effect should be to put downward pressure on long-term rates in the hopes that this might boost home purchases, help households strengthen their balance sheets with refinancing, and encourage investment and net exports. A realistic assessment I think would say that the effects of borrowing short and lending long are likely to be pretty modest, particularly given that the U.S. Treasury has been issuing long-term debt faster than the Fed can buy it. My conclusion is that measures such as QE2, insofar as they had an effect, operated primarily as a tool the Fed can use to punctuate its declarations of near- and longer-term policy objectives.

Sunday, March 11, 2012

Why Freddie Mac Hired Gingrich

Three Scenes Inspired by Newt Gingrich’s Campaign : The New Yorker

Ken Griffin opens up about politics

Ken Griffin opens up about politics, the Koch brothers and super PACs in the wake of the financial crisis -

The proper tax rate on capital income is zero

Sumner and Mankiw are lost in their models.
Accountants are much more practical and clever than these two profs. If the rates of taxation of different forms of income are dramatically different, there will be lots of money and time spent on tax arbitrage.
The wealthy will have incentives to convert all income to capital income.

Sumner even admits this in his essay, but then goes on to say we should do it anyway and adds a push for a one time wealth tax. Who thinks that any republican would accept a wealth tax in return for zero tax on capital gains?

Economics: The proper tax rate on capital income is zero

Saturday, March 10, 2012

Free-Trade Blinders

Lunch with the FT: Charles Murray

“OK, let’s try this,” he said. “If you get a rising economy, for example, if Barack Obama could say we are going to bring on seven years of incredibly low unemployment, then he would argue that this would do a lot of good to the working class, wouldn’t he?” I agree. “But we already had that in the 1990s, and yet the dropout from the labour force continued to go up, people on social disability went up. Divorce went up. We have no evidence that a robust economy has much to do with these problems at all.”

Lunch with the FT: Charles Murray -

One year on

Nuclear Disaster in Japan Was Avoidable

Nuclear Disaster in Japan Was Avoidable, Critics Say -

Very similar to the US financial crisis:

"Mr. Shimazaki and others say the fault lay not in outright corruption, but rather complicity among like-minded insiders who prospered for decades by scratching one another’s backs. They describe a structure in which elite career bureaucrats controlled rubber-stamp academic policy-making committees, while at the same time leaving it to industry to essentially regulate itself."

Tuesday, March 06, 2012

Team Romney Rallies Around Carried Interest

Brad DeLong: Alec MacGillis: Team Romney Rallies Around Carried Interest:

Mankiw needs to read his own blogs. He came out in the Sunday NYT defending carried interest. In 2007, he had this to say:

" Deferred compensation, even risky compensation, is still compensation, and it should be taxed as such. Paul Krugman hit the nail on the head with this question: ‘why does Henry Kravis pay a lower tax rate on his management fees than I pay on my book royalties?’ The analogy is a good one. In both cases, a person (investment manager, author) is putting in effort today for a risky return at some point in the future. The tax treatment should be the same in the two cases."

Under $2 a Day in America, Part 1

Mitt Romney " I am not worried about the poor"

Off the Charts Blog | Center on Budget and Policy Priorities | Under $2 a Day in America, Part 1

Try overshooting for once

Why are we worried about inflation when unemployment is 8% and growth is 3%?

Monetary policy: Try overshooting for once | The Economist

Government for the Super Rich

Large Courses Open to All, Topple Campus Walls

Next to Tribe With Alcohol Ban, a Hub of Beer

Preschool Cavities Prompts Anesthesia

Murray may be right...

Rise in Preschool Cavities Prompts Anesthesia Use -

“I had a lot on my mind, and brushing his teeth was an extra thing I didn’t think about at night,”

There is little government can do to address dumb behavior.

Sunday, March 04, 2012

Capital Gains vs. Ordinary Income

The real lesson is that there should be no difference in the taxation of ordinary income and capital gains. Smarter accountants than Mankiw will always figure out how to arbitrage different tax rates.

Capital Gains vs. Ordinary Income - Economic View -

Adam Smith on Charles Murray

"All economics is either footnotes to Smith or Ricardo, or wrong."

Adam Smith on Charles Murray — Marginal Revolution

Friday, March 02, 2012

Re-Visions of Minard

Re-Visions of Minard

"In defence of Dodd-Frank"

Letter to the Editor: "In defence of Dodd-Frank":

Treasury summarizes capital market reforms:
"...they have already brought about a fundamental change in capital requirements, the most important source of vulnerability in any financial system. They establish comprehensive oversight and transparency of the $600 trillion derivatives markets. They provide a form of bankruptcy to unwind large banks that mismanage themselves into peril. And they consolidate consumer protection into one agency with stronger authority to extend those protections beyond banks, so that we can better prevent fraud and predatory practices at a range of consumer-finance companies. These reforms won’t solve all our problems, but if they had been in place earlier this crisis would have been much less damaging to the United States and to the world."

Financial Crisis Amnesia

The End in Afghanistan?

"The Afghan War shouldn’t be the world’s most complicated subject to deal with.� After all, the message is clear enough.� Eleven years in, if your forces are still burning Korans in a deeply religious Muslim country, it’s way too late and you should go.�"

Tomgram: Engelhardt and Turse, The End in Afghanistan? | TomDispatch:

Thursday, March 01, 2012