China as Consumer?
September 29, 2009
There’s a growing consensus that the U.S. needs to export more, and import less. The basic argument here is that huge recent imbalances between the consumption-mad U.S. on the one side and exporting China, Japan, Germany, and the Persian Gulf on the other can’t go on and that we need to “rebalance” the global economy. And it sounds good, especially when Larry Summers says it. The only problem is, it’s not clear to whom we would do all this new exporting.
Larry Summers Blogs (!) About Innovation
September 21, 2009
Last month I wrote a piece noting (a la Paul Krugman) that it was tough to see where growth would come from absent some technological breakthrough that attracted a wave of business investment. I went on to argue (not a la Krugman) that the imperative for such a breakthrough was so strong we might want to consider something as crude as industrial policy to expedite the process. At the time, I conceded that the White House appeared to be thinking along similar lines, if not quite as ambitiously as I'd prefer.
Call of the Wolf
September 16, 2009
Long before Martin Wolf became the chief economics columnist for the Financial Times, he wrote the newspaper letters--lots and lots of letters. It was the early 1980s, the height of the Thatcher era, and Wolf was running research at a think tank in London that was sympathetic to the government's pro-trade agenda.
Innovation: The Way Forward?
September 14, 2009
With speeches by White House economic advisor Larry Summers on Friday and President Obama today on Wall Street, the Obama administration is moving from triage as the chief aim of economic policy to recovery. Which is good: The job picture remains dismal, and many economists now assume any recovery will feature weak hiring and strong productivity growth as it did from 2001 to 2003. No wonder a lot of people are asking: From where will the next round of high-quality growth come? Which brings me to my answer: The next round of high-wage growth will come from metropolitan areas.
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.
August 26, 2009
California is auctioning items on eBay to raise funds. What Bernanke's reappoinment means for Larry Summers. Cowen, Thoma, DeLong, Reinhart, and Galbraith on Bernanke's future. Why the health insurance market isn't competitive right now. Expats from the UK are heading home.
The Logic of Reappointing Bernanke
August 24, 2009
The big news from Martha's Vineyard is that Obama is appointing Ben Bernanke to a second term as Fed chairman. I've explained before why I think this is a good idea--Bernanke has been creative, even highly unorthodox, at precisely the moment when the economy demanded these qualities from the Fed, and when a conservative, by-the-book approach would have likely sent us into a depression.
August 12, 2009
Should Tim Geithner's Wall Street consigliere make us queasy?
After Peak Finance
July 24, 2009
There are three kinds of "bubbles"--a term often used loosely when asset prices rise a great deal and then fall sharply, without an obvious corresponding shift in "fundamentals." A short-run bubble. Think about 17th century Dutch Tulip Mania: spectacular, probably disruptive, but not a major reason for the decline of the Netherlands as a global power. A distorting bubble. In this case, the increase in asset prices contributes to a reallocation of resources across sectors. Think of the Dot-com Bubble: fortunes were made and lost, the collapse was scary to many, and--at the end of the day--you'
Jamie Dimon Vs. Larry Summers
July 19, 2009
Jamie Dimon has won big. JP Morgan Chase now stands alone, both in financial position and political clout--including special access to the White House and, as explained in today's NYT, Rahm Emanuel's likely attendance at his next board meeting tomorrow. Dimon's semiotics have been brilliant throughout the crisis--it wasn't his fault, he was forced to take TARP money, and--in phrasing that will make the history books--bankers should not be "vilified." But now he has a problem. Larry Summers forcefully stated Friday that high recent profit levels for big banks (i.e., JPMorgan and Goldman) are b