Employment losses after financial crises


HT: oregoneconomicanalysis.com

The dead are many – the U.S. Food and Drug Administration (FDA)

I found that the unregulated market was very quickly weeding out ineffective drugs prior to 1962. Their sales declined rapidly within a few months of introduction, and there was thus little room for the regulation to improve on market forces . . . most of the subsequent academic research reached conclusions similar to mine . . .

The carnage from this regulation, I regret to assure you, will continue for a long time . . . the deaths of which I speak are counterfactual deaths, not deaths that can be directly connected to any regulatory malfeasance . . .

the actual victims of the regulation did not swallow a bad FDA-approved pill. They merely failed to swallow a good one in time and never knew what they had missed.

Sam Peltzman 2005, 15–6

The costs of global warming and other government statistics – Updated

Figure 1. The 14 estimates of the global economic impact of climate change, expressed as the welfare-equivalent income loss, as a functions of the increase in global mean temperature relative to today



Source: Richard Tol

The recent IPCC report found that the temperature rise that we are expected to see sometime around 2055-2080 will create a net cost of 0.2-2% of GDP. The UK, Japan, and the US wanted this rewritten or stricken.

The IPCC report showed that strong climate policies would be more expensive than claimed as well – costing upwards of 4% of GDP in 2030, 6% in 2050, and 11% by 2100.

Politicians tried to delete or change references to these high costs. British officials said they wanted such cost estimates cut because they “would give a boost to those who doubt action is needed.”

Sir Humphrey: No, no… Blurring issues is one of the basic Ministerial skills.
Jim: Oh, what are the others?
Sir Humphrey: Delaying decisions, dodging questions, juggling figures, bending facts and concealing errors.

and more from Yes Minister:

Seven ways of explaining away the fact that North-West region has saved £32 million while your department overspent:
a. They have changed their accounting system in the North-West.
b. Redrawn the boundaries, so that this year’s figures are not comparable.
c. The money was compensation for special extra expenditure of £16 million a year over the last two years, which has now stopped.
d. It is only a paper bag saving, so it will have to be spent next year.
e. A major expenditure is late in completion and therefore the region will be correspondingly over budget next year. (Known technically as phasing – Ed)
f. There has been an unforeseen but important shift in personnel and industries to other regions whose expenditure rose accordingly.
g. Some large projects were cancelled for reasons of economy early in the accounting period with the result that the expenditure was not incurred but the budget had already been allocated.

HT: Bjørn Lomborg and wattsupwiththat


http://www.reddit.com/user/pnewell was good enough on the climate sceptics subreddit to point out that there is an updated version of the graph I posted at the top that includes corrections for gremlins in Richard Tol’s original paper.

His response reminds me of another passage from Yes Minister where prime ministerial candidate Jim Hacker is arguing with a European commission official about butter mountains.

Hacker said in one room a European commission official was subsidising people to produce milk, while in the next room another official is subsidising people to destroy it.

The response of this European union official was to say that was not true. Hacker asked how it was not true. He was told that the two officials were not on the same floor, the other official paying people to take the milk away is on the next floor.

The main body of my post is:

  1. about propaganda tactics to discredit criticism and suppress inconvenient facts, and
  2. the IPCC report facts that even if global warming is a problem, doing anything about it makes us even worse-off.


Prison numbers are too high?

How can prison numbers be too high? There are unsolved crimes: murders, robberies, sexual assaults and burglaries to name a few.

There are people out there who should have been arrested, convicted and sent to prison for serious crimes. Many of them are repeat offenders and career criminals.

I have never understood the reasoning behind the notion that prison numbers are too high.

Concerns about prison numbers being too high is exclusively a concern about the criminals who were sent to prison. Their victims are never mentioned nor are victims of unsolved crime who have been denied justice.

There is an economic literature on the efficient level of crime. Those that are concerned about prison numbers being too high explicitly reject the economics of crime literature for the purpose of framing public policy about criminal justice. The reason is obvious from this passage by David Friedman:

The economic analysis of crime starts with one simple assumption: Criminals are rational.

A mugger is a mugger for the same reason I am a professor-because that profession makes him better off, by his own standards, than any other alternative available to him.

Here, as elsewhere in economics, the assumption of rationality does not imply that muggers (or economics professors) calculate the costs and benefits of available alternatives to seventeen decimal places-merely that they tend to choose the one that best achieves their objectives.

If muggers are rational, we do not have to make mugging impossible in order to prevent it, merely unprofitable.

If the benefits of a profession decrease or its costs increase, fewer people will enter it-whether the profession is plumbing or burglary.

If little old ladies start carrying pistols in their purses, so that one mugging in ten puts the mugger in the hospital or the morgue, the number of muggers will decrease drastically-not because they have all been shot but because most will have switched to safer ways of making a living.

If mugging becomes sufficiently unprofitable, nobody will do it.

Putting more offenders in prison should decrease crime by both incapacitating incarcerated offenders and deterring potential offenders.

Why governments cannot pick winners

The salary of one top hedge fund manager exceeds the entire payroll of any of the government departments in New Zealand.

To get on the list of top 25 hedge fund manager you must earn at least $300 million a year. The best of these earned $3 billion last year.

Anyone who was any good at picking the share market would certainly not accept government wages.

Government employees have neither the aptitude nor the taste for risk that betting it all every day and losing everything perhaps requires.

Why Robert Lucas disagreed with Keynesian macroeconomics

Proponents of a class of models which promised 3 1/2 to 4 1/2 per cent unemployment to a society willing to tolerate annual inflation rates of 4 to 5 per cent have some explaining to do after a decade such as we have gone through [i.e., the 1970s, when inflation rose to 16 per cent and unemployment to 8 per cent in the United States, and to 30 per cent and 6 per cent in the U.K. Inflation rose as high as 25 per cent in Japan and 7 per cent in Germany, though unemployment remained relatively low].

A forecast error of this magnitude and central importance to policy has consequences, as well it should.

World War II in Europe: Every Day

HT: austrianaddict.com


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