Rethinking the Economy

A snarky friend asked, how is it possible that We’re Not As Smart As We Think We Are? Isn’t that an infinite regress?
To understand why it isn’t, I’m going to geek out a bit and talk about some lessons a lot of folks – including myself – have learned the hard way about building [...]

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One thing I’ve realized is that I need to be more clear about who I’m arguing with and what we are arguing about.
At one level, my framework has to respond to economic policy wonks like Krugman. Their argument is essentially that it just ain’t gonna work. As we saw when it came to the government’s [...]

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I think a critical piece of a framework for talking about the economy is being able to bypass the “government vs. market” muddle that traps a lot of folks. After reading Markos’ posts on being a Libertarian Democrat I thought I might’ve found a way — by using power as a focus. A [...]

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Now that I’ve used Getting Green Done to flesh out part of my argument, here’s the latest version of my framework.
The conventional economic framework, a.k.a. Econ 101, says the economy can be broken into 3 layers:

People are calculators: they rationally pursue their self-interest given near perfect information about the world
Organizations are calculators
[...]

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A great piece by John Cassidy in the New Yorker on one major reason why Wall Street crashed.
According to a common narrative, we have lived through a textbook instance of the madness of crowds. If this were all there was to it, we could rest more comfortably: greed can be controlled, with some [...]

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As we’ve seen, Big Pharma’s very sophisticated in how they pollute the info doctors and patients have take decisions about drugs. Food manufacturers? Not so much.
A new food-labeling campaign called Smart Choices, backed by most of the nation’s largest food manufacturers, is “designed to help shoppers easily identify smarter [...]

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Aside from being truly appalling, the subject of last week’s post is a great example of how traditional economic models don’t work. To recap via the New York Times:
A growing body of evidence suggests that doctors at some of the nation’s top medical schools have been attaching their names and lending their [...]

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In a post on the economic issues around health insurance, Professor Dan Saviro makes the standard “moral hazard” argument:
Consumer demand drives the market, but it is largely the demand of subsidized consumers who are not actually paying at the margin for what they get. Suppose that in the market for groceries or cars we [...]

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Richard Thaler is a very smart guy. He’s one of the founders of Behavioral Economics — the folks who argue that people aren’t calculators. So when he jumped into the healthcare debate over the public option, I was eager to see his take on the debate.
Unfortunately, he turned off his behavioral economist brain and [...]

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In my last post, I complained Robert Kuttner didn’t really capture the government’s role in the market. Ironically, he also didn’t capture what I love about the market.
Kuttner, Dean Baker, Jamie Galbraith, they’ll all write that “markets accomplishments much superbly,” “the market is an incredibly powerful force,” etc. But they sound like a little [...]

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