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We shouldn't throw away the concept of second best however. Remember why it was introduced - there are parts of the policy world that our policy makers can't control (like other countries). It makes no sense to pretend we can control things that we can't.
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Yes, international IP standardization stinks.
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OK, my main concern about state owned enterprises, is that the fox is in charge of the hen house. I like COUNTERVAILING power, not just power.
Toggle Commented 6 days ago on 'Socialism, American-Style' at Economist's View
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For German readers: http://www.spiegel.de/wirtschaft/soziales/euro-drei-szenarien-fuer-die-zukunft-kolumne-a-1044440.html#ref=meinunghp
Toggle Commented Jul 21, 2015 on Links for 07-21-15 at Economist's View
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This is an odd thing to measure, since it is not policy independent.
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"One reason is fairly simple: Labor is taxed, and leisure is not." What was my law again? Oh yea, income effects generally overwhelm substitution effects. Why do people keep forgetting about income effects. Now really, really try to imagine leisure without any money, and see how attractive it is tax or no tax (and note SPENDING on leisure IS taxed). But oh well - if you didn't pay people of course they would just sit in the dirt.
Toggle Commented Jul 17, 2015 on Links for 07-17-15 at Economist's View
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"Should Americans Work More? To Hit 4 Percent Growth, We Would Have To" That has got to be one of the silliest headlines ever. What has the LEVEL of hours worked got to do with the RATE OF CHANGE of GDP. Can anybody else see why the sentence is silly? (Yeah, I know people seem to have problems with time derivatives, but still.)
Toggle Commented Jul 17, 2015 on Links for 07-17-15 at Economist's View
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oops ... how NEW products and technologies And for the matter worker lifecycles and the importance of entry level jobs.
Toggle Commented Jul 17, 2015 on Paul Krugman: Liberals and Wages at Economist's View
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This is missing a little bit here, by using the rather vague words "workers are people". The productivity payoff comes from better training and better integration in teams. That is, if workers stay longer (and feel more secure) investment will be made in the job (from both sides). This was always the problem with the commodity view of labour - it views labour as static. Labour is not static. (By the way exactly the same applies to software - but that is another issue). In general, this sort of thinking plagues economics, and we really need a dynamic revolution. People need to understand better how things develop over time. (In particular, how need products and technologies are introduced with full consideration of hysteresis effects).
Toggle Commented Jul 17, 2015 on Paul Krugman: Liberals and Wages at Economist's View
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P.S. There welfare theory is a side alley though. Economics can be useful for things other than that. (For instance it tells us that under reasonable assumptions, changes in monetary policy can affect the real economy. It tells us that government debt and private financial wealth are directly connected. It tells us that taxing negative externalities can have positive welfare benefits. It tells us that substitution effects and income effects work in opposite directions, so that income subsidies that are not means tested distort marginal decisions less - i.e. that helping the poor via a basic income may make economic sense.)
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Mitch "Yes, they mean it maximizes human welfare through perfectly rational actions. " No it doesn't. It says that given an INITIAL an initial distribution of wealth the free market maximises human welfare, under very special assumptions (that are never met). Notice, what it doesn't say - that given total resources available, and known technology that you cannot generate more welfare over some time period (i.e. what any sensible person would call efficiency).
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Mitch, do economists really make "efficiency" claims. Only for a special use of the common word efficiency.
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Anne [ One of these things is not like the other. ] I like to look not just at levels but rates of change. Norway and Finland have falling participation rates, the others rising participation rates. This is also interesting. Sweden has the most impressive recent record (I would say by far).
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The rage "I think the Schlitz debate is a good example of the gap between the New and Post Keynesian schools." 1. There was no Schlitz debate. Somebody posted something ridiculous and nobody agreed with him. 2. There is no Post-Keynesian school. There are economists who call themselves Post-Keynesian, but apart from the label they have little in common.
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I really don't like Tim Haab much, and besides his argument is foolish, because there is a direct statistical as well as indirect causal relationship between inequality and growth - dependent on the distribution of income gains during different phases of the growth cycle. Unless he filters this out, his results may be meaningless.
Toggle Commented Jul 14, 2015 on Links for 07-14-15 at Economist's View
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Why is it that people have so little understanding of the difference between stocks and flows? Is it a general problem with the human brain?
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bakho, "Some of the downsides of the Euro could be finessed by Eurozone countries having dual currencies." The problem with that is that it doesn't solve the debt problem. Sure the transition would be a lot easier, but without a debt moratorium (and eventually a haircut or rebasing) it makes the long term problem worse.
Toggle Commented Jul 14, 2015 on Links for 07-14-15 at Economist's View
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What ever happened to "don't work harder, work smarter". Working harder is not the solution to much.
Toggle Commented Jul 14, 2015 on Paul Krugman: The Laziness Dogma at Economist's View
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Cut and pasted from my comment on a related thread http://crookedtimber.org/2015/07/14/bluffed/#comment-636551 I was trying to explain my family last night why the agreement was useless. They, as all the Germans seem to think, were saying the “Greeks are taking our money and wasting it”. I pointed out that “wasting it” was mostly giving it back to foreign lenders. But I pointed out my continual argument – people are concentrating on the wrong deficit. It is not the government deficit that is the key it is the trade deficit. The key question is “where do the Euros come from in the first place”. If the government doesn’t borrow then the private sector has to, otherwise Greece will just run out of Euros. When the private sector borrowing turned bad, the government needed to borrow. Long term the Euro is not sustainable so long as Germany runs a trade surplus against other European countries. Why does nobody talk about this?
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Mitch, you have a real thing about what sort of unemployment is this - don't you? From the point of view of the individuals involved, it doesn't matter, not having a job (and the income that comes with it) is not having a job. My personal preference is that there be only private unemployment insurance and a basic income (so workers can say FO to exploitative offers). But given that is not the case, public unemployment is needed because market clearing, especially in the labour market, is not instantaneous.
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For example Mitch "" This caused increased inflation and an actual shortage of skilled labour " Sorry, but inflation does not cause structural unemployment. " What Robert was saying that increased inflation (due to monetary stimulus) was accompanied (not caused) by a shortage of skilled labour (i.e. less unemployment). a. He didn't say inflation caused unemployment b. He didn't imply that the (non-existant) unemployment was structural.
Toggle Commented Jul 9, 2015 on Links for 07-09-15 at Economist's View
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Mitch, I didn't say Robert Waldmann is massively underappreciated by Mark Thoma. But who are you anyway? Everything you have said is wrong, which I don't think even Matt Young manages.
Toggle Commented Jul 9, 2015 on Links for 07-09-15 at Economist's View
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@RC AKA Darryl, Ron sagte als Antwort auf Mitch And Robert Waldmann is an American (he lives and teaches in Italy, but he is an American).
Toggle Commented Jul 9, 2015 on Links for 07-09-15 at Economist's View
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This piece from Robert Waldmann is also excellent: http://angrybearblog.com/2015/07/a-case-for-grexit.html
Toggle Commented Jul 9, 2015 on Links for 07-09-15 at Economist's View
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Glad to see Robert Waldmann's excellent piece http://rjwaldmann.blogspot.de/2015/07/the-structural-problems-ideology-is-not.html linked to here. I think Robert Waldmann is massively underappreciated.
Toggle Commented Jul 9, 2015 on Links for 07-09-15 at Economist's View
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