Over the past few centuries, Western cultures have been very good at creating general prosperity for themselves. Historian Niall Ferguson asks: Why the West, and less so the rest? He suggests half a dozen big ideas from Western culture -- call them the 6 killer apps -- that promote wealth, stability and innovation. And in this new century, he says, these apps are all shareable. [more inside]
Peter Orszag (previously of Obama's OMB) argues that circumventing democracy is the best way to save it, but Catherine Rampell isn't sold, and Uwe Reinhardt points out that technocrats base "science" on moral values.
Are small theaters punching a ticket to oblivion? Radical changes in the traditional structure of the lab processing and exhibition sides of the film industry have been filling the lives of small theater operators with uncertainty and worry for the last few years. Will filmstock be the next Kodachrome? (And what will that mean for the future of film preservation?) [more inside]
BBC News asks independent trader Alessio Rastani "what would keep investors happy, make them feel more confident?" and gets a surprisingly honest answer: "Personally, it doesn't matter. See, I'm a trader. I don't really care about that kind of stuff. If I see an opportunity to make money, I go with that. So, for most traders, we don't really care that much about how they're going to fix the economy, about how they're going to fix the whole situation; our job is to make money from it. And, personally, I've been dreaming of this moment for three years. I have a confession which is I go to bed every night and dream of another recession, I dream of another moment like this." [SLYT]
Obama to Congressional Republicans: pass this jobs bill, or take the blame. The Economist has the details of the plan. Paul Krugman describes the plan as significantly bolder and better than expected. Good news and bad news: Obama's plan would work, but GOP won't pass it. Why not? [more inside]
Robert Reich talks at Google about the biggest problem facing the US economy. [SLYT, 57min]
JS Mill vs. Thomas Carlyle Economics may deserve its reputation for being hardnosed and calculating, not warm and fuzzy. But sometimes it is its critics who are lacking in the spirit of humanity. [more inside]
White House economic policy largely originates with The Council of Economic Advisers, CEA, who directly advise the President of the United States. CEA research and publish the annual Economic Report of the President[ .pdf ], which details the state of the nation's economic health. Today President Barack Obama is expected to nominate Princeton Economist Alan Krueger as chairman of the White House Council of Economic Advisers. Krueger, who previously held the post of Assistant Treasury Secretary for Economic Policy, has written on a wide range of topics, from the economics of rock music [ .pdf ], the causes of terrorism [ .pdf ] and American's changing work / life balance. But Krueger is best known as a labor economist who has extensively researched long term unemployment. [more inside]
As is well known, having six legs is the only possible defence against Dutchmen but, in unrelated news, Brad DeLong comments on the tendency of economists to blame prediction failures on irrational people failing to model the theories rather than the theory failing to model the people. He also highlights how this applies to waltzing with Darwin on starships. Or something like that. [more inside]
From 1935 to 1951, Time Magazine bridged the gap between print & radio news reporting and the new visual medium of film, with March of Time: award-winning newsreel reports that were a combination of objective documentary, dramatized fiction and pro-American, anti-totalitarian propaganda. They “often tackled subjects and themes that audiences weren’t used to seeing — foreign affairs, social trends, public-health issues — and did so with a combination of panache and subterfuge that today seems either absurd or visionary.” (Previous two links have autoplaying video.) By 1937, the short films were being seen by as many as 26 million people every month and may have helped steer public opinion on numerous issues, including (eventually) America’s entry to WWII. Video samples are available at Time.com, the March of Time Facebook page and the entire collection is available online, (free registration required) at HBO Archives. [more inside]
Researchers at the New England Complex Systems Institute say they've uncovered a pattern that triggers riots wherever it's found. What is that pattern? The price of food. When it rises to a certain level, social unrest & violence are soon to follow. According to their calculations the food price index is due to peak in August of 2013, assuming no corrective action is taken. The original paper is here.
Roubini warns of global recession risk. In a video interview with the Wall Street Journal, Economist Nouriel Roubini of Roubini Global Economics warns that the risk of a global recession is higher than 50%, suggests investing in cash, blames George Bush for the United States' economic predicament, advocates higher taxes, warns of a possible break-up of the European monetary union and states that "Karl Marx was right". [more inside]
Has the Higher Education Bubble Popped? According to the CSM, the boom in demand for bankers, barristers, and bureaucrats is over.
Over the past three weeks, Israel has experienced what may perhaps be the largest, spontaneous / grass roots social protest of the secular middle class that it has witnessed in decades. Thousands of demonstrators in cities and towns throughout the country have been protesting cuts in government funding to health care and education, and massive, exorbitant rises in taxes and housing costs -- and demanding change. Tent cities have sprung up in Tel Aviv, Jerusalem and in public gardens and parks throughout the country. And they may not be going anywhere: polls indicate Israeli support is "exceptionally high". [more inside]
UCSD physicist Tom Murphy inaugurates his blog Do the Math with two posts on the thermal limits of energy use on earth and the related absurdity of infinite economic growth.
