Thursday, September 27, 2007

Life and Death

"There's a limit to how many times you can read how great you are and what an inspiration you are," he says, "but I'm not there yet."

Here is a sequel to an earlier post. Do pass it on, may be you would be able to help other folks.

Wednesday, September 26, 2007


On the left is excellent art work by Peter Selgin, the twin brother of George Selgin, another prominent Austrian monetary theorist and advocate of free banking.

Tuesday, September 25, 2007

Did Hayek and Robbins Deepen the Great Depression?

The answer is NO according to Larry White, one of the prominent Austrian monetary theorists and advocates of the free banking ideal.

Here is what Milton Friedman claimed they did, from Larry's paper:

I think the Austrian business-cycle theory has done the world a great dealof harm. If you go back to the 1930s, which is a key point, here you hadthe Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse.… I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.

What's the real culprit then?

Real Bills Doctrine.

Read Larry's paper here.

Greg Mankiw Cited Work By My Co-blogger

This is from Greg Mankiw's blog:

A Reading for the Pigou Club

Here is supply-side guru Arthur Laffer together with coauthor Wayne Winegarden:

Of the two primary policies being proposed to address global warming—the capping and trading of emissions and the taxation of emissions—we favor the taxation of emissions. We suggest that a pro-active environmental policy should include an appropriate carbon tax fully offset by a static dollar-for-dollar across-the-board reduction in marginal income tax rates. If implemented with taxpayer protections, this policy would mitigate many if not all of the adverse economic costs from reducing carbon emissions. (My Emphasis)

Here is the link.

Who's Wayne?

Not only did we attend the same graduate school but we were roomates for about 4 years. Wayne graduated a year ahead of me and we have the same professor serving as our dissertation adviser.

Wayne worked in Hong Kong for a couple of years before returning home to the US.

This is a profile of Wayne.

Monday, September 24, 2007

Property Rights Guru

Gary Libecap, formerly at U of Arizona, has now moved to UC Santa Barbara. Gary is an expert on property rights and US economic history.

An important point which Gary helps enlighten me in his work is why property rights might not always evolve in an efficiency-enhancing manner. His best work thus far, in my view, is certainly Contracting for Property Rights.

Now Gary has a new book out called Owen Valleys Revisited, more information about the book can be found here.


Sunday, September 23, 2007


While displaying photos of his bosses and students over the years, he said that helping others fulfill their dreams is even more fun than achieving your own.

More here.


前天剛收到教授為高斯主辦的一個研討會所提交的論文,The Economic System of China, 長六十二頁,仍未及細看。

個人最喜歡是教授 74 年的 A Theory of Price Control,至少精讀了ニ、三十遍,最後一節到今天還是似懂非懂。

Thursday, September 20, 2007

When Supercrunchers Meet Antitrust

I am almost done with reading the fantastic book Supercrunchers, and here are some of my thoughts:

1) In the early days, if you want a suit, you go to the nearby tailor to get one tailored made for you. Boom, with technological advances come pre-made suits that come with all sizes. You just go to a nearby department store and pick the one that fits. Now with supercrunchers, it comes full circle once again where you have services and goods pre-selected and pre-packaged to serve individual needs.

2) But what interests me more is the possibility to pursue perfect price discrimination with the advent of supercrunchers. With that, it completely transforms the monopoly problem from one of efficiency to one of equity. The traditional textbook type argument for why monopoly is bad is because the firm will produce stuff at a level where price exceeds marginal cost. That is an efficiency argument. You cannot use that type of argument anymore now that perfect price discrimination is feasible. Distribution of gains between the producer and customer becomes the only relevant issue under such circumstances. What is interesting to see is whether the prevalence of perfect price discrimination will render it necessary to change at least part of the antitrust law


I have reached a critical juncture in my life where important decisions again have to be made. So I try to read something which is inspiring. And inspiration I have found once again in Steve Job's 2005 speech at Stanford. This is the best bit:

"...Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers.

Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle."

More here.

Best Line I Have Read Today

[T]he United States protects competition, not competitors. Read more here.

