Request for requests

Do please leave your requests for topics, questions, and the like in the comments.  I will try to cover some of them in the year to come or who knows maybe even tomorrow.


Wealth is equal to raw naked power: the power to fund PACs; the power to endow university chairs to influence people; the power to tear down neighborhoods and erect shopping malls.
to what extent does the increase in wealth and income of the upper x% (relative to median or some other broad measure) mean that to much power is concentrated in the hands of to few people
one amusing example is from Kahnemann's thinking fast and slow.
Small schools show the best results
b gates poured money into small schools
However, what gates didn't realize is that this is a small numbers artifacts; small schools show the best and worst results cause with a small schoool you can deviate from the mean ...there you have raw naked power having a huge influence on educational policy

Wealth still doesn't give you more votes.
Wealth might equal power, but is it really worse in a democracy than under other forms of government? A comparative analysis would be insightful.

In the US, wealth gives you access to power.

In Russia (among many others), power gives you access to wealth.

Cute but you could reverse the countries and it would still be true. Wealth and power are pretty interchangeable anywhere. Lots of US politicos might start out less than rich, but the successes don't ever end up that way.

Wealth gives you power to use the media and influence people the same way advertising does.

So your point is people do sh!t for money? Do we really need Tyler to explain that to us?

Wealth is certainly not "raw naked" power to tear down neighborhoods and erect shopping malls- only government and political connections can get you that.

I would like to encourage Tyler to encounter some pro-Hindu or at least neutral literature on the subcontinent, instead of just trendy PC and anti-Hindu stuff like that put out by Wendy Doniger and Muslim apologists. Frawley, From the River of Heaven might be a good start; also anything by Koenraad Elst.

Speaking of India, I would like Tyler to cover the results for the 2009+ India Pisa Results that were released last week.

Sadly very few people seemed to have noticed it while a year earlier everyone was hyperventilating about the Shanghai results.

Steve Sailer had an interesting discussion of the Pisa results--I agree it would be interesting to get Tyler's take.

What exactly is the argument against gold? I've heard it said that there isn't enough gold in the world to make it the only form of currency, but the gold bugs say that's because gold is underpriced. If gold were priced appropriately, there would be enough gold to replace all of the world's currency. What's wrong with that argument?

The real problem with gold, in my mind, is that gold supply is every bit as determined by government policy as is paper money supply. The only difference is that paper money supply is determined by democratic institutions ultimately answerable to elected officials or the population, while gold supply is determined by the willingness of the totalitarian Chinese government to devote labor resources to its internal gold mines. China already holds a pretty powerful card with respect to our fiscal policy; I don't want to give them leverage over our monetary policy, also. But maybe Tyler or Alex will tell me that I'm wrong about that.

Has gold mining output been very variable? I thought it wasn't.

In Romania, Europe's largest gold reserves have reportedly just been discovered.
I am on my way.

No more than 3% of all known gold reserves is in China, twice less than in the USA. You should worry more about Brazil (4%) and Australia/Russia (11% each).

It's procyclical: the money-value of gold rises during recessions as people seek security, which raises the value of each unit of money, which is contractionary. That's basically the mainstream argument.

Note that the money-value of gold under a gold standard would be determined by an issuing government, so it isn't any more credible in the long-term than fiat currency in that sense. The government can change the standard or end its convertibility suddenly. Indeed, that is precisely what happened.

er, whoops. The real-value of gold rises during recessions.

Gold is almost the same as 'fiat' currency in that its value isn't absolute (like say atomic weights), it's whatever it's perceived to be.

This is really a problem of currency as a medium of exchange anyway. There's no way to eliminate uncertainty and human action from modern, complex, global economics, which is really what goldbugs wish we could do. That and to take treasure-baths with Ron Paul:

I agree with this - the essence of Goldbuggery is a psychological dislike for uncertainty and discretion, but gold doesn't solve any problems it just sounds stable and old-fashioned and traditional.

CBBB, you have posted this comment repeatedly, and its nothing more than verbal diarrhea. commodity money resolves the two problems that plague fiat money. the first being that public choice economics will inevitably lead to the political class printing money in order to purchase votes. they finance the "bread and circuses" through the regressive flat tax that is inflation. governments cannot print gold, hence most politicians, bureaucrats, and economists despise it. the second problem that gold resolves is it limits the leverage of commercial banks. the threat of a bank run by depositors for their gold keep banks in check. today, there is outrageous risk taking because they believe the central banks will not let them fail, and are repeatedly proven right.

because of all this, gold is denigrated in the media for the sake of . the fact of the matter is, an ozt of gold purchased today will be worth ozt of gold. the value in terms of dollars or any other fiat currency is irrelevant. the holders of bullion bars and rounds can sleep soundly knowing XX.XX% of their wealth is safe from the political class and the financial elites. they do not need to fear a Weimar Germany or Zimbabwe-like event.

Why do universities (in the US and Britain only) have endowments, and should they? And why does no one but Henry Hansmann write about this question?

Everyone wants to be well endowed, don't they?

I'd like to see you engage some of the heterodox crowd given the field's failures wrt the recent crisis.

E.G. Keen, Vienneau, Yves Smith

Isn't Tyler still basically Austrian, albeit an Austrian with a more subtle capital theory than is generally the case? When did that stop being heterodox?

Actually, it would be nice if Tyler provided his personal summary of the ratex/ABCT theory laid out in Risk and Business Cycles. The discussion at descends into bickering even on a good day.

Tyler is not an Austrian. And Austrian economics can say it's heterodox but until it stops coming to virtually the same policy conclusions as 'orthodox' free market economics I won't be able to take that assertion seriously.

Keen and such distinguish Austrian economics from the orthodoxy, as far as I am aware, even if they disagree.

Austrians and the mainstream differ most obviously in monetary policy, for one thing.

Keen actually discusses how closely linked Austrianism and neoclassicism are in his latest book.

Monetary policy is the only area they differ.

"Monetary policy is the only area they differ."

Well, that's rather wrong. To take only one other area of marked difference, there is methodology. Maybe you shouldn't go to Keen for an explanation of how they differ, but rather look at what actual self-avowed Austrians and Neo-classicals have said on the subject.

