Herbert Gintis on Krugman

From his review of Paul Krugman's new book Concience of a Liberal:

This book epitomizes what is wrong with American liberalism. Krugman was a fine, perceptive international trade theorist, but he is a political hack, with nothing new to offer. There is one problem as far as Krugman is concerned: inequality. But inequality is an intellectual abstraction, not a politically motivating issue. People hated the Robber Barons because they were robbers and barons, not because they were rich. Oprah Winfrey and Bill Gates do not send the Pinkerton men out to protect their ill-gotten gains; nor [do] the other super-rich. Socialists' ringing political slogans dealt with fairness, social progress, and power to the people, not "inequality." Moreover, a truly progressive movement must built on technical progress that is impeded by the reigning powers that be (Sam Bowles and I call this efficiency-enhancing egalitarian redistribution), not the beggar-thy-neighbor, zero-sum-game sort of redistribution favored by Krugman.

--He is right in that most people votes based on what they think is just, not what they think is equitable. However, what Krugman points out over and over is that populist economic policies are popular with American voters. A majority of people view what is just and what is equitable to be one and the same. Here's the link.

Social Mobility in America

Once again the folks at Cafe Hayek miss the point:

Wilson Mixon, from Division of Labour, sent me this graph -- which Wilson got from the Wall Street Journal -- summarizing IRS data on economic mobility that Thomas Sowell mentions here.























--The point they're making that is "economic mobility is real." The point that, everyone knows economic mobility is real, and that it is getting worse in America. They shouldn't be bragging about the levels of economic mobility in the U.S. when they are among the worst in the western world. Economists should be looking at ways to reverse the trend, not simply show that it exists.

Look At How Smart You Are

If you are reading this blog then you are one freaking GENIUS according to this site. It measures the sites reading level like when you were in grade school. If there are any third graders out there reading this, tell your teacher, you may get extra credit.

Decoupling...My Thoughts

You read a lot in the papers lately about how the Canadian economy is "decoupling" from the American economy. The article then usually goes on to site some numbers about dropping number of imports to the US along with the higher growth rates in Canada. I don't think this should be taken that seriously. For instance, if you looked at growth rates in Texas compared to the rest of the United States there would be time where the Texan economy was doing a lot better than the rest of the country and vis versa. Yet nobody ever says that Texas is decoupling from the United States. It is possible for the Canadian economy to be completely integrated with the American economy and still be growing at a higher rate.

Truly Heartwarming...For Some

All the parents out there should read this article from the globe and mail.

Bad Productivity News

From the Globe and Mail:

Canada's usually weak productivity growth returned to dismal last year after a respectable rise in 2005, according to a report that has economists warning that the country's standard of living could soon suffer.

National labour productivity, one of the key indicators of an economy's health, rose a meagre 1 per cent last year, down from a solid 2.2-per-cent gain in 2005, Statistics Canada said yesterday.

Last year's productivity growth is "truly depressing" and shows that 2005 was "just a blip," said Toronto-Dominion Bank chief economist Don Drummond.

Although Canada's job market has been robust, low productivity will eventually hurt employment, Mr. Drummond said. "As we approach a flattening of our labour force, all of Canada's economic growth will have to come from productivity gains."

--I'm not quite sure how to take this news. It's possible that you could attribute some of the lower productivity to a lower unemployment rate. A.K.A. when less people are employed only the highly productive have jobs. However, I doubt that's the entire story, it could be more evidence that Canada's increased growth could be mainly due to high commodity prices and that's not a good thing. Get the full version here.

Adaptation of Technology

Wired magazine has an informative, yet depressing, article about implementation of technology in the U.S. military. It highlights the mistakes that were make in trying to transition Afghanistan and Iraq from their former regimes. It is also a lesson in the danger of trying tactics that have never been used before, before you know if they work. Here's the link.

Online banks

Freakonomics blog recently posted about the growth of online lending sites. Indeed these websites have an advantage because they eliminate the middleman, the bank. This allows people to borrow money at a lower interest rate and save money at a higher interest rate. Despite this they also have a huge disadvantage, there is less guarantee that the person you are lending to will pay you back. Banks also have better ways of obtaining information about the loan applicant to see if they have the means to pay back the loan. Finally, backs can disperse most of the bank risk by making thousands of loans, individuals cannot do this unless they are very rich.