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February 2008

The fight over interpreting "market failures"

Whenever an event widely viewed as a "market failure" occurs, the fight over interpreting what happened is intense and politically charged.

The subprime "crisis" will be an example. As you try to follow the debate, you may find this post by Ilya Somin on Volokh useful: it summarizes the argument that zoning and other land-use restrictions played an important role.

And don't forget that government-fostered lower underwriting standards also probably contributed.

(This is drawn from my short piece that James Pethokoukis posted on his blog. I thank James for inviting me to contribute.)

The last of the old-school UCLA economists

Peter Klein, at Organizations and Markets, writes about young George Mason economist Josh Wright:

Josh recently (2003) completed his PhD in economics at UCLA, where Ben Klein, Armen Alchian, and Harold Demsetz were on his dissertation committee. Josh is quite sure this committee had the highest median age of any dissertation committee on record.

That sounds right. The committee would rank very high on a scale of intellectual firepower, too.

Peter closes his post on this sad note:

Almost certainly Josh is the last representative of the UCLA tradition in economics which, like the Chicago school from which it sprung, has been absorbed into the Borg-like consciousness of mainstream (MIT) economics.