As for drawing the same policy conclusions... to the extent it's true, and to the extent that Austrians even among themselves draw the same conclusions, it's not a sufficient reason to object to their being called "heterodox". Further, you seem to indicate a preference for the heterodox, hence your defensive need to dissociate it from Austrianism. Your dislike of the policy conclusions is certainly not the touchstone of validity correct theories of econnomics.

Serious question: how is the Austrian school heterodox? If it's heterodox, what's supposed to be mainstream, and how does it differ? It certainly doesn't seem like Keynes is all that favoured by most policy writers.

Well for one, most Austrians are against central banking altogether. Everyone might not be pro-Keynes, but that hardly makes Austrians also orthodox as there are plenty of bigger and more prominent schools- the Chicago School being the notable one. Don't forget the monetarists, supply siders, etc.

The mainstream is the New Keynesian three-equation model, built from a merger of two of the three propositions of monetarism that Friedman set forth, plus a lot of neoclassical individually-rational microfoundations that induce a broadly Keynesian dynamic (where expansionary policy is expansionary).

Austrians reject ratex, reject neoclassical modeling, reject monetarism, and reject the broadly Keynesian dynamic, so...

Right but they do seem unable to come to any conclusion other than government = bad, which neoclassical libertarians also do.

In 2012 you will embrace bitcoin, so I'd like you to close 2011 with another ill-researched dismissal of the topic. "It can't work as a currency if the price moves wildly relative to the dollar" or something like that again would be cool.

Who's right about Glass-Steagall?

Favorite musicologists, academic or otherwise.

More about chess! Make it into a chess blog, with economics on the side.

I guarantee: once you write about strip chess, your blog will skyrocket.

By the way: any girls interested? ;-)

What proportion of the world's population is employed (defined by working at a task that is not unorganized food gathering for at least 20 hrs per week)? How will this proportion change over the next 100 yrs. Will productivity gains obviate the need for more than a small fraction of the population to work? In such a world, how is economic output distributed? Who gets to, or has to, work? Do the workers run things, or are they a servant class to a tiny percentage of the population who are information controllers?

Good topic. I second this one!

Are you where you want to be (what you write is really what you want to write,) or are you currently doing what you do because it's a path to getting to where you think you want to be?

And where is the shortcut?

He's a tenured professor with a blog, where else could he go?

To a more prestigious university. To an "industry" job that pays 10X more. To the US Treasury? Retire and become a full time writer. Always lots of choices.

This space has mentioned the cultural infrastructure necessary to sustain a republican form of government (usually mis-labeled "democracy") and/or capitalism. Especially given the current financial troubles, it seems that this would give rise to more than one line of exploration.

1) To what extent do free-market economics and republicanism depend on/support each other?
2) There appears to be a positive feedback cycle wherein it is easier to expand the scope of government in the economy of a republic than to contract it. What mechanisms might counteract this phenomenon? Are we doomed to only experience these liberties cyclically?
3) In the West, the twentieth century bore witness to dramatic reductions in the cultural power of numerous institutions (church, family, fraternal organizations, even habitual groupings for entertainment). What effect does this atomization of our social spheres affect republicanism? Capitalism?
4) The US electoral college has been criticized on several fronts. One defense is that (except for Reconstruction) it has prevented mere regional parties from gaining power, and ensured that we will always have two centrist parties. In turn, these centrist parties create a relatively stable political and economic environment, encouraging long-term investment. Agree or disagree? Evidence?
5) Have the regulations increasing reporting requirements and the quarterly reporting of corporate financial results made corporations reluctant to invest in long-term and/or more risky ventures? Should we be encouraging companies to be privately held as a partial remedy?
6) What is the rate of economic/political acculturation of immigrant families into various host nations? Has the rate changed? Do concerns of this matter support the policy of immigration quotas to preserve the infrastructure necessary to preserve capitalism/republicanism? If so, what is the optimal flow?

Admit the error of your ways and resign

Then what the hell would you do with all your surly, unemployed time besides play hard to get with your internet crush?

Nice one I was trying to participate in a civil discussion here and you have to resort to personal attacks.

LOL. Irony much?

I don't follow

The next time you post here in a civil manner, without resorting to attacking Mr. Cowen, will be the first.

Follow that.

No, you're not trying to participate in anything. You're just being annoying.

What do you think of Noam Chomsky's work?

Which area? Linguistics and grammar? I thought that was pretty impressive. The rest of it, not so much -- so I guess I would like to hear Tyler's take.

I am interested in knowing how the Housing industry's percentage of GDP has fluctuated over the past 30 years and what if any effect this may have over the overall GDP?

One would think that by now everyone has a house already.
I'll inherit my parents' one, why should I build one of my own?

Your German sense of humor isn't easy to understand. Surely you aren't ignoring scrappage, population growth, rising/falling affluence, changing living patterns, etc?

Our population is shrinking.
Some cities actually blow up blocks of apartments (after the remaining tenants have moved) to reduce supply and regain land for parks.

Yes, I'm aware of the demographic challenges in Europe. But I think the question you replied to was about US housing.

Given the events of the last 3-4 years, what were you wrong about? What were you right about? Is there an underlying lesson?

More science content, particularly science content focused on scientists. Do what you can to make them celebrities, at least for the nerds reading this blog.

Why don't we trust/allow computers to set monetary policy or perform other tasks, like redistricting?

What rule would the computer use to set monetary policy? Or is this the same as Sumner's NGDP idea?

That would be a question to be answered after agreeing to do it, wouldn't it?

Actually, courts have developed rules on this and it would be interesting to write the algorithm to see how challenged and unchallenged districts depart from it.

I suspect there is a conspiracy of silence between the two parties for most of the districts.

I believe the first impartial system was put in place in the South during the Civil Rights movement.

Sorry, but the USC rule that requires that the census counts of congressional districts not vary by more than one in a given state REQUIRES that the lines be screwed up at the micro level. We won't have decent lines until the lawyers on the court admit that they are not mathematicians, and leave the game theory to us.

And yes, it is fascinating to watch the duopoly play the redistricting game. Of all the ways that political power is corrupted, this is the most pernicious, as it necessarily gates the others.

Then your question is really "what monetary policy should we set."

On two occasions I have been asked,—"Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?" ... I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a question.
—Charles Babbage

Because I don't trust the programmers of these computers.

Make more appearances on EconTalk please.

