Conversation of Nobel Laureates for Economics on the Future of Capitalism

Gary Becker, Kenneth Arrow and Myron Scholes talk about the future of capitalism.

Immigration-related cases clog courts

"During a push to crack down on illegal immigration last fall, Customs and Border Protection floated a plan for New Mexico that would have suspended the practice of sending home hundreds of illegal immigrants caught near the border with Mexico. Instead, these people would be sent to court.
The idea, called "Operation Streamline," was to make it clear that people caught illegally in the U.S. would be prosecuted".

How to Balance Freedom and Security

"The world after 9/11 has led many Western countries to rethink their security policies, but where does the limit lie between protecting citizens and eroding their civil liberties?" asks Der Spiegel.

Is Democracy the Best Setting for Growth?

Daron Acemoglu and Edward Glaeser answer this question.

The Tale of Two Bids

Private equity goes after Britain’s Boots.

Who Are the Jihadists in Europe

In the Der Spiegel :"242 jihadists, 31 attacks, 28 networks. After examining militant Islamism in Europe, researchers have found that self-recruitment is on the rise among terrorist leader Osama bin Laden's Eurofighters, and that there is no such thing as a standard terrorist".

Michael Jensen

David Warsh writes:"By any measure, Michael Jensen is an interesting figure. After graduating from Macalester College in 1962, he learned economics at the University of Chicago in the mid-1960s, and became co-founder in 1973 of the Journal of Financial Economics that, along with two other scientific journals, launched a revolution in quantitative finance -- portfolio selection, options pricing and all that. His 1976 paper with William Meckling, "Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure" started another revolution, and quickly became one of the most-cited papers in all of present-day economics". Read the rest here.

Is Transition from Communism Possible?

Sam Vaknin writes:"Can Socialist Professors of Economics Teach Capitalism? Is Transition from Communism Possible? Lest you hold your breath to the end of this article - the answers to both questions in the title are no and no. Capitalism cannot be "learned" or "imported" or "emulated" or "simulated". Capitalism (or, rather, liberalism) is not only a theoretical construct. It is not only a body of knowledge. It is a philosophy, an ideology, a way of life, a mentality and a personality".

A Brand New Journal in Economics

A new journal in economics, economics-ejournal. The journal is free, quick, democratic, widely disseminated, convenient and up to date.

Best Buy vs. Circuit City

"The companies' financial results are telling. Best Buy, the nation's No. 1 electronics retailer, this week posted an 18 percent rise in fourth-quarter profits despite a bruising environment of flat-panel TV price drops. No. 2 Circuit City, on the other hand, swung to a loss in the quarter and is shaving its total work force by 8 percent, laying off 3,400 of its most experienced (and expensive) clerks". Read more here.

Hal Varian on the Fashion Industry

Hal Varian writes about the fashion industry and intellectual property protection:
"Recently, two law professors, Kal Raustiala of the University of California, Los Angeles, and Chris Sprigman of the University of Virginia, wrote a fascinating paper that outlines the workings of the fashion industry and how it manages to function without much intellectual property protection.

At one time, the fashion industry did have a self-imposed system of intellectual property protection. In the 1930s, the Fashion Originators’ Guild prohibited copying among its members and urged retailers not to sell items from those who copied other designs. The guild was reasonably successful in these efforts. But in 1941, the Supreme Court held that its practices violated antitrust laws, and since then the fashion industry in the United States has had no intellectual property protection for designs.

A result has been that “piracy” of designs is common in the fashion industry. Designers constantly experiment with new shapes and colors. If a particular style catches on, it is quickly copied. Skinny jeans have been fashionable for the last few years, but there are signs that the trends are now moving toward straight-leg designs. If the tide changes, pretty soon everybody will be selling straight-leg jeans.

According to Mr. Raustiala and Mr. Sprigman, the fashion industry can survive without intellectual property protection because of two interacting factors that they refer to as “induced obsolescence” and “anchoring.”

The first factor means that clothes become unfashionable before they wear out, so trendy people have to keep buying new clothes every year. When you are wearing the same thing as your cool friends, that’s great. But when you start seeing that style on decidedly uncool people, it’s time for something new — which the fashion industry is happy to provide.

But how do the fashionable decide what the next big thing is? Or perhaps more to the point: how does the fashion industry convey to their consumers what they should be wearing? How does the industry “anchor” the consumers in this season’s fashions? This is where copying comes in. If all the designers are showing baby doll dresses in the spring of 2006, then there’s a good chance that is what everybody will be wearing by the summer of 2006.

Mr. Raustiala and Mr. Sprigman argue that the lack of intellectual property protection actually promotes the functioning of the industry. If the extension of copyright to fashion prevented clothes manufacturers from copying each other, the industry would be ceding a major role to the lawyers and become much less creative. We’d see the same thing year after year. In other words, women’s fashion would look much more like men’s fashions — boring, boring, boring.

Since I have the same fashion sense that most economists have — that is, none whatsoever — I cannot attest to the accuracy of the law professors’ description of the fashion industry. But it is consistent with other examples of what happens when there is no intellectual property protection."

High Education Salaries

The College and University Professional Association for Human Resources (CUPA-HR) survey presents the median salaries for over 500 academic and administrative job categories.

The Efficient Market Hypothesis

A good presentation of the Efficient Market Hypothesis.