"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK
- A little while ago, commenter stickman recommended I read Thomas Sterner and U. Martin Persson paper An Even Sterner Review, which discusses the alleged dependence of the original Stern Review's results on a low social discount rate. I, like Sterner and Persson, think a very low social discount rate is quite justified. But Sterner and Persson argue that modeling relative price adjustments (that basic point of mircoeconomics that Mario Rizzo thinks Keynesians don't think about, FYI) produces optimal carbon paths comparable to Stern's. The idea is that what they call "environmental goods" - clean water, presumably food, anything we think might be conceivably impacted by global warming directly - are imperfectly substitutable with other goods. This means that as production of these environmental goods becomes more costly, prices respond more substantially than consumption, and environmental goods take up an increasing share of income, crowding out other goods.
- Menzie Chinn has an interesting graph of government employment. When you take out temporary census workers it is declining. This is not surprising if every three months you eagerly await the new BEA NIPA tables. It is surprising if you only follow people who repeatedly tell you about the explosion of government. As with the budget, the federal/state split is going to look a little different - and that's disconcerting for me, of course, as I've stated repeatedly on here. But the overall trend in government spending and employment is not what many would like you to believe.
- Incredible Wampum, a libertarian student's blog, googles "libertarians are..." and gets some interesting results. This, the author says, is what motivates her to call herself a "classical liberal". This is pretty sad - the internet can be a very antagonistic place, and I sympathize with her and totally see where she's coming from. Out of curiosity I googled "Keynesians are..." and got many of the same results that she did! One thing I got that she didn't was "...are witch doctors". The anonymity (or as Evan likes to add, "pseudonymity") of the internet can make it nasty sometimes - it is what it is I suppose.
- Mark Thoma has an excellent post on the relationship between views on regulation and population density, specifically the way he views regulation coming from a small town environment. He keeps it simple, but he's essentially discussing what you might call the asymmetry of "asymmetric information". Or, as Adam Smith tells us, "the division of labor is limited by the extent of the market". In small markets, the division of labor is low. That has it's costs but one cost that it keeps low is transactions costs. It's a trade-off, of course, which gets into Krugman's economic geography and the economics of agglomeration. But it also helps to explain differential views on regulation. This, of course, is also a substantial argument for robust federalism.