If things go so badly that the S&P 500 becomes permanently worthless, I have a hard time believing that the people who own gold will rule the world. I think it's more likely that the people who own steel that is conveniently shaped like guns will control everything, including all of the shiny rocks. At that point, the new currency will be something along the lines of "Wash my car and I won't shoot you in the leg."
They would be stunned not only by the sheer length of the invoice and the total amount billed, but also because so many line items would be expressed in either Latin or Greek and thus be completely incomprehensible to most parents. Upon requesting a fee schedule from the dean of the college, the latter would patiently explain that different prices had been negotiated with different parents and that all of those fees are proprietary information.
I know I sound like a broken record going on and on about OmniGraphSketcher, but it really is an essential tool for econ students. At least ones who refuse to turn in hand-written homework.
I take notes (admittedly handwritten) during class and then organize them into an outline using this awesome app. It does all the normally outliney stuff, which makes it great for organizing hierarchical information. And come test time, I just bust out the One Outline to Rule Them All and kick some ass.Ebook program
This class participates in a pilot scheme, sponsored by the publisher Wiley, for free electronic download of the textbook. Instructions may be found under "Course Documents".
After all, if we concede that traditional economists are historians with a math fetish, then behavioral economics are mathematicians with a psychology fetish. Either way, I don’t feel any more comfortable handing them the keys to the financial kingdom.
Given the enjoyment and convenience obtained by the multitude of products we use it’s a wonder how little of that full value we actually pay. The rest is consumer surplus.
So, to summarize: Mankiw is wrong that the stimulus consists mostly of Keynesian-type investments. So far, it has been closer to the tax cut end of the spectrum. But he's also wrong that the stimulus is not working. By the benchmark that he implicitly endorses -- GDP -- it's done very well. Mankiw is so wrong, in other words, that he may actually be right: the stimulus looks a lot like one he might have designed, and it's helping the economy.
Despite all the media coverage (or maybe because of it), most of the public has a very limited understanding of the health care system and health policy. They think the insurance companies are the main problem. They think an employer mandate is a good idea because employers pay for care. They want to control cost, but oppose every policy that might do that except for thinking that drug company and insurance company profits are too high. They say they want everyone to have access to care but only one in four favors an individual mandate.
| Requirement | Possible | Actual |
| Problem Sets | 15 | 14.3 |
| Exam 1 | 20 | 19.8 |
| Exam 2 | 20 | 20 |
| Policy Paper | 15 | 15 |
| Final Exam | 30 | ? |
| Total | 100 | 69.1 |
Greg Mankiw's students' favorite book from his freshman seminar reading list was Milton Friedman's Capitalism and Freedom, so I'm adding that to my reading list for the Christmas break. Thanks, Greg Mankiw's students."Moral hazard" is a term commonly applied to certain financial contracts, under which one party is obliged to pay another money if a specified event (e.g., illness or a fire or an accident) occurs. The term refers to situations in which the very existence of the contract alters the behavior of one party, so that it increases the probability of the event's occurrence or the size of the monetary payoff based on that event, or both.
In the context of health care, having an insurance plan will increase the likelihood that a person will actually use the health care system. It will also probably increase the resource-intensity of the treatments chosen by patients and physicians. Some economists even theorize that such coverage encourages unhealthy lifestyles and reckless behavior.
In the context of the wider financial sector, the now openly demonstrated willingness of our government—whether it be the Bush or the Obama administration—to make taxpayers bear the financial risk of serious mismanagement or risk within the private financial sector is likely to bring about the moral hazard of future mismanagement. Much has been written about that threat.
My point in the op-ed article was that the term "moral hazard" can also be applied to the contingency of war and its cost.
If the monetary and the blood cost of war are shifted mainly to citizens other than the elites who are empowered to declare war and decide how it is conducted, I argued, then that elite is more likely to embrace war and to spend on it.
There is a famous joke about economists: Two economists are walking to the beanie propeller hat shop. One says, "Look! There's a $20 U.S. Federal Reserve Note on the ground!" (remember, he's an economist). The other says, "Can't be. If that were true, someone would have already picked it up." They walk on, leaving the $20 bill on the ground.
The joke is about the efficiency of markets. In an efficient market opportunities to systematically make profits above the market average don't exist. Any news that suggests a profit opportunity is taken advantage of nearly instantly and the extra profit is arbitraged away. The $20 is gone. It can't be there. Don't bother looking for it. This is the efficient market hypothesis (EMH) in a nutshell.
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