• Congestion Pricing in Israel

    Dec 22 • Thinking Economically • 210 Views

    Run privately, guaranteeing 70kph (43.5 mph), a toll lane will be created on a busy Israeli road. More traffic–price up; less traffic, price drops. Another solution to the tragedy of the commons.
    To read more, go to http://www.jpost.com/servlet/Satellite?cid=1260930882954&pagename=JPost/JPArticle/ShowFull

    Should we be concerned that a toll road is regressive?
    Regressive: those who are less affluent pay a higher percent of their income than those that earn more.

    Tragedy of the Commons: When a resource is shared by many rather than privately owned, it tends to be “misused” or “overused”. For a pasture, “misuse” is over grazing; in the ocean, fish populations are depleted; in the air, factories pollute.

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  • Con and Pro Thoughts of Paul Samuelson

    Dec 21 • Thinking Economically • 242 Views

    in this week’s Barron’s, commentator Gene Epstein shares a rather different view of Paul Samuelson from most who eulogized his life. Epstein perceived the economist who has been elevated for bringing math to his discipline as the scholar who needed more so to recognize human unpredictability. Commenting on Samuelson’s analysis of the Soviet Union, he saw a naive individual who failed to see the reality of their false statistics.
    Because Epstein sounds rather harsh (although his basic opinions can be defended), I add here a link to a textbook inscription to Greg Mankiw from Paul Samuelson that is special.
    http://gregmankiw.blogspot.com/2009/12/memories-of-paul.html

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  • A New Kind of Misery Index?

    Dec 20 • Thinking Economically • 235 Views

    11.84 is the current level of our “misery index” if we use what Arthur Okun (economic advisor to Lyndon Johnson) created. November unemployment + inflation rates = 11.84.
    However, according to Floyd Norris, a new index might be more appropriate. Suggested by Pierre Chilleteau, it combines a nation’s budget deficit as a percent of GDP with its unemployment rate.

    The Economic Lesson

    A misery index reflects an economic dilemma. Each has a different opportunity cost for less unemployment. Each requires a tradeoff. For Okun, if we solve unemployment, we get more inflation (or the opposite). For Chilleteau, a Keynesian solution to unemployment means an even higher budget deficit or less spending means (Keynes again) more unemployment.

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  • Adam Smith and Wine

    Dec 19 • Thinking Economically • 217 Views

    Known for his absentmindedness, Adam Smith seemed always to be pondering economic issues. According to The Economist, not always. In their December 17 issue, Smith is quoted in an article on the history of wine. He seemed to be alluding to “terroir” when he noted that “the vine is more affected by the difference of soils than any other fruit tree. From some it derives a flavour which no culture or management can equal.

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  • Paul Samuelson’s Nephew

    Dec 18 • Thinking Economically • 254 Views

    During a recent interview, Larry Summers, Director of President Obama’s National Economic Council, (former economics professor, president of Harvard, Secretary of the Treasury) spoke about his family. His mother’s brother (Kenneth Arrow) and his father’s brother (Paul Samuelson) were Nobel laureates in economics. His parents taught economics at the University of Pennsylvania.
    Saying during the interview that economics permeated his life–even when deciding who would get to watch TV, he added that for years he did not realize that his childhood was atypical.
    (Interview from Bloomberg on the Economy 12/15/09)

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