Thursday, February 28, 2013

Clear-Headed Thinking on the Debt (and Stimulus)

From the always clear-headed Robert Solow in today's New York Times (here). Solow is the 1987 recipient of the Nobel Memorial Prize in Economic Sciences.

Ignoring Path Dependency and Practical Politics Is No Way to Promote a Better Climate Policy

Over at Project Syndicate (here), the very smart economist Jeffrey Sachs lauds Europe for displaying seriousness about climate change (e.g., by creating the world's largest carbon trading market in the form of the EU Emissions Trading Scheme), but then recommends that they would be better off scrapping that system entirely and moving to a carbon tax, as should ever other country in the world.

As someone who generally believes that carbon taxes are preferable to cap-and-trade for at least some combinations of greenhouse gases and sources, I am appalled by Sachs' lack of serious analysis of the situation in Europe that makes adoption of a Union-wide carbon tax nearly impossible. Specifically, under EU constitutional rules, such a tax would have to be separately enacted by each member state; unlike the EU ETS, it could not imposed from above by Directive. How likely does Sachs believe it is that EU member states would unanimously embrace a unified carbon tax scheme? Does he know that the EU tried going down that road before, and switched to emissions-trading after realizing that a carbon tax would go nowhere? Moreover, does he have any idea how many vested interests have been created by the ETS, and how those interests would now strongly oppose scrapping that scheme in favor of a completely new tax-based system?

Sachs also ignores two modest adjustments to the existing EU ETS that would add to it the best qualities of a tax-based scheme, one of which the EU is already implementing: (1) the EU is ramping up  mandatory auctioning of emissions allowances (to 100% by 2020), and the auction price functions just like a tax; and (2) what the EU has not yet done, but should, is set a price floor for emissions allowances, so that the entire system becomes more robust to economic recession. Just recently, the EC had to intervene in the market (with parliamentary approval) and withdraw allowances to keep the price from falling to zero (see, e.g., here and here). A fixed (or adjustable) price floor would have obviated the need for such an emergency intervention.

Economists and policy analysts really should try to avoid sweeping and simplistic policy recommendations that ignore real-world politics and path-dependencies. If they want their ideas to be taken seriously, they themselves must take seriously practical problems of policy design and implementation. Frankly, we suffer from a glut of facile policy recommendations for climate policy with too little serious analysis.

Monday, February 25, 2013

Wanted: Executive Director for Vincent and Elinor Ostrom Workshop in Political Theory and Policy Analysis

The search went public today (see here), and I serve on the search committee. Obviously, we do not expect to replace the irreplaceable, but we are looking for a prominent senior scholar to carry forward the important work that Lin and Vincent Ostrom started. The ideal candidate will be a Workshopper at heart (if not in fact), with a strong commitment to interdisciplinary collaboration, utilizing multiple methods, to understand, diagnose, and hopefully resolve difficult social dilemmas. The terms, which are negotiable, should be highly attractive for a senior, high-profile scholar.

Feel free to email me if you have questions or would like to nominate someone for the position.

Renewed Political Threats to Defund Social Science Research

Over at Legal Planet (here), Dan Farber analyzes new legislation in the House that would prevent the National Science Foundation (NSF) from funding social science research. One pretext for the legislation is that the NSF is funding silly projects, which no doubt is sometimes true; but the examples given by legislators, and quoted in Dan's post, do not seem to fit that mold. Moreover, as Dan explains, the cost savings to the federal budget from abolishing the grants would be miniscule:
The NSF budget for social science research is three-quarters of one percent of the NIH budget for medical research, and only about three percent of the total NSF budget.  It is also about one-third of one-thousandth of military spending. The federal government could probably generate equivalent savings if the Pentagon ordered cheaper pencils and paper clips.
As a Co-Principal Investigator on one current NSF grant (studying the effects of climate change on institutions for allocating water in snowmelt-dependent irrigation systems in Kenya and Colorado) and a current applicant to NSF for another project, I have a dog in this fight. But I'm really not all that worried. Republicans in the House try to kill off NSF funding for social science research every year, and even when they succeed in passing legislation in their own body, it always seems to die in the Senate. I wonder if NSF has given anyone a grant to study this trend?

