• Hayek vs. Keynes

    Jan 26 • Economic Debates, Economic Thinkers, Government • 450 Views

    Good enough to watch, this youtube performance between Hayak and Keynes is similar to a recent Planet Money “boxing match” between the classical perspective and Keynes which I also recommend. Both are helpful when deciding whether you prefer government assistance or waiting for the market to come to the rescue.

    The Economic Lesson
    In the voting booth, we demonstrate a preference either for legislators who want to do less or those who want to do more. Representative of the Austrian school, Hayek’s ideas emphasize government doing less. By contrast, John Maynard Keynes believed government economic intervention could be beneficial.

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  • Ethical Man

    Jan 25 • Thinking Economically • 243 Views

    For the

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  • A Macro-difference With Micro-insurance

    Jan 24 • Thinking Economically • 207 Views

    Listening to a recent segment of Marketplace.org (1/15.2010), I heard about microinsurance. The concept sounds like win/win for everyone.

    With more resilient structures, Haitians can purchase microinsurance policies that cost $1 to $2 a day. Correspondingly, a Lloyd’s report cited Bolivian health insurance being sold for $5 a month.

    For low income individuals, microinsurance represents risk protection for structures, businesses, and health catastrophes.
    For insurance companies, it means new markets, new customers, new products, and billions of dollars of new revenue.

    It is a pleasure to see new markets and profits for large insurance firms potentially doing good.

    Comments? What am I missing?

    The Economic Life:
    Bangladesh Nobel prize winning (2005) economist Muhammad Yunus has been called a microfinance missionary. Through microfinance, very small loans are making a very big difference. Being able to borrow small sums has enabled poor entrepreneurs in developing nations to start and sustain businesses.

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  • Steel and Banks: President Kennedy and President Obama

    Jan 23 • Thinking Economically • 209 Views

    Commenting on yesterday

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  • Deja Vu Glass-Steagall?

    Jan 22 • Thinking Economically • 252 Views

    Thinking back to Glass Steagall (and related 1930s legislation) which was formally repealed in 1999 (summarized in “It’s Complicated”, my 1/17 blog), there were five problem areas that sound remarkably similar to today’s challenges:
    1. Abuse of diversified investment services. Banks had conflicts of interest when they implemented commercial and investment activities.
    2. Branch banking: There was concern about banks becoming too large.
    3. Interest Rates: Competing for savers through higher interest rates, banks engaged in potentially destructive through high interest rates.
    4. Deposit Insurance: Money was fleeing the banks because of lack of confidence.
    5. The Power of the Federal Reserve: Which banking authority should be strengthen to prevent future banking abuses?

    Today, the White House indicated similar banking industry goals. But Glass-Steagall worked for a 1930s banking environment. Today we have an interconnected world. If US banks are constrained, will businesses easily move to those abroad who are not? As happened during the 1970s here, will disintermediation (my 1/17 blog) resurface?


    The Economic Life:
    The impact of financial legislation can be unpredictable. Hopefully, legislators will consider opportunity cost more so and populist rage less so when deciding what ultimately will benefit the most people.

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