From 1973 to 1985 German inflation was most of the time over two percent a year, sometimes much over two percent. In 1973 it hit eight percent and in the early eighties it exceeded six percent a year. Source here (pdf), see p.6.
From 1951-1973, the Germans seemed happy with roughly the same inflation rate as what Americans had. Source here (pdf), see p.9, and also p.13, passim. In the early 1970s, the rate averaged almost seven percent a year for a few years (p.15). It is fine to note the role of oil shocks here, and in the earlier period Bretton Woods, but still Germans tolerated the higher inflation rates. They expected the alternatives would be worse and probably they were right.
The claim that the current German dislike of inflation dates back to unique memories of Weimar hyperinflation is dubious. Rightly or wrongly, today’s Germans associate high rates of inflation with wealth transfers away from Germany and toward other nations. More broadly, Germany is a more flexible country than outsiders often think, not always to the better of course.
Geoff Olynyk writes:
So for once I can intelligently comment on a Marginal Revolution article. (I have a Ph.D. in applied plasma physics and fusion energy; I worked on the “conventional” fusion reactor design, the tokamak). Lockheed hasn’t released many details of their concept (at least, not enough details that it can actually be evaluated in technical detail), but it looks like it’s a combination of a magnetic mirror and a levitated dipole. The magnetic mirror was studied in detail in the 1960s and 1970s and didn’t work out (due to [detailed plasma physics reasons]) and the levitated dipole has a fundamental flaw as a power-producing reactor in that the superconducting magnets are inside the neutron shielding – neutrons destroy the magnets.
It’s tough as a scientist to be able to comment on things like this, because it’s “science by press release”, i.e. there’s a big media hype but the actual researchers don’t release enough technical details to actually evaluate it. One wants to remain cautiously optimistic, but with fusion in particular, we’ve been down this road many, many times. Thus I predict that the most likely outcome is that as they scale their device up, they’ll find that the confinement (a measure of how well the device holds a fusion plasma) unexpectedly drops off due to some different types of turbulence turning on at higher temperatures / higher pressures… and it will quietly go away.
I hope that I am proven wrong.
There are other interesting comments at the link and Kottke offers more.
Here is Guy Norris:
Hidden away in the secret depths of the Skunk Works, a Lockheed Martin research team has been working quietly on a nuclear energy concept they believe has the potential to meet, if not eventually decrease, the world’s insatiable demand for power.
Dubbed the compact fusion reactor (CFR), the device is conceptually safer, cleaner and more powerful than much larger, current nuclear systems that rely on fission, the process of splitting atoms to release energy. Crucially, by being “compact,” Lockheed believes its scalable concept will also be small and practical enough for applications ranging from interplanetary spacecraft and commercial ships to city power stations. It may even revive the concept of large, nuclear-powered aircraft that virtually never require refueling—ideas of which were largely abandoned more than 50 years ago because of the dangers and complexities involved with nuclear fission reactors.
Here is another account. It is suggested that the reactor can fit on the back of a truck.
In response to such speculative reports I usually say: “If it’s true, why isn’t the price of oil down?” But these days the price of oil is down! I am not suggesting this is the reason, but at least I can no longer say “If it’s true, why isn’t the price of oil down?”. I have to say something else, so if this is true — which I cannot judge — there is no great stagnation (any more).
For the pointer I thank various MR readers.
Terrence McCoy reports:
Schultz wants $150,000 for Ebola.com — a price he thinks is more than reasonable. “According to our site meter, we’re already doing 5,000 page views per day just by people typing in Ebola.com to see what’s there,” said Schultz, who monitors headlines the way brokers watch their portfolios, to gauge his domain’s worth. “We’re getting inquiries every day about the sale of it. I have a lot of experience in this sort of domain business, and my sense is that $150,000 is reasonable.”
The full story is here, and for the pointer I thank Michael Rosenwald.
From a Jean Tirole press conference:
French economist Jean Tirole advocated Scandinavian-style labour market policies and government reform as a way of preserving France’s social model.
Hours after he won the economics Nobel Prize, Tirole said he felt “sad” the French economy was experiencing difficulties despite having “a lot of assets”.
