The Sunday New York Times has a contrast of Larry Summers and Glenn Hubbard on our collective economic future.
Summers is a past president of Harvard and economic-adviser extraordinaire to President Obama. Hubbard is the dean of the NYU Business School, and star of this ‘stinging’ sendup of Ben Bernanke.
Neither lacks confidence, that’s for sure.
It’s hard for me to give a better example for the 300 students than Hayek talking about tin. This is from the 1945 AER piece, “The Use of Knowledge in Society“:
It is worth contemplating for a moment a very simple and commonplace instance of the action of the price system to see what precisely it accomplishes. Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose—and it is very significant that it does not matter—which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all this without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes. The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.
Professor Ádám Galambos spearheaded bringing a TEDx event to the Lawrence University campus this Friday, and I have been along for the ride. The theme is Reimagining the Liberal Education, and we have some impressive people from around the country coming in to re-imagine things with us. The university’s TEDx Lawrence site will contain the live web feed. The Appleton Post Crescent posted a story Wednesday, and here’s what Ádám had to say:
Liberal education has a great deal to contribute to society. It’s up to us to figure out how we’re going to be a part of creating our future.
I hope this will result not just in intellectual exchange, although that’s really important, but also action, taking those new ideas to change in the world.
Professor Scott Corry will be featured on a Post-Crescent webcast tomorrow as well! (Link here)
Incoming Randolph College President, Bradley W. Bateman, will be on hand talk about the role of advising at liberal arts colleges. This is a timely piece given that advising at large universities came under fire earlier this week. Also, coincidentally enough, President Bateman was my undergraduate advisor once upon a time, though I don’t recall him ever suggesting that I should go to graduate school and become a professor (?).
One of the marquee speakers is Jeff Selingo of the Chronicle of Higher Education and author of the about-to-be-released College (Un)Bound: The Future of Higher Education and What it Means for Students. That talk is set for 9:35 a.m. Friday. We are also very excited to have Andy Chan from Wake Forest coming in to talk about links between education and career development. And, one of the co-founders of Coursera, Daphne Koller from Stanford, will join us via video feed to tell us about the MOOCs.
Wow!
LU has a strong presence as well, with President Beck and Dean Pertl sharing their visions of the future. The tireless Bob Perille (’80), founder and champion of of the Lawrence Scholars programs, will be on hand to talk about (you guessed it) the Lawrence Scholars programs. Rick Davis (’90) from George Mason will invoke the role of the liberal arts in fomenting collaboration and Jennifer Herek (’90) will be on hand to talk about spreading the liberal arts to technical education in Europe.
In addition, Jenny Kehl from UW-Milwaukee will be on hand to talk about how central collaboration and interdisciplinary work will be to tackling some of our toughest environmental issues.
All TEDx events showcase videos from TED events, and as part of that we will be watching the Erik Brynjolfsson video that Professor Finkler discussed in a previous post.
It should be a good one. Professor Brandenberger and I were co-organizers, and fortunately John handled some of the more delicate interpersonal matters. We’re interested in seeing how this goes over. If you have a few minutes, tune in to the webcast and let us know what you think. Here is that link.
The cover of the May Atlantic Monthly states flatly that “We Will Never Run Out of Oil.”
In its typically exhaustive style, The Atlantic takes a few thousand words to come to this conclusion.
This, of course, is what pretty much any off-the-shelf economist has been saying for years, though we didn’t need a series of enormous technologically driven supply shocks to lead us down the path to that conclusion. Here’s Tim Haab on why Peak Oil doesn’t matter if markets are at all functional. Here’s a peek at oil futures.
Oh, and by the way, Peak Oil?
We’ve received late notice that the Colorado College is hosting its 2nd Annual Research Symposium, and we are invited.
Can’t get out to CC in an expeditious fashion? Well, come join me in Briggs 223 where I will stream a few of the presentations LIVE. There are a couple of presentations on innovation, capped off with the big kahuna himself, Dan Johnson, talking about some sort of esoteric bidding system.
All times are CDT.
Mark Montgomery and Irene “Tinker” Powell will be on campus this week to deliver the next Economics Colloquium address, “Baby Markets: Thinking the Unthinkable in International Adoption.” The talk is Thursday at 4:30 in Steitz 102. This is quite a topic, where the rules of the game have pretty significant distributional consequences, and it will be interesting to see how this sorts out.