Sunday, February 24, 2013

A Rare Weekend in February: Two Outdoor Rides

Saturday: A short (40 minute) course of hill repeats; 5 times hard up a shallow climb and once up each side of Griffy.

Sunday: A relatively easy 20-mile route with Dr. Jim, featuring just three tough climbs (Sample Rd., Kinser Pike up to 37, and the north side of Griffy lake). My heart rate was telling me I'm way out of shape, but Rome wasn't built in a day.

Hopefully, tomorrow I'll make a February trifecta with a commute on the bike to and from school. The rest of the week after tomorrow looks pretty messy.

Saturday, February 23, 2013

Santi Cazorla: One of the Bright Spots in Arsenal's Gloom

The main thing is, he scored both of Arsenal's goals today, one early and one late, to give his team a badly needed and barely deserved victory over a visiting Aston Villa side that has been hovering around the relegation zone all season. Cazorla now has 11 goals for the season - the first Arsenal player to score 10 or more in his first season with the club since Thierry Henry.

Here are some more impressive stats from Cazorla's game today, courtesy of Andrew Mangin at (here):
On Saturday, he had a pass completion rate of 90 percent, made 34 of 40 attempted passes in the final third, took six shots, beat his man in three of four take-ons, created four chances and scored twice.
Between Jack Wilshire and Santi Cazorla, Arsenal's attacking midfield looks like one part of the club that does not require a massive upgrade to compete for silverware next season.

Omloop Het Nieuwsblad

The classics season gets off to an early start today with the Omloop Het Nieuwsblad, a 200 km race that begins and ends in Ghent. A very strange feeling to start a classics season without Rabobank as a team sponsor. Sponsors come and go, of course, but Rabobank was such a constant presence for so many years. It's nearly as difficult to imagine cycling without Rabobank as it is to imagine the sport (or any other professional sport, for that matter) free of PEDs.

And your winner is ... Luca Paolini of Team Kathusha. Somewhat surprisingly, he and Omega's Stijn Vandenbergh managed to keep a half-minute advantage over a seemingly powerful chasing group, including the likes of Sylvain Chavanel, Geraint Thomas, and Greg Van Avermaet, for the final 10 kilometers of the race. Paolini took the two-main sprint without much of a challenge from Vandenbergh.

Congrats to the Blackhawks

They set a new record last night for the best-ever start to a season, having not lost (in regulation) in 17 games. The only blemish on their record are two losses in post-overtime shoot-outs. But they've managed at least one point in their first 17 games. The three teams they have surpassed on this streak all went on to win the Stanley Cup. The odds of at least getting there look very, very good for Hawks fans.

I am personally appalled, however, by the NHL's ridiculous blackout restrictions, which prevented me from watching last night's game or any other home game because I am considered to live within Chicago's (and St. Louis's) local market, despite the fact that it would require a 4-hour drive each way for me to take in a Hawks game at Chicago Stadium. The NHL needs to draw more realistic "local market" boundaries.

Friday, February 22, 2013

Of Magic Words and Legal Nonsense: Estates and Future Interests

I'm teaching first-year Property this semester for the first time in five or six years. We just completed the chapter and estates in land, and are about the start the chapter on future interests. Prepping those two chapters for class has reminded me of what so many non-lawyers detest about lawyers and the legal system: seemingly unbreakable commitments to antiquated rules that make no sense today, and probably made no sense when they were first adopted.

First, the complexity of the rules is such that no one who is not carefully trained in the law could confidently engage in estate planning or lifetime conveyancing of any but the simplest interests without hiring an attorney. If they do not have a lawyer, they risk having their intent ignored or mangled by judges who draw irrational but consequential legal inferences about intent based on the use of innocent-seeming phrases, like "so long as" and "but if."

For example, if a husband dies leaving land to his wife "for so long as she remains unmarried," that is considered a valid conveyance of a defeasible life estate based on the husband's imputed intent to take care of his wife until she remarries. However, if the husband used slightly different language, "to my wife, but if she remarries..." the courts would construe that the husband intended to restrain his widow from remarrying, which is against public policy (except for non-heterosexuals in most states).

