- Chris Dillow writes in Praise of Complexity Economics
One feature of complexity economics is that recessions can be caused not merely by shocks but rather by interactions between companies. Tens of thousands of firms fail every year. Mostly, these failures don't have macroeconomic significance. But sometimes - as with the Fukushima nuclear power plant or Lehman Brothers - they do. Why the difference? A big part of the answer lies in networks. If a firm is a hub in a tight network, its collapse will cause a fall in output elsewhere. If, however, the network is loose, this will not happen; the loss of the firm is not so critical.
- Tim Worstall asks Isn’t the Venezuelan economy doing well?
As we’ve mentioned around here before there’s nothing wrong at all with the idea that you’d like to change an uneven income distribution. It may or may not be desirable, may or may not be practicable, but the basic desire for a little less extremity in the gap between rich and poor is not a dishonourable goal. It’s just that there are sensible and non-sensible ways of going about this.
- Clive Cook writes about The Year of Piketty
Above all, admirers and critics alike pay tribute to "Capital" for drawing attention to inequality. I hadn't noticed that it was lacking attention to begin with. The American left pays attention to little else. It was really the reverse: The obsession with inequality demanded, so to speak, an academic testament, and that's what "Capital" provided. Piketty's economics leaves a lot to be desired, but his timing was fantastic.
- Scott Sumner on The French experiment: Laffer >>>>>>> Piketty
What an unmitigated disaster for Pikettynomics! The French "super-tax" on the rich raised less than one one-hundredth of one percent of GDP in tax revenue.
- Stephen Moore on The Laffer Curve turns 40: the legacy of a controversial idea
When Reagan left the White House in 1989, the highest tax rate had been slashed from 70 percent in 1981 to 28 percent. (Even liberal senators such as Ted Kennedy and Howard Metzenbaum voted for those low rates.) And contrary to the claims of voodoo, the government’s budget numbers show that tax receipts expanded from $517 billion in 1980 to $909 billion in 1988 — close to a 75 percent change (25 percent after inflation).
- Emma Griffin on Sex and the Industrial Revolution
Before the mid-18th century poverty had controlled young people’s sexual behaviour and steered them away from sexual intercourse until they were ready in the eyes of their neighbours to marry, set up house and raise a family. The young men and women of the factory districts did not show this kind of deference to social norms. They made decisions about when to start a family that tied in with their own wishes, rather than obeying what their community dictated. Seen in this light it becomes possible to understand the true complexity and significance of the Industrial Revolution. As well as ushering in new working patterns, industrialisation raised the incomes of the poor just enough to permit them to make meaningful decisions about their own life. As such, it was a vital step towards the sexual revolution of more recent times.
- John Cochrane asks Cancel currency?
Ken Rogoff has an interesting NBER Working paper "Costs and Benefits to Phasing Out Paper Currency." Ken would like to get rid of paper currency in favor of all electronic transactions. I'm a big fan of low-cost electronic transactions using interest-paying electronic money. But I'm not ready to give up cash. Ken has two basic points: The zero bound, and tax evasion / illegal economy.
Saturday, 3 January 2015
Interesting blog bits
A few interesting blog bits to start the year with.