Tuesday, June 30, 2009

No Free Lunch

民協馮檢基批評,政府過去一年公屋越建越少,醫療事故頻繁,未有積極製造就業,更無回應小班教學訴求。 More here.

So what should we do about it? I bet Mr Fung is going to say that we need more resources to be devoted to building new public housing, to buying better medical equipment as well as employing more medical staff, and more jobs for building roads to nowhere, tennis courts where no one uses, railways where utilitzation rate stays low....

Does he understand that more of these things require that we have less of other things? Who is going to pay for these things? And why? How can he tell the things we get as a result of giving up other things are more valuable than those things that we have (or are forced) to give up?

Monday, June 22, 2009

Go, Go, George Mason

According to this latest ranking of Economics Dept, my alma mater is assigned a rank of 85 among the top 10 percent of top level institutions (it's a world wide ranking, not just confined to higher learning institutions in the US).

It is ranked above:

Indiana U, Bloomington, ranked 91;

U of Washington, Seattle, ranked 100;

George Washingtonm, ranked 130.

HT to Greg Mankiw for the pointer.

Thursday, June 18, 2009

Wow! Samuelson on Economic History

This bit from an interview of Nobel lauerate Paul Samuelson really surprises me:

Very last thing. What would you say to someone starting graduate study in economics? Where do you think the big developments in modern macro are going to be, or in the micro foundations of modern macro? Where does it go from here and how does the current crisis change it?

[Samuelson's response]: Well, I'd say, and this is probably a change from what I would have said when I was younger: Have a very healthy respect for the study of economic history, because that's the raw material out of which any of your conjectures or testings will come.

And I think the recent period has illustrated that. The governor of the Bank of England seems to have forgotten or not known that there was no bank insurance in England, so when Northern Rock got a run, he was surprised. Well, he shouldn't have been. But history doesn't tell its own story. You've got to bring to it all the statistical testings that are possible. And we have a lot more information now than we used to.

More here.

Tuesday, June 09, 2009

Larry White Moves to George Mason

Great news, Larry White, who has done a lot of work in advancing the theory of free banking will start teaching at my Alma Mater starting next fall.

Here is a bio of Larry in Wiki, and here is Larry's dissertation, "Free Banking in Britain" available free for download courtesy of IEA in England.

I met Larry a couple of times back in my graduate school days, twice when I visited the campus of U of Georgia where Larry used to teach, and once when I was attending a FEE Austrian Economics Seminar up in New York with my fellow classmate Wayne. Larry is a softspoken gentleman, and a graduate of UCLA.

HT to Taking Hayek Seriously for the pointer.

Monday, June 08, 2009

Cheung's Theorem


This is from Professor Steven N S Cheung's latest column, more here.

Several implications follow:

1. In situation where the problem of information asymmetry is serious, and where the government intends to intervene , we should expect more officials to act in ways that contravene public interests, like soliciting bribe, defining rights in such a way which would benefit their supporters...etc

2. It cautions against those who automatically ask for the visible hand to step in when information asymmetry prevents the market from discharging its ususal function.

The same asymmetry information which negatively affects the operation of the market also encourages or provides a better cover for officials to benefits themselves instead of working for the public interests. So the results generated by government intervention might be worse than that delivered by the market.

Furthmore, even if the incentive problem articulated by Professor Steven Cheung is resovled, say all officials are Angels, you would still encounter the Hayekian type knowledge problem. For officials would need to know exactly when to intervene and how to intervene. As the Professor mentioned, "但他们要懂得分辨哪些工作他们要做,哪些应由市场处理". We differ on this point because the Professor thinks the officials would do a pretty good job in this area if the incentive problem articulated by him could be ignored. I am far less sanguine about the officials' ability to resolve the knowledge problem.

Wednesday, June 03, 2009

Tuesday, June 02, 2009

Why the Worst Get On Top

The title of this post of course is taken from a chapter in Hayek's Road to Serfdom.

Now Bryan Caplan has offered another answer in addition to that offered in Hayek's work:

[A]ll successful politicians are big liars by the absolute standard we routinely apply to the people we personally know.

More here.

You can read a condensed version of The Road to Serfdom here for free.