Econosseur: political economy Archives

A "must read" from Mankiw: the Nobel Peace Prize

By Richard W. Evans on October 9, 2009 11:53 AM | No TrackBacks

You must read Greg Mankiw's post from today entitled, "First-year Grad Student Wins Nobel Prize in Economics!" And please do it in the following order. First read what Mankiw wrote about young Quintus Pfuffnick winning the Nobel Prize in Economics (not really). Then click on the link to the AP story about the Nobel Peace Prize award. Well played, Greg.

Here is a fun little video parody from Reason.tv. (Thanks to Jason for the link.)

Housing, Geithner, and The Daily Show

By Richard W. Evans on July 31, 2009 12:11 PM | 3 Comments | No TrackBacks

Greg Mankiw posted this video sketch yesterday from The Daily Show on a major signal that the housing market has not yet stabilized. Hilarious! My favorite part is when Robert Shiller starts giving advice on how Geithner should redecorate his bathroom.

The Daily Show With Jon Stewart

Mon - Thurs 11p / 10c

Home Crisis Investigation

www.thedailyshow.com

Daily Show
Full Episodes

Political Humor

Joke of the Day

Democrats' Health Plan Diagram

By Richard W. Evans on July 31, 2009 11:34 AM | 1 Comment | No TrackBacks

Mark Showalter sent me a link to this article in Roll Call last week describing how Democrats blocked House Republicans from mailing the diagram below to their constituents. The diagram below was created by the staff of Rep. Kevin Brady (R-TX) and the Republican staff of the Joint Economic Committee. I thought that this diagram was a funny enough caricature to include on the economic jokes page. However, despite the expansive, complicated, government-private, heavily regulated nature of both current and proposed U.S. health care, ours is probably the most privatized system of all developed countries.

Short the Government

By Jason DeBacker on April 24, 2009 10:52 AM | 1 Comment | No TrackBacks

I've been thinking that a decent investment strategy might be to go short anything the government gets heavily involved in (think housing and banking). Of course timing is everything here and it's hard to know when the bet will pay off (will health-care fall apart sooner or later?).

Well, I just came across a fund that is taking a like-minded strategy. The fund is called the Congressional Effect Fund. The fund's basic strategy is to capture the above average returns on the stock market on those days when Congressmen are on vacation. A great idea and much easier to implement than my strategy. The average annualized return to the S&P 500 when congress is in session (1965-2009)? 0.31%. The average annualized return to the S&P 500 when congress is out of session? 16.15%.

Hat tip to DoL'er (and fellow Georgian) Frank Stephenson.

St. Patrick's Day Leprechaun Bailout

By Richard W. Evans on March 18, 2009 1:41 PM | No TrackBacks

Greg Mankiw posted this link yesterday (3/17/09, St. Patrick's Day) to another funny Flash video from the folks at JibJab--Leprechaun Bailout.

Obama nominees and taxes cartoons

By Richard W. Evans on February 24, 2009 4:10 PM | 1 Comment | No TrackBacks

Here are some of my favorite cartoons about President Obama's nominees and their tax problems. (Thanks to Mary Hokanson for sending these to me.)

Continue reading Obama nominees and taxes cartoons.

Only difference from Great Depression is monetary policy and TARP

By Richard W. Evans on February 12, 2009 5:22 PM | No TrackBacks

The only significant policy difference between the current period of global recession and the Great Depression is monetary policy and financial market intervention. The government spending part is looking like it will be the same. The annual deficit is projected to rise from its current 2008 level of just under 3% of GDP to potentially 10% of GDP in 2009. However, this rise in the deficit is also similar to the early 1980s and 2000. (The big blip is World War II.)

Continue reading Only difference from Great Depression is monetary policy and TARP.

Slippery slope argument against the TARP

By Richard W. Evans on February 12, 2009 4:18 PM | No TrackBacks

Back in October 2008, I was a member of a panel discussion hosted by the BYU Economics Department that was tasked with explaining different aspects of the financial crisis up to that point and answering questions from the audience. Each member of the panel, myself included, supported the government's role in bailing out U.S. banks and financial companies citing the systemic role they play in the world economy (see my post 1 and post 2). However, since the crisis began in October 2008, two of my colleagues have consistently made what I see as the only good argument against the TARP financial bailout program--the slippery slope costs will outweigh the systemic risk reduction benefits.

Continue reading Slippery slope argument against the TARP.

