It was fifty years ago that a young assistant professor named Leland Yeager organized a series of lectures meeting at the University of Virginia in Charlottesville. The topic was money – oddly enough a neglected topic in university economics in those days. Eleven authors, including Milton Friedman, James Buchanan, Jacob Viner, Benjamin Graham and Murray [...]

 Plenty of shoe leather went into Jackie Calmes’ account in The New York Times last week of the simmering tensions among the five top economic advisers to President Barack Obama – “several dozen interviews with administration officials and others familiar with the internal debates.” The story even included a little map of the White House [...]

An Air France flight with 228 persons on board, en route from Rio to Paris, disappears in a mid-Atlantic thunderstorm without so much as a farewell call of distress – a nearly perfect specimen of bad news, at least for a certain class of people. How is it that, within days, we receive a satisfying [...]

 
 
People continue to try to find the horizon.  The Economist last week warned  that in seeking to assign new tasks to government, President Barack Obama risks stifling the dynamism of the American economy. Business Week began a series of contributed essays building towards a special issue in August, “The Case for Optimism.” In August, too, will [...]

Last September, when Treasury Secretary Henry Paulson first described to a startled world his $700 billion plan to deal with the emerging financial crisis, it was with these words:  “And we’ll use – you know, we’re working through the processes, but there will be some form of auction process.”
 
Eight months later, the first auctions of [...]

Now that the flurry of appraisals of Barack Obama’s first hundred days are behind us, what of the next five hundred?  That’s the length of time before the 2010 midterm elections are at hand.  The new president’s success or failure in increasing his Congressional majority in 2010 will determine the way his presidency enters the [...]

We are a very long way from having a broadly agreed-upon story of the crisis that quietly commenced on the afternoon of June 20, 2007.  That was when  two Bear Stearns real estate hedge funds began to come apart, ushering in a long period of nervous waiting for fear eventually to subside (it didn’t) or [...]

A newspaper’s authority derives ultimately from its prosperity.  So it was more bad news last week that among the 25 largest US newspapers, only The Wall Street Journal managed to eke out a small gain in circulation during the six months of the financial crisis. The general gloom, however, may be somewhat overstated. A hot-potato [...]

Emmanuel Saez, 36, a public economics expert teaching at the University of California at Berkeley, was awarded the 2009 John Bates Clark Medal last week. Nobody has done more to describe the broad changes in income distribution in the United States that have taken place during the last ninety years.
 
His most striking finding has [...]

Next weekend, some young American economist will win the John Bates Clark Medal. The prize has been awarded every second year since 1947 by the American Economic Association to the researcher who is “judged to have made the most significant contribution to economic thought and knowledge” before the age of 40.  (The European Economic Association [...]

Truly new ideas don’t emerge very often in economics, but it happens. Still less frequently do they turn out to be fundamentally important. If they find their way to the surface in the midst of a grave crisis, as happened during the 1930s, they may be electrifying.
 
When “Leverage Cycles and the Anxious Economy,” by John [...]

Economic Principals is traveling and not writing this week.

President Obama has been a little slow in building a narrative of the Whys and Wherefores of the situation he unexpectedly inherited.  So it was a step in the right direction last week when he said at his press conference, “[T]his crisis didn’t happen overnight and it didn’t result from any one action or decision. [...]

Bonus-payment fury took center stage in Washington last week. The fever goaded Congress to a terrifying mood, the House and Senate competing to punish someone, never mind the Constitution. A classic Washington power-struggle unfolded in the background, a reminder of the closing days of the administration of George H.W. Bush, when budget chief Richard Darman [...]

The current crisis has precipitated the first decline in total global economic activity since the end of World War II. There are two main ways of looking at it. One of them was encapsulated by the Financial Times in a five-part series of full-page articles last week on “The Future of Capitalism” The other, a [...]

What’s widely perceived as dithering at the Treasury over the resolution of doubts about the solvency of the US banking system may have more to do with preparations for regulatory overhaul. A far-reaching redesign of the national financial system is expected to begin in Congress in a few weeks and could be completed fairly swiftly.
 
Former [...]

“The Paper” is a 1994 film by director Ron Howard that is highly esteemed by newspaper folk.  The background is the competition between a couple of New York City dailies, a tab not unlike the New York Daily News and a broadsheet resembling The New York Times. 
 
The hero and heroine are the tab’s city editor [...]

How’s the US banking crisis going to end? Nouriel Roubini, of New York University, has taken the lead in urging the Swedish solution, namely government receivership: take ’em over, clean ’em up and sell ’em back to the private sector, preferably in pieces. Others, including Chris Whalen, of Institutional Risk Manager, argue that bankruptcy, like [...]

The power of the Web is such that, on a pressing issue, a blogger with a point of view can quickly become nearly as indispensable as such journalists as Martin Wolf of the Financial Times or Paul Krugman or Joe Nocera of The New York Times, as long as the author is sufficiently knowledgeable and [...]

There is a widespread sense that Barack Obama has gotten off on the wrong foot with the stimulus debate – not that he’s mistaken in urging that emergency measures be taken quickly, but that he has hasn’t been clear about the Why, the How and the What Next? In short, he has lost control of [...]

Doubts about the future of newspapers are thick in the air. All around the country, big city dailies are caught in a great downdraft of technological change, losing many of their readers and much of their help-wanted and classified advertising to the World Wide Web. Unable to bring costs in line sufficiently quickly, most are [...]

George W. Bush left Washington last week amid a hail of jeers. “The Frat Boy Ships Out” headlined The Economist.  “Serially incompetent,” declared the Financial Times. “Worse than Hoover,” concluded Columbia University historian Alan Brinkley.
 
Bush arrived in Midland, Texas, to find a cheering crowd of 20,000.
 
For years now, persons close to Bush have been advertising [...]

Here at the outset, let’s set out a possible goal for the US Treasury. Nobody forecasts eight years ahead. Yet in terms of human aspiration, of planning, of envisaging the state of affairs to be brought about, of considering which paths to follow (and those to avoid), that span of years is no time at [...]