Some more on a single land tax, please. Would it have dampened the housing bubble? OK, it's politically difficult, but is that a reason not to talk about it?

Have you read Matt Ridley's "The Rational Optimist"? Thoughts?

Thanks, Gabe.

What I'd love to see is Tyler make some sort of a Simon-Ehrlich wager . Can Tyler announce a public wager on MR that we might then find a counter-party in the blog-sphere (Krugman? Taleb? ).

Not sure what might be a good betting point though. Bitcoins? Death of the Euro? Some metric of TGS?

I'll bet against death of the Euro any time.

+1. A few countries may get kicked out, but there will forever be a currency union between at least a few European nations.

Why don't hotels include toothpaste in their free toiletries?

Toothpaste mafia?

Greater heterogeneity of tastes than, say, shampoo. And I don´t just mean flavor, but other features including medical ones.

What's the incidence of hotel customers wanting psoriasis or color-safe shampoo versus those wanting fluoride-free or sensitivity-reducing toothpaste? I'm not sure heterogeneity explains it.

Corporate Personhood: is it the preferred mechanism of capitalist organization and why/why not?

Your question needs further definition. First, what is the universe of legal constructs available for one or more persons to build a business? Partnerships, limited liability companies (LLCs), etc.?

What are the rules to insulate the partners/shareholders from personal liability -- i.e., if the partnership goes bankrupt, the partners are often personally liable for the partnership's debts. Not true for corporations. If it were, then hardly one would ever invest their retirement in a company. It would really stink to be on the hook for more than you invested.

Also, what do you mean by personhood? The ability to contract and hire people? It would be hard to run a business if you can't hire anyone.

Dear Prof Cowen:
May I offer my thanks for all the hard work you put into this blog ?
As to things for next year:
I think we all agree that the economy is not doing well, and that the current slump is the worst since the great depression.
There are various views on what actions we can take to ameliorate the situation.
I think I understand two of these views: There is a camp that says we should pump money (helicopter drops) into the economy - I think this is what Dr. Krugman advocates.
There is also a camp that advocates taxcuts and reductions in gov't regulations; I think this is the view of the GOP freshman and many of the candidates in the GOP field for the 2010 presidential nomination.
without debating the merits of these, and other proposals you may know of, I would like to know, what happens if we try one of these ideas, and it doesn't work.
IF we borrow, say 1 T dollars, and the economy doesn't improve, or if we cut tax rates on (say) the upper 1% by 50%, and the economy doesn't improve, what then ?
And how does this change our views on what we should or shouldn't do

Actually, the economy is doing better than it is generally portrayed in the media. Still a long way to go, but far better than 2 years ago and nowhere near as bad as the worst periods of the 1981-2 recession, for example.

If you are college educated, your unemployment rate is 4.5%. Yes there is a really rough transition going on right now for uneducated, lower skilled labor. But they are a minority of the labor force. Corporate profitability has never been stronger, personal debt service is the lowest its been since the mid 90s, consumption is higher than when this recession started, etc.

The Great D can no longer be reasonably compared to our current situation.

What are the impacts in moving from home production/shadow economy to the market economy, and vice versa. For example, around 1880-1900 upper middle class families in the North had Irish maids and cooks, paying salaries, while the kids played in the streets. As the home gets electrified, housewives at the same social level started doing their own housekeeping, just buying appliances. Then in the 60's or so people started eating TV dinners and eating fast food. With the freed-up time they started being helicopter parents, paying lots more attention to their kids (see Megan McArdle's recent post on the decline of spanking). Didn't all these changes affect statistics on productivity, etc.?.

I would like more content on schools and healthcare. Specifically, I heard somewhere recently (though I can't remember where) that if you factored out car crashes and homicide, America would have the highest life expectancy in the world. I want to know if that is true and what kind of implications it should have (if true) on policy. But a general fleshing out of both these topics would be appreciated since there seems to be so much data.

Can you simplify macroeconomics for someone with far less intelligence than you? I know that's a tall order, but macro doesn't make intuitive sense to me. What are your favorite analogies/narratives for how the fed works?

What was the most important statistic/data of 2011? A top ten would also be nice.

That's groveling a little bit. Surely you can use wikipedia. Fed has a dual mandate. Is the currency authority. Monitors financial activity and has private information on the large investment banks. If I had to say, they make sure the practical problems of the implementation of money does not hinder economic activity.

Macro is the worst performing (empirically) area of economics. Experts can only guess and offer a string of logic.

why isnt there a developed "free north korea" movement in the west as there is for iran, myanmar, cuba, tibet, etc?

What do the North Korean exiles say about it?
Or do they all go to South Korea and just wait for reunification? I am from West Germany and I think maybe it's the same as in East Germany: if you have an alternative that you can escape to, a country that welcomes you openly, supports refugees financially, and where language and culture are similar, then emigrating is enough.
Iranians on the other hand have nowhere to go, they don't want t live in Iraq or Afghanistan. Same for Tibetans. Different though or many Cubans who could come to Miami, I concede.

Even many of the people who leave North Korea are STILL Pro-North Korea - unlike the Cuban exiles, etc.
The North Korea situation is pretty different since it is a regime fundamentally based on nationalism in a way that has not really been seen in the world since the 1940s.

I think it's got to do with having a critical mass of exiles settle in the US to get noticed and make noise.

very insightful question.- congrats

1. Co-ops: I tool a uni course on cooperative firms and found the literature to be pretty polarized. I'm surprised by the lack of discussion of that literature in this network of blogs as it seems to be an important and interesing debate.

2. Biology: you do a lot on psychology but it seems like biology is opening up to a lot of network/ dynamics/ complex systems theory that has an analog in economic systems.

3. Canada and austrailia/NZ: theyre important countries. you do a lot more on the US and emerging markets and Europe.

4. Epistemology. You've said philosophy doesn't fit blog formats well but this has a lot of applications in Econ and you are insightful in this area

5: yourself. I want to 2nd the people requesting an explication of your personal ideology

#3 - Canada sucks should have been annexed by the US in the 19th Century so that I could move to California or NY without a visa

6. A substantial post on fiscal policy. I read via Krugman the new David Romer paper claiming to settle the effectiveness of fiscal policy with an abundance of new studies. Do you agree? I've always been under the impression that fiscal policy was weak and that the multiplier was "roughly zero".

