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Monthly Archives: September 2009

beverly-hillbilliesA good editorial here about monetary policy, focused on the Federal Reserve and how it has dealt with the recession. Some valid criticisms here–rewards for the “imprudent financial firms at the expense of their more prudent rivals,” and a recent policy reversal that is poorly timed.

Then the amusing bit, critiqueing Bernanke’s claim that the recession was nearly over.

One doesn’t usually turn to old TV shows for economic insights. Yet the best way to put the Fed’s role in the recent crisis in perspective is by recalling an episode of “The Beverly Hillbillies” – the one in which Granny convinces everyone that a spoonful of her medicine can cure the common cold. Sure enough, it can: It just takes between a week and 10 days.

I like the mataphor. The message–of course–is that recessions are self-curing too, and Bernanke and money policy do not deserve credit for a recovery.

commercial-fishing-boat_15053Catch share is one solution for overfishing that is being adopted by some US fishing fleets. The problem is a classic tragedy of the commons situation, where property rights are not established for a resource. In this case the resource is the ocean’s fish populations, where anyone is free to catch–and perhaps over harvest–the fish. 

Overall quotas for many areas have been enforced for years now, but they push fishermen into a reckless race to catch as much as they can before the quota is reached. Catch share gives each fisherman a quota of his own, allowing time to avoid bycatch of overfished species and destruction of the sea floor. It is a curious sort of property right, but works in the same way. If I have a personal right to the resource, I will take care of it and ensure that it is not destroyed.

In this case, it would seem there are still incentives to use dragnets and catch overfished species, just as a way to save money, but boats will carry independent observers to monitor every catch.

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unemployedA jobless recovery? New jobs they mean, as reported in the Times today. No surprise in this, as the character of the American economy is changing. Manufacturing and the industrial sector have undoubtably shrunk due to international competition, and the tertiary or service sector must take its place. Training for decent service jobs–working in banking or finance or education–takes time, but I believe there are policies that can help.

A shorter work week would easily expand the number of job offerings being made. For a long time now many European countries have considered a 35 or 36 hour work week to be full time. My time in The Netherlands, it was common for people to work only four days a week, and employers are still required to give full benefits. My German friends in Suzhou never work Friday afternoons. Their weekend starts Friday at noon. By contrast, it is common for American workers to be put on salary and work 60 hours a week or more.

Of course it would also be a good idea to subsidize the training for service industries. The wrong response? Protectionism, and I am afraid there is more talk about that than there should be. 

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