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  • December 21, 2014--Stranger Things Have Happened

    I was halfway through a good new book on US-Russian relations last week when it occurred to me that I might very well vote for Jeb Bush, that is, if I get the chance. I was startled by the thought. For the last ten years, at least, I’ve thought of myself as being unshakably wedded […]

  • December 14, 2014--The News-World Federalists

    The news last week that John Micklethwait, editor-in-chief of The Economist, would be moving to New York from London to take charge of the far-flung editorial operations at Bloomberg News reminded me of s politically incorrect joke from my Midwestern childhood – the one about the Norwegian who moved from Minnesota to Wisconsin, thereby raising […]

  • December 7, 2014--A Parallax View

    Boston is slated to regain a battered badge of its identity next month, when arts coverage is expected to return to the daily broadsheet editions of The Boston Globe. To be sure, the return of the section formerly known as “Living/Arts” is apparently a consequence of an expanding business section. It is a heartening development […]

  • November 30, 2014--On Doing the Right Thing

    Irony – the tendency to underscore a point by stating the opposite of what is meant – has been the downfall of many an advocate.  It’s an often powerful technique. In political speech, though, it is prone to backfire, because it can easily be taken out of context. It’s more dangerous than ever in the […]

  • November 23, 2014--An Especially Good Chronicler of Ukraine’s “Costly European Dream”

    No one was surprised when the broadcast television networks decided not to carry President Obama’s speech Thursday evening. The networks aren’t The Networks any longer.  Everyone remembers a moment when they first decided they needed cable television, too. By offering superior content, cable reduced commercial television’s revenue stream, its ambitions, and its status.  The networks […]

  • November 16, 2014--The Fourth Generation in Chicago

    CHICAGO — A remarkable conjunction occurred here last spring, somewhere between a concatenation and coincidence. Gary Becker, of the University of Chicago, died unexpectedly, in May, at 83, from complications following ulcer surgery. In June, Glen Weyl, 29, anointed Becker’s successor as expositor of Chicago’s most distinctive tradition, published a prospectus for “A Short Summary […]

  • November 10, 2014--A Few Good Things

    Economists have written any number of popular introductions to their field – Armchair Economist, Undercover Economist, Naked Economist, Economic Naturalist’s Field Guide,  Freakonomics, From Here to Economy and Tradeoffs all come to mind – but seldom do economists write about their own experience of the craft. That’s why, as an economic journalist with some familiarity […]

  • November 2, 2014--Meet Elmus Wicker

    BLOOMINGTON, IND. – Some professors find a second wind when they stop teaching.  Norman Mclean wrote A River Runs Through It after he retired from the University of Chicago, in 1973. Fifteen years later, he published a sequel, Young Men and Fire.   Samuel Hynes, of Princeton University, with The Unsubstantial Air: American Fliers in the […]

  • October 26, 2014--Economic Principals is Traveling

    EP is on the road, attending conferences, and will return next week. dw

  • October 19, 2014--Imperfect Competition, Legitimate at Last

    The Nobel award  last week to Jean Tirole, of Toulouse School of Economics, capped a twentieth-century drama whose story has barely begun to be told. I can describe it here only in the broadest way; thanks to the Swedes, the details will now gradually emerge, as did those of similar developments in the past. But […]

  • October 12, 2014--The Badger

    American International Group minority shareholder Maurice (Hank) Greenberg, 89, sued the US government in 2011, charging the bargain it drove when it rescued the enormous insurance company he had built from humble beginnings was not only extortionate (the Federal Reserve Board took 80 percent of A.I.G.’s stock) but illicit, to boot. US Court of Claims […]

  • October 5, 2014--Busted!

    Not for the first time, EP chose a topic too difficult for the time allotted. Back next week. dw

  • September 29, 2014--Early Warnings

    The course in introductory computer science at Harvard College this year surpassed elementary economics in popularity. It has 818 enrollments, or nearly 12 percent of the undergraduate population, compared to 711 students in Economics 10. For most of the last thirty years, the economics course has been the catalog’s top offering. The swing probably reflects […]

  • September 21, 2014--Meanwhile, in the Annals of Citizenship

    US capitalism seems to be taking another turn.  The Old Normal (Carmen Reinhart and Kenneth Rogoff, This Time Is Different) was the expectation that, even after a serious banking crisis, growth would resume its long-term annual trend of 2.0 percent in five years or so. The New Normal says, “Forget the trend.” Robert Gordon, of […]

  • September 14, 2014--Opposite Ends

    Interested in some civic virtue? Some Got fourteen hours to spare?  A new series by master storyteller Ken Burns about Theodore, Franklin, and Eleanor airs this week on the public broadcasting network – two hours tonight, and each succeeding evening through Saturday. That’s one way to acquire a little social currency. If you are pressed […]

  • September 7, 2014--Two Views of Russia

    Perhaps the single most intriguing mystery of the Ukrainian crisis has to do with how the Foreign Service officer who served as deputy national security advisor to Vice President Dick Cheney for two years, starting on the eve of the invasion of Iraq, became the Obama administration’s point person on Russia in 2014. Victoria Nuland […]

  • August 31, 2014--Summer Ends Now

    Labor Day in the United States, and EP has taken the day off.  Herewith a re-issue of EP’s edition of July 18, 2004. Frank Levy, of the Massachusetts Institute of Technology,  and Richard Murnane, of Harvard University,  had just published The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton, 2004).  It turned out […]

  • August 24, 2014--Nobel Süd: the Afterglow

    LINDAU, BAVARIA — Organizations extend their influence by involving the young. Science fairs, the Model United Nations, central banking competitions for college students: all are designed to encourage young leaders eager to succeed. Something of the sort went on last week in this little nineteenth-century summer resort at a corner of Switzerland and Germany, where […]

  • August 17, 2014--Political Arithmetick Becomes Measurement Economics

    (Please see the correction appended below) The Econometric Society was founded in 1932 with the idea of combining economic theory, measurement, and statistical technique to create a powerful new means of analysis. Econometrics has grown to be an important field of study, but it remains a topic within economics instead of one subtending it. Eighty-two […]

  • August 11, 2014--The Startling Story behind a Famous Footnote

    Progress is a slippery word; but none can doubt that price theory, the preoccupation with markets that historically has at the heart of economics, has seen a great deal of elaboration in the least 75 years.  Jerry Green, of Harvard University, gave a graphic illustration when he travelled to Middlebury Colllege last fall to give […]

  • August 3, 2014--Reinterpreting the Revolution

    When he was eighteen, before entering college, John Micklethwait toured the US for a year with a friend, traveling on Greyhound buses. When they arrived in San Francisco, they spent a memorable evening with expat British businessman Antony Fisher, founder of London’s Institute of Economic Affairs, and his downstairs neighbor, Milton Friedman. They talked about […]

  • July 27, 2014--Swallow Hard, Start Over

    It is a busy summer.  Economic Principals has many pots upon the stove and relatively little time to read the papers. That seems just as well most days. The news from Gaza, Ukraine, and the southern border of the US is uniformly heartbreaking. I do, however, find time to look at Johnson’s Russia List whenever […]

  • July 20, 2014--Look Both Ways!

    We wouldn’t be talking this summer about a body of work known as “disruption theory” if its principal author, Clayton Christensen, of Harvard Business School, hadn’t turned up as the featured expert on coping with change at The New York Times and Harvard University, two  institutions much concerned with maintaining the continuity in American life […]

  • July 13, 2014--EP Is Not Writing This Week

    Economic Principals spent the week reporting and is not writing this week.

  • July 6, 2014--The Contest between Macro and Growth

    It was about a year ago that Paul Krugman asked, “[W]hatever happened to New Growth Theory?”  The headline of the item on the blog with which the Nobel laureate supplements his twice-weekly columns for The New York Times telegraphed his answer: The New Growth Fizzle.  He wrote: For a while, in the late 1980s and […]

  • June 29, 2014--The Evening Papers?

    It was business page news last week that George Stephanopoulos is to become the “chief anchor” at ABC News, meaning he will lead the network’s coverage whenever there is breaking news. Stephanopoulos isn’t replacing Diane Sawyer as anchor of ABC’s evening news broadcast when she steps down in August.  Her replacement is David Muir. Instead, […]

  • June 22, 2014--The Guru’s Job

    Chances are, unless you are an MBA, you’ve never read anything by business guru Clayton Christensen, the author of a series of self-help business books beginning with The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, in1997. Now, however, an interesting brouhaha has erupted surrounding Harvard historian Jill Lepore’s systematic evisceration of Christensen […]

  • June 15, 2014-- Welcome to His World

    One of these days, there’s going to be a book about the financial crisis as good as Peter Baker’s book about the US response to 9/11,  Days of Fire: Bush and Cheney in the White House (Doubleday, 2013). Baker’s account, which presents George W. Bush as “the Decider,” at first somewhat overly inclined to take […]

  • June 8, 2014--Normandy and Stalingrad

    “We don’t recall the Red Army took part in D-Day,” grumbled the editorial page of The Wall Street Journal, at the news that Vladimir Putin had been invited to D-Day celebrations in France last week, even as he was shut out of the G7 meetings in Brussels. Seventy years after the landings at Normandy the […]

  • June 2, 2014--Stack Arms!

    PALO ALTO — Former Secretary of State George Shultz repeatedly stole the show last week at a Hoover Institution conference on central banking practices here, no time more decisively than when he pronounced a benediction on the conference dinner. The meeting, Frameworks for Central Banking n the Next Century, was organized by Stanford economist John […]

  • May 25, 2014--Oops? A Columnist Tackles a Best- Seller

    The Financial Times headline yesterday all but smirked. “Star economist Piketty did his sums wrong in bestseller that tapped inequality zeitgeist.”  The story dominated the front page. The large photo, which captured Piketty’s defensive, appraising gaze in some earlier q&a session, bore the caption, “Pause for thought: a FT investigation undercuts Prof. Piketty’s central theme […]

  • May 18, 2014--Turbulent Times

    For all the reporting about the unceremonious manner in which Arthur O. Sulzberger Jr. replaced executive editor Jill Abramson with Dean Baquet, the strongest evidence that the needle on his tenure as publisher of The New York Times has reached the danger zone is the company’s internal “Innovation Report” that someone at the New York […]

  • May 11, 2014--Searching for a New Direction

    What might a successful Democratic presidential candidate in 2016 look like who is not Hillary Rodham Clinton?  The Republican Party can’t be expected to field a successful mainstream candidate until some of its serious kinks have been worked out – at least another cycle or two.  This time the Democratic Party nominee is more than […]

  • May 4, 2014--Who Won the Cold War? Who Lost the Peace?

    To understand the roots of the Ukraine crisis, a good place to start is with the State of the Union address in 1992.  That’s when George H. W. Bush intoned, “By the grace of God, America won the Cold War.” Bush must have felt he had to say it. He was under fire from the […]

  • April 27, 2014--Going Native (Flash Boys edition)

    Among writers on finance, none has been more interesting to me in recent years than Felix Salmon, of Reuters news service. So when he quit last week to join the digital side of Fusion, a cable television network, in order to pursue “post-text” journalism, I wondered what he had in mind. Fusion is a joint […]

  • April 20, 2014--Paris Takes Its Place

    “Economist Receives Rock Star Treatment”: That was the headline yesterday on Jennifer Schuessler’s story in The New York Times. The facts bear her out. Thomas Piketty, 42, of the Paris School of Economics, seemed to be everywhere last week. Publication of his 685-page Capital in the Twenty-First Century had been moved up by two months, […]

  • April 13, 2014--A Hundred Years from Now

    After spending a couple of days last week at the annual conference on macroeconomics of the National Bureau of Economics (more about that in July), I spent the remainder of my time last week reading In 100 Years: Leading Economists Predict the Future  (MIT Press, 2013), a collection of essays edited by Ignacio Palacios-Huerta, a […]

  • April 6, 2014--Bronze, Silver, Gold, Platinum – Why Choose?

    For all the political controversy surrounding the rollout of the Affordable Care Act, the remarkable thing is how few persons are affected by it. The first annual period of open enrollment ended last week, 7.1 million persons have signed up. Never mind the political bickering about the composition of the group – it is inside-baseball […]

  • March 30, 2014--Economic Principals Is Not Writing Today

    Back next week!

  • March 23, 2014--The Spring Snaps Back

    There was no particular moral to it when my old friend Fred Pillsbury told me the story of what happened the day his detachment of Marines in Okinawa learned that a second atom bomb had been dropped on Nagasaki and that the Pacific war was over. For weeks they had been preparing on Okinawa to […]

  • March 16, 2014--The Future of the Bundle

    This week marks the beginning of Economic Principals’ thirteenth year as an online outlet instead of a newspaper column. EP’s proprietor was in a stock-taking mood. What’s been happening to the news business since he changed stands? I turned to newsman Felix Salmon’s five-part online series to find out. Dense with links, nearly all of […]

  • March 9, 2014--“Don’t believe everything you think”

    A strong hint of spring in Boston interacted with Economic Principals’ reluctance to write about the very complicated fracas in Ukraine. In the end he gave up and took the day off. The advice in the headline comes from David Johnson, editor-in-chief of Johnson’s Russia List, the press digest from which EP gets most of […]

  • March 2, 2014--He Got Conned!

    By all accounts, including his own, Jordan Belfort is a rotten guy – a swindler, a rat on his friends, an all-around cad. So what’s he’s doing in the movies, dressed up nicely and played by Leonardo DiCaprio?  Like everything else associated with Belfort, The Wolf of Wall Street is pure baloney — an improbable […]

  • February 24, 2014--Accountability: What Did They Know?

    (scheduled for Sunday, 16 February 2014, disrupted by snow) I was tough on Dean Starkman when I wrote about his new book, The Watchdog That Didn’t Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, 2014).  I don’t think newspapers could have prevented what happened in 2008 by getting up on […]

  • February 23, 2014--That Fateful Year

    You may or may not have been reading the transcripts released Friday of the 2008 Federal Open Market Committee meetings – 1,865 pages detailing what was said on the record in the course of the eight regularly-scheduled and six emergency meetings of the Federal Reserve System’s top policy-makers during that fateful year. Certainly I have. […]

  • February 9, 2014--Towards Stunde Null

    Things happen first in California, the saying goes.  The West Coast news last week was bad. There is the drought, though of course that is becoming old news; and then there was the previously undisclosed attack on a San Jose power substation last April that may have been a dress-rehearsal for a terrorist attack on […]

  • February 2, 2014--The Newspapers Are All Right

    The news last week was that The Washington Post had embarked on a major expansion.  New York Times executive editor Jill Abramson told an interviewer that, with 800,000 subscribers and a high renewal rate, she expects the Times will be publishing a print edition for decades to come. Rupert Murdoch’s Wall Street Journal seems to […]

  • January 26, 2014--A Tea Party Knight Is Out

    News, goes an old saw, is what happens near an editor. That’s what commenced last September when Wall Street Journal editors got hung up in lane closings at the George Washington Bridge. Whoever they were, the editors passed along their displeasure and, perhaps, suspicions to the paper’s transportation reporter, Ted Mann. After a month of […]

  • January 23, 2014--A Hundred Years Later: How Are We Doing?

    A century after the outbreak of World War I, in 1914, and the memory of the wholly unexpected series of horrors to which it led, many commentators are feeling a little gloomy. Ordinarily I am persuaded by whatever sensible, knowledgeable, well-connected Martin Wolf has to say. So I was surprised last week to find the […]

  • January 12, 2014--Shaggy Dog Story

    The holidays, followed by the economics meetings, are always disorienting. As a way of regaining the horizon, I decided to read The Great Escape: Health, Wealth, and the Origins of Inequality, by Angus Deaton (Princeton University Press, 2013). Deaton, 68, a Princeton University professor of economics, is perhaps the single most level-headed student of economic […]

  • January 5, 2014--Continuing Education

    PHILADELPHIA — The annual meeting of the Allied Social Science Association is many things.  (The ASSA is a collection of some sixty organizations, of which the American Economic Association is by far the biggest. The American Finance Association is second.)   It’s a job fair, a ceremonial pageant, a swift channel into print for late-breaking […]

  • December 29, 2013--An Encounter with the Chronophage

    In Cambridge, England, for a meeting a couple of years ago, I bought a volume of Maurice Dobb from one of the many second-hand bookstores there. I knew only a little about him. He had been the teacher of the great Marxist historian Eric Hobsbawm, mentor to Nobel laureate Amartya Sen, co-editor to Piero Sraffa […]

  • December 22, 2013--London Takes the Lead

    Remember the spectacular opening ceremonies of the London Olympics two summers ago?  James Bond, played by Daniel Craig, with Queen Elizabeth parachuting into the stadium and all that?  I especially liked the moment when a house surrounded by teenagers doing social media pulled away to disclose Sir Tim Berners-Lee, inventor of the World Wide Web, […]

  • December 15, 2013--The Stage is Set

    One of the enduring mysteries of the second term of the Obama presidency may turn out to be the riddle of how Stanley Fischer, 70, wound up as governor and vice chair of the Federal Reserve Board – assuming that he does. It is the president’s decision whom to choose, of course, but surely much […]

  • December 8, 2013--Remember the Headwinds

    The news finally seemed better than expected.  The US economy added 200,000 jobs in November, for the second month in a row. The unemployment rate dipped to 7 percent, down from its peak of 10 percent, in October 2009. Mohamed El-Erian, the investment manager who in 2009 coined the useful term “the new normal” to […]

  • December 3, 2013--Five Years Later

    Lost decades, secular stagnation — gloomy growth prospects are in the news.  To understand the outlook, better first be clear about the recent past. The nature of what happened in September five years ago is now widely understood within expert circles.  There was a full-fledged systemic banking panic, the first since the bank runs of […]

  • November 25, 2013--Turning Over the Cube

    We crave narrative. It’s in the nature if things that, at any given moment, there should be a conventional wisdom about what to expect in the years ahead.  Get ready, therefore, for an extended discussion of whether “secular stagnation” will become the prevailing economic forecast of the present day, replacing “crisis,” and, before that, “the […]

  • November 17, 2013--One Simple Step

    The troubled roll-out of the Affordable Care Act has added to the list of internal fumbles that have seriously undermined the public confidence in Barack Obama’s ability to manage the second term of his presidency. These include former aide Lawrence Summers’ highly public campaign to be nominated the Federal Reserve Board and Secretary of State […]

  • November 10, 2013--Home Alone II?

    The rollout of the Affordable Health Care Act is a public relations nightmare, no doubt about that. How serious are the problems with the implementation of the act itself?  The answer, at least according to Jonathan Gruber, of the Massachusetts Institute of Technology, who designed the measure, is that no one knows. They won’t until […]

  • November 3, 2013--Cow-Tipping Our Way into the Cloud

    The news that six people had signed up on the first day for Obamacare prompted me to think back seventy-five years ago to World War II. Decisions taken then can shed some light on the situation in which Americans find themselves today. For instance, there was the decision to ramp up the production of strategic […]

  • October 27, 2013--Beckoning Frontiers

    The Federal Reserve System remains in the news. Sen. Rand Paul (R-Ky) has promised to oppose the nomination of Janet Yellen to chair the Fed, perhaps with a “hold,” which could be overcome by sixty votes. Former chair Alan Greenspan is promoting his new book, The Map and the Territory: Risk, Human Nature and the […]

  • October 20, 2013--Trends, No Trends, and Statistics

    No skein of work in economics has been so heavily written about by high-end journalists over the years as the developments that are the subject of this year’s Nobel Prize. Asset pricing is not my thing, but I’ve been reading about it ever since 1967. That was when The Money Game, by “Adam Smith” (who […]

  • October 13, 2013--Wanted: A Straw to Stir the Drink

    “The straw that stirs the drink” is an old newspaper colloquialism, derived from politics, applied to very successful columnists. It means a commentator with a large following, one whom even the opposition reads. (It’s heard in baseball circles, too. After Reggie Jackson had been signed by the Yankees he showed up at spring training and […]

  • October 6, 2013--The Shutdown Spreads

    NEW YORK – Economic Principals shut down itself this week, in order to attend a research conference in honor of Thomas Cooley. He is among the leaders of a generation that changed the way that much macroeconomics is done, contributing various tools for elaborating models and insisting that they routinely be tested against economic data […]

  • September 29, 2013--Creating a New Responsibility

    Between the political posturing in Washington, and the excellent nuts-and-bolts reporting of the major news organizations, it is easy to lose sight of what is about happen on Tuesday. When the Affordable Care Act takes effect, October 1, requiring most US citizens to obtain health insurance one way or another or pay a tax penalty […]

  • September 22, 2013--The End of the Saga

    A few last words about Lawrence Summers and the Federal Reserve Board: Although the White House was already moving to reframe the choice, it may have been a magazine story that precipitated the end of Summers’s candacy.  Felix Salmon, the finance blogger at Reuters, wrote: Michael Hirsh’s anti-Summers National Journal cover story landed on the desks […]

  • September 15, 2013--Towards a Climax

    Gene Sperling, 55, President Obama’s top economic counselor, will be leaving his job as Director of the National Economic Council at the end of the year, the White House announced last Friday.  Named to replace him was Jeffrey Zients, 46, who until April served as acting Director of the Office of Management and Budget. Did […]

  • September 8, 2013--The Siege Within

    The fifth anniversary of the Lehman Brothers bankruptcy is coming up next weekend. If nothing else, the avalanche of stories about it that are now in preparation should demonstrate that George W. Bush deserves credit for dealing with the financial crisis of September 2008 when it arrived in completely unexpected form Yes, of course, Bush […]

  • September 2, 2013--Obama at the Crossroads

    After a week of traveling in the Midwest, I returned to Massachusetts convinced that President Obama’s presidency is at a crossroads. I talked to more streetwise Republicans in a few days than I ordinarily do in a month (or two) in Boston.  It’s become harder to defend the president. I don’t mean Obamacare. That courageous […]

  • August 25, 2013--Summers: A (Mildly) Exculpatory Note

    Larry Summers is leaning in – he badly wants that job as chairman of the Fed. Many find his candidacy hard to fathom. To understand Summers’s motivation, it helps to know something about the career of E. Gerald Corrigan.  Just as Jerry Corrigan., now 72, was the greatest US crisis manager of his generation, so Summers, 58, […]

  • August 18, 2013--An Airport Store, Compared to the Founding of a Mutual Fund

    Jacob Frenkel, 70, is the original economist-turned-policy-maker, the first to blaze a trail well-travelled now by Ben Bernanke and several others, from seminar room to chairman’s office of a central bank. A student of Robert Mundell and Harry Johnson, at the University of Chicago, Frenkel (and Rudiger Dornbusch and Stanley Fischer) of  effected a momentous […]

  • August 12, 2013--The Golden Age of Newspapers: A Short History

    Perhaps golden ages always are this way:  slow to take shape, suddenly glorious, then quickly over.  It depends, of course, on what you mean by “slow” and “quick.” Richard Gingras, senior director of news and social products at Google, illustrated the point at Harvard University’s Kennedy School of Government last spring with a story about […]

  • August 4, 2013--The Economist Who Outdid Camus

    Reading Jeremy Adelman’s Worldly Philosopher: The Odyssey of Albert O. Hirschman is to enter to a particular sort of world we have lost,  in order to ponder a question about the world we live in today. If you have seen Roberto Rossellini’s War Trilogy or read The Hare with Amber Eyes: A Hidden Inheritance, by […]

  • July 28, 2013--Larry Swings for the Fences Again

    For the sixth time in five years, Lawrence Summers has mounted a campaign for a top job in Washington.  He has won one of these and lost four so far. He’s not likely to get this one, either.  But even if he fails, the 58-year-old Harvard professor won’t be going away. Summers and his mentor, […]

  • July 21, 2013--Neighborhood News

    The dog days of summer arrived ahead of schedule — or so it seemed. Federal Reserve Board chairman Ben Bernanke’s presumed farewell appearance before Congress last week left markets and market followers wondering whom will President Obama choose to replace him – and how the Senate Republicans will react when the nomination is made. I […]

  • July 14, 2013--Economic Principals Is Traveling

    Economic Principals is traveling and will return next week. .                                                           dw

  • July 7, 2013--Will Clinton Be Our Eisenhower?