Before the next chapter of American political history unfolds further, it is worth thinking back a little on the one that is coming to a close.  An unusually good elucidation of some crucial developments of the past thirty years appears this month as So Damn Much Money: The Triumph of Lobbying and the Corrosion of [...]

Plenty goes on at the annual meetings of the American Economic Association.  Some 10,600 persons turned out for this year’s  three-day session in San Francisco — the largest attendance in the 23,236-member organization’s history. “The economists  decided not to participate in the recession,” said John Siegfried, of Vanderbilt University, association secretary.
Newly-minted PhDs entered the workforce.  [...]

The New York Times earlier this month contributed a memorable anecdote to the lore of this crisis when it reported on the emergency session that took place in the Roosevelt Room of the White House on the day after the credit markets shut down.
 
It was Thursday, September 18, when Federal Reserve Board Chairman Ben Bernanke [...]

The economic downturn is routinely billed as the most perilous since the Great Depression. What exactly does that mean?  What is most likely to happen next?  As it happens, fundamental aspects of the situation lend themselves to portraiture.
 
Sometimes a picture really is worth a thousand words. Have a look at this history of American economic growth [...]

The first false note of Barack Obama’s presidency was an alarming one. He stumbled when he briefly described his National Recovery Plan during his regular Saturday radio broadcast on December 6, promising to create millions of jobs “by making the single largest new investment in our national infrastructure since the creation of the federal highway [...]

Paul Krugman, of Princeton University and The New York Times, will deliver his Nobel Lecture in Stockholm tomorrow.  You can see the talk in real time on Monday in a webcast on the Nobel Foundation site (3 P.M. European Standard Time) or wait a few days for an online video to appear.
 
His topic is “Increasing Returns,” [...]

Economic advisers to President-elect Barack Obama marched into the spotlight last week. Who knew that there would be so many of them?
 
Before they begin work, therefore, let’s prepare a scorecard of the players. For the pecking order among them is far from clear. A fundamental distinction worth keeping in mind is between specialists and general [...]

In thinking about the bewildering array of problems facing the new administration, it helps to remember that every twenty-five years or so for the past century and a half, the US government has adapted to a changing world by assuming broad new economic responsibilities.

In the 1860s, Congress passed the Morrill land grant college and Homestead [...]

When five of the richest and most powerful US hedge fund proprietors gave sworn testimony before the House Committee on Oversight and Government Reform last week, the theatrical opportunities were as rich as the witnesses’ themselves.  The billionaires included:

The legendary George Soros, his latest book on reflexivity and financial crises on display on the table [...]

You might think that in the midst of what is widely billed as the worst economic crisis in seventy-five years, I would have better things to read than a history of inflation. You would be wrong.  Hardly anything could be timelier. Robert J. Samuelson’s The Great Inflation and Its Aftermath: The Past and Future of [...]

Readers, if they are diligent, plow through a couple thousand words each week to extract Economic Principals’ message – or not, depending on whether the topic seems interesting to them. Why that length?  The form evolved, and now seems natural to the function.
 
Not this week.
 
I’ve been reading The Great Inflation and Its Aftermath: The Past [...]

The emergency continues, a little less desperate than before. A remedy that works – direct government investment in threatened institutions in exchange for equity – seems to have been settled on in most industrial democracies.
  
A number of mysteries remain.  For instance:
 
How deep has been the opposition between the Federal Reserve Board and the US Treasury [...]

To the long list of sharp reactions provoked around the world by George W. Bush now must be added another:  the decision last week by the Royal Swedish Academy of Sciences to give its 2008 Nobel Prize in economics to Paul Krugman, 55, of Princeton University and The New York Times.
 
Not that the honor is [...]

The widespread craving for authority in the current crisis is not easily satisfied. Paul Volcker, who led the worldwide battle against inflation twenty-five years ago, still vigorous in his 80s, is one such figure who commands wide respect. Warren Buffett, the immensely successful investor (but no regulator), is another.
 
New York Times reporter Peter S. Goodman, [...]

How peculiar is it that the leading introductory economics texts scarcely mention the cycles of manias, panics and crashes that have been a familiar feature of global capitalism since its emergence in the seventeenth century?
 No propensity to bubble or bail is among the ten big ideas that govern economics in N. Gregory Mankiw’s text, for [...]

In anticipation of the presidential debate on national security and international relations last week, I took down one of the best books I know on the subject, The Weary Titan:  Britain and the Experience of Relative Decline 1896-1905, by Aaron L. Friedberg.  It is a broad, dispassionate study of how Britain’s leaders thought about their [...]

It is a remarkable political irony that the man who thirty years ago led the successful battle against global inflation, which in turn laid the groundwork for a quarter-century of world-wide economic growth, was still on hand last week to galvanize efforts to stem the crisis that has turned out to be the climax of [...]

st1\:*{behavior:url(#ieooui) }
Here’s a slick idea:  describe, briefly but authoritatively, the main modes by which knowledge has been produced, distributed and conserved over the last twenty five centuries, mainly in the West, but in Chinese, Islamic and Indian civilizations as well, until all four traditions converge [...]

Economic Principals is traveling and not writing this week.

Bull markets, it is said, like to climb a wall of worry.  It is the same with political campaigns. In the wake of the Democratic National Convention, many stories are being written to the effect that the race has tightened up, that Barack Obama just might lose the election. The Financial Times and the Economist [...]

No issue throws off more apprehension and confusion among a certain set than does global warming. Since the Norwegians last year propelled Al Gore’s film documentary, “An Inconvenient Truth,” into the stratosphere by awarding half a Nobel Peace Prize to the former presidential candidate (Gore shared it with the Intergovernmental Panel on Climate Change, an [...]

The newspaper industry’s funk is worse than ever. The most helpful discussion of the situation that I have seen in a long time was put forward the other day by Jack Shafer, the media critic at the e-zine Slate. Yes, classified and help-wanted advertisers have been migrating to the Web, Shafer writes. But the deeper [...]