Montgomery and Powell are professors at Grinnell College, and are well known for lighter work, including “Should Economists Marry Economists?” and their economics murder mystery, Theoretically Dead.*
Baby Markets: Thinking the Unthinkable in International Adoption
Mark Montgomery and Irene Powell
Grinnell College
Adoption laws, national and international, outlaw payments to families for relinquishing their children. This does not stop “baby selling,” but rather moves it into the hands of criminals. History suggests that restricting mutually beneficial exchanges can make worse the problems it is supposed to solve. Is it time to think the unthinkable in international adoption?
The talk examines how current adoption laws create incentives for fraud and other forms of abuse, identifies “moral hazards” abuse created by the legal structure of adoption, and explores how relaxing restrictions on compensating birth mothers would change incentives and behavior of birth parents, adoptive parents and adoption facilitators.
*As far as I know, they are both economics professors, though the Publisher’s blurb says one is a philosophy professor. I suppose teaching labor economics long enough can turn anyone somewhat philosophical.
I’m just going through a backlog of interesting stories to share with my Econ 280 class. First up, Jonathan Adler points us to a short story on a residential subdivision’s successful legal challenge to the construction of a home windmill. The residents of a the Forest Hills subdivision just outside of Carson City, Nevada, argued that the proposed windmill would sully their sight-lines and provide interminable noise from the turning of the rotors. This is a solid example of what Shavell would call an ex ante property rule, and you can read all about it in the Las Vegas Sun.
Speaking of benefits, the fall Journal of Economic Perspectives has another symposium on contingent valuation. Twenty years ago, Peter Diamond and Jerry Hausman famously asked, “Is Some Number Better than No Number?” Although Hausman seems to have found some clarity on the issue, I’d say for the profession the question remains unresolved.
Next up in the news, we have a consortium of cities and businesses is looking at a $200 million reservoir project to satisfy all its water needs, but it is contemplating paying rice farmers $100 million not to farm instead.
Is this Coasean bargaining inevitable? I wouldn’t bet the farm on it.
Finally, we have Thomas Kinnaman offering the classic economist’s take down of two benefit-cost analyses of shale gas production (i.e., fracking):
The costs of natural gas extraction include, paradoxically, all of the items listed as “benefits” in the two reports discussed above. Natural gas extraction requires labor, capital equipment, pipelines, and raw materials. These economic resources, in a fully employed economy, could have been allocated to other uses. The price paid to secure these resources from these other industries indicates the value of these resources to these other industries (had their value been higher, the market price would have been higher). Thus, the quantity of each economic resource times its market price – in fact 13 the total expenses by the industry as gathered in the surveys – represent the cost of utilizing scarce economic resources to gas extraction.
This block quote is a battle we economists will probably never win. When I tell my students “jobs” are a cost not a benefit, they look at me as if I suddenly began speaking Swahili. The paper is from Ecological Economics, and an ungated version is available here.
One of my favorite features at the Cheap Talk blog is Consider the Equilibrium, where, as you might expect, the authors consider the equilibrium outcome in scenarios ranging from bike sprinting to inferring the quality of Asian restaraunts.
This week they tackle the dicey problem of dual-zone vehicle climate controls.
Oh, and coincidentally enough, I was telling my Econ 280 class yesterday that men should ride shotgun because she is safer.
I talk the talk, but do I ride the ride?
The now annual Economics Open House for prospective majors is coming Monday, April 8, at 4:30 in Briggs 217. The economics faculty will be on hand to discuss the once and future of the economics department, answer questions, and just generally provide a pleasant ambiance.
We encourage current majors and minors to stop by and feast both on the complementary snacks and the delicious conversations that will undoubtedly spontaneously emerge. Tell your friends and see you there.
One of my favorite Lawrence alums, Eric Schacht (’89), is featured on the LU website for winning the Stanley Malles Award for distinguished community service.
From the press release:
Schacht led the launch to form the Mahomet Community Tennis Association in 2009 to introduce tennis to this area with few tennis courts and no high school team. During the past five years more than 30 junior high and high school girls have participated in a program designed with the team concept. Schacht’s dedication to working with the girls in the program has led to them recently playing competitive matches against area clubs, tournaments, and invitational events.