    It’s inviting on the Fourth of July to speculate a little about the next presidential election. Thus Politico last week asked, What Happens If Hillary Clinton Passes in 2016? At The New York Times, Jonathan Martin reported Republicans Paint Clinton As Old News for 2016 Presidential Election. I was traveling last week; as one who […]

  • June 30, 2013--And Now, The Weather

    The climate change debate isn’t going to be settled by rhetoric, but the next few elections probably will be.  That said, President Obama, administratively imposing limits on carbon dioxide emissions by US power plants, declared last week, “We don’t have time for a meeting of the flat earth society.” The editorial page of The Wall […]

  • June 23, 2013--Has the Press Retreated from Its Watchdog Role?

    Now that the surprise is over – the indignation registered, biographical details filled in, charges filed (first in secret, then, under pressure, released) – it’s possible to begin to think about the questions that former National Security Agency contractor Edward Snowden raised by his act of civil disobedience. “Society really seems to have developed an […]

  • June 16, 2013--Previews of Coming Attractions

    For a little while last week, the most emailed item on The New York Times website was Robert Hershey’s fine obituary for the economic historian Robert Fogel, of the University of Chicago.  Fogel, who shared the Nobel Prize in economics in 1993 with Douglass North, died last week, at 86.  EP has been planning to […]

  • June 9, 2013--A (Rickety) Apparatus for Nipping Panics in the Bud

    An expert story-teller knows how to employ a McGuffin to advance his tale – A McGuffin being something the protagonist and, often, his foe, are willing to do almost anything to possess or protect, like the lost ark in the Steven Spielberg film of the same name, or the meaning of Rosebud in Citizen Kane.  […]

  • June 2, 2013--Persuasion, Great and Intimate

    I flew out to Chicago for a dinner last week on Spirit Airlines, an ultra-low-cost carrier. The price was $150 instead of the $220 I’m accustomed to paying.  The bag I carried fit under the seat and so was free. A carry-on suitcase, stowed above, would have cost $35, a checked bag $30; a bottle […]

  • May 26, 2013--Footnote to a Current Controversy

    The current dust-up between Paul Krugman and the “austerians,” in which the Princeton University economist, a columnist for The New York Times, cast Carmen Reinhart and Kenneth Rogoff, both of Harvard University, to play the villain opposite himself, is reminiscent of an earlier episode in the same drama. In 1992 it was Krugman vs. the […]

  • May 19, 2013--Mark 400, mark 3000: What’s the difference?

    For all the talk about scandals in Washington, the news that caught my eye was the differing treatment accorded the latest benchmark in the global warming debate. Atmospheric carbon dioxide reached 400 parts per million earlier this month, as measured by two monitors installed in Mauna Loa, Hawaii, in the middle of the Pacific Ocean. On […]

  • May 12, 2013--“Expansionary austerity,” in bad times and good

    Enthusiasm for budget-balancing swept Europe in 2010 in the wake of the financial crisis, just as the Tea Party movement was taking root in the United States.  (See this four-minute history of the American events to refresh your memory.) The difference is that, in Europe, “expansionary austerity” was taking hold at the highest levels of […]

  • May 5, 2013--Reinhart and Rogoff, in Context

    The list of genuine heroes of the financial crisis of 2007-08 is a short one, as opposed to the roll of pretenders, which is as long as my arm. High on the former are Carmen Reinhart, of Harvard’s Kennedy School of Government, and Kenneth Rogoff, of the university’s economics department. The recent controversy about an […]

  • April 28, 2013--… and nine books of poetry, too

    For three years as a young man, I worked for a business magazine in New York.  Fortune, Business Week, Barron’s were fast cutters in relation to the mighty vessel that was The Wall Street Journal, but none in those days sailed closer to the wind than Forbes (the present-day iteration bears almost no resemblance to […]

  • April 21, 2013--How Not to Organize a Search

    In the aftermath of a very long week in Massachusetts, two things about the response to the Boston Marathon bombing seem clear. One is that command and control of the investigation was a mess. Rival federal agencies and police that couldn’t agree among themselves on Wednesday long enough to call a press conference overreacted Friday […]

  • April 14, 2013--Getting Serious about Climate Change

    The Republican Party seems mired in nostalgia. Calvin Coolidge one week, eulogies for Margaret Thatcher the next. Take a closer look, though, and you’ll find powerful forces of regeneration hard at work within the party. As is often the case, the harbingers of change are to be found in California. Some of this takes place […]

  • April 7, 2013--Three Branches, Many Boughs

    The Federal Reserve Board celebrates in December the hundredth anniversary of its founding. That means Americans will be going to school on books about central banking for a while longer.  Thanks to the financial crisis of 2007-9, a larger niche is being carved in the civics curriculum for the government agency that oversees the intersection […]

  • March 31, 2013--Short Work of It

    You could fault me, I suppose, for having spent the week thinking about marriage, and, by extension, about families. Listening to the justices of the Supreme Court turning over the possibility of extending to same-sex couples the right to enter into the kind of matrimonial contracts devised over the centuries to serve men and women […]

  • March 24, 2013--The Newspapers and the War in Iraq

    Like many others in the commentary business, I went back last week and read what I was writing around the time of the US invasion of Iraq. I was not very happy at what I found. In The Risk-Taker, on March 16, I was a reluctant endorser of what I understood to be the Bush […]

  • March 18, 2013--Economic Principals Is Not Writing This Week

    Economic Principals is not writing this week, having been laid low by a flu virus (despite  inoculation).

  • March 10, 2013--Campaign Biography: the Prequel

    The single most interesting thing about Amity Shlaes’ new book, Coolidge, is its cover .  There the man who succeeded to the presidency on Warren Harding’s death, in 1923, and served until 1929, stares into the camera lens, which is to say directly into the eyes of the present-day reader. He is 53 years old. […]

  • March 3, 2013--A Sequester Sequester

    I like movies as much as the next guy, maybe more, but I was sorry to learn that Michelle Obama had announced the Oscar for the best picture last Sunday. She made the announcement via video feed from the White House. Presidential participation in the Academy Awards gives Hollywood story-telling a legitimacy that it does not […]

  • February 24, 2013--February Vacation

    As a former newspaperman now making a living as a journalist on the Web, I still suffer from a beat reporter’s traditional commitment to writing books, meaning that I split my time. I find I can read about a book or two a week substantially unrelated to work on my own book (or a handful of […]

  • February 17, 2013--Early Childhood: the Nub of the Problem

    At a lunch club talk the other day, the member of our group who almost always asks the smartest questions finally asked what seemed to me a dumb one.  Massachusetts Gov. Deval Patrick wants to raise taxes and spend $500 million on early childhood education.  Why spend more on poor kids, this veteran bond buyer […]

  • February 10, 2013--The Fancy Papers and the Local Papers (in which Boston gets its newspaper back, provisionally)

    The Economist, in characteristically hyperbolic tones, asked on its cover in 2006, “Who Killed the Newspaper?” Last December, in an item tucked away in its Business section, the editors quietly changed their mind. News Adventures: after years of bad headlines the industry finally has some good news suggested that perhaps newspapers had a future after all, […]

  • February 3, 2013--The Head of the Table

    Stanley Fischer will step down as governor of the Bank of Israel in June, halfway through his second term, for “personal reasons,” he said last week. There is nothing mysterious about his decision. His eight years on the job there have been an unparalleled success.  He has been at odds with the Netanyahu administration, according […]

  • January 27, 2013--Who Did the Choosing?

    Instead of reading about the Israeli elections and Maghreb terrorism last week, I spent my free time reading The Chosen Few: How Education Shaped Jewish History, 70-1492, by Maristella Botticini and Zvi Eckstein (Princeton University Press, 2012). The book, which appeared last autumn, has sparked controversy among historians since 2003, when its basic ideas were […]

  • January 20, 2013--The Practitioner’s Tale

    To begin near the end of the story, William Janeway, the author of Doing Capitalism in the Innovation Economy: Markets, Speculation, and the State, is today a very rich man.  It was not always so (though presumably he was never less than comfortable). The valedictorian of his Princeton class (1965) and a Marshall Scholar, Janeway […]

  • January 13, 2013--Team of Allies

    Whatever hope Wall Street had of getting the Treasury Secretary it wanted – former Sen. Bill Bradley – ended with the fiscal cliff negotiations. Once the Administration concluded there was no chance of accommodation with Congressional Republicans over the next two years, Jack Lew’s nomination to succeed Tim Geithner was assured.  A team of allies […]

  • January 6, 2013--There’s More Than One Kind of Best Practice

    SAN DIEGO — For all the unease about the 2,300-page Dodd-Frank Wall Street Reform and Consumer Protection Act, with its hopes to defer to experts the hard decisions, there is one unambiguously good provision tucked away in its depths, where no one is looking – its anti-stigma provision. This is a measure designed to protect […]

  • December 30, 2012--An All-Star for the Team of Rivals?

    For all the talk about the State and Defense departments, there has been very little speculation about who might be about to head the Treasury Department, the administration’s most important post.  Because I’ve been reading The Founders and Finance:  How Hamilton, Gallatin and Other Immigrants Forged a New Economy, by Thomas K. McCraw, I feel […]

  • December 23, 2012--Paradigms, after Fifty Years

    For a book built on a narrative of, among other things, the history of our understanding of electricity, The Structure of Scientific Revolutions, by Thomas Kuhn, has had a remarkable run.  It appeared in 1962, and people have been arguing about it ever since.  Structure didn’t make the list of 88 “Books that Shaped America” […]

  • December 17, 2012--A History of Violence

    As it happened, on the day of the shooting rampage in Connecticut, I attended a lunch talk by Steven Pinker, the Harvard University experimental psychologist whose most recent book is The Better Angels of Out Nature: Why Violence Has Declined  Pinker swiftly reprised the book. Despite the various horrors that regularly punctuate the news, we […]

  • December 9, 2012--On Understanding the History of Technological Change

    I have a taste for collective biography; I think it’s generally the best way to tell a story, at least once its broad outlines are known. I am currently reading one popular account, The Generals: American Military Command from World War II to Today, by Thomas Ricks, and have two more on my bedside table […]

  • December 2, 2012--A Symbolic Slaying

    The fiscal cliff negotiation is no better than a skirmish in what promises to be an epic ten-year struggle to achieve a new fiscal compact. For evidence of that, consider Warren Buffett’s entry into the debate last week, with a suggestion that negotiators seek to bring in revenues at 18.5 percent and cap spending at […]

  • November 25, 2012--Too Much Thanksgiving

    Economic Principals wrote a piece that wasn’t good enough to post. It doesn’t happen often, but it happens. .                                                      dw

  • November 18, 2012--The Story of the Recent Election

    Why did Obama beat Romney?   Of the various explanations that have been offered – demographic changes, Romney’s shortcomings as a politician, a GOP funding bottleneck in June – the account I find most convincing is the old-fashioned one: the overall narrative process, driven by a naturally-occurring tipping mechanism. Obama’s re-election was a further illustration of […]

  • November 11, 2012--Economic Principals is Traveling

    Economic Principals is traveling and not writing this week.

  • November 4, 2012--If Only The New York Times /Could/ Rise above Principle

    Scandal over the tendency of organizations to shield sexual predators sometimes concealed in their ranks, the public investigation of which began with the Catholic Church, spread to Penn State University college football, and the Boy Scouts, recently has stained the British Broadcasting Co.  The story of the late Jimmy Savile, a one-time coal-miner turned British […]

  • October 28, 2012--The /Real/ Club of Rome Turns Forty, in Vienna

    Fifty years ago this week, the United States and Soviet Union came closer to nuclear war than anyone, including John F. Kennedy and Nikita Khrushchev, knew at the time. On Friday, October 26, at the height of the Cuban missile crisis, a US destroyer dropped practice depth charges, the size of hand grenades, on a […]

  • October 21, 2012--A Snowball Flung on the Uppermost Slopes

    As it happened, the Market Design Working Group was holding its regular meeting at the National Bureau of Economic Research this weekend.  So, three days after his Nobel prize was announced, Alvin Roth, 60, who is in the process of moving to Stanford University from Harvard, returned to Cambridge, Massachusetts.  He dined with his children, […]

  • October 14, 2012--Getting Back on the Horse

    It’s an old saw that, when learning to ride, or swim, or master any inherently risky activity: when the horse throws you off, the important thing is to get back on the horse. It’s important to understand what happened to you, of course; but, even more than that, rote confidence is required. In that context, […]

  • October 7, 2012--What Really Happened

    The effusion of books about the 2007-08 financial crisis has mostly run its course. Two new accounts by policy-makers who were sometimes in the room (Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, by Neil Barofsky, who kept tabs on Treasury Department lending under the Troubled Asset Relief Program […]

  • September 30, 2012--On the Demand for Referees

    Much of the success of professional football stems from the fact that its complicated goings-on are relatively comprehensible. Its calendar is well-demarcated: a seventeen-week schedule, September to December, followed by a month of playoffs, culminating in a championship game. On the field, a clear set of rules govern the intricate patterns of play, enforced by […]

  • September 23, 2012--Hard Times Come Again Once More?

    I keep a couple of books on the shelf above my desk to remind me of how much things have changed over the past hundred years. One is Only Yesterday: An Informal History of the 1920s, by Frederick Lewis Allen, which first appeared in 1931. The other is The Great Leap: The Past Twenty-Five Years […]

  • September 17, 2012--Back to School

    The Chicago teachers strike was an interesting skirmish in what Washington Post columnist Harold Meyerson last week described as a civil war within the Democratic Party. As far as I could tell, the walkout was a contest between the Billionaire Boys Club, its program fronted by Mayor (former Wasserstein Perella investment banker and ex-White House […]

  • September 9, 2012--Looking Ahead

    Barack Obama’s convention speech last week was pronounced flat. Bill Clinton had upstaged him. Michelle Obama was more inspiring. Joe Biden more persuasive, it was said. John Kerry gave the finest speech of his career. Supporters described the president’s address as effective and serene. But about the best that anyone in the commentariat had to say […]

  • September 2, 2012--A Citadel of High Economics Turns Fifty

    Critics delight in pointing out that the Nobel Prize in economics was no part of Alfred Nobel’s 1895 will. Indeed, sometimes it’s not even called a Nobel prize. Officially, at least, it is the Swedish Central Bank Prize in Economic Sciences in Memory of Alfred Nobel. By undertaking the award, in 1969, the Nobel Foundation […]

  • August 26, 2012--The Prestidigitator

    Among my favorite columnists is David Brooks, of The New York Times. One reason is because he’s unpredictable. I never know when I begin to read where he might end up. He surprised me again last week with (Paul) Ryan’s Biggest Mistake. What would that have been?  Brooks thinks that it occurred when the presumptive Republican […]

  • August 19, 2012--Innovators vs. Conservatives

    Mitt Romney’s choice of Paul Ryan as his running mate has clearly energized his campaign. It has also touched off a furious debate among innovators and conservatives within the Republican Party. Two days after Ryan was announced, reporters Alexander Burns, Maggie Haberman and Jonathan Martin wrote in Politico: In more than three dozen interviews with […]

  • August 12, 2012--Measurement: The Second Generation

    The measurement economists met inCambridge,Mass., last week, or at least many of the best of them. Interesting as they were, some of their deliberations had the aspects of stars fulfilling their appointed functions in the heavens. Members of the Conference on Research in Income and Wealth, founded in 1936 by Simon Kuznets and others, met […]

  • August 6, 2012--Who /Really/ Invented the Internet?

    “It’s an urban legend that the government launched the Internet.” That was former Wall Street Journal publisher L. Gordon Crovitz, starting an interesting discussion last month on the paper’s editorial pages. (He now writes the “Information Age” column for the paper – subscription required.)  He was, of course, riffing on President Obama’s “you didn’t build […]

  • July 29, 2012--The Three Rings of the Libor Circus (and a Sideshow)

    The Libor scandal last week assumed for the first time the faint outline of a dispiriting caper movie. The Wall Street Journal reported on new details that have emerged about a suspected ring of thieves (subscription required) – “more than a dozen traders from at least nine banks, often allegedly working together in small groups […]

  • July 22, 2012--About that Little House on the Prairie

    Author Laura Ingalls Wilder was born in 1867, the same year as economist Irving Fisher.  Between 1932 and 1943 she published eight books for children — Little House in the Big Woods, Little House on the Prairie, On the Banks of Plum Creek, By the Shores of the Silver Lake, The Long Winter, Little Town […]

  • July 15, 2012--Tight Little Island

    As it happened, when the Libor story began to break two weeks ago, I was reading Joel Mokyr on the institutional underpinnings of the Industrial Revolution. Mokyr, of Northwestern and Tel Aviv universities, is the foremost living historian of that momentous transformation, the author of The Enlightened Economy:  A History of Britain 1700-1850 (as well […]

  • July 8, 2012--Summer Daze

    EP is taking a breather and will return next week.

  • July 1, 2012--Making History Happen

    Driving through Pittsburgh last week, I was interested to see that the United States Steel tower had been “rebranded” with a giant “UPMC” sign atop its 64 floors. UPMC is the largest employer in western Pennsylvania, a combination medical center and insurance plan closely affiliated with the University of Pittsburgh, which in turn is the fifth […]

  • June 24, 2012--… and, Thanks to Her (and Him), They Didn’t

    Anna Jacobson Schwartz, who died last week at 96, was the last principal of a once lively debate which, thirty years ago, she and Milton Friedman won, and, having won, refused to take “yes” for an answer. That argument between “monetarists” and “Keynesians” will now finally fade into the history of thought.  As it happens, […]

  • June 17, 2012--Field of Dreams

    Floyd Norris, the highly regarded finance columnist of The New York Times, took note in a provocative column last week of the widespread suspicion of Germany in Europe (“As Europe’s Currency Union Frays, Conspiracy Theories Fly”). Just suppose, Norris wrote, that a newly-unified Germany had set out in 1992 to achieve the dominion it had […]

  • June 10, 2012--A Mind Made Up

    One of the heroes of the near-meltdown of 2008 is Phil Angelides. A two-term former treasurer of California with a reputation for integrity, he was hired while the sense of peril was still fresh to chair a Federal blue-ribbon commission (six Democratic legislators, four Republican, fifty staffers).  Its mission: examine the causes of the financial […]

  • June 3, 2012--You Can’t Tell the Unhappy Families Without a Scorecard

    There was the bad news on the front page of The New York Times last month, “New Orleans Newspaper Scales Back in Sign of Print Upheaval”:  The Times-Picayune, a much beloved 175-year-old institution that memorably rallied the Crescent City after Hurricane Katrina, “had buckled under the pressures of the modern newspaper market.” Henceforth The Times-Picayune […]

  • May 27, 2012--Hard Times for the Elusive “Father of the Euro”

    Someday there’s going to be a biography of Robert Mundell, of Columbia University – in all likelihood, there will be more than one, because Mundell has been so elusive over the years. Surely he is the only Nobel laureate who lacks a detailed curriculum vitae  (his first twenty years were only a little less of […]

  • May 20, 2012--Economic Principals Is (Not) Traveling

    Some stories overshadow all others in importance – not many, but some. The threatened break-up of the euro is one. This week it was difficult to think of anything else. The world won’t end if European Monetary Union fails. But it will have shunted onto a different path. Unfortunately, Economic Principals’ Ball Square offices, in […]

  • May 13, 2012--History Matters

    When Harvard president Drew Faust, a historian, overruled her economics department in the spring of 2008 and passed up the chance to hire the husband-and-wife team of Christina and David Romer, certain compensations were set in train. Christina Romer became chairman of President Barack Obama’s Council of Economic Advisers. The University of California at Berkeley […]

  • May 6, 2012--On Financial Peace of Mind

    The death of the middle class has been greatly exaggerated.  It’s not that future generations of this great estate won’t find themselves tested in a changing world. But an enormous quantity of wealth has been built up in the sixty-seven  years since the end of World War II. The retirement of the generation of the […]

  • April 29, 2012--Regulating Banking, Regulating Healthcare

    The Federal Reserve System seems to be regaining a measure of its former prestige, despite (or perhaps thanks to) continued sniping, left and right. Next year will be the hundredth anniversary of its creation. There is a growing recognition that, while the Fed failed in its supervision of bank lending, spectacularly and instructively,  it has […]

  • April 22, 2012--In Which the Bloomberg Kids Put on a Show

    In a better world, the Pulitzer Prize for editorial writing this year might have gone to the organization that wrote a judicious series of articles examining the tension between desirable everyday transparency in banking and the protective secrecy that on occasion is suddenly required to stem a financial panic; a series which, in the process, […]

  • April 15, 2012--Odds and Ends

    Now that it’s agreed that Mitt Romney will be the Republican Party nominee in the fall election, the former governor of Massachusetts will come in for a closer look. It’s hard to imagine that much new biographical material about President Barack Obama will surface at this point. There is his own autobiographical Dreams From My […]

  • April 8, 2012--The Daily Melody

    Turmoil continues in the daily newspaper business. The once-mighty Philadelphia Inquirer was sold last week for a paltry $55 million. The Denver Post decided to put its proprietary local news on the front page and move its commodified national items to the second section. And another hopped-up hedge fund operator explained to gullible Forbes readers […]

  • April 1, 2012--Bush’s Best Pick

    What was that all about? Over the past two weeks, Federal Reserve Chairman Ben Bernanke has been interviewed  by Diane Sawyer on ABC, appeared on the cover story of The Atlantic magazine, gave four lectures to college students, delivered a major address  on unemployment to the National Association of Business Economists, testified before Congress on […]

  • March 25, 2012--The Fourth Tool

    Eventually we’ll have the Black Box: the record of what policy makers of the Federal Reserve Board were saying to each other as the crisis deepened in 2008, in the course of fourteen tense meetings during the year, six of them unscheduled.  The Federal Open Market Committee releases transcripts of its meetings five years after […]

  • March 18, 2012--Tuesdays (and Thursdays) with Ben

    In an unusual departure from custom, Federal Reserve Board Chairman Ben Bernanke this week will give the first two of four lectures about the Fed and its role in the financial crisis that emerged in 2007 to a class of college students at George Washington University, in Washington, D.C. I’ll be there (online) and, if […]

  • March 11, 2012--She Who Fights and Runs Away….

