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Assorted links
1. Boston Globe story about Peter Leeson.
2. Seth Godin weighs in on Gladwell vs. Anderson.
4. The macroeconomics of Australia, with a poke at Kiwis at the end.
5. Free Saudi wedding for quitting smoking.
Posted by Tyler Cowen on July 1, 2009 at 10:15 AM in Web/Tech | Permalink
Comments
It can be difficult to know if Gladwell or Anderson is right. Now that Mr Godin puts his foot firmly in the Anderson camp, the case is settled. Gladwell is right.
Anderson is the guy who charges thousands of bucks for lectures where he tells the audience that free is the future. He's at least correct that it isn't the present, that much I'll give him.
Posted by: Joe Torben at Jul 1, 2009 10:44:44 AM
not bad tractor-work there, lads! not bad at all!
Posted by: farmer at Jul 1, 2009 10:49:27 AM
Terrific tractor square dance!
Posted by: Yan at Jul 1, 2009 11:37:08 AM
Aussies do like poking fun at Kiwis, but might pause to ask who gets the better of this deal: "NZ does have advantages relative to Australia: [NZ's] bad debt is held by Aussie banks". Plus, if all hell breaks loose, the Kiwis know that the Aussie constitution says that NZ can choose to become part of Australia. I believe that's called "hedging".
Posted by: dearieme at Jul 1, 2009 1:13:28 PM
The tractor square dance was fantastic. Those pony wheels are HARD to turn that fast. No power steering on those old Farmalls!
Posted by: Sean at Jul 1, 2009 9:35:48 PM
Key issue about Aussie banks under-reported in domestic analysis is the benefits of an oligopolistic industry structure. If you make large profits in normal times from basic banking activities you have much less incentive to chase marginal business at high leverage to keep pace with global peers with respect to incentive structure benchmarking. Also no incentive to get basic mortgages off your books via securitisation if they are inherently profitable - therefore incentive to do proper credit checks remains.
This costs Australian society at large a small amount per capita on in normal times ("dead weight" loss of excess profits), but provides significant stability benefits in stressed times. This has been accident not design from a regulatory perspective but as a system (to date) it has proven to be a relatively robust industry construct. Would be interested in other readers thoughts on this issue.
Posted by: homeandhosed at Jul 2, 2009 1:11:28 AM
@homeandhosed
I got the same consideration when studying the Asian Financial Crisis around about 2005 at uni (it sort of tied into Stiglitz's "mild financial repression" prescription). I was undecided about whether massive rents from the Four Pillars policy (which makes one morally queasy as well as being a dead weight loss) were made up for by what I was only hypothesising was a lack of riskier lending and the increased stability that might bring.
Needless to say, present events are swaying me towards that opinion. But dude, it's still hard to watch the banks swallow those economic profits.
Posted by: Richard Green at Jul 2, 2009 3:49:19 AM
Strawmen are great. Two people get to write books. Not everything is going to be free. One thing will be free. It's a big a$$ thing.
Posted by: Andrew at Jul 2, 2009 5:27:36 AM
Richard,
Aust governments pre de-regulation (1983) used to tax these excess profits by requiring large %'s of bank assets be placed on reserve with the government on which no/nominal interest was paid. Problem with this approach is that it puts the banks back into a marginally profitable environment, which encourages greater (potentially excessive) risk taking. As perverse as it seems, the short run dead weight loss just might be the economically optimal outcome (with possible implications for global financial system design).
Posted by: homeandhosed at Jul 2, 2009 7:28:00 PM
Gladwell's article has clear arguments explaining his position. Seth Godin, on the other hand, says stuff that sound pithy at first glance, but is just a lot of hot air if you think about it for a minute..
eg:The first argument that makes no sense is, "should we want free to be the future?
" Who cares if we want it? It is.
The second argument that makes no sense is, "how will this new business model support the world as we know it today?"
Who cares if it does? It is. It's happening. The world will change around it, because the world has no choice. I'm sorry if that's inconvenient, but it's true. "
anyway, at least he realises the irony in people having to pay monyey for his and Anderson's books.
Posted by: Krishna at Jul 3, 2009 1:14:28 AM
