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Assorted links
1. Tim Harford explaining Thomas Schelling.
2. Richard Posner on the financial crisis; a good overview of his new book.
3. Profile of Andrew Sullivan.
4. Lane Kenworthy critique of Goldin and Katz on inequality and education.
Posted by Tyler Cowen on April 15, 2009 at 11:17 AM in Web/Tech | Permalink
Comments
If you ask me, what Schelling should be remembered for is his observation that rationality does not explain economic equilibria. How different would economics look if rational theory had been dropped in favor of doing statistics on group dynamics back when he wrote The Strategy of Conflict? I guess we'll find out soon enough.
Posted by: Michael F. Martin at Apr 15, 2009 12:02:39 PM
2. Back in the day, Eddie Van Halen likened all the new jack finger tappers to someone stealing your car and then pulling up to your house and saying "man, check out this hot ride I just got."
Apparently Posner just got a new Austrian model.
Posted by: Andrew at Apr 15, 2009 1:16:19 PM
Better late than never when it's a federal judge, especially this one.
Posted by: Michael F. Martin at Apr 15, 2009 1:46:00 PM
That Andrew Sullivan article is excellent.
Tyler, what are your thoughts on the politics of Mr. Sullivan? I've always found his politics fascinating--its erratic, but strangely consistent.
Posted by: rob at Apr 15, 2009 3:22:06 PM
Consistently erratic is how I would describe him, at least any more. He seems to doubt himself as much as he doubts anyone else, turning rabidly on his own opinions when he feels his intellect rather than his ideologies are in question. I did not like him as a cheerleader for Bush, I like him even less in whatever it is he has become.
Posted by: PM at Apr 15, 2009 4:35:38 PM
Well, now I'll be a bit more understanding of the people that don't understand whether gays want to partake of marriage or destroy it. The gays don't even know.
Posted by: Andrew at Apr 15, 2009 5:11:13 PM
Posner = Poppycock...
What was deregulated?
Nonbanking mortgage companies were never regulated. Now, government wants to slam the door after the horses are out of the barn.
Fannie Mae and Freddie Mac were never properly regulated. This was opposed by Democrat politicians.
Tax laws and government subsidies encouraged over investment in real estate.
Cheap money created by the Fed dared private equity companies and investment banks to leverage up to the hilt.
19th century system of insurance regulation encouraged irresponsible actions by insurers like AIG. Their products were not properly priced for the risk.
Investment banks were never properly regulated. Now they don't exist.
By some estimates, subprime mortgage fraud approached 70% by the BORROWERS.
The bond raters were paid by the issuers, not the purchasers. A failed business model.
The Fed merged healthy banking companies creating huge mega-companies resulting in massive layoffs.
Granted the uptick rule should have been kept.
Easy credit means easy bankruptcy. The road to hell.....
Posted by: jorod at Apr 15, 2009 9:08:01 PM
19th century system of insurance regulation encouraged irresponsible actions by insurers like AIG. Their products were not properly priced for the risk.
AIG got into trouble because of its credit default swap exposure. Credit default swaps were not regulated under the 19th century system of insurance regulation because they didn't exist back then. Do I understand you correctly in arguing that credit default swaps ought to be regulated as insurance products?
Investment banks were never properly regulated. Now they don't exist.
It's only major American investment banks that no longer exist. That still leaves hedge funds and non-U.S. institutions that operate largely as investment banks in the U.S. like UBS and Credit Suisse.
Posted by: Ricardo at Apr 16, 2009 3:48:45 AM
Its amazing that Robert Merton still has credibility despite LTCM and the present crisis.Something is very rotten in the state of Academia.
Posted by: Sumant Rawat at Apr 16, 2009 4:03:17 PM
A succinct summary of Andrew Sullivan's recent politics: America doesn't allow gay marriage. Therefore Al Qaeda deserves to win.
Pretty the position of the Democratic base.
Posted by: Bulbman at Apr 23, 2009 4:32:16 AM
I ordered Posner's book. We'll see if it lives up to jorod's review above...haha.
This economic cycle, and the roll wall street and the mortgage market played in imbalancing capitalism is going to be an intriguing research and historical topic for economic students for generations.
Andrew Sullivan is an interesting study in the politics of an inquisitive mind crossed with personally conflictual behavior.
Great links.
Posted by: Bill Rice at May 8, 2009 3:10:48 PM
It's amazing how many Austrians this crisis has created. Posners description here:
"Then the Federal Reserve mistakenly pushed down and kept down interest rates, which led to a housing bubble (because houses are bought with debt) and in turn to risky mortgage lending (because mortgages are long term and there is a nontrivial risk of default); and when the bubble burst, it carried the banking industry down with it. The effect on the nonfinancial economy was magnified by the fact that Americans had little in the way of precautionary savings built up. Their savings were concentrated in risky assets like houses and common stock. When the value of those savings fell steeply, people’s savings were inadequate, so they curtailed their personal consumption expenditures, precipitating a fall in production and sales, a rise in unemployment (which made the still-employed want to save even more of their income, lest they lose their jobs too), and, in short, the downward spiral we’re still in."
To a word, this is deeply Austrian.
Posted by: Travis at Aug 4, 2009 10:45:51 AM
