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September 7, 2012 • 10:19 am 0

Good news or bad? Unemployment rate drops despite weak jobs numbers

So on first glance, these jobs numbers are nothing but bad. 96,000 new jobs with downward revisions on the two previous months. So as far as description is concerned, it looks like weak growth continues to carry the day. So “what does it mean?” Well, it means we aren’t suddenly in a booming economy; things continue to peter along.

“What does it mean” has another interpretation, though: what will happen as a result? The upshot as far as I can tell?

  • Undecided voters will mostly hear 8.1% unemployment and think these are good numbers.
  • QE3 is gonna happen.
  • The fire under the Republicans to ensure the “fiscal cliff” doesn’t occur will continue to burn hotter, meaning Obama might be able to make some headway on either stimulus or deficit reduction or both in a second term.

Certainly Nate Silver at fivethirtyeight has stressed that the jobs numbers will have significant consequences for the election: good numbers and Obama’s sure to win; bad enough numbers and he’s out. The Bernanke  is relying on these BLS numbers, among others, to try to decide what to do. So I was trying to think about what to think about the actual consequences of the numbers. I’m just freewheeling here, but I think there might be some interesting and counter-intuitive results.

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August 23, 2012 • 2:24 pm 0

Principles of Microeconomics – news video feed and some commentary

So the Fall semester has begun. I show YouTube clips in my class and discuss them. If you’re interested in following along, the playlist is here and will expand as the semester goes:

http://www.youtube.com/playlist?list=PL7B5C6A1491718E93

In the first class, I talked about texting campaign contributions, Rio drug gangs banning crack, and football players going on diets.

First, texting campaign contributions. The goal here, presumably, is to drive down the transaction cost of contributing–or at least the psychic transaction cost borne by the contributor.

A few things worth noting: this is probably aiming at people for whom texting is a regular activity–so read: younger.

Second, the contributions are for $10, which is not very much, so this is probably aiming at some kind of “warm-glow” giving, which when aggregated can really add up; the danger being that if people are substituting texting donations for $25 checks, then the campaigns are in trouble.

Finally, the transaction costs here are actually really high–the video said 40% if I recall. That means that even if these are substituting for $7 checks, the campaigns are in trouble. Unless there are some sort of external benefits of voter engagement or something, but yeah…I’m curious whether this is a flash in the pan or a new way of giving that pans out. Read the rest of this entry »

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July 23, 2012 • 3:22 pm 0

The *real* real problem with financial regulatory reform: closing our model

“How come good people do bad things?”

So people are thinking and talking about this and there are two glaring problems in the discussion. First, “the structure of regulation” will never be done, complete, finished–it’s a game we make up as we go along. Second, the question “How come good people do bad things?” is the wrong question.

Jim Surowiecki argues that regulators need to focus more on “preventing malfeasance from happening.” John Kay argues that we need “a structure of regulation” that fixes perverse incentives and makes people–or financial institutions–more trustworthy.

Felix Salmon shoots holes in both of them, basically saying “yeah, good luck with that.” Which I’d like to reinterpret: for real, good luck.

The answer: people do things, and smart people do creative things, and there is no fix–there is managing society, and if everyone does what people do, it’ll never end. There is no regulation to solve it–but we have to put up a dam and pile up the levees or the torrent of human intention will go places we don’t want it.

Tunnel under the embankment - geograph.org.uk - 1154526

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March 28, 2012 • 11:15 am 0

Will everything be free in the future? Robots, information, value, and the long view of relative prices.

I don’t think everything will be free–more likely relative prices of raw goods and manufactured goods are just likely to swing drastically. If you take the long view of human history, increasingly the value of a good is defined by the information in it, and we have gotten much better at separating, recording and transmitting that information. If you think about it, mathematics and engineering are about inventing the language to describe the information contained in a good, interchangeable parts and mass production increase the signal-to-noise ratio, information goods like books, music, movies, research, software–these *are*their information–and then the development of an information infrastructure as well as cheaper and more widely distributed mechanized production methods mean that the information slowly becomes the only missing part.

Another way to think about it is that we have steadily shortened the distance between knowing how to make something and having it made. Little by little, the having it made part is becoming trivial relative to the knowing how to make something. Because information is non-rival–my having information implies nothing about your ability to have it–private goods become less private. Read the rest of this entry »

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February 27, 2012 • 1:44 pm 0

Ezra Klein: Romneycare is working. The jury is still out on Obamacare, but the outlook is good.

Ezra Klein has an excellent summary of economists’ analyses of Obamacare and Romneycare. Healthcare coverage certainly seems like a natural monopoly, and it looks like costs are declining with increases in scale.

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February 27, 2012 • 11:02 am 0

Detroit auto makers are back. General Motors, Ford, Chrysler are all working to expand capacity, but demand is outpacing them.

Nothing quite like reading the news. The article here is from the AP and discusses at length the change in the market from dialing down production to rushing to get back to capacity. It’s such a dense article, and you can’t read it without thinking about the elasticity of supply…well, at least I can’t. What will happen to prices? Was the bailout a good thing? Like I have any idea. I give it a crack though. Part 2 is after the break. Enjoy!

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