“We haven’t succeeded in France to undertake the labour market reforms that are similar to those in Germany, Scandinavia and so on,” he said in telephone interview from the French city of Toulouse, where he teaches.
France is plagued by record unemployment and Tirole described the French job market as “catastrophic” earlier on Monday, arguing that the excessive protection for employees had frozen the country’s job market.
“We haven’t succeeded also in downsizing the state, which is an issue because we have a social model that I approve of – I’m very much in favour of this social model – but it won’t be sustainable if the state is too big,” he added.
Tirole remarked that northern European countries, as well as Canada and Australia, had proven you could keep a welfare social model with smaller government. In contrast, he said France’s “big state” threatened its social policies because there will not be “enough money to pay for it in the long run”.
There is more here, hat tip goes to Alex. And I very much liked this Appelbaum interview with Tirole,here is one bit:
There’s no easy line in summarizing my contribution and the contribution of my colleagues. It is industry-specific. The way you regulate payment cards has nothing to do with the way that you regulate intellectual property or railroads. There are lots of idiosyncratic factors. That’s what makes it all so interesting. It’s very rich.
It requires some understanding of how an industry works. And then the reasoning is very much based on game theory. Usually we don’t have a perfectly competitive market, so we use game theory, which describes situations with a small number of actors. And information economics, those are the tools. But then you go into the industries and try to think about the possible rules. It’s not a one-line thing.
I liked David Henderson’s piece, and this one too, Tirole on France and Canada.
Today’s Nobel prize winner in economics, Jean Tirole (working with Rochet) is a pioneer in one of the most important new areas in the economy and economics, the study of platform markets. Platform markets, also called two-sided markets, are markets where a firm brings together two or more sides both of whom benefit by the existence of the platform and both of whom may (or may not) be charged. A trivial but telling example is the singles bar that brings together men and (usually) women. Other examples are the Xbox, a platform for game players and game developers, credit cards a platform for buyers and firms that accept that card, newspapers a platform for readers and advertisers, and malls a platform for customers and stores to meet. An important example for the internet age is that Google is a platform of search users and advertisers.
An key difficulty in these markets is that the price charged to one side of the market influences the demand on the other side of the market. The price a newspaper charges to readers, for example, influences the number of readers but that in turn influences the price that the advertisers, the other side of the market, are willing to pay to advertise in the newspaper. It further often happens that one side of the market is harder to “get” than the other and so the profit-maximizing prices on the two sides of the market are very different. One side of the market may even be “subsidized.” The price that newspapers charge readers, for example, is often much less than the cost of the newspaper. Or, to give another example, Microsoft makes money by selling its Xbox at close to cost or even below cost and charging game developers a fee for the right to write games for the Xbox and a royalty rate on their sales. Google finds it optimal to give its services away for free and just charge one side, the advertisers, for being on the platform.
Antitrust and regulation of two-sided markets is challenging because the two sets of prices may look discriminatory or unfair even when they are welfare enhancing. In a mall, for example, it’s often the largest firm (the anchor) that gets the lowest price (sometimes even zero!). Does this represent an unfair advantage that a large firm has over smaller rivals or is it a rational consequence of the fact that the anchor store may bring the most customers to the other, smaller stores in the mall so that the total package is welfare maximizing? Is Microsoft engaging in predatory pricing if it prices the Xbox at or below cost? A singles bar may have “ladies are free night”. Sexist? or good economics? Platform markets mean that pricing at marginal cost can no longer be considered optimal in every market and pricing above marginal cost can no longer be considered as an indication of monopoly power. The analysis also impacts such issues as network neutrality. People worry, for example, that firms like Netflix may be the anchor stores of the internet and get better prices as a result. But the analysis of platform markets suggests that this isn’t necessarily welfare reducing. As these examples indicate is easy to go wrong regulation these markets and in fact Rochet and Tirole urge caution in regulating platform markets.
Rochet and Tirole provide one of earliest and most important analyses of pricing in these types of markets (see also here for an overview).
See Tyler’s post below for much more on Tirole.