EP is on vacation.
Back next week.
dw

It’s August. Is anyone surprised that trade talks in Geneva collapsed last week, just in time for a proper vacation, after which the world trade community will have a couple of months to tidy up its collective desktop in anticipation of the US election in November?
 
As the Financial Times put it, “Like Wimbledon fortnight but [...]

Here’s a challenge for the economics profession: to think up something suitable, an occasion or a prize, to commemorate the contribution of Martin S. Feldstein. For example, there’s the annual Ely Lecture, named for Richard Ely, the nineteenth-century reformer who organized the American Economic Association and served as its first president, before being ousted for [...]

The so-called “Easterlin Paradox” has been in the news recently. A clever new paper by Betsy Stevenson and Justin Wolfers, both of the University of Pennsylvania, has been making the rounds, arguing that the survey data on subjective happiness has been misinterpreted, and that a careful re-examination of the evidence suggests that the “hedonic treadmill” [...]

It is becoming clear that the US is indeed facing its most serious economic crisis since 1932.  Last week it was the vast government-sponsored but publicly-owned pools of mortgage liquidity known as Fannie Mae and Freddie Mac that felt the pinch of the rolling sub-prime lending crisis. Together, they hold about half of all US [...]

A friend sent me a copy of The End of Food, by Paul Roberts, with the suggestion that I read it.  It arrived from Amazon with a couple of coupons tucked away in the package, from McDonald’s, for two new products: chicken for breakfast, chicken for lunch. First I traded in the coupons and ate [...]

Bill Gates retired last week from daily management of Microsoft, after a 33-year career to rank along side those of Thomas Edison and Henry Ford. But those who identify him mainly with the personal computer, the machine he loved and sought to put in every home and on every office desk, underestimate the role he [...]

That didn’t take long.  Barely a month after the University of Chicago unveiled plans to purchase the hundred-year-old building of a theological seminary near the center of its campus in order to relocate much of its economics department and establish a Milton Friedman Institute, a faction of the faculty has cried foul.
 
One hundred and one professors, [...]

A striking array of first-magnitude stars turned out last week when the Federal Reserve Bank of Boston convened a conference on Cape Cod to mark the fiftieth anniversary of the publication of the Phillips curve. That possible link between the unemployment and inflation rates, first observed as “an empirical regularity” by A.W. Phillips, has been [...]

Expositions of Obamanomics have begun to appear.  In The New York Review of Books, John Cassidy asks, “If Obama isn’t an old-school Keynesian, what is he?” One answer, writes Cassidy, is a behavioralist – “the term economists use to describe those who subscribe to the tenets of behavioral economics, an increasingly popular discipline that seeks [...]

Perhaps, now that Harvard’s Russia scandal is receding into the past, Andrei Shleifer, 47, will take it easy. He has a steady stream of students, presides over a growing literature in comparative economics, and has developed an interesting sideline in the economics of persuasion. His wife, Nancy Zimmerman, runs a hedge fund that has seen explosive [...]

Among the most prescient sentences I have ever written was this one, in 1984, in my first book, The Idea of Economic Complexity:  “Complexity is an idea on the tip of the modern tongue.”
 
Three years later, New York Times reporter James Gleick created a sensation in certain circles with his best-seller, Chaos: Making a New [...]

If you had a sharp eye out, you would have been struck last week by the full-page advertisements in the front section of The New York Times burnishing the reputation of the University of California at Los Angeles. In one, studio chief Sherry Lansing (and UCLA alumna) asserted, “It’s Clark Kerr’s fault!” (Why? His long-range [...]

(EP is travelling.  The May 18 edition will appear 0900 EST Tuesday, May 20.) 
 
The film Iron Man sold more than $100 million worth of tickets in three days when it opened in US theaters last weekend, nearly an all-time record for a movie that’s not a sequel. As a result, a relatively little-known genre known [...]

There is no point in continuing to try to deny the Republicans credit for their “Reagan revolution.” The best reason to expect that Democratic Party elders will award the nomination to Obama is that they recognize that the Clintons’ attempt to dwell on the past would gravely threaten their future. The next phase in the cycle of American history already has begun.

If you believed everything you read in the newspapers, you might think that working Americans had fetched up in a kinder, gentler age in which they could expect to take one encore after another. One recent “Retirement” supplement, headlined ‘”A Longer Goodbye,” describes how “shorter hours, lighter duties and other perks entice older workers to [...]

If the speculators had beaten Iceland, which carry-trade economy would have been next? Hungary, Turkey and New Zealand all have high current-account deficits, high interest rates and capital inflows. A spiral of lost confidence could have begun to make the global financial crisis of the late 1990s, when when the Asian crisis spread to Russia and Brazil, look like a qualifying round.

The differential play that the Greenspan story received last week in each of four major newspapers in the US was interesting for what it reveals about the relationship of each with its audience – that is to say, about its politics. The real news, however, was the entry onto the scene of former Federal Reserve chairman Paul Volcker, and the light he shed on what monetary policy migh look like during an Obama presidency.

The forty years since independence have been mostly bad ones for most of Africa. Latin America, too, suffered fifty years of internecine warfare, political instability and economic stagnation, after it gained independence from European rule in the first half of the nineteenth century, according to Robert Bates and Jeffrey Williamson, of Harvard University, and John Coatsworth, of Columbia University. At a certain point it stabilized and began to grow. Africa’s experience may turn out to be the same, for many of the same reasons. Indeed, the possibility exists that Africa’s evolution could avoid some of the worst side effects of Latin America’s successful transition, they say. Might the worst be over for Africa?

The Internet and the telecommunications revolutions have meant that more news is produced today than ever before. But that doesn’t mean it is easy to follow. And many wise voices have been rendered silent by the bumpy dis-integration of news.