I'd like to see more on this also. Krugman says the other side is stupid. The other side says Krugman is stupid. Is it all just bias?

Is fear still more valuable than love - or would Machiavelli have to rewrite in 2012? Or would he even mention love this time around?
How do culture and economics mix? For example I remember in a post this year it was mentioned that Germans are frugal and expected the Greeks to also be frugal. Are some cultures simply more economically sound than others?

(Says the German.)

I think Machiavelli wrote that FOR PRINCES it was better to be feared then loved (ie this rule was not meant to be universally applied to all political situations). He also wrote about republics and I believe preferred republics to principalities.

I was thinking of Machiavelli in terms of what advice he might give to modern princes and other non-republics, which seem to be re-evaluating the love/fear issue right now after the Arab Spring. What would he have written to al-Assad, Gaddafi, Kim Jong-un, The Communist Party of China, and so on? Anyway would you say that the fear/love question really doesn't apply to republics? Perhaps it is better for the government of a republic to be more loved than feared, but many would say that the amount of love and fear required for the government to survive changes with the nature of the times, which I find interesting.

I thought about somehow working the words marginal revolution into the last sentence but I resisted.

An economist's perspective on loneliness; how to optimise (temporary) period of time to be spent alone.

What precisely is a financial meltdown. 'They' said if TARP isn't passed or AIG isn't bailed out, for instance, there would be a meltdown. Lets say a financial meltdown starts at 8 AM, on Monday 2nd Jan 2012. What happens at 9 am? What happens on Tuesday, what happens in a weeks time? How terrible a thing is a financial meltdown?

I'd love for you guys to write about economics as a science--to what extent economics IS a science, and if so, in what way. Specifically, I'd like for you to support/ defend/ criticize the Austrians' idea that economics is a "deductive science" to which the concepts of validation and falsifiability do not apply.

To no extent is Economics a science

Somewhat related, MR is good about pointing to interesting critiques of their views by others in their field. But what premises do Cowen, Krugman, Caplan, Delong, etc share? Are there good / worthwhile / interesting critiques of those premises?

I'm asking for more philosophy tags.

1. I'd encourage you to read the Arsenal of Democracy, a first-hand account of the U.S. economic mobilization prior to and during WW2, written by Donald Nelson, the chairmen of the War Production Board. It begins with Roosevelt giving him nearly dictatorial power over private and public production, and is an incredible story of how people and firms put competition aside for something larger. Whether it was the acquisition of aluminum, rubber, or engines, this is an uplifting history of success in a variety of industries. I'm a capitalist through and through, but there are some important anecdotes and lessons here that are never the topic of history courses I've seen taught at any level. I have a copy myself that is quite marked up, and would be happy to point you to some of the most insightful passages.

2. Last time someone told me that I could "sell ice to eskimos," it got me thinking: is there anyone in the world that does just that? I figure there must be, albeit on a small scale. Perhaps there are other idioms which could be looked at more literally, and combined they might make a great feature piece.

3. A look at the diamond industry and prices over time. How are prices maintained if synthetic and CVD diamonds are now nearly indistinguishable?

#3 Huh? The same way the price difference between Champagne and Sparkling Wine is maintained. Could you make something as good as Cristal using grapes from outside Champagne? Probably
Could you charge as much as Cristal for your product being labeled "Sparkling Wine"? NOPE

PhD in Economics Please


I got my wife a synthetic diamond (not our engagement ring, but one subsequent) because she like me doesn't wish to add to exploitation of diamond workers. But not all diamond recipients would be so receptive. I'd wager a guy who didn't clear that first with his beloved would be considered cheap if he told her and a liar if he didn't.

I got my wife a synthetic diamond

You should have given her a piece of high quality glass instead. Just from looking at it, you, she, and 99.9% of all other people would never be able to tell it from a real diamond, synthetic or not.

Understood but the synthetic is more neat-o, and it cuts glass, and it was still inexpensive.

Is Alfred Marshall's Principles of Economics still a good text for learning economics?Is any of it outdated? Is there a better choice, other then Smith, which is available as a free e-book?

What would happen to the economy if and when astronomers detect a large asteroid in a collision path to the Earth? I suppose if the time to collision is short and people believe no action can avoid the disaster, incentives to save will disappear, bank runs will follow and hyperinflation. If the time period is such that a possible action , like deflecting the asteroid trajectory , has a non-zero probability, some people will nevertheless decide not to save anymore and maybe the interest rate will have to go up. Several scenarios can be imagined. Is it possible to write a model?

Invite a person to blog a headline piece where you are not the expert.

Create a point-counterpoint debate between two experts on the same subject on the same website.

More on William Barnett's book and thought. By more, I mean critical evaluation, and maybe a suggestion for avenues for the non-economist to approach.

What do you think of Cal Tech's Social Sciences PhD program compared with mainstream Econ programs? Does the lack of macro make it more intellectually honest?

Reading the description this sounds like what an Econ PhD SHOULD be

Have Tyrone write more posts. Many more posts. On topics of his choosing.
(And have him co-author with Alex occasionally.)

Yes! More Tyrone, please!

What do you think of MBA students? Is the degree anything more than a signaling tool?

What do you think of the expansion in graduate education? Is the signal being degraded by the increasing number of graduate programs? What will be the consequences?

I'd like stuff on commercial trust mechanisms in System D regions. How do they handle things escrow, loans, investments, dispute resolution and restitution and so forth and product quality concerns such as branding and proving that the product is safe for use and other things in that area.

Also security mechanisms for dealing with thieves or interlopers.

That's a lot of stuff, hope you can get to at least a little of it.

I think maybe you have covered this in some post, but you could talk about the relationship between food, the great discoveries, and the beginning of colonialism. After all the spice trade as a important driver of the great discoveries.

Look at the social costs of HOV lanes versus benefits: increased accidents, death, loss of property along with increased traffic waiting times versus fuel savings. Maybe there is some evidence out there on this?

Discuss the way in which higher education makes the taxation system far more progressive than is generally observed. To wit, the "rich" ($250k+ in income) have to pay upwards of $250k to send their children to college, while those making under say $75k, pay close to nothing, with a slide scale between those numbers. For those near the bottom end of the "rich" threshold, college expenses can move their effective tax rate well above the 60% mark, while the aid received by those at the other end should be considered income in this analysis.

