Assorted Links (1/26/2011)

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

My State of the Union Address

“President Obama fulfilled his constitutional duty and gave his report on the state of the union last night. Here’s mine: We’re in deep trouble.”

If We Win the Future, Who Loses?

“Or does that question even make sense? The State of the Union Address was predicated on the notion that The Future is something that can be won or lost, and if we as Americans are not diligent about doing what it takes to Win, someone else will. ”Winning the future” is an idea that doesn’t really make sense.”

Fazzari on Keynesian stimulus

“The latest EconTalk is a conversation with Steve Fazzari on the economics of government spending to improve the economy. We talk about the intuition of the Keynesian argument on behalf of government spending and whether it’s possible to evaluate whether it made things better or worse.”

Uncertainty Continues To Depress Jobs

“President Obama, in his State of the Union address, promised to focus on job-creation this year. But robust new hiring is unlikely when so much uncertainty — created by the same White House now promising jobs — hangs over the economy.”

Another Day Older and Deeper in Debt… — The American, A Magazine of Ideas

“If lawmakers are going to vote in favor of raising the debt ceiling, they should do it only in exchange for a change in the country’s direction.”

Too Moderately Moderate

“The main flaw that has dogged Obama’s progressive thinking from the outset is that on domestic issues, he believes that the appropriate path toward prosperity is a combination of new regulation with larger government spending.  Slimming down government through deregulation is a distant third on his agenda.”

Risk, Uncertainty, and Rule of Law

This article provides an excellent explanation of risk versus uncertainty (relying upon Frank Knight’s seminal book (published on 1921) on this topic), and explains well the Austrian economics concept of “regime uncertainty” (see also

Postal Service Eyes Closing Thousands of Post Offices

“The postal service is reviewing more than half of the nation’s post offices, which are operating at a deficit, and lobbying Congress to allow it to change a law so it can close the most unprofitable.”

Paul Samuelson’s Secret

David Warsh provides a fascinating narrative concerning the late MIT economist and Nobel Laureate Paul Samuelson’s involvement in one of the earliest and most influential hedge funds ever, Commodities Corp.  Along the way, Mr. Warsh also manages to provide a rich conceptual framework and intellectual history for understanding how important developments in finance theory which were largely pioneered by the likes of Professors Samuelson and Fama (e.g., the notion that financial markets are informationally efficient which in turn implies that stock prices follow a random walk) have influenced the evolution over time of financial markets and institutions.  Mr. Warsh also liberally references a recently published book by Sebastian Mallaby entitled “More Money Than God: Hedge Funds and the Making of a New Elite”, which he refers to as a “…very interesting book about the origins and recent history of the hedge fund industry”.  I think I’ll buy a copy!

Journal of Universal Rejection

“The founding principle of the Journal of Universal Rejection (JofUR) is rejection. Universal rejection. That is to say, all submissions, regardless of quality, will be rejected.”

Number of the Week: Americans Dipping Into Savings

“Over the two years ending September 2010, Americans withdrew a net $311 billion — or about 1.4% of their disposable income — from their savings and investment accounts.”

Review & Outlook: Amber Waves of Ethanol

“Four of every 10 rows of U.S. corn now go for fuel, not food.”

Generation ‘Y Me?

“Michael Casey Jr. writes in The Wall Street Journal that demographic changes here and abroad mean young Americans face a bleaker investment future than their parents did.”

The Weekend Interview with Walter Williams: The State Against Blacks

“In The Wall Street Journal, Jason Riley interviews economist Walter Williams, who says that ‘The welfare state has done to black Americans what slavery couldn’t do. . . . And that is to destroy the black family.’”

George F. Will – Hubris heading for a fall

“This is the vicious cycle of government that should worry Larry Summers.”

Fibonacci numbers in nature and in finance

My favorite econ blogger, George Mason University’s Russ Roberts, posted the following (short, less than 4 minutes) video called “nature by numbers” yesterday on Cafe Hayek.  This video provides a remarkable and beautiful presentation concerning how Fibonacci numbers appear in nature. 

For more information concerning the math used in this video, go here.  Peter Bernstein (author of the worldwide best seller “Against the Gods: The Remarkable Story of Risk”) traces the origins of risk theory and finance back to a 13th century Italian mathematician by the name of Leonardo Pisano, who was known for most of his life as Fibonacci (see pages 23–26 from Bernstein’s book for historical context on the Fibonacci number series).  For some examples of applications of Fibonacci numbers in finance, go here.

