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Economics

September 16, 2014

"Bond market conundrum redux"

A distiniguished economist, James Hamilton, tries to figure out what's going on with long-term interest rates and equities

September 15, 2014

"The Simple Lesson We Should Learn from Global Economics"

Daniel J. Mitchell, senior fellow at Cato:

I very rarely feel sorry for statists. After all, these are the people who think that their feelings of envy and inadequacy justify bigger and more coercive government. . . .

But I nonetheless feel sorry for statists when I see them fumble, stumble, duck, and weave when asked why global evidence contradicts them.

"Illinois Racing Against California for Biggest Pension Disaster"

My money's on Illinois. But it'll be close.

More: Jeffrey Dorfman, "Public Pensions Are Still Marching To Their Death".

If Detroit makes other cities and states face reality and adjust their pension plans to economic reality rather than political agendas, at least Detroit’s poor employees and retired workers will have done something positive for millions of other public sector employees out there. In the meantime, public sector employees and their union leaders need to make a hard choice: settle for realistic, smaller pensions that they are sure to collect or gamble on larger pensions that can only be paid for with well-above average future investment returns or by huge tax increases. Bigger pensions only look attractive until you factor in the risk of collecting nothing.

Still more: "Pension 'spiking' to cost CalPERS nearly $800 million, controller says".

Taxpayers and local governments are on the hook to pay nearly $800 million stemming from "legal" pension spiking over the next two decades, the state controller said Tuesday.

But please remember, pension "spiking" is just "another name for the things we do together".

September 14, 2014

"Famous pop singers who know economics"

The bros on the Economic Job Market Rumors board have some fun.

September 11, 2014

"The Reality Behind the Latest Pro-Obamacare Spin"

I thought maybe the recent reports sounded suspiciously good.

Obamacare’s defenders are busy declaring victory again.  Ezra Klein is touting a new survey of Obamacare benchmark premiums in some regions of the country as evidence that the law is defying the predictions of critics and working to cut costs rather than increase them.

But, as Bob Laszewski notes, the truth about Obamacare implementation is far less rosy than the latest round of cheerleading would indicate.

"Stimulus bill enabled billions in waste, exploitation of employees"

One downside of that really, really wonderful stimulus

September 09, 2014

"It’s won’t be long before US debt is out of control"

By Rebecca Strauss, Associate director of publications, Council on Foreign Relations. Note that Liberals think we should alwayts imitate Europe (home of fine Lefty solutions to all public policy problems).

Except when we shouldn't:

All advanced countries have faced similar challenges in controlling government debt and most have made austerity cuts that have slowed economic growth and employment in the short term. But, surprisingly, Europe—despite facing more difficult decisions than those confronting Washington—has done far more to bring their long-term debt burden under control.

Related: "Budget Crash Likely, Not Predicted Deficit Cuts".

"Supply issues could hamper the U.S. economy"

Don't look now but Larry Summers seems to be halfway to becoming a supply-sider.

To achieve growth of even 2 percent a year over the next decade, active support for demand will be necessary but not sufficient. In the United States, as in Europe and Japan, structural reform — to both increase the productivity of workers and capital and to increase the number of people able and willing to work productively — is essential.

September 08, 2014

"The Public Choice Revolution in the Textbooks"

James Gwartney laments that more economics textbooks don't treat Public Choice sufficiently

I am nonetheless disappointed that public choice has exerted so little impact on mainstream economics. Rather than analyzing how both markets and collective decisionmaking handle economic problems, mainstream economics continues to model government as if it were an omniscient, benevolent social planner available to impose ideal solutions. The highly successful text of Greg Mankiw illustrates this point. Mankiw introduces his discussion of the role of government and the correction of market deficiencies in the following manner: To evaluate market outcomes, we introduce into our analysis a new, hypothetical character called the benevolent social planner. The benevolent social planner is an all-knowing, all-powerful, wellintentioned dictator. The planner wants to maximize the economic well-being of everyone in society.

(Professor Gwartney is co-author of an excellent text--now in its 15th edition--that very much does: Economics: Private and Public ChoiceThe principles text co-authored by John Taylor of Stanford also does a good job.)

I think if there was one thing I could change about current economics teaching, it would be to incorporate much more Public Choice at all levels, from principles on up. I'd have the students read, for example, pieces like "When the Basic Income Guarantee Meets the Political Process". And I'd invite them to understand exactly why there's been "Four Decades of Declining Trust in D.C."

"Humans Need Not Apply"

The robots are here . . . and lots more are coming. This video makes a reasonable case for trouble. It's more than a simple-minded Luddite screed, and while I think history strongly suggests optimism, I think the video's arguments are worth considering. (Link via Kottke.)

More warnings: "Here Are Some Jobs That Are Basically Guaranteed To Be Taken Over By Robots" and "The best-case scenario for automation? Still worrisome for workers".

Arguments both optimistic and pessimistic: "Here's How Robots Could Change The World By 2025".

Two optimistic pieces: "One Paragraph Cuts Through The Hype Of Robots Taking Your Job" and "Will artificial intelligence destroy humanity? Here are 5 reasons not to worry."

Finally, a video by noted MIT professor Erik Brynjolfsson that frames the debate, I think, correctly: "The key to growth? Race with the machines".

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