Krugman Thinks Well.

Below is an excerpt, but the entire post is good and only a few additional paragraphs beyond the ones shown. Krugman's critical thinking skills are what are impressive here, not his actual economics one way or the other.

Make claims. Support them with evidence. Analyze and evaluate your own views and beliefs as needed.

Why Am I A Keynesian? - NYTimes.com

So, am I a Keynesian because I want bigger government? If I were, shouldn’t I be advocating permanent expansion rather than temporary measures? Shouldn’t I be for stimulus all the time, not only when we’re at the zero lower bound? When I do call for bigger government — universal health care, higher Social Security benefits — shouldn’t I be pushing these things as job-creation measures? (I don’t think I ever have). I think if you look at the record, I’ve always argued for temporary fiscal expansion, and only when monetary policy is constrained. Meanwhile, my advocacy of an expanded welfare state has always been made on its own grounds, not in terms of alleged business cycle benefits. 

In other words, I’ve been making policy arguments the way one would if one sincerely believed that fiscal policy helps fight unemployment under certain conditions, and not at all in the way one would if trying to use the slump as an excuse for permanently bigger government. 

But in that case, why am I a Keynesian? Maybe because of convincing evidence?

A Series of Interesting Posts over at Marginal Revolution

Below are a series of links to posts from George Mason University economist Tyler Cowen at Marginal Revolution. The first two were posted yesterday and today respectively. The third is a link from the blog posts by Cowen providing "evidence" of the effectiveness of being a miser. All of these posts discuss a recent gift of $400 million to Harvard University by a wealthy donor.

Did the Wisconsin state system just abolish tenure?

A tweet in the form of a blog post, with an addendum, #Paulson, #Harvard

What I Like About Scrooge

It seems to me that author is confusing miserliness defined as "excessive desire to save money; extreme meanness" with asceticism, which is defined as "severe self-discipline and avoiding of all forms of indulgence, typically for religious reasons."

In any instance, the entire debate seems to hinge around the marginal benefit supplied by Harvard receiving an additional $400 million on top of its already huge endowment of $36 billion. I'd imagine the marginal benefit is quite small, which implies the opportunity cost of this donation is quite large as $400 million is capable of having dramatic impact when given to another organization whose marginal benefit would be quite higher.

Even excluding the moral weight a decision like this carries, we can look at the marginal propensity to consume (MPC) of various economic classes to decide this isn't the best use of $400 million from an economic standpoint. Harvard essentially serves the most elite of the economic world. The wealthy have a lower MPC than the poor and so a gift of this magnitude would have a larger economic effect on growth by ensuring it gets into the hands of the poor instead of the elite.

What Is the Keynesian Multiplier in Real Life Anyway?

Below is short excerpt from a recent article by Paul Krugman talking about the fiscal multiplier (Keynesian multiplier). According to him, the research is recent years points to the actual number being around 1.5. That means that rGDP would go up $1.5 billion (perhaps a little less) if the government were to spend $1 billion.

Multipliers and Reality - NYTimes.com

The fiscal multiplier — the increase in real GDP per dollar of government stimulus spending, or the fall per dollar of austerity cuts — has assumed a lot of significance in recent years. When Bernstein and Romer assumed that it was 1.5, Robert Lucas accused them of “shlock economics“, and smeared Romer’s professional ethics. Since then there has been quite a lot of empirical work, which generally indicates a multiplier of about … 1.5. 

That said, I still do believe that the multiplier is not much bigger than 1 — indeed, around 1.5; partly because of the econometrics, but also because taxes and transfers act as automatic stabilizers.

What is Wrong With Our Culture [Alan Watts]

Below is a video that was shared on FB by one of the other teachers at school. It reminds me of the renown economist John Kenneth Galbraith's book The Affluent Society, which I read in college and still remember quite well.

Growing wealthy is not the point of economics or even personal and individual finance. The point is to enrich your own life and those of others. As the short video quotes Gandhi, "Be the change you wish to see in the world." 

Q&A with Richard Thaler, a Behavioral Economist

Economist's View: 'Q&A: Richard Thaler'

Question: What are the most valuable things that you got out of studying economics in graduate school?

Answer: The main thing that you learn in grad school, or should learn, is how to think like an economist. The rest is just math. You learn a bunch of models and you learn econometrics -- it’s tools. Some people who are so inclined concentrate on having sharper tools than anybody else, but my tools were kind of dull. So the main thing was just, “How does an economist think about a problem?” And then in my case it was, “That’s really how they think about a problem?” ...

The Finnish Disease - NYTimes.com

A short blurb from Krugman on the impact of inflexible exchange rates and its effects on recovery for the Finnish.

The Finnish Disease - NYTimes.com

A followup to my post inspired by troubles in Finland: it’s worth emphasizing just how bad Finland’s performance has been. For Finns, the great depression they remember is the slump at the beginning of the 1990s, driven by a combination of a bursting housing bubble and the collapse of the Soviet Union next door. The result was a very nasty slump, and a delayed recovery. But this time, although the slump in per capita GDP never got quite as deep, has been far more persistent:

Photo

Why can’t Finland recover this time? Debt is not a problem; borrowing costs are very low. But it’s all about the euro straitjacket. In 1990 the country could and did devalue, achieving a rapid gain in competitiveness. This time not, so that there is no quick way to adjust to adverse shocks

"This is your life. This is the only one you got."

Bill Murray was asked what he wants that he doesn't already have. His answer is great.

As you watch, try to keep the IB mission statement in mind, which states, "The International Baccalaureate aims to develop inquiring, knowledgeable and caring young people who help to create a better and more peaceful world..."

I think his answer is essentially driving at the necessity to be present in order to make the most of this one life we have and make a positive difference in the world. Of course, Murray is much more eloquent and better spoken.