Assorted Links (1/21/2011)

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

Does health care reform reduce the deficit? No, but its tax increases do.

“I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.”

The Neuroscience Of Music

“Why does music make us feel? On the one hand, music is a purely abstract art form, devoid of language or explicit ideas. The stories it tells are all subtlety and subtext. And yet, even though music says little, it still manages to touch us deep, to tickle some universal nerves.”

Fans of Fibonacci

“If you, like me, enjoy the Fibonacci numbers, you will enjoy this. And if you don’t know what they are, you’ll enjoy it anyway.”

Do We Need a Department of Homeland Security or a TSA?

“The new Republican House of Representatives took office amidst much fanfare about the US Constitution and respecting Constitutional limits on government. I have suggested that if they are really serious about it, they will start by abolishing the Transportation Security Administration.”

John Taylor: The Republicans’ Shadow Fed Chairman – BusinessWeek

“The Stanford University economist’s blistering policy critiques have inspired GOP leaders.”

Backdoor Big Government

“Americans sent a small-government message in November, but Obama isn’t listening.”

A Most Valuable Democrat

“Joe Lieberman has often put himself between a rock and a hard place. But at the end of the day, he’s been an indispensable senator.”

Charles Krauthammer – Everything starts with repeal

“The whole Obamacare bill was gamed; repeal is crucial.”

Paul Rubin: Obama’s Deregulation Initiative Won’t Work

“In The Wall Street Journal, Emory University economist Paul Rubin says that the permanent staffs at executive branch agencies relentlessly push for more, not fewer rules and controls.”

Review & Outlook: The Ruling Ad-Hocracy

“The Wall Street Journal on the collapse of Dodd-Frank’s promise of no more bailouts.”

Harsanyi: Obama isn’t fooling anyone – The Denver Post

“President Barack Obama penned a witty Wall Street Journal op-ed this week titled “Toward a 21st Century Regulatory System.””

Amy Chua Is a Wimp

“”Battle Hymn of the Tiger Mother” may denounce soft American-style parenting, but its author shelters her children from the truly arduous experiences necessary to achieve.”

Review & Outlook: Obama’s Rules Revelation

“The Wall Street Journal asks if the era of big regulation is really over.”

Review & Outlook: The Anti-Illinois

“The Wall Street Journal writes that Georgia debates a tax reform with lower rates.”

Herbert Pardes: The Coming Doctor Shortage

“In The Wall Street Journal, Dr. Herbert Pardes of New York-Presbyterian Hospital writes that we can’t insure 32 million more people and cut funding to train doctors by $60 billion.”

Dick Armey and Matt Kibbe: What Congress Should Cut

“In The Wall Street Journal, Dick Armey and Matt Kibbe of FreedomWorks identify $3 trillion in federal spending cuts over the next decade.”

Review & Outlook: The Repeal Vote

“The Wall Street Journal on an historic repudiation of an entitlement that is only 10 months old.”

Midday rail service may attract more riders, but at what cost?

“On Tuesday, Capital Metro will inaugurate all-day, weekday MetroRail service. The question is, will it be a success? And the answer will be, almost certainly, that we won’t know.”

The numbers cited in this Austin American Statesman article imply a “fare recovery ratio”, or FRR of 2.9% for light rail. FRR measures the % of the transit system’s operating costs actually paid by riders (as opposed to taxpayers). Putting Cap Metro’s 2.9% light rail FRR into perspective, the average FRR for US public transit systems is roughly 40%. Pre-light rail, Capital Metro’s FRR was 9% (see

Limiting free speech isn’t the answer 

“In the aftermath of the January 8 atrocity in Arizona, in which alleged shooter Jared Loughner killed six people and wounded 13, politicians and pundits have blamed inflammatory language or symbols used by certain political groups — read Sarah Palin and the Tea Party — for Loughner’s acts.”

How Many People Suffer From Mental Illness? – The Numbers Guy – WSJ

“Producing a reliable count vexes researchers.”

Higher Investment Best Way to Reduce Unemployment, Recent Experience Shows

“Some economists argue that the efforts now underway to reduce government spending as a share of GDP will have adverse effects on unemployment. This is not what the data show.”

Assorted Links (1/14/2011)

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

Charles Krauthammer – Massacre, followed by libel

“Don’t link the Tucson tragedy to a ‘climate of hate’; Loughner has a clinical disorder.”