The inanity of these differential judicial inferences is compounded by the ease with which a well-advised spouse can combine the offending intent of restraining his wife from remarrying with the correct language to have that restraint upheld. Meanwhile, the condition itself (remarriage) creates an incentive for the surviving spouse to shack-up (that is, live in sin) rather than remarry, an incentive which courts do not factor into their public policy considerations.

And don't even get me started on the scholasticism of the Rule Against Perpetuities (RAP), which I haven't taught in nearly 15 years because it has been increasingly trivialized (where it has not been nullified completely) by changes in tax codes and other legal rules facilitating the rise of monied dynasties, which the RAP initially was created to prevent. Legal changes abolishing or marginalizing the RAP have increased the power of the dead to control land forever (more or less), and have contributed significantly to the "new gilded age" in America, where social mobility, up or down, has become more difficult.

Unfortunately, my colleagues convinced me to teach the RAP this semester for the sake of (a foolish?) consistency in our Property curricula. So next week, against my own better judgment and against the tide of history, I will be teaching about ridiculous juridical presumptions concerning "fertile octagenarians" and "unborn widows."

Jeremy Bentham famously referred to presumptions of natural law as "nonsense upon stilts." I think that phrase could just as well apply to some of many of common-law rules governing estates in land.

Tuesday, February 19, 2013

Arsenal on Verge of Exiting Champion's League

Having crashed out of the FA Cup against lower-level competition last weekend, Arsenal are now on the verge of crashing out of the Champion's League (CL) after today's 3-1 loss at home against a clearly superior Bayern Munich side. They still have to play the second round in Munich in two weeks' time. But Arsenal would have to beat Bayern by 3-0, and that seems about as likely as my winning the lottery without buying a ticket.

If Arsenal do exit the CL, there's no telling when they'll get back again. Indeed, the only "trophy" left for Arsenal to win this season is CL qualification for next season. Arsene Wenger considers it would be equivalent to winning a cup (see here). But it remains to be seen whether this Gunner side is strong enough to "win" fourth place in the League. It really would be like winning a cup, given everything else that's gone wrong this season. But will we really want to shout in triumph, "We 'won' fourth place." It's actually pretty sad, especially when you stop to consider that the Gunners could just as easily finish outside a Europa League place.

RIP: Armen Alchian, 1914-2013

The great property-rights economist Armen Alchian has died at the age of 98. Alchian was among Lin Ostrom's economics professors at UCLA in the 1960s, and she always talked about him with great affection. I never was fortunate enough to meet the man. You can read a nice appreciation of his work here.

Sunday, February 17, 2013

Jeff Stake's "Last Lecture"

Not really his last lecture, but at the end of the last school year my esteemed colleague Jeff Stake gave the "Last Lecture" at the IU Maurer School of Law. It's a humorous but seriously insightful look at the US News & World Report law school rankings. It should be especially useful for undergrads, who tend not to appreciate just how insignificant ordinal rankings can be. In any case, it's a fun half hour of viewing for anyone interested in the "inside baseball" of legal education.

In Tallahassee

My favorite city in the middle part of extreme Northern Florida. I'm here to give a talk to Environmental Certification students at the FSU law school tomorrow. I'll be talking to them about my new-ish article in the Alabama Law Review (here) on "Law, Politics, and Cost-Benefit Analysis."

Saturday, February 16, 2013

Alan Ryan's "The Making of Modern Liberalism"

Having just finished reading On Politics (WW Norton/Liveright 2012), Alan Ryan's magisterial history of (predominantly Western) European political thought, I have started reading his equally magisterial, The Making of Modern Liberalism (Princeton 2012).

The book is worth buying, and reading, for the third chapter alone (although the first two chapters were also excellent, and I do not know what delights await in subsequent chapters), which concerns the problems of "Culture and Anxiety" that have plagued modern societies since Enlightenment thinkers and Humanists first began questioning the primacy of theology. The chapter is part autobiography, part meditation on egalitarianism and meritocracy as features of modern moral/political theory, part assessment of the role widening educational opportunity, and higher education in particular, has played in the development of liberal (with a small "l") culture.

