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    February 2011

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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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    Don't despair!

    By all means take a break. But as an entrepreneur similarly horrified by recent goings on, I really appreciate you writing about this. It's very heartening to know that I'm not crazy in my thinking that business can have (and perhaps must have) a moral foundation. Doubly so given your formal education in economics and your practical experience with small business.

    They say that for sailing students, the smaller the boat, the faster they learn. I think it's the same for businesses; running a small business in a small town let your ancestors see the true essence of commerce in a way that Blankfein, et al, never can. I hope you'll keep reminding people of the lessons they learned, as I think more of their spirit is the only way to return to sustainability and economic sanity.

    Happy holidays!

    Happy Holidays and come back soon. More than any other economics blogger you are able to go to the heart of issues and make us see the big picture.

    I've told my daughter who's a senior and about to go into economics to read you. Hope she does.

    Well, you've inspired at least one future economist. 4.0 after my first semester, and if my economics teacher could have given me a 5.0, he would have.

    Maxine, be sure and take that break. Nobody can deal directly with the dirt constantly, and your full life deserves your attention, and some peaceful time for sure.

    What you do in writing this weblog is I think very valuable. I know I've both learned from your take on matters, and in finding the level of caring.

    I have the sense that we will invent our way out of the current pickle, and not by any direct things that happen because corps or choruses define them.

    This is throw-back to the lessons of communities, and certain history as well. I'm not sure yet exactly how much difference it makes, but we actually do have a lot of tools in the shed this time.

    Best to you and yours,

    p.s. you've gotten one of your big rewards in the post just above mine ;)

    Maxine, I understand your need to take a break and you are entitled. However you will be missed. Your blog has been refreshing. It raised my hope that perhaps this lost-it's-way economics profession that we have chosen might find it's way back to what matters again.

    Good luck on the grant.

    I hope that after a well earned rest and a pause for other work you will return. Your ability to enable us to see the moral dimensions of economic issues is remarkable and valuable.

    Take a break but come back. You have a unique voice and gift in explaining technical concepts within a framework that sees economics as tool to advance the welfare of society...welfare that must be inclusive.

    Beautiful and well-said, Maxine! Tis a strange world after all. I have linked it in my own writing today. Good luck to you in the new year.

    Thank you for your moral clarity and practical focus.

    When I first read the Meditations of Marcus Aurelius, I was stunned by the similarities to people, actions and circumstances in the 1969 USA.

    What I have carried with me is the certainty that all material changes will require structures and processes (?incentives) that do not require people to undergo fundamental change. The passions that drove the Romans ~ 150 still drive us today. Discouraging but also encouraging if we view the long term trends. Optimism may require us to step outside our slice of history, do the yeoman's work for later generations' benefit and have faith that narrow self-seeking over a truncated horizon will be held somewhat in check.

    I have difficulty believing this, but I am willing to accept it on faith.

    Maxine, love the blog, and wish you and yours the best for the holidays.

    While you're spending the time off thinking, I'd like to seriously suggest you consider either reading Marx and/or looking at becoming a full fledged socialist/communist.

    Take a break and come back. Yes, a lot of this seems as though it does not make a difference, but it all adds up. Few write as well as you about the intersection between economics and moral behavior.



    Thank you for your compassionate, clear, and non-technical explication of the state of our political economy.


    I want to thank all of you for the very kind comments and encouragement. rl is right. Barefoot Bum's news was the best holiday gift an educator can ever receive. Thank you, BB. M. Gauthier, I hope your daughter learns and benefits from anything I write. Thank you for the recommendation. Jim, nice to hear from a kindred spirit. And thanks to the rest of you (and those readers who don't comment) for reading and for taking the time to provide thoughtful comments. I don't always have time to respond, but I assure you that I think about everything that is said. It often shapes future blogs or gives me new perspectives. Many, many thanks and Happy New Year to you all.

    Nice to post this article & sharing.

    The comments to this entry are closed.

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