Tuesday, July 31, 2007

Chicago Price Theory is Back

I am extremely happy to report that Transaction Press has decided to reprint Milton Friedman's classic Price Theory text as well as Gary Becker's Economic Theory.

Meantime, publishers have also offered both paperback and hardcover versions of Frank Knight's Risk, Uncertainty and Profit.

To learn more about the origin and development of the Chicago School of Economics, you can't miss this.

Monday, July 30, 2007

Your Imaginery Friend Just Might be Real

Yet the new research on priming makes it clear that we are not alone in our own consciousness.

We have company, an invisible partner who has strong reactions about the world that don’t always agree with our own, but whose instincts, these studies clearly show, are at least as likely to be helpful, and attentive to others, as they are to be disruptive.

That is from a fascinating story from NYT, more here.

What I would like to know though, is what are the rules of interaction between these conscious and unconscious portions of our mind. How are these rules set in order to guarantee that each part serves our overall interests?

Nobel Laureate Is Leaving My Alma Mater

It is official. Vernon Smith will be leaving in 2008 for Chapman University. Here is a story in LA Times.

Sunday, July 29, 2007


近日心情不怎麽樣,因為人也因為事。 閑時讀的不是文學,就是與經濟学無關的書。


Thursday, July 26, 2007


留學英倫曾與我共事的L告我, 從同事口中得知高層對她不滿, 着她早為未來打算。

Not that she wants to stay at that damn place, but you need to make a living right, and you have bills to pay as well, what else could you do until you find eh..eh.. another "opportunity". In most likelihood, one is more likely to get a lousy job under such circumstances . That is why I put the word opportunity in parenthesis.

This is what our Chief Executive called the best economic situation in 25 years?

Casual empirism suggests to me that a lot of the late 30s and early 40s crowd somehow feel stuck, they fail to sense that there are opportunities out there waiting for them. Do you guys out there feel the same or is it just me?

Monday, July 23, 2007

Beautiful Mind

My former professor Tyler Cowen, co-blogger up at Marginal Revolution, is profiled in New York magazine. Read more here. Actually the piece is a review of Cowen's latest book, "Discover Your Inner Economist."

Sunday, July 22, 2007

Hal Varian Joins Google

Hal Varian at UC Berkeley is now the Chief Economist at Google, yes you hear it right, Google.

And yes, he is the author of one of the most popular microtext for graduate students. I used his graduate text as well as his undergraduate text when I was a graduate student.

Friday, July 20, 2007

Listen Up Ben

Chicago's Lester Telser reminded Fed chief Ben Bernanke what's the Fed's real job here.
Bottom line: Fed's real job is to respond to cirses, not monetary policy.

And yes, it is the same Telser who wrote the path-breaking piece "Why Should Manufacturers Want Fair Trade" back in 1960.

Best Line I Have Read Today

As a colleague of mine once warned: “nobody gets tenure for demonstrating that markets really work.”

Read more here.

Thursday, July 19, 2007

What is Capitalism?

Capitalism is talk, talk, and talk all the way down.

Read more here.

Secrets of University of Chicago Economic Department's Success

As Deirdre McCloskey, a former U. of C. professor, notes, " 'Don't you know that the greatness of the University of Chicago has always rested on the fact that the city of Chicago is so boring that the professors have nothing else to do but to work?' "

Read more here.

Wednesday, July 18, 2007

Land Grab: China vs India

You have read or heard a lot about how expropriation of China's rural land for industrial or property development has created social stability problems. For an example, read this.

What is new to me is that the same problem occurs in India as well, a place where the legal system is presumably better developed than China's. This is from today's WSJ:

In recent months, peasant revolts have been flaring up across the country, protesting against industrialization and the land grabs that accompany it. Harnessing the anger of rural poor, Maoist-inspired insurgents roam freely across much of central India, causing Prime Minister Manmohan Singh to call them the largest threat to India's security.

Read more here.

Thursday, July 12, 2007



Professor Lui is certainly one of the best minds in this town.

Monday, July 09, 2007

好朋友擬辦一家專賣社科及金融書的書店,託我在這調查一下,看是否有市場。 賣點是價格比網上書店及本港書店平。暫時只賣英文書,包括那些曾在這博客推介過的。有興趣的請留言。

Why Doesn't Capital Flow to Poor Countries?

The paper's abstract states:

We find anecdotal evidence suggesting that governments in poor countries have a more left wing rhetoric than those in OECD countries. Thus, it appears that capitalist rhetoric doesn't flow to poor countries. A possible explanation is that corruption, which is more widespread in poor countries, reduces more the electoral appeal of capitalism than that of socialism. The empirical pattern of beliefs within countries is consistent with this explanation: people who perceive corruption to be high in their country are also more likely to lean left ideologically (and to declare support for a more intrusive government in economic matters).