Arsenal Stumble Out of FA Cub

At home to Championship side Blackburn. Wenger took a chance resting Cazorla, Walcott, and Wilshire, ahead of a stern mid-week Champion's League test away to Bayern Munich, and it cost the Gunners a chance at the FA Cup title. More specifically, Gervinho cost them a chance at the FA Cup by failing to convert a first-half chance that seemed more difficult to miss than to make. In the second half, Thomas Rosicky, who played a fine game, blasted a shot off Blackburn's crossbar. The shock was complete when Blackburn converted on nearly their only chance of the game on a scuffed follow-up shot, following a fine save by Szczesny.

Arsenal seemed to have possession of the ball for 80% or more of the game (although I'm sure the stats will show it was somewhat less than that). And they seemed to have several dozen corner kicks, most of which failed to clear the first defender.

But they couldn't find a way past Blackburn's stubborn defense, with a major assist from the wasteful Gervinho. In Gervinho's defense, Oxlade-Chamberlain was also poor, although he at least seemed to be working hard to create chances.

Arguably, the FA Cup was Arsenal's best chance for winning any silverware this season (having fallen out of the League Cup earlier against an even more downtrodden opponent). It is a measure of Wenger's excessive faith in his team that he thought he could get through this round without playing his strongest side, in favor of resting several key players for a mid-week clash in Munich in a competition Arsenal have much less chance of contesting.

I will not be the only Gunners fan shaking my head in dismay today.

Monday, February 11, 2013

Tribute to Levon Helm at Grammies

I didn't watch The Grammy Awards last night, but I heard they did a all-star tribute to Levon Helm (and other great musicians) who died this past year. No one was more deserving of such a tribute.

I found the video, and it's pretty darn good (especially Mavis Staples (who famously sang a verse with The Band in The Last Waltz (1976) and Brittany Howard of Alabama Shakes). Unfortunately, despite Levon's best efforts, Robbie Robertson will be getting all the royalties from the performance in Levon's honor. But, so what, it's a great song.

Non-human Agents

In Lin Ostrom's Institutional Analysis and Development (IAD) framework (see below), bio-physical systems, community attributes and rules are inputs into action situations, in which humans interact for various purposes, ranging from collective-choice decisions about new or amended rules to operational-level decisions about production and provision of goods, debt or equity financing of purchases, exchange, etc. (all of which are affected by rules adopted at collective-choice levels and/or norms established by prior interactions).

More than once in the past couple of weeks, anthropologists at the Ostrom Workshop have mentioned that Lin's IAD Framework is Western-centric in its presumption that only humans are actors in the action arenas (or, as Lin later preferred to call them, action situations). They point to "Eastern" cultures
in which land and other resources are invested with independent agency, so that they become as actors in collective-choice or operational action situations.

Needless to say, taking account of resources as agents would require a substantial reworking of the IAD framework. But before we start down that road, I want to insert a note of anthropocentric skepticism, based on observations William Baxter made in his 1974 book, People or Penguins: The Case for Optimal Pollution (Columbia Univ. Press). Ordinarily, I don't pay much attention to works with the word "optimal" in the title because I find the authors usually end up constructing models with virtually no application to real-world problems. This is not the case, however, with Baxter's book, which makes the important point that only humans (so far as we are or can be aware) are capable of expressing and ordering preferences and deliberating over trade-offs. As a practical matter, this prevents us from giving real agency to land or other resources, which are unable to state preferences or make trade-offs, at least in any ways that we might understand. This hardly  means that land and other resources have no value. In fact, as Baxter explains, we humans tend to value penguins (and other forms of charismatic mega-fauna) quite highly; we are loathe to allow them to go extinct (even if we don't always treat the planet with the care that it would take to avoid that result). But the value they have is not and cannot be independent of the values with which humans invest them.

What does this imply for social-scientific theories of non-human agency? At least, it puts the onus on supporters to show that what appears to be agency really is agency, rather than merely a privileging of one human group's preferences - perhaps as self-anointed guardians of the resources - over the preferences of other human groups. To put the question concretely: Do sacred cows in India possess independent agency? Or are they sacred and deemed to possess independent agency only because of human value systems applied to cows?

