3 Interesting Articles on The Economy

1) The Quiet Coup

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

2) Learning How to Think

Other studies have confirmed the general sense that expertise is overrated. In one experiment, clinical psychologists did no better than their secretaries in their diagnoses. In another, a white rat in a maze repeatedly beat groups of Yale undergraduates in understanding the optimal way to get food dropped in the maze. The students overanalyzed and saw patterns that didn’t exist, so they were beaten by the rodent.

3) Game Theory and the Economy

I am no economist so in all honesty I can suggest any solution that won’t be better than that of any other armchair economist but it could be that inflation could be a way forward. With inflation the value of having savings decreases and so does the payoff of defecting. Interestingly, in most economic crises inflation is one of the economic indicators that tends to go down.

hat tips: Josh Paley and Daniel Horowitz

  • kevindick

    I agree with all of these. In particular, the first one is an argument against regulation. Regulatory capture always becomes a weapon.

    The second reinforces my belief that opinions (even expert ones) are almost worthless, bets are worth something , and long-term multi-source statistical evidence is the only thing you can really trust. Unfortunately, many problems do not lend themselves to accumulating the latter.

    The third is a pretty typical position of monetary economists, take Scott Sumner as a case in point.