Month: April 2008
Did you ever buy a carton of milk and find that, upon pouring the milk into your cereal bowl, it spills out onto the table? At the same time the milk runs down the side of the carton and appears to drip out of the bottom. Is this spillage a temporary aberration in the steadiness of the wrist? (But it spilt for Natasha as well.) Is it a design flaw in just a few of the cartons? If so, exactly what went wrong on the assembly line? Or does the product work this way on purpose? Does there exist an angle at which the milk can be poured without spillage?
Does this mean we won’t all evolve into uploads?
In November, the duo created Friends for
Sale, now one of Facebook’s most popular games with nearly 700,000
daily players. Users buy, sell and own their friends, as though their
friends were pets or stocks. Owners can control their acquisitions,
forcing them to do or say things, as well as sell them and turn a
profit. Those being bought and sold are also part of the game, going up
and down in value.
The game has become especially popular among Facebook’s crowd of users in their 20s.
Here is much more, for the pointer thanks to Marko Siladin and also Curt Gardner. I have to admit I don’t really understand how this works, but it sure sounds like a "Markets in Everything" entry.
A few points on the new plan:
1. The Fed is smarter than other regulators, the Fed can pay higher salaries, and the Fed has more independence.
2. Ceteris paribus, the Fed usually can do a better job than other potential regulators. If someone is going to oversee hedge funds and other non-bank financial institutions, why not the Fed?
3. An independent central bank is, all things considered, a good idea for reasons of monetary policy.
4. The Fed, as regulator of financial markets, has an incentive to keep economic growth high and this also militates in favor of the Fed as regulator. A new prudential regulatory agency for capital markets would not be responsible for the overall macroeconomy and would not necessarily have that same pro-growth incentive.
5. A regulator must, one way or another, be accountable to Congress and the President. The more that the Fed is accountable to the other branches of government on regulatory issues, the more it is accountable to them period. That would be true even if monetary policy and regulatory decisions were not converging in practice, as they have been in recent months.
6. In essence we are on the verge of "spending" some of the Fed’s monetary policy independence in return for superior regulation. That choice makes me nervous. Indeed, arguably we have already made that "expenditure."
7. The new plan, oddly enough, takes away the Fed’s power to oversee banks on a daily basis.
8. One important question is what kind of relationship would develop between the Fed and a new, unified office of prudential regulation. See #7. Even if there is consolidation of all the loose regulatory spokes (should credit unions really get a separate regulator?) into an oversight agency, we should somehow keep the Fed’s special access to bank balance sheets. I’m not sure how the Paulson plan fares on that score.
Note also that the Fed is deliberately non-transparent. Is that, when all is said and done, one reason why we are looking to it to enforce more transparency in other institutions?
Tullock next turns to what he considers to be the real reasons behind the backwardness of the social sciences, which in his view is due to differences in the social organization of natural versus social science. The first difference is the relative absence of applied research: because there is no way to patent applied research in the social sciences (He asks, for example, how does one patent a new sales technique?), little of it is done. But this means that, unlike the natural sciences, there are many fewer checks from the applied side on pure social science research (p. 149). Furthermore, the second motive for research, curiosity, is in the social sciences “likely to get distracted to essentially non-scientific ends.” This is because in the social sciences:
[TC: this is now Tullock]. . . there is a strong possibility of artistic distraction. Literature of all kinds is quite frequently based on careful observation of human beings. A large number of brilliant men led by their curiosity to study their fellow men have produced great literature instead of science (p. 151).
Tullock is responding to Mises and Hayek, who both thought that the social sciences were different because matters of human affairs are more complex and because of the subjective dimension of human choice and expectation (NB: the views of Mises and Hayek are not exactly the same and Hayek himself changed his position over time, laying greater stress on complexity rather than subjectivity).
I would note, by the way, that while economics lags behind physics, we understand the economy better than we understand the human brain or for that matter the deep ocean. I see complexity of the topic and accessibility to information as determining the progress of a science; I am not so far from Hayek’s view, although he underestimated how much progress quantitative and experimental economics could make.
It seems there were even ancient computers, not to mention advanced philosophy. So the point remains: the absence of a developed economics until the mid-18th century remains a startling anomaly in the history of ideas. Why was that?
Addendum: Arnold Kling comments.