The issue of non-human agency has been debated in legal scholarship for quite some time, at least since Christopher Stone's famous 1972 book, Should Trees Have Standing? The term "standing" refers to the right to have grievances redressed in court. Traditionally, to have legal standing sue, one would have to have suffered a cognizable harm that the court is in a position to redress. Recognition that trees, or other resources, had standing to sue would be to recognize that they have rights of their own, which they have independent agency to enforce in judicial proceedings.

At least one problem should be immediately apparent: How could a tree appear in court to represent its own interest? Of course, it could not. We might analogize, however, to other beings, such as infants, that cannot appear in court to protect their own interests but nevertheless have standing. They are protected by the appointment of guardians or trustees, who are charged with a legal obligation to represent their interests. Indeed, Stone argued that the same could and should be done on behalf of trees and other natural objects, which were subject to harm by human pollution, over-extraction, and habitat degradation.*

But note the chief implication of Stone's argument: in order to grant legal agency to resources, we would have to appoint human agents to represent their interests. And we are right back where we started with human agents. It might be argued that Stone's agents, as legal guardians, would have a legal duty to act in the best interest of their arboreal wards. But different humans might well have very different views of that "best interest." And we should expect disputes as to who should be appointed guardian in the first place. Should it be a representative of the Sierra Club, Weyerhaeuser Corp., a local community, an even more local indigenous group, or the Dean of Yale Forestry School? In the end, the determination of the best interests of resource (whether or not as an agent in its own right) boil down to human choices about human representatives.

If different cultures appear to give agency to resources - the land, a tree, a river, or a mountain - appearances may be deceiving. Instead of the resource having agency, the apparent agency may be a manifestation of deeply ingrained attributes of the human community, which affect how human agents treat the resource in their action situations. That, at least, is an alternative hypothesis worth considering in light of the inherent problems of actualizing non-human agency.

*My friend Jan Laitos (Denver) has taken up and extended Stone's argument in a provocative new book, The Right of Nonuse (Oxford 2012). Jan calls for a legally enforceable "right of non-use" to be created for and held by resources themselves. Despite his best efforts, however, I don't think there's any way to avoid the problem of human agency in right-creation and -enforcement processes. Ultimately, some person or persons must be appointed to represent the aggrieved resource. The choice of guardian, and the discretion he or she possesses, may be legally constrained; but if so, that just means the deck has already been stacked, one way or another, in a prior, all-human, collective-choice determination. Whatever rights are allocated to resources inevitably are the outputs of collective-choice action situations comprised exclusively of human actors. Even an argument that nature endows trees with certain inalienable rights is, after all, a human argument about natural rights.

The Pope's Resignation

How often can someone do something no other human being has done in more than 600 years (not involving new technology)?

Friday, February 8, 2013

Too Easy a Target

It is sometimes jokingly said of the House Intelligence Committee that its name is an oxymoron. But it's no joke when Michelle Bachmann is named as a member of that committee (see here).

I usually try to avoid the argumentum ad hominem on this Blog, but sometimes the temptation is irresistible, especially in the case of politicians and other public figures who never let facts get in the way of telling politically convenient stories, no matter how harmful to others.

"Here Comes the Hawks, the Mighty Blackhawks"

I've never blogged about the National Hockey League, and never expected to do so this year, when it seemed the entire season would be lost to a protracted labor negotiations following a lock-out (Gary Bettman may be the worst league commissioner in professional sports, and that's saying something). The deal finally got done, and we have a protracted 40-game season, which is shaping up to be very exciting especially for fans (like me) of the Chicago Blackhawks.

I must confess, I wasn't feeling very optimistic when I first saw the schedule, which had the Hawks on the road for 9 of their first 11 games (the Chicago Stadium must have been contracted out for Ice Capades, Disney on Ice, and several other frozen water-based forms of entertainment during January). But here we are, 10 games into the season and the Hawks have yet to lose a game in regulation time (they've lost two in post-overtime shoot-outs). Even the most optimistic Hawks game could not in their wildest imagination have guessed that the Hawks would returns from the current 6-game road trip with a season record of 8-0-2.

