Thursday, September 1, 2011

Some links...

It's been a while since I posted, and while I am irked about the NLRB's strike against free, voluntary trade between employees and Boeing for the common worker against evil, corporate America, I'm not irked enough to blog in full.

Or rather, since I like to talk about comparative advantage and free trade, to utilize a Ricardian model, my current comparative advantage lies in improving my financial skills via the CFA curricula, whereas others comparative advantages are in economics blogging, such as Don Boudeaux of Cafe Hayek, or George Selgin of Free Banking. Clearly, if we traded, both parties would be better off:

1) I would gain free time to pursue CFA studies (and to also work on one of my weaknesses that I view as essential to correct, Spanish), while getting to post top-notch content that is often wittier than mine; and

2) Any site I link to will likely have a gain in traffic. A very small gain, mind you, but the marginal cost of these blogs trading with me is nil, so the cost/benefit analysis for them is also in favour of them trading with me.

Hence, why I am engaging in free trade today with these blogs. Known to some as outsourcing. Known to the NLRB as something to be discouraged because of hurting the American worker. But nevertheless, free trade that should be unfettered.

Without further ado, the links:

A) What I thought, at Age 16, Academia was Supposed to be

David Henderson posts the excerpts from Heather MacDonald's piece on the Great Courses product in the City Journal (published by the Manhattan Institute). Yet another article from an economist I admire pointing to the potential savings that can be accrued by letting market forces actually dictate how consumers (parents and students) get their product and what they learn (to a degree). How? 1) Content Delivery, allowing economies of scale through spreading of costs over a larger customer base than a university; and 2) tailoring the course to the desires of the audience (if they want to learn about the American Revolution, that's what they'll get).

Is online content delivery bad? Well, I met a person recently who teaches physiology at Georgetown's School of Nursing, but as an online course. She loves it, her students love it, and so far it works. And then there's the next step, which is the content of a superstar professor becoming more available to a broader audience (what Greater Courses seems to do), such as Aswath Damodaran. So, it can work. Reason enough that experimentation here should occur, and would be more likely to occur if all college costs per paid by the consumers, and not via subsidies.

Also, as an Indian, I quite frankly do not mind those "dead whites men of the Western world." Philosophy is universal, but I am a classical liberal, and therefore could care less about the race of a person compared to the person's actual ideas! Give me John Locke and "Life, Liberty and Property" any day!

B) An Austere Recovery

Besides being a superb site for a crash course in free banking, a la Scotland before 1845 or so, I find it worth visiting for George Selgin's regular posts. One of his more recent ones takes a look at actual history, and recounts an episode of U.S. history where austerity was the solution - the Depression of 1920-21, during which unemployment went from 1.4% to 11.7% on the high end of calculations (Lebergott) and 3.0% to 8.7% (Romer) on the lower end.
 Did the U.S. government hasten the recovery by means of deficit spending and other "stimulus" programs? Not in the least. instead, it stuck to conducting business as usual which, in those naive days before Keynes revealed that prudence and thrift were shopworn Victorian shibboleths, meant reverting to its prewar budget and retiring its wartime debt.[...] Instead of spending more than it had been, the Harding administration steadily cut expenditures, exclusive of debt retirement, from just over $6.4 billion in fiscal 1920 to just under $3.3 billion in fiscal 1923--a whopping 45 percent! [Emphasis added] As a percentage of GNP, Randy Holcombe shows, Federal outlays fell from just over 7 percent to well under 4 percent.* 

Selgin has some other statistics in there - industrial production fell by 30 percent during that depression, and so on. The point being that the 1920s is remembered for the Roaring Twenties (and Prohibition). Who remembers being taught about the Depression of 1920? I believe the first I read of it was in Security Analysis by Graham and Dodd. And yet, we should be taught it, because it is a clear case that the Keynesian macro model of Aggregate Demand and Aggregate Supply and the need to stimulate to get the economy on track may well be false.

When history provides such a clear example of austerity and positive results - another being 1946 when government expenditures were drastically cut despite Keynesian cries that it would lead to another depression, but instead it hallmarked the start of a prosperous era in U.S. history (and why when we say "postwar", we mean post World War II) - I begin to doubt the intellect of people who would have us believe austerity is a bad idea.

Yes, I'm talking to you, Economist editors and Henry Blodget (I never trusted you during the dot com bubble, why the hell should I trust you now?). If you thought the Republicans were reckless during the debt ceiling negotiations, then I suppose you think that Harding was what? Beyond reckless? Never mind the inconvenience of actual historical facts that belie your assertions.

N.B. The CFA curricula include Keynesian economics in its subject matter. Needless to say, you all know what I'll say when asked about it.

C) Incentives Matter

From Cafe Hayek's Quotation of the Day, the note that the sons of merchants were the most eager to learn foreign languages.

That's it! I love free trade! Even if the NLRB doesn't. Thank goodness they don't regulate bloggers like me.

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