Patent Failure: How Judges, Bureaucrats and Lawyers Put Innovators at Risk, a new book, by James Bessen, a software developer turned economic savant, and Michael J. Meurer, a professor at Boston University School of Law, argues that the problems plaguing the patent system rest on the flawed analogy between technology and real property. “If you can’t tell the boundaries, then it ain’t property,” they write.

This was the week that the sub-prime lending debacle turned into a full-blown financial crisis.  Look beyond the Federal Reserve Board’s new $400 billion special lending facility for the holders of mortgage-backed securities that was announced last week; look beyond its bailout of Bear Stearns. Look beyond the scheduled Tuesday meeting of the Federal Open [...]

Business Week raised a ruckus last December with a cover story on ”The Dangerous Wealth of the Ivy League.” Provosts from eleven public universities in the Midwest wrote to protest sentiments attributed to Harvard University president Drew Faust, who was said to suggest that land-grant universities should compete less intensely for federal research dollars in basic science. [...]

Economic Principals is traveling and not writing this week.

With the Russian presidential election coming up next Sunday, I have been paying more than usual attention to Johnson’s Russia List (JRL), which arrives nearly every morning at my desk via email, with the complete texts of yet another thirty or forty news stories about what is happening in Russia, mostly from the English- and [...]

David Landes on legendary business dynasties; Jacob Weisberg on “The Bush Tragedy:” why do dynasties fare so poorly in politics? Perhaps for the very reason that they cannot deal with their problems internally, “within the structure of the business.”

Economist Alan Krueger and psychologist Daniel Kahneman, of Princeton University, want to produce a “U-index” to measure the proportion of time individuals spend in what they consider an “unpleasant” or “undesirable” or “unhappy” state. Is the sum of all blue moods really a measurable quantity?

The presidency of the National Bureau of Economic Research is worth much more than its $750,000 annual paycheck. It is the most prestigious and powerful job in all of American economics. Harvard’s N. Gregory Mankiw says he took himself out of the running because he’s looking for ways to cut his tax bill.

Put yourself in Ben Bernanke’s shoes. Assume that a recession was inevitable. When was the right time to take it? At seventy-two months, the current expansion is already longer than any of the thirty years before Volcker, except for the inflationary nine-year Vietnam boom. Meanwhile, the problems awaiting the next president are simply enormous, whoever it is who takes office in January 2009 – budget deficits, the war in Iraq, health care reform, climate change. Would the Fed chairman be doing the new administration a favor to push ahead a recession, too, into its first couple of years?

New York Times columnist Paul Krugman is right more often than not about economic issues. Is he right about this year’s election? Probably not. Plus, more on in defense of tax-shielded ESOPs.

One of the things that news reporters learn early in their careers, if they are fortunate, is not to take anyone’s claim to authority too seriously. For example, I remember meeting Louis Kelso in the early 1980s.
Kelso was the San Francisco attorney and amateur economist who, starting in 1958, had gained a measure of fame [...]

There was plenty of interest in the economy when the Allied Social Science Association met last week in New Orleans. And there was the usual fluff. But the deepest excitement had to do with the fundamental argument among economists about how to view the prospect of industrially-induced global warming: Dire emergency? Or manageable threat?

After the golden age of automobiles, metropolitan areas will depend much more on railroads to curb congestion and pollution. Beads-on-a-string cities will fade, hub-and-spoke arrangements will thrive, according John Stilgoe, a prominent student of the American landscape.

Meet Wellesley College professor Chip Case, discoverer of the housing bubble, father of the Case-Shiller-Weiss Index (on which residential housing futures and options trading is based), best-selling text-book author and teacher extraordinaire.

Is the long political cycle in the United States about to turn? In the run-up to the 2004 election, Economic Principals saw Hillary Clinton as a likely bet in 2008. Barack Obama seems the better candidate today. Meanwhile, a surprising gridlock of epic proportions during a snowstorm presages congestion pricing for Boston.

The Swedes should do the world a favor and award the economics prize to the environmental economists who have created the tools to talk meaningfully about taking precautionary action in uncertain circumstances, before the physical science can be nailed down.

On the eve of parliamentary elections in Russia, Anders Aslund explains why he thinks the collapse of Harvard’s Russia Project in 1997 amid charges of corruption was no big deal. The incident isn’t mentioned in his new book.

Is it possible that Alan Greenspan is gradually following George W. Bush down the “worst ever” path into history? If he was so prescient, why did permit the housing bubble to get so out of hand, before retiring as chairman of the Federal Reserve Board in 2006?

Sovereign wealth funds are in the news these days mainly because of the possibilities of strategic behavior that they offer their owners. As long as these vast sums of money are managed professionally and transparently, they will be no different from any other large pool of wealth — pension funds, insurance portfolios, mutual funds. But opportunities for mischief exist. And the risk that these trust funds pose to their eneficiaries are not trivial, either.

“New” growth theory all but eclipsed development doctrines for a time in the 1980s and ’90s. With the appearance of One Economics, Many Recipes, by Dani Rodrik, of Harvard University’s Kennedy School of Government, a similarly “new” development economics has acquired a rallying point, and a new leader.

For those who don’t know it, Neuromancer is the book that in 1984 coined the term “cyberspace” and introduced to the Internet generation a forward-looking fictional landscape that, for a time, captured their imagination as completely as George Orwell’s Nineteen Eighty-Four enthralled readers for well over a decade after it appeared in 1948. Its author, William Gibson, is still ahead of the curve.

The vogue for economics primers exemplified by Freakonomics caught everybody by surprise. The primer I have enjoyed most, the one I would recommend to a friend who wanted to learn how economists think about the world right now, is one that passed almost completely unnoticed into the stream, perhaps because it is so slight. But then, that is the point of Economics: A Very Short Introduction, by Partha Dasgupta, the Frank Ramsey Professor of Economics at Cambridge University.

So “mechanism design” has entered the language of everyday economics, as described by newspapers. It is a truism that most Nobel Prizes are won by researchers who tumble onto their topics in their twenties and often have all but nailed them down by their late thirties. What is Leo Hurwicz, at 90, the oldest person ever to be recognized in any discipline, doing on the citation for this year’s prize?