    For 150 years, daily newspapers have been suppliers of real-time narrative to industrial democracies around the world.  They no longer enjoy readers’ undivided attention — but then they didn’t for most of that time. First magazines, then radio, newsreels, television, and recently the Web cut sharply into their mindshare, periodically unsettling but not displacing newspapers […]

  • March 4, 2012--What We Are Telling Ourselves (That We Know) Now

    Know, then, thyself, presume not God to scan; The proper study of mankind is man. Placed on this isthmus of a middle state, A being darkly wise, and rudely great: With too much knowledge for the skeptic side, With too much weakness for the stoic’s pride, He hangs between; in doubt to act, or rest; […]

  • February 26, 2012--Economic Principals is Vexed

    Economic Principals bungled its preparation and is not writing this week. In beginning to read Why Nations Fail: The Origins of Power, Prosperity and Poverty (Crown, 2012), by Daron Acemoglu, of the Massachusetts Institute of Technology, and James Robinson, of Harvard University, I learned that the authors had launched a blog in order to stimulate […]

  • February 19, 2012--A Fan’s Notes

    It seems to me too early in the 2012 presidential campaign to be toting up the successes and failures of the Obama administration. Yet Noam Scheiber’s new book wants to be read, digested, taken into inventory. The Escape Artists: How Obama’s Team Fumbled the Recovery is the third account by a high-level journalist to appear […]

  • February 12, 2012--Translating the Chinese Experience

    Yikes! Xi Jinping arrives tomorrow.  The Economist last month added a regular standing section on China to the front of the magazine, along with the US, the Americas, Asia, the Middle East and Africa, Europe and Britain.  They’ve generally been on top of things since 1845, when they added railroads to the list of things […]

  • February 5, 2012--A Narrowing Gyre

    When the Journal of Economic Literature appears next month, it will contain two review essays surveying broadly the literature that has appeared so far on the financial crisis and its aftermath. For anyone who doesn’t want to wait, both articles are available now as working papers at Social Science Research Network. Non-economists will once again […]

  • January 29, 2012--One Thing Obama Could Have Done Differently

    Curious about why you’ve heard so little out of Davos?  For the first time in thirty years, China sent none of its various vice-premiers to the World Economic Forum, ostensibly because the meetings this weekend fall in the middle of Chinese New Year celebrations.  More likely the Chinese are preoccupied with the regular ten-year leadership […]

  • January 22, 2012--Snow Day

    There was a good little snow in Boston this weekend. As a result (that is, taking advantage of it), there is no Economic Principals this week .                              dw

  • January 15, 2012--Continuing Education

    Modeling the passage of time is notoriously difficult in economics.  Living the passage of time is much easier.   Each year’s Nobel Prize turns up as a subject of discussion fifteen months later on the program of the meetings of the American Economic Association. Since one of the main functions of the meeting is the continuing […]

  • January 8, 2012--Let the Sun Shine In

    Economic Principals is in Chicago at the four-day meetings of the American Economic Association. The single most interesting development was the adoption by the AEA’s Executive Committee of stringent new disclosure requirements for authors seeking to publish in the association’s seven journals, including the flagship American Economic Review. Three stages are involved. First, to journal […]

  • January 1, 2012--Winter in New England

    …In Silicon Valley, all the Sturm und Drang of 2011 seemed as relevant as the Cricket World Cup. High unemployment? Crippling debt? Not in Silicon Valley, where the fog burns off by noon and it’s an article of faith that talented, hard-working techies can change the world and reap unimaginable wealth in the process. “We […]

  • December 25, 2011--A Traveling Companion

    In “The Deadweight Loss of Christmas,” economist Joel Waldfogel years ago declared war on wasteful gift giving.  The best you can hope to do with a $10 gift, he argued, is to duplicate a $10 purchase the recipient would have made for him or herself.  Chances are you’ll overspend. He asked some undergraduates how they […]

  • December 18, 2011--How Business Schools Got to Be the Way They Are

    If, as still seems likely, Mitt Romney becomes the nominee of the Republican Party, then the US presidential campaign in 2012 will consist of a competition between two men with very different preparations for the job: one, a political organizer who found a home in law schools; the other, a private equity investor with close […]

  • December 11, 2011--Time Zero

    Nobel lectures in economics can be something of an anticlimax.  It takes thirty or forty years to win the prize, often in collision with some prevailing orthodoxy. Eventually comes a day of exhilaration, followed by two months of polishing a paper whose kernel may have been tucked away in a drawer, just in case — […]

  • December 4, 2011--Ruizismus among the Austrians

    Everyone in Boston of a certain age knows the story of Rosie Ruiz, the marathoner who crossed the Boston finish line in 1980 at 2:31.56, flabby thighs and all, having barely broken a sweat.  Despite mounting skepticism, she basked in the glory of having run the third-fastest female marathon in history – for a few […]

  • November 27, 2011--Still an Overgoverned Society?

    What makes the Occupy Wall Street episode so interesting is that it’s the first development in quite a while to signal a longing for profoundly different times. This was not just a matter of its inception — a significant improvement of methods that were first employed to organize the street protests during the 1999 World […]

  • November 20, 2011--Health Care Overhaul and the (Legislative) Hot Stove League

    When the Supreme Court agreed to take the case of the 2010 health care act, it virtually guaranteed that, barring an unforeseen emergency, the overhaul will be the central issue in next year’s election, set against the background of the general state of the economy. In search of some perspective on 2012, I pulled down […]

  • November 13, 2011--The Anthropologists’ Hour

    Some of the mystery surrounding the Occupy Wall Street movement vanished last week when Bloomberg Businessweek published a profile of anthropologist David Graeber. Previously all I knew about the thinking behind OWS I had learned from a week-long episode in Doonesbury, when radio host Mark Slackmeyer interviewed an organizer with a paper bag over his […]

  • November 6, 2011--But Is the Planet Really Burning?

    With the United Nation Climate Change Conference scheduled to convene later this month in Durban, South Africa, to consider a second commitment period to follow the Kyoto Protocol, it seemed like a good time to tune in on the global-warming controversy. The Kyoto agreement was signed in 1997, took effect in 2005, and, of the […]

  • October 30, 2011--Grand Minds, Beautiful Pursuits

    It’s a recurrent theme here at EP that “news values,” nurtured in the West for the last hundred and fifty years mainly by broadsheet newspapers and magazines, are an important part of world culture, different from, but intimately related to, law, politics, history, the arts, science and religion.  News values have to do with truth, […]

  • October 23, 2011--A Rice Bowl Should Not Be Carelessly Threatened

    A hard-working reporter, even one who is full of himself, is a useful citizen.  I was so surprised by the animosity that Jacob Weisberg showed earlier this fall to Ron Suskind, that, after reading Confidence Men: Washington, Wall Street, and the Education of a President,  I went round to hear Suskind talk at a local […]

  • October 16, 2011--From the Armchair to the Computer

    It may not be an accident that, in reporting the award last week of the Nobel Memorial Prize in Economic Sciences to Thomas Sargent, of New York University, and Christopher Sims, of Princeton University, The New York Times referred on subsequent reference to “Dr. Sargent” and “Dr. Sims.” The honorific was a promotion.  Last year […]

  • October 9, 2011--Our Gutenberg

    I didn’t read everything about Steve Jobs last week, but I read a lot. Bloomberg BusinessWeek and Time both dropped what they were doing and prepared instant covers.  Time’s package included a six-page essay by former editor Walter Isaacson, whose biography of Jobs, due to appear October 24, is already the number one best-seller on […]

  • October 2, 2011--Economics in the Next Ten Years?

    A young economist, or an economics journalist interested in what the young are working on, could do a lot worse than reading through, as I did the other day, 55 very short papers written by distinguished economists describing the large questions they think are likely to dominate the next generation of research in their respective […]

  • September 25, 2011--Tales of the Neoliberal Thought Collective

    Presidential aspirant Ron Paul stopped by The Washington Post last week.  As Dana Milbank reported in the Post, barely fifteen minutes into his question-and-answer session, Paul was speaking Austrian. “I mean, how many people have read Human Action?” the former obstetrician asked, referring to a 1949 treatise by Ludwig von Mises. “How many people have […]

  • September 18, 2011--Making It Multiple Choice

    One of the great mistakes of America’s war in Vietnam was to allow a bad analogy to drive policy-makers’ thinking about what was at stake. Although it scarcely seems possible in retrospect, in the 1960s you heard over and over again that the war there was designed to prevent “another Munich.” American opposition to the […]

  • September 11, 2011--Some News about the News

    Keeping my distance as best I could from the welter of 9/11 remembrances, I was struck by the slideshow that the Guardian put together. I was riveted by the compilation of tapes and transcripts assembled and posted on its website by The New York Times. That took half an hour, but it not only brought […]

  • September 4, 2011--Obama Smartens Up

    President Obama took quite a beating over the summer, from right and left alike. There is no doubt about it. Routinely overlooked, however, is the basis on which he won the Democratic nomination and then the general election in 2008. There was little or no chance of electing a Republican that year to follow the […]

  • August 28, 2011--A Momentous Event, Not Yet Widely Understood

    Before leaving for the Midwest, I consulted the Almanac of American Politics. There is no better way to glimpse the issues behind the controversies that have been roiling the United States recently – in this case, the states of the Old Northwest – Ohio, Indiana, Illinois, Michigan Wisconsin, and Minnesota. But this was vacation, so […]

  • August 21, 2011--Economic Principles Is on Vacation

    … and not writing this week. .                               dw

  • August 14, 2011--A Three Year Plan and Other Topics

    Four broad approaches to the aftermath of the banking panic and financial crash of 2007-09 have been proposed: stimulus, forgiveness, somewhat accelerated central bank-mediated inflation and structural reform (aka spending cuts). In the course of making an argument in the Financial Times (registration required)  last week for a little inflation, his preferred option, Harvard’s Kenneth Rogoff […]

  • August 7, 2011--The Debt Problem Is Like the Cold War

    “Grim week echoes depths of 2008 crisis,” headlined the Financial Times yesterday. Not exactly, at least not yet. But the sense of foreboding in the United States is considerable, illustrated daily on the front pages of newspapers by photographs of frightened traders and lines of job-seekers. How do Americans respond to daunting news? The hundred days […]

  • July 31, 2011--Where Do We Go From Here?

    The debt-ceiling business is a hostage crisis. That much became unmistakably clear last week, with multiple commentators endorsing the view, James Fallows, Paul Krugman and law professor Geoffrey Stone among them (“Negotiating with Terrorists” was the original headline on Stone’s post). And while it’s yet to be determined how many casualties there will be from […]

  • July 24, 2011--A Short History of Intransigence

    When did things begin to go seriously wrong in American politics? I’ve been covering political economy a long time, mostly from a newspaperly perspective. I’ve leaned this way or that for years at a time, but always sought to remain within speaking distance of those near the center on the other side. Last week I […]

  • July 17, 2011--Clicking, Watching, Reading

    US political theater as riveting as the debt-default negotiation doesn’t come along very often. The Senate Watergate hearings, in 1973. The House Judiciary Committee impeachment proceedings, in 1974. The Army-McCarthy hearings, in the summer of 1954. The Clinton impeachment shenanigans of 1998 and their anticlimax in 1999 never came close to this level. EP spent […]

  • July 10, 2011--A Bare-Knuckles Pricing Strategy for The New York Times

    It is hard to think or write sensibly about the future of newspapers, or their place in the vast social construction of what we call “news,” without describing the personal experience of them. For instance, I’m accustomed to buying my New York Times every morning on the way to work. I enjoy the daily exchange. […]

  • July 3, 2011--Last Week in Jerusalem

    Was economics caught unawares when the worst crisis since the Great Depression threatened three years ago?  The answer seems to be both yes and no. There is some truth in the allegation, common at the time, that the leadership of the profession turned up flat-footed in the event. Yes, there had been some striking predictions about […]

  • June 26, 2011--Sunday School

    JERUSALEM — Expectations were high in the autumn of 1970 when Jerry Bock and Sheldon Harnick opened their new musical on Broadway. Their previous collaboration, Fiddler on the Roof, a buoyant examination of the difficulties of maintaining cultural identity in czarist Russia, had been an enormous success. It entered the repertoire immediately. But while The […]

  • June 19, 2011--EconomicPrincipals is Traveling

    ,,, and not writing this week.

  • June 12, 2011--Kept from All Thoughtful Men

    Peter Diamond, of the Massachusetts Institute of Technology, last week withdrew his candidacy to be a Governor of the Federal Reserve Board. You know the story. His nomination had been blocked last year by Sen. Richard Shelby, of Alabama, the leading Republican member of the Banking Committee, who objected that Diamond, an applied theorist, wasn’t […]

  • June 6, 2011--An Adverisement for Itself

    Economic Principals has a wicked summer cold.  Instead of a half-baked weekly, EP invites readers to skim “The Hidden History of the Health Care Bill,” from its archives, December 27, 2009. It is only a little different from Ryan Lizza’s thoroughly-reported and timely piece (subscribers only) in this week’s New Yorker – making it an […]

  • May 29, 2011--Now Change the Rest

    The Economist was founded in 1843 by James Wilson, a hat manufacturer temporarily brought low by one of global capitalism’s first identifiable business cycles. By a series of courageous re-inventions over 168 years, it has managed to become, and then remain, one of the most influential editorial voices in the world. It is time for […]

  • May 22, 2011--Those Shifting Plates

    All eyes remain on President  Obama’s Mideast speech last week and justly so.  For more than fifty years, US supported stability in the Mideast; now, after a decade of intense debate, it supports change.  Only a little less interesting, however, was the news in a Financial Times op-ed by Yoichi Funabashi, former editor of Japan’s […]

  • May 15, 2011--On Emulation

    I’ve been thinking about bank regulation recently, so I’ve been reading a lot of Edward J. Kane. Kane, who earned a PhD from the Massachusetts Institute of Technology in 1960, is today professor of management at the Carroll School of Management at Boston College.  For decades he has been among the most persistent critics of […]

  • May 8, 2011--Bigwigs and Double-Domes

    The intransigence in US politics today is remarkable – uncomfortable and dangerous. How will it resolve itself?  David Brooks, of The New York Times, wrote last week that Americans must “find ways to moderate solipsistic tribalism and come up with tax and welfare state reforms that balance economic dynamism and social cohesion.” Brooks pins his […]

  • May 1, 2011--The Smartest Guy in My Room

    Every once in a while, it’s useful to write down what you expect to happen over a long period of time – say, a decade. I was reminded of this by the news last week in The Wall Street Journal that several prominent hedge-fund operators were ramping up their donations to the Republican Party. They […]

  • April 24, 2011--Prize Season

    The Pulitzer Prizes were announced last week, all good awards. Drill down to the other two finalists in each category and you glimpse how much additional good journalism continues being done despite the turbulence in the industry.  My favorite runners-up were the New York Times investigation of systemic medical radiation errors, the Wall Street Journal […]

  • April 17, 2011--Better Than Wingo

    I’ve subscribed to three newspapers in my life.  The first was the Chicago Daily News, the afternoon daily that my family read when I was a child – that long-gone broadsheet (b. 1876, d. 1978) having been a prime specimen of a population that, taken as a whole, added up to the golden age of […]

  • April 10, 2011--Learning How to Push Back Against the Bankers

    We all invoke past successes in hopes of illuminating the way ahead. Hedge fund magnate George Soros rented the Mt. Washington Hotel, in Bretton Woods, N.H., over the weekend for a gathering of his Institute for New Economic Thinking. In its inaugural meeting last year, the INET crew assembled in John Maynard Keynes’ old college […]

  • April 4, 2011--In Which, Finally, I Understand Facebook

    I’m one of those who has been slow in coming around to Facebook. For years the bourgeoning social network site seemed like one more distraction that I did not need. I friended those I knew who asked, admired the digital persona that my friend the columnist Alex Beam devised (so like the real thing only […]

  • March 27, 2011--A Recent Exercise in Nation-Building by Some Harvard Boys

    It was worth a smile at breakfast that morning in February 2006, a scrap of social currency to take out into the world. Michael Porter, the Harvard Business School management guru, had grown famous offering competitive strategies to firms, regions, whole nations.  Earlier he had taken on the problems of inner cities, health care and […]

  • March 20, 2011--A Big But

    I’m as susceptible as the next guy to lashing out at the nanny state.  The jigging around of Daylight Savings Time over the last twenty-five years is my latest peeve. For a quarter-century after 1962, DST (what the British call Summer Time) began the last Sunday in April and ended the last Sunday in October. […]

  • March 13, 2011--A Tendency of Our Times

    One reason the news out of Wisconsin has been so disorienting is that, for a hundred years, the political traditions of that state have meant something quite other than confrontation and the surrender of rights. In The Wisconsin Idea, published in 1912 (with a foreword by Theodore Roosevelt), Charles McCarthy defined his subject broadly as […]

  • March 6, 2011--A Hierarchy of Problems

    The turmoil that has been sweeping the Middle East is susceptible to at least two broad and daring explanations. On the one hand, Charles Krauthammer, of The Washington Post, argues that revolts against autocratic governments in Tunisia, Egypt, Yemen and Libya are testimony to the “fundamental tenet of the Bush Doctrine that Arabs are no […]

  • February 27, 2011--The Asterisk

    I’m always interested to see a new book on the transition of the Russian economy from central planning to the oil-based siloviki-dominated oligarchy of today. No Precedent, No Plan, by Martin Gilman, stakes a claim to being the definitive word on some of those events. The impact of the crash of August 1998 needs to […]

  • February 20, 2011--That Old Hoot-Smalley

    Shibboleths are tribal test words, used to distinguish friend from foe. The Hebrew word long ago meant, roughly speaking, grain. The Book of Judges in the Bible relates how men of Gilead recognized Ephraimites who were seeking to slip through their siege by asking all passers-by to pronounce the word. If they replied with a […]

  • February 13, 2011--A Buyer’s Agent in the Big-Money World

    Sixty years of financial evolution culminated in a wild melee during the crisis of 2007-9.  In its purely human dimension, senior figures of the industry resembled warriors from many and various tribes fighting a nighttime battle. They had trouble distinguishing friend from foe. So did bystanders, investors and taxpayers alike. When chaos subsided, who had […]

  • February 6, 2011--A Night at the Movies

    Instead of reading any more of the Financial Crisis Inquiry Report, I went home Friday night and watched American Madness, Frank Capra’s 1932 thriller about a banking panic. The friend who recommended it borrowed it for me from the library. A faster 75 minutes I’ve seldom spent. Like the Congressional Commission’s report, the film reinforced […]

  • January 30, 2011--A Mostly Happy Story

    America’s first “Sputnik Moment” occurred 150 years ago, in April 1861, when Confederate cannons fired on Fort Sumter in Charleston Harbor. South Carolina had seceded a few months before. Sumter surrendered after a day and a half. The Civil War had begun. The 37th Congress met that summer to deal with war finance. The next […]

  • January 23, 2011--Paul Samuelson’s Secret

    The last two volumes of Paul Samuelson’s collected papers appeared this month, edited by Janice Murray, his assistant for twenty years. As far as I can tell, the only mention of Commodities Corp. to be found anywhere in the seven volumes appears in the final one, in the last serious piece he ever wrote, which […]

  • January 16, 2011--Savoring the Horse and Rabbit Stew

    Will technological innovation be cranked up to tackle the problem of climate change? To anyone who thinks about the course of events since, say, 1939, it is obvious that innovation policy can be a very powerful tool in emergencies that involve a common enemy. The list of technologies that governments pioneered includes nuclear energy, jet […]

  • January 10, 2011--Past and Present

    DENVER – Perhaps this year the event acquired a name that at last will stick.  The World Financial Crisis? The Great Recession?  Why not call it The Long Slump, said Robert Hall, of Stanford University, in his presidential address at the meeting here of the American Economic Association. A slump describes the time that passes, […]

  • January 2, 2011--The Ninth Decision… and the Road Ahead

    When you look back on the eight key economic decisions of the Obama presidency as identified the other day by Ezra Klein, in The Washington Post, what stands out is a ninth choice – the measures that were not taken. The interventions in the financial, auto and housing sectors; the stimulus package; the health care […]

  • December 27, 2010--Holiday Routine

    Economic Principals has taken the week off.

