Archive for November, 2009|Monthly archive page

An Idiosyncratic Perspective on the Economy and Economics

I have completed the last part of my lecture and have edited it. I still hope to incorporate data on the defunding of higher education.

An Idiosyncratic Perspective on the Economy and Economics

Thoughts on the hacked climate change e-mail

One of the problems is that science has become politicized. Industries hire hacks (including scientists) to attack any science that does not meet their needs. Think of the Chamber of Commerce’s recent call for economists to write a paper that will attack health care.

Under constant attack, scientists may feel the need to “play defense.” Just like a football team that keeps its practices secret to prevent opponents from learning their plans, scientists may well become insular.

In this way, industry destroys good science, which should depend on sharing of information.

Elite Ignorance on Health Care?

Jonathan Gruber is a health economist from MIT — an expert, no doubt.  David Leonhardt quotes his favorable comment on the Senate health care bill: “I can’t think of a thing to try that they didn’t try.”

Leonhardt, apparently, never bothered to ask him about single payer.

Michael Perelman Needs Help ASAP

The school invited me to give the annual lecture on December 8.  I’m trying to copyedit The Invisible Handcuffs, finish two articles before a December 1 deadline, and grade papers before school starts next week.


My idea is to show how ideas evolve with my books, paralleled with both the course of the economy and the course of higher education, particularly in California. I don’t have much data on education yet.


I have roughed out the first draft of the talk, which I’m sure will have a lot of problems. If anyone has any these suggestions for improvement, I would be more than grateful.

Warm and Fuzzy about Windows 7

The National Security Agency testified that Microsoft let the agency “enhance Windows 7.”

From NSA Information Assurance Director Richard Shaeffer’s testimony to the Senate Judiciary’s Subcommittee on Terrorism and Homeland Security:

“Working in partnership with Microsoft and elements of the Department of Defense, NSA leveraged our unique expertise and operational knowledge of system threats and vulnerabilities to engance Microsoft’s operating system security guide without constraining the user’s ability to perform their everyday tasks …. All this was done in coordination with the product release, not months or years later during the product’s lifecycle.” Continue reading

California Collapsing: What Would Reagan Do?

When he was in office, Ronald Reagan looked bad. Now, by today’s standards, he looks like a progressive.

Reagan, Ronald. 1973. “On Spending and the Nature of Government.” National Review (7 December).

“When I took office in 1967, we discovered that the promise of “no tax increases” could not be carried out. California was virtually insolvent, the precious administration having changed that state’s system of budgetary bookkeeping in a way that allowed the spending of 15 months’ revenue in twelve months’ time, thus avoiding a major tax increase in election year 1966. The state government was spending $1 million a day more than it was collecting.”

“California, unlike the Federal Government, cannot print more money or pile up deficits. The governor is required to submit a balanced budget, and if any additional taxes are needed to balance revenues with spending, the constitution requires the governor to propose higher taxes.”

“So our first major lesson in government was painful: for the taxpayers and for us. We had to increase taxes by some $800 million to balance the unbalanced budget we inherited.”

How Digital “Piracy” Creates Value

EBay just sold a large portion of Skype after a long legal dispute with Skype’s founders.  What interested me was the Skype’s code evolved from the founders’ earlier venture, the file-sharing system, Kazaa.  In effect, the experience with the “illegal” Kazaa allowed the founders to develop technology that had a great value, especially for people communicating internationally.

The founders, Niklas Zennstrom and Janus Friis, blocked the sale for a long time on the grounds that EBay violated an agreement not to tamper with the code without their approval.  In effect, Ebay acted like a pirate, while the pirates became anti-pirates.

Perhaps someday someone will catalog all the other benefits that that the pirates developed.

Here is some background information: Continue reading

From the Department of Unbiased Research

“The U.S. Chamber of Commerce and an assortment of national business groups opposed to President Obama’s health-care reform effort are collecting money to finance an economic study that could be used to portray the legislation as a job killer and threat to the nation’s economy, according to an e-mail solicitation from a top Chamber official.”

“The e-mail, written by the Chamber’s senior health policy manager and obtained by The Washington Post, proposes spending $50,000 to hire a “respected economist” to study the impact of health-care legislation, which is expected to come to the Senate floor this week, would have on jobs and the economy.”

“Step two, according to the e-mail, appears to assume the outcome of the economic review: “The economist will then circulate a sign-on letter to hundreds of other economists saying that the bill will kill jobs and hurt the economy. We will then be able to use this open letter to produce advertisements, and as a powerful lobbying and grass-roots document”.”

Shear, Michael D. 2009. “Health Bill Foes Solicit Funds for Economic Study.” Washington Post (16 November).

Rwanda: The Case for Humanitarian Intervention

Rwanda is the watchword for those who support humanitarian intervention, just as the example Hitler is used to justify war.  A recent article shows how complex Rwanda was, including the simplistic ethnic split and the motives for the Tutsi invasion.

The article deserves a wide dissemination.

At the Pinnacle of Capitalism, Now Bad Deed Goes Unrewarded

This is rich.  John Paulson who made billions betting against the subprime mortgages is now rewarding Alan Greenspan, who did so much to make it happen.

Anon. 2009. “Overheard.” Wall Street Journal (13 November): p. C 14.
“John Paulson already has hired Alan Greenspan as an adviser. Now the hedge-fund honcho is giving $20 million to business school NYU Stern to endow two faculty chairs, including the Alan Greenspan Chair in Economics.  Mr. Paulson, who made billions betting against subprime mortgages when the credit bubble burst, and the former Fed chairman are NYU graduates.  One subject worth studying?  The dangers inherent in keeping interest rates too low for too long.”