Unemployment in China

By Jason DeBacker on February 11, 2009 1:48 PM | 2 Comments | No TrackBacks

As I wrapped up a chapter on labor markets today, a student asked what the labor market in China was like. I couldn't give her precise numbers regarding the unemployment rate, so had to look back on some work that students of mine did last semester when they wrote about the macroeconomic experiences of different countries. Here is a graph of the official rate of unemployment in China:

Continue reading Unemployment in China.

America to Obama: Do we need to pay our taxes?

By Richard W. Evans on February 2, 2009 11:52 PM | 3 Comments | No TrackBacks

Following up on Jason's post today, I am a bit bewildered with the Obama administration's choice of, not one, but two tax evaders as cabinet members. Bad enough is that the Treasury Secretary, Timothy Geithner, allegedly didn't pay taxes. The I.R.S. is a department within the Department of the Treasury. How can you appoint someone to oversee the Treasury and the I.R.S. who didn't pay taxes? In Geithner's defense, the amount of unpaid taxes was only about $17,000, so maybe this was an oversight.

However, adding an exclamation point to the Geithner appointment is now the Daschle appointment to head the Department of Health and Human Services.

Continue reading America to Obama: Do we need to pay our taxes?.

Hope and Change?

By Jason DeBacker on February 2, 2009 12:20 PM | No TrackBacks

First Geithner, now Daschle. Those now in power want to spend more money, but not their own. Those who last had control want "family values", just not for themselves. I'm not sure I see the "change"- politicians still say one thing and do another.

And it looks like the stimulus package leaves little hope that there has been a change in rent seeking behavior.

Inaugural business cycles: no counterfactual

By Richard W. Evans on January 21, 2009 2:01 PM | No TrackBacks

Before I switched from MSNBC to CNN for coverage of yesterday's historic inauguration of Barack Obama as President of the United States, one of the MSNBC commentators said something that piqued my interest. He said that the only good examples of a President entering office in a recession before Barack Obama are Ronald Reagan (1981) and Franklin Delano Roosevelt (1933). Further the commentator contrasted Reagan's promise to decrease the size of government with FDR's commitment to increase the size of government. However, the following picture shows that Reagan is not the correct counterfactual.

Continue reading Inaugural business cycles: no counterfactual.

Political Business Cycles?

By Jason DeBacker on January 16, 2009 12:22 PM | No TrackBacks

Whatever you think of the PBC literature (and despite the fact that Bush has his dates wrong) you've got to love this quote from GW's last press conference on January 12, 2008:

"In terms of the economy, look, I inherited a recession, I am ending on a recession."

Thanks to Bart-man for the quote.

Two interesting dissertations from 2008

By Richard W. Evans on December 26, 2008 3:17 PM | 2 Comments | No TrackBacks

The December 2008 Journal of Economic Literature published the 105th annual list of doctoral dissertations in economics published between July 2007 and July 2008. This is really just a shameless plug by Rick and Jason for our two of favorite entries in this year's JEL list. The first is entitled, Three Essays on Openness, International Pricing, and Optimal Monetary Policy, and the second is entitled, Essays on Dynamic Political Economy.

Continue reading Two interesting dissertations from 2008.

Upton Sinclair on economic communication

By Richard W. Evans on December 2, 2008 2:08 AM | No TrackBacks

"It is difficult to get a man to understand something, when his salary depends on his not understanding it!"

(Upton Sinclair, I, Candidate for Governor: And How I Got Licked, (1935) repr. University of California Press, 1994, p. 109.)

Paul Krugman used this quote in his blog post Sunday (Nov. 30, 2008) as the final word in his plea for policy makers to get on board with a big Keynesian fiscal stimulus plan.

Congressional and auto industry "chutzpah"

By Richard W. Evans on November 25, 2008 5:07 PM | No TrackBacks

(This is a Val Lambson original.)

Old definition of "chutzpah": (n) nerve, gall, audacity, insolence, impertenence.

New definition of "chutzpah": CNNMoney.com reported on a Congressional hearing in which "Skeptical lawmakers grill[ed] auto execs... [and] portrayed the Big Three as both short-sighted... and devoid of vision."

Does gridlock matter for government spending?

By Jason DeBacker on November 5, 2008 12:46 PM | 1 Comment | No TrackBacks

Since 1929, government expenditures as a fraction of GDP (excluding the wartime spending of 1942-1945) have averaged 22.9% under both Democrat and Republican presidents. A worry is that if the president also has the support of both chambers, he will more easily pass legislation that increases the size and role of the federal government.