The Market Flashes ‘Caution’ on U.S. Treasurys

“In The Wall Street Journal, Neel Kashkari and Steve Rodosky write that the forward five-year annual inflation rate has increased 94 basis points to 2.90%, which is now above policy makers’ unofficial target of 2%.”

Obama Rises to the Challenge

“He sounded like the president, not a denizen of the faculty lounge, writes Peggy Noonan.”

Wisconsin 1, Illinois 0

“In The Wall Street Journal, Potomac Watch columnist Kimberley A. Strassel writes that with Springfield raising taxes amidst its fiscal disaster, the new Republican governor of the Badger State is telling Illinoisans, Escape to Wisconsin.”

The Jared Loughner Problem

“In The Wall Street Journal, Business World columnist Holman W. Jenkins, Jr. says that remedies exist short of locking up troubled people based on their personalities.”

A Price for Raising the Debt Ceiling

“In The Wall Street Journal, Arthur B. Laffer writes that Republicans should attach provisions repealing the worst aspects of ObamaCare and financial reform to spending that the president absolutely needs.”

Why the Left Lost It

“In The Wall Street Journal, Wonder Land columnist Daniel Henninger writes that the accusation that the tea parties were linked to the Tucson murders is the product of calculation and genuine belief.”

Illinois’s Tax Increase Has Business Fuming, Neighbors Courting

Sadly, the land of Lincoln (my home state) has become the US equivalent of Greece in terms of its current fiscal situation! “As Illinois raised its corporate-tax rate to 7% from 4.8%, governors of some nearby states said they would woo the state’s businesses.”

S&P, Moody’s Warn On U.S. Credit Rating

Apparently money doesn’t grown on trees after all!  “Two leading credit rating agencies cautioned the U.S. on its credit rating, expressing concern over a deteriorating fiscal situation that they say needs correction.”

The U.S. Loses Ground on Economic Freedom

“The world is resuming its trend toward more freedom, but those who fear the U.S. is falling behind the dynamic economies of Asia have cause for concern, Terry Miller writes in The Wall Street Journal.”

The Jared Loughner Problem

“In The Wall Street Journal, Business World columnist Holman W. Jenkins, Jr. says that remedies exist short of locking up troubled people based on their personalities.”

A Predictable Tragedy in Arizona

“In The Wall Street Journal, Dr. E. Fuller Torrey writes that starting in the 1960s, we emptied state mental hospitals without providing adequate treatment alternatives.”

George F. Will – The charlatans’ response to the Tucson tragedy

“Half-baked sociology ties conservatism to violence.”

Obamacare Deficit Debate is a Red Herring

“The law is only deficit neutral because of the inclusion of the Community Living Assistance Services and Supports program.”

Jockeying for Position: Strategic High School Choice Under Texas’ Top Ten Percent Plan

Unintended Consequences: This new NBER paper documents that high school students have responded, gaming the system by choosing high schools with lower performing peers as a way to get into the top 10%. The authors note, “The net effect of strategic behavior is to slightly decrease minority students’ representation in the pool.”

Junk Science Isn’t a Victimless Crime

“In The Wall Street Journal, Dr. Paul A. Offit of the Children’s Hospital of Philadelphia writes that vaccines don’t cause autism—and there was never any proof that they do. Too bad kids had to die while we figured that out.”

In Budget Crises, an Opening for School Reform

“In The Wall Street Journal, Michelle Rhee, former chancellor of the Washington, D.C., school system and the founder of StudentsFirst, writes that school systems can put students first by making sure any layoffs account for teacher quality, not seniority.”

The Politicized Mind

“The political opportunism occasioned by the Tucson massacre has ranged from the irrelevant to the irresponsible, all while we ignore the most productive questions.”

If You Can’t Stand the Heat . . .

“In The Wall Street Journal, John Steele Gordon offers a short history of heated political rhetoric in the U.S. He writes that Harry Truman would have had little patience for the notion that caustic political rhetoric causes murder—an argument pundits are currently making about the murders in Tucson.”

Traditional Bookstores are Doomed

“The traditional bookstore is doomed by e-readers and online sales of hard copy books.”

Economic Principals

“Perhaps this year the event acquired a name that at last will stick. The World Financial Crisis? The Great Recession? Why not call it The Long Slump, said Robert Hall, of Stanford University, in his presidential address at the meeting here of the American Economic Association… This slump, which began in the autumn of 2007, is expected to last most of a decade… before the unemployment rate returns to its post-World War II trend.”