The “visible hand” of hierarchical corporate management began disappearing almost as soon as Alfred Chandler made it famous. That doesn’t diminish Chandler’s achievement much; he was the greatest of business historians (nor that of James W. Michael, probably the most influential buisiness editor of the times). Get ready, though, for organizational economics.

Fifty years ago last week, the Soviet satellite known as Sputnik roared into orbit around the Earth, catching the United States completely by surprise. The real watershed came the next year, however, when Congress passed the National Defense Education Act.

Michael Perelman, professor of California State University at Chico, author of The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression, and 16 other cranky and original books, is the most completely unrepentant populist economist around, a regular Howard Zinn for the economics class

No single event in the last quarter century has been more transformative of technical economics than a lecture series about the nature of economic growth delivered by Robert Lucas, of the University of Chicago, to a skeptical audience in Cambridge, England, in December 1985. Here’s the how and why.

What remains of The Boston Evening Transcript? Once prized as “the country’s thought of Boston” devoted to literature, science, art, music, Harvard, the wool market, genealogy and a half dozen other peculiarly Boston institutions, the afternoon daily gave up the ghost in 1941. But certain of its traditions linger on — at The Boston Globe, The Wall Street Journal, and Economic Principals.

Global warming alarmists may be right for the wrong reasons. A pair of papers by Harvard University’s Martin Weitzman make the case that the standard treatment of rational expectations equilibrium conceals a hidden assumption, which, if unwarranted, means that economists confront a future permanently more uncertain than previously believed — a “thick tail” of probabilities, in the language of the bell curve, instead of the comforting thin tail of a normal distribution of probabilities, which describes possibilities that are evermore small.

At 95, Daniel Aaron is going strong. He first appeared on the national stage in 1951 with Men of Good Hope: A Story of American Progressives, a portrait-gallery of eight middle-class reformers — Ralph Waldo Emerson, Theodore Parker, Edward Bellamy, Henry George, Henry Demarest Lloyd, William Dean Howells, Thorstein Veblen, Brooks Adams (and their generally unreliable executor, Theodore Roosevelt) — that conveyed, as he described it, a vision of ”a serene and humane society where ‘costs’ would be calculated under a different accounting system and ’success’ be weighed on a different set of scales.” But it is a little book that he edited in 1952, America in Crisis: Fourteen Crucial Episodes in American History, that is of current interest.

For the first hundred and fifty years or so after 1788, when James Hutton firmly [...]

Blame for the crisis in real estate lending seems to be zeroing in on the [...]

Economic Principals is a news-oriented weekly, not a newspaper or a book review.  A Farewell to Alms: A Brief Economic History [...]

These are dark times for newsfolk. The Wall Street Journal has been sold to Rupert [...]

The year was 1940. Germany had invaded Poland. The United Kingdom and France had declared [...]

The Wall Street Journal, which the heirs of the Bancroft family are in the process [...]

The task facing a certain kind of entrepreneur these days is no more unfamiliar than the engineering of a successful [...]

Towards the end of his life, the economist Charles P. Kindleberger tumbled with great excitement on to [...]

For the last few years, my favorite way of keeping tabs — very loose tabs — on the heavy waves [...]

The supply of economics commentary is growing.

Europe’s Centre for Economic Policy Research (CEPR) [...]

Even before I spent the weekend at the meetings of the History of Economics Society, [...]

When Kenneth Sokoloff died at 54 last month, of liver cancer, the economic history profession [...]

The world’s largest association of heterodox economists meets next weekend in Salt Lake City. [...]

One of the most striking features of the years after the collapse of communism has [...]

Alfred Chandler, the distinguished historian of business, died last week at 88, in Cambridge, [...]

The death last week of Boris Yeltsin called to mind an important truth — policy never gets made in a vacuum. The US seriously [...]

In was in 1995 that Susan Athey made her debut as an economist, in The New York Times. [...]

When the Pulitzer Board this week awarded its gold medal for public service to The Wall Street Journal for its “creative and comprehensive probe” into backdated stock [...]

By any measure, Michael Jensen is an interesting figure. After graduating from [...]

Joseph Schumpeter died in 1950, a few weeks before his sixty-seventh birthday, and since then, [...]

The resolution of Harvard’s Russia scandal last year sheds some light on the recent unpleasantness [...]

After five years, people still ask, “What do you envisage for your blog?”  The short answer is, “It’s not a blog; it’s a weekly.” The longer answer, which I elaborate below, is that my hopes for it are constantly changing.
The confusion is understandable. www.economicprincipals.com  launched on March 17, 2002, about the same time that web-logs [...]

The year 1957-58 was a good one for global self-understanding.  Taking a leaf from the [...]

It is difficult to imagine more of a hornets’ nest than the etiology of mental illness. So when Cornell University economist [...]

A new online Internet news magazine has appeared, covering 22 Asian nations from Afghanistan to [...]

So federal legislation to establish carbon caps and emissions trading is suddenly all but a [...]

“A man commonly saunters a little in turning his hand from one sort of employment [...]

The United State filed a complaint last week against China with the World Trade Organization. [...]

Monday evening, most Public Broadcasting System stations in the United States will broadcast The [...]

We take for granted now so much of what is new: personal computers and cell [...]

The Boston News Bureau and What Became of It

“Kicking over Waste Baskets and [...]

The American Economic Association met for three days over the weekend in Chicago. In some respects, its meetings remain [...]

There’s a toplofty headline if ever there was one.  You would have to range freely over all the globe to make good on [...]

Duncan Foley, of New School University, in New York, is very close to being a [...]

Something like 150 years have passed since the emerging industrial economies of Europe began systematically [...]

There’s nothing like staking out an extreme position to get the juices flowing.  Take Harvard [...]

A rare decline in November sales, its first in a decade, last week landed Wal-Mart [...]

A pair of top political reporters, John Harris and Jim VandeHei, quit The Washington Post [...]

