Differences in Ability and Quality of Teaching

Eric Rasmusen says: "I hear lots of complaints from professors that it is hard to teach a class because the students differ so much in ability. It is easier to teach all smart students or all stupid students than a mix, which is one reason required courses are tougher to teach— they get a random sample of abilities".

Stocks Have Worst Day Since 9/11 Attacks

"Stocks had their worst day of trading since the Sept. 11, 2001, terrorist attacks Tuesday, hurtling the Dow Jones industrials down more than 400 points on a worldwide tide of concern that the U.S. and Chinese economies are stumbling and that share prices have become overinflated". Read the remainder of the article here.

Greenspan Forecasts a Recession

Former U.S.Federal Reserve Chairman Alan Greenspan warned Monday that the American economy might slip into recession by year's end.

Life and Times of Milton Friedman

Remembering the 20th century's most influential libertarian by Brian Doherty published in Reason.

Slavery

The Economist published a confusing and badly written article on Slavery. However it makes a correct point when it acknowledges African participation in the institution of slavery: "A smokescreen still covers the African role in this pernicious trade. It is an awkward fact that the traffic could not have existed without African chiefs and traders. Europeans rarely went far from their forts; slaves were brought to them. Indeed, when the Europeans arrived the slave trade and slavery were already integral parts of local tribal economies. One of the few Ghanaian historians to touch these issues, Akosua Adoma Perbi, writes that “slavery became an important part of the Asante state [the Gold Coast's most powerful] right from its inception. For three centuries, Asante became the largest slave-trading, slave-owning and slave-dealing state in Ghana.”"

Mankiw and Reich

Mankiw criticizes Robert Reich for his economic non-sense: "Robert Reich says that, as a requirement for free trade deals, we should tell developing countries to "set a minimum wage that's half their median wage." The proposal raises two questions in my mind:1. Does Reich pay his nanny, cleaning person, and gardener more than half the median wage of members of his family?2. If not, should I refuse to buy his books?"

Tom Schelling and Michael Spence

A conversation between two Nobel Prize winners:Tom Schelling and Michael Spence

The Health Insurance Crisis

There are scores of people without health insurance in the U.S. . For instance, in New Jersey "About 15 percent of the population, or 1.4 million people, has no health insurance and little access to preventative care. Instead, the state pays nearly $1 billion a year to hospitals, which are required to treat the uninsured when they show up at emergency rooms with critical, not-so-critical and chronic illnesses. Hospitals say the reimbursement is insufficient. Many of them operate in the red". Mark V. Pauly, a Wharton School professor, analyzes the issue in a series of articles here .

Marketing Pizzas to Hispanics

The essence of capitalism is creativity. Consider the success of Pizza Patrón: " it has expanded to 61 locations in just a few years; same-store sales for the final quarter of 2006 (before the “Pizza por pesos” promotion began) were up an impressive 35 percent over the year before. Usually restaurants that focus on a particular ethnic group serve food associated with that demographic, and one of the first things people ask Antonio Swad, Pizza Patrón’s founder, is whether there’s something particularly (or maybe stereotypically) Hispanic about his pizza. Does he use habanero peppers and cilantro? The answer is no. Apart from offering chorizo as a topping, the pizzas are pretty much what you’d expect from any pizza place". Read the article here

A Cybernetic Arms Race

"At the Naval Network Warfare Command here, U.S. cyber defenders track and investigate hundreds of suspicious events each day. But the predominant threat comes from Chinese hackers, who are constantly waging all-out warfare against Defense Department networks, Netwarcom officials said". See the rest here.

Friedman and Blogs

"While 99.9% of blogs will be read only by their authors and three buddies, possibly coerced, quality asserts itself quickly and rises to the top. With no editorial straitjacket on the information or the quality of offerings, the consumer chooses by his action (reading—or not; spreading the word—or not, linking—or not) what makes a quality product. The “blogosphere” is like a little experimental universe validating consumer choice vs. regulation—and consumer choice has won a colossal victory. Trial and error may not help find the right surgeon, but it seems to be a great way to find your right media diet. By and large, blog consumers have shown an incredible sense for quality and reliability". See the rest of the article here.

Hayek and Fusionism

Is it possible to to combine libertarianism and conservatism into a unified political philosophy and program? Edward Feser analyzes this question.

Tyler Cowen on Hayek

Here is a short essay on Hayek written by Tyler Cowen.

What Magic is Holding up the Dollar?

