Fighting the liquidity trap???

The funniest take so far - but read it twice, or think it over - goes a long way into "how absurd is money" (and at the same time how would we do without it...)?

THROW MONEY OUT OF HELICOPTERS

(hat tip: the Economist's Free Exchange blog, as so often, a great source!)

Ending the "war on drugs"

Far more stupid, costly and counter-productive even than Bush's so-called "war on Terror" - the "war on drugs".

Two recent takes on how to end it, one more fun, one more serious:

- Israeli ad on legalizing marijuana

- a thorough paper on a "neo-paternalist" (read: liberal-paternalist, as opposed to conservative-paternalist) approach to drug laws offenders - the idea: "coerced abstinence" while leaving offenders (as long as they stay off drugs) out of prison. To me, sounds like a much less defensible and effective approach than simply legalizing the stuff. But then again, since there seems to be no prospect of any of it (even grass) becoming legal any time soon, this might be a step forward?!

Interesting links - on regulation, spanish influenza, China and beyond...

Very interesting link on better regulation and the environment - how (relative) de-regulation (or even tax cuts) can help fighting global warming (hat tip Matt Yglesias)

Some interesting posts about the spanizh influenza epidemic of 1918-1919, which killed more people than WWI, but is much less talked about...in fact, it is often so with epidemics - historic writing about them is not proportionate to their importance, maybe because they are frustrating for humans' sense of self-importance?? (and again it all started with Matt...)

Robert Reich writes some very interesting stuff these days - and I also recommend his book "Supercapitalism" - one of the few intelligent accounts I've read of what happened over the last 30-40 years, i.e. how we gained power as consumers/investors, and lost a lot as workers/citizens!

A good discussion by James Fallows of the paradoxical financial relationship between the US and China - a lot left untested inside (e.g. why China could not grow just as well with more internal consumption and less exports), but still well worth the read

A fun discussion of this horrid word compound: judeo-christianism (as one of my best - jewish - friends always says: how can two religions be more contradictory than these two...but read it, rather good)

Relaxation bonus - pseudo anti-meat-eating advertisement - absurd (a bit at least) but fun...

Lack of consumer protection as one of the roots of the financial crisis - more evidence

I will continue posting on this, which to me is one of the most interesting aspects - in the meantime:

- an interesting link on the changes made in 2005 to the bankruptcy law, which made personal bankruptcy much more difficult in the US, thus encouraging subprime lending...

- an update by Robert Reich on how this could change as even Citi realizes that foreclosure makes repayment of anything even less likely...i.e. banks end up losing more money with this new system, whereas they thought they'd make even more...

"Lemon" socialism

In US-English a "lemon" is a bad second hand car or something similar - in other words, a really bad deal. (In French it would maybe be "une charrue" or sthg like that...am still looking for an appropriate translation - if you have one pls put it in comments). Here is (hat tip economist) a great take on how the US Gov't (and taxpayers) are getting stuck with all the "lemons" in the economy, through successive bailouts (I expect we may get the same situation all over Europe, though we probably will nationalize more, so the taxpayers might get a better deal after all...): Lemon Socialism by Robert Reich.

Evaluating public policies, regulation, growth...

It has been a while since I have been wanting to write this post...lack of time, and then bad health have prevented me from doing so. As a result, I'll at least start, even if it stays shorter than I'd like. At issue again: how to evaluate what we are doing in terms of public policy, and how we are doing in terms of economic development, with something else than GDP.

GDP is bad because of a number of reasons:

- it counts as "growth" any added monetary activity, even if the activity (a) is not a really new activity, but just something becoming monetary, that previously was done "in house" (e.g. outsourcing your child's care to a nanny adds GDP...) and/or (b) is actually noxious for the country (e.g. increasing distance between house and workplace means more mileage means more cars, fuel etc., means more GDP) - this is well known, and has been known for ages

- growth can be tremendously unequal and thus strong growth can lead to no improvement (or even a worsening) in conditions for the majority of the population (see most of the Bush years, or even most of the last 30 years in OECD countries - have a look at Robert Reich's book "Supercapitalism" on this, for instance)

- huge differences in GDP usually correlate well with differences in well-being (think: Switzerland vs. Bhutan) - but smaller differences (as, for instance, between north-western Europe, the USA, Canada, Japan) usually are less important than other factors (environment, health care, infrastructure, education etc.) in what people feel as well being

- the accumulated stock of wealth is just as, or more, important than this year's GDP - for instance, when I used to live in Italy, the GDP/capita was not much below France's (it was 10 years ago) - it was lower, but not that much. However, you could see that the country (particularly in Rome, where I lived) had had a significantly lower level of output than France for well over a century. The accumulated infrastructure was poor.

And I could go on and on...

Now, GDP is good for one reason: it exists, it has a clear definition, is measurable, can be aggregated, compared etc. (Well, there still is the thorny question of using purchasing power parity vs. current exchange rates, both being bad for different reasons, but then again...)

So what do we do? A few ideas:

- The UN has this crude instrument, the Human Development Index. It combines GDP, education and health statistics. But it is quite crude too, and relies a lot on GDP anyway. And it is difficult to use it to track policy outcomes and short-term changes, because the indicators used on education and health (life expectancy at birth) vary slowly...

- Cost-benefit analysis of specific policies: how much do they cost to implement (e.g. for a regulation, using the "standard cost model" to measure this - relatively reliable at least), and comparing this to what they bring (often far more tricky to evaluate...this is the problem)

- Looking at SEVERAL indicators simultaneously: GINI coefficient (inequality) or similar measures of inequality, health indicators, education indicators, crime indicators, environment, etc. - and GDP. Maybe this would be the most useful: having systematically, whenever there is a policy discussion, a set of indicators, and looking at the evolution of ALL of them...

Comments welcome!

Appointments, special elections, substitutes...

Lots of discussions these days regarding the right mechanism to substitute the current system to replace Senators (or Representatives) when they get another position (e.g. President of the US...) (or die etc.) - all the discussion in the US centers on special appointments (by Governors - see: ridiculous scandal in Illinois and ridiculous comedy in NY...) vs special elections. Latest take by Matt Yglesias here.

A simple system is the one in place in France, for instance: every representative (député) is elected at the same time as his/her replacement (suppléant) - funny that this does not exist in the US, and that no one even appears to be thinking about it...Funny on the other hand that the US has a system of substitutes for the executive branch (Vice-President, Lieutenant-Governors) - and France has none, but has substitutes for the legislative branch...

Economics, crisis etc. - a few links

To celebrate getting (slowly) back to blogging, a few good links:

- Matt Yglesias on the use of regulation vs. the use of direct government intervention to reduce inequality

- two takes on what else than massive gov't spending one can do to tackle the crisis - I mostly like this one, but that one is also interesting

- on the right use of the word "liberal" and "liberalism" - I love this one, really

Coming back

Have had health problems - still do, but starting again to blog a bit...more soon...