Recovery & Offshoring:
Galbraith’s “second caveat” makes sense when you think about it. Recessions tend to take out the least cost-effective producers of goods & services, who are less able to cut costs IOT deal w/ downturns, and instead go BK. In our current environment, many domestic US producers are the least cost-effective – is partly due to low productivity & management flaws, but also due to higher labor costs – and so it’s unsurprising that they get taken out (e.g., Big Three). The downside to this, of course, is that this further erodes our industrial base, leaving us more dependent on imports post-recession.
The obvious counter to this trend would be tariffs, so that even the better-run foreign companies that might otherwise dominate our markets via imports would at least be required to establish US-based production facilities if they wanted to sell in the US market (since tariffs would make it too costly to import from their factories, etc., overseas).
Success, Luck, Pay, & Entitlement:
People born with good genes and raised in nurturing families can claim little moral credit for their talent and industriousness. They were just lucky. And they are vastly more likely to succeed than people born without talent and raised in unsupportive environments.
The real problem with investment bankers goes deeper, and is the problem of the entire upper middle class: we have come to believe that complying with the rules produces excellent results as by some natural law. In school, if you do your work, teacher gives you an A. It comes to seem like a sort of a natural law: if you have a good education and work hard, the universe is supposed to reward you. After school, the upper middle class gravitates towards careers with very well defined advancement hierarchies: medicine, law, finance, consulting, where this subtle belief is constantly reinforced.
Anyone who has a halfway decent job is incredibly lucky–and yes, journalists and academics, complaining that it isn’t fair you don’t get paid much, that includes you. If your IQ had been forty points lower, or Mom had been on drugs, or you’d been born in Africa, you’d be spending your days doing hard, disgusting manual labor. The difference in utility between your salary and an investment banker’s is trivial compared to the difference in utility between your salary and a Bangladeshi farmer’s.
Workable Torture: “…arguing that something doesn’t work isn’t necessarily an argument for not doing it–it could just as easily be an argument for improving our technique. And if advances in brain scanning research let us develop a reliable lie detector, as seems possible in the relatively near future, then torture will work very, very well.”
Death of the Asian Development Model: The wages (ahem) of frugality & underconsumption taken to the extreme.
One upside of the swine flu scare: it yielded plenty of decent explanations of the economic effects of pandemics.
Distance Education Watch: More quality lectures available online
New Orleans & Flood Risk: “Levees and floodwalls surrounding New Orleans — no matter how large or sturdy — cannot provide absolute protection against overtopping or failure in extreme events…The voluntary relocation of people and neighborhoods from areas that are vulnerable to flooding should be considered as a viable public policy option.”
Rating Agencies Replacements: Note that the data being provided could also be used to estimate the values of mortgage-backed securities & the like.
FDIC Payouts: What happens when a bank is _really_ screwed up.
Friendship & Economics: Methinks I shift between these two categories, depending on how well I know a person. The key, for me, is figuring out whether the person in question is likely to screw me over. If so, then at best they’ll remain a “flow”. If not, and I enjoy their company, then they’ll probably end up a “stock”. In the latter case, the dictum “Never attribute to malice what can be adequately explained by incompetence” sometimes comes in handy. Probably everyone I know starts out as a “flow”; promotion to “stock” status only comes w/ experience….
Kaplan on Geopolitics: Robert Kaplan on the future of Eurasia (in particular). Not entirely sure I agree w/ his take, but it’s an interesting read.
Mankiw v. Liquidationism: Wow, and I thought liquidationism discredited. Apparently not….
Risk Communication: Thoughts on how to get people to pay attention to the risk of low-probability, high-cost events (e.g., epidemics).
Higher Education Reform Watch: Ending graduate education as we know it. Not sure how well his proposed replacement would work, though….
Torture Prosecutions: Possible barriers thereto.
Waterboarding Executions: Yes, we did execute for waterboarding…sorta.
Mental Cupboard: Guestimated measures of people’s average vocabulary.
US v. Soviet Imperialism: Why US imperialism was less worse than Soviet imperialism.
Colony Collapse Disorder Cure: A very encouraging result. Let’s hope it holds up….
Postmodern Dating, Online Edition
Statsguy on “Too Big to Fail”
California Default & the Muni Bond Market
California Default Redux