Is Groupon Good for Retailers? — HBS Working Knowledge

“For retailers offering deals through the wildly popular online start-up Groupon, does the one-day publicity compensate for the deep hit to profit margins? A new working paper, To Groupon or Not to Groupon, sets out to help small businesses decide.”

The Hateful Left

“Where incendiary political rhetoric truly resides in America.”

United in Horror

“Violence in American politics tends to bubble up from a world that’s far stranger than any Glenn Beck monologue.”

AAMC Releases New Physician Shortage Estimates Post-Reform

“The AAMC Center for Workforce Studies has released new physician shortage estimates that, beginning in 2015, are 50 percent worse than originally anticipated prior to health care reform.”

Capitalism’s comeback

“It’s up to free markets and the private sector to bail us out of the mess The spirit of capitalism, supposedly killed off in the wake of the financial crisis, is sweeping the world’s economies. From Obama’s new White House to the Las Vegas computer show to the international auto industry and beyond, business is making a comeback and the essence of free markets — competition — is ripping through the global economic system.”

Assorted Links (1/8/2011)

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

Will Repeal of Obamacare Increase the Deficit?

“Rescinding the federal law to overhaul the health-care system, the first objective of House Republicans who ascended to power this week, would ratchet up the federal deficit by about $230 billion over the next decade … , according to congressional budget analysts.”

The Dismal State of Long-Term State and Local Government Finance

“The disturbingly large present and prospective fiscal deficits of the federal government receive much attention, and deservedly so. Yet the financial situations of many state and local government finances are also in bad shape, and in many respects they are far more difficult to solve than are the federal fiscal problems.”

Underwater Homes Estimate of One in Four Springs Leaks

“Roughly one in four homeowners with a mortgage owe more than their home is worth, according to widely repeated estimates, but the real housing picture may not be so dismal.”

The Great Lone Star Migration

“In The Wall Street Journal, Michael Barone finds that more and more Americans are moving to low-tax, business-friendly states.”

The Taxman Cometh to Illinois—With a 75% Hike

“In The Wall Street Journal, Stephen Moore writes that Democrats in the Illinois legislature have convened an emergency session to raise income taxes before Republicans take control.”

Government Electric and its secret bailout

“No company is more cozy with government, in my opinion, than General Electric. GE spends more on lobbying than any other corporation. So many of its businesses thrive on — or even depend on — Big Government: defense systems, embryonic stem-cells, smart meters, greenhouse gas offsets, wind mills, electric car components, high-tech batteries, health-care products, and more.”

Congress’s Broken Windows

“In The Wall Street Journal, Wonder Land columnist Dan Henninger writes that the president must have power over the budget to make spending reform work.”

Charles Krauthammer – Constitutionalism

“Its wide appeal and depth make it a promising first step to a conservative future.”

Yule Blog 2010-2011: The Light at the End of the Yule Blog

“As a kid I always had some trouble understanding the business about the three wise men. Gold always comes in handy so I could see why you would bring gold to a baby — but what on earth were frankincense and myrrh and why would anybody give them to a child? I figured myrrh might have something to do with myrtle, like the crepe myrtles that bloom so beautifully in South Carolina. So maybe the myrrh was flowers for the mom?”

Buckle Up for Round 2

“The health care crackup is coming, no matter how much people wish the issue would just go away.”

retirement planning – MSN Money

“The bear market led throngs of investors to flee stocks for the relative ‘safety’ of bonds. But with the economy changing, those investments now threaten our retirement savings.”

Michigan and Rich Rodriguez: Inside the Tragicomedy

“If the tenure of Michigan coach Rich Rodriguez, who was fired Wednesday, looked chaotic to outsiders, it appeared positively crazy from the inside. Writer John U. Bacon offers his thoughts.”

Hey, Folks: Here’s a Digital Requiem for a Dearly Departed Salutation

“Across the Internet the use of dear is going the way of sealing wax. Email has come to be viewed as informal even when used as formal communication, leaving some etiquette experts appalled at the ways professional strangers address one another.”

Harsanyi: The Constitution is dead. Long live the Constitution

Hat tip to Russ Roberts… “Every patriotic fiber of my body tells me that reading the Constitution aloud at the commencement of congressional sessions is a good idea. Heck, a pop quiz might even be in order.”

Yule Blog 2010-11: Dwelling in Darkness, Seeing A Light | Via Meadia

“As the Christmas season draws to a close and the return of regular blogging looms, I’m looking back over my short life as a writer on religious matters and thinking about how writing on religion is and is not like writing on other controversial topics.”