  • December 19, 2010--Strictly Personal

    It’s a little late for gift-giving, I admit, but here are four very interesting books about investing that aren’t going to get into Economic Principals unless they do now. Three of these, whose first editions appeared in 1982, 1978 and 1973 respectively, are already classics. The fourth seems destined to achieve that status. As to the various joys […]

  • December 13, 2010--A Few Words about the Vladimir Chavrid Award

    Remember Rosalind Franklin, “the dark lady of DNA?”  She was the physical chemist whose artful x-ray photographs enabled James Watson and Francis Crick to deduce the double-helical structure of the DNA molecule, just ahead of Linus Pauling. Franklin died of cancer in 1958.  Maurice Wilkins, her supervisor, shared the 1962 Nobel Prize in Medicine with […]

  • December 5, 2010--End of an Era?

    Call me credulous, but after a week of listening intently to the talk from Washington, I am prepared to believe the US has indeed reached the end of an era. That long strange journey began in the mid-1960s, with a binge of Keynesian guns-and-butter spending unaccompanied by tax increases. It took a new twist in […]

  • November 29, 2010--When Open Market Operations Were New

    If you get a headache, as I do, from the arguments and counter-arguments surrounding the Federal Reserve Board policy known as QE2, you may wish to briefly ponder the lessons of a simpler time – the decade of the 1920s, when the Federal Reserve Board first learned how to moderate the business cycle by buying […]

  • November 22, 2010--The Situation Bears Watching

    There was a distinct flutter of excitement at the Massachusetts Institute of Technology earlier this month when Jeff Hawkins talked at MIT’s new Center for Biological and Computational Learning. Hawkins was a co-founder of Palm Computing and Mindspring (and inventor of the Palm Pilot and Treo devices). These days he is better known for his […]

  • November 14, 2010--The World Through Up-and-Comers’ Eyes

    There was plenty of commotion in Seoul last week. Adding the G-20 insults (and its own!) to election injuries. The New York Times led its Friday paper this way: Obama’s Economic View Is Rejected on World Stage China, Britain and Germany Challenge U.S. – Trade Talks with Seoul Fail, Too A good week, therefore, to […]

  • November 7, 2010--Next?

    Nancy Pelosi, seeking to remain the leader of House Democrats, is betting that the election results had more to do with the state of the economy than with the intrinsic appeal of the Republican program. What about the White House? Surely some part of the sharp reversal is a verdict on the administration’s economic crisis […]

  • October 31, 2010--Conservatives, Radicals and Other Republicans

    A Republican majority in the US House of Representatives come January? One consequence will be to give increased prominence to The Fiscal Times, a digital news site launched earlier this year by Peter G. (Pete) Peterson, and, especially, its principal columnist, Bruce Bartlett. Peterson, 84, is the nation’s most insistent conservative Republican. There was a […]

  • October 24, 2010--The Vainglory of Economists, and Other Campaign Issues

    The single hardest and potentially most costly decision Barack Obama made in his first few weeks as president-elect may have been to hire Lawrence Summers to oversee his administration’s economic response to the aftermath of the crisis. If you doubt that, see Inside Job, a documentary film by Charles Ferguson designed to get you mad […]

  • October 17, 2010--The Fourth Member of a Great Quartet

    Nobel prizes in economics can be classified as either history prizes or museum prizes.  History prizes identify major turning points in the way that economic problems are conceptualized. Often their award makes news. Museum prizes are more like exhibits or installations. They are designed to showcase technical economics’ relevance to one problem or another, and […]

  • October 10, 2010--None of the Above?

    The Nobel prize in economics will be announced Monday – technically “the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel,” the only one not ordained by the 1895 will. Mark Whitehouse, an economics reporter for The Wall Street Journal, surveyed various betting pools last week and came up with the following report.  […]

  • October 3, 2010--The Flash Crash: A Cautionary Tale

    So the finger that caused the “flash crash” May 6 turns out to have been merely heavy instead of fat. An order to sell $4.1 billion of stock index futures as quickly as possible, and never mind the price, spooked an already-jittery market into a spectacular selling frenzy that day according to a long-waited forensic […]

  • September 26, 2010--Coming (Back): the $1 Fancy Newspaper?

    It has become commonplace to assert that the days of newsprint are numbered – perhaps the days of newspapers themselves. Yale University’s library recently closed its newspaper reading room. Asked last week about the suggestion that The New York Times might print is last edition in 2015, publisher Arthur O. Sulzberger Jr. told an industry […]

  • September 19, 2010--Reinventing George Bailey

    “The Volcker rule” has haunted the debate about the financial crisis since the argument began, more like a dimly-remembered promise than a recipe for avoiding another calamity. What was it we were supposed to do? Former Federal Reserve Board chairman Paul Volcker, now 83, led the effort that in the early 1980s battled spiraling inflation […]

  • September 13, 2010--The Fire Hose

    The price of admission to the first rank of economic celebrity, at least in the United States, is an introductory textbook – a means of establishing authority as a virtuoso performer over and above whatever popular appeal may be gained by other means, plus the opportunity, just possibly, to shift the focus of the entire […]

  • September 5, 2010--Now The Real Work Begins

    So much for summer vacation.  It’s back to work for Economic Principals.  Doing what?  Plowing through the torrent of literature of the 2007-09 crash, among other things. The experts’ deciphering of the crisis is nearly complete. Now the real work begins. The best account of what happened, packaged as a book and intended for the […]

  • August 8, 2010--Summer Sabbatical

    I was surprised – perhaps readers were too – when Economic Principals failed to deliver two weeks in a row. In eighteen years of writing for The Boston Globe, I never paused the Sunday column.  There was too much to write about; the space was too valuable, the summer audience in New England too good […]

  • August 1, 2010--Early August

      Economic Principals is not writing this week. .

  • July 25, 2010--High Summer

       Economic Principals is not writing this week.                                 .

  • July 19, 2010--The Economist As Political Philosopher

    Few positions educate the incumbent more thoroughly to a global point of view than that of chief economist of the International Monetary Fund. The IMF was buttressed in its founding by the authority of John Maynard Keynes, even if his fellow architect Harry Dexter White, representing Franklin Roosevelt, had more to do with its design. […]

  • July 11, 2010--Comes a Moment to Decide

    As a (sometimes) shadow newspaper columnist, one who joined the Obama bandwagon before the Iowa caucuses made the Illinois Senator a favorite, Economic Principals feel obligated and/or entitled to keep track of the shifting tides of his presidency. EP tipped George W. Bush for the presidency in 1998 and stayed with him online as well. […]

  • July 4, 2010--The Highest Form of Mention

    The long-running comic strip Doonesbury recently spent a half-dozen strips chronicling one family’s return to newspapers. Even after Zonker explains their virtues to teenage Sam, she still doesn’t get it. “It costs money, the content’s old, there are no links, you have to turn pages and it’s heavy!  Why would I go offline for this?” […]

  • June 27, 2010--What’s In a Name?

    SYRACUSE, NY – When currency trader George Soros rolled out his Institue for New Economic Thinking last spring, in a conference at Cambridge University, the writer of The Economist’s “Economic Focus” feature who covered the conference invoked a metaphor devised by David Colander, of Middlebury College, to describe the Institute’s view of how economics may […]

  • June 20, 2010--One Thing at a Time

    Congressional negotiators are working overtime to reconcile various provisions of the House and Senate bills to overhaul financial regulation, hoping to send a final version to President Obama’s desk before the July 4 weekend. Thursday Senators on the panel voted 10-2 to kill a provision that would have made the Federal Reserve Bank of New […]

  • June 13, 2010--The Economist as Journalist

    When Nouriel Roubini converted his Roubini Global Economics service to a subscription basis in 2005, EP compared the development to the launch of a magazine. Like many others, the New York University professor was searching for a business model.  His site had begun life nearly ten years before as a public service bulletin board posting […]

  • June 7, 2010--Demonstration Effects

    The Gulf oil spill has a way of putting in perspective our other troubles.  Suppose the first few shards of evidence hold up – that BP engineers were under some pressure to cut costs by electing cheaper safety methods against the possibility of a blowout? What would be the cost, going forward, of increasing tenfold […]

  • May 30, 2010--In the Thrall of the Billionaire Boys Club

    It has the potential to become Barack Obama’s Vietnam.  Not the Gulf oil spill, serious though that is. Nor Afghanistan. Other people’s mistakes are one thing.  The ones that haunt forever are the ones you make yourself.  I mean the system of public education.  Remember the recipe for a policy disaster? Start with a handful […]

  • May 23, 2010--Is Summers Headed Home?

    Though as a journalist I have been right far more often than I have been wrong about Lawrence Summers in the nearly thirty years that I have followed his career, I have occasionally misjudged him. For example, I argued that he’d be a good president of Harvard University. Last year I speculated that he’d be […]

  • May 16, 2010--No Gold Watch

    Another generation of US workers, at least significant numbers of them, are being forced into retirement sooner than expected and without ceremony, by the Bust. As Catherine Rampell noted in The New York Times last week, millions of people have been dismissed – file clerks, ticket agents, autoworkers and the like – who might otherwise […]

  • May 9, 2010--Learning To Love Heterarchy

    It is no secret that news organizations, newspapers in particular, are being buffeted by the winds of change. In What Is Happening to the News: The Information Explosion and the Crisis in Journalism, Jack Fuller sets out to understand why disciplined professional journalism has  lost so much of its mindshare to new media – websites, […]

  • May 2, 2010--Peter Diamond Ate My Homework

    An old joke among psychologists, anthropologists and sociologists has it that economics is the study of economic models. Lingering doubts that things are changing will be dispelled by the selection of Esther Duflo, of the Massachusetts Institute of Technology, as winner of this year’s John Bates Clark Medal, awarded annually to the economist nearing forty […]

  • April 25, 2010--Towards Partition

    What should be done about the banks?  With a Senate bill headed for a test vote on a procedural matter Monday, a long-simmering debate may finally be coming to a head. Break up the biggest American banks, which have mushroomed in recent years?  Or leave them as they are and write some new rules for […]

  • April 18, 2010--Constructing The Narrative

    To the policy makers dealing with the next really big financial emergency – the crisis he  imagines might arrive perhaps a hundred years from now – Gary Gorton offers some advice in the last chapter of Slapped By the Invisible Hand: The Panic of 2007 (“I wish I were there to see [your futuristic] new […]

  • April 11, 2010--The Hunt for New Ideas

    The year was 1985. The new annual would be devoted to real economic problems, specializing in articles of two kinds: the first seeking answers to specific questions; the second demonstrating the empirical relevance of potentially important new ideas. Like what? Well, in the first instance, in that first issue, like why European unemployment rates were so […]

  • April 5, 2010--Perils of the Parallax View

    LONDON – There will be a general election here next month, probably in the first week in May (this week the Queen must give her blessing). Either Labor’s Gordon Brown will remain prime minister, or David Cameron, leader of the Conservative Party, will replace him, depending on whose party wins the most seats in the […]

  • March 28, 2010--Bloggers and Journalists

    Commencing its ninth year online, Economic Principals is making a couple of significant changes in its operation. The Web has changed enormously since EP moved online in early 2002. The blogosphere, which scarcely existed ten years ago, has become a vibrant new medium, competing for attention with books, newspapers, magazines, film, radio, and television. William […]

  • March 21, 2010--Every Hundred Years or So

    In connection with the closing hours of the health care debate, I have been reading 1912: Wilson, Roosevelt, Tafts and Debs — The Election that Changed the Country, by the late James Chace. About all that most of us remember about 1912 is that Woodrow Wilson was elected then, an idealistic president whose administration moved […]

  • March 14, 2010--How We Got the Bad News

    “Differences of opinion is what makes horse races.” So my algebra teacher would taunt us, deliberately ungrammatical, standing at the blackboard, chalk in hand, touting the virtues of proof. Differences of opinion make markets, too – especially speculative financial markets. No matter how complicated the transaction might be, its essence boils down to a buyer […]

  • March 7, 2010--In the Slough of Despond

    Every once in a while, Economic Principals bogs down. It happened this week. . EP spent a good deal of time reading most of three remarkable books about the mechanics of the subprime crisis: Fool’s Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed […]

  • February 28, 2010--Sour Sixteen

    Here’s a relatively light-hearted way to tackle the question of what caused the macroeconomic mess of 2008 and 2009. Allen Sanderson is a familiar figure on the campus of the University of Chicago, a lecturer in economics and a prolific popular writer, especially on the economics of sports. Last summer the university magazine asked him […]

  • February 21, 2010--Many Pieces, Many Hands

    The books and papers pile up. So many pieces to the puzzle! Newspaper reporters provide detailed case studies of particular events – Fool’s Gold, by Gillian Tett, on the invention of credit default swaps; The Greatest Trade Ever, by Gregory Zuckerman, on how hedge fund manager John Paulson put those CDSs to use. Policy-makers give […]

  • February 14, 2010--This Battle Is A Close-Run Thing

    Political cohesion, or the lack thereof – the stand-off between the president and the Republicans – is the big story in Washington these days, mainly because of the dire problem of restoring fiscal stability in the wake of the 2008-09 recession. It is underscored by the Obama administration’s new ten-year budget. Not until 2015 is […]

  • February 7, 2010--What Can Be Done for Haiti?

    How best to aid Haiti in the aftermath of its devastating earthquake? That question can’t begin to be answered without thinking hard about how Haiti came to be one of the poorest nations in the world, having been among its richest colonies. In an essay in his just-published Natural Experiments of History, Jared Diamond puts […]

  • January 31, 2010--No January Thaw

    In New England, there is ordinarily a break in the weather known as the January thaw. Most years, usually around January 25, temperatures climb about six degrees from their chilly norm and remain there for a few days, before the next cold spell arrives. It is then that, if you look up, you see buds […]

  • January 24, 2010--A Road Not Taken

    So a Republican won Ted Kennedy’s Senate seat last week in Massachusetts.  Scott Brown defeated Martha Coakley by a solid margin. Before you file away the result as the inevitable consequence of widespread revulsion at health care reform, let me suggest an alternative and, to my mind, much more plausible interpretation. The Democrats would have […]

  • January 17, 2010--Things Fall Apart?

    I was reading Marlowe’s Soldiers the other day, by Alan Shepard, evading the mysteries of the business cycle in favor of Elizabethan war stories, when this passage, from Geoffrey Cates’ The Defense of Militarie Profession, of 1579, caught my eye. (Elizabethan spelling retained) There must bee therefore an other state and profession of men, whose […]

  • January 10, 2010--Obama and FDR

    ATLANTA – Now that health-care restructuring has begun, the big item on the legislative agenda in 2010 has to do with how to regulate and organize the banks. We’ve been through the most alarming economic crisis since the October Crash of 1929 ushered in the Great Depression. What assurance is there that the same damn […]

  • January 3, 2010--Best and Highest Use

    “Tim Geithner? Larry Summers? My bet is that one or the other will be gone by the first of June.” Those are the rashest lines I wrote last year. It would have been fine if only I’d had the presence of mind to add, “that is, if this unseemly jostling continues.” It was March. The […]

  • December 27, 2009--The Hidden History of the Health Care Bill

    State legislatures are indeed “laboratories of democracy,” as Supreme Court Justice Louis Brandeis famously described them a century ago. But it is presidential candidacies that conduct the marketing campaigns for the social policies that governors and legislators devise. To understand the extraordinary Republican bitterness attendant on Senate passage of the health care bill, it is […]

  • December 20, 2009--Paul Samuelson’s Legacy

    Paul Samuelson died last Sunday, at 94. For some historical perspective on the role he played, consider that, for the entire history of modern economics, all 250 years of it, from its beginnings during the Enlightenment of the eighteenth century to the present day, the discipline has been dominated by five canonical textbooks – and […]

  • December 13, 2009--The Enormous Black Box

    STOCKHOLM – “Ships that pass in the night should berth at Stockholm for the weekend more often.” John Moore, of the London School of Economics, pronounced that benediction that on a Nobel symposium in August 1990, at which 24 leading economists met quietly for three days in a city suburb to discuss contract economics. Such […]

  • December 6, 2009--The Visionary

    Among the relative handful of disappointments in Peter Brooke’s charmed life appears to have been his inability to persuade Harvard University to confer an honorary degree on former British Prime Minister Margaret Thatcher. In a new book, A Vision for Venture Capital: Realizing the Promise of Global Venture Capital and Private Equity, Brooke writes, “It […]

  • December 3, 2009--Was Henry George Right After All? (A shaggy dog story)

    I am not, to put it mildly, an expert on the endgame leading to last year’s banking panic. For that we have authors Andrew Ross Sorkin, of The New York Times (Too Big to Fail); David Wessel, of The Wall Street Journal (In Fed We Trust); the beat reporters of the newspapers; several columnists; and […]

  • November 22, 2009--The Thing about the Fed Most Worth Knowing

    Those who think that relatively independent central banking is crucial to maintaining order in the modern world must be discouraged by the news from Washington these days. It was the House of Representatives that this week made headlines. Its Financial Services Committee backed a provision, by a 43-26 margin, that was introduced by Texas Republican […]

  • November 15, 2009--Sound Familiar?

    A prominent American working as adviser to a foreign government successfully bargains for the details of a new constitution – while quietly arranging a lucrative deal for himself with a foreign company operating in his client state under the new laws. He is exposed and suffers profound embarrassment. Sound familiar? Yes, it’s a little like […]

  • November 8, 2009--Long Before Berlin

    Long before the Berlin Wall came down, there was May Day in New York.  In the flow of history these last forty years or so there have been many other signposts. But it is May 1, 1975, that stands out in memory as a moment in which it became clear that things were changing in […]

  • November 1, 2009--What The Woman Lived

    Elinor Ostrom’s Nobel Prize raised an interesting question. Who’s the most famous female economist in the profession today? Ostrom’s influence, via her field work on informal governing coalitions, had been greatest among political scientists. She was not among the worthies (Ronald Coase, Douglass North, Oliver Williamson) who founded the International Society for New Institutional Economics. […]

  • October 25, 2009--How Can We Miss It When It Never Went Away?

    When the World Trade Organization negotiations broke down in July 2008, the global financial crisis was so quickly upon us – October panic, bailout, US election, stimulus package – that it’s easy to forget that the Doha Round didn’t end after seven years, it simply took a break. It’s still out there, zombie-like, waiting to […]

  • October 18, 2009--The Student of Working Together

    Who owns the Nobel Prize in economics? A basis for an answer to that question appeared last week, when the Nobel Committee opened the door to a capacious new wing of economic research, citing political scientist Elinor Ostrom, of Indiana University, for her investigations of how ordinary citizens solve problems that arise when sharing common […]

  • October 11, 2009--Get a Grip on It

    The Nobel Prize is among the world’s most successful brands. Since 1901, the program has enabled Scandinavians to have a resonant voice in world affairs despite their relative isolation in northern latitudes. They’ve done it by taking great pains to be convincing. The science prizes created a master narrative for one of the great stories […]

  • October 4, 2009--In Which a Spear-Carrier Vents a Little

    When Economic Principals moved to the Web from The Boston Globe nearly eight years ago, its inspirations were Esther Dyson and Edward Tufte. But its guide was Ira Stoll. Dyson and I had worked down the hall from one another at Forbes in the mid-1970s. She was as fearless and indefatigable as any journalist I’ve […]

  • September 27, 2009--The Straw That Stirred the Drink

    Irving Kristol, who died earlier this month at 89, meant many different things to many different people. One way to remember him is as the editor who, with his friend and City College of New York classmate Daniel Bell, founded The Public Interest in 1965, at just the moment the phenomenon known as “the counterculture” […]

  • September 20, 2009--Keynes In Context

    The current wave of interest in the life, times and ideas of John Maynard Keynes is not hard to understand. You don’t need to be an economist to know that the last ten years or so in some deep way resembled the Roaring Twenties. Last autumn, the possibility of world depression seemed frighteningly real for […]

  • September 13, 2009--Economics and Its Discontents

    In the aftermath of the worst scare since the 1930s, economists have identified a new culprit to share the blame for the subsequent mess – themselves, or rather those among their tribe with whom they disagree. No longer are greedy Wall Street bankers, feckless regulators and a blasé Federal Reserve Board the only suspects. The […]

  • September 6, 2009--The Power of Self-Recovery

    Barack Obama was elected president in the hope that he would create a new consensus about the sort of country that the United State is trying to be – to lead to the left, but relatively slightly, in such a way that a broad majority of voters would be satisfied that the nation remains on […]

  • August 30, 2009--When Money Was New

    In the ongoing reconstruction of twenty-first century finance, ancient Greece may seem an unlikely place to turn to for guidance. Then again, why not? For it was in the little city-states around the Aegean Sea that coined money first appeared in the seventh century B.C., and, in the sixth century, came into widespread use. The […]

  • August 23, 2009--A Low-Tech Apparatus for Horizon-Scanning

      To Her Majesty, The Queen Buckingham Palace, London Madam,   The disarming question you asked when you visited the London School of Economics last autumn – why did nobody notice that the credit crunch was on its way? – produced a thoughtful letter from the various authorities who gathered recently at the British Academy […]

  • August 16, 2009--Mulligan

    Deep into August, EP is taking a mulligan, dropping another ball and taking a second swing next week at a column too interesting to send out into the rough.