Two years ago, the Mahomet CTA started offering a Midwest Youth Team Tennis program targeting for youth 10 years of age and younger. Approximately 60 children participated in the summer program in 2012, and the successful program will again be offered in 2013.
Schacht has been coaching girls’ tennis teams for several years, and was previously the coach at two area high school teams. He also served as a volunteer coach for the University of Illinois women’s collegiate team.
You can catch the charismatic Schact in his acceptance speech here.
Schacht was a standout tennis player at LU from 1986-1989 and has been an avid sportsman his whole life. Going back to 1980, for example, his YMCA ‘Spartan’ basketball team came up short in its quest for the title to the more talented (and better looking) ‘Badger’ team. See Professor Gerard for details.
In his day job, Schacht works as general counsel for Wolfram Research, developers of the fabulous Mathematica and Wolfram Alpha projects.
Congratulations to Eric.
Our next Economics Colloquium is April 18 and will feature Mark Montgomery and Irene “Tinker” Powell, Professors of Economics at Grinnell College. We had originally scheduled this one for May 30, but we just can’t wait.
Baby Markets: Thinking the Unthinkable in International Adoption
Mark Montgomery and Irene Powell
Grinnell College
Adoption laws, national and international, outlaw payments to families for relinquishing their children. This does not stop “baby selling,” but rather moves it into the hands of criminals. History suggests that restricting mutually beneficial exchanges can make worse the problems it is supposed to solve. Is it time to think the unthinkable in international adoption?
The talk examines how current adoption laws create incentives for fraud and other forms of abuse, identifies “moral hazards” abuse created by the legal structure of adoption, and explores how relaxing restrictions on compensating birth mothers would change incentives and behavior of birth parents, adoptive parents and adoption facilitators.
I’m looking at some eye-grabbing headlines in my RSS feed and it looks like my life could be in for some radical changes, from a new face for the academy to fewer outlets to indulge my passion for shopping at the mall to higher prices for my beloved coffee drinks:
Will Google kill the big box Store?
Will free MOOCs destroy higher education?
Will the internet destroy the news media?
How climate change could affect coffee… and wine
And, perhaps most tragically, the future is now:
American writing is now more emotional than British writing
Did anyone see that coming?
No, that’s not me introducing Professor Galambos at a recent Economics Colloquium; it’s George Lucas hashing out his initial vision of the Indiana Jones character with Steven Spielberg and Lawrence Kasden.
In what has to be one of our greatest “Bedtime Reading” finds ever, behold this remarkable 90-page transcript of the “spitballing” sessions available online. The sessions are excerpted in a recent New Yorker piece.
If you have ever wanted to see creative genius at work in all its fits-and-starts, here you go.
Kasdan: Do you have a name for this person?”
Lucas: I do.
Spielberg: I hate this, but go ahead.
Lucas: Indiana Smith.
And, if you have 13 minutes and would like your mind completely blown, you might check this side-by-side out.
That’s the topic for the Spring Reading Group, featuring Liebowitz and Margolis’ Winners, Losers, and Microsoft: Competition and Antitrust in High Technology. For those of you who plowed through the book in IO, I am compiling an auxiliary set of readings to complement (and update) the Liebowitz and Margolis book.
We will meet Thursdays from 11:10 to 12:15 in Briggs 217. The sign-up sheets are posted on the board outside of Professor Gerard and Professor Galambos’ office.
Here are our course offerings for the Spring term.