There are many theories of how shifting involvements among generations might create a cycle in [...]

Popular books in recent years have offered some striking vocabulary for talking about the changes [...]

So Harvard University has taken away Andrei Shleifer’s endowed chair and its privileges — stripped [...]

A friend asked at lunch the other day what I thought accounted for the phenomenal success of  Freakonomics. [...]

In the run-up to the Nobel Prize in economics, usually someone is willing to go out on a limb. A few days after dark horse [...]

When economists gathered in 2001 at Columbia University to honor Edmund Phelps with a festschrift, [...]

The newspaper industry has been experiencing a series of profound technological shocks, especially in America. [...]

College students have returned to the classroom. Still selling briskly, at least in Cambridge, Mass., [...]

When I was a boy, a “Butter and Egg” man lived down the street in [...]

It was a somber August day in 1995 when Fischer Black died of cancer. He [...]

It’s a commonplace in science that we care about the last word, not the first.  [...]

Driving back to Boston from the Midwest, I am always struck by the extent to which geography is destiny — specifically, [...]

When I bought some stamps at the post office the other day, around the corner from former [...]

Of all the national economic transformations that began during the 1980s — China, Brazil, Russia, [...]

Like a lot of Americans this week, I have been reading Thomas Ricks’ Fiasco: [...]

People in Boston are talking about the Big Dig.  Many of them have been inconvenienced [...]

The first week of the Summer Institute of the National Bureau of Economic Research unfolded last week in Cambridge, Mass.,  mostly uneventfully, 80 papers given over six days, the first of some 365 papers to be presented [...]

Ever wonder how Chicago got to be the city that it is today?  Not because it’s situated [...]

I’ve been reading the annual report of the Bank for International Settlements.  Economic Principals generally [...]

Slate, the online magazine, has been celebrating [...]

“Overcoming what we intuitively ‘know’ requires disciplined analysis.”  That is the underlying strategy of Yale [...]

“Out of His League,” was the headline on the Financial Time’s May 14 post-mortem on [...]

As Harvard University gathers for its graduation ceremonies this week, an eight-member committee [...]

A major challenge in the current age of globalization has to do with deciding how to think about what it is that is essentially the same among people around the world and what may be significantly different about them.
Will the Chinese, through superior industry, intelligence and sheer numbers, take over the global economy? Is, say, [...]

What has been the most single exciting province of applied economics these last dozen years?  [...]

Towards the end of The Economics of Attention: Style and Substance in the Age of [...]

It was a big step last week when the executive committee of the American Economic [...]

It is always good to learn that some new citizen has joined the ranks of [...]

[...]

Missing in the controversy over Harvard’s Russia scandal has been any attempt to explain, much less place a favorable [...]

The National Bureau of Economic Research held its 21st Annual Conference on Macroeconomics last week in Cambridge. The question of why Europeans work so much less than Americans once again held center-stage. The emphasis this time was on new ways of investigating the interplay between European tax rates and generous social insurance programs.
There are highly [...]

A lot of finger-pointing is going on amid the bitter disappointments stemming from the US [...]

If you look carefully on the back way into Stanford University, you can still see the barn on Stock Farm Road that is all [...]

[...]

Clarifying the impact of Harvard University’s Russia scandal and the Andrei Shleifer/Lawrence Summers affair on [...]

[...]

[...]

David Colander is a member of a rare and valuable tribe — an insider to [...]

That didn’t take long. After a decade of astonishing growth — from zero to $10 [...]

A persistent riddle of the Andrei Shleifer case has been the failure of three of the four major English language papers to report in any detail the story of Harvard’s failed Russia Project. The Wall Street Journal was quick to grasp its significance in 1997. Carla Anne Robbins’ aggressive reporting on page 1 when the [...]

Should Harvard University president Lawrence Summers travel this week to the World Economic Forum in [...]

When the American Economic Association met in New York City in December 1965, the sessions [...]

[...]

Among those who work for newspapers, the inevitability of bias is a widely acknowledged problem. [...]

To a certain strand of argument, the news last week from Dover, Pennsylvania, was a [...]

The great promise of economics is that it enables us see things relatively whole. Sometimes, [...]

What’s behind the spate of public criticism of the work of a number of prominent [...]

[...]

[...]

[...]

The arrival last month of Benjamin Friedman’s The Moral Consequences of Economic Growth [...]

The proposition behind Economic Principals always has been that all those who are interested in the production and distribution of economic ideas should have access to its journalism, especially those around the world who are far removed from economics’ major research centers, and the lively conversations that go on around them.
The problem is that journalism [...]

[...]

The Fed, Columbia University
and the New York Times
President George W. Bush, under stress, is being pestered [...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

A lot of ink and pixels have been spilled recently over the relationship between journalism and blogging. As a working journalist who is frequently mistaken for a blogger, I have some ideas.
The difference mainly has to do with who the audience is. A journalist is someone who gets paid to make calls and ask [...]

The last great [...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

Paul Anthony Samuelson turned 90 last week, and the Massachusetts Institute of Technology (his long-time employer) and McGraw Hill Co. (his long-time publisher) threw him a grand party in Boston. Some 400 of his friends from [...]

In the dénouement of the US government’s successful lawsuit against Harvard University for its failed Russia project in the 1990s, a scheduled conference again has been postponed, this time until June 2, while the various parties’ continue their four-month-long attempt to agree on appropriate damages.
A negotiated settlement would avoid an expensive and time-consuming jury [...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

It is now [...]

[...]

[...]

[...]

One of the proudest names in American industry quietly entered the history books last week when, just shy of its 130th [...]

To understand the itch [...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

The spectacle of four American presidents and one presumptive candidate for the office gathering last week in Little Rock, [...]

[...]

[...]

Be careful what you want, goes the old saw. You just might get it.

Had he been one-term president, George W. Bush might have [...]

[...]

[...]

[...]

The Nobel Prize in economics will be announced tomorrow, Monday, October 11, just before lunch in Stockholm. North [...]