Similarly, is there really a middle-class squeeze, or do I just think there is?

If I made less, my kid could have gotten substantial financial aid from, say, Harvard.
If I made more, the tuition wouldn't really have made a dent in my lifestyle.
In the middle, with no financial aid, a top school doesn't make as much sense as a school one tier down.

I think the problem is sharp eligibility cutoffs. There's a step-change at some income level that causes this; rather have a smooth variation from high-aid to no-aid as a function of income / wealth.

How do we actually get banks that are "small enough to fail"?

Is the Euro crisis really mostly about keeping banks afloat (again)?

More Tyrone wouldn't be bad.

1. Why do we want our economies to grow at large rates? What would be the downside to having planned growth at 1-2% yearly, with an adequate plan for long-term resource expansion, unless we know for granted that there will be more resources for us to use (which we currently do not)?

2. Climate and economics related stuff would also be interesting. Where's the value for you, Tyler, in protecting the environment, and where does it stop? What should be done more, what less?

1. Resources are not used arithmetically more with economic and population growth. Technology has allowed us to use ever less of certain ones, and completely substitute away from others. This will not cease.

2. He covers this a lot already.

My suggestion: Why has the Northeastern US -- despite having the world's leading universities and being the global epicenter of finance -- created so few innovative technology companies in the past 30 years? Nobody thinks it is odd when people like Bezos and Zuckerburg leave the NE to start their companies. We take it for granted that if you want to do technology you should relocate to the West Coast. If we were comparing two nations, we would call this a brain drain.

There is a fair amount of innovation out east, especially compared to other nations or even other parts of the US. Just off the top of my head I think of EMC, AOL, and Foursquare (not to mention GE, etc) as E Coast founded companies. Only 'Silicon Valley' does much more. SV has the critical mass of people and culture devoted to venture capital, but it's not a monopoly.

This is great. I have two requests (for Tyler or anyone who may have some answers):

1. Could you address the idea of preference preferences? It strikes me that psychoactive drugs alter one's utility function. Can that be modeled, or does that put you in non-linear-dynamical-system territory that doesn't admit functions as we know them?

2. Am I being overly simplistic in this stripped-down political model? It seems to me that ideal welfare would measure your lifetime productivity at birth and then compensate you to the extent that it falls below $X. Obviously this comes at some cost, but it seems to me that a consequence of Arrow's impossibility theorem is that there's no political solution to choosing X (and how the cost of X would be distributed).

Thanks to Tyler and all who can shed some light!

Is money a function of social hierarchization or of division of property? (If both, is the consolidation of two functions by one substance elegant or inelegant?)

Why does Switzerland have a low unemployment rate

1. Why don't you like David Foster Wallace?

2. Talk more about Roissy-esque topics, e.g., Game, feminism, the sexual/relationship market, what men and women want (and the ramifications thereof).

I appreciate how subtle you can be (much more subtle than Krugman et al.), but sometimes it seems like you avoid controversial topics or otherwise approach them very obliquely ("cosmopolitan issues"?), i.e. that you save your best for when the stakes are lowest. It also seems like Roissy gets under your skin (or used to) in a way that you're reluctant to admit/interrogate.

My suggestion would be a more in depth take on the situation in China. Can they keep on growing for another decade with the growth model they got right now, or will we see in comming to a sudden stop in the next years.
The bears like Patrick Chovanec see the credit bubble popping every minute, while the bulls like Arthur Kroeber see room for more growth, and China on a sustainable path. No bubble as far as he is concered (i.e. in this ppt:
What is your take on the debate?

In this, like most things, the answer is usually the muddled middle. China cannot keep growing at these rates (no one can, law of development), nor do things have to come to 'a sudden stop'. Growth rates will slow over time until they are close to the rest of the developed world, maybe 2-3%

Do you think there is a natural end to capitalism? If so, where and why?

Do you believe new big ideas (E.g., Christianity, Marxism) will matter much in the future? Or will it be millions of small ideas the rest of the way out?

From Tao Lin's twitter:

"Imagined malcolm gladwell in bed idly considering writing a book titled 'the shitstorm' documenting 'the darker side' of 'the tipping point'"

I feel that that's something you could write.

I'd like to see some thoughts on a libertarian/free market framework for limiting non-state coercion, i.e. the "local bullies" Noah Smith discusses here (

To the non-libertarian outsider, it has always felt like this is a key blind spot in free market thought

(My iPhone had problems submitting, apologies if this already made it in):
David Goldman, former head of fixed income research at Bank of America and senior editor of First Things, recently wrote a book: "How Civilizations Die (and why Islam is dying, too)" He makes many claims, but I would like you to consider two in particular:
1) Analysts (Political, Economic, Social, etc..) work with an unstated assumption--- that societies make rational choices within the context of expecting to exist indefinitely.
2) Many societies/cultures are facing collapse as a result of demographic decline unseen in major societies since Ancient Rome. This is leading to lots of behaviors which are not predictable or explainable under the normal assumptions. Just as a man with two weeks to live may be acting perfectly rationally in blowing all his money in Vegas, societies on the verge of collapse may find it perfectly rational to engage in highly risky behavior, i.e., Iran.

By the way, David Goldman's subtitle for the book is based on his claim that the Muslim world is facing a demographic collapse equal in magnitude to that of Europe, but as they are far poorer, they will suffer far more.

D'oh, my request is that you read the book and respond to the claims.

1. Engage with the arguments by Sailer and his ilk that Mexican immigration is different than the waves of the 1920's, 1880's, etc.

Specifically, they cite the example of New Mexico, current Latin America, evolving California, etc. where class-based hierarchies that closely mirror IQ differences have proven remarkably stable to all sorts of interventions over the time span of centuries (whether peaceful in the case of NM or violent in the case of the Mexican revolution).

Also, they point out that communication differences as well as the changed nature of the economy now (i.e., much fewer blue collar manufacturing jobs that transition families between immigrant manual labor to white collar knowledge industry workers, fewer overall manual labor jobs such as garment factories, the presence of a welfare state, etc.) make assimilation a much harder proposition.

Interesting to see what Tyler and Alex have to say in response to these arguments...

2. Talk more about the insights of economic geography in relation to free trade (i.e., given the increasing returns to knowledge concentrations and complex manufacturing ecosystems, does the argument for outsourcing and the US moving up the value chain really hold water?)

