Relevant and even prescient commentary on news, politics and the economy.

Wealth and Redistribution Revisited: Does Enriching the Rich Actually Make Us All Richer?

Update: There is a revised and corrected version of the model and spreadsheet here, with discussion. In a recent post I built a model with one rich person and ten poorer people to ask: does redistribution from rich to poor make us all more wealthy? The conclusion was Yes. Jump back there to see a quick rundown […]

"Starve the Beast" Theory in One Sentence

Krugman’s leeches analogy today spurs me to comment: If the police department in your town is doing a bad job and the crime rate is high, the obvious solution is to cut funding for the police department! Sounds a lot like bloodletting theory, dontcha think? We’ll just drain off the bad blood! It’s so simple […]

Coase on Mainstream Economics

‘It is suicidal for the field to slide into a hard science of choice,’ Coase writes in HBR, ‘ignoring the influences of society, history, culture, and politics on the working of the economy.’ (By ‘choice,’ he means ever more complex versions of price and demand curves.) U Chicago, my daughter’s college, sends me interesting emails […]

Explaining the Fed Credibility Argument

Following up on my last post, I actually think that there are two possible explanations for the “Fed Credibility” argument’s wide deployment, both hinted at in Simon’s response to my comment: I think the credibility argument is really about the underlying motives of the policymakers, rather than their abilities. However I also think that argument […]

The Fed Credibility Argument

For once a short post, inspired by Simon Wren’s suggestion that the Fed should allow (encourage) a temporary rise in wage inflation. (The merits of such a policy being obvious to many of us given the current virtues of some extra inflation, and past decades’ wage trends.) I’ve never understood the credibility danger of the […]

Modeling the Price Mechanism: Simulation and The Problem of Time

Today’s New York Times article on rapid online repricing by holiday retailers depicts a retail world starting to approach the “flash-trading” status of financial markets: Amazon dropped its price on the game, Dance Central 3, to $24.99 on Thanksgiving Day, matching Best Buy’s “doorbuster” special, and went to $15 once Walmart stores offered the game […]

Does the Minimum Wage Increase Productivity?

This Galbraith article – pointing to Ron Unz’s ongoing good thinking on the topic, got me thinking: If employers are faced with higher wage rates, that gives them more incentive to invest in business capital that 1. makes workers more efficient and productive, and 2. reduces the number of workers they need. Is this incentive […]

The Efficiency of De Ebil Gubmint Man

I’ve pointed out before that in some areas (here, Medicare), government programs are hugely more efficient and well-run than their private counterparts. I don’t know if this qualifies as one of those, but it does make a very important point that I’ve also made before: Government is not the problem. Bad government is the problem. […]