Archive for December, 2009

Savings = Investment, Ebenezer Scrooge Edition

Wednesday, December 23rd, 2009

Before The Accidental Theorist, before Freakonomics, there was The Armchair Economist, and that’s Steven Landsburg.

In this Slate piece, Landsburg makes the case that Scrooge wasn’t such a bad guy, and that savings, in fact, might just be more virtuous than spending. To wit:

In this whole world, there is nobody more generous than the miser–the man who could deplete the world’s resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser spreads his largess far and wide.

If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer–because you produced a dollar’s worth of goods and didn’t consume them.

You will know you’ve arrived as an economist when you can annoy your brethren by expounding on the virtues of Scrooge over the holiday season. For more pithy advice from Landsburg, we’ll be using his text in Economics 300 next term.

See you there.

More on Finanial Market Reform from The EV

Tuesday, December 15th, 2009

The Economists’ Voice has added several more articles to its special issue on financial markets reform. There is a piece by Charlie Calomiris on ratings agencies, a back-and-forth on bankers’ pay, and a discussion of the whens and wherefores of financial regulatory reform by Robert Litan.

Samuelson and Schumpeter at O&M

Tuesday, December 15th, 2009

There is a very interesting post over at the Organizations and Markets blog about the relationship between Josef Schumpeter and Paul Samuelson. Samuelson, who died Sunday at the age of 94, is the Nobel Prize winning economist who shaped and then dominated the introductory textbook market for decades. In one of his more audacious moments, he famously proclaimed, “Let those who will, write the nation’s laws if I can write its textbooks.” He also was the driving force behind formal economics modeling (read: mathematical models).

His dissertation advisor, Josef Schumpeter, was also an amazing and amazingly-influential economist of a different stripe. Even without the formal modeling (and perhaps due to the absence), his work has become central to the recent revival of the economics of innovation and entrepreneurship. You could do worse over the break than to pick up a copy of the recent biography, Prophet of Innovation.

I know I did.