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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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    12/16/2010

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    Comments

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    Absolutely right - except you didn't have enough emphasis on the fear.

    The ADF rules you with fear only if you care about the association and their competitions. One can easily move on to tango or Lindy Hop or square dancing and gain skill and admiration in those areas.

    But in the dance federation of commerce, where do you go? To live comfortably, you must engage the monetary system. Oh, one could live like the raggle-taggle gypsies, always at risk, never at peace. Neither of these choices is freedom, and even the comfortable one is not truly a choice, since it is only open to a fraction of the population.

    In a utopia I toy with now and then, the whole country has a festival tied to an eleven year cycle, where all currency is thrown in a bonfire one summer night, and not replaced till the following year, with new, redesigned currency. (You can keep the old stuff, it just isn't negotiable anymore.)

    The purpose is to press all the air out of real wealth, to take the wind out of the sails of the rent seekers. The eleventh year is when each community really knows who their friends are and what real bounty they have provided for others.

    Noni

    Outstanding comment.

    I wonder, sometimes, why the logic of the zero-sum game does not impress itself upon the public mind more, when the increasing proportion of national income and wealth flowing to the very, very few, comes up. There seems to be a very common inability, across much of the political spectrum, to connect the dots that lead from income distribution issues, to the increasingly predatory conduct of banks and health insurance companies and other corporations, and back to the increasingly authoritarian state, being built in our politics, as you say, by fear.

    The Left could really use a demagogue right now: someone, who could say to parents with teenage children wondering how anyone could afford $15,000 for health insurance and $20,000 for a year of college, while staying current on credit cards charging 18+% and an underwater mortgage, while working, if lucky, a job, where wages are stagnant or declining, that Social Security is "going broke" only in the sense that Rich people and powerful corporations do not want to pay taxes.

    Your insight about "fear" seems especially apropos during the enactment of the Hostage Tax Cut Extension. Our politics do seem to be driven by an unreasoning fear of crashing The System, as if the The System is not oppressing us.

    There really is a sense in which the the Economy of the post-WWII era is completely played out. The remaining foundation of economic rents is little more than rapidly eroding beach sand, and the tide is coming in. The U.S. is perched on top of a high dune, and anywhere it goes from here will carry it down from those heights; we will lose our privileged positions as hegemon or technological leader or whatever, but we will lose those advantages very soon, no matter what. But, instead of using the remaining advantage of height, to see where we could go, and to go, we wait, paralyzed, for the tide.

    Maxine

    Nice post. I'd extend it a bit - not all "controllers" are rent-seekers. The dance we are all moving in is an old and complex one, with none of us fully aware of the whole pattern or all the possible moves. Duty, honour, obligation, compassion need their guardians and exemplars - and these are part of the pattern too (Jane Jacobs explores some of this very well). And if they must be there, they must be paid for.

    We have dismantled a good deal of authority over the last few decades on the grounds that we did not need them, or that they just got in the way of wealth-creation. Sometimes it was true. Sometimes - like the older university or banking traditions, I think we lost more than we gained.

    The dance goes on, but who now sets the pace and pattern?

    The comments to this entry are closed.

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