Mankiw 1, Krugman 0

http://gregmankiw.blogspot.com/2009/11/taking-out-trash.html

It's ALIVE

Now...expect to hear powerful voices go on and on about dangerous inflation (which isn't going to happen people).

Mainstream Economists Deserve Their Fall From Grace

Couldn't agree more. Hat-tip to Mike Moffatt

Pointless Public Option

"We need this option because the insurance companies have failed to meet their obligation" to the public"

...Bologna.

The main reason our system has failed to meet obligations is because our system has failed to provide competition in the market - our system fosters oligopoly formation in the health insurance industry. So of course insurance companies will try to extract super-rents from consumers. But, so long as reform promotes increased competition amongst private insurers both within States and between States, that in and of itself will bring enough competition. We won't need a government run health program to add one more competitor to the mix then.

Obama gets this point. He sees competition as the important issue, not the public option. He understands that we don't necessarily need a public option to get to competition. So, either the left wing doesn't believe reform can increase competition, or they do believe it they just have another agenda....

A Curious Post by Delong

Delong posts a Bush-era finding on the benefits of cap and trade. Part of it compares cap and trade to 'emissions fees' (tax) - and finds, for some of the same reasons I've mentioned on this blog, that a tax has certain downsides compared to cap and trade.

See this (bold is something I've discussed before):
"As mentioned previously, one problem with emission fees is that it is difficult to know beforehand at what level to set the fee to achieve the desired pollution reduction. This might require periodic adjustments of the fee level, and such adjustments would introduce uncertainty that could interfere with firms' planning decisions. The emissions fee does, however, allow the government to set with certainty the marginal cost of emissions reduction. For each emission fee there is a corresponding allocation of permits that would achieve the same results; however, it is difficult to know beforehand what the market price for permits will be once trading actually takes place."

The reason the post is curious is that it was released by Bush economists lead by Greg Mankiw, who everyone knows know has the complete opposite position (favors taxes over cap and trade).

Posner and Keynes, sitting in a tree...

I never thought I'd see that day, that Chicago-school idolater Richard Posner became a Keynesian (not to be confused with NEW Keynesian - which isn't real Keynesianism anyway). The day has come.

One of the most poignant quotes from his "New Republic" article:

"Baffled by the profession's disarray, I decided I had better read The General Theory. Having done so, I have concluded that, despite its antiquity, it is the best guide we have to the crisis. And I am not alone in this judgment."

A couple things strike me: (1) I was saddened (though not altogether shocked) that someone so intellectual had never even bothered to read Keynes' opus before. (2), happiness that someone who I have, in the past, deemed intellectually brainwashed could muster enough fortitude to break through the mainstream economic morass.

Another glimmering quote:

"Keynes wanted to be realistic about decision-making rather than explore how far an economist could get by assuming that people really do base decisions on some approximation to cost-benefit analysis."

So true Professor, so true.

If this is a foreshadowing of how economics, and mainstream economics, might go, I only wish I was born today, so that I could grow up in an academic economics environment a little more accepting of real thought, and a little less accepting of trying to make everything fit a 'rational' mathematical model.

As if there's any wonder why banks are failing....

Here's one reason: they provide multi-million dollar loans with no proof of collateral other than someone's signature.