Mark Steckbeck (his blog is very good) writes:

Barry Schwartz believes that Americans suffer from too many choices. (PDF file) The result is that we become overwhelmed with too many choices, become depressed, and consequently lead less fulfilling.

I’m certain that Schwartz did not mean that there are too many ideas from which to choose to believe in, but why not? It’s overwhelming listening to political ads during campaigns or editorials and stories on major topics in newspapers. As Ronald Coase said, the reasons for regulating markets for goods is no different than the reasons for regulating markets for ideas, execpt that there’s probably more reason to regulate the latter.

I wonder which ideas Schwartz recommends we eliminate from the set from which we choose.

Cataracts cloud her eyes and arthritis stiffens her spine, but Maria Luisa Torres, 70, still walks the streets of the Merced selling her body, as do many elderly women in the downtown heighborhood…Among the thousands of prostitutes in North America’s largest city are hundreds of women in their sixties, seventies and eighties who continue to sell themselves to earn cash to buy food or medicine…

Some of the prostitutes are eighty-five years old.

Men know she is not young, but she chooses to think that "an antique can be more valuable than something new," she explained.  She strolled through Jardin Loreto, a nearby park, saying to passing men: "Amor, vamos?" or "My love, shall we go?"  After agreeing on a price — often $5 or less — she leads her customer to one of the many run-down hotel rooms nearby.  She has been doing this for decades, since she left the coconut fields in Western Mexico.  At first she had higher hopes and opened a little sandwich kiosk.  But "not even a fly would stop" at her stand, and she turned to the only sure money she could find.

Here is the full story.

One of my Ph.d. students asked me that question.  Similarly, you might wonder whether Hayek adds to the Arrow-Hahn-Debreu equilibrium framework.  Joe Stiglitz insists no; my answer ran as follows:

The invisible hand theorem assumes some (possibly weakened) version of perfect markets.  It suffices for everyone to simply maximize utility or profit, and then all supply and demand curves will cross.  Under spontaneous order, cross-market externalities are more significant.  Markets are imperfect, so people look to institutions — and other markets — to orient their behavior and to predict the unknowable future.  Market choice is a game of interpreting symbols, drawing inferences, and mapping an understanding of context to the appropriate situations.  The resulting order is greater and more complex than the partial equilibrium story we might tell about any single market.

As for Adam Smith, he was closer to Hayek…But the dilemma of the Austrian School is whether it can tell this story without economic analysis collapsing into pure context-dependence.  How much do we really know about how people interpret economic signals?  So far experimental economics — as exemplified by Vernon Smith — has done the most to bridge these gaps.

Another question I heard this week: "Why is it that older people start going deaf, yet still object more to loud music?"  I couldn’t really answer that one either.

A member of the Canadian parliament apparently required that constituents who wanted his help in obtaining visitor visas first post a bond promising that the visitor would return to the home country.   (It’s unclear whether any actual exchanges of money took place or whether this was a publicity stunt designed to promote a bill implementing a more formal procedure.)

The ethics of an MP offering money for services is questionable but the basic idea is sound.  Australia, for example, has had a Security Bond system for nearly five years.  Family who wish to sponsor visitors may be asked to post a bond which is subject to forfeiture if the visitor fails to keep to the terms of the visa.  The bond system is good for the government which has fewer illegal visitors to track down (note that I am not here taking a position on the merits or demerits of immigration) but it’s also good for prospective visitors.

Under the old system if the government thought that a visitor might violate the terms of the visa they didn’t let him in.  Now the family can post a bond and the visitor is allowed entry – moreover, since the money is returned when the visitor leaves, the system has low costs for honest entrants and their families.  Since implementing the system most visitors (68%) are required to post bonds and the entry rate has increased.  A good deal all around.

Brad DeLong notes:

When can deficit spending in a recession help?

1. When it is part of a stable and sustainable structure of economic policy, so that nobody fears that it is the beginning of a process of rampant inflation or expropriation. In that case deficit spending will have no deleterious effects on investment, and to the extent that it gets more money into the hands of those who are temporarily short of cash it will boost demand and employment.
2. When things are already so bad (as in 1933 and 1934) that there is no investment anyway: if business confidence is already at its nadir, deficit spending cannot do any harm by reducing investment, and does good by putting people to work and boosting their incomes and their demand.

I’ll add further conditions, none of them absolute.  First, it should be accompanied by an expansionary yet stabilizing monetary policy (similar to Brad’s first condition).  Second, the money should be well spent, ideally on durable infrastructure.  Third, fiscal policy should be a signal of a government’s competence or seriousness about fighting the recession.  Fourth, I doubt it does much good if the core problem is bankrupt or otherwise malfunctioning financial institutions.

Mostly I am a skeptic about fiscal policy, if only because discretionary fiscal changes tend to be small relative to modern wealthy economies.