Utopia, you are standing in it!

At the end of my post a couple of days ago, I observed that the last two sentences of the footnote that I reproduced from Alchian’s “Information Costs, Pricing, and Resource Unemployment,” required a lot of unpacking. So let’s come back to it and try to figure out what Alchian meant. The point of the footnote was to say that Keynes’s opaque definition of involuntary unemployment rested on a distinction between the information conveyed to workers by an increase in the price level, their money wage held constant, and the information conveyed to them by a reduction in their money wage, with the price level held constant. An increase in the price level with constant money wages conveys no information to workers about any change in their alternatives. Employed workers are not induced by an increase in prices to quit their current jobs in the expectation of finding higher…

Hal Varian is a very, very smart economist, now Professor emeritus at UC Berkeley, and chief economist at Google.  For a number of years, he used to write a monthly column for the New York Times.  In a January 2004 column, he posed the question “Why Is that Dollar in Your Wallet Worth Anything?.”  The first answer he considered was the one in which most lay people probably believe:  that the government makes it worth something by declaring it legal tender.  The problem with that answer, Varian observed, is that whatever the government says, nothing prevents people who want to from using something other than dollars to execute the transactions or discharge their debts.  If people didn’t find it in their own best interest to transact in dollars, all the legal tender laws in the world couldn’t force them to keep making transactions in dollars.

Varian therefore proposed…

Brad DeLong recently did a post (“The Disappearance of Monetarism”) referencing an old (apparently unpublished) paper of his following up his 2000 article (“The Triumph of Monetarism”) in the Journal of Economic Perspectives. Paul Krugman added his own gloss on DeLong on Friedman in a post called “Why Monetarism Failed.” In the JEP paper, DeLong argued that the New Keynesian policy consensus of the 1990s was built on the foundation of what DeLong called “classic monetarism,” the analytical core of the doctrine developed by Friedman in the 1950s and 1960s, a core that survived the demise of what he called “political monetarism,” the set of factual assumptions and policy preferences required to justify Friedman’s k-percent rule as the holy grail of monetary policy.

In his follow-up paper, DeLong balanced his enthusiasm for Friedman with a bow toward Keynes, noting the influence of Keynes on both classic and…

Last week The New Zealand Initiative released The Health of the State, our report on public health and lifestyle regulations. You may have caught some of the media coverage on it.

While the report has a bunch of key messages that I think are important, here’s the one I found most valuable during the course of this research: don’t rely on media coverage or press releases alone. Read the report. And even then, read the whole report, not just the abstract and conclusion. It’s amazing, and incredibly rewarding, discovering studies – evenly highly regarded studies – aren’t all that they seem.

Outcomes from the panel discussion

To launch the report, we held a panel discussion where I spoke alongside The Treasury’s Chief Economist and Deputy Secretary Dr Girol Karacaoglu, Maori Party co-leader Marama Fox, and Institute for Economic Affairs Fellow Jamie Whyte. You can watch the full panel discussion here

I’ve written previously, and skeptically, about the financial capability strategy the government released last year. It is something of a wonder that civilisations have reached their current prosperity and sophistication without the aid of governments and their officials strategizing and pontificating about what we, citizens, “need” to know about money.  “Building the financial capability of New Zealanders is”, we are told, “a priority for the government”.  But what business is it of theirs?   And each time I read that line, I can’t help thinking that it would be better, and much more legitimate, if it were reversed: building financial capability of governments (and its agencies and officials) should be a priority for New Zealanders.

Last week, the bureaucrats were at it again.  The Financial Markets Authority published a so-called White Paper, with a Foreword written by the Chief Executive (so this is no mere background research paper, simply reporting the…

I have an op-ed in the Chronicle of Higher Education titled, “College Sex-Assault Trials Belong in Court, Not on Campus,” and there’s already a lively discussion in the comments. I would welcome your thoughts, on this site or that one.