The SEC vs. Zuckerberg

“In The Wall Street Journal, Business World columnist Holman W. Jenkins, Jr. writes about Facebook’s likely IPO.”

The States Versus ObamaCare

“In The Wall Street Journal, Florida’s Attorney General Pam Bondi writes that as new state attorneys general take office in the coming days, we should expect to see an increase in the number of states challenging the health-care law in court.”

Obamacare And Price Controls

“If they survive judicial and legislative challenges, the Patient Protection and Affordable Care Act’s big ticket health insurance reforms – the individual mandate, Medicaid expansion, creation of health insurance exchanges, and prohibition of preexisting condition exclusions and basing premiums on health status – will take effect in 2014.”

Charles Limb: Your brain on improv | Video on

“TED Talks Musician and researcher Charles Limb wondered how the brain works during musical improvisation — so he put jazz musicians and rappers in an fMRI to find out. What he and his team found has deep implications for our understanding of creativity of all kinds.”

Assessing the Housing Sector

“An examination of various housing and home construction data suggests prices will be little unchanged in 2011, an economist writes.”

What does one TRILLION dollars look like?

Hat tip to Harvard’s Greg Mankiw for pointing this website out, which illustrates (using Google Sketchup software) what $10,000, $1,000,000, $100,000,000, $1,000,000,000, and $1,000,000,000,000 looks like if you stacked up a bunch of $100 bills (which is the largest denomination US currency in circulation)…

Assorted Links (1/4/2011)

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

Visitors snap up 100 trillion Zimbabwe bank notes – Yahoo! Finance

“Western visitors to Zimbabwe are looking for zeros. They’re snapping up old, defunct Zimbabwe bank notes…”

The Benefits Storm

“Why New York can’t afford enough sanitation workers to clean up the snow.”

The Tale of How Insulin Came to Market

“One of the most pressing questions of modern biomedical research asks what the relationship between government regulation and scientific innovation is. Nothing is more common today than the plea that extensive government regulation, at every stage of the development process, is needed to protect innocent and uninformed patients and their families from exploitation by pharmaceutical companies, hospitals, and physicians.”

A Very Good Year for Economics ideos, Especially Cartoons

“Short video clips are a good way to get students interested in economics and help them understand the basics. I especially like the Golden Balls video for teaching game theory and Milton Friedman’s classic telling of the pencil story for teaching price theory…”

Yule Blog 2010-11: The Mother of Meaning

“Connections between the adult Jesus and the baby in the manger aren’t easy to make. At first glance, the gospels don’t help much; whatever the gospel writers had in mind, producing complete biographies of Jesus wasn’t it. Mark omits Christmas altogether, and starts with Jesus getting baptized and launching his career.”

Dodd-Frank and the Return of the Loan Shark

“In The Wall Street Journal, Todd Zywicki of George Mason University writes that in the name of consumer protection, Congress has pushed more Americans outside the traditional banking system.”

Congress Rediscovers the Constitution

“In The Wall Street Journal, Cato Institute scholar Roger Pilon says that Congress must recognize its responsibility to decide on a legislation’s constitutionality and not just defer to the courts.”

Review & Outlook: Rules for Smaller Government

“The Wall Street Journal argues the House GOP is making it harder to tax and spend.”

Living in the Political Wake of the Bubble

“We are repeating history and thus will repeat the mistakes of history; here are four ideas to make sure the future is better than the past.”

An Innovator in Every Apartment

“Cities should unravel their pre-digital regulations.”

Yule Blog 2010-11: How Real Is The Meaning?

“By now, the Three Kings are well on their way to Bethlehem, and the Christmas season is drawing to a close. But the Three Kings (actually, ‘wise men’ according to Matthew’s gospel) aren’t just bringing their famous three gifts of gold, frankincense and myrrh. They bring with them another set of questions that we have to wrestle with a bit if we are going to see Christmas clearly.”

How Videogames Are Changing the Economy

“In The Wall Street Journal, Andy Kessler writes that videogames—and not wars—are now driving innovation and helping companies save money.”

Review & Outlook: Canada’s Competitive Edge

“The Wall Street Journal describes how Canada’s lower corporate tax rate has created a warmer climate for capital and business investment than in the U.S.”

Peter J. Wallison: Moving Beyond Fannie and Freddie –

“Peter Wallison writes in The Wall Street Journal that the new Congress should never again allow government housing guarantees to put taxpayers at risk.”