by Tyler Cowen
on January 13, 2011 at 11:37 am
1. Port-au-Prince, before and after.
2. Brad DeLong, slouching toward Zero MP workers.
3. Interview with Ronald Coase.
4. Markets in everything: fake marijuana plant.
5. New Haiti photos.
6. Estonia vs. Spain, a must-read.
7. A business model for 50,000 naked men (safe for work).
So, none of the forecasts and beliefs of Edward Hugh became true (Estonia is posting high economic growth instead of dying), but we still need to read his writings? Maybe it is time to realise that his understanding of Eastern Europe is not very deep indeed? And try other sources?
6. My mother was from Lithuania and she once said Estonians had a reputation in the Baltics for being the smartest nation, so national character plays a large part. I wonder how Estonia would compare against Catalonia alone? I also wonder if the crisis continues or gets worse, if you'll see some nations break up. Many of the natives believe Catalonia, Piedmont and Flanders would be better off on their own.
Companies don't go through and fire the least productive workers during mass layoffs. They cancel whole projects and shutdown entire production units throwing every out onto the street productive and unproductive alike.
Perhaps a given project was unproductive or under-performing altogether but that doesn't mean all those workers were useless.
Also what about the legions of people who graduated from universities in the last couple of years and haven't been able to find proper jobs? Are they all completely useless Zero MP workers?
Are there any trends seen when a small nation has a large aggressive neighbour? Estonia is still Scandinavian, Protestant work ethic perhaps?
This recovery looks different because earnings growth expectations fell by much further than in any recession since the great depression. Look at the stock market. It is roaring upward, yet still doesn't value corporate America nearly as high as two years ago. Apply the CAPM and it is clear that earnings expectations are significantly lower than they were before the recession. Why would companies have as many employees as they did a few years ago if they don't expect as much growth, particularly if there have been productivity gains? It makes perfect sense they aren't hiring. The level of the stock market is the appropriate barometer here.
In contrast, when the speculative stock bubble burst in 2000, companies did not have as many employees as their valuations might have implied during most times. In 2008, the stock market did not collapse because it was insanely over-valued. Something else happened.
A worker working on a failing project is an unproductively allocated worker – this is the fault of management not the worker. It does not necessarily mean that this worker has zero marginal productivity working on another project.
> A worker working on a failing project is an unproductively allocated worker –
> this is the fault of management not the worker. It does not necessarily mean
> that this worker has zero marginal productivity working on another project.
In the short term, it does. Well, maybe not zero, but for anything more complicated than carrying stuff it means drastically reduced productivity that’s not offset by a drastically reduced wage.
I didn’t say the worker was at fault; I don’t think that. Thinking about fault is misleading here.
“Whether you want to decorate your living room or large office or your hotel lobby or outdoor garden, our 6’ marijuana plant is a great choice!”
Nothing makes the office look more professional than a human-size ganja plant.
Take a long term chart of the Dow Jones and plot it against the unemployment rate. Observe the correlation between the rate and how far *off trend* the market is at that time. Then say this time it’s Zero MP workers and not a fall in earnings expectations.
Either Coase is 100 and still doing interviews about economics, or zombies exist. I am leaning towards the latter.
The Coase interview is very interesting. I recommend reading it.
great article about the business model for 50,000 naked men. Interesting to say the least. PEO
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