Newmark's Door

The Law of Unintended Consequences strikes one more time

Megan McArdle: "How the IRS Wrecked Your Pension".

Work economics teachers need to do more of

Almost every week there is some new awful risk the media warn us of, awful because the sellers are "unregulated". Two examples;

"Wild, unregulated hacker currency bitcoin getting close to mainstream". (I'll admit "wild" is a nice touch.)

"Think Those Chemicals Have Been Tested?"

Unlike pharmaceuticals or pesticides, industrial chemicals do not have to be tested before they are put on the market. Under the law regulating chemicals, producers are only rarely required to provide the federal government with the information necessary to assess safety.

An answer--which needs to be taught more, and more forcefully--is nicely expressed in a column by George Mason economist Donald J. Boudreaux: "Competitive regulation".

The demand for government regulation springs from the lack of understanding that markets are amazingly proficient at regulating themselves through the competitive process. This process involves firms' competition for customers, workers, financing and suppliers.

See also Steven Greenhut's "Free Markets Are More Important Than Safety Regulations".

"The Minimum Wage Delusion, And The Death Of Common Sense"

Nice, short, non-technical summary of some of the important evidence.

"Here's Why So Many Wealthy Athletes Wind Up Broke"

A big one is that they tend to avoid paper assets--certificates of deposit, index funds, bonds--in favor of tangible ones. 

"Newegg nukes 'corporate troll' Alcatel in third patent appeal win this year"

Kmart, QVC, Lands' End, Intuit, Zappos, Sears, and Amazon all settled. Newegg and Overstock.com didn't and they won convincingly. 

"The Upper Class and Wealth Inequality in Sweden"

Tell me you would have guessed this. I wouldn't have.

Sweden is viewed as an egalitarian utopia by outsiders, but reality is complex. In some ways Sweden has less social equality than the United States. While the American upper class is largely meritocratic, the upper class in Sweden are still mostly defined by birth.

Who says big macro models are dead?

Nancy Pelosi apparently has one:

"Many of the initiatives that he passed are what are coming to bear now, including the Affordable Care Act," Pelosi said in an interview with MSNBC's Chris Hayes. "The Affordable Care Act is bringing the cost of health care in our country down in both the public and private sector. And that is what is largely responsible for the deficit coming down."

I hope some enterprising reporter asks her for her GDP and S&P500 predictions soon.

"Drunk [repeatedly] sounds alarm"

Where some NYC tax dollars go. 

"Overqualified Yet Underprepared, Graduates Face 'Unique Paradox': Study"

A McKinsey study finds, "While the young people are qualified—even overqualified, in many cases—to enter the workplace, most of them feel ill-suited to tackle the harsh realities of an evolving job market."

One thing that might help is for schools to offer a lot more career information: "career day" on steroids.

Another thing would be to tell students, as I have for some years, that they need to think of themselves not as potential employees looking for jobs, but as independent small businessmen and women, as, yes, entrepreneurs. (With one major exception--if they plan to work for the government. But that's likely to change in the near future.) Just like small business people do, they need to periodically assess competitive opportunities and threats, and their strengths and weaknesses. Don't take my word for it--a presentation by billionaire Reid Hoffman makes the point very nicely. 

"The Biggest Retirement Myth Ever Told"

As usual, some history is useful when appraising current crises.

The notion that these challenges are new -- that there was some golden era when Americans were prepared to kick up their feet and enjoy retirement in financial security -- is a myth. By some measures, retirees are in a better position today than at any other time in modern history.