ECON 100 ● INTRODUCTORY MICROECONOMICS ● 8:30-09:40 MWF BRIG 420 ● Mr. Galambos
ECON 120 ● INTRODUCTION TO MACROECONOMICS ● 01:50-03:00 MWF BRIG 223 03:10-04:20 T BRIG 223 ● Mr. Georgiou
ECON 151 ● INTRO TO ENVIRONMENTAL POLICY ● 09:50-11:00 MWF BRIG 224 ● Mr. Hixon
ECON 170 ● FINANCIAL ACCOUNTING ● 11:10-12:20 MWF BRIG 223 ● Mr. Vaughan
ECON 225 ● DECISION THEORY ● 01:50-03:00 MWF BRIG 206 ● Mr. Galambos
ECON 245 ● LAW AND ECONOMICS ● 11:10-12:20 MWF BRIG 423 ● Mr. Georgiou
ECON 280 ● ENVIRONMENTAL ECONOMICS ● 12:30-02:20 TR BRIG 223 ● Mr. Gerard
ECON 300 ● MICROECONOMIC THEORY ● 08:30-09:40 MTWR BRIG 223 08:30-09:40 ● Mr. Gerard
ECON 320 ● MACROECONOMIC THEORY ● 09:50-11:00 MTWR BRIG 223 09:50-11:00 ● Mr. Finkler
ECON 421 ● INVESTMENTS ● 01:50-03:00 MWF BRIG 217 ● Ms. Karagyozova
ECON 425 ● ENTREPRENEURSHP AND FINANCE ● 02:30-04:20 TR BRIG 217 ● Mr. Finkler, Mr. Vaughan
ECON 465 ● INTERNATIONAL FINANCE (G) ● 09:50-11:00 MWF BRIG 206 ● Ms. Karagyozova
We hope that you are enjoying your break and recharging your batteries for the final third of the 2012-13 academic year. Rest assured, we here on Briggs 2nd are making the necessary preparations for the academic homestretch.
And we couldn’t be more excited, if not a little edgy.
The big events seem to be steady rain and the onset of finals, so my guess is that you are busy being busy, doing things like studying and writing papers. Or, possibly even taking a break and surfing the internet. Why else would you be reading this?
How much is that internet worth to you, anyway? Probably a lot.
The Economist surveys the evidence.
See you in the Spring.
The Spring Economics Reading Group will feature the astonishing Winners, Losers, and Microsoft: Competition and Antitrust in High Technology by Stan Liebowitz and Steven Margolis. The book is more about competition in high technology than it is about Microsoft itself, and it was written back when people still used VHS players and Apple was a bit player in the computer market (pun possibly intended).
Oh, how times have changed.
This book is tried-and-true. Last year students gave it rave reviews as the featured reading for the Economics Senior Experience, and we also read it in my Industrial Organization this past term.
If you happened to have already read it, don’t despair, I am compiling an auxiliary set of readings to complement (and update) the Liebowitz and Margolis book. Indeed, the group discussion might be the ideal setting for you to augment your knowledge of the knowledge economy.
We will meet Thursdays from 11:10 to 12:15, provisionally in Briggs 217.
In response to our series of posts documenting the advertising campaigns launched to attract FDI to eastern Europe, we received this trenchant (and profanity-laden) correspondence from our friend, “New Jersey Tommy”:
[What the heck], eastern Poland? [Spending all of that money] on advertisements. Those mad men are ripping off the literally poor taxpayers of eastern Poland.
Waitaminute. Huge coal and natural gas reserves. NOW we all understand what “investing in eastern Poland” means: it means supplying fossil fuel energy to hungry and thirsty western Europe. Badda bing.
In possibly related news from the March 1 Wall Street Journal reports that “Germany debates fracking as energy costs rise.”
And, as if you didn’t know already, the internets move quickly.
This week in Industrial Organization we will talk about the peculiarities of the deregulation movement that got going in the Jimmy Carter administration (?). One peculiarity is that — like the Spanish Inquisition — no one expected the deregulation movement. Why? Because the benefits of regulation generally flowed to a nice, concentrated group of producers at the expense of diffuse, often clueless consumers. This is pretty much the point of the Stigler-Peltzman-Becker characterizations of regulation.
A second puzzle is the public suspicion of regulation, and in particular the lack of recognition that consumers have been the overwhelming beneficiaries of the deregulation movement. On each of these points, I refer my students to the Clifford Winston’s excellent (but somewhat dated) piece from the Journal of Economic Literature.
Derek Thompson has a quite excellent piece in The Atlantic online, “How Airline Ticket Prices Fell 50% in 30 Years (and Why Nobody Noticed).” Well, some of us noticed, I guess, like those of us who teach IO.
Of course, deregulation has had its share of fiascoes and industry handouts as well, so perhaps that’s more etched in our brains than the radical price differences and innovation that often accompany industry deregulation.