[...]

I have been trying to imagine a world in which David Shipler’s new book, [...]

[...]

Half a [...]

[...]

In thinking about political history, it helps to periodize. To the extent that you listen to any of the hoopla emanating from New York City this week about jobs, pay, retirement security, health care, education, energy and the environment, spare a moment to think back on a memo that Dick Cheney wrote nearly thirty [...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

[...]

BERLIN — The day last week that that a mistrial was declared in the epic [...]

[...]

At least on the surface, Germany is the last place you’d go to think about the economics of global integration. The nation seems hung-over from its miraculous reunification a decade ago, diminished by the growth in the membership of the European Union (ten new members on May 1), and, according to both the national and [...]

[...]

BERLIN — Economic Principals had contended for a long time that another sort of Cold War began with events of 9/11. The 3/11 bombing in Madrid reinforces this view. Whoever is to blame, it is further evidence that a new ideological struggle has replaced the old one.
Instead of the state against the market, this [...]

BERLIN — The eight-month election campaign has begun in the United States. What are [...]

Situations don’t come much trickier than the one facing the U.S. Congress. The president’s plan to “personalize” the safety net that is the Social Security system is in deep trouble. But that doesn’t mean Democratic legislators are off the hook. As the Washington Post editorial page observed [...]

[...]

[...]

[...]

[...]

[...]

The dramatic growth of specialization in the 20th century has produced some spectacular examples of professions taking advantage of the intrinsic complexity of things to cut sweet deals for themselves. These don’t last forever, but the forces of competition can take a long time to bring them back into line.
Take physicians, for example. The introduction [...]

[...]

Eight years ago, when economists gathered in San Francisco for the [...]

This is not an age for statuary. As a rule, we honor not the doer [...]

It’s been quite a year. The biggest change was the transformation [...]

Robert L. Bartley [...]

Like nearly everybody else I know, I read New York Times columnist Paul Krugman twice a week. He is overbearing. He [...]

[...]

[...]

[...]

To have some idea of where we are going in this world, it is useful to have some sense of where we have been. [...]

[...]

 
For some time, heteroskedasticity has been the code-word around my office for the more opaque concerns of econometrics. Who beyond the relatively small community of professionals who specialize in statistical inference cares about T ratios and P values and chi squares anyway? I’ve always believed that clever applications of economic theory, expressed in models, and [...]

Nearly a hundred years ago, Andrew Carnegie contributed $10 million to start a fool-proof system of free pensions for college [...]

It’s been 18 months since Economic Principals rolled out as a source of independent commentary about economics and economic [...]

“I have spent my life trying to determine the extent of the influence of my father upon me, passing over the periods [...]

A book about manufacturing may seem an odd place to begin a disquisition about how to read a newspaper, but I have long [...]

The Russian economy is booming again. It was just five years ago this month that its first frenzied post-communist expansion ended [...]

Ocean swimmers know the mechanics of a sea-puss. A submerged sandbar is formed by breaking waves. Closed at one end, it becomes [...]

  What went so spectacularly wrong in the northeast power grid that 50 million people did without power for nearly a day? The [...]

One of the hardest things to get a handle on is the difference between the lives we lead and those of our parents and grandparents [...]

“Tell all the Truth, but tell it slant,” advised the poet Emily Dickinson. There’s a reason that the Defense Advanced [...]

The aftermath of the stock market bubble of the late 1990s continues to work its way through the economy. The California recall election [...]

One of many intricately-related propositions about the capacity of American government that is being tested in Iraq these days has to [...]

  Americans Found to Lack Leisure;
 

Philosopher Says They Keep Too Busy
During Time Spent Off the Job

Lie down and listen to the crabgrass grow,
The faucet leak, and learn to leave them so.
Feel how the breezes play about [...]

It was in 1967 that a little paper called “Conservation Reconsidered” appeared in the American Economic Review, sandwiched between contributions by [...]

What to worry about in the world, economically speaking? At the top of most lists today would be Japan. The world’s second-largest [...]

Now that the two top editors of The New York Times have “resigned,” attention has shifted to the man who hired and maybe fired them, [...]

In a week when management failures at The New York Times were much in the news, I wanted to call attention to a series of stories [...]

Every June, another thousand or so economists receive their PhDs and go out into the world, there to impinge upon our consciousness [...]

It’s been nearly thirty years since its stirrings reached my little corner of America and swept me up and carried me along [...]

When New York Times Co. chairman Arthur O. Sulzberger Jr. fired Boston Globe publisher Benjamin Taylor four years ago, little attention [...]

For more than a half century, the American Economic Association has awarded a medal every other year to the economist under the age of forty judged to have made “the most distinguished contribution to the main body of economic thought or knowledge.”
Though there are other professional recognitions that may come [...]

It’s a commonplace that the Cold War had a great deal to do with shaping the global economy in the second half of the 20th century.
The rivalry between the Soviet Union and the United State started [...]

Springtime, and economic departments around the world are jockeying for position.
They are hiring each other’s newly-minted PhDs, interesting young men and [...]

The biggest unknown of the Gulf War II has become what to expect when it is over. Will it have been worth it in the end?
A range of costs under various circumstances are easy enough [...]

The war in Iraq probably is going better than you’d guess from the up-and-down stream of news coverage. But that doesn’t mean [...]

Among the American casualties of the war in Iraq may be the weekly newsmagazines —– Time, Newsweek and US News and [...]

George W. Bush’s reputation among his friends, ever since college, has been that of a venturer, a risk-taker — not exactly a high-roller, [...]

The president of the Game Theory Society knew he had a problem when the editor of one of the society’s flagship journals turned [...]

There’s never been an American war quite like this one. With oil prices soaring and the economy seemingly fragile, it is striking [...]

Suppose we all had kitchen gardens. Now would be the time for poring over catalogs, starting seedlings under glass, thinning those already sprouted, building tents [...]

It was a good week for Tax Policy Theater. Federal [...]

