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19 Nov 09
Daron Acemoglu | Esquire: Creating a World Without Poverty
How do we know that institutions are so central to the wealth and poverty of nations? Start in Nogales, a city cut in half by the Mexican-American border fence. There is no difference in geography between the two halves of Nogales. The weather is the same. The winds are the same, as are the soils. The types of diseases prevalent in the area given its geography and climate are the same, as is the ethnic, cultural, and linguistic background of the residents. By logic, both sides of the city should be identical economically. And yet they are far from the same.
17 Nov 09
Advanced NFL Stats: Belichick's 4th Down Decision vs the Colts
New England coach Bill Belichick is taking a lot of heat for his decision to attempt a 4th down conversion late in the game against the Colts. Indianapolis came back to win in dramatic fashion. Was the decision a good one? ...
Statistically, the better decision would be to go for it, and by a good amount.
16 Nov 09
Niall Ferguson - The Great Wallop - NYTimes.com
Intervening in the currency market served two goals for China: by keeping the renminbi from rising against the dollar, it promoted the competitiveness of Chinese exports; second, it allowed China to build up foreign currency reserves (primarily in dollars) as a cushion against the risks associated with growing financial integration, painfully illustrated by the experience of other countries in the Asian crisis of the late 1990s. The result was that by 2000 China had currency reserves of $165 billion; they now stand at $2.3 trillion, of which at least 70 percent are dollar-denominated.
Paul Krugman - World Out of Balance - NYTimes.com
Indeed, the 2008-9 plunge in world trade was one for the record books. What it mainly reflected was the fact that modern trade is dominated by sales of durable manufactured goods — and in the face of severe financial crisis and its attendant uncertainty, both consumers and corporations postponed purchases of anything that wasn’t needed immediately. How did this reduce the U.S. trade deficit? Imports of goods like automobiles collapsed; so did some U.S. exports; but because we came into the crisis importing much more than we exported, the net effect was a smaller trade gap.
11 Nov 09
Tomorrow's burden (public debt) | The Economist
AS AMERICA’S financial crisis recedes, the rumblings of its next crisis can be heard. The federal government has wrapped its guarantees around banks and the housing market. It has borrowed hundreds of billions of dollars to stimulate the enfeebled economy, while tax revenues crumble. And in the years to come the cost of retirees’ benefits will explode. “There is every reason to worry that the banking crisis has simply morphed into a long-term government-debt crisis,” says Kenneth Rogoff of Harvard University.
10 Nov 09
Anil K. Kashyap and Frederic S. Mishkin: The Fed Is Already Transparent - WSJ.com
Economic theory and massive amounts of empirical evidence make a strong case for maintaining the Fed's independence. When central banks are subjected to political pressure, authorities often pursue excessively expansionary monetary policy in order to lower unemployment in the short run. This produces higher inflation and higher interest rates without lowering unemployment in the long term. This has happened over and over again in the past, not only in the United States but in many other countries throughout the world.
09 Nov 09
Leonhart: If Health Care Is Going to Change, Dr. Brent James's Ideas Will Change It - NYTimes.com
James’s answer to such skepticism — and there is a lot of it, especially beyond Intermountain — is to show results. Intermountain has reduced the number of preterm deliveries, as well as the number of babies who must spend time in the neonatal-intensive-care unit. So-called adverse drug events, which include overdoses and allergic reactions, were cut in half in the mid-1990s. A protocol for dealing with one broad category of pneumonia cut its mortality rate by 40 percent over several years. The death rate for coronary-bypass surgery was cut to 1.5 percent, from the national average of about 3 percent. Medicare data on heart-failure and pneumonia patients show that Intermountain has significantly lower-than-average readmission rates. In all, James estimates that the changes have saved thousands of lives a year across Intermountain’s network. Outside experts consider that estimate to be fair.
03 Nov 09
Crisis Compels Economists To Reach for New Paradigm - WSJ.com
The pain of the financial crisis has economists striving to understand precisely why it happened and how to prevent a repeat. For that task, John Geanakoplos of Yale University takes inspiration from Shakespeare's "Merchant of Venice."
The play's focus is collateral, with the money lender Shylock demanding a particularly onerous form of recompense if his loan wasn't repaid: a pound of flesh. Mr. Geanakoplos, too, finds danger lurking in the assets that back loans. For him, the risk is that investors who can borrow too freely against those assets drive their prices far too high, setting up a bust that reverberates through the economy.
