This is hilarious - EconoTrolls: An Illustrated Bestiary

Noahpinion: EconoTrolls: An Illustrated Bestiary: In your journey through the Econ Blogosphere, you will be beset by a great many curious and interesting species of EconoTroll. At first y...

Why aren’t we doing the maths?

This nice piece by Tim Hartford resonates with the noise in the media over polls and who will win the upcoming election.

I was discussing numeric literacy with a colleague and Hartford's story and conclusion is sobering:

An article published in the Annals of Internal Medicine in March put these questions to a panel of more than 400 doctors with relevant clinical experience. Eighty-two per cent thought they’d been shown evidence that test “A” saved lives – they hadn’t – and of those, 83 per cent thought the benefit was large or very large. Only 60 per cent thought that test “B” saved lives, and fewer than one-third thought the benefit was large or very large – which is intriguing, because of the few people on course to die from cancer, the test saves 20 per cent of them. In short, the doctors simply did not understand the statistics on cancer screening.

The practical implications of this are obvious and worrying. It seems that doctors may need a good deal of help interpreting the evidence they are likely to be exposed to on clinical effectiveness, while epidemiologists and statisticians need to think hard about how they present their discoveries.

http://timharford.com/2012/10/why-arent-we-doing-the-maths/

Gender Wage Gap May Be Much Smaller Than Most Think

Economists Eric Solberg and Teresa Laughlin applied an index of total compensation, which accounts for both wages and benefits, to analyze how these benefits would affect the gender gap.7 They found a gender gap in wages of approximately 13 percent. But when they considered total compensation, the gender gap dropped to 3.6 percent.

http://www.stlouisfed.org/publications/re/articles/?id=2160

bleeding heart libertarianism

What Austrian Economics IS and What Austrian Economics is NOT

MR University

An example of the material that Cowen and Tabarrok include in MR University.

http://mruniversity.com/

Sentences to ponder

From Sober Look:

Starting January 1 of 2013 the top tax rate on dividends in the US will officially become the highest in the developed world. If you live in NY for example, the top rate on stock dividends will be close to 50% – which is significantly higher than France. Sentences to ponder

ASET Bookclub Oct. 24 - possible discussion questions

The Next Convergence – by Michael Spence

1. What is your reaction to “Our natural instincts to look for a villain, some human constraint that held in place . . ." (17) provides an insight into a question that our book group has raised during a number of meetings and that continually reflect upon - How do beliefs persist that seem to be in conflict with the world, for example, minimum wage other price controls effectively address questions of economic welfare.

2. Chapter 6 is, important, for the reinforcement of William Easterly's critique of the mainstream foreign aid thesis. Thinking back to the end of chapter 2, I wonder how effective the analysis in this chapter would be to an audience that is primarily operating with a "snapshot" perspective that generates a belief in the efficacy of policies such as aid.

3. What was your evaluation of Spence's treatment of comparative advantage in chapter 10 in contrasting the dynamic nature of comparative advantage with the static view of the world held by some, including many public leaders? How well does Spence support his conclusion that the consequence of this dynamic comparative advantage is "Sustained growth and structural change go hand in hand?" (67).

4. I am looking forward to our discussion of chapter 11 and the role of government is supporting growth. That discussion will be, I hope, informed by the first two paragraphs on page 71 as well as the contentions outlined in the past paragraph on page 105.

5. What is your reaction to the role that Spence outlines for the public sector in the investment areas of education and infrastructure? Public education is at the center of our next book The Race between Education and Technology.

6. Spence finds 4 attributes of government involvement in society that is positively related to growth (106): How would you evaluate point 4 and critique Spence's chapter 17 analyses.

7. I also wonder, to what extent, there are constructive responses to what Spence sees (third paragraph of page 113) as the common causes of poor economic performance. 8. On pages 134-5 Spence roughly outlines an emergence in the interplay between domestic and global financial regimes that seems to be shaped by state action and regulation. What is your view of this presentation?

9. The hot button that I suspect will generate significant levels of conversation in October is found on page 145 - "The prevailing view now is that this [financial crisis] was largely a failure of regulation. Regulatory failures surely contributed, but it was more than that." I wonder how our group will react to the discussion of the role of "regulatory and self-regulatory components"(146).

