
Paul Krugman was a consultant to Enron
14 Jul 2014 Leave a comment
in financial economics Tags: Enron, Paul Krugman

In 1999, Paul Krugman was paid $50,000 by Enron to act as a consultant and hold seminars. Krugman wrote a glowing article about Enron for Fortune magazine. After the collapse of Enron, he was a stern critic of that company.
In his columns, Krugman worked hard to link Enron to the Bush administration, and in one blamed Enron’s consultants for the company’s collapse. Krugman neglected to mention that he had been an Enron consultant:
Enron sold lots of things, but above all it sold itself: it crafted a self-portrait that business gurus loved. Like a schematic diagram from The McKinsey Quarterly or The Harvard Business Review, Enron’s business plan made a perfect PowerPoint presentation.
Other companies hired business gurus as consultants; Enron, in effect, put the gurus in charge. (Jeff Skilling, who made Enron what it is today, is a former McKinsey consultant.) What they created was a company so trendy that investors were dazzled. And that let executives get away with financial murder.
11 Classic Movies That Were Originally Box-Office Bombs | Business Insider
14 Jul 2014 Leave a comment
in economics of media and culture, movies Tags: box-office sleepers, movie classics
see 11 Classic Movies That Were Originally Box-Office Bombs | Business Insider for the list,

HT: Newmarks’ Door
Groundhog Day for economic forecasters – The Grumpy Economist
13 Jul 2014 Leave a comment
in economic growth, great recession Tags: forecasting errors, John Cochrane
Wrong from the start – Joseph Stiglitz
13 Jul 2014 Leave a comment
in business cycles, global financial crisis (GFC), macroeconomics, monetary economics Tags: East Asian economic miracle, global financial crisis, Japan, Japanese banking system, Joseph Stiglitz, zombie banks
A man of his times, back in 1996, smoking Joe Stiglitz used to be an admirer of the Japanese banking system because of its long-range thinking and lending
Cooperative behaviour between firms and their banks was also evident in the operations of capital markets.
In Japan each firm had a long-standing relationship with a single bank, and that bank played a large role in the affairs of the firm.
Japanese banks, unlike American banks, are allowed to own shares in the firms to which they lend, and when their client firms are in trouble, they step in. (The fact that the bank owns shares in the firm means that there is a greater coincidence of interest than there would be if the bank were simply a creditor; see Stiglitz 1985.)
This pattern of active involvement between lenders and borrowers is seen in other countries of East Asia and was actively encouraged by governments.
That praise of the Japanese banking system in 1996 did not stop him criticising the Japanese Zombie banks in 2009. Shame, Stiglitz, shame.
Note: A zombie bank is a bank with an economic net worth of less than zero but continues to operate because its ability to repay its debts is shored up by implicit or explicit government credit support.
PAT CONDELL: “Why I support Israel”
13 Jul 2014 Leave a comment
in laws of war, liberalism, politics, war and peace Tags: Israel, war crimes

Seinfeld economics
13 Jul 2014 Leave a comment
in economics of media and culture Tags: Seinfeld
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$3.1 billion: The amount the show has generated since entering syndication in 1995.
$400 million: What Larry David and Jerry Seinfeld can each make just from the most recent syndication cycle.
For a potential tenth season, Seinfeld was offered $5 million per episode, or $110 million per year. He turned it down.
HT: http://www.vulture.com/2014/06/breaking-down-the-seinfeld-economy.html
Female voting demographics and the growth of government
13 Jul 2014 1 Comment
in applied price theory, gender, income redistribution, Public Choice Tags: John Lott, The growth in government, voter demographics