What the Last Meal Taught Him - NYTimes.com
“Just to sit with your father and have a beer and smoke a cigar, that is really important,” Mr. Keller said. ... On a soft spring evening in 2008, one of the world’s great chefs set about making the old man’s favorite dinner one last time: barbecued chicken. He used bottled sauce and served the chicken alongside mashed potatoes moistened with warm half-and-half and collard greens braised in butter and bacon fat.
28 Oct 09
FT.com / Columnists / Martin Wolf - How mistaken ideas helped to bring the economy down
The era when central banks could target inflation and assume that what was happening in asset and credit markets was no concern of theirs is over. Not only can asset prices be valued; they have to be. “Leaning against the wind” requires judgment and will always prove controversial. Monetary and credit policies will also lose their simplicity. But it is better to be roughly right than precisely wrong. Pure inflation targeting and a belief in efficient markets proved wrong. These beliefs must be abandoned.
27 Oct 09
Charter Cities: Rules and Culture: Corruption in Hong Kong
According to Transparency International’s corruption index, corruption is “sticky.” Over time corrupt countries tend to remain corrupt, while clean countries remain clean. This makes it tempting to lean on cultural interpretations to explain the persistence or absence corruption.
Hong Kong provides a compelling counterexample, showing that a change in rules can defeat a culture of corruption. Though it once had high levels of corruption, comparable to those in mainland China in the 1970s, the British government was able to effectively banish corruption. In 1977, 38% of the population thought that corruption was widespread, by 1982 only 8% did.
20 Oct 09
SPACEWAR - by Stewart Brand - Fanatic Life and Symbolic Death Among the Computer Bums.
Rolling Stone, 7 December 1972 -- The first "Intergalactic spacewar olympics" will be held here, Wednesday 19 October, 2000 hours. First prize will be a year's subscription to "Rolling Stone". The gala event will be reported by Stone Sports reporter Stewart Brand & photograhed by Annie Liebowitz.
13 Oct 09
Paul Romer | Skyhooks versus Cranes: The Nobel Prize for Elinor Ostrom
Most economists think that they are building cranes that suspend important theoretical structures from a base that is firmly grounded in first principles. In fact, they almost always invoke a skyhook, some unexplained result without which the entire structure collapses. Elinor Ostrom won the Nobel Prize in Economics because she works from the ground up, building a crane that can support the full range of economic behavior.
11 Oct 09
John Cassidy: Capitalism and financial crashes : The New Yorker
On June 10, 2000, Queen Elizabeth II opened the high-tech Millennium Bridge, which traverses the River Thames from the Tate Modern to St. Paul’s Cathedral. Thousands of people lined up to walk across the new structure, which consisted of a narrow aluminum footbridge surrounded by steel balustrades projecting out at obtuse angles. Within minutes of the official opening, the footway started to tilt and sway alarmingly, forcing some of the pedestrians to cling to the side rails. Some reported feeling seasick. The authorities shut the bridge, claiming that too many people were using it. The next day, the bridge reopened with strict limits on the number of pedestrians, but it began to shake again. Two days after it had opened, with the source of the wobble still a mystery, the bridge was closed for an indefinite period.
08 Oct 09
Martin Feldstein - A Better Way to Health Reform - washingtonpost.com
Here's a better alternative. Let's scrap the $220 billion annual health insurance tax subsidy, which is often used to buy the wrong kind of insurance, and use those budget dollars to provide insurance that protects American families from health costs that exceed 15 percent of their income.
07 Oct 09
Clay Shirky: Let a thousand flowers bloom to replace newspapers; don’t build a paywall around a public good » Nieman Journalism Lab
NYU professor and Internet thinker Clay Shirky gave a talk Tuesday at the Shorenstein Center on the Press, Politics and Public Policy, our friends just on the other side of Harvard Square. His subject was the future of accountability journalism in a world of declining newspapers.
Andrew Ross Sorkin's 'Too Big to Fail' | vanityfair.com
With the implosion of Lehman Brothers, in September 2008, the realization dawned: Morgan Stanley and Goldman Sachs could be next. In an excerpt from his new book, the author reveals the incredible scramble that took place—desperate phone calls, seat-of-the-pants merger proposals, flaring tempers—as Washington got tough and Wall Street titans Lloyd Blankfein and John Mack fought for survival.
02 Oct 09
Raghuram Rajan | FT.com - More capital will not stop the next crisis
The minimum hurdle that reforms should meet is whether they would have prevented the last crisis. Any feasible level of required capital would not cross this hurdle, so let us not rely too much on it to avert the next crisis.
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