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    Maxine's Essays

    • 21st Century Regress
      Sometimes it seems like the world is going to hell and there's absolutely nothing a girl economist can do about it.
    • What Exactly Are We Crowding Out?
      The current economic downturn isn't a random draw of a black ball from an urn containing white balls and black balls. There's no sampling distribution. Very specific policies and actions landed us here. Now we must decide not only what policies need to be put in place to prevent it happening again, but also what policies would best drive us out of the ditch faster and sustainably.
    • I Wish It Were Only Butter
      We should be giving up some butter if we must. We should not give up education or health investment (or infrastructure or the environment (hello, BP). They may be the only legacies of any value that we pass on to our children and grandchildren.
    • Rational Health Investment?
      The obvious "market solution" is to improve the long run return on investments in health among the disadvantaged through meaningful and effective publicly funded education. The obvious short run "market solution" is to reduce the costs of investment and the shadow price of health for the disadvantaged by providing health insurance cover and reduced out-of-pocket costs.
    • The Socrates Parameter
      To the extent that our limbic systems respond to such engineering by over-riding the judgment of our frontal lobe and to the extent that our frontal lobe is deprived of the information it requires to make a rationally self-interested judgment, we are not only pigs and fools, we are slaves.
    • The Economic Rewards of Virtue
      If individual virtue tempers our "piggy" desires and conditions our choices to something that is both individually and socially better, then the economic rewards of virtue as embodied in and promoted by societal norms and institutions are far greater than we have ever suspected. As economists, we would do well to recognize this when we teach U max.
    • The Market for Morals
      Markets then are places where more is exchanged than goods and services, labor and product, credit, and interest. They are places where we also develop the personal virtues of temperance and prudence and the social virtues of benevolence and justice. When they function well, they produce trust, loyalty, and sympathy among those who trade there.
    • Post-Modern Applied Economics: It’s the Error Term, Stupid
      Maxine believes it’s time to refocus attention and discussion on the error term. It is often where much of the action is in our models. It is where unexpectedly catastrophic events dwell resulting in fat tails. It is where our animal spirits manifest and cause us to do the right thing or the wrong thing or the thing everyone else is doing rather than the self-interested, fully-informed rational thing. It is where God and miracles and chance dwell.
    • Intergenerational Win-Win: Health Insurance, Education, Environment, Infrastructure
      So when we’re talking about fiscal stimulus packages and we’re borrowing from our grandchildren to finance them, we should be thinking about how to use stimulus monies to create value for those grandchildren AND stimulate our economy.
    • Short-term Private Payoffs, Long-term Social Costs
      The real health reform discussion, the one we should be having, is “What must we do to create a health system that is both efficient and fair?” The answer will almost certainly include relegating the private sector to markets where market forces or regulation are effective at aligning short-term private incentives and goals with long-term societal interests. If such markets are scarce or non-existent in health, then the private health sector will be of limited value.
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    « More Mismanaged Risk? | Main | Private Sector "Make Work" Jobs? »

    06/03/2010

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    Is it a waste of their time to take someone who is otherwise unemployed and pay them to do such work, especially if it provides us with something of long-term value and them with earned income? better educated kids and safer streets and highways.
    Thanks ..

    I live in Oakland and have spent considerable time guiding tours in Yosemite. In Oakland, we have an amazing park system (shh...don't tell anybody, I'd hate for Oakland to get popular and expensive like SF), and nearly every time I'm in the park system I see some plaque or monument saying how a particular trail or water diversion or recreation facility was built by the WPA. In Yosemite, again, a huge number of trails and park facilities were built by the WPA.

    If somebody were to estimate how many lives have been improved by these "make-work" projects, the number would run high into the millions. I can't think of anything I use in my daily life that was created by private enterprise during that period. That's not to say private enterprise doesn't do anything of value--but private projects do tend to have a much shorter payback period. Government projects generally have a tremendously longer period of return...and we've been badly neglecting these projects for decades now. I can't understand how people think projects that will benefit millions of people for many decades to come are "make work."

    For some reason or another no one demanded proof that tax cuts for the wealthy would help the economy. We tried that. It didn't work. We had a lost decade, and we're in the hole. It's time to try something else. Not doing anything is trying something else, but not doing anything has a pretty bad record for getting the economy going.

    Exactly my perspective. This compulsion to keep 10% of the workforce idle just seems bizarre to me. There is plenty of public infrastructure work that most everybody would agree needs doing. Potholes. Unsafe bridges. Worn out roads. Why not pile on those no-brainer projects and just get them done now and take care of unemployment at the same time? Instead, local governments are cutting back on basic infrastructure work to balance budgets decimated by the recession and we are getting further behind on our infrastructure while millions stand idle.

    If we, as a nation, continue to make brain-dead choices because of politics and ideology it is only a matter of time before we are eclipsed by China, who cheerfully went all in on fiscal stimulus over a year ago and are already back to strong growth.

    The comments to this entry are closed.

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