Book Review: Sheila Bair's "Bull By the Horns"

A succinct description of "Bull By the Horns" is that lots of mistakes were made during the crisis - by others. Current Treasury Secretary Timothy Geithner receives particularly vivid criticism, a feature of the book that is not surprising in light of the widely-known animus between the two officials.Book Review: Sheila Bair's "Bull By the Horns"

George Takei on Big Government, Democrats, and Republicans

Really powerful and personal perspective on government, power and freedom.

George Takei on Big Government, Democrats, and Republicans

US Income distribution

http://mjperry.blogspot.com/2012/08/pew-research-calls-it-hollowing-out-of.html

Our buddy Merle Hazard is back with a new, animated version of his surf-music take on the Fiscal Cliff.

The half-life of an economics book

The half-life of an economics book

Possible Discussion Questions for The Next Convergence

The Next Convergence

Tyler Cowen writes: I don’t understand what the book is supposed to be signaling.” What do you think the book is “signaling”?

“Prof Spence believes, for example, that emerging market economies have insured themselves by accumulating the liabilities of western governments.” How well is this argument advanced in the text and what is your view of the argument.

Spence concludes chapter 2: "Our natural instincts to look for a villain, some human constraint that held in place . . . He seems to be saying that the belief mechanism that seems to underlie the instinct for blame is based upon a static or "snapshot" perspective that dominated historical belief systems and continues today. What is your view of this perspective?

What is your reaction to Spence’s assertion in light of his analysis of the role of government - "Sustained growth and structural change go hand in hand." (67).

I am looking forward to our discussion of chapter 11 and the role of government in supporting growth. That discussion will be, I hope, informed by the first two paragraphs on page 71 as well as the contentions outlined in the past paragraph on page 105.

Spence outlines the role that the public sector can play in the investment areas of education and infrastructure. Public education is at the center of our next book The Race Between Education and Technology

Returning to Spence's book, he finds 4 attributes of government involvement in society that are positively related to growth (106):

1. The government takes economic growth seriously.

2. The governing group has values that cause it to try to act in the interest of the vast majority of the people.

3. The government supports open trade, high levels of investment and a future orientation.

4. Economic freedom is supported by the legal and regulatory policy.

I am looking forward to both the discussion and reaction to point 4 above and an examination of Spence's chapter 17 analysis.

Spence asks, at the bottom of page 109, ". . . what could be done about failing states."(109). This question bedevils social scientists and policy makers and I wonder, after reading Douglass North, Daron Acemoglu, Michael Spence and other contemporary thinkers and reflecting on Adam Smith's analysis of the causes and conditions of the wealth of nations, what really can be done? I also wonder, to what extent, there are constructive responses to what Spence sees (third paragraph of page 113) as the common causes of poor economic performance.

The Next Convergence - Part 4

Part 4. The future of growth:

Can the emerging economies sustain high growth?;

China and India;

China's structural challenges;

India's growth, diversification and urbanization;

Brazil's growth reset; Energy and growth;

The challenge of climate change and developing-country growth;

Information technology and the integration of the global economy;

European integration and transnational governance;

Global governance in a multispeed world;

The G20, the advanced countries, and global growth;

Sustaining growth: the second half century of convergence.

A Nobel for Planning?

Very thoughtful set of comments.

he use of the word "market" in describing exchanges of every sort has become ubiquitous, even in cases where there is no actual price that helps clear the market or channel information. Perhaps due to this slippage, an interesting fact about the work receiving the award has been largely ignored. The concrete applications that are discussed as ways of "improving the performance of many markets"--such as matching residents to hospitals, matching donors to organs, and students to schools--are not really "markets." At least not if we think of markets as institutions where prices help clear supply and demand. Instead, they involve non-market interactions, where the matches are actually formed by centralized exchanges.

http://economistsview.typepad.com/economistsview/2012/10/a-nobel-for-planning.html

The Prize in Economic Sciences 2012

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2012 was awarded jointly to Alvin E. Roth and Lloyd S. Shapley "for the theory of stable allocations and the practice of market design"

The Prize in Economic Sciences 2012

Recommended New Books with Hayekian Themes

Recommended New Books with Hayekian Themes

Is US economic growth over?

Is US economic growth over? Faltering innovation confronts the six
Robert J. Gordon, 11 September 2012

• There was virtually no growth before 1750;
• There is no guarantee that growth will continue indefinitely.

This column introduces my CEPR Policy Insight, which argues in detail that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history (Gordon 2012).
The data I use only concern the US and view the future from 2007 while pretending that the financial crisis did not happen. The focus is on per-capita real GDP growth in the frontier country since 1300, the UK until 1906 and the US afterwards. Growth in the frontier economy gradually accelerated after 1750, reached a peak in the middle of the 20th century, and it has been slowing since. The paper is about 'how much further could the frontier growth rate decline?'