Kenneth Rogoff writes on why the dollar hasn’t crashed yet:"As long as the status quo persists, with strong global growth and stunning macroeconomic stability, the US can continue to borrow and run trade deficits without immediate consequence. Over time, the dollar will still decline, but perhaps by no more than a couple of percent per year. Nevertheless, it is not hard to imagine scenarios in which the dollar collapses. Nuclear terrorism, a slowdown in China, or a sharp escalation of violence in the Middle East could all blow the lid off the current economic dynamic.

In principle, one can also think of scenarios in which the dollar shoots up, but overall these seem less likely. In sum, the fact that the US trade balance has defied gravity for so many years has made it possible for the dollar to do so, too. But some day, the US may well have to pay the bill for its spendthrift ways. When that day arrives, Americans had better pray that their creditors will be as happy to accept dollars as they are now". Read the article here.

Lucas on Growth, Poverty and Business Cycles

Listen the podcast with the Nobel Prize winner Robert Lucas Jr. on Growth, Poverty and Business Cycles
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The Publication History of the The Road to Serfdom

See the excerpt from Bruce Caldwell’s introduction to The Road to Serfdom: Text and Documents—The Definitive Edition by F. A. Hayek.

Edmund Phelps' Contributions to Economics

On Edmund Phelps' contributions to modern economics.

Interrogating Inequality

What type of inequality do we talk about when we talk about inequality?

Guinea-Bissau: Fears of an Emerging Narco-State

Guinea-Bissau ranks fifth to the last on the United Nation's human development index as it struggles to recover from a brief civil war that ended six years ago. With observers agreeing that political tensions could again spark violence, donors are reluctant to provide assistance, and thus the government remains under-funded and ineffectual.

"As the state is unable to control its own territory, traffickers can operate undetected," Mazzitelli said

The European Economy since 1945

A review of Barry Eichengreen's book "The European Economy since 1945: Coordinated Capitalism and Beyond", from economicprincipals.com.

The Inevitable Collapse of China's Banks?

For Nicholas Vardy, the answer is yes. He says: "Chinese megabanks aren't even banks -- at least not the way we understand them. Carved out of the old Communist banking system just over 10 years ago, the state-owned banks' role has been to bankroll the government's massive infrastructure projects and to keep otherwise bankrupt state-owned enterprises [SOEs] afloat. As arms of the Communist government, Chinese banks have had no incentive to learn the disciplines of basic banking. Conversely, loan applicants never had to cobble together a business plan to get a loan -- or suffer the negative consequences of failure.

That's why it's no surprise that Chinese state-owned banks are a commercial disaster. The Chinese government has pumped over $434 billion to bail them out -- just since 1998. That's more than the GDP of banking giant Switzerland. The U.S. Savings & Loan scandal of the early 1990s cost to the U.S government barely registers in comparison. Add to that the estimated $358 billion in bad loans that China's four-largest banks officially have on their books today, and something smells rotten in Shanghai".
Read the rest of his article here.

Economic Idiocy

Only in France such stupid economic decision can happen: The government has decided to exclude particular retailers from the famous Champs Elysees.

Stiglitz, Sen, Gunter Grass on Globalization

An excellent link to articles written by Joseph Stiglitz, Amartya Sen, Gunter Grass, Meghnad Desai and others on globalisation.

Terror, Risk and Investment

Here is an article in The Economist on the economic effects of terrorist attacks. They increase uncertainty, reducing investment and job creation.

Hayek on Liberalism

In this article on liberalism Hayek analyzes its history and definitions. The article was published in 1973 in the Italian Enciclopedia del Novicento.

Questioning Milton Friedman’s Free Market and Freedom

Pranab Bardhan disputes Friedman's idea that economic freedom is a necessary and sufficient condition for political freedom.

Lucas vs. Lucas: On Inequality and Growth

Cordoba and Verdier wrote this interesting paper [IMF Working Paper No. 07/17]: "Lucas (2004) asserts that "Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution... The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production." In this paper we evaluate this claim using an extended version of Lucas' (1987) welfare-evaluation framework. Surprisingly, we find that the welfare costs of inequality outweigh the benefits of growth in most cases. These calculations support the case for a research agenda that treats not only growth but also inequality as a priority".

Incomes and Inequality

Tyler Cowen writes: "While there is little doubt that the gap between the wealthy and everybody else has widened in recent years, the situation is not as unfair as some of the numbers seem to imply". Read the article here.