Also, would love to see Tyler and Alex address the hidden rationing argument for Medicare supply restrictions (i.e., since outright rationing of care is not practical given political constraints and supply-induced demand common in health care, Medicare has a strong interest in restricting the number of physicians via residency spots).

From my experiences with CMS, this argument seems to affect their decisions strongly (especially since the main drawback of higher prices by current providers is limited by existing price caps in the form of DRGs, RVU schedules, etc.) but having an actual economist look at this would be very interesting given the implication that expanding access would be highly harmful to overall health care cost borne by the government.

(1) The developing science surrounding complexity theory and its application and potential to more accurately model social, economic, and political dynamics. Additionally, opportunities for it to more obejectively macro vs micro decision making and deliver a more transparent governance framework. (2) The concerns about america's aging infrastructure and fall from being an international leader. What's needed, how much should be invested, how can you value/define 'all' the benefits (direct, fringe, residual, etc) and fairly compare it against 'all' the costs (including opporutnity costs). Lastly, what are your thoughts about privitization opportunities or PPPs?

My request is for Tyler to blog more on the question, "what is art?", and on various theories of aesthetics. I would be especially interested in learning more about his views of Plutarch

If you're still reading at comment #144, please weigh in on the Atlas of Economic Complexity (, and particularly the work by Hausmann, Hidalgo et al on the network structure of economic production. (Some papers:,

Evaluate the statistical evidence presented by experts by both sides in the largest class-action discrimination lawsuit, Dukes v. Walmart.

(1) What are the long-term consequences of having zero return on savings?

(2) What are the biggest differences between economics at the undergraduate and graduate levels? Put another way, what do people like me with a BA in econ misunderstand the most?

(3) Why are there so few breakfast-focused restaurants in the Washington DC area?

Bitcoin is dead, long live Ripple.

A few requests:

1. Thoughts on Le Guin's The Dispossessed (a renewed request!)

2. Analysis of Australia's housing bubble (or, alternatively, an explanation why there is no bubble)

3. Analysis of China's housing bubble (what consequences for world and region as it implodes?)

4. Thoughts on speed chess


oops - was still editing

4. Thoughts on speed chess addiction (hello, my name is DKN and I am a speed chess addict)

5. Thoughts on Mieville's Embassytown

Tyler you have covered solar power a lot recently. Can you also target other alternative energy options: gas-to-liquids processes, geothermal, wave power etc.


Any thoughts on whether automatic stabilizers might tend to be more (or less) effective in a progressive consumption tax system than in an income tax system? Obviously either system could be designed well or poorly...

What would happen to productivity measures, median wages, GDP, unemployment, gini index etc. if the standard work week was 30 hours instead of 40 and what would they be like if it were still 60 hours like it was in 1900

I never got gifts other than candy and food during Hanukkah, and neither did any Jewish kid I know. I doubt if people who claim to be Jews and 'Chr-stmasify' Hanukkah are actually Jewish.

Continue discussing the current sovereign debt crisis, monetary policy responses, potential debt issues in Japan, and potential problems in China.

If you lived in a world where a) you still had your PhD, b) you HAD to do something directly related to your PhD, but c) you couldn't be an academic and d) you couldn't blog or write in any pop-medium full time, what would you do?


1) Was the idea of a "middle class" an anomaly of the 20th century?

2) What will kids being born today find weird about life in the 2000s when they reach mid 30s?

I need some help with the true basics...
How about a place (even highlighted links on the right), with discussions/primers on questions like this:
What is Keynesian Economics, and how is it manifested today?
What is the alternative to Keynesian Economics, and how would it be implemented today?
If small government, lower taxes were really implemented, what would happen to basic services (street lights; landscaping for public parks; infrastructure upkeep and enhancement)?
There are quite a few other "basics" that we need. I read you blog, and feel enlightened, but also at times, pretty lost. Please help the ignorant among us (me!) get a better grasp of some basics.

Yo quisiera ver mas sobre paises latinoamericanos. En particular, Bolivia me parece un caso interesante. Todo mundo le gusta contar la tema de Morales como la tercer parte de la trinidad con Chavez y Castro, pero a mi me parece que hay elementos que Bolivia quiere convertirse en la segunda Noruega.

Please list your 10 favorite living composers, and your favorite "barely known" composer of the 20th century.

Assuredly buried all the way here at the bottom--I really enjoy it when you kind of go "off-topic" and address art/culture/writing/etc. My specific interests lie in the connection between art and politics/economics, and you often bring a unique (and educated) view to those topics.

If the paleo movement really takes off, what impact will it have on relative prices, the economy, agriculture and the healthcare system? Would the current population be sustainable?

-A critique of NGDP targeting
-A critique of standard welfare economics, a la Russ Roberts

In my opinion the most important cause of America's stubbornly high unemployment levels and declining living standards is that American wages are far too high in the new global economy. This huge disequilibrium is driving a long-term process that will continue until American and Asian wage rates have "equilibrated", and Asian labor is no longer cheap by American standards. This happened with Japanese labor costs, and I wouldn't be surprised if Chinese wages are higher than American wages in a generation or two.
I'm focussing a lot of my thought on this crucial issue, and would love to read Tyler's ideas about it.

How much incremental social value do financial innovations provide? Algorithmic trading would be one example. Another would be investment banking activities beyond the simplest debt and equity instruments.

What are some options for what a revenue maximizing Tyler (or Tyrone) would do for a living. And not necessarily for yourself; Cass Sunstein is 'generating' quite a bit of growth cleaning up govt. waste, maybe billions.

I miss the Trudi/Prudi advice column you once had regarding dating and relationships.

Survey GMU's econ principles students and ask them:

1. their political party affiliation
2. what grade they rec'd in their last econ class(or use the grades from the current class)
3. whether then enjoyed the class

I suspect there is a correlation between party affiliation and whether or not they like the material.

Maybe too late but......

I agree, great blog. Ironically, since you believe the internet consumer surplus is small. More on food and economics, please, surely your USP. A specific on this subject; has all food been invented? It seems to me that the El Bulli style food is just desperate scrapings of the barrel, as we get close to the scorpion tail of marginal utility. We've had the six major cuisines around now for a few hundred years (Italian as the last?). Is it possible we could have 7 or eight?