  • August 9, 2009--Public Turmoil, Then and Now

    I’ve been enjoying Anthony Flint’s Wrestling with Moses: How Jane Jacobs Took On New York’s Master Builder and Transformed the American City. Jacobs is one of the seminal figures from the great age of American dissent – The Death and Life of Great American Cities, appeared in 1961, just before Rachel Carson’s Silent Spring (1962), […]

  • August 2, 2009--The Morning Meeting

    The second most important part of a daily newspaper is something readers never see, or even hear about – the daily meetings in which editors hash out their plans for coverage of upcoming events. (Most reporters never attend these sessions, either.) The afternoon meeting is terse, as editors vie for space for their reporters’ stories […]

  • July 26, 2009--Pausing at the Fork in the Road

    Congressional leaders have postponed their work on health-care reform until after their August vacation. That’s a good thing. They should take a deep breath before setting in motion a system to gradually rebalance the incentives in a fifth of the American economy. If you believe, say, Wall Street Journal columnist Peggy Noonan, Obama’s drive has […]

  • July 19, 2009--Learning By Doing

    In the aftermath of war, the old city was a wreck. Carl Bildt, the former prime minister of Sweden, who served as co-chairman of the peace conference that effectively ended the bitter conflicts that followed the break-up of the former Yugoslavia, described the shock of his first visit this way (in Peace Journey):   The southern […]

  • July 12, 2009--Now We May Perhaps to Begin?

    Explaining his doubts about the hastily-contrived response to last fall’s banking panic – George Bush’s Troubled Asset Relief Program and Barack Obama’s subsequent stimulus package – John Taylor told the following story last week. His wife had given him a new set of golf clubs for his birthday, including a driver with a club-head so […]

  • July 5, 2009--The Perpendicular

    The morning that I visited him last week, Mark Thoma had fielded back-to-back calls first thing from Reuters and Bloomberg. The day before, The Wall Street Journal had sought to arrange for a photograph; the day after, N. Gregory Mankiw, of Harvard University, proudly pointed on his blog to a Thoma item about a speech […]

  • June 28, 2009--Against Gerontocracy

     The appearance of a new economics journal seldom makes waves. The American Economic Association’s flagship American Economic Review, founded in 1911, is still the most widely consulted journal in the field. The two main university-owned journals, Harvard’s Quarterly Journal of Economics and Chicago’s Journal of Political Economy, were established even earlier. The AEA’s Journal of […]

  • June 21, 2009--Towards a Fiscal Constitution

     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 […]

  • June 14, 2009--Up or Out?

     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 […]

  • June 7, 2009--Landing on Those 240 Inches

    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 […]

  • May 31, 2009--The View from the 23rd Century

        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, […]

  • May 24, 2009--Auctions and Politicians

    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 […]

  • May 17, 2009--The Next 500 Days

    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 […]

  • May 10, 2009--True Confessions of the Crisis: Up-Close and Top-Down

    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 […]

  • May 3, 2009--The Newspaper that Fired Its Readers

    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 […]

  • April 26, 2009--The U-Turn

    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 […]

  • April 18, 2009--The Clark Medal: A Hindcast

    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 […]

  • April 12, 2009--“This Time They Are More Interested”

    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,” […]

  • April 5, 2009--Economic Principals is Traveling

    Economic Principals is traveling and not writing this week.

  • March 29, 2009--The GPT That Dares Not Speak Its Name

    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. […]

  • March 22, 2009--Is Physiognomy Destiny?

    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 […]

  • March 15, 2009--Only You, Dick Daring!

    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 […]

  • March 8, 2009--Follow The Leader

    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. […]

  • March 1, 2009--What Comes After a Golden Age?

    “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 […]

  • February 22, 2009--Late Starter

    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 […]

  • February 15, 2009--To See Ourselves As Others See Us

    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 […]

  • February 8, 2009--More Than Two Aspirin

    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 […]

  • February 1, 2009--Newspapers at the Crossroads

    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 […]

  • January 25, 2009--In Which George W. Bush Enters History

    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 […]

  • January 18, 2009--Looking Forward: a Semaphore

    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 […]

  • January 11, 2009--Gzing! Gzing! Gzing!

    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 […]

  • January 4, 2009--Vital Signs

    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 […]

  • December 28, 2008--Man of the Year

    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 […]

  • December 21, 2008--The Story So Far

    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 […]

  • December 14, 2008--Change We /Would/ Believe In

    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 […]

  • December 7, 2008--Lost Decade? Or Memorable Hangover?

    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 […]

  • November 30, 2008--More Rivals

    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 […]

  • November 23, 2008--Towards a Health-Care Fed

    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 […]

  • November 16, 2008--The Crash Next Time

    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 […]

  • November 9, 2008--Frame Tale

    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 […]

  • November 2, 2008--History, Swinging On Its Hinge

    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 […]

  • October 26, 2008--What Just Happened?

    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 […]

  • October 19, 2008--The Professor and the Columnist

    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 […]

  • October 12, 2008--A Riddle for These Times

    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 […]

  • October 5, 2008--Some Bodkin!

    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, […]

  • September 28, 2008--A Weary Titan?

    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 […]

  • September 21, 2008--The City Manager’s Son and the $2 Trillion Man

    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 […]

  • September 14, 2008--Bears Watching

    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 in the twentieth century to produce a truly global civilization. Ian […]

  • September 7, 2008--EP Is Not Writing This Week

    Economic Principals is traveling and not writing this week.

  • August 31, 2008--Looking Forward

    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 […]

  • August 24, 2008--A Guide for the Perplexed

    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 […]

  • August 17, 2008--That Newspapers Are the Central Banks of Social Currency

    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 […]

  • August 10, 2008--On Vacation

    EP is on vacation. Back next week. dw

  • August 3, 2008--On the Significance of Geneva

    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 […]

  • July 27, 2008--He Changed Economics

    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 […]

  • July 20, 2008--About that Green Light

    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” […]

  • July 13, 2008--Getting On With It

    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 […]

  • July 6, 2008--Thought for Food

    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 […]

  • June 29, 2008--The Other Meaning of Bill Gates

    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 […]

  • June 22, 2008--The Chicago School (and the Russert Wing)

    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 […]

  • June 15, 2008--Old Embers, New Flames

    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 […]

  • June 8, 2008--Voices in the Air

    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 […]

  • June 1, 2008--A Normal Professor

    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 […]

  • May 25, 2008--A Brave Army of Heretics

    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 […]

  • May 20, 2008--Episode III of Keeping the Wolf at Bay, in Which the Wolf Bites Itself

    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 […]

  • May 11, 2008--Technostalgia: Celebrating Contingency

    (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 […]

  • May 5, 2008--Down the Memory Hole?

    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.

  • April 27, 2008--A Longer Goodbye?

    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 […]

  • April 20, 2008--An Almost American Attitude to Risk

    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.

  • April 13, 2008--Politics, Economics and the News

    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.

  • April 6, 2008--Might the Worst Be Over for Africa?

    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?

  • March 30, 2008--The Dis-Integration of the News

    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.

  • March 23, 2008--The Properties of Property

    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.

  • March 16, 2008--How Did It Become So Dangerous?

    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 […]

  • March 9, 2008--Mineshaft Canary

    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. […]

  • March 2, 2008--EP Is Not Writing This Week

    Economic Principals is traveling and not writing this week.

  • February 24, 2008--Climate Change?

    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 […]

  • February 17, 2008--On Dynasties

    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.”

  • February 10, 2008--The Coin of Your Life (and the “U-Index”)

    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?

  • February 3, 2008--Revealed Preferences

    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.

  • January 27, 2008--Was There a Better Time for a Recession?

    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?

  • January 20, 2008--The Partisan

    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.

  • January 13, 2008--Dancing With Tycoons?

    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 […]

  • January 9, 2008--Down In New Orleans

    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?

  • December 30, 2007--The Shape of the Cities

    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.

  • December 23, 2007--What is Better Than Beating the Yankees?

    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.

  • December 16, 2007--When the Facts Change

    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.

  • December 9, 2007--Extreme Arithmetic

    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.

  • December 2, 2007--A Nation Once Again?

    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.

  • November 25, 2007--Greenspan Shrugged

    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?

  • November 18, 2007--Strong Medicine

    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.

  • November 11, 2007--A Necessary Profession, Re-Invented

    “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.

  • November 4, 2007--Spook Country: An Introduction

    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.

  • October 28, 2007--Economics for Adults

    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.

  • October 21, 2007--The Road to a System that Works (Without Shooting People)

    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?

  • October 14, 2007--An Enormous Pearl, a Little Giant, a Vanishing Hand

    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.

  • October 7, 2007--The Generation of 1958

    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.

  • September 30, 2007--From Zig to Zag

    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

  • September 23, 2007--The Road since “The Mechanics of Economic Development”

    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.

  • September 16, 2007--The Second Century of the Boston Evening Transcript

    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.

  • September 9, 2007--In Which Those Troublesome “Black Swans” Find a Champion in Economics

    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.

  • September 2, 2007--A Most Useful Citizen

    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.

  • August 26, 2007--Putting the (Molecular) Clock on Development

    For the first hundred and fifty years or so after 1788, when James Hutton firmly established to the satisfaction of his peers the antiquity of the Earth, most of what we knew about the human past came from old bones, archeological digs, ethnographic expeditions and speculation about the origins of languages. Charles Darwin and Gregor […]

  • August 19, 2007--Dealing with “Sympathetic Bias”

    Blame for the crisis in real estate lending seems to be zeroing in on the credit-rating agencies that, starting in 2000, signed off on the complex new debt instruments that have proved to be so vulnerable and opaque. As reporters Aaron Lucchetti and Serena Ng explained in The Wall Street Journal last week  (subscription required).  […]

  • August 12, 2007--Sink or Swim?

    Economic Principals is a news-oriented weekly, not a newspaper or a book review.  A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark, an economic history professor at the University of California at Davis, won’t be published until September. Most of the professionals whose opinions are relevant haven’t seen it yet, […]

  • August 5, 2007--Science, Economics and the News

    These are dark times for newsfolk. The Wall Street Journal has been sold to Rupert Murdoch. The other international English-language papers, The New York Times, The Washington Post and the Financial Times, are under earnings pressure, too. General-interest magazines have become scarce. As a spiritual exercise, I spent part of  last week reading Nayan Chanda’s […]

  • July 29, 2007--Good Old Cal?

    The year was 1940. Germany had invaded Poland. The United Kingdom and France had declared war in return. In the United States, the popular historical novelist Kenneth Roberts (Northwest Passage) sought to foster fellow-feeling for the British and, at the same time, to remind his readers of the costs of war. So he conjured up […]

  • July 15, 2007--Swept Away by the River of Money

    The Wall Street Journal, which the heirs of the Bancroft family are in the process of selling to Rupert Murdoch, is the ultimate symbol of the capitulation of the “American century” to the forces of economic change. Dow Jones, if not the WSJ itself, shortly will join the Great Atlantic and Pacific Tea Company, American […]

  • July 8, 2007--Everything You Wanted To Know (But Were Afraid To Ask) About Two-Sided Markets

    The task facing a certain kind of entrepreneur these days is no more unfamiliar than the engineering of a successful dinner party.  The French ambassador would never so much as respond to an invitation — unless you intimated that Rupert Murdoch, say, would be there, in which case he would accept. Murdoch, if he thought […]

  • July 1, 2007--The Upside of Bubbles

    Towards the end of his life, the economist Charles P. Kindleberger tumbled with great excitement on to One Hundred Years of Land Values in Chicago, by Homer Hoyt. Published in 1933, Hoyt’s book traced in great detail five cycles of boom and bust in the Windy City, starting with the huge run-up in land prices […]

  • June 24, 2007--From Mister Johnson to Beta, and Back Again

    For the last few years, my favorite way of keeping tabs — very loose tabs — on the heavy waves of new technology transforming the financial markets has been to glance twice a week at Financial Engineering News.  I don’t mean the occasions when breaking news requires aggressive reporting and interpretation — like the attempt […]

  • June 17, 2007--More European Voices

    The supply of economics commentary is growing. Europe’s Centre for Economic Policy Research (CEPR) has launched a new website called Vox, that seeks to become the focal point for discussion and analysis of policy-relevant economics. The enterprise joins a two-year-old American venture, The Economists’ Voice, The Economists’ Voice, and Project Syndicate, Project Syndicate, a still […]

  • June 10, 2007--The Daily Diary of the Impartial Spectator Weighs a Buy-out

    Even before I spent the weekend at the meetings of the History of Economics Society, at George Mason University, I had been thinking a good deal about the Impartial Spectator. That was the metaphor Adam Smith employed to characterize the psychological mechanism by which we routinely temper our basic selfishness in order to live together, […]

  • June 3, 2007--Flung On Their Own Catapult

    When Kenneth Sokoloff died at 54 last month, of liver cancer, the economic history profession lost one of its best men, and the University of California at Los Angeles one of its brightest stars. Sokoloff had built UCLA’s economic history program into one of the strongest in the nation, sufficient to persuade a major figure […]

  • May 27, 2007--Outside, Inside

    The world’s largest association of heterodox economists meets next weekend in Salt Lake City. The International Confederation of Associations for Pluralism in Economics describes itself as committed to “the idea that pluralism and intellectual progress are complements. This is not to say ‘anything goes,’ but that each tradition of thought (Austrian, feminist, old and new […]

  • May 20, 2007--Kornai’s Choice

    One of the most striking features of the years after the collapse of communism has been the general lack of interest on the part of Americans, at least, in what the former communists have to say about their lives, their experiences, their societies. We make exceptions, of course, for defectors, those who wholeheartedly adopted our […]

  • May 13, 2007--Turn, Turn

    Alfred Chandler, the distinguished historian of business, died last week at 88, in Cambridge, Massachusetts, after a short illness. He was a leading member of a generation of social thinkers who, in the years after World War II, helped the United States maintain its bearings. Like his friend Thomas Hughes, the historian of technology (Networks […]

  • April 29, 2007--The Un-Marshall Plan

    The death last week of Boris Yeltsin called to mind an important truth — policy never gets made in a vacuum. The US seriously mishandled its relationship with Russia in the years after the fall of the Berlin Wall, in large measure because of its own internal tax-cut politics. With the benefit of hindsight, three […]

  • April 22, 2007--Clark Medal to Susan Athey

    In was in 1995 that Susan Athey made her debut as an economist, in The New York Times. She was 24.  “The Top Draft Pick in Economics; A Professor-to-Be Coveted by Two Dozen Universities” read the headline on Sylvia Nasar’s prescient story about the Stanford Graduate School of Business-educated whiz. “We fought really hard to […]

  • April 15, 2007--And Besides, the Wench is Dead

    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 options, it recognized one of the most remarkable newspaper stories of recent years.  But the citation, when it noted that the inquiry “triggered investigations, the ouster of top […]

  • April 8, 2007--Beyond Coordination and Control Is… Transformation

    By any measure, Michael Jensen is an interesting figure. After graduating from Macalester College in 1962, he learned economics at the University of Chicago in the mid-1960s, and became co-founder in 1973 of the Journal of Financial Economics that, along with  two other scientific journals, launched a revolution in quantitative finance — portfolio selection, options […]

  • April 1, 2007--In the Schumpeter Wing

    Joseph Schumpeter died in 1950, a few weeks before his sixty-seventh birthday, and since then, his reputation as a sage has been appreciating almost constantly, at least outside of economics. First there was Robert Heilbroner’s The Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers. When the book appeared in 1953, Schumpeter […]

  • March 25, 2007--When the Attorney General Was a Mensch

    The resolution of Harvard’s Russia scandal last year sheds some light on the recent unpleasantness over the Bush administration’s decision to fire eight US attorneys. That successful prosecution of Harvard University, by an attorney appointed by President Bill Clinton, provides a textbook illustration of how the system is supposed work, to resist political pressure. Donald […]

  • March 18, 2007--Ceci N’est Pas Un Blog

    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.  launched on March 17, 2002, about the same time that […]

  • March 11, 2007--Fifty Years On

    The year 1957-58 was a good one for global self-understanding.  Taking a leaf from the International Polar Years of 1882-1883 and 1932-1933, scientists from 67 nations around the world undertook coordinated measurements of everything from cosmic rays to the depth of ice sheets to the composition of the crust of the earth, as part of […]

  • March 4, 2007--New Pathways, Dense Thickets

    It is difficult to imagine more of a hornets’ nest than the etiology of mental illness. So when Cornell University economist Michael Waldman poked it with a stick last fall, suggesting that television was to blame for the rise in the incidence of autism among young children in the US, he got plenty of stinging […]

  • February 25, 2007--What’s News

    A new online Internet news magazine has appeared, covering 22 Asian nations from Afghanistan to Japan.  It fills the void left by the demise of the Far Eastern Economic Review and Asiaweek, and gives further evidence of the capacity of the World Wide Web to add to the spectrum of high-quality news. Among the editors […]

  • February 18, 2007--Take a Deep Breath

    So federal legislation to establish carbon caps and emissions trading is suddenly all but a foregone conclusion in Washington, conceivably even before George W. Bush leaves office. What changed?  Katrina had something to do with it. The discovery that ice sheets in Greenland and Antarctica are shrinking faster than expected probably did, too. It means […]

  • February 11, 2007--Life, Liberty, and the Pursuit of Knowledge

    “A man commonly saunters a little in turning his hand from one sort of employment to another,” Adam Smith wrote in The Wealth of Nations.  He was discussing the advantages of specialization — the cobbler who sticks to his last. EconomicPrincipals is in sauntering mode, tying up loose ends, starting a new book, readjusting to […]

  • February 4, 2007--On Being Invisible

    The United State filed a complaint last week against China with the World Trade Organization. Hidden subsidies, including special tax rebates and tariffs, not to mention a monetary policy aimed at keeping China’s currency, the yuan, artificially low, were conferring unfair advantages on its exporters, the US claimed. The charges were an expression of exasperation, […]

  • January 28, 2007--Unintended Consequences

    Monday evening, most Public Broadcasting System stations in the United States will broadcast The Power of Choice, a well-made 90-minute documentary on the life, times and ideas of Milton Friedman. The good news is that Friedman got to see the show last year, along with a glittering audience of a thousand friends, before his death, […]

  • January 21, 2007--A Week, Long Ago, in Biarritz

    We take for granted now so much of what is new: personal computers and cell phones, communications satellites and microwave towers, music file-sharing and cable television, copiers and scanners of all sorts, designer molecules and genomic medicine. All involve elements, large and small, for which the fixed cost of development is high, but the cost […]

  • January 14, 2007--Closed Standard: The Secret of The Wall Street Journal

    The Boston News Bureau and What Became of It “Kicking over Waste Baskets and Whacking His Cane on a Desk” The redesign of The Wall Street Journal has gone pretty well, despite the first-day foul-up. The company planned to give away the January 2 edition of the paper as a free sample at newsstands, but […]

  • January 7, 2007--Ten Years Later

    The American Economic Association met for three days over the weekend in Chicago. In some respects, its meetings remain pretty much the same from year to year. The cities change, but the kinds of things that raise eyebrows and fill the journal of its proceedings are conserved. Really significant developments are discernible mainly over time. […]

  • December 31, 2006--The Year in Economics

    There’s a toplofty headline if ever there was one.  You would have to range freely over all the globe to make good on its promise.  There was no exhilarating breakthrough, like the proof of the Poincaré conjecture in mathematics — or if there was, I don’t know it. As it happens, the big story in […]

  • December 24, 2006--On the Influence and Authority of Conscience (and Other Considerations Not Found in Any Economics Textbook

    Duncan Foley, of New School University, in New York, is very close to being a saint of economics — that is, a holy person, both mild and intense, whose life is animated by deep assurance — in this case, the conviction that the way to grasp the meaning of “capitalist economic life” is to find […]

  • December 17, 2006--Bad Apples and Good Bets

    Something like 150 years have passed since the emerging industrial economies of Europe began systematically constructing social programs and safety nets.  Before that, life was mostly lived at the local level. There was plenty of loss-sharing and charity, but it was usually home-grown and face-to-face. With an eighteenth century revolution in transportation, inventions proliferated and […]

  • December 10, 2006--It Isn’t All in Adam Smith

    There’s nothing like staking out an extreme position to get the juices flowing.  Take Harvard University professor N. Gregory Mankiw, writing in the most recent Journal of Economic Perspectives.   Asked what theoretical developments in macroeconomics had contributed to practice over the last thirty years, Mankiw, author of a leading introductory college text, answers, Next […]

  • December 3, 2006--Brave New World?

    A rare decline in November sales, its first in a decade, last week landed Wal-Mart on the front page of The New York Times, under the headline “Wal-Mart Trips as it Changes a Bit Too Fast.” “The stumbles seem to resurrect the perennial question,” wrote Michael Barbaro, “Is Wal-Mart too big for its own good, […]

  • November 26, 2006--Settling the New Continent

    A pair of top political reporters, John Harris and Jim VandeHei, quit The Washington Post last week to join an Internet-based news organization in Washington, D.C. They are the most prominent journalists to have joined the gradual migration from newsprint to the Web since Michael Kinsley started Slate. There is, of course, no stampede to […]

  • November 19, 2006--The Zigzag of Politics

    There are many theories of how shifting involvements among generations might create a cycle in politics lasting thirty or forty years — periods during which public purpose and private interests would alternate in dominating the agenda. Ralph Waldo Emerson had such a theory. So did Henry Adams. So do Albert Hirschman and Arthur Schlesinger Jr., […]

  • November 12, 2006--The World is What?

