Russell Roberts's Blog, page 1553

Is the Gaza embargo a crime?

Tom Palmer writes (HT: David Henderson):

The trade embargo against the people of Gaza is itself a crime, and the incompetence and avoidable deadly violence of the Israeli authorities in dealing with the aid flotilla are further arguments that it should be lifted.

He then says:

How can the Israeli authorities expect peace from people who, in the end, feel that they have nothing to lose? Free the trade with Gaza and let the people there work, produce, and flourish. Let them trade with Israelis...

Cleaning up after the black swan

Who will write the first article about the silver lining to the oily cloud–the green jobs from cleaning up after the black swan currently swimming toward the Gulf shores? Please keep me posted. And is there a better metaphor for this disaster than a black swan?

Perfection

Last night, Armando Galarraga of the Detroit Tigers took a perfect game into the ninth and with two outs, induced the batter to ground out to first. But the umpire blew the call costing Galarraga his rightful place in baseball history.

This unfortunate human error has created a firestorm of outrage, demands for instant replay, an obscenity laced self-indictment from the umpire Jim Joyce who blew the call, and a gracious reaction from Galarraga who hugged Joyce.

I have a different reaction...

Carnage? Compared to What?

Here's a letter sent a few days ago to the New York Times:

Bob Herbert writes of "the nonstop carnage that has accompanied the entire history of giant corporations" ("An Unnatural Disaster," May 29).  Every writer is entitled to poetic exaggeration, but Mr. Herbert's allegation that large corporations have unleashed unremitting sanguinary havoc extends well beyond exaggeration into inexcusable ignorance of history.

Since the dawn of the industrial age, when the modern corporation debuted, life...

Why I'm wrong

In my narrative of the financial crisis, Gambling with Other People's Money, I argue that excessive leverage was favored by the executives as a way of inflating returns and generating high profits that justified large levels of compensation. The puzzle is why anyone would lend the money to finance those imprudent bets. My answer is that the US government has systematically rescued large creditors 100 cents on the dollar for the last three decades. This destroyed prudence and made our...

Hayek and Duflo

Provocative post speculating on what Hayek would think of the idea of using micro-experimentation as a way of improving aid efforts to help poor people.

The way I think of it is that economists understand that incentives matter. We also understand that markets invariably use incentives. Then many economists make the mnistaken leap that we can get the effects of markets by creating incentives for good outcomes. These folks ignore the infrastructure of markets–cultural context and other...

Crack Reporting

Here's a letter to the New York Times:

Dear Editor:

Suppose Uncle Sam orders you to raise by 41 percent the price you charge for subscriptions to your newspaper.  Would you be surprised to find a subsequent fall in the number of subscribers?  If you assigned a reporter to investigate the reasons for this decline in subscriptions, would you be impressed if that reporter files a story offering several possible explanations for the fall in subscriptions without, however, once mentioning the...

A Quiz about 'Economic' Values

Without googling, guess who wrote the following passage:

Economic changes, in other words, usually affect only the fringe, the "margin," of our needs.  There are many things which are more important than anything which economic gains or losses are likely to affect, which for us stand high above the amenities and even above many of the necessities of life which are affected by the economic ups and downs.  Compared to them, the 'filthy lucre,' the question whether we are economically somewhat...

Is psychiatry a science?

The latest EconTalk is an interview with Louis Menand on the state of psychiatry. One thing that emerges from our conversation is the parallels between macroeconomics and psychiatry. Understanding causation in a complex system is difficult. Both the brain and the economy are hard to model and it's hard to know when an intervention has actually made a difference. Menand is a superb writer (the podcast draws on a recent review article he did in the New Yorker) and a very good talker as well.

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"Your Hair Will Save Lives"

I'm skeptical on oh so many counts of the slogan, "Your Hair Will Save Lives" but it ranks as one of the all-time markets in everything examples. Don't you want your hair to be used to sop up the gulf oil spill? Now you can with the help of the Hair Cuttery and Fed Ex. They pledge "From the floor to the shore in just days." Not sure if it will actually do any soaking. Not sure what flavor of lives will be saved. But it's a heck of a marketing ploy no matter what.