"We now have a smallish house in a nondescript working class Seattle neighborhood with no sidewalks. We have one car, a battered old minivan with a large dent on one side where you have to bang it with your hip to make the door shut. Our boys go to public schools. Our jobs pay enough to support our lifestyle, mostly anyway. If we wanted, we could both do the "next thing" on our respective career paths..... Fact is, we just don't want to work that hard! We already work harder than we feel like working. We enjoy having time to lay around in the living room with the kids, reading. We like to watch a little TV after the kids are in bed. We like going to the park and visits with friends and low-key vacations and generally relaxing. Going further down our respective career paths would likely mean more work, greater responsibilities, higher stress, and less time to lay around the living room with the kids. So why do it?" David Roberts in Grist on satisficing, voluntary non-affluence, and the medium chill.
There may be $2 trillion sitting on the balance sheets of American corporations globally, but firms show no signs of wanting to spend it in order to hire workers at home, however much Washington might hope they will.
Time magazine outlines five common destructive myths about how to stimulate U.S. Growth.
Time magazine outlines five common destructive myths about how to stimulate U.S. Growth.
Everyone knows that correlation doesn't imply causation, but researchers invariably need to come up with plausible explanations (i.e., models) for the patterns found in their data. However, very different models can "explain" the same pattern. The books The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It and Wars, Guns and Votes: Democracy in Dangerous Places by Oxford economist Paul Collier try to explain why some countries have remained poor using data from econometric studies. In his very interesting review (PDF), Mike McGovern, a political anthropologist at Yale, critiques the types of explanations found in popular economics books. Statistician Andrew Gelman has further thoughts on descriptive statistics, causal inference, and story time.
The housing bubble was the last chance most middle-class families saw for grasping the brass ring. Working hard didn’t pay off. Investing in the stock market was a sucker’s bet. But the housing bubble allowed middle-class families to dream again and more importantly to keep spending as if they were getting a big fat raise every year. - How the Bubble Destroyed the Middle Class
There is an European Commission budgetary proposal to boost E.U. funding for science and technology by 45% from €55B to €80B by trimming some fat form the controversial Common Agricultural Policy. [more inside]
"Any industry would be proud of an average annual growth rate of 34% over ten years and of a global reach from Austria to Taiwan. But the headlong expansion of exchange-traded funds (ETFs), which by May this year controlled almost $1.5 trillion of assets (not far short of the $2 trillion in hedge funds), has become a matter for concern among financial regulators. Could ETFs be the next source of financial scandal, or even of systemic risk?" Characterizing the Financial sector "like a hyperactive child" that "can never leave a good thing be", The Economist appears to be wishing for the ETFs to be better regulated because "it would be a shame if reckless expansion spoiled a good innovation".
Albrecht Ritschl (web site / papers) of the London School of Economics says Germans should remember their status as postwar debtors when offering advice to Greece.
The Growth Ponzi Scheme, a series of five blog posts on the financial underpinnings (or lack thereof) of the American post-war development pattern. 1: The Mechanisms of Growth - Trading near-term cash for long-term obligations. 2: Case studies that show how our places do not create, but destroy, our wealth. 3: The Ponzi scheme revealed - How new development is used to pay for old development. 4: How we've sustained the unsustainable by going "all in" on the suburban pattern of development. 5: Responses that are rational and responses that are irrational.
David Mamet discusses free-market economists, studying Kaballah, Aristotle's conception of drama, Tennessee William's expensive habit, and his love for Sarah Palin. Oh, and his HBO movie about Phil Spector (whom he believes is innocent). Previously, previously, and previously.
The Washington Post asks: Can Mutants And Humans Really Co-Exist? Metafilter's own Mightygodking responds.
"The argument is straightforward: When less legal work is available, more illegal 'work' takes place. ... But there have long been difficulties with the notion that unemployment causes crime. " Author James Q. Wilson on crime, law enforcement and the economy.
The World Top Incomes Database (click on "Graphics" and select countries, years and other variables) (via)
The Age of Imperialism is over, but its impact remains, leaving behind a long-lasting legacy through cultural norms. Comparing individuals on opposite sides of the long-gone Habsburg Empire border within five countries, it shows that firms and people living in what used to be the empire have higher trust in courts and police.