Nice explanation of the difference in the reported unemployment measures for 3Q 2012

In fact, in a directional sense, both the household and payroll surveys are giving the same signals. In the table below, we compare the recent trends in monthly job gains measured in both surveys. The coverage in the two reports is slightly different. Unlike the payroll count, the household survey includes the self-employed and counts multiple jobs held by a single person as a single instance of employment. Because of this, the BLS also reports an adjusted version of the household survey, called the payroll concept adjusted employment measure. This payroll-consistent measure is designed to control for definitional differences across the household and establishment reports and also makes statistical adjustments for changes to the population controls in various years. So we include the data from this measure in the last column of the table.

Overall, all three measures suggest a weaker trend over the last six months than over the last nine months. All three measures also indicate that things were somewhat stronger on average in the last three months than in the prior three months. The bottom line in our view is that, though the employment levels can be quite different across the three measures, all suggest that the jobs picture has improved somewhat in the past three months.

http://macroblog.typepad.com/macroblog/2012/10/divergent-jobs-reports-will-the-real-state-of-the-labor-market-please-stand-up.html

UNWRAPPING THE ADAM SMITH AT THE CORE OF FRIEDRICH HAYEK

UNWRAPPING THE ADAM SMITH AT THE CORE OF FRIEDRICH HAYEK

The Next Convergence - Part 3

Part 3. The crisis and its aftermath:

Emerging markets during and after the global crisis;

Instability in the global economy and lessons from the crisis;

Stimulus in the crisis and the need for cooperative behavior;

Rebalancing the global economy and its consequences for growth;

The excess-savings challenge in China; The openness of the global system and the WTO;

Legacies of the crisis: slow growth and sovereign-debt issues in advanced countries;

Periodic systemic risk and investment behavior

Spence presents three categories of challenges confronting growth in the 21st century:

1. Instability and volatility

2. Re balancing

3. Adding up problems

Of these three issues I see the last, perhaps better defined as the coordination problem, as the one that may present significant headwinds for what Spence calls sustainable growth. Given the speed of change and increasing complexity of global relationships, the first two issues, which I see as consistent historical challenges will interact with the coordination problem to present obstacles to transition for emerging economies and a force that may reinforce vicious circles for the bottom billion.

On pages 134-5 Spence roughly outlines an emergence in the interplay between domestic and global financial regimes that seems to be shaped by state action and regulation. I am looking forward to whatever attention our book club devotes to these ideas and the consequences of either this type of model or alternative developments.

Spence underscores both the importance of open trade and the emerging forces that may act to shape the path toward increased openness. In particular, he takes about both the US and China (137) and the potential future impact on bond and money markets. This concern has been raised by participants in our book club and, without positive attention to the US deficit and debt the likelihood of both increased volatility in money and debt markets as well as unpleasant re balancing in the US seems to be probable.

In writing about the 2009 world wide financial crisis, Spence writes (139):

"Here we have an example of two things. One is that policies can have unintended consequences. The second is that the response driving by national priorities differed from a cooperative global response."

This last observation, it seems to me, continues to characterize the contemporary intersection of domestic and global policy making around the globe.

The hot button that I suspect will generate significant levels of conversation in October is found on page 145 - "The prevailing view now is that this [financial crisis] was largely a failure of regulation. Regulatory failures surely contributed, but is was more than that." I wonder how our group will react to the discussion of the role of "regulatory and self regulatory components"(146). I couldn't help but think of Smith's analysis of behavior, first in The Theory of Moral Sentiments and later in The Wealth of Nations. In particularly, the institutional framework that both reflects and shapes these two manifestations of control are important. As inclusive institutions (to use the language from last month's book) incentivize other thinking, the presence of individual impartial spectators shape a broader view of costs and benefits. That is, perhaps the self regulation that Spence hopes for is rooted in Smith's mechanism of self reflection and self control. The virtues of beneficence and prudence (informal institutions) emerge in those open access societies that develop inclusiveness.

Hayek on Buckley’s Firing Line Nov 7, 1977 ‘Is There a Case for Private Property’

Hayek on Buckley’s Firing Line Nov 7, 1977 ‘Is There a Case for Private Property’

Possible Book Club Selections

One of the recommendations is by our October special speaker - The