    Popular books in recent years have offered some striking vocabulary for talking about the changes wrought by technological advance: The Death of Distance, The Weightless World, The Invisible Continent, and, most famously, Thomas Friedman’s best-seller, The World Is Flat. (“…[I]t is now possible,” wrote Friedman, “for more people than ever to collaborate and compete in […]

  • November 5, 2006--The Light Gray Curse

    So Harvard University has taken away Andrei Shleifer’s endowed chair and its privileges — stripped him of his epaulets, in effect. Any day now, the Becker Center on Chicago Price Theory at the University of Chicago, too, will have to do the same, remove the Whipple V.N. Jones Professorship from in front of Shleifer’s name […]

  • October 29, 2006--CSI: Economics

    A friend asked at lunch the other day what I thought accounted for the phenomenal success of  Freakonomics. A good question. The book appeared in April 2005; only last week did it fall off The New York Times best seller list for the first time. It has sold more the 2 million copies in the […]

  • October 22, 2006--Value Added

    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 Trygve Haavelmo won in 1989, New York Times economics columnist Peter Passell polled senior economists to write a memorable column about the speculation that had taken place on the eve […]

  • October 15, 2006--The Realist

    When economists gathered in 2001 at Columbia University to honor Edmund Phelps with a festschrift, it was a celebratory conference. The truly remarkable thing was the temperamental diversity of the cast of characters. Paul Samuelson gave the opening talk. Robert Lucas presided over one series of papers, Robert Solow over another. Thomas Sargent and Michael […]

  • October 8, 2006--Two Models for Newspapers

    The newspaper industry has been experiencing a series of profound technological shocks, especially in America. Alternatives venues for advertising have proliferated. So have means of delivering the news, from broadcast to the Internet to giveaways. Newspaper profitability has sagged as a result. Share prices have fallen.  Proud old families have sold their birthrights, giving rise […]

  • October 1, 2006--Separatism, Defeated

    College students have returned to the classroom. Still selling briskly, at least in Cambridge, Mass., is “The Puritan Dilemma,” Edmund S. Morgan’s short and highly readable biography of John Winthrop.  Nearly fifty years after Morgan wrote it, the story of the first governor of the Massachusetts Bay Colony, the man who declared in a famous […]

  • September 24, 2006--How to Fly a Helicopter and Other Useful Skills

    When I was a boy, a “Butter and Egg” man lived down the street in our suburban village outside Chicago. Our fathers called him that, even though the exchange on which he traded commodity futures had, in his grandfather’s day (in 1919), renamed itself the Chicago Mercantile Exchange.  His family was not conspicuously well-to-do, even […]

  • September 17, 2006--A Cautionary Tale

    It was a somber August day in 1995 when Fischer Black died of cancer. He was 57 — not so much an athlete dying young (“Eyes the shady night has shut/Cannot see the record cut,” A.E. Houseman) as an explorer engaged in a fruitless search for El Dorado. Black was a general partner at Goldman […]

  • September 10, 2006--A Story with Everything but an Ending

    It’s a commonplace in science that we care about the last word, not the first.  Once a puzzle has been recognized, all kinds of solutions are proposed: conjectures, speculations, proofs clumsy or flawed. Many are useful. Some come tantalizingly close.  Then someone finally poses the problem with sufficient clarity, and somebody else solves with sufficient […]

  • September 3, 2006--Boston and New York

    Driving back to Boston from the Midwest, I am always struck by the extent to which geography is destiny — specifically, by the inevitability of the victory of New York over Boston in so many contests. Is Boston’s triumph over New York equally inevitable, at least in certain other respects? I think perhaps it is […]

  • August 13, 2006--Supply-side Economics at 25

    When I bought some stamps at the post office the other day, around the corner from former House Speaker Thomas P. (Tip) O’Neill Jr.’s old house, I asked for a sheet of Ronald Reagan commemoratives. “I have mixed feelings about Ronald Reagan,” I said to the man who sold me the stamps After all, the […]

  • August 6, 2006--The Most Happy Nation?

    Of all the national economic transformations that began during the 1980s — China, Brazil, Russia, India, Mexico — one of the most successful is one of the least attended.  It was a poor little island at the beginning of the decade, riven by centuries of colonization and neglect. Twenty-five years later, a survey by the […]

  • July 30, 2006--Gauging the Costs of the War

    Like a lot of Americans this week, I have been reading Thomas Ricks’ Fiasco: The American Military Adventure in Iraq. Ricks is chief Pentagon correspondent of The Washington Post. Two lengthy excerpts that appeared in the paper last week helped catapult his book to the top of the best-seller lists. His first-paragraph summary of the […]

  • July 23, 2006--Breakdown!

    People in Boston are talking about the Big Dig.  Many of them have been inconvenienced by the closing of one portion of the extensive tunnel system, which occurred after several concrete roof panels fell on a car at 11 P.M. on July 10, killing a woman on her way to the airport (but miraculously sparing […]

  • July 16, 2006--At the Summer Institute

    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 over three weeks to approximately 1400 attendees from around the world during the NBER’s annual conclave. Thus the […]

  • July 9, 2006--The $2 Billion Men

    Ever wonder how Chicago got to be the city that it is today?  Not because it’s situated near O’Hare, the busiest airport in the world. Nor because the Union Station is located on what used to be the edge of town. Chicago started out where it did because it marks the single point at which […]

  • July 2, 2006--Would You Like a Belt with Those Suspenders?

    I’ve been reading the annual report of the Bank for International Settlements.  Economic Principals generally steers away from international economics, since there are plenty of excellent professional journalists who cover the field. This is one newspaper beat that isn’t understaffed. But there’s always something so reassuring about the BIS report, whose appearance coincides with the […]

  • June 25, 2006--The Best Economics Columnist You’ve Never Heard Of

    Slate, the online magazine, has been celebrating the tenth anniversary of its founding. I’ve been reading it since Day One. Only a couple of years ago did I throw out the umbrella they sent me as a paid subscriber, during the brief interval in which they charged $19.95 for access. (Not long after that, I […]

  • June 18, 2006--Nine Different Ways to Make a Living

    “Overcoming what we intuitively ‘know’ requires disciplined analysis.”  That is the underlying strategy of Yale Law School professor Yochai Benkler’s long-awaited book about property and production — everything from the highly-proprietary organizations to which some producers devote their working lives to the relatively open commercial systems that are much more common to the communities of […]

  • June 11, 2006--Choosing the Right Pond

    “Out of His League,” was the headline on the Financial Time’s May 14 post-mortem on Lawrence Summers’ tumultuous five-year presidency of Harvard University. There may be no better way to put it.  The lengthy FT article (subscription required) was the first of what will surely be many re-assessments designed to put to rest the canard […]

  • June 4, 2006--On Re-inventing the Public Realm

    As Harvard University gathers for its graduation ceremonies this week, an eight-member committee of its Faculty of Arts and Sciences and their dean are still wrestling with the question of what if anything to do about its errant economics professor Andrei Shleifer. He has announced that he intends to return from leave to teach next […]

  • May 28, 2006--That People are the Same and Different

    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, […]

  • May 21, 2006--When Auction Theory Was Put to Work

    What has been the most single exciting province of applied economics these last dozen years?  Auction engineering, probably. What developments in finance were to the ’60s and ’70s, auction theory was to the late ’70s and ’80s. And when the ’90s came along, economists were ready. It wasn’t just the nations of the former Soviet […]

  • May 14, 2006--Stuff, Fluff and Tristram Shandy

    Towards the end of The Economics of Attention: Style and Substance in the Age of Information, Richard A. Lanham relates the circumstances in which, as a young man, he unwittingly tumbled on the topic of his life’s work. Two doors down from where I grew up, the family had a magnificent 1934 Dietrich-bodied Packard, a […]

  • May 7, 2006--Broader, Deeper

    It was a big step last week when the executive committee of the American Economic Association, meeting in Chicago, authorized the creation of four new topical journals. For the first time since the American Economic Review (AER) was established in 1911, the dominant association in North America (and, at least for a while longer, in […]

  • April 30, 2006--Hail and Farewell

    It is always good to learn that some new citizen has joined the ranks of economic journalism, or, alternatively, that one who seemed to have gone away has produced a fine new piece of work — especially in view of the fact that someone is always permanently leaving the scene. Naturally I rejoice as well […]

  • April 23, 2006--Back To the Future?

    A century after the devastating San Francisco earthquake, are there lessons from that city’s remarkable revival that might be useful to New Orleans today? There are, according to Mason Gaffney, professor of economics at the University of California at Riverside. San Francisco, 1907 to 1930, was a case study in born-again disaster recovery, he says […]

  • April 16, 2006--In Which, At Last, We Meet, Perhaps, Andrei Shleifer’s Evil Twin

    Missing in the controversy over Harvard’s Russia scandal has been any attempt to explain, much less place a favorable interpretation upon, the actions of its two principals, Andrei Shleifer and Lawrence Summers. It’s missing because none of their many friends and allies has come publicly to their defense. They grumble instead among themselves about how […]

  • April 9, 2006--Hjalmar Horace Greeley Schacht and Other Citizens of the Twentieth Century

    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 […]

  • April 2, 2006--A Case of Protesting Too Much

    A lot of finger-pointing is going on amid the bitter disappointments stemming from the US invasion of Iraq. Everyone has a favorite special interest group to blame for the war. Political philosopher Francis Fukuyama, in America at the Crossroads, cites the confederation of intellectuals and public policy entrepreneurs known as neoconservatives. Film-maker George Clooney, in […]

  • March 26, 2006--Secrets of Silicon Valley

    If you look carefully on the back way into Stanford University, you can still see the barn on Stock Farm Road that is all that remains of the racetrack where, in 1878, Eadweard Muybridge invented the motion picture. The new technology had its beginnings in an argument between rich men who owned race horses, East […]

  • March 19, 2006--The Turbulent World of News

    This week marks the beginning of Economic Principals’s fifth year as a Web-based weekly. Its online incarnation appeared seven weeks after The Boston Globe unexpectedly closed down the newspaper column. I was able to continue covering economics thanks to Laughing Squid, Dreamweaver and a great deal of help from a pair of friends. Richard Harrington […]

  • March 5, 2006--Gangsta-nomics

    Clarifying the impact of Harvard University’s Russia scandal and the Andrei Shleifer/Lawrence Summers affair on the economics profession (generally) and on Harvard (in particular) will take years. The outlines of one mechanism, however, already can be discerned. Tracing its workings through offers clues to what may be the controversy’s ultimate resolution. Just as opening the […]

  • February 26, 2006--Those Three Weeks in March

    So Larry Summers has resigned the Harvard presidency, pretty much (though not exactly) as predicted. But the story of Harvard’s failed Russia project and its lengthy aftermath only gets more curious. In most newspaper accounts, little was made of the scandal and Summers’ long-time mentoring and presumed protection of the man at its center, Harvard […]

  • February 19, 2006--Big Box Ecology

    I remember exactly when I started going to the warehouse club. It was to buy an air-conditioner. Sure enough, the machine was cheap and well-made (in Korea), and soon I was hooked on Costco. For a time, I told myself that I liked the enormous store — a so-called “big box” outlet in a giant […]

  • February 12, 2006--Warming Up for Life

    David Colander is a member of a rare and valuable tribe — an insider to economics who speaks clearly and introspectively to outsiders about what the insiders are doing.  As the author of several textbooks, the Middlebury College professor has thought deeply about what teaching economics reveals about its research enterprise — that is, about […]

  • February 5, 2006--The Annals of Evil: From One Extreme to the Other, with Pretty Good Results

    That didn’t take long. After a decade of astonishing growth — from zero to $10 billion annual revenues in just ten years — Google has begun to do a little bit of evil in the world. That is, the idyllic situation described by CEO Eric Schmidt a couple of years ago obtains no longer. Google […]

  • January 29, 2006--When the Watchdog Doesn’t Bark

    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 […]

  • January 22, 2006--The Tick-Tock

    Should Harvard University president Lawrence Summers travel this week to the World Economic Forum in Davos, Switzerland, as he usually does, he’ll find that the hottest item in the snowy little Alpine village is the international edition of Institutional Investor — the one with the cover story, “How Harvard Lost Russia: The inside story of […]

  • January 15, 2006--What Has Changed in Economics?

    When the American Economic Association met in New York City in December 1965, the sessions were dominated by an interest in the economics of knowledge. As president-elect, Princeton’s Fritz Machlup sought to showcase the latest work in the field that interested him most deeply: Zvi Griliches and Dale Jorgenson and Edward Denison on the measurement […]

  • January 8, 2006--What Next for “The Quiet Revolution?”

    There is an image, somewhat faded now, of how in the course of the 20th century the rough equality of the sexes was achieved. Starting in the years before 1900, a relative handful of women went to college. Then as suffragettes, their children marched and won the right to vote.  And all the rest followed […]

  • January 1, 2006--If You Believe This… (A Litmus Test for Credulity)

    Among those who work for newspapers, the inevitability of bias is a widely acknowledged problem. News reporters bring all sorts of prior convictions to their work. The job of editors is to strive to correct for bias and minimize its effects. Editors hire reliable and imaginative reporters (within parameters that they and their publishers set […]

  • December 25, 2005--Down, Not Out

    To a certain strand of argument, the news last week from Dover, Pennsylvania, was a knockout blow. “Our conclusion today,” wrote US District Judge John E. Jones III of the Middle District of Pennsylvania, a Republican appointed by President Bush, “is that it is unconstitutional to teach Intelligent Design an alternative to evolution in a […]

  • December 18, 2005--Nobody’s Perfect

    The great promise of economics is that it enables us see things relatively whole. Sometimes, however, thanks to various blinders imposed by its methods, it presents a seriously distorted view of costs and benefits. Usually this has to do with leaving things out. Two cases in point arose last week. At the World Trade Organization […]

  • December 11, 2005--In Which Economics Enters a Period of Critical Self-Examination

      What’s behind the spate of public criticism of the work of a number of prominent applied economists? Some of the top names in the new generation — Caroline Hoxby of Harvard University, Steven Levitt of the University of Chicago, the research trio known as AJR, consisting of Daron Acemoglu, Simon Johnson (both of Massachusetts […]

  • December 4, 2005--On Post-Modern Corruption

    When Harvard University Professors Edward Glaeser and Claudia Goldin set out to write an introduction to a conference on the history of corruption and reform in the United States in a volume that will appear next year, they began by noting that conventional measures ranked the U.S. among the ten least corrupt countries in the […]

  • November 27, 2005--Remembering the Old Colony

    Ordinarily, when on the Wednesday before the American holiday of Thanksgiving, there appear in The Wall Street Journal a pair of editorials that have be reprinted on the same day every year since they were first written in 1961, I find it touching. “The Desolate Wilderness” quotes from the account of William Bradford, as recorded […]

  • November 20, 2005--New Kids on the Block

    Economic journalism in the English-speaking world is well off its all-time peaks. Walter Bagehot (1826-1877), Norman Angell (1872-1967), Oscar Hobson (1886-1961) are long gone. In the 1950s, general-interest magazines flourished, supporting writers such as Daniel Bell, Robert Heilbroner and John McDonald. But by the fourth quarter of the twentieth century, magazines were on the ropes, […]

  • November 13, 2005--Leading Indicator

    The arrival last month of Benjamin Friedman’s The Moral Consequences of Economic Growth immediately sent me back to have a look at his earlier book, Day of Reckoning, published in 1988.  After nearly twenty years, I wondered, what could be said about the way that book, with its chapter-head quotations from the books of Proverbs, […]

  • November 6, 2005--It’s Worth What You Pay For It

    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 […]

  • October 30, 2005--Feeling the Elephant, Coming to Blows

    Economists since Adam Smith have asserted that competition among schools is good for everyone but teachers — and probably good for teachers, too, since it broadens the market for their services. And almost everybody has a favorite example of effective competitive policy in education. Two of the most successful in the United States: The Morrill […]

  • October 23, 2005--Special Run-Amok Edition:

    The Fed, Columbia University and the New York Times President George W. Bush, under stress, is being pestered by the go-for-broke supply-siders among his backers to take an even bigger plunge than he did when be nominated White House Legal Counsel Harriet Miers to the Supreme Court. His candidate to succeed Alan Greenspan as chair […]

  • October 16, 2005--The Complementary Task

    Formal game theory burst upon the world in 1944 with the publication of John von Neumann and Oscar Morgenstern’s Theory of Games and Economic Behavior, more than 600 pages of rigorous and abstract mathematics designed to subject various fundamental economic problems to “a treatment different from that which they have found in the literature so […]

  • October 9, 2005--When the Wolf Is Real

    In the short history (and prehistory) of global warming, there have been three signal events so far.  The “energy crisis” of the 1970s, though mostly a false alarm, turned out to be a useful cautionary tale on many levels. It illustrated the immense complexity of environmental science and resource economics, and began the differentiation among […]

  • October 2, 2005--Fast Forward

    There’s a lot of commotion in newspaper offices around the world these days.  Publishers are laying off staff, experimenting boldly with the Internet.  Meanwhile, Yahoo’s infant News Division is hiring 30 columnists and a war correspondent. What’s the newspaper of the future going to look like?  Chances are that it will look a lot like […]

  • September 25, 2005--Reversal of Fortune?

    The risk with George Bush always was that good luck had made him somewhat reckless. (He was risk-prone enough to begin with.)  He won the Republican nomination on a flier and the White House on a bluff. He escaped what might have been a sharp recession with a series of well-timed tax cuts. Then success […]

  • September 18, 2005--Rooting for Leipzig

    Looking back at the history of the last thirty years, it is clear that there was no one correct way to open up a national economy to global markets in the late 20th century. Not Margaret Thatcher or Ronald Reagan or Lee Kwan Yew. Not Helmut Kohl or Willy Brandt or Francois Mitterand or Rajiv […]

  • September 11, 2005--In the Turbulence Lab

    Japan goes to the polls today, Germany next Sunday. Is it an accident that these two aging veterans of World War II, the second- and third-largest economies in the world after the United States, have been experiencing a certain degree of stagnation? After the war, each cleared away the wreckage of defeat, brought forth a […]

  • September 4, 2005--Wanniski-ism, RIP

    Jude Wanniski died last week, at 69, of a heart attack. He was best known to the public for his 1978 book, The Way the World Works, which helped build support for the election of Ronald Reagan in 1980. Among economic policy veterans, he was better remembered for his “Two Santa Claus” theory. So it […]

  • August 28, 2005--The Riddle of August

    Why do Americans work so much more than West Europeans? A couple of years ago, Arizona State University professor Edward C. Prescott noted that a substantial turnabout had taken place.  Until the early 1970s, Europeans worked as hard or harder than their American counterparts.  Now they work substantially less.  Increases in holidays and vacations account […]

  • August 21, 2005--The Virtual Corridor

    It was just ten years ago this month that Netscape had its initial public offering. Remember the vague feeling of anticipation, of not quite knowing what would happen next? The browser turned “online” into a household word signifying massive economic change.  Now Google, another middleware giant, is raising $4 billion in new money to extend […]

  • August 14, 2005--Who Wants to Know? (Or, Why This Is Not a Blog)

    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 […]

  • August 7, 2005--Andrei and Rafael

    The last great financial scandal of the 1990s wrapped up in court last week when Harvard University agreed to pay the US government $26.5 million to settle charges that its star economics professor Andrei Shliefer had sought to gain a personal fortune while leading Harvard’s government-sponsored mission to Moscow The settlement put an end to […]

  • July 31, 2005--The Great Can-Opener

    One of these days, some empirically-minded political economist is going to assert that the great turn towards markets that occurred around the world during the 1970s and 1980s can best be understood as a relative price phenomenon, a matter of taxes and prices — the cost of collective provision of certain goods having become too […]

  • July 24, 2005--Front-Runner for the Fed?

    Events last week shed some light on the way George Bush makes decisions about appointments.  For an opening on the Supreme Court, he interviewed five candidates, asking them about everything from the hardest decision they ever made to their exercise regimes. (To one jogger he recommended more cross-training.) And in the end, he chose John […]

  • July 17, 2005--Up in Michigan

    When Economic Principals began in 1983 as a weekly newspaper column, its custom was to take no breaks during the year.  There were too many stories to be covered. The opportunity was too valuable to waste. The practice continued as a habit after EP left the newspaper environment in 2002 and migrated to the Web […]

  • July 10, 2005--The Best Kind of Help

    It’s a fact, but not yet a commonplace, that the last twenty five years have seen events as epochal as any since the Great Depression and World War II — most notably, the collapse of the century-long experiment with government monopolies known as communism, and the beginning of a worldwide experiment with market principles. Just […]

  • July 3, 2005--Highways for Africa?

    New York Times columnist David Brooks is withering in his scorn for Jeffrey Sachs, the globe-trotting advocate for the world’s poor. Sachs, a Columbia University economist and the author of The End of Poverty: Economic Possibilities for Our Times is “a child of the French Enlightenment,” says Brooks. (Not just the Enlightenment, mind you, but […]

  • June 26, 2005--A Dinner Party is Not a Revolution

    At the beginning of Winesburg, Ohio Sherwood Anderson conjures up a writer with a theory of truth — “That in the beginning when the world was young there were a great many thoughts but no such thing as a truth.  Man made the truths himself and each truth was a composite of a great many […]

  • June 19, 2005--What Happens Next?

