Assorted Links (12/1/2010)

Here’s a list of articles that I have been reading lately:

Who Pays for Big Government?

“A comparison of France and the United States suggests that increasing tax revenue will ultimately put a burden on the poor, not the wealthy, an economist writes.”

Need Vitamin D Supplements? Depends Which Newspaper You Read

“Vitamin D: should we take less or triple that intake? Whatever you do, don’t just read this headline and run with it.”

There’s No Public Goods Problem in Higher Education

Apparently, colleges and universities no longer sell “…top quality, liberal education(s) that improve critical thinking skills, raise intellectual curiosity and improve students’ respect for the rule of law and private property”. Rather, “we are selling a whole smorgasbord of things that have little to do with education”; e.g., such as markets for marriage, gateways into careers and graduate school admissions, and fun places to party!

Democrats’ Dwindling Options on Tax Cuts – David Leonhardt

“Democrats’ only chance to pass legislation on the Bush tax cuts before they expire involves a retreat, and a millionaire’s tax may be part of the calculation.”

Should Investors Fear the “New Normal”? – Fama/French Forum

“In this video, Kenneth French explains why lower economic growth may not hinder future stock returns. In fact, history shows that average returns tend to be higher during periods of economic difficulty. The information about a current recession is factored into stock prices, and investors may require a higher expected… return to induce them to take higher perceived risk.”

After Meeting, Obama and Republicans Hopeful About a Deal on Bush Tax Cuts

“President Obama and congressional Republicans expressed determination Tuesday to reach an agreement on the tax cuts due to expire at year’s end, raising the possibility of a compromise that could avert a tax increase for virtually every American worker.”

WikiLeaks Foreshadows a Host of Digital Disasters

“Instead of harnessing the power of Silicon Valley to fight cyber attacks on government and business, the Obama administration is targeting top tech companies with anti-trust violations.”

2010 Hubble Space Telescope Advent Calendar

“As we find ourselves in December once more, I’d like to present the third annual Hubble Space Telescope imagery Advent Calendar for 2010. Keep checking this page – every day, for the next 25 days, a new photo will be revealed here from the Hubble Space Telescope, some old and some new.”

What Ben Bernanke May Be Thinking

“In The Wall Street Journal, Nobel-winning economist Vernon L. Smith writes that the Fed’s easy money could help banks reset underwater mortgages and start lending again.”

Why the Spending Stimulus Failed

“In The Wall Street Journal, Michael J. Boskin of Stanford writes that new economic research shows why lower tax rates do far more to spur growth.”

Review & Outlook: The Dead Enders

“The Wall Street Journal writes that even after their defeat, Democrats keep insisting on a tax increase.”

RealClearMarkets – Ugly Tax Bill Is Washington As Usual

“Americans may have voted for change in November, but for now it is business as usual in Washington. Just take a look at the messy tax legislation that is working its way through Congress under the euphemism of a ‘tax-extenders’ bill.”

B-School Admission Essays, For a Fee – BusinessWeek

“Perfect Words and Essaywriter say they can deliver admission essays that will open the doors of elite business schools. Is it ethical?”

QE2: It’s About Debt, Not The Economy –

I have made similar points in a recent blog posting entitled “Political economy and the (inflationary) future” (cf.; among other things, QE2 provides policymakers with a way to “monetize” our nation’s growing debt by “…printing new money to finance deficit spending.”

Donald Marron: How Much Did TARP Cost? $25 Billion

“The much-maligned TARP program will cost taxpayers only $25 billion according to the latest estimates from the Congressional Budget Office. That’s substantially less than the $66 billion CBO estimated back in August or the $113 billion that the Office of Management and Budget estimated in October.”

While I am sure that Dr. Marron’s estimates are correct, the real long-term “cost” of TARP is not the net cash flow which was generated by the program; rather it is the impact that programs like TARP have on incentives for financial institutions to make increasingly risky investments and adopt highly leveraged financial structures because their “backs” are covered in case if things don’t turn out as planned. Geeky people like me refer to this as a “moral hazard” problem.

Puzzle: a drunkard and a cliff – Mind Your Decisions

“From where he stands, one step toward the cliff would send the drunken man over the edge. He takes random steps, either toward or away from the cliff. At any step his probability of taking a step away is 2/3, of a step toward the cliff 1/3. What is the chance of falling off the cliff?”

RealClearMarkets – Will Congress ‘Lame Walk’ the ’03 Tax Cuts?

“It has been a tough few weeks for the outgoing 111th Congress, what with the tea party throwing incumbents overboard and then giving the GOP establishment “the evil eye” on earmarks. If the Beltway crowd doesn’t realize it’s on double secret probation, it hasn’t been paying attention.”

The Superfluousness of Realtors – Homes sold through Realtors don’t garner a price premium over ones

“It’s a straightforward question asked by nearly all sellers of homes: Is it worth paying a 6 percent commission to a Realtor to sell this house? In other words, will a Realtor be able to command a price greater than 106 percent of the price an owner could get selling the house himself or herself?”