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- Assorted linksYesterday
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2. Krugman chooses the winning caption
3. An independent fiscal policy council?
- Economists Have Abandoned PrincipleYesterday
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The title is from Oliver Hart and Luigi Zingales writing in the WSJ:
Practically every day the government launches a massively expensive new initiative to solve the problems that the last day's initiative did not. It is hard to discern any principles behind these actions. The lack of a coherent strategy has increased uncertainty and undermined the public's perception of the government's competence and trustworthiness.
By principle, Hart and Zingales mean economic principle such as intervening only when market failure in the technical sense is an issue. Bankruptcy, for example, is not the end of the world (As you may recall I have been pushing the idea of speed bankruptcy for which the FDIC has developed significant expertise.) For example,
...what would have been so bad about letting Bear Stearns, AIG and Citigroup (and in the future, General Motors) go into receivership or Chapter 11 bankruptcy? One argument often made is that these institutions had huge numbers of complicated claims, and that the bankruptcy of any one of them would have led to contagion and systemic failure, causing scores of further bankruptcies...
...This argument has some validity, but it suggests that the best way to proceed is to help third parties r
- Insurance markets in everythingYesterday
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If only. But now we have insurance in insurance:
For these economically uncertain times, the UnitedHealth Group has a “first of its kind” product: the right to buy an individual health policy at some point in the future even if you become sick.
Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own. They may expect to retire early, for example, before they qualify for Medicare. Or they are worried about the possibility of losing their job and their health coverage.
People who are already sick will generally not be eligible for the new product. Those who do pass a medical review, will pay 20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future.
There is also a politics angle: b
- Joe the Plumber and his favorite booksYesterday
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Joe reads economics:
The Theory of Money and Credit (Ludwig von Mises): "It brought monetary theory into the mainstream of economic analysis. It is important reading for these troubled times."
My theory is that someone in Ron Paul's camp told him to say that. Here is the full list of his favorite books. Here is my source. Here is an on-line version of TOMAC. Scrolling through it a bit, it is more readable than my recollection and it remains one of the better 20th century books on monetary theory.
- The Capital StrikeYesterday
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Roosevelt went on in later weeks to speculate that the slowdown in investment was not economically explicable but was, rather, part of a political conspiracy against him, a "capital strike" designed to dislodge him from office and destroy the New Deal...In a reprise of his tactics in the "wealth tax" battle of 1935 and the electoral campaign of 1936, Roosevelt loosed Assistant Attorney General Robert Jackson, along with Ickes, to give a series of blistering speeches in December 1937. Ickes inveighed against Henry Ford, Tom Girdler and the "Sixty Families,"...Left unchecked, Ickes thundered, they would create "big-business Fascist America - an enslaved America." For his part, Jackson decried the slump in private investment as "a general strike - the first general strike in America - a strike against the government - a strike to coerce political action." Roosevelt even ordered an FBI investigation of possible criminal conspiracy in the alleged capitalist strike, but it revealed nothing of substance.
(From David M. Kennedy's Freedom from Fear (p. 352) in The Oxford History of the United States.)
A group of capitalists go on strike to protest a government that is confiscating their wealth. The government vows to force them back to work and sets agents on their trail.