Is Krugman Too *Optimistic* About the Economics Discipline?
September 07, 2009
So I think I agree with pretty much every point Paul Krugman makes in yesterdays' Times magazine about where economics went off the rails. Including his big prescriptive point: Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system. If the profession is to redeem itself, it will have to reconcile itself to a less alluring vision — that of a market economy that has many virtues but that is also shot through with flaws and frictions. The good news is that we don’t have to start from scratch.
September 07, 2009
WASHINGTON -- President Obama's health care speech on Wednesday will be only the second most consequential political moment of the week. Judged by the standard of an event's potential long-term impact on our public life, the most important will be the argument before the Supreme Court (on the same day, as it happens) about a case that, if decided wrongly, could surrender control of our democracy to corporate interests. This sounds melodramatic. It's not.
The Danger of Rejecting Compromises
September 03, 2009
Earlier this year, a group of former Senate Majority Leaders--Howard Baker and Bob Dole, along with Tom Daschle--released a template for bipartisan health reform. They did so through the Bipartisan Policy Center, which they'd established along with George Mitchell (who subsequently left to join the Obama administration). The reaction from liberals was lukewarm, at best. And I shared the ambivalence.
Numbers That Should Disturb, But Not Surprise, You
September 02, 2009
Seven hundred billion dollars may seem like a lot of money. But when it's spread out over ten years--and you're using it to pay for health care reform--it really isn't. It costs money to put people on Medicaid. And it costs money to subsidize private insurance for people who can't afford premiums on their own. Spending enough to make sure every American, or close to every American, has health insurance would push the price tag of reform to over $1.5 trillion, if done properly. Anything less and you have to start cutting back. You offer lower subsidies.
Is Modern Finance Like Junk Food?
September 01, 2009
Is modern finance more like electricity or junk food? This is, of course, the big question of the day. If most of finance as currently organized is a form of electricity, then we obviously cannot run our globalized economy without it. We may worry about adverse consequences and potential network disruptions from operating this technology, but this is the cost of living in the modern world. On the other hand, there is growing evidence that the vast majority of what happens in and around modern financial markets is much more like junk food--little nutritional value, bad for your health, and a h
September 01, 2009
The Constitution in 2020 Edited by Jack M. Balkin and Reva B. Siegel (Oxford University Press, 355 pp., $19.95) There is a genre, the "constitutional manifesto," that sits uneasily between the scholarly or theoretical analysis of constitutional law and the buzzwords of day-to-day constitutional politics. The latter category may be nicely illustrated by the competing slogans of interest groups contesting the Sotomayor nomination: "judicial activism," "empathy," and so on.
Implementing ARRA--Another Way to Gauge Stimulus Success
August 31, 2009
With the President Obama’s $787 billion stimulus package (aka, the American Recovery and Reinvestment Act or ARRA) six months old now, it's fair to ask like everybody else is: How’s it working? One way to decide is to simply count the jobs created and jobs preserved. And on that front the commentariat has been quick to pronounce.
August 27, 2009
Bernanke feels your pain: the chairman falls prey to identity theft. Fed may not spend all $1.25 trillion set aside for mortgage securities. Society won't necessarily benefit from a post-finance job market. An argument against the banning of flash-trades? Another defense of the Taylor Rule by its creator. Has the placebo effect become more powerful?
Do Markets Increase Trust?
August 27, 2009
What's the relationship between markets and morality? The standard assumption is that markets have little impact on the moral character of people who operate within them. But it doesn't look like that's necessarily the case. Patrick Francois and Tanguy van Ypersele studied what happened to people's level of "trust in others" in states that deregulated their financial sectors in ways that increased competition. Trust can be considered a moral attribute, and given what's happened in the subprime market, you'd think that deregulation might lead to a drop in trust.
The Economic Storm Ahead
August 26, 2009
With the near-simultaneous release this morning of CBO's updated Budget and Economic Outlook and OMB's Mid-Session Review, we have the most detailed economic analyses and forecasts we are likely to see for the rest of the year. If the consensus these documents represent is in the ballpark, the country and the Obama administration are in for a rough ride.