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Economics

July 21, 2014

"Obama's Wrong; The Economy Is Improving Because Of Congressional Deadlock"

Yes, indeed: a day the Congress is not passing new laws is generally a good day for business.

July 17, 2014

"Economist: LeBron James Worth Almost $500 Million to Cleveland"

Unusual for articles of this type, the work is shown.

July 16, 2014

"It's Not Your Imagination: The Government Really Is Worse Than Ever"

Fiscal Times, summaring work by Paul Light, Senior Fellow at Brookings Institution:

Using data drawn from news archives, Light identified government failures dating back to 1986 and found that major problems occurred at a rate 1.6 per year until 2001 – nearly doubling in the years afterward, to 3.0. 

It appears to be getting even worse. President Obama may have had fewer major failures than his immediate predecessors have, but as Light points out, his second term isn’t over yet. “At its current pace, government still has plenty of time to set a record average before Obama leaves office in 2017.”

Of course, Professor Light blames the Republicans for this. They have been, allegedly, "willing to vandalize federal programs in service of an ideology that believes smaller government is better government." I, on the other hand, trust the old adage, "The first thing to do when you're in a hole is to stop digging."

(And note I posted on Monday, "Government, particularly the federal government, doesn't work as well now." Score one for me.)

"Do We Need ESSP?"

Another fine article by Arnold Kling.

Watts' book can be regarded as an extended argument in favor of what I might term Epistemological Skepticism about Social Phenomena, or ESSP. Those of us with ESSP believe that we should be skeptical about how much we can know with certainty in the fields known as the social sciences. We may learn things that are true for a majority of cases under specific circumstances. But we are less likely to find perfectly reliable, broadly applicable laws comparable to those found by physicists.

The opposite of believing in ESSP is what Friedrich Hayek termed "scientism." Scientism is a belief that social phenomena can be understood in a scientific manner. It is the belief that we should be able to explain and predict social outcomes on the basis of simple, powerful, verifiable universal principles.

July 15, 2014

"Taylor Swift doesn't understand supply and demand"

That's O.K., Ms. Swift: not enough people do.

The Wall Street Journal just published an amazing essay from Taylor Swift, in which she argues that the music industry is not dying, but in fact "just coming alive."

Based on this piece, there are many reasons to believe that Taylor Swift has not been paying very much attention to the music industry.

"Fair Trade is Fraud. And Getting Worse."

Professor Munger issues a noteworthy smackdown:

FairTrade does not help the people it claims to help. . . . It does, however, give rich white people a chance to feel good about themselves, at a convenient price.

"The Invisible Economy Our techniques for measuring economic performance are obsolete, obscuring a complete picture of how we're faring."

I think economists would be virtually unanimous in agreeing that this is a serious problem.

However, finding a good solution is really difficult.

July 14, 2014

"California High-Speed Rail—the Critics' Case"

James Fallows presents some of the criticism, but then he tries a neat rhetorical trick. Is there opposition to California's proposed high speed rail? Yes, but "Every big peacetime project that any democracy has ever undertaken has generated controversy." He gives as examples the Louisiana Purchase, the Alaska Purchase, the Golden Gate bridge, the 1964 Civil Rights Act, and Medicare ("now the sacred cow of American politics").  

Leave aside that both purchases involved just one-time expenditures and little bureaucracy to plan, execute, and administer, the Civil Rights Act didn't involve spending a lot of money of any kind, and that Medicare probably wouldn't have passed if it had been understood how hugely expensive it would become. (In 1965 a billon dollars was a really big deal rather than a rounding error in the budget of some obscure federal bureau.)

The main difference--the difference few Liberals understand--is that those examples are all about 50 years old or older. Government, particularly the federal government, doesn't work as well now. As Glenn Reynolds and his readers point out, two reasons are public employee unions and the environmental lobby. I'd add that now, as opposed to then, the federal government and many state governments are effectively broke.

Good Lord, people, don't you know that these are . . . *public goods*?!

Everyone know the private sector can't supply these efficiently. It's, it's . . . impossible! 

/Sarcasm off.

Whether or not they’re expecting to profit, Gilbert and other capitalists — large and small — are trying to rebuild the city, even stepping in and picking up some duties that were once handled by the public sector. Shop owners around the city are cleaning up the blighted storefronts and public spaces around them. Only 35,000 of Detroit’s 88,000 streetlights actually work, so some owners are buying and installing their own. In Gilbert’s downtown, a Rock Ventures security force patrols the city center 24 hours a day, monitoring 300 surveillance cameras from a control center. Gilbert is proposing to pay $50 million for the land beneath the county courthouse and a partly built jail near his center-city casino, with the intention of moving the municipal buildings to a far-off neighborhood; his goal is to clear the way for an entertainment district that flows south, without interruption, from the sports arenas past his casino and into downtown. Detroit’s new mayor, Mike Duggan, told me he had no problem with the private sector doing so much to shape his city: Other metropolises had their entrepreneurs and deep-pocketed magnates who built and bought and financed things. With a state-appointed emergency manager overseeing various aspects of Detroit’s operations, with many civic services inoperable for years and with a dire need for investment, Duggan said he felt lucky that his town was getting its turn.

While the jury is still very much out, there is much potential good news in "The Post-Post-Apocalyptic Detroit".

 

July 10, 2014

"How India’s Economic Rise Could Bolster America’s Economy"

Let's hope this comes to pass

But I'm skeptical.

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