What would high quality artificial reality do for the economy? I believe we are (relatively speaking) pretty close to this. Assuming the permanent income hypothesis is correct, wouldn't the economy shrink significantly if the major consumption was free or nearly free?

Why aren't more people scared of artificial intelligence? It seems clear to me that once we can upload ourselves, it is game over for the human race, since we would then have the ability to edit our morality and preferences at will. Due to the limited ability of human intelligence, cooperation is the best strategy today for increased wealth, but winner takes is best strategy if you can upgrade your intelligence regularly. I am tempted to say we should ban AI research, but that's not going to stop N.Korean's types, which is kind of the point, if you think this is going to happen, better make sure it is you not anyone else.

One other item: you took suggestions for your class in Berlin's reading list, but you never said what the final list was. It just seems fair to share.

"As a zero marginal product worker (with little prospect of changing that condition), what should one do with one's life? How to find respectability, happiness, and a sense of achievement?"

(I once requested this topic by email some months ago (and I think you said you would blog about it), so I sincerely apologize if I have missed your addressing it in the meantime.)

Thank you and happy (non-zero productivity) holidays!

Any research on prevalence of (different types of) cognitive errors in different groups.

Economics or finance book recommendations to help well-meaning left-wing college students understand how the world actually works. Specifically, I am thinking of humanities students with weak math skills.

an economist does lunch, obviously.

Heath, Economics without Illusions

What does TGS mean for convergence?

Any thoughts on this?

Review of 'Microeconomics: Behavior, Institutions, and Evolution' by Samuel Bowles.

Your best responses often include recipes for cooking at home. Please continue the tradition.

What is your incentive to write this blog? Has a blog like this led to professional credibility supplemental to academic publishing?

The expected expects of repealing online gambling in the US. Finally US betting markets with real money!

US prediction markets that is..

Lords of Finance - useful in evaluating the options for central banks in 2012-15?

How much should renewed study of the history of central banking (globally) be encouraged as a way of grounding the debate about what should work (or be tried) globally, going forward?

What should be he next era of central banking studied by Liaquat Ahamed or those like him?

Interview Liaquat A?

Americans don't seem to want much of a manned space program, with colonies on the Moon and Mars and miners in the asteroid belt, and all that. The thought of such evidently makes most economists engage in projectile vomiting. It's the technological stagnation We All Want!

So, what's possibly going to happen in manned space? In another century, another country?

Assume that the challenges facing spaceflight, etc are met, then eventually you will see the first human born off-planet. So, at some future point, you will likely see the population of the solar system exceed that of Earth's. Then the taxable income of the Solar system will eventually exceed that of Earth's. At that point, things could start to get really interesting.

Humans born off-planet, hmm. You do know that the US government has no plans for people to live in space for other than temporary periods? And that the possibility that children might be born in space has never been addresed by the government -- by NASA, by Congress, by the White House science advisor, or anyone else -- since NASA was founded in 1958? I know the science fictional notions of future methane-breathing Virginia Dares is close to many of our hearts, but the sad reality is that populating the solar system isn't something the US government (or more US citizens) want to do.

Forget the SF, forget the dreams of manifest destiny and the ineffable urges that fill our glorious souls. What's the future of space flight look like if Americans and Europeans and others stay on their present course, and nothing but economics keeps them in space? Can we stay planet bound for the next billion years?

Seriously? We are at the very start of this billion year spree, and barely a century past the fragile beginnings of powered flight. Today there are a number of individuals with their eyes fixed on the stars and they are making serious & credible efforts to gain repeated entry 'up there'. They won't be the last either. What are the likely chances that - within the next fifty years - a child is conceived in space? Seen any couples booking flights for the Not-so-Virgin Galactic? Now, I'd be the first to agree that there are significant challenges to be overcome, however if you believe in the ability of humans (the ultimate resource) to prosper and succeed despite long odds, then you would have to acknowledge that humanity's expansion into the solar system is a possibility, even if it does take a few thousand years. Wasn't it Heinlein who observed that "if you can get to low-Earth orbit, you're halfway to anywhere".

If you are talking about 1000-year horizons everything is idle speculation.

The Top Ten policies that governments and economists have to get right in the next ten years.
Does an increasing population mean that humanity has more time available to it, to solve the significant problems facing humanity?

Effects of extreme life extension on savings and consumption. ~ How different will the picture be if the treatment is an expensive one or a cheap one , one which has to be administered regularly or one which can be administered once in a year?

Rudy Gay: Zero Marginal Product worker?

Would you care to comment on this post by Intrfluidity:

It was pretty unconventional and it seems strangely (even frighteningly) convincing. It sure is a breath of fresh air in the finance debate. Thoughts?


Opacity is absolutely essential to modern finance. It is a feature not a bug until we radically change the way we mobilize economic risk-bearing. The core purpose of status quo finance is to coax people into accepting risks that they would not, if fully informed, consent to bear.[...]One purpose of a financial system is to ensure that we are, in general, in a high-investment dynamic rather than a low-investment stasis. [...]Opacity and interconnectedness among major banks is nothing new.[...]This is the business of banking. Opacity is not something that can be reformed away, because it is essential to banks’ economic function of mobilizing the risk-bearing capacity of people who, if fully informed, wouldn’t bear the risk. Societies that lack opaque, faintly fraudulent, financial systems fail to develop and prosper. Insufficient economic risks are taken to sustain growth and development. You can have opacity and an industrial economy, or you can have transparency and herd goats.


A general rule for retirement is the 4% of assets rule. If you expect to withdraw from your portfolio for 40 years or more, you can probably safely withdraw and spend 4% of its value every year.

This rule has certain assumptions built in about reasonable rates of return. If we are in an era where where we expect real rates of return to be low for, say, the next couple of decades, do we need a new rule of thumb?

Why don't more policy discussions (macro, trade, structural reform, etc.) explicitly invoke and/or rebut Buchanan and Tullock? Why isn't public choice econ central to any policy discussion?

If you believe the Great Stagnation thesis, what would that do to your investment strategy? The EMH "buy lots of index funds" approach seems to rely on returns trending along the historical curve, but if you think we're in for decades of stagnation, the your strategy would presumably differ.

Do you have a preferred reform to government backed student loans and their associated bankruptcy treatment?

