Monday, June 30, 2008

Coase, Chicago and China Conference

The conference organized by R. Coase on China is forthcoming in mid-July.

Stars who will attend include Coase, Bob Mundell, Doug North, Bob Fogel, Janet Landa and Gordon Tullock. You can access the conference's program here. Enjoy!

And yes, Professor Steven N S Cheung's paper would be the first paper to be presented at the conference, and discussants are Bob Fogel and Bob Mundell.

比爾蓋茲 (Bill Gates) 與‘創新’資本主義

早前比爾蓋茲的‘創新’資本主義 (Creative Capitalism) 演說引起媒體的廣泛報導。

多位著名經濟學者近日在一博客討論這‘創新’資本主義的可行性, 包括有 Gary Becker, Bill Easterly, Dick Posner, Greg Clark...等,大都對這嶄新理念有所保留。

Read more here. All posts deserve a close read, and yes, even if you do not fully agree with their authors' views.

Wednesday, June 25, 2008


A good friend of mine Ming is curious about the term anti-commons. The term actually was coined back in 1998 by Columbia Law School professor Michael Heller in a Harvard Law Review piece, some simple description of the concept could be found here.

Two years later, Jim Buchanan and his colleague wrote a piece in Journal of Law and Economics elaborating on the idea. The abstract for the piece is reproduced below:

An anticommons problem arises when there exist multiple rights to exclude. In a lengthy law review paper, Michael A. Heller has examined "The Tragedy of the Anticommons," especially in regard to disappointing experiences in efforts to shift from socialist to market institutions in Russia. In an early footnote, Heller suggests that a formal economic model of the anticommons has not been developed. This paper responds to Heller's challenge. We analyze the anticommons problem in which resources are inefficiently underutilized rather than overutilized as in the familiar commons setting. The two problems are shown to be symetrical in several respects. We present an algebraic and geometric illustration and extend the discussion to several applications. More importantly, we suggest that the construction is helpful in understanding the sources of major value wastage in modern regulatory bureaucracy.

Tuesday, June 24, 2008

Monday, June 23, 2008

Government Policy Should Not Bias Towards Homeownership

No, the line above does not come from some free market economists, it is a line I've got from Paul Krugman's latest column in NYT.

I can't remember when is the last time I acutally agree with stuff written by Krugman, this is certainly one of those rare occasions. More here.

"Anybody who can claim that Milton was not one of the major thinkers of his time is crazy"

That is Columbia University Free Trade Guru talking.

Here is the source. And Professor Jagdish Bhagwati is criticizing those U of Chicago professors (you hear me right, U of Chicago professors) who oppose the establishment of an Institute in Milton Friedman's honor.

HT to Truth on the Market for the pointer.


I really think Miss Ling should run in the forthcoming Legislative Council election and on the platform of free market principles.

No minimum wage, no maximum working hours, no more favours to selective interest groups like scrapping taxes on diesel which meets the Euro V standard, slash taxes, oppose the buidling of the West Kowloon Cultural Hub (instead the money saved is given to each and every Hong Kong resident through the form of cultural activities coupon and let them decide what kind of art activities they would like to enjoy, guess it is too late now), reduce the wages of civil servants, slashing the number of civil servants, balanced budget amendment to the Basic Law, distributing the cumulative surplus now piled up at the HK Monetary Authority back to where it belongs, ordinary folks, people like you and me, in Hong Kong a la Macau style on a per head basis...

Stupidity Hurts, Stupidity in Economics Hurts Even More

Fuel Price Concern Transportation Joint Conference spokesman Stanley Chiang Chi-wai asked:

"If Hong Kong has a monetary authority to maintain currency stability, why can't it set up something similar to regulate the price of diesel and petrol?"

More here.

Yeah, Stanley, while you are at it, why don't we set up a body to regulate food prices (they are in the rise, aren't they?), rents (they too go up a lot as well?)...or what about we simply prohibit any price increase ? Wouldn't that be better?