    So Harvard University and economist Andrei Shleifer have agreed to pay monetary damages to settle the government civil suit against them. US District Court Judge Douglas Woodlock last Monday gave the parties sixty days to sign the final pact, agree on press releases, cut the checks, etc That means the reins at last are fully […]

  • June 12, 2005--Third Summer in Iraq

    Last week, Hillary Rodham Clinton seemed to signal a long-range plan to campaign against the Bush on its fiscal imbalances, deficits, poor economic performance. Speaking at a fund-raiser for her senatorial re-election campaign next year, Mrs. Clinton lambasted the Bush administration for “giving up fiscal sovereignty” to the Chinese government in Beijing. The Clinton administration […]

  • June 5, 2005--The Ever-Present Threat

    (Note:  When a system upgrade at misfired, Economic Principals was unable to publish its usual email edition.) A remarkable fourth act in the history of The Washington Post has been overshadowed momentarily by the wave of Watergate nostalgia and introspection occasioned by the identification of the previously-mysterious player known as Deep Throat. This fourth […]

  • May 29, 2005--Adult on Board

    As the US government’s case against Harvard University for the collapse of its Russia Project under economist Andrei Shleifer winds towards its suspenseful conclusion, one question more than any other has taken on additional interest. Who has oversight of the legal strategy for the seven-member corporation that rules the university — the President and Fellows […]

  • May 22, 2005--Paul Samuelson, Columnist

    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 around the world trooped to the Copley Plaza Hotel for an afternoon of panel discussions among his former students […]

  • May 15, 2005--A Bigfoot Enters the Harvard Story

      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 […]

  • May 8, 2005--Down, Not Out

    There is a lot of gloom these days in the old American city of Boston. The loss, in the space of a few years in the early 1990s, of Massachusetts’ prosperous minicomputer industry (Digital Equipment, Data General, Prime, Wang) to Microsoft and Intel and their clones was only the beginning. Next The Boston Globe was […]

  • May 1, 2005--How to Fight AIDS in Africa

    The infectious disease expert at the center of the latest Harvard controversy involving president Lawrence Summers is a deeply interesting person in her own right. Members of the intricately-linked public health community combating AIDS worldwide are subject to a continuous push-and-pull of appraisal and evaluation. In that firmament, Phyllis Kanki is a star — a […]

  • April 24, 2005--The Man Who Succeeded Gerschenkron

    Anyone who hasn’t read The Fly Swatter: How My Grandfather Made His Way in the World, Nicholas Dawidoff’s account of the life of Alexander Gerschenkron, the great 20th-century scholar of economic development, is missing a good thing. Anyone who doesn’t know about Daron Acemoglu is missing a good thing, too. There will be many fewer […]

  • April 17, 2005--Breaking the Other Monopoly

    It is intuitively obvious that the late John Paul II contributed greatly to the peaceful collapse of communism in the last quarter of the 20th century, but how? In the mountain of memorial appreciations written about the Polish priest who became pope, a column by Washington Post columnist Anne Applebaum stood out. As the Warsaw […]

  • April 10, 2005--The Best (Macro)economics Columnist There Is

    A good newspaper column puts a human face on a truth-seeking collectivity whose organizing principle otherwise may be too fragmentary to easily grasp. Such a lot of bright people are writing columns about business and economic matters these days. Among them are Thomas Friedman and Paul Krugman in the New York Times; Homan Jenkins, Alan […]

  • April 3, 2005--Housekeeping Matters

    Why does Economic Principals write so often about Harvard’s failed Russia Project in the 1990s?  Why not write more frequently about quirky subjects that don’t get noticed much? The answer, of course, is that the Russia Project is a quirky subject that doesn’t get noticed much. Why it should be neglected is itself a great […]

  • March 27, 2005--A Theory of the Harvard Mess

    The storm that has erupted at Harvard University turns out to have been building for some time — for three-and-a-half-years, or precisely the period that economist Lawrence H. Summers has been president. Heretofore Economic Principals has stuck to covering just one neglected aspect of Summers’ presidency, the government lawsuit over Harvard’s failed Russia project in […]

  • March 20, 2005--Dangerous Games

    Harvard’s Faculty of Arts and Sciences voted narrowly last week to censure President Lawrence Summers. An unusually rich account of what was said at the meeting appeared soon after on Harvard Magazine’s Website. Economics professor Benjamin Friedman was described as making what seemed to me the wisest remarks. In his experience, Friedman said, he and […]

  • March 13, 2005--The Two Traditions

    It is now generally recognized that President Bush has made a major mistake is his attempt to “personalize” Social Security by adding individual accounts.  The Washington Post counted heads in the Senate and reported on March 10 that the measure probably wouldn’t come to a vote. Not enough attention has been paid to why Bush […]

  • February 27, 2005--Mr. Shoot-the-Moon

    The flap over the telephone conversations with the then presidential aspirant which were tape-recorded in 1998-2000 by political consultant Doug Wead has been under-appreciated. It was reported mostly in The New York Times. The story went away almost as quickly as it arrived — before its underlying significance to understanding the man in the White […]

  • February 20, 2005--Nature, Nurture and Politics

    Settlement talks again have broken down among lawyers for Harvard University, its economics professor Andrei Shleifer and US attorneys, as they prepare to address the question of what had been gained and what was lost when Harvard’s government-sponsored mission to Moscow collapsed in the mid-1990s amid disclosure of Shleifer’s many financial conflicts of interest. A […]

  • February 13, 2005--On Gingrichism

    The conventional wisdom among those who identify themselves as “progressives,” “liberals” or simply “conservative Democrats” is that something has gone profoundly wrong with America. Their attention is riveted on religious fundamentalists who are at odds with evolution, social conservatives worried about abortion and homosexuality, fiscal radicals trying to roll back the welfare state, global warriors […]

  • February 6, 2005--The Caretaker’s Hand

    One of the proudest names in American industry quietly entered the history books last week when, just shy of its 130th birthday, AT&T Corp. agreed to be acquired by one of its offspring, SBC Communications Inc. of San Antonio, Texas, for the trifling sum of $16 billion (In contrast, Procter & Gamble paid $57 billion […]

  • January 30, 2005--Why the Hurry?

    To understand the itch behind the Republican Party’s attempt to replace the Social Security Administration with an investment-based system, it is necessary to recognize that the single most powerful voice advocating the creation of “personal” accounts has not been George W. Bush channeling Barry Goldwater, or the PR battalions of the securities industry (though these […]

  • January 23, 2005--Writing History

    So the idea that a strange new Cold War is underway has become soaring US presidential rhetoric, on its way to becoming boilerplate.  George W. Bush’s second inaugural address last week was all about seeking to write history, to engage in periodization. “For a half century, Americans defended our own freedom by standing watch on […]

  • January 16, 2005--Who Is Minding the Store?

    During the first few days of the New Year, the US government’s lawsuit against Harvard University and its economics professor Andrei Shleifer had inched forward in the direction of a grinding damages trial. The case, which has to do with the collapse of Harvard’s mission to Moscow amid charges of corruption, is an embarrassing hangover […]

  • January 9, 2005--“What Can You Tell Me That I Don’t Already Know?”

    PHILADELPHIA — When historians look back on economics in the last quarter of the 20th century, one of its more striking features will be the explosion in the quantity and quality of empirical work that was done. It’s not that economics became less mathematical. It didn’t. But the advent of the desk-top computer made it […]

  • January 2, 2005--Covering the Social Security Debate

    In ordinary times, the story might have been found in some other part of the newspaper: on page one, perhaps; or in a review of a novel by John Le Carré. Journalists visiting the US Naval Base at Guantánamo, Cuba, in which several hundred prisoners are incarcerated, most of them from Afghanistan and Iraq, were […]

  • December 26, 2004--Same As It Ever Was: A Report to Readers

    Economic Principals started life as a newspaper column. A little less than three years ago it became an on-line weekly. If EP were an airplane, these weekly reports would be its wings. Its engine, however, the thing that makes it go, is no different on the Web from what it was during newspaper days — […]

  • December 19, 2004--Second Time Farce?

    Social Security in the United States is a program against old-age poverty. It provides insurance benefits to others, too: workers who become disabled, survivors of workers who die. But mostly, by guaranteeing something between $12,000 and $20,000 a year to every participant, depending on their lifetime earnings, it’s a way of insuring that no elderly […]

  • December 5, 2004--The “Assigned To” Trial

    It was in 1974 that Harvard University created the Harvard Institute for International Development.  Since 1947, the university’s little Development Advisory Service (the brainchild of economist Edward Mason) had been providing relatively disinterested macroeconomic advice on development projects to foreign governments, starting with Pakistan soon after its partition from India. Its small corps of development […]

  • November 28, 2004--Gingering the Merchants of Life

    Malaria is a devastating disease. The mosquito-borne parasite that causes it has been eradicated in North America and Europe through a combination of swamp drainage and DDT. But slow economic development elsewhere in the world, plus a steadily growing resistance to insecticides and to drugs used to treat the disease, means that malaria is still […]

  • November 21, 2004--Two Houses, Alike in Dignity…

    The spectacle of four American presidents and one presumptive candidate for the office gathering last week in Little Rock, Arkansas, to open Bill Clinton’s presidential library should be enough to cheer all but the United States’ most dour European friends. Almost everyone has seen the photographs by now:  Jimmy Carter, George H.W. Bush, Bill Clinton, […]

  • November 14, 2004--Rabbits Out of Hats?

    Might George Bush succeed in pulling off some sort of significant tax reform in his second term? Conceivably even restore balance to the Social Security system before leaving office? Several different avenues may be open, thanks to the peculiar geometry of the Congress. But whichever path the president takes will involve a fundamental assertion of […]

  • November 12, 2004--“A Narrow and Technical Issue”

    Did the customary conflict-of-interest provisions apply to Harvard economist Andrei Shleifer when, under contract to the U.S. government in the mid-1990s, the young professor led Harvard’s mission to Moscow? After a three-day trial last week, a jury took barely more than two hours to decide that indeed they did. With the verdict, the government’s case […]

  • November 7, 2004--Eighteen Months

    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 gone down in the history books as a latter-day Woodrow Wilson — a man who, in going to war in defense of democracy, had done the right thing, even though the […]

  • October 31, 2004--The Situation in Iraq

    The political views that occasionally appear in this weekly are the hangover of having spent many years in and around newspapers.  They are like one of those statistical series (of which there are many) that someone once thought relevant, that you just go on collecting, because there is a long baseline and it doesn’t cost […]

  • October 24, 2004--Confessions of a Swing Voter

    There hasn’t been enough long-term thinking about the significance of the US election. The really interesting question is what will happen next.  Not now, but next — four years from November 2.    If President Bush is re-elected, then Hillary Rodham Clinton might very well be the Democratic nominee in 2008.  After eight years of […]

  • October 17, 2004--A Day in the Life of Ed Prescott

    Back in 1968, molecular biologist James D. Watson electrified a notable portion of the reading public with a memoir he called The Double Helix: Being a Personal Account of the Structure of DNA, a Major Scientific Advance Which Led to the Award of a Nobel Prize. The book was remarkable not just for the candor […]

  • October 10, 2004--And the Winner Is…

    The Nobel Prize in economics will be announced tomorrow, Monday, October 11, just before lunch in Stockholm. North Americans will wake up to the radio news. Why does the identity of the prizewinner(s) always come as a surprise?  More largely, what is it that really takes place when the Royal Swedish Academy of Sciences awards […]

  • October 3, 2004--The Sea Otter, and Other Cautionary Tales

    The Enron debacle continues to be a real mystery.  Sixteen years from the purchase of a little gas transmission pipeline company to become seventh largest American corporation among the Fortune 500? Some $100 billion in revenues?  How did that company fool so many people so completely?  How did things go so wrong? An intriguing answer […]

  • September 26, 2004--Who Cares About the Working Poor?

    I have been trying to imagine a world in which David Shipler’s new book, The Working Poor: Invisible in America would enjoy success comparable to that of Michael Harrington’s 1962 classic, The Other America.  It was easier to stir voter interest in the problem of poverty in the 1960s. The mood was different then, and […]

  • September 19, 2004--When the Wolf Is Real

    It is a familiar story.  Experts warn that the sky is falling.  The public seems to ignore their alarms.  The experts despair. Two new pieces of survey research arrived last week, each designed to throw some light on the complex interplay between expert knowledge and public opinion. Mainly, they succeed in illuminating the limits of […]

  • September 12, 2004--Meet the Siloviki

    Half a world away from Moscow and the dreadful sorrows of the North Ossetian city of Beslan, U.S. District Court Judge Douglas P. Woodlock said last Thursday that he wanted a short, tightly-focused trial on the failure of Harvard University’s mission to Moscow in the 1990s — perhaps a few testimonials by experts for a […]

  • September 5, 2004--A Walk on the Beach

    It was another summer together on Cape Cod. Two old friends were walking on the beach, deep in conversation, their wives and children momentarily left behind. One was Andrei Shleifer, Harvard professor and chief outside economic adviser to the Russian government in the mid-1990s.  The other was Lawrence Summers, former Harvard professor, second in command […]

  • August 29, 2004--The Really Interesting Question

    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 years […]

  • August 22, 2004--Unraveling the Greenhouse Riddle

    “Fahrenheit 911″ may be the dominant campaign movie of 2004, but several other overtly political films have been making the rounds as well. My favorite is “The Day After Tomorrow,” in which a climatologist tries to figure out a way to save the world from abrupt global warming. How abrupt?  It happens over the weekend, […]

  • August 15, 2004--Push Me, Pull You?

    I stopped by a forum on global drug pricing for biotech and pharmaceutical company executives at Massachusetts Institute of Technology last week — “Large Molecules, Large Dreams,” it was called. Beneath the usual bubbling excitement of the industry, there was an unmistakable sense of siege. In Nevada the day before, John Kerry had been campaigning […]

  • August 8, 2004--Infectious Good

    Ten years ago, Robert Frank, Thomas Gilovich and Dennis Regan published “Does Studying Economics Inhibit Cooperation?,” a famous paper in the Journal of Economic Perspectives. They surveyed previous work on the topic, did some of their own, and concluded that, yes, the likelihood that people would make selfish choices increased with their exposure to economics. […]

  • August 1, 2004--Summer Housekeeping

    A conference on damages in the government’s suit against Harvard University and one of its star economists, originally slated for July 19, has been rescheduled for September 9. US District Court Judge Douglas Woodlock presumably will ask all parties to file briefs on what they think they ought to be required to pay — Harvard […]

  • July 25, 2004--Strategic Thinking for Democrats

    With barely three months to go, it is difficult to form an expectation about the outcome of the election. Like everybody else, I talk to my political friends.  I read the newspapers. I follow the polls. I look at the maps of the battleground states. I keep coming back to the Fair Model of presidential elections. […]

  • July 18, 2004--A World Without Shims?

    A shim is a piece of stone, wood or metal, usually tapered and used as a filler or leveler between components that otherwise wouldn’t fit together smoothly. You see shims in the stone walls of old cathedrals, between pieces of furniture and the floor, and, if you know where to look, in the Boeing 727. […]

  • July 11, 2004--Remembering Michael Kelly

    Now that government of Iraq has been handed back to its citizens, now that a serious attempt to ratchet down the level of violence finally has begun, it is ironic to recall that the single most forceful journalistic voice for the US intervention should have been stilled by death in the first weeks of the […]

  • July 4, 2004--Judge Finds Against Shleifer, Hay and Harvard

    The US government’s long-running wrangle with economist Andrei Shleifer and Harvard University over Harvard’s ill-fated Russia Project in the 1990s was resolved last week, in the government’s favor. A Federal judge ruled that, by quietly investing on their own accounts while advising the Russian government, Harvard professor Shleifer and his Moscow-based assistant Jonathan Hay had […]

  • June 27, 2004--1932, 1968 and 1980

    The remarkable thing about Bill Clinton’s “My Life” is the short shrift it gives to what happened in America in 1980. Considering the impact of Franklin Delano Roosevelt on the formation of Clinton’s own view of politics (long before he ever heard of John F. Kennedy), you would have thought he might have given more […]

  • June 20, 2004--A Short History of America’s Foreign Wars

    How can the American presidential contest be so close, given that so much has happened since the tie election of 2000? Leaving aside the economy for this week, the answer is there are two competing views of the Bush administration’s response to 9/11. One interpretation sees the U.S. campaign in Iraq as being personal, visceral, […]

  • June 13, 2004--The Birds of Berlin

    BERLIN — “Berlin, more than almost any other great city, is a city of birds.” So wrote Otto Friedrich in “Before the Deluge,” the luminous portrait of Berlin in the 1920s that he published in 1972. “One hears not only sparrows chirping in the midst of traffic on the Kürfurstendamm but wood thrushes singing in […]

  • June 6, 2004--After Europe’s Civil Wars

    Sixty years after the Allied landing at Normandy, Europe’s two great wars are finally receding from the foreground of the living past. All but the youngest living veterans have entered their eighties. History and memory are changing in the process, in some of the same ways as did those of America’s Civil War. It’s still […]

  • May 30, 2004--A Subtle National Obsession

    BERLIN — Hidden in plain sight here is the splendor and vigor of die deutsche Sprache. It seems fair to say that the German language is a subtle national obsession. Newspapers flourish, even when they are not profitable. Magazines thrive. The market for books is one of the most dense in the world. Television stations […]

  • May 23, 2004--To Be or Not to Be?

    BERLIN — Niall Ferguson was here last week, promoting his latest book, Colossus: The Price of America’s Empire. For those who don’t know him, Ferguson (whose first name is pronounced Neal) published three very well-regarded books in his first ten years out of Oxford: Paper and Iron: Hamburg Business and German Politics in the Era […]

  • May 16, 2004--The Shifting Ideology of Adventure

    BERLIN — It was here that the Society for Space Travel was founded in 1927, by a trio of enthusiastic kids and a visionary professor interested in the possibilities of liquid fuels. As  Otto Friedrich tells it in Before The Deluge, “They gathered in an abandoned arsenal in the northern suburb of Reinickendorf, named its […]

  • May 9, 2004--A Forest Grows in Toulouse

    BERLIN — It was all Brahms and cheerful possibility here last week, as the fifteen nations of the European Union became The Twenty Five. Beleaguered Daimler-Chrysler Corp. flew the Berlin Philharmonic to Athens to perform in front of the Acropolis. Countless mayors trod bridges to their midpoints to shake hands with their counterparts from the […]

  • May 5, 2004--Abundance and Fragility

    A pair of very interesting books has appeared this month, examining the two sides of the coin of modern life. In The Birth of Plenty: How the Prosperity of the Modern World Was Created, William Bernstein seeks the wellsprings of industrial civilization and its accomplishments In  The Company of Strangers: A Natural History of Economic […]

  • April 18, 2004--Two Cities, Two Tales

    BERLIN — A great deal of attention has been paid in the last few years to the monumental new  Jewish Museum of Berlin, which opened empty in 1999, and filled up with exhibits two years later. The controversy is not only about the way Berlin remembers the millions who were murdered, and the way of […]

  • April 11, 2004--Open and Closed

    LONDON — Stepping suddenly into London from Berlin, certain differences are striking.  In Berlin, every bus stop and underground station equipped with a map of the neighborhood, often of the city itself. There are few public maps in London.  You can always buy an overpriced one from the newsagent, however.  Nor is it just knowledge […]

  • April 4, 2004--Guilty Pleasures: The News From Home

    BERLIN — The day last week that that a mistrial was declared in the epic trial of former Tyco International executives Dennis Kozlowksi and Mark Swartz, I happened to be reading the German papers. Not the news from Duesseldorf, where German judge had thrown out the criminal charges against the six Mannesmann directors who pocketed […]

  • April 1, 2004--The Bigger Dig

    The hardest thing I do these days is explaining to my European friends why the re-election of George W. Bush in the autumn still seems more likely than not, even though events of the last few weeks have made it clear what a hash the Bush Administration has made of its occupation of Iraq. It […]

  • March 28, 2004--In the Shadow of the Old Bundestag

    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 […]

  • March 21, 2004--The Spanish Mechanism

    BERLIN — George W. Bush may have done more than anything since the advent of a single currency to unify Europe. On the first anniversary of his brief war against Saddam Hussein, nearly every political conversation here threatens to get out of hand. ‘Old Monkey Face’ is what one of my German acquaintances calls the […]

  • March 14, 2004--Cold War? Yes, But…

    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 […]

  • March 7, 2004--Money Talks

    BERLIN — The eight-month election campaign has begun in the United States. What are the chances of forming a clear view of the long-run consequences of George W. Bush’s religiously-motivated doubts about the desirability of growing “spare parts” from manufactured human embryos? The news last week was that the White House Personnel Office had dismissed […]

  • March 6, 2004--Don’t Just Do Something

    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 March 6, they have basic two options. The […]

  • February 29, 2004--The Short Run and the Long Run

    BERLIN — It is odd to follow American politics at a distance. The instrumentation is the same — what the candidates say, what people write in the newspapers, discussions with people living in different parts of the country. But it is like watching events unfold through the other end of a spyglass. The daily stories […]

  • February 22, 2004--Two Failed Walls

    BERLIN — There was a gala dinner here last week before Hope M. Harrison’s lecture about the origins of the Berlin Wall in 1961. The chef of the American Academy in Berlin, Reinold Kegel, prepared a witty meal: first, Rostock fish stew with mussels, a typical East German dish; then, “Broiler,” baked chicken on a […]

  • February 15, 2004--Architect of the Public Household

    In Munich, not far from Max Weber Platz, at an outpost of the University of Munich’s Center for Economic Studies, is a conference room named for Richard Musgrave. If Weber was the most important German political economist during the first half of the 20th century (and he was), it was Musgrave who achieved that distinction […]

  • February 8, 2004--Mountain of Difficulties

    So the German government intends to sell 600 tons of its gold reserves — something like a sixth of its total holdings — over the next few years, in order to invest the proceeds in research projects of various sorts. Last week Chancellor Gerhard Schroeder endorsed the previously-announced plan. It is a potent symbol of […]

  • February 1, 2004--A Doktor in the Haus

    The talk of a certain stratum of society in Berlin these days is the German government’s plan to designate a handful of universities “elite” and supplement their budgets with an extra $60 million each annually — the equivalent of something like $1 billion in endowment funds, enough for each to hire a couple dozen new […]

  • January 25, 2004--A Short History of the Other MIT

    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 […]

  • January 18, 2004--The Color of the Flower

    You have to start somewhere. Traveling to Berlin last week to begin a five-month stay, I read a book about Albert Einstein — the circumstances in which he moved to Berlin in 1914, and those in which, 18 years later, he left — three weeks before Adolf Hitler became chancellor. “Take a good look,” he […]

  • January 11, 2004--Leading Indicator

    Eight years ago, when economists gathered in San Francisco for the annual meeting of the American Economic Association, the plenary lecture — properly speaking, the only lecture, given annually at the invitation of the incoming president — was presented by Martin Feldstein of Harvard University. He called for the privatization of Social Security.   And […]

  • December 28, 2003--Our Marshall

    This is not an age for statuary. As a rule, we honor not the doer but the deed. The Massachusetts Institute of Technology, which has done about as much to define our times as any other single institution, made this point long ago with a sly joke.   When chief architect W. Welles Bosworth in […]

  • December 21, 2003--Texas Against the World

    It’s been quite a year. The biggest change was the transformation in the political capital of George W. Bush. He began the year with a considerable reservoir of good will, both from the immensely difficult election of 2000 and the events of 9/11.   He ended it as a hard-core Texas loner trapped in a […]

  • December 14, 2003--Understanding Bob Bartley

    Robert L. Bartley died last week. He was a loving husband and father, a loyal employer, and something of a genius of a newspaperman. His proudest boast, that for 30 years he had run “the only editorial page in the country that actually sold newspapers,” was unconditionally true. For more than a million readers, it […]