The gender gap in voting dates back 2 generations or more and may now be in double digits.
A large share of all social spending is for the care of dependents – everything from children to non-working mothers and old age pensioners. Women support this spending because they benefit more from the social insurance it offers. Women both earn less and are more likely to be out of the workforce caring for children. Women also change their voting patterns more often than men as they marry and divorce or as they become single mothers.
John Lott pondered on why the government started growing precisely when it did. The federal government, aside from periods of wartime, consumed 2 to 3% of GDP up until World War I. In the 1920s, non-military federal spending began steadily climbing. FDR’s New Deal continued an earlier trend.
Lott explains the growth of government with women’s suffrage. For decades, polls have shown that women as a group vote differently than men. Without the women’s vote, Republicans would have swept every U.S. presidential race but one between 1968 and 2004.
A major gender gap issue is smaller government and lower taxes, which is a much higher priority for men. Women were more opposed to the 1996 federal welfare reforms, which mandated time limits for receiving welfare and imposed work requirements on welfare recipients.
Women are also supporters of Medicare, Social Security and educational expenditures more than men. Studies show that women are generally more risk-averse than men so they support government programs to ensure against certain risks in life.
- Women’s average incomes are also slightly lower and less likely to vary so single women prefer more progressive income taxes.
- Once women marry, they bear a greater share of taxes through their husbands’ relatively higher incomes so their support for high taxes declines.
Marriage also provides an economic explanation for why men and women prefer different policies.
Single women who believe they may marry as well as married women who most fear divorce, look for protection against possible divorce: a more progressive tax system and other government transfers of wealth from rich to poor.
Lott considers that A good way to analyse the direct effect of women’s suffrage on the growth of government is to study how each of the 48 state governments expanded after women obtained the right to vote.
- Women’s suffrage was first granted in western states seeking women migrants: Wyoming (1869), Utah (1870), Colorado (1893) and Idaho (1896).
- Women could vote in 29 states before women’s suffrage was achieved nationwide in 1920 with the adoption of the 19th Amendment to the Constitution.
The impact of granting of women’s suffrage was startling: state governments started expanding the first year after women voted and continued growing until real per capita spending more than doubled. The increase in government spending and revenue started immediately after women started voting.
There were 19 states that had not passed women’s suffrage before the approval of the 19th Amendment, nine approved the amendment, while the other 12 had suffrage imposed on them.
If some unknown third factor caused a desire for larger government and women’s suffrage, government should have only grown in states that voluntarily adopted suffrage. After approving women’s suffrage, government grew at a similar pace in both groups of states.
As more women voted and eventually voted in similar numbers as men, the size of state and federal governments expanded as women became an increasingly important part of the electorate. It took up to 30 years for women’s voting participation rate to equal that of men.
Lott also found that women’s political views on average vary more than those of men:
- Young single women are about 50 per cent more likely to vote Democratic.
- For married women, this gap is only one-third as large.
- Married women with children become more conservative still.
- Women with children who are divorced are suddenly about 75 per cent more likely to vote for Democrats than single men.
Not surprisingly, political parties pitch their platforms to women because they are more likely to change their vote over identifiable issues that are within the scope for government to change or influence
Conspiracy Theories Debunked: The Moon landing was a hoax?!
13 Jul 2014 1 Comment
in politics - USA Tags: conspiracy theories, moon landing hoax
If staged in the studio, a 143 minute continuous broadcast of the footage of the Moon approach and the astronauts on the Moon with the recording technology of the time would have required tapes the size of cars if it were pre-recorded in some manner on 5,300 feet of film that is free of scratches and specs of dust. 1969 did not have the technology to fake the landing on video. Slow motion video was truly primitive in 1969: 30 seconds replayed at 90 seconds maximum.

Hayekian Environmental Policy
13 Jul 2014 Leave a comment
in economics
Just as decentralized knowledge implies economic non-intervention, so too it implies environmental non-intervention.
One of the contributions to economics made by the Austrian-school economist Friedrich Hayek is the theory of scattered knowledge. In his famous article, “The use of knowledge in society,” Hayek analyzed how the knowledge needed for economic activity by consumers, producers, legislators, and bureaucrats is dispersed, tacit, and ever-changing. Sellers of goods can conduct surveys to find out what people want, but such data collection reveals only a small fraction of the subjective desires of buyers. The knowledge of how to produce goods is decentralized among the firms, each of which has its own local knowledge of the costs and the demand for its goods.
Much of the knowledge about goods is tacit, not written down. A label can list the ingredients, but it will not tell the buyer about how good it will taste, and does…
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