Coordination Problem

The Great Recalculation Visualized

Steven Horwitz

Well, at least for labor anyway.  Courtesy of my colleague Bob Blewett, here's a very cool animation showing the changes in the unemployment rate by county in the US from January 2007 to November 2009.  I'll only make two comments about it:

1. It's interesting that the high plains and Rockies are somewhat better off than everyone else.  

2. Note the two islands of "not awful" surrounded generally by seas of awfulness:  Washington DC and New Orleans.  Both are busy cleaning up major government failures.  In DC's case, with more of the same of course.  In New Orleans' case, they are still cleaning up broken windows, literal and figurative.

It would be interesting to see whether one could come up with a comparable animation for idled capital and durable consumer goods like housing, especially if it could capture re-fit capital in uses less optimal than it was designed for.

Justice, Medieval Stye

In today's Boston Globe.

Bill Easterly and NYU's Development Research Institute (DRI) Wins Frontier of Knowledge Award

|Peter Boettke|

The BBVA Foundation announced that NYU's Development Research Institute has won the 2009 Frontiers of Knowledge Award.  In 2008, the MIT Poverty Action Lab won the award.

The Foundation reports that Bill's first words upon hearing that his Institute won this prestigious and lucrative award were: "Development really happens when people figure out the solutions to their own problems."  Bill then explained why "Big Plans" just don't work to promote development.

Congratulations to Bill (and co-director Yaw Nyarko), to NYU, and to all those at DRI (including Claudia Williamson and Adam Martin).  And don't forget to check out Aid Watch everyday.

Pithy and Profound: Albert O Hirschman

|Peter Boettke|

My class is currently reading Hischman's The Passions and the Interests (Princeton, 1977).  I have enjoyed reading Hirschman since my graduate student days when Don Lavoie introduced me to his work when Don was contemplating a move from comparative economic systems as his main field of study to development economics.  Ironically, Don didn't stress Hirschman's development work, but instead his broad ranging essays in the history and methodology of economics.

One of the thing that is striking about Hirschman is how he packs so much into such little space.  He doesn't write huge books, yet he does produce "weighty" books; they are pithy and profound.

I would nominate the following as Hirschman books which must be read by economists: Exit, Voice and Loyalty (Harvard, 1970); The Passions and the Interests (Princeton, 1977); Rival Views of Market Society (Harvard, 1986); and A Propensity to Self-Subversion (Harvard, 1995).

I also developed a fascination with Kenneth Boulding during graduate school (some might think that was because I was able to be his student, but actually I was fascinated with Boulding prior to the opportunity to get to know him).  I first became enamored with Boulding through reading his 1971 essay "After Samuelson, Who Needs Smith?", but that quickly gave way to reading as much of his work as I could get my hands on.  Boulding also wrote profound books that were not particularly hefty.  My list of Boulding favorites would be: A Reconstruction of Economics (1950); The Image (1956); Conflict and Defense (1962); Evolutionary Economics (1981); and Three Faces of Power (1989).

But reading Boulding is a totally different experience than reading Hirshman.  Boulding's argumentative style is more meandering, Hirschman's more direct.

It is not clear to me that there is any economists/political economists who is as pithy and profound as Hirschman.  What do you think?  And who would you nominate for such an award either ancient or modern?

White Says Macroeconomics is Off Track

|Peter Boettke|

No, I am not pointing to Larry White, but instead to William White.  I am sure Larry wouldn't disagree though.

(HT: John Cochrane)

Klein on Some Basic Facts of Politics and Economics

|Peter Boettke|

Peter Klein addresses the question as to whether the financial crisis represents the end of laissez-faire.  Klein simply looks at the regulatory and spending behavior of the federal government over the past few decades.  What laissez-faire have we had?

Excellent Peter. Keep up the great work.

Steven Kates, ed., Macroeconomics and Its Failings

|Peter Boettke|

Steve Kates, the author of the important book, Say's Law and the Keynesian Revolution, has a new book coming out this spring --- Macroeconomic Theory and Its Failings: Alternative Perspectives on the Global Financial Crisis. Request a copy for your library.

The book contains chapters by co-blogger Steve Horwitz, as well as my paper (co-written Will Luther) on "The Ordinary Economics of an Extra-Ordinary Crisis."  Will often blogs at The Perfect Substitute, where you can often see his intellectual curiosity and tenancity at work.

Hooverism Lives

Steven Horwitz

Frank Stephenson at Division of Labour finds a lovely bit of Hooverism in an AP report on the economy:

Wages and benefits paid to U.S. workers posted a modest gain in the fourth quarter, ending a year in which recession-battered workers saw their compensation rise by the smallest amount on records going back more than a quarter-century.

The anemic gains have raised concerns about the durability of the economic recovery. The fear is that consumer spending, which accounts for 70 percent of economic activity, could falter if households don't have the income growth to support their spending.

As Frank rightly notes:  "With 10% unemployment, you'd think it just might dawn on them that wages might fall or remain relatively flat as part of the great recalculation."

It's not going to dawn on anyone as long as the worst fallacies and biases of economics continue to live on in the mind of the public and the second-hand dealers in ideas.

Elgar Companion to Adam Smith

Steven Horwitz

My departmental colleague Jeff Young, one of the very top Adam Smith scholars in the world, has edited the now-available Elgar Companion to Adam Smith.  Yes, it's at the usual Elgar price, but you might consider having your library order it.  Contributors include Buchanan, McCloskey, Medema, Samuels, Peart, Levy, and other big names.  And I am sure Jeff's introduction will enhance your understanding of Smith significantly.

"The greatest sin in life is wasted talent"

|Peter Boettke|

I was preached that line since I was a little boy by my father and my coaches from Little League through college.  I believed it then, and I have preached it myself to the kids I coached and to the students that I have taught.

An implication of this, is that you exalt the examples of those who get the most out of the least, while condemn harshly those who get the least out of the most.

At the end of December, The Painted Area: One Tough Hombre of a Basketball Blog, the All Decade NBA Underachiever Team was named.  The list includes Stephon Marburgy and Bryon Davis (MVP) and Rasheed Wallace and Lamar Odam (surprising, but there were huge expectations on him since HS).  These all make sense.  But I think the best choice is Tim Thomas.  Thomas is from NJ and had all the physical tools to be great and he had moments of brilliance both at Villanova and in the NBA.  But the consistency never could be found. (Hat-tip to Kevin Grier).

Reading this post made me wonder --- there are underachievers and overachievers in every walk of life, not just in sports.  And the sin of wasted talent applies equally as well.  Clearly there are underachievers and overachievers in the field of economics.  I think the story of the overachiever is fascinating and I would point to John List as an example, not because he doesn't have a great natural endowment of talents (he obviously does) but his career didn't follow the normal trajectory of the elite in the profession. Roland Fryer would be another who climbed the professional ranks in an atypical fashion.  Both of these extremely talented economists made the most out of the opportunities presented to them.  They are good role models to follow.

The underachievers are harder to name (for obvious reasons), but I am sure everyone has some candidate in mind.

Just remember that to whom much is given, much is expected.  And you need to work in proportion to your aspirations.  

Don't be Tim Thomas, be more like Steve Nash (only 1 D1 scholarship, but made the most of that, now even though small by NBA standards [he is 6'3"], he was named NBA MVP 2 times in the mid-2000s; and in 2009-2010 season he is averaging 18.5 ppg, and 11apg). And, of course, if you can be like Mike (or Magic or Larry) than be like Mike.