  • December 7, 2003--Reality Check

    Like nearly everybody else I know, I read New York Times columnist Paul Krugman twice a week. He is overbearing. He needs to be the center of attention in whatever game he plays. But he’s also unusually brilliant – he possesses the ability to see things fresh, often before anybody else. He has done it […]

  • November 23, 2003--Detective Stories

    Towards the end of his life, the great historian of science Thomas S. Kuhn turned for pleasure to detective fiction. Having exhausted himself in the controversies that he had sparked about the growth of knowledge, the physicist-turned-philosopher explained in a late-in-life interview that he still enjoyed the unambiguous solution of a good mystery. As his […]

  • November 20, 2003--The Publisher

    “I remember them in tweed caps, wrapped in blankets on the first-class decks of ocean liners; or strolling along Fifth Avenue on Sunday mornings in their top-coats and hats from Locke; or in Hunterdon County in autumn with Faulkner down for the weekend. They lunched at ’21′ and dined at Chambord and the Colony. After […]

  • November 16, 2003--The Man Who Became Keynes

    In the late 70s, when the global economy seemed out of control, and the need for a figure of commanding authority to point the way was widely felt, the plaint was sometimes heard among economists and in the press, “We need a new Keynes!”   From the distance of 25 years, it is clear that even […]

  • October 26, 2003--The Conservation of Curiosity

    To have some idea of where we are going in this world, it is useful to have some sense of where we have been. It is one thing to assert that most prominent economists of the 20th century can be divided into three groups: the Generation of the Great Depression (and World War II); the […]

  • October 19, 2003--Boxing the Compass of News

    No journalistic accomplishment is more ephemeral than success in covering a highly competitive daily story. By its very nature, real news diffuses so rapidly that readers can’t keep track of who was responsible for the scoop. Editors remember, of course; at least they remember what they thought at the time. And afterwards, there are the […]

  • October 12, 2003--Not Your Father’s Nobel Prize

      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, […]

  • September 28, 2003--Something to Think About

    Nearly a hundred years ago, Andrew Carnegie contributed $10 million to start a fool-proof system of free pensions for college professors. The steel-magnate-turned-philanthropist’s reasoning was that faculty members would be less likely to preach revolution if they were confident they would be comfortable in their old age. Since then, Carnegie’s system has grown into Teachers […]

  • September 21, 2003--A Report to Readers

    It’s been 18 months since Economic Principals rolled out as a source of independent commentary about economics and economic journalism, and I wanted to offer readers a report. It seems fair to say that EP is moderate success. The site is not famous, but it is read — 7500 monthly visitors, nearly 2000 free email […]

  • September 14, 2003--The Bush Family’s Thirty-Year Adventure — and Our Own

    “I have spent my life trying to determine the extent of the influence of my father upon me, passing over the periods when I did my utmost to escape from it to dwell upon those when my mind was filled with the precepts I thought I had gleaned from him.” So wrote the great film-maker […]

  • September 7, 2003--How to Read a Newspaper

    A book about manufacturing may seem an odd place to begin a disquisition about how to read a newspaper, but I have long thought that among the most penetrating accounts I have ever read about how an industry actually works — any industry — is Eric von Hippel’s The Sources of Innovation. The hallmark of our […]

  • August 31, 2003--Five Years Later

    The Russian economy is booming again. It was just five years ago this month that its first frenzied post-communist expansion ended in a debt default that brought the world currency system to the brink of disaster. But its second, more orderly expansion has turned Russia into one of the few bright spots in the global […]

  • August 24, 2003--The Sea-Puss

    Ocean swimmers know the mechanics of a sea-puss. A submerged sandbar is formed by breaking waves. Closed at one end, it becomes an underwater dam — then, without warning, suddenly gives way. The penned-in water flows out to sea, a rip-tide carrying unwary swimmers with it. A situation that one moment seems monotonously predictable is […]

  • August 17, 2003--If the Cities Had Built the Airlines

      What went so spectacularly wrong in the northeast power grid that 50 million people did without power for nearly a day? The newspapers have gone to work discovering the truth, or a pretty good approximation of it. As usual, journalists will do a dandy job. Everyone seems to agree that there needs to be […]

  • August 10, 2003--What’s the Limit?

    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 — until, by accident, you see it a movie. Take “Seabiscuit,” for example. Director Gary Ross intersperses his otherwise-quite-riveting tale of a come-from-behind horse in the Great Depression with newsreel […]

  • August 3, 2003--Tell It Slant

    “Tell all the Truth, but tell it slant,” advised the poet Emily Dickinson. There’s a reason that the Defense Advanced Research Projects Agency does its funding quietly. Can you imagine how, at the height of the Vietnam War, the Senate would have reacted to a Pentagon scheme to render the US telephone system invulnerable to […]

  • July 27, 2003--Narrative Threads

    The aftermath of the stock market bubble of the late 1990s continues to work its way through the economy. The California recall election is the most recent example of the enormous harm to the social fabric. The Golden State was one of many states to overshoot its budget during those heady times — in its […]

  • July 20, 2003--A Very Short History of the Volunteer Army

    One of many intricately-related propositions about the capacity of American government that is being tested in Iraq these days has to do with the staying power of its all-volunteer army. Occupation duty is harder than charging north to capture Baghdad, after all — especially occupation duty under sporadic guerrilla fire. Complaints to news reporters may […]

  • July 13, 2003--Time, Gentlemen, Please

      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 your hair And sunlight settles on your breathing skin. What else can matter […]

  • July 6, 2003--“Conservation Reconsidered” — Reconsidered

    It was in 1967 that a little paper called “Conservation Reconsidered” appeared in the American Economic Review, sandwiched between contributions by Peter Diamond on stock markets and Charles Plott on majority voting, The author was John Krutilla, a research economist (Reed College, Harvard PhD in 1952) working for the Washington think-tank Resources for the Future. […]

  • June 22, 2003--How To Catch Up

    What to worry about in the world, economically speaking? At the top of most lists today would be Japan. The world’s second-largest economy has been mired in depression for a decade and shows few signs of resuming robust growth. Then comes sub-Saharan Africa, where many countries actually have been becoming steadily poorer for thirty years, […]

  • June 15, 2003--Why It Matters

    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, Times chairman and publisher Arthur Sulzberger Jr. Last week Sulzberger was giving interviews to deny that he had sacked executive editor Howell Raines and managing editor Gerald Boyd, or that […]

  • June 8, 2003--Call It News

    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 that have appeared in that paper during the period of crisis, all of them written by David Firestone, one of the paper’s beat reporters on tax policy. The first […]

  • June 1, 2003--How to Play It Straight

    Every June, another thousand or so economists receive their PhDs and go out into the world, there to impinge upon our consciousness to one degree or another, employing the measuring rod of money to learn things about the world that we have built. But first, of course, they must learn to impinge on one anothers’ […]

  • May 25, 2003--What Pendulums Do

    It’s been nearly thirty years since its stirrings reached my little corner of America and swept me up and carried me along — me and half my generation and most of the next. Nor, of course, was it just the United States whose political landscape was subsequently transformed by its swing. From Chile to Spain […]

  • May 18, 2003--The Name of the Moose

    When New York Times Co. chairman Arthur O. Sulzberger Jr. fired Boston Globe publisher Benjamin Taylor four years ago, little attention was paid to fact that Sulzberger was deposing one of the handful of persons in the Times organization who could pose a threat to him internally were he to get in trouble, given that […]

  • May 4, 2003--A Short History of the Clark Medal

    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 later in life, the […]

  • April 20, 2003--A New Meaning for S&L

    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 with the atom bombs, long-range bombers and radar. The doctrine of massive retaliation was designed to spare each […]

  • April 13, 2003--Spring Trading

    Springtime, and economic departments around the world are jockeying for position. They are hiring each other’s newly-minted PhDs, interesting young men and women who have come onto the job market for the first time. They are making offers to a relative handful of established senior faculty at competing institutions, inviting them to switch sides. They […]

  • April 6, 2003--Give Peace a Chance

    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 to estimate. Potential benefits are much harder to gauge. It is not easy to put a credible price tag […]

  • March 30, 2003--The Iraq Invasion in (An) Historical Perspective

    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 it is going easy. You don’t hear much these days from the Administration about Panama, as in “Iraq is just like Panama, only bigger and farther away.” The reference is to December 1989, […]

  • March 23, 2003--Fading Fast

    Among the American casualties of the war in Iraq may be the weekly newsmagazines —– Time, Newsweek and US News and World Report. They will be wounded by the action. The kind of summing-up and context-placing that for 75 years has been their bread and butter is increasingly superfluous in a world where many other […]

  • March 16, 2003--The Risk-Taker

    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, but more of a gambler than, say, any other member of his family. The merit of that view is clearer now than ever before — not just the impending war in Iraq, […]

  • March 9, 2003--Sorin, Rapped

    The president of the Game Theory Society knew he had a problem when the editor of one of the society’s flagship journals turned up last year as a signatory to a French-led petition urging a boycott of scientific institutions in Israel in protest of Israeli policy in Palestine. Campaigning for an international academic embargo of […]

  • March 2, 2003--Fathers and Sons

    There’s never been an American war quite like this one. With oil prices soaring and the economy seemingly fragile, it is striking just how greatly the situation resembles that of 1991, on the eve of the Gulf War. There are plenty of differences, of course, but the similarities are greater. One of these is likely […]

  • February 23, 2003--Searching for the “Sane Deep Self”

    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 for early strawberries, pruning fruit trees, cutting back berry bushes, setting out old clothes and otherwise getting ready for spring. By April we would be outdoors, on our hands and […]

  • February 16, 2003--Present at the Creation

    It was a good week for Tax Policy Theater. Federal Reserve Chairman Alan Greenspan was on Capitol Hill, taking issue with the Administration’s stated reason for seeking tax cuts, implicitly questioned its commitment to good fiscal housekeeping. That is, he leaned against the wind. Congress, meanwhile, was beating up in hearings on Enron, Sprint, the […]

  • February 9, 2003--Competing in Explanation Space

    The New York Times and The Wall Street Journal are on a collision course. Many readers are accustomed to thinking of the New-York-based newspapers as being quite different sorts of publications — tea and coffee for the reading classes. But clearly the executives who run them are competing for the same space — dominance of […]

  • February 2, 2003--Second Place and the Thought Department

    Anybody who has followed the pastoral messages of the Vatican and the United States Conference of Catholic Bishops over the years understands that the leadership of the Roman Catholic Church has preferred its own precepts of social justice to the ostensibly “value-free” research program of neoclassical economics. Not surprisingly, therefore, when some twenty-five years ago […]

  • January 26, 2003--A High-Stakes Mediation that Failed

    The stand-off over the Andrei Shleifer case is scheduled to become even more tense next week, when Harvard University lays out the reasons why it believes it shouldn’t be prosecuted for the lax supervision of one of its star professors under the provisions a Civil War statute designed to deter contractors who sold the government […]

  • January 19, 2003--What Next?

    For nearly thirty years, the University of Chicago’s Robert Lucas has been a reliable guide to What Comes Next in Economics? Because the research future rarely has been obvious, he takes a little getting used to. With a series of technical papers in the early 1970s, Lucas operationalized general equilibrium analysis, introduced expectations to macroeconomic […]

  • January 12, 2003--Shleifer to Leave Harvard?

    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 […]

  • January 5, 2003--What’s in Our Wallet?

    Last year Paul O’Neill decided he wanted to address the American Economic Association meetings in Washington this week on the topic of “Using Economics to Improve Public Policy.” O’Neill was Treasury Secretary, so he got what he wanted: top billing on the first day. His office lined up three Nobel laureates to comment on what […]

  • December 29, 2002--Eagerly Awaited

    When the American Economic Association meets next week in Washington D.C., two of the most interesting stories there won’t be in the exhibition hall. Princeton University professor Paul Krugman is finishing an introductory principles textbook. But even if the controversial economist/newspaper columnist turns up to do a little on-scene promotion, the book itself won’t arrive […]

  • December 22, 2002--Who Will Replace Marty?

    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 […]

  • December 15, 2002--Bridging the Gaps

    From the beginning, the “Anomalies” column was probably the most popular feature in the Journal of Economic Perspectives. That non-technical journal was founded in 1987 by the American Economic Association with a view to filling a gap between the enormous volume of published economic research and the writing about it that appeared in the popular […]

  • December 8, 2002--On Guard!

    (Economic Principals is traveling, messed up, regrets the late post.) “The Bush Administration’s economic team apparently will remain intact — for now,” That was Economic Principals’ view just two weeks ago. “An economic team shakeup may not be imminent. But it looms.” It stopped looming and turned imminent Thursday afternoon. That was when the administration’s […]

  • December 1, 2002--Knowing More about Knowing How

    The last ten years have seen a heightened interest in the avalanche of technological change which, for the last twenty or thirty years, has been such a striking feature of the present age. I don’t mean just more frequent and better newspaper stories, like the typically useful account that appeared in the Wall Street Journal […]

  • November 24, 2002--Why Boston

    The Democratic Convention will be held in Boston in the summer of 2004. Is that a bad idea? Not at all. If the American left is to redefine a set of values that can attract a majority of voters in a presidential election sometime in the next eight or twelve years, Boston is the right […]

  • November 17, 2002--Short Takes

    The Bush Administration’s economic team apparently will remain intact — for now. Before the election, speculation surged that a shakeup was in the works. It centered on the president’s chief economic adviser Lawrence Lindsey. A better strategist than administrator, the 48-year-old Lindsey has seemed less than comfortable as director of the National Economic Council. But […]

  • November 10, 2002--Better Men and Better Women

    Whatever is going on between Republicans and Democrats in America today has been going on since 1980. That’s when the election of Ronald Reagan set a political agenda for the US quite different from the program of Franklin Roosevelt’s “New Deal,” which the country had pursued since 1932. The late Robert Nozick called this the […]

  • November 3, 2002--Short Takes

    Slipping out the door of the Justice Department all but unnoticed some day this month will be the key figure in the last act of the Microsoft drama, Charles James. As assistant attorney general for antitrust, James threw the company a softball settlement pitch last year, even though the government had won the most important […]

  • October 27, 2002--Going to Trial?

    It sounds as though the Andrei Shleifer matter may be going before a jury next year. When the US Attorney in Boston two years ago accused Harvard University of bungling a critical government-funded mission to Moscow in the 1990s by failing to keep tabs on its advisers’ financial frolics there, the proceedings provoked an avalanche […]

  • October 20, 2002--Short Takes

    International Economy is a glossy magazine that since 1987 has carved out a comfortable niche in the world of controlled circulation magazines by covering central bankers, treasury officials, global lenders, politicians and all those who seek to advise them. How comfortable? Its minimalist website has been down for months while the company moves its maintenance […]

  • October 13, 2002--The Vital Many

    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 […]

  • October 6, 2002--“Theory is the Root of Peace”

    Years ago, when I was first coming to grips with economics, one of my favorite books was a collection of essays, “The Nature of Economic Thought” by G.L.S. Shackle. Life is complicated, Shackle wrote, and a person needs a system of explanation to cope with it. Since he was a thorough-going Englishman, born in 1903, […]

  • September 29, 2002--Short Takes

    1. Another charette is underway in New York City — an intense effort to solve an architectural problem in as limited period of time. Lower Manhattan Development Corp. last week chose a second set of six teams of architects and urban planners to submit competing plans to rebuild the World Trade center site. They are […]

  • September 22, 2002--Short Takes

    1. A YEAR AFTER 9/11/01, what’s become of the theory that a new and quite different kind of Cold War has begun? Last week the theory became the official policy of the American government, with the publication of the Bush administration’s National Security Strategy. The document won’t be posted on the White House Web-page until […]

  • September 15, 2002--At Bat and On Deck

    Alan Greenspan gave testimony to Congress last week, and if you closed your eyes and listened it was almost like old times. The long-serving chairman of the Federal Reserve Board warned that a return to continuous large government deficits of the 1980s and ’90s would raise long term interest rates, and threaten the prospects for […]

  • September 8, 2002--Who Will Replace Greenspan? When?

    One way to evaluate Alan Greenspan’s speech last month in Jackson Hole, Wyoming, in which he disclaimed responsibility for the bubble, is to see the chairman as a lame duck, and ask who might succeed him at the Fed.   The search still is in its preliminary stages. The usual deep divisions exist within […]

  • September 1, 2002--Short Takes

    Economic Principals is experimenting with forms, in anticipation of adding a regular column of items this autumn. The column wishes readers around the world a happy US Labor Day. 1. The hardest job in financial journalism is having something worthwhile to say about the way business is done — a couple of times every week. […]

  • August 25, 2002--Skirmishers

    Economics more than ever is a business for specialists. So when a generalist presents himself as ready to express opinions on a broad array of topics, prepared to skirmish regularly with those who hold opposing points of view, we sit up and take notice. Everybody knows (at least a little) about Paul Krugman, the Princeton […]

  • August 18, 2002--On Giving Headaches — and Getting Them

    In the early 1990s, the Massachusetts Institute of Technology found itself facing no small crisis. During the fifty years following the outbreak of World War II, the engineering school had grown into one of the world’s preeminent universities, thanks to unstinting government funding of its departments and laboratories, in the interest of keeping the US […]

  • August 11, 2002--The Future of “Greed”

    One of the interesting concomitants of the bear market has been the way that Philadelphia’s Vanguard Investments last month passed arch-rival Fidelity of Boston to take over the top spot among mutual fund companies — at least for now. What does that signify? Nothing more than that those two exceptional companies have raced over the […]

  • August 4, 2002--Needleman and Me

    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 buckets of oats with one owner. The north forty and potato peelings for dinner with the next. And, always, the specter of the knacker’s yard. So when in early 2002 […]

  • July 28, 2002--The Recession That Was Postponed

    For all the talk about how the current bear market in stocks was precipitated by a “crisis in confidence” in American institutions that started with the Enron scandal, the roots of the decline go back to 1997. That’s when the Asian financial crisis first began to bite — and America stepped up to keep the […]

  • July 21, 2002--The Case Against Intellectual Property

    Every generation receives an overwhelming lesson or two in economics from the real world. In the ’70s, it had to do with the superior performance of trade-oriented economies — Japan and the Asian “tigers” in particular — and the dismal record of the command economies of the socialist nations. In the ’80s, it had to […]

  • July 14, 2002--Draining the Ambiguity Swamps

    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 changed much at all since going public in the 1930s, the result of a couple of acts of Congress. Half of all Americans worked on farms in those days […]

  • July 7, 2002--The Thing’s a Mess

    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 […]

  • June 30, 2002--The Ten-Year Toot

    Bernie Ebbers; Martha Stewart and the Waksal brothers; Dennis Kozlowski; Gary Winnick; Kenneth Lay, Jeffrey Skilling and Andrew Fastow; Jack Welch and Suzy Wetlaufer — what a cast of characters! With companies such as Tyco International, Global Crossing, ImClone Systems, WorldCom, Adelphia and Enron coming to grief, who can doubt that the sky is falling […]

  • June 23, 2002--Hollow Men?

    Coming back to my university after some years away, I remember asking a knowledgeable friend in the autumn of 1971 what had happened to the student rads. Only two years before they had led a massive strike. In previous Aprils they had nearly shut things down again over Cambodia and Laos. Yet suddenly things were […]

  • June 16, 2002--An Antidote to the Business Pages

    Paul Burstein is as quick as anyone among my friends spot the most interesting stories in the business pages of the newspapers. A physicist, his specialty is using CAT scanners to examine rocket motors for defects. Last week he jumped on two items. The first story was news of a new wireless broadband antenna developed […]

  • June 9, 2002--A Problem Solved

    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 is a steady accumulation of practical developments. A good example is the modern monetary system. In a few short years in the late 20th century, plastic cards with magnetic stripes replaced […]

  • June 2, 2002--Voices in the Air began on March 17, 2002, with a view to providing sustained coverage of developments in the community of technical economics, for an audience of well-informed citizens who possess above-average curiosity about the subject. In its haste to be up and running, it just began. Now it is time to take a breath and say […]

  • May 26, 2002--The Storyteller of Markets

    “Markets and governments have an uneasy relationship,” writes John McMillan in his new book, Reinventing The Bazaar. “Markets coordinate the economy better than any centralized alternative; governments sometimes distort and even destroy markets. But help from the government is essential if the economy is to reach its full potential.”   That is as succinct a […]

  • May 19, 2002--Discriminating Wisely

    Of the many economic policy misjudgments in the ’90s, one of the worst had to do with the treaty establishing the World Trade Organization, specifically the component of it known as TRIPs, for Trade Related aspects of Intellectual Property. Before TRIPs, many Third World countries afforded no patent protection to new medicines, and proprietary manufacturing […]

  • May 12, 2002--Shorty is Alive and Well

    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 the most memorable price fixing case since the General Electric/Westinghouse electrical equipment scandal in the late 1950s. That was the last time senior executives of some of America’s biggest companies went […]

  • May 5, 2002--What They Don’t Tell You

    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 disclosure and tax credits for “retirement education.” The Senate is working on a version of its own. Even without the legislative oversight, plenty of people are thinking hard about their […]

  • April 28, 2002--Oh, Odious? No Dough!

    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 in your name. You don’t have to pay, as long as it can be shown you weren’t complicit in the theft. A key strut in this system is the existence […]

  • April 21, 2002--Making Progress

    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 monetary policy, and keeping channels open for free trade. In recent years, innovation policy has muscled onto the center stage as well. For those who like to follow these matters […]

  • April 14, 2002--Wind-Tunnel Economics

    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 calculator of pleasures and pains” characterized by Thorstein Veblen a century ago, but the habit-ridden, time-bound, emotionally-driven creatures that we know ourselves to be. An extensive interchange among psychologists, political […]

  • April 7, 2002--Something Happened

    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 — it has been twenty years since the United States endured a recession worthy of the name. It was in July 1981, that an inflation-wracked and thoroughly-overheated economy stalled and […]

  • March 31, 2002--The Next Generation

    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 […]

  • March 24, 2002--Upstairs, Downstairs

    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 […]

  • March 17, 2002--The Ghost’s Story

    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 Experience” […]

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