When Democrats have had control of both Houses and the Presidency (1932-1946, 1949-1950, 1961-1968, 1977-1980, 1993-1994), government expenditures as a fraction of GDP have averaged 23.5%. On the other hand, when Republicans have had control (1929-1931, 1953-1954, 2003-2006), spending as a fraction of GDP has averaged 21.1% (not statistically different). Divided government spending averages 23.9% of GDP. The graph below shows the size of government over time by party in control. The most prominent trend is the fall in the size of government since the late 1960s, which is evident under Democratic or Republican controlled government and divided government over this time period.

But the "power of the purse" resides in Congress, so does party matter in Congress?

Continue reading Does gridlock matter for government spending?.

Time to get behind Obama in the American way... with a vibrant national debate

By Richard W. Evans on November 5, 2008 1:58 AM | No TrackBacks

In full disclosure, I want to say up front that I did not vote for Obama. But I am hopeful that he will be a good President. McCain's excellent concession speech last night reminded me what really makes America great. It is the characteristic that has made America one of the most durable and dynamic democracies in history. Our country's strength is its embrace of multiple ideals, national debate, opposing forces, and checks and balances.

Continue reading Time to get behind Obama in the American way... with a vibrant national debate.

The Economics of McCain and Obama

By Jason DeBacker on October 29, 2008 4:40 PM | No TrackBacks

I'm talking to the Economics Society here at UGA tonight. It's a panel on the economic policies of the Presidential candidates. Oddly, I'm the only faculty member from the Economics Department (the other two panelists are Professor Grafstein from the Political Science Department and Professor Fertig from the College of Public Health). The topics I'll cover include the tax and trade policies of the two candidates.

I'm tempted to start off the discussion by reading Don Boudreaux's letter to an Obama supporter. As with most of Boudreaux's writing this one has some great lines: "Very few of them [politicians] have any knowledge of the subject [economics], and even fewer of them are courageous enough to speak about it honestly."

If not that, I'd like to make a case for not voting at all, but maybe George Carlin has already done this better than I ever could.

But I think I'll be more PC. Below are my summaries of the candidates stances on taxes and trade as well as some opinions about fiscal policy in general and the chances the candidates will push us into the next Great Depression.

Continue reading The Economics of McCain and Obama.

Need, Greed, and Compassion

By Richard W. Evans on October 29, 2008 2:22 PM | No TrackBacks

"'Need' now means wanting someone else's money. 'Greed' means wanting to keep your own. 'Compassion' is when a politician arranges the transfer."

(Joseph Sobran, syndicated political columnist and former National Review writer. Quote is from his chapter in the book The Economics of Liberty (Mises Institute) entitled "Back to First Principles.")

Capitalist Hell vs. Communist Hell

By Richard W. Evans on October 29, 2008 2:06 PM | No TrackBacks

A man dies and goes to hell. There he discovers that he has a choice: he can go to capitalist hell or to communist hell. Naturally, he wants to compare the two, so he goes over to capitalist hell. There outside the door is the devil, who looks a bit like Ronald Reagan. "What's it like in there?" asks the visitor. "Well," the devil replies, "in capitalist hell, they flay you alive, then they boil you in oil and then they cut you up into small pieces with sharp knives."

"That's terrible!" he gasps. "I'm going to check out communist hell!" He goes over to communist hell, where he discovers a huge queue of people waiting to get in. He waits in line. Eventually he gets to the front and there at the door to communist hell is a little old man who looks a bit like Karl Marx. "I'm still in the free world, Karl," he says, "and before I come in, I want to know what it's like in there."

"In communist hell," says Marx impatiently, "they flay you alive, then they boil you in oil, and then they cut you up into small pieces with sharp knives."

"But... but that's the same as capitalist hell!" protests the visitor, "Why such a long queue?"

"Well," sighs Marx, "Sometimes we're out of oil, sometimes we don't have knives, sometimes no hot water."

(Taken from the website of Jeffrey Parker at Reed College)

What didn't cause the crisis?

By Jason DeBacker on October 20, 2008 3:48 PM | No TrackBacks

Rick made some important points about some of the causes of the current crisis. As important (or maybe more so, given our political economy) is to outline what didn't cause the crisis:

Continue reading What didn't cause the crisis?.

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