Tuesday, September 18, 2007

Mrs. Watanabes

Guess who has the ability to move FX market these days?

Mrs. Watanabes from Japan. Read more here.

Thursday, September 13, 2007

Steven Pinker

Here is an interesting review of Harvard evolutionary psychologist Steven Pinker's latest book, The Stuff of Thought. Highly recommended.

Tuesday, September 11, 2007


記者: 啊乜太, 為何你忽然支持民主?

乜太: 別大驚小怪, 如果作為 Hayek 的學生 Abba Lerner 可支持計劃經濟,我作為殖民地的過氣跑腿,支持民主又有何不可?





Monday, September 10, 2007

Books I May Want to Get Eventually

1. Dick Posner's new edition of Law and Economics. Get it here.

2. The Panic of 1907.

3. Alan Greenspan's The Age of Turbulence

4. A new biography of one of the most influential members of the Austrian School of Economics Ludwig Von Mises. This remains the best introductory volume on Mises' economic thoughts.



是的,只在數年前我看的書十之八九都是用英語寫成的。 過去十多二十年,用得着中文的機會實在多。 九八年回港後的第一份工,要為公司的首席執行官朱小華寫中英文講稿,才驚覺自己中文底子單薄。

加入報社後年多,機緣巧合地替《華爾街日報》寫了篇評論文章,留英的舊同事Y 看後告我:如你駕馭中文的能力和英文的一樣好,相信你的文章會有更多讀者。打後我下大力氣努力改善自已的中文語言能力,離開報社後仍然如此。

I am not satisfied with my English language ability as well. Even today, I spend a lot of time and effort looking up meaning of new words or different meaning of words which I have encountered before. You need to learn how to use those words in making a sentence as well. In addition, with the advent of the internet, I will also use the computer to help me learn pronounce words that hithero I may know how to use but not pronounce. It requires a lot of hard work. But what doesn't?

Best Paragraph on Randomization

Randomized trials are very popular techniques these days in economics, here is one non-technical summary of what it's all about:

The sample size is the key. If we get a large enough sample, we can be pretty sure that the group coming up heads will be statistically identical to the group coming up tails. If we then "intervene" to the heads differently, we can measure the pure effect of the intervention. Super crunchers call this the "treatment effect". It's the causal holy grail of number crunching: after randomization makes the two groups identical on every other dimension, we can be confident that any change in the two groups' outcome was caused by their different treatment. (italics in original)

That is on page 49 of Ian Ayres' Super Crunchers.

Best Line I have Read Today

Political scientists are at fault, he said, because they haven’t “got a clue about how to build a democracy.”

More here.

Sunday, September 09, 2007

Assorted Links

Here is a story on ingenious ways to pursue wealth transfer without the public knowing it.

Here is a profile of professor Robert Barro in the latest issue of IMF's Finance and Development. Here is the new macroeconomics text by Bob.

Wednesday, September 05, 2007

Pitting Americans Against Americans

In lobbying, that is. Here is a fasinating story in NYT on how Indian outsourcing firms have fine-tuned their lobbying strategy ahead of the US presidential election next year.

Best Line I have Read Today

“To understand Singapore,” he said, “you’ve got to start off with an improbable story: It should not exist.”

More here. That's Singapore's founding statesman Lee Kuan Yew talking.

Antitrust Law -- Chinese Style

After a long gestation period, China has finally got its own antitrust law, here (sorry folks, in Chinese only) is a commentary by Citibank's China economist Shen Minggao who previously taught at Peking University and got his Ph.D. in economics from Stanford University.

Bottom line:

《反垄断法》明确将“国有经济占控制地位的关系国民经济命脉和国家安全的行业”排除在反垄断范围之外。这一特例相当于通过法律的形式确定了国有企业垄断的合法性。与市场经济国家的反垄断法不同,国家安全一般是针对外资并购而言的,而在中国,非国有企业也受到了与外资企业同等的待遇。 由于法律没有规定哪些行业属于关系国民经济命脉和国家安全的行业,事实上存在着这样的可能性,即凡目前国有占控制地位的行业都属于需要保护的行业。

A one line summary: Existing privileges enjoyed by SOEs are exempted from the law.

