Global Economics and Management

Christine Lagarde

A remarkably balanced and wise speech by the IMF's incoming Managing Director, today at the Jackson Hole meeting of the world's central bankers.

Here is more for some background.

Prize Money

... and a great sense of humor. This is old news, but I just found out about it, so I am posting it as an illustration of the power of economic incentives. And more here on breaking free from the shackles of a totalitarian regime.

The Power of the Economic Mind

Here is the forthcoming book: Grand Pursuit

And here is the video:

Judge Posner on the Current Depression

I'm afraid I have to agree with Richard Posner's pessimism. The article seems irrefutable both on the diagnostic and the prescription sides. The only possible silver lining would be a major innovation, like the Internet in the 1990s. What that major innovation could be, I do not know.

Planet Made of Diamond

This could lead to a massive reduction in the price of diamonds. If only we could get to it.

French Rich Want to Pay More in Taxes

Here. This echoes Warren Buffett's (no relation to Jimmy) similar desire in the US. What I don't understand is, if they are so eager to contribute, why don't they just voluntarily write a big check to their country's treasuries? Why drag the rest of us into their philanthropic urges?

The Wisdom of Milton Friedman

 

An Entry Level Home in Beverly Park

All $14.8 milion buys you in Beverly Park is an "entry-level home". Funny.

A Great Solution to the Euro Crisis (Not)

Let's say you are the President of a medium-sized European country. You face a Europe-wide debt crisis brought about by the explosion of the welfare state over decades, as well as governments taking on the liabilities of banks that engaged in irresponsible lending practices. Unfortunately, the affected countries canot devalue their currency because they locked themselves into a fantastic-sounding monetary scheme called the Euro. The Euro faces a real threat of collapse. Your own country faces a real threat of contagion, because your real estate market is in a full-blown bubble, you run a gigantic budget deficit and your banks are exposed to all these bad periphery countries. What is a poor Sarkozy to do?

The answer is obvious: create a new giant bureaucracy! 

And here is a recommendation for just the right person to run it.

History will not look back kindly on these people.

Returns to Higher Education

Lately I have gotten a bit annoyed at people who bemoan the rising cost of tuition and argue that going to college is a waste of time. See my posts here and here.

This excellent article by Michael Greenstone and Adam Looney should put to rest the notion that going to college is a waste of time. Since I have separately calculated that the returns to an MBA degree exceed those of college (a rate of return, for UCLA Anderson students, that approaches 25%), this statement holds even more forcefully for an MBA degree.

Since the rate of return on investments tend toward equality over time, this observation also implies the college and MBA tuition rates should continue to increase. With a more or less fixed capacity in the educational system, the supply of skills will increase too slowly for the equalization of rates of return to come from the benefit side.