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George Akerlof, Meet Oliver Williamson

October 11, 2015 in Economics

By Peter G. Klein

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George Akerlof, Meet Oliver Williamson

October 11, 2015

Robert Shiller's column in last Friday's New York Times illustrates the foolishness of the new “behavioral” approach to economic policy. Referring to his new book with George Akerlof, Phishing for Phools, Shiller recites a laundry list of standard (and trivial) business practices like putting candy bars at supermarket checkout lines, touting them as evidence that “manipulation and deception” pervades the market system. Obviously, the solution is government intervention, glibly described by Shiller as “common-sense regulation.”

Shiller's worldview features a caricature understanding of free markets along with a naive and uncomprehending model of government regulation. I suppose we can blame the Times's editorial team, not Shiller, for the headline “Faith in an Unregulated Free Market? Don’t Fall for It.” But it nicely illustrates the Shiller crowd's view that support for free markets is based on faith, rather than two centuries of reason and evidence. You might think that Shiller's coauthor George Akerlof could walk down the hall and speak to his UC Berkeley colleague and fellow Nobel Laureate Oliver Williamson for a better understanding of how markets work. Williamson, of course, is famous for explaining how market actors protect themselves against opportunistic behavior from other market actors through contracts, joint ownership of assets, reputation, exchange of “hostages,” and similar practices. It is markets, not government, that enable cooperation and joint production in the face of information and incentive problems. (I also wonder if Shiller and Akerlof have bothered to read Coase, Buchanan, or Ostrom; I won't even ask about Mises, Hayek, or Rothbard.)

As is characteristic of the behavioral policy literature, Shiller is silent on the implications of behavioral economics for the analysis of government intervention. But thoughtful readers will find the basic premise of “Phishing for Phools” — that firms systematically manipulate and deceive naive consumers, who should then turn to government regulators to protect them — unintentionally hilarious. What is modern democracy, other than an attempt by candidates to manipulate and deceive voters, in hopes of winning the right to manipulate and deceive them as citizens? I'll take the market, candy bars and all, any day.

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Source: MISES INSTITUTE

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Inglis, Florida: Home to the 1,000th US Mass Shooting Since Sandy Hook

October 11, 2015 in Blogs

By Matthew Teague, The Guardian

Four people died following an attack in the tiny town of Inglis, Florida, on the same day as the Oregon shooting but the shooting in the south-east failed to register on the national consciousness


Just before sundown on Thursday 1 October, an old man charged across the main street of the little town of Inglis, Florida. He was expecting trouble. Someone had recklessly fired a pistol in public, and Buzz Terhune intended to have words about it. The horror that unfolded in the next few minutes has become so mundane, so everyday, that it no longer makes national news. Terhune was marching headlong into the 1,000th mass shooting in the United States since the Sandy Hook elementary school massacre almost three years ago.

Just a few hours earlier, a gunman in Oregon had killed nine people and injured nine others at a community college. It shocked the American conscience. But what happened to Terhune and three other people, and has happened to thousands of others across the country, went unnoticed. Shootings that injure or kill four or more people – mass shootings – have become commonplace in American culture.

An examination of the details, though, reveals mass shooting number 1,000 to be, like all the others, a human cataclysm. Broken hearts and bullets, an affair in which the roles of victim and perpetrator flip in an instant.

It started a few days earlier, when sheriff’s deputies responded to a missing person report. Walter Tyson, 57, couldn’t find his wife, Patricia. But when deputies arrived at the house, they found notes Patricia had left saying she wanted a new life. And so she had left.

Days passed.

Inglis sits on Florida’s west coast, in a swamp draped with Spanish moss. The town has been dying since the day, decades ago, when commercial net fishing was outlawed. Its population has dwindled to 1,300, and most residents are getting old.

Most of 1 October, 68-year-old Buzz Terhune ran errands in the tiny downtown. He stopped by city hall to leave a get-well card and balloons …read more

Source: ALTERNET

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The Republican Suicide Ballad: The Party That Can’t Govern, and the Country That Hates Its Guts

October 11, 2015 in Blogs

By Andrew O’Hehir, Salon

The zombie party that cheated its way to power faces chaos, ruin and universal loathing. Now comes the bad part.


It is time once again to ponder the question of whether the Republican Party can be saved from itself – and if so, what exactly there is to save and why anyone should care. The GOP’s current struggle to find someone, or indeed anyone, who is willing to serve as Speaker of the House of Representatives, the position once held by Henry Clay and Sam Rayburn and Tip O’Neill – the president’s most important counterbalance and negotiating partner, and traditionally the second most powerful job in Washington – is of course a tragic and/or hilarious symptom of much deeper dysfunction.

It’s always time for this question in the cracked crucible of 21st-century American politics, and when considered in full it reaches beyond the arena of Machiavellian power struggle into the abstract theological realm favored by Church scholastics of the Middle Ages. How many angels can dance on the head of a pin? Whatever the number is, it’s infinitely larger than the number of Republicans who want to pick up John Boehner’s poisoned gavel. How large are Heaven and Hell, measured in cubits and ells? Not large enough, it appears, to encompass the pride and arrogance of the House Freedom Caucus, the group of 40-odd far-right Jacobins who first sabotaged Boehner’s speakership and then torpedoed the candidacy of his chosen replacement, Kevin McCarthy.

In the great tradition of doomed revolutionaries, the Freedom Caucus prefers death, or at least political annihilation – which will be theirs one day, and sooner than they think – to the dishonor of compromise. It’s easy to make fun of the vainglory and self-importance embodied in the group’s name, but it strikes me as accurate enough. They have declared themselves free of all the responsibilities of government, free from the need to discuss or negotiate or pass any legislation that has the slightest chance of being enacted. They represent freedom in precisely the same sense that death represents freedom from being alive. They could just as well …read more

Source: ALTERNET