EppsNet Archive: Economics

Academically Speaking, I’ve Still Got the Geedus

 

I took a Computational Finance midterm over the weekend on Coursera. I’ve taken a few Coursera classes before — they had quizzes, problem sets, programming assignments, essays — but none of them had a midterm or final exam. It’s the first academic exam I’ve taken in at least a couple of decades, and the first exam ever in which — because it was online — I was able to participate in the company of my life partner, Wild Turkey. Here’s my result: I lost the one point on this question right here: If you understand the question, it’s obvious which one of the four I missed, but it may not be obvious what the right answer is. It wasn’t to me, anyway. My wife asks, “Did you see the grading curve?” “No, but when you score 149 out of 150, you leave it to others to worry about the curve.” Read more →

Screw Economics

 

One of the classes I’m taking on Coursera is Principles of Economics for Scientists, taught by Prof. Antonio Rangel at Cal Tech. First of all, it’s a great class. Rangel has a real passion for the material and he’s provided extra resources to accomodate online students, many of whom probably don’t have the math background of the average Cal Tech student. He’s from Madrid, so his pronunciations and mannerisms are different, like the gesture below, which I captured from one of the video lectures. He was explaining how something or other would increase our understanding of economics and he punctuated the word “understanding” by pointing at his head with two fingers. I don’t know what this gesture means in Spain, or if it means anything at all. Probably he knows what it means in America, but as I said, he’s passionate about the material and I think he loses himself… Read more →

Thomas Jefferson on Why Your Health Insurance Premium is Going Up

 

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers. — Despite New Health Law, Some See Sharp Rise in Premiums – NYTimes.com That headline should not read “DESPITE new health law,” it should read “BECAUSE OF new health law.” But we were going to get things for free! We were promised better things at a lower cost! In my day, most of the citizens were farmers or merchants or tradesmen. They lived by their hands and their wits. They had horse sense and they knew when they were being sold a bill of goods. Of course, that was before television. Americans today are unfortunately rather stupid. Most of them don’t know anything about economics, science, history, government… Read more →

I Don’t Understand What Warren Buffett is Talking About

 

In an op-ed for the New York Times, Warren Buffett argues that higher taxes won’t keep the super-rich from trying to make money: Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.” Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist. — A Minimum Tax for the Wealthy – NYTimes.com Really, Warren? It’s an investment, right? It’s not a sure thing. It’s not a giveaway. I’m being asked to put money at risk. That’s the difference between… Read more →

Thomas Jefferson on “You Didn’t Build That”

 

Almost everything appertaining to the circumstances of a nation, has been absorbed and confounded under the general and mysterious word government. Though it avoids taking to its account the errors it commits, and the mischiefs it occasions, it fails not to arrogate to itself whatever has the appearance of prosperity. It robs industry of its honours, by pedantically making itself the cause of its effects; and purloins from the general character of man, the merits that appertain to him as a social being. — Thomas Paine, Rights of Man (1792) My fellow Americans — You see how my friend Tom Paine, 220 years ago, perfectly anticipated — and rejected — your President Obama’s “You didn’t build that” quote. Oh yes, we were aware of the “progressive” philosophy — that everything good comes from government — even then and we wanted no part of it. By the way, I notice that… Read more →

Milton Friedman Would Be 100 Years Old Today

 

What the market does is to reduce greatly the range of issues that must be decided through political means, and thereby to minimize the extent to which government need participate directly in the game. The characteristic feature of action through political channels is that it tends to require or enforce substantial conformity. The great advantage of the market, on the other hand, is that it permits wide diversity. It is, in political terms, a system of proportional representation. Each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color-the majority wants and then, if he is in the minority, submit. It is this feature of the market that we refer to when we say that the market provides economic freedom. But this characteristic also has implications that go far beyond the narrowly economic. Political freedom means… Read more →

The Person Who Says It Can’t Be Done Is Interrupted By The Person Doing It

 

In his latest book, The Price of Inequality, Columbia Professor and Nobel laureate Joseph Stiglitz examines the causes of income inequality and offers some remedies. In between, he reaches some startling conclusions, including that America is “no longer the land of opportunity” and “the ‘American dream’ is a myth.” — The ‘American Dream’ Is a Myth: Joseph Stiglitz on ‘The Price of Inequality’ “If there is anybody at all who has a dream, then they can definitely make it happen,” she told WBTV. “There are no excuses. It depends on you and no one else.” — Dawn Loggins: Homeless, Abandoned Teen Heads to Harvard – Yahoo! Shine The second link above goes to a story about Dawn Loggins, an 18-year-old girl from Lawndale, NC, who, after her mother and stepfather left the state without her and she was dropped by her grandmother at a local homeless shelter, “just made a… Read more →

You Can Make It If You Try

 

“It’s becoming conventional wisdom that the U.S. does not have as much [economic] mobility as most other advanced countries,” said Isabel V. Sawhill, an economist at the Brookings Institution. “I don’t think you’ll find too many people who will argue with that.” — Harder for Americans to Rise From Lower Rungs – NYTimes.com I’ll argue with it . . . the fact that people are not doing something doesn’t necessarily mean it’s a hard thing to do. Maybe people aren’t trying to do it. Maybe people don’t want to do it. From Daniel Kahneman‘s Thinking, Fast and Slow: A large-scale study of the impact of higher education . . . revealed striking evidence of the lifelong effects of the goals that young people set for themselves. The relevant data were drawn from questionnaires collected in 1995-1997 from approximately 12,000 people who had started their higher education in elite schools in… Read more →

Educating Oligarchs

 

Education not only increases the average income a person will earn, but it also changes the entire distribution of possible life outcomes. It does not guarantee that a person will end up in the top 1 percent, but it increases the likelihood. I have not seen any data on this, but I am willing to bet that the top 1 percent are more educated than the average American; while their education did not ensure their economic success, it played a role. Let me give you a couple examples. I am comfortably in the top 1 percent. I believe that Paul [Krugman], with his Princeton professorship, regular Times column, speaking fees, and moderately successful textbook, is there as well. I suspect (although cannot prove) that if he and I had stopped our educations after finishing high school, we would not have been anywhere near where we are in the income distribution.… Read more →

The Rich Get Poorer

 

Here is a fact that you might not have heard from the Occupy Wall Street crowd: The incomes at the top of the income distribution have fallen substantially over the past few years. According to the most recent IRS data, between 2007 and 2009, the 99th percentile income (AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879 to $32,396. These recent numbers illustrate the broader phenomenon, discussed in this paper, that high-income households have riskier-than-average incomes. — Greg Mankiw’s Blog: The Rich Get Poorer Read more →

The Rising Burden of Government Debt

 

Our analysis paints a sobering picture of worsening public debt dynamics and a sharply rising debt burden in advanced economies (AEs). But perhaps the worst is yet to come. First, AEs as a group are experiencing little population growth. Second, they are facing rapidly aging populations. Third, their economies are likely to register slow growth . . . Fourth, entitlement spending on health care and pensions is likely to explode due to unfavorable demographics. — The Rising Burden of Government Debt – Brookings Institution Read more →

All of Them?

 

Bill Clinton: “Do you know how many political and economic decisions are made in this world by people who dont know what in the living daylights they are talking about?” Read more →

Other Than That . . .

 

The social fabric is fraying. Human capital is being squandered. Society is segmenting. The labor markets are ill. Wages are lagging. Inequality is increasing. The nation is overconsuming and underinnovating. China and India are surging. —David Brooks, New York Times Point taken. But other than that, things are going okay, right? Read more →

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