Thaler has a new column

Prof. Richard Thaler has a new column in New York Times.  Here is the first one.

Independence Day

This amazing feat was a part of Belarus' Independence day celebration on July 3.   

Cricket and America

Just a tangential post on a game I am a big fan of.  Nice to see this post from an American viewpoint.  Enjoy!

Link from CFR on economic crisis

Here

Jobs report - Obama's plan working or not working?

Prof Mankiw's post is scary.  One can give the benefit of doubt to the policy makers saying the baseline was overly optimistic (as Mankiw suggests).  But either way -- looks like things are worse than what the government presumed.  If that's the case, where are we headed? Japanese style recession as Krugman suggests.  (In short, Japanese style recession is when there is a slowdown in economy including slow bust of housing prices.  Even if production increases a bit but not enough to keep unemployment from increasing or the machines from staying idle)

Thinking about systemic risks

After spending few years in engineering safety systems for nuclear power plants and the transmission grid - I can say I have a deep sense of appreciation for complex systems.  To me, they are as close as to the proverbial butterfly that flaps its wings in the Amazon causing a storm in Japan.  One of the key design criteria in the nuclear power plant is that it has to be able to shutdown safely if an adverse event occurs.  Thinking for banks, I believe the same can apply.  In case of a major macroeconomic (or other) shock, the bank has to design ways to safely "shutdown" and wind-up without causing a cascading set of reactions resulting in a financial "meltdown" or "blackout".  Anil Kashyap in his FT piece talks something in those lines.  

Debt as a palliative?

In this piece, Ben Funnell asserts that debt has been used to assuage the pain that was caused to the lower income groups as their incomes decreased and while they witnessed the higher income groups becoming richer.  This thought is in line with what Rajan spoke in Chicago Booth's convocation address.  BTW, just free wheeling -- Is it the same reason why student activism has vanished from colleges?  Is it because even before students graduate they are sunk in student loans.  Are student loans a good thing then?  Or, there is a better way for public policy to stimulate higher education but not take away the freedom to stand up against poor governance and be passionate for a cause and take the role of activist to bring in change.

Economics and Pirates

While strolling in World Bank's info shop, I picked up The Invisible Hook.  Boston Globe has got a good review mentioning Austrian economists - Hayek and Ludwig von Misses.  Looking forward to reading this over the next few days.

Not a lack of Regulation but a lack of imagination

Regulation is as good as to what extent people can imagine within the context that particular regulation.  In his op-ed, Samuelson drives this point.  This is important and in a way it lends itself to the belief that there has to be a shift in culture from reckless risk taking to a more responsible one -- treating OPM (other people's money) as if it were your own.  Such a culture should reward self-reporting of potential risks and give incentives who bring forth systemic interconnects that can bring down the house.  To build such a culture may well require a radical event. Imagination like anything else will not have in a vacuum.  Carrots and sticks are necessary to drive this.  And that's not what I see is happening.  I keep my fingers crossed.    

Kevin Murphy

I did not take Kevin Murphy's famed "Turbo economics" (Adv Micro) class when I was in Chicago but I became a fan in the few talks and lectures I was able to attend.  He is one of the very few people who can take complex subjects and break it up, distill, and articulate in a conversation format.  He is sharp, witty, and very insightful. Here's a recent interview.