In a foreshortened season, a hot start is especially valuable. With ten games under their collection belt, the Hawks are already a quarter of the way to the end of the regular season and the start of the playoffs, with a seven point lead in their division and the five point lead in the Western conference. Of course, a fast start is not so important as entering the playoffs in top form. But what was looking as a season to write off is shaping up as a season to remember for the Blackhawks and their fans.

Wednesday, February 6, 2013

How the US Postal Service Can Cut Costs

The New York Times is reporting (here) that the US Postal Service is planning to stop Saturday deliveries of mail (but not parcels) in an effort to cut costs. The move would save an estimated $2 billion per year, or nearly $5.5 million per day. Unfortunately, the USPS currently is losing an estimated $36 million per day. So, even a move as dramatic as curtailing a whole day of mail delivery saves only peanuts compared to the massive deficits the USPS runs up.

So, what more can the USPS do to stem the tide of red ink. Arguably, the best way would be to apply for liquidation in bankruptcy, in concert with a move by Congress to start a competitive bidding process (state-by-state, regionally, or, less likely, nationally) for private contractors (think UPS, FedEx, and other delivery services) as a replacement (with successful bidders obligated to provide universal service in their territories).

Even assuming there once were rationales for the government to be involved with mail collection and delivery (the universal service burden may have been one such rationale), those rationales probably no longer apply. In a modern world where communications, including payments of bills, increasingly is electronic, and private enterprises exist that could pretty easily take up the slack left by the absence of the USPS, and more efficiently provide the same services, there is no reason for US taxpayers to continue bearing the excess costs associated with relatively inefficient government provision.

Of course, creating monopoly private providers in different regions is not necessarily an efficient solution either  - witness the history of monopoly private provision of cable tv or electricity. Perhaps it's not even necessary for the government to demand universal service, as companies would naturally be willing to serve every house in American, no matter where located, as long as they could profit. This would, of course, mean differential pricing - a stamp would no longer cost the same regardless of point or origin or (domestic) destination. But that's already the case with respect to privately-owned parcel services that will send almost anything almost anywhere, using differential pricing. Whether mail should be treated any differently than parcels (given existing technologies) is the real question.

Woerdman on False Alternatives in Energy/Climate Policy

Over at CommentsVisions (here), my friend Edwin Woerdman (Groningen) has an excellent post about the way policy advocates often engage in faux, instead of real, comparative institutional analysis. Instead of addressing both the strengths and weaknesses of each policy alternative, there is a tendency to compare the weaknesses of a policy on opposes to the strengths of a policy one prefers. So, to borrow, Edwin's example, economists and others who prefer carbon taxes to the existing system of emissions trading under Europe's Emissions Trading Scheme, compare the problems of the existing system with the theoretical advantages of their preferred scheme without paying much (if any) attention to problems that would likely impede a successful set of carbon taxes, including the same political dynamics that led the EU to institute emissions trading rather than a tax-based scheme to begin with. And I might add that such either-or analyses also tend to ignore the prospects for combining the best features of emissions trading and taxes, e.g., by adding price floors (which essentially constitute a tax) to ensure that auctioned allowances create incentives to minimize emissions even in circumstances of economic recession.

Edwins "model-versus-muddle" framework is consistent with Neil Komesar's (Wisconsin) long-standing efforts to get scholars to engage in real comparative institutional analysis, instead of comparing real, existing, inevitably flawed systems with idealized versions of alternatives. See, for example, Neil's 1997 book, Imperfect Alternatives: Choosing Institutions in Law, Economics, and Public Policy.

Tuesday, February 5, 2013

No Win Situation for S&P

The US Justice Dept. has filed suit against Standard & Poors (S&P) for ignoring its own standards in rating, often as "AAA," mortgaged-backed securities that before bundling were, essentially, junk. The suit comes after months of negotiations between the government and the private rating agency failed to result in a settlement.

The government reportedly is seeking more than $1 billion in damages on grounds that S&P "falsely represented that its credit ratings of RMBS and CDO tranches were objective, independent, uninfluenced by any conflicts of interest that might compromise S&P's analytical judgment, and represented S&P's true current opinion regarding the credit risks." S&P has responded that the lawsuit is without legal or factual merit (see here).