The New York Times and The Wall Street Journal are [...]

Anybody who has followed the pastoral messages of [...]

The stand-off over the Andrei Shleifer case is scheduled [...]

For nearly thirty years, the University of Chicago’s Robert Lucas has been a reliable guide to What Comes Next in Economics? [...]

What will happen if one of the brightest and most beguiling economists in the world turns out to be a world-class scoundrel, too?
Andrei Shleifer’s stature as an economist is common knowledge. Among the Harvard professor’s more striking accomplishments was a 1997 article, “The Limits to Arbitrage,” in which he and his friend University of [...]

Last year Paul O’Neill decided he wanted to address [...]

When the American Economic Association meets next week in Washington D.C., two of the most interesting stories there won’t be in [...]

Suppose that Martin S. Feldstein does get a job in Washington. Clearly he would like to succeed Alan Greenspan as chairman of the Federal Reserve Board. Who then would take over the presidency of the National Bureau of Economic Research from the mild professor that nearly everyone calls Marty?
A little bit of history is in [...]

From the beginning, the “Anomalies” column was probably the most popular feature in the Journal of Economic Perspectives. That non-technical journal [...]

(Economic Principals is traveling, messed up, regrets [...]

The last ten years have seen a heightened interest [...]

The Democratic Convention will be held in Boston [...]

The Bush Administration’s economic team apparently [...]

Whatever is going on between Republicans and Democrats [...]

Slipping out the door of the Justice Department [...]

It sounds as though the Andrei Shleifer matter [...]

International Economy is a glossy magazine that since 1987 has carved out a comfortable niche in the world of controlled circulation [...]

One of the most interesting aspects of the new-fangled tradition cited by the Nobel Foundation last week is the difficulty — at least on the surface — that experimental economics has had over the years in establishing an institutional identity.
Considering that a single experiment designed to investigate, say, attitudes towards risk, can take $50,000 in [...]

Years ago, when I was first coming to grips with economics, one of my favorite books was a collection of essays, [...]

1. Another charette is underway in New York City — an intense effort to solve an architectural problem in as limited [...]

1. A YEAR AFTER 9/11/01, what’s become of the theory that a new and quite different kind of Cold War has [...]

Alan Greenspan gave testimony to Congress last week, [...]

One way to evaluate Alan Greenspan’s speech last month in Jackson Hole, Wyoming, in which he disclaimed responsibility for the dot.com [...]

Economic Principals is experimenting with forms, [...]

Economics more than ever is a business for specialists. [...]

In the early 1990s, the Massachusetts Institute of Technology found itself facing no small crisis. During the fifty years following [...]

One of the interesting concomitants of the bear [...]

The life of a newspaperman resembles the saga of Black Beauty, as A.J. Liebling wrote long ago. A warm dry stall to sleep in and [...]

For all the talk about how the current bear market in stocks was precipitated by a “crisis in confidence” in American institutions [...]

Every generation receives an overwhelming lesson or two in economics from the real world. In the ’70s, it had to do [...]

What are the odds we’ll get some real accounting reform out of the current corporate scandals? They’re pretty good.
After all, the financial reporting system hasn’t [...]

With the breakdown of negotiations for a settlement last month, the Justice Department’s complaint against Harvard University in connection with its 1990s mission to Moscow has taken a new and ominous turn.
The Boston Globe reported last month that prosecutors had filed a motion for summary judgment, asserting that in a thousand pages of exhibits and [...]

Bernie Ebbers; Martha Stewart and the Waksal brothers; Dennis Kozlowski; Gary Winnick; Kenneth Lay, Jeffrey Skilling and Andrew Fastow; Jack Welch and Suzy Wetlaufer — [...]

Coming back to my university after some years away, I remember asking a knowledgeable friend in the autumn of 1971 what had happened to [...]

Paul Burstein is as quick as anyone among my friends spot the most interesting stories in the business pages of the newspapers. A physicist, [...]

Does economics make progress? The hoary old question was a perennial for many years. You don’t hear it so much any more. One reason [...]

EconomicPrincipals.com began on March 17, 2002, with a view to providing sustained coverage of developments in the community of technical economics, for an audience of [...]

“Markets and governments have an uneasy relationship,” writes John McMillan in his new book, Reinventing The Bazaar. “Markets coordinate the economy better than any [...]

Of the many economic policy misjudgments in the ’90s, one of the worst had to do with the treaty establishing the World Trade Organization, [...]

Enron Corp.’s conduct during the California power crisis of 2000-2001 (and that of other energy companies) seems certain to go into history books as [...]

In the wake of the spectacular failure of Enron Corp., the House of Representatives has passed a pension reform bill, stressing new diversification rights, more [...]

One of the crucial lubricants of the credit card business is the ubiquity of insurance. Say somebody steals your card and runs up big bills [...]

One of the payoffs of recent developments is that the government’s economic management task no longer is narrowly conceived as consisting of making fiscal and [...]

There has been an explosion of interest in the last few years in the economics of human beings as they really are; not the “lightning [...]

With the US apparently emerging from a downturn so shallow it doesn’t seem to meet the standard test — two consecutive quarters of declining output [...]

From the standpoint of individual choice, one interesting thing about the aftermath of 9/11 is that the only American caught fighting for the Taliban was a white guy from northern California, John Walker Lindh. Given the strength of Islam among African-Americans, why is it that there was nothing in Afghanistan even slightly reminiscent of the [...]

Boston’s Hynes Convention Center last week was the site of one of those happy intersections of human affairs that illustrate why the truth of economics cannot be captured in a single sentence — not even with the king of the oxymorons, “creative destruction.”
The cavernous hall has grown by degrees since it was inaugurated in the [...]

Everybody knows John Nash now, thanks to the film “A Beautiful Mind,” even if they are not entirely certain exactly what it was that John Nash did. The story of the Nobel laureate’s schizophrenia is to be told by Mike Wallace on Sunday evening (March 17) on “60 Minutes,” and again on “The American [...]