Tuesday, September 04, 2007

My Mentor

In reviewing this book written by my former thesis advisor Richard Wagner, Peter Boettke wrote in the Austrian Economists :

"Wagner is perhaps the best political economist in the Viriginia School tradition, and he is amazingly creative in the way he utlizes the history of ideas (in politics, philosophy, sociology, and economics) and contemporary streams of research (Austrian, public choice, new institutional, economic sociology, agent based computational modeling, emergence studies, etc.) to address the intricate matrix of institutions and human behavior that produce social order."

Wagner was a student of Nobel Laureate Jim Buchanan and he once told me he was Ronald Coase's, another Nobel Laureate, research assistant while at graduate school.


Monday, September 03, 2007

Subprime mess: An Austrian Explanation.

Bottom line: Fine-tunning by the Fed is the culprit of the current subprime mess.

Here it is, and hat tip Larry White up at Division of Labor for the pointer.


For those who want to know more about Austrian monetary theory and business cycle theory, visit this website. And more here.

Sunday, September 02, 2007

China's Productivity Surge Helps Raise Income

This is what I think is the more important message in this NYT story, though the author puts more on weight on labor shortage as a contributing factor to wage rise in China.

Get This Freddy Boy, It's Our Money Not Yours

A story in the HK Standard reported that:

...Asked whether the government would invest more money on Hong Kong Disneyland to attract more tourists, Secretary for Commerce and Economic Development Frederick Ma Si-hang said the government is considering all the possibilities and more investment is not ruled out.

The former secretary [for economic development and labor] Stephen Ip Shu-kwan had said more investment was not possible ... but the government's decision is not rigid. We will not rule out any possibility," he said.

However, Ma stressed the government is only a shareholder and should not get involved in the management of the theme park. He added that Disneyland, "should think of a way to solve the problem [of decreasing visitors]."

Read the whole story here.

Picture this: If you were an owner with a 57% stake in a company and the managment team has continously failed to deliver on performance during the past two years since the firm in question. Would you, as a majority owner, sit back and wait for the same old management team to turn around the firm as implied by Freddy's remarks up top, or would you go ahead and dump the useless management team just like that.

What would you do?

Guess 99.999% of my readers would choose the second option. Then why Freddy is so stupid? No he is not. Afterall, it's not his money which is at stake, it's yours and mine i.e. tax payer dollars we are talking about here. That's why.

Books I have Been Reading

1) Wages of Destruction. A new economic history book on Nazi Germany.

2) China's Financial Transition at a Crossroad. The title says its all.

3) Gut Feelings.

4) Moral Minds. Go read the book review by game theorist H. Gintis further down the page. Then read this review in NYT by Stanford philosopher Richard Rorty.

Funny thing is according to the author Harvard professor Marc Hauser, apparently Rorty had not read the book before writing the review. Could you imagine such a reputed scholar like Rorty would do anything like that! Amazing indeed. Hauser's claim could be found in the new material section of the paperback edition (p. 8)

5) Super crunchers

"A lively and yet rigorously careful account of the use of quantitative methods for analysis and decision-making.... Both social scientists and businessmen can profit from this book, while enjoying themselves in the process."—Dr. Kenneth Arrow, Nobel Prize winning economist, and Professor Emeritus at Stanford University


離港前與 L 在咖啡廳碰面,說舊事談未來,往事混着從杯內徐徐升起的薄湮幻化成一帳帳舊照片。

三年前初遇 L,共事同一報社。L 個子不高,面上掛着的是少年得志留下的一股傲氣。其實在那時他在公司裏的地位已大不如前。

L 話不多,和同事的關係也不怎麽樣。 久L被公司外放塞外,繼而被解僱。剛為人父的L ,境況的確堪憂。闊別三年,L 面上少了那傲氣卻添上幾分滄桑,展露出一種人在經受沉重打擊後自覺需要鼓起勇氣重新上路的心境。

覆讀者 Leona: 感謝您的留言。離開報社快兩年,其時還沒有WSZ的專欄,我是社論主筆之一。