I've got one.

I remember hearing somebody opine once that "You can learn any job in one or two hours!" I have come to doubt this (e.g., surgeon!?), yet I do believe this is true of most jobs, especially the kind of jobs you have during and immediately after college.

Since then I have been wondering what Tyler would believe to be be the highest-paying job in America that one really could learn in one or two hours. Note that considerations of actually becoming qualified for this job or how to get it shouldn't affect his choice. Also note that simply being famous (e.g., Kim Kardashian) are exceptional and shouldn't be thought of as jobs in this sense.

My guess is anesthesiologist. If you disregard the many years of preparation and focus only on what they need to do their job on a day-to-day basis, I believe an intelligent person could learn that job in no more than 2 hours.

Given the extremely wide range of economic views, even within the mainstream of the field, what do you think is the real societal benefit of Economics? What is the marginal productivity of a PhD economist? Does it vary dramatically if s/he is from Princeton or U of Chicago? And if you get 1 of each, do they neutralize each other, or improve upon one another?

I ask because I'm a very interested observer. I'm not educated as an economist, but I find the economic blogs (especially yours) the most interesting reads on all the financial current events. That said, I'm not sure I've seen any direct benefit to having thousands of economists gainfully employed at the upper echelons of government, corporate America and Academia. We've even seen them break into pop culture! But how have we benefitted? I don't see Alex suggesting that we need to push more kids to study Economics.

I have read many complaints from doctors about how difficult it is to bill insurance companies. Why, then, are the fees so much worse for uninsured people than for insurance companies? I understand why it would be worse if the patient paid in installments, but if they were willing to pay upfront it seems like that would be preferable to the doctor.

Concerning Intrade: How much volume does the market need to be in order to be accurate? The republican race is only trading a few thousand dollars. Isn't it a possible that intrade only reflects the opinion of degenerate gamblers rather than a consensus among experts. Right now I believe that the prediction power of intrade is not was high as most economists believe. A desperate campaign could cheaply buy and boost their candidates position. Do you think this will happen in the future?


You should be asking Robin Hanson this question (although he has already answered most of these more general questions, non-specific to Intrade, on his blog).

I'd be interested to hear your thoughts on the value of different college majors. Are the STEM majors far more valuable and useful to society? Are some majors essentially useless (and does obtaining a degree in one of these majors amount to simple signalling?). Does a college student's major even matter? Also, based on research in labor economics, what fields would be best for new graduates to enter (i.e. which fields are growing/will grow in the future and which are declining)? Perhaps an argument for majoring in economics?

I would be interested to know what you think about the very low ultra long-term real forward rates. For Germany, the euro 30 year forward nominal rate is currently somewhere around 2.4%:

This implies a real rate of around 0.4%. And this includes a (significant?) default risk (5 year CDS is around 1%). Hence, the risk-free real forward rate is even lower.

And this is not a euro specific problem. The nominal forward rate in Switzerland is somewhere around 1%, which probably implies a negative real forward rate:

What do you think this implies? Is the bond market really signaling that the long term steady state real interest rate is somewhere around 0%? If yes, what do you think is the reason for this? The financial crisis should probably be resolved in 30 years. Will it take that long to repay the exessive debt, depressing interest rates? Is this a bubble in government long term bonds? Will the demand for capital be depressed for a much longer period than we currently expect?

On the other hand, in the US, the 30yr real forward rate is somewhere around 1.4%, which seems to be closer to the historical steady state rate. But why is the dollar then not valued higher compared to the euro? Does this maybe include a larger default risk than the bonds with shorter maturities (5yr CDS of roughly 0.5%)?


Non-economics discussion:

Living abroad I sometimes find myself defending basketball as the most exciting all-around major sport, but I think the rules tend to make the last few minutes of most games very boring. Teams down by double-digits have to resort to constantly fouling opponents, which is almost always very anti-climactic.

What about rule changes to discourage that (i.e. fouled team can choose free throws or taking the ball in from anywhere with 10 extra seconds on the shot clock), plus a new rule where shots from beyond half court are worth 5 points? If the trailing team were to hit even a couple of those it could make for some incredibly exciting finishes, without taking 15 minutes to play the final 60 seconds on the game clock.

It would be interesting to hear your thoughts on the "political economy" aspect of the eurozone crisis. For instance, in what instances do European leaders accept a suboptimal "fix" based on political calculations, rather than economic/financial calculations? How would a eurozone breakup (either partial or full) alter the balance of power in the international community? Would Germans be more willing to accept a "haircut" on peripheral debts if they knew that the alternative was a much smaller voice in the UN/OECD/WTO/etc.?

Tyler, what do you think of Arnold Kling's proposal for competitive government? It seems to address a number of Tyler-Cowen-ish ideas, such as
* Like it or not, most things that are done by governments in developed nations are done because people want them.
* Many things can be done effectively by government. (See Sweden or Finland for an example.)
* Those things aren't likely to be done effectively by government in the United States, for a variety of reasons.

It seems that competitive government would be a way to square this circle by making it efficient for governments to provide the services that people want to be provided by government.

Krugman was a market monetarist in 1998, as he argued against the fiscal stimulus in Japan. Why did he change his mind? Maybe he has realized that monetary stimulus increases debt too. The main difference is the type of debt created (public vs. private). Which type of debt is more costly? Who were less wrong, Italians (they created a burden on future generations via accumulation of public debt) or Spaniards (achieved the same via housing bubble debt)?

Could you possibly discuss the valuation of data (like genomes) as trade secrets, while they are in principle readily obtained by a second party (often at a falling cost)? I'm in particular interested in the idea because eminent domain could be used to bring data to the entire scientific community, without society paying for the redundant effort; those funds would be available for further discovery. However, one would need to compensate the originators of the data fairly.

Why does hockey have fights? Is it optimal for a team to hire an enforcer?

The antiquities market is extraordinary, perhaps the largest unregulated and opaque international market in existence. Why is this the case, and should it remain so, given the social cost: destruction of archaeological sites by antiquities looters, as well as the infiltration of undetectable fakes in large enough numbers to turn art history into a guessing game? If some form of regulation should be introduced, what sort?

What are humanity's most worthy institutions (in the organizational sense)?

E.g. Wikimedia Foundation, Cal Tech

This would be an interesting exercise across locale and/or time.

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