Rethinking the Economy

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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Recently NPR ran a piece about the impact behavioral economists — the folks who argue that people aren’t calculators — are having on the Obama administration. NPR gave a sample of the dizzying amount of hard empirical research backing up behavioral economics, then asked, “So why would economists assume that human beings are so hyper-rational?” [...]

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As we saw in the last post, one reason computerizing healthcare records can be a disaster is that the people designing the software don’t pay attention to how people will actually use it.
Some software designers argue that the way to avoid this mistake is to use “user-centered design.” Don’t assume that nurses in a hectic [...]

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There’s one thing Democrats and Republican politicians agree on when it comes to healthcare reform: digitizing healthcare records could be a godsend. When it works, it can improve patient care, reduce medical errors, and save billions of dollars a year — a crucial consideration given the threat that skyrocketing healthcare costs pose to our economic [...]

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