Frankly, I don't see what S&P has to gain by going to court over this. Even if S&P is correct  that it is being singled out for punishment for failing to foresee, like nearly everyone else, the collapse of the housing market, its only real defense would seem to amount to this: the misleading and grossly inaccurate ratings of mortgage-backed securities resulted from ignorance or negligence, rather than any intentional effort to mislead consumers.

Personally, I'd retain more confidence in a rating agency that admitted intentional wrongdoing, and paid the price, than one that conceded (falsely or honestly) that it was a dupe and didn't know what it was doing.

Sunday, February 3, 2013

First Spin on Trainer in a While

After suffering with the flu over the holidays, I got a couple of rides in during good weather in January, and then suffered a relapse. I finally started feeling better a week ago, but wanted to give myself that week to make sure I was fully recovered (more or less) before getting back on the bike.

I just finished my first spin on the trainer in about a month. Needless to say, I feel like I'm starting from scratch, but I've got to start somewhere. I may have a second spin on the trainer later today during part of the Super Bowl.

Saturday, February 2, 2013

New Frank Ramsey Biography

In his very short life, the Cambridge polymath Frank Ramsey (1903-1930) made important contributions to philosophy and economics ("Ramsey discounting" is still widely used in benefit-cost analysis), supervised Ludwig Wittgenstein's PhD, and translated Wittgenstein's Tractatus Logico-Philosophicus into English.

A new biography of Ramsey has just been published in the UK, authored by his sister. I can hardly wait until it is available in the US. In fact, if it takes too long, I'll probably just order a copy from the UK, or buy a copy when I'm in the UK in May.

Friday, February 1, 2013

Coase to Launch New Economics Journal?

Last month, Ronald Coase published a terrific short article in the Harvard Business Review (here), "Saving Economics from the Economists," in which he called on academic economists to stop treating all economic activity as a simplistic application of price theory and "reengage the severely impoverished field of economics with the economy." To promote that goal, Coase, at age 102, is planning to launch a new economics journal to be called, "Man and the Economy." Bloomgberg Businessweek has the story here.

It's not that Coase opposes economic theory as such. After all, he has made several fundamental contributions to economic theory starting with his seminal 1937 article, "The Nature of the Firm" (even if other economists did not notice or appreciate its insights for 20 years or more after it was published). Coase's real beef is with theory that is not grounded in, or ever corrected by, empirical observation.

I have one bone to pick with the Bloomberg article for suggesting that the kind of journal Coase wants to start already exists, citing the Real-World Economics Review (here) as an example. That journal is an outgrowth of the "post-autistic economics" movement that started in France more than a decade ago. Unlike Coase, many (if not most) members of that movement reject neoclassical economics in its entirety, including elements such as price theory that have obvious importance to any realistic theory of economic activity. The author should have made clear that Coase is no more likely to find common ground with those scholars than with pure neoclassical theorists. He is no more likely to support throwing out price theory than he is to rely on it exclusively as a basis for predicting economic behavior.

Coase is a founder (along with Douglass North) of the New Institutional Economics, which seeks to reconcile the valuable insights of neoclassical theory (including price theory) with observed deviations from the conventional assumptions of the neoclassical model. It does so by, among other things, relaxing or eliminating neoclassical assumptions, in accordance with lessons from behavioral theory (based on the works of Herbert Simon, Daniel Kahneman, and others), and by focusing on the important role that institutions (the "rules of the game" as Doug North refers to them) play in affecting economic outcomes. In contrast to the "post-autistic economics" crowd, the New Institutionalists (including Coase) avoid throwing out the baby with the bathwater.

I hope Coase gets his journal up and running. If he does, I predict we will never see in it an article purporting to test or apply the "Coase theorem" or purporting to study the effects of "Coasian bargaining."


Thanks to Gerard Magliocca for pointing me to the Bloomberg Businessweek story.

David Brooks Makes the Case for Immigation

I'm pretty hard on David Brooks from time to time (see, e.g., here and here), but he is, on average, among the pundits we have (even if that's not saying much). His column in today's New York Times (here) makes a strong economic case for increased immigration (while also giving a nod to the moral case).