My question is: Does their argument apply with equal force across political regimes? What about China? China scored 3.3 out of a possible 10 in the Trasparency International's Corruption Percetpion index, which was a bit low, yet the place is a foreign capital magnet!

India seems to be a better fit with the authors' claim, a democratic country which scored the same point as China did in Transparency International's Corruption Perception Index, and it attracts far less foreign capital as China does.

Then what about Hong Kong? A lot of Hong Kong people here, including this party, are demanding the government to introduce universal suffrage. Given that Hong Kong has scored high (8.3) in the Transparency International's ranking, does it mean that policies would not be left-leaning even if democracy were in place?

If this were indeed one of the implications of the author's theory, perhaps someone from Hong Kong's pro-democrats should relay this info to this pro-business political party whose reason for delaying the introduction of universal suffrage is its fear that the introduction of universal suffrage means turning Hong Kong into a welfare state.

Transparency International's index could be accessed here. HT to Marginal Revolution and Econlog.

Read the paper here.

Net Experiment

A good friend of mine, who is interested in opening a bookstore which combines the best of the virtual and the real world could offer, asks me to do him a favor by posting an ad for his store.

For those interested in getting books which have been recommended in this page, (others as well) at lower prices than Amazon (including shipping costs it charges), please drop me a note. Before he officially launches his store, my friend wants to know how many readers out there actually want to get their own books first.

Sorry at this amount, my friend's store will only serve those readers who live in Hong Kong only.

Two-sided Markets

In "Two-Sided Markets: A Progress Report," Rochet and Tirole explained the thinking behind the bourgeoning literature as of the end of 2005. "Getting the two sides on board" might be a useful characterization, but it didn't go nearly far enough. "We define a two-sided market as one in which the volume of transactions between end-users depends on the structure and not only on the overall level of the fees charged by the platform."

The two sides' willingness to trade depends on the policies of the platform; its membership (or fixed) fees get them into the tent; its usage (variable) fees condition their enthusiasm once they are there. A favorite example: dating bars, which charge men a stiff fee and let women in for free, making money on the sale of drinks. But in fact the model illuminates matchmaking in everything from portals such as Google and Yahoo, TV networks and newspapers (in which "eyeballs" are the stock-in-trade) to mobile phone networks, personal computers, credit cards and videogames (in which more sophisticated commodities are marketed).

That is from a book review of Catalyst Code, read more here.

Saturday, July 07, 2007

Friday, July 06, 2007


"Mr. Lott offers so many fascinating theories that the "Freedomnomics'" ideas-per-page ratio is more daunting than that of the frothy "Freakonomics," which Mr. Levitt's writing partner, journalist Stephen J. Dubner, optimized to not tax tired travelers' oxygen-deprived brains at 35,000 feet...

Mr. Lott argues that Messrs. Levitt and Mr. Dubner "portray America's free market as a cut-throat environment in which consumers are constantly swindled by so-called experts. Habitually attributing economic anomalies to some kind of scam, the pair don't seem to realize that market forces exist that punish dishonest behavior." This is somewhat overstated — "Freakonomics" is too attention-deficit disordered to have much of a theme beyond promoting Mr. Levitt as a "rogue" genius. Nonetheless, Mr. Lott's chapter on how the market encourages good behavior by penalizing bad reputations is insightful. "

Read more here.

The real puzzle, according to the author, is that:

If the free market is so wonderful, how did "Freakonomics" become the nonfiction publishing sensation of the decade?

"Maybe the book market rewards truth-telling less than helping customers feel good about themselves? To paraphrase the famous quote by Adam Smith about butchers, bakers and brewers with which Mr. Lott launches "Freedomnomics," "It is not from the benevolence of the economist, the journalist, or the publisher that we expect our cheesy bestsellers, but from their regard to their own interest." "


Thursday, July 05, 2007

Books, More Books for Your Summer Holidays

1. The Institutional Foundations of Public Policy in Argentina: A Transactions Cost Approach

2. War, Wine and Taxes by John Nye who would join my almar mater George Mason University this fall.

3. A Farewell to Alms:A Brief Economic History of the World by Gregory Clark.

Does Poverty Cause Terrorism?

With the identities of the terrorists in the unsuccessful car bombings in England revealed as doctors, people start to have doubts about the conventional wisdom: Does Poverty Cause Terrorism.

A scholar said no, read more here.