What about your wage Mr Chiang, guess it has been rising huh? Should the government also set up a body to cap the wages in your sector as well? !

Thursday, June 19, 2008

Tuesday, June 10, 2008

Results Are In, Music Please

From the April issue of Southern Economic Journal:

According to this study, GMU Econ now ranks 41 OVERALL among programs in the U.S.

GMU is just behind #40 UNC-Chapel Hill, and above highly regarded programs such as Univ. of Washington (45), Texas A&M (49), Florida State (52), GW (54), U. Pittsburgh (59), Washington University (69), Emory (71), UC-Irvine (72) and VA Tech (75), and West Virginia (104).

More here. HT to Austrian Economists for the pointer.

GMU, of course, stands for George Mason University, my Alma Mater.

Tuesday, June 03, 2008

Gary Becker Meets Behavioral Economics

Yes, I suspect that psychology might have some potential use in economics (frankly, I have only read one book on behavioral economics, though I plan to also read Nudge and Sway).

But I am also puzzled by how behavioral economists would respond to Gary Becker's 1962 piece Irrational Behavior and Economic Theory, appeared in Journal of Political Economy, the purpose of which, in Becker's own words is to "show how the important theorems of modern economics result from a general principle which not only includes rational behavior and survivor arguments as special cases, but also much irrational behavior." (my emphasis).

Monday, June 02, 2008

Behavioral Economics = Freudian Pyschology ?

"Self-help books are among the hottest sales items in your favorite book store, right after Gothic novels and cookbooks. Many people are dissatisfied with their lives and don't quite know why. Self-help interpretations claim they offer helpful psychological insight, but do they? Freud gave us the quite valuable notions of id, ego, and superego, but also the quack notions of penis envy and oedipal complex. Later generations of self-help pop psychologists turned Freud into a cash cow of dangeriously overused but highly fashionable slogans, such as psychosomatic illness, inferiority complex, repressed memory, childhood trauma, and hysterical conversion syndrome.

Freudian psychology is just about dead in the self-help arena, but now we have a new contender for leader of the pop psychology: behavioral economics. (My emphasis) Ariely's is one of several new books that take the experimental results of the past quarter century and turn them into self-help. The main message is that we are irrational, but if we understand and correct for this, we can overcome our irrationality and improve our lives. "We are pawns in a game whose forces we largely fail to comprehend," says Ariely. "Although irrationality is commonplace," he continues, "it does not necessarily mean that we are helpless. Once we understand when and where we may make erroneous decisions, we can try to be vigilant." (p. 243)

Like Freudian psychology, behavioral economics gives us a few critically important insights, including hyperbolic discounting, excessive pattern-finding, loss aversion, status quo bias, and innate altruistic cooperation and punishment. However, just as Freud was mostly wrong (and therapeutically a high-maintenance disaster), so is behavioral economics, although I doubt that people will be paying $200 per hour to sit on a couch with a behavioral economics therapist."

That is H Gintis reviewing the book Predictably Irrational, more here (scroll down a bit and you will see it). Strangely enough , soon after writing this review, the same Gintis has a five-star review on the book Nudge by Thaler and Sunstein, also on behavioral economics.

Best Line on Government I Have Read Today

When demanding assistance from the state people forget that it is a demand upon the other citizens merely passed on through the government, but believe they are making a demand upon a sort of Fourth Dimension which is supposed to be able to supply the wants of all and sundry to their hearts' content without any individual person havnig to bear the burden.

Wilhelm Ropke cited in Jim Buchanan (2007) p. 136.

Man of the Street is Better Politician than Intellectual

As a general rule states are better governed by the man in the street than by intellectuals. These are the sort of people who want to appear wiser than the laws, who want to get their own way in every general discussion, because they feel that they cannot show off their intelligence in matters of greater importance, and who, as a result, very often bring ruin on their country. But the other kind -- the people who are not so confident in their own intelligence -- are prepared to admit that the laws are wiser than they are...

Thucydides cited in Jim Buchanan (2007) p. 132