Here’s a list of articles that I have been reading today (organized by topic):
This year’s Nobel Prize in Economics goes to Elinor Ostrom and Oliver Williamson. The New York Times is running an article today entitled “Two Americans Share Nobel in Economics” which puts Ostom’s and Williamson’s intellectual contributions into context. The following excerpt taken from the official press release from the Nobel Prize Committee also provides some context:
“Economic transactions take place not only in markets, but also within firms, associations, households, and agencies. Whereas economic theory has comprehensively illuminated the virtues and limitations of markets, it has traditionally paid less attention to other institutional arrangements. The research of Elinor Ostrom and Oliver Williamson demonstrates that economic analysis can shed light on most forms of social organization.
Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.
Oliver Williamson has argued that markets and hierarchical organizations, such as firms, represent alternative governance structures which differ in their approaches to resolving conflicts of interest. The drawback of markets is that they often entail haggling and disagreement. The drawback of firms is that authority, which mitigates contention, can be abused. Competitive markets work relatively well because buyers and sellers can turn to other trading partners in case of dissent. But when market competition is limited, firms are better suited for conflict resolution than markets. A key prediction of Williamson’s theory, which has also been supported empirically, is therefore that the propensity of economic agents to conduct their transactions inside the boundaries of a firm increases along with the relationship-specific features of their assets.”
Economics and the Financial Crisis
Mr. Wesbury notes that “New job growth will follow this year or in 2010, but new tax burdens could keep unemployment higher than it should be.”
Professor Shiller notes that “New data on the housing market are startling, but may be just a signal of more price volatility ahead.”
Washington Post: “The genius of democracy is the rotation of power, which forces the opposition to be serious — particularly about things like war, about which until Jan. 20 of this year Democrats were decidedly unserious.”
Wall Street Journal: “Henry Kissinger once noted that the only way to achieve peace is through hegemony or balance of power. Well, hegemony is out. As Obama said in his General Assembly address, ‘No one nation can or should try to dominate another nation.’ And if hegemony is out, so is balance of power: ‘No balance of power among nations will hold.’
Health Care Reform
“Numbers are hard. Some people find them boring… But numbers matter in health care reform. I want to highlight some important numbers and economic forces in these bills that are receiving insufficient attention. If these bills become law, these numbers will significantly affect your financial well-being.”
“A supermarket chain says it has held its employee health care costs in check by offering financial incentives for healthy behavior.”
Boston Globe: “It’s that time of year again, the Earth’s northern hemisphere is tipping away from the warmth of the Sun. Days in the north are getting cooler and shorter, leaves are changing, animals migrating and many harvests are underway. The wet summer in New England this year should make 2009 a banner year for brightly-colored fall foliage in the area. Collected here are a group of photographs of recent Autumn scenes around the northern hemisphere. (32 photos total)”