• Ranking China

    Dec 8 • Thinking Economically • 291 Views

    Look at your dining table or your clothing and you might see “Made in China”. Thinking of all they are producing, a market economy might come to mind. Next, though, take a look at the Index of Economic Freedom at:
    http://www.heritage.org/Index/Ranking.aspx
    China is ranked lower than some might expect. The link that explains why they fared so poorly takes you to their lack of property rights and investment freedom. Interestingly, they score higher on monetary and fiscal freedom. Also (and predictably), they have relatively more “trading freedoms”.

    Econ Connection
    What to produce, how to produce (land, labor, capital), and who receives the returns are the three basic questions all economies answer.

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  • More on the Tragedy of the Commons

    Dec 7 • Thinking Economically • 417 Views

    Good discussion of the Tragedy of the Commons in three podcasts:
    1. 2009 Nobel Laureate, Elinor Ostrom, discusses her ideas in the 10/23 Planet Money podcast. In a 15 minute interview, she uses her department’s messy refrigerator as one of her examples.
    http://www.npr.org/blogs/money/2009/10/podcast_elinor_ostrom_checks_i.html

    2. An 11/30 Econtalk discussion between Russ Roberts and Pete Boette further looks at Ostrom. One interesting question from their private/public ownership talk: Can a lighthouse be privately owned? But then, why would the owners leave the lights on??? They have an answer.
    http://www.econtalk.org/archives/2009/11/boettke_on_elin.html

    3. Then, finally, in an 11/02 Econtalk interview, Russ Roberts and Michael Heller discuss the “Tragedy of the Anticommons”–where private ownership of such publicly held resources as “airwaves” can lead to less productivity because there are too many owners. (http://www.econtalk.org/archives/2009/11/heller_on_gridl.html)

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  • When a Buffet Problem Becomes a Tragedy

    Dec 6 • Thinking Economically • 310 Views

    I just heard a perfect example of “the tragedy of the commons.” (defined yesterday) In a recent “Curb Your Enthusiasm”, during a dinner party, Larry David observed a friend depleting the caviar on a buffet table. Predictably, he complained to his hostess.
    Other examples:
    -underproduction in Plymouth Plantation, 1623 when everyone farmed together.
    -blue fin tuna depletion (http://dotearth.blogs.nytimes.com/2008/11/26/the-tuna-tragedy-of-the-commons/)
    Still more tomorrow…

    Negative Externality:
    When a “transaction” has a negative impact on an uninvolved party. For example, a polluting factory impacts people who live nearby. A loud music player affects others in the dormitory. Negative externalities are experienced through the tragedy of the commons.

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  • French Bicycles, Plymouth Plantation, and the Commons

    Dec 5 • Thinking Economically • 284 Views

    According to a recent NY Times article (10.31.09), the Parisian bicycle sharing program has experienced considerable vandalism. Although the article attributed the damage to gangs of unhappy immigrant youths, I wondered whether the tragedy of the commons was relevant. More tomorrow on this year’s Nobel prize winner and solving the “problem” of the commons.

    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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  • The American Dream

    Oct 4 • Thinking Economically • 234 Views

    The precipitous current dip in housing is so explicit in the graphs at:

    http://www.calculatedriskblog.com/2009/10/impact-of-declining-homeownership-rate.html

    Translating the lines into people and numbers brings to mind John Maynard Keynes. As much as Keynesians believe that the stimulus will take us out of the recession and reverse these dips, they have not cited empirical research on such fiscal policy. According to Columbia economics professor, Ricardo Reis (stated during an Econtalk discussion with Russ Roberts), there is almost no research that proves the Keynesian position.

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