The success of The Walking Dead, paradoxically, has left the network with an unusual dilemma. Like the executives of Mad Men’s Sterling Cooper Draper Pryce, AMC is facing an existential question: How do I grow my business without sacrificing who I am? The Zombies at AMC’s Doorstep. TL;DR version: How AMC Explains the Brutal Economics of Cable Television
New working paper by three economists estimates the psychological costs of war at between $1.5 and $2.7 billion. [more inside]
The McKinsey Global Institute has published "Internet Matters: The Net's sweeping impact on growth, jobs, and prosperity" [70 Page PDF or just the Summary]. "On average, the Internet contributes 3.4 percent to GDP in the 13 countries covered by the research an amount the size of Spain or Canada in terms of GDP, and growing at a faster rate than that of Brazil... For governments, investments in infrastructure, human capital, financial capital and business environment conditions will help strengthen their Internet supply domestic ecosystems." Found on Marginal Revolution where Tyler Cowen has a few interesting comments.
The Destruction of Economic Facts - "Renowned Peruvian economist Hernando de Soto argues that the financial crisis wasn't just about finance—it was about a staggering lack of knowledge" (via) [more inside]
Made in America: small businesses buck the offshoring trend - "For US manufacturing to make sense, factories must make extensive use of automation. That's getting easier, given that the cost of robots with comparable capabilities has decreased precipitously in the past two decades." [more inside]
Bitcoin is a peer-to-peer digital currency. Trading at eight dollars this week—and being used to pay for everything from freelance programming jobs to magic mushrooms—it has been described as “the most dangerous open-source project ever created” and “an unambiguous challenge to the government monopoly on the power to print money.” Estimated at over 20 petaFLOPS the Bitcoin network is currently the fastest virtual supercomputer in the world. [more inside]
PBS's excellent weekly news magazine, Need to Know, explains why European broadband speeds are racing ahead of the USA. Britain now has 400 broadband suppliers with service available for as little as $6/month. Bonus: Harvard's Berkman Center reports on broadband supply trends around the world.
A conservative billionaire who opposes government meddling in business has bought a rare commodity: the right to interfere in faculty hiring at a publicly funded university. [more inside]
In a pinch, upgrade the humans or redistribute the robots - "[S]uppose [as a factory owner] I replace all my workers with machines... This squeeze has many implications, one of them being that here is an important sector of the economy in which more or less all the gains accrue to the owners of capital and more or less none to the working class..." [more inside]
Furthermore, let’s remember that Alderaan isn’t gone. It’s just blown up. Suddenly all the metallic elements that were languishing away in the planetary core are floating around in the void, ripe for the plucking. And anyone who can plausibly claim to have owned them is dead. You can build a lot of Death Stars with that much tungsten. Well, not even a lot—but maybe one.The Overthinking It Think Tank takes a look at “the economic calculus behind the Empire’s tactic of A) building a Death Star, B) intimidating planets into submission with the threat of destruction, and C) actually carrying through with said destruction if the planet doesn’t comply.” [more inside]
Keynes v. Hayek Rap Battle: Round 2 (SLYT, about 10 mins) EconStories revives the econ beef to end all beefs. Previously. [more inside]
9 Things The Rich Don't Want You To Know About Taxes - "4. Many of the very richest pay no current income taxes at all: Paulson made himself $9 billion in fees in just two years. His current tax bill on that $9 billion? Zero... 9. Other countries do it better: no one in Germany or the rest of the modern world goes broke because of accident or illness" (via) [more inside]
Fareed Zakaria: Are America's Best Days Behind Us? - "We have an Electoral College that no one understands and a Senate that doesn't work, with rules and traditions that allow a single Senator to obstruct democracy without even explaining why. We have a crazy-quilt patchwork of towns, municipalities and states with overlapping authority, bureaucracies and resulting waste. We have a political system geared toward ceaseless fundraising and pandering to the interests of the present with no ability to plan, invest or build for the future. And if one mentions any of this, why, one is being unpatriotic, because we have the perfect system of government, handed down to us by demigods who walked the earth in the late 18th century and who serve as models for us today and forever. America's founders would have been profoundly annoyed by this kind of unreflective ancestor worship." [for/against]
Out of thin air? "Have you ever said something like 'Let me buy you a beer next week'? I'm sure you have. We all issue promises of this sort. And we frequently use such promises as a form of currency... I have just described a simple credit exchange. Societies rely heavily on promising-making and promise-keeping. It is the foundation of all financial markets. I'd like to point out something about the promises you make. They are made 'out of thin air.' " [more inside]
In a lecture entitled
The State of White AmericaCharles Murray, a W. H. Brady Scholar of the American Enterprise Institute and co-author of the controversial The Bell Curve, details the thesis of his upcoming book Coming Apart:
Over the last half century, the United States has developed a new lower class and a new upper class that are different in kind from anything America has ever known. The second contention of the book is that the divergence of America into these separate classes, if it continues, will end what has made America America.[more inside]