U.S. Objects to China’s Web Filtering – New York Times – Keep an eye on this. It seems like a trivial development amid everything else going on right now, but risking our relationship with our most important trading partner is a big deal. This could turn out very well (China opens the country to greater freedom of speech), very badly (we end up in a trading war and inflation goes through the roof), or ho-hum (China ignores or makes a useless promise that they never follow up on, and the Obama administration lets it go). This could turn into quite the poker game to see who blinks first.
Egypt’s Young Unemployed — Yasser M. El-Shimy – Here’s the reason why our support of Egypt’s repressive regime and our tendency toward military over humanitarian assistance are both dangerous policies: “When 20 of every 100 young Egyptians spend most of their time hanging out at the local coffee shop, smoking shisha financed by the meager allowance their parents give them, they are unlikely to silently accept the probable transfer of power from Mubarak to his son. Additionally, they are likely to fall prey to all sorts of ‘isms’ that tell them why the world is such a nasty and an unjust place.”
Making Financial Regulation Work: A Systemic Risk Regulator — Dean Baker – Baker’s analysis of the Systemic Risk Regulator is spot-on (full disclosure: I make the same argument in my forthcoming book), but his solution leaves something to be desired. Will firing the current regulators be enough to prevent regulators twenty or thirty years down the road from making the same mistakes with new financial innovations, the inevitable regulatory capture, and the go-go-go of the next boom? I doubt it. (For more long-term solutions, of course, you’ll have to read my book.)
The President’s Press Conference: Climate Change — Keith Hennessey.com – Hennessey is a good economist, but he should be more careful when he takes President Obama to task for saying that efforts to reverse climate change “will lead to the development of new technologies that lead to new industries that could create millions of new jobs in America.” In fairness to Hennessey, his revulsion to this sort of language is not unwarranted. Politicians make these sort of claims all the time with little understanding of the economic implications of their policies. Hennessey is right to point out that the President does not guarantee a NET increase of jobs. But his counterargument, that taxing carbon necessarily implies a net decrease of jobs, is incorrect. If the government taxes the private sector and invests that money in projects that yield a higher return on investment than that money would otherwise have generated in the private sector, then it can easily lead to a net increase in jobs and GDP. The most likely time for this to happen is a recession, i.e. now.
The Non-Debate over Non-Reform — Arnold Kling – I disagree with Kling’s solution, for reasons that I will explain in the next edition of “From the Editor’s Desk,” but his complaint about the current debate in Washington is right on the money: “Some form of restraint in our choice of medical procedures is going to be necessary. The debate we should be having is over whether restraint in our use of medical services should be initiated by government officials or left to consumers.”
Fish Capable of Judgment Calls — Scientific American – We like to think we have superiority over the rest of the animal kingdom because we have emotions, judgment, and the like. The truth, though, is that we just have much greater brainpower. The actual elements in that brain aren’t much different from many other species.
Senate Democrats Share Plans for Immigration Reform — Washington Post – Climate change, health care, financial regulation, and now immigration? I love the energy — long overdue — but what are the odds that all 4 issues see comprehensive reform this year? Bravo to Congress for finally doing their job. We haven’t seen them work this hard in several years. I just hope they know what they’re doing (politically, I mean)…
Evolutionary Origins of Your Right and Left Brain — Scientific American – Another facet of a point made earlier today (see below): The elements of our brain that we often think are so unique, in this case hemispheric division of labor (so to speak), are not unique at all, though our brainpower remains far above the rest of the animal kingdom. This article is full of gems, from stories about how different species use parts of their brain to how language evolved. Set it aside for when you have the time to enjoy it all.
The Science of Economic Bubbles and Busts — Scientific American – Most of this is old news; behavioral economics is well-known by now. If you’re not up on all the cognitive biases of the investing mind, though, it is an excellent overview. The really hopeful point comes at the end: Adaptive-market models may be part of a bright future for finance and the right tool (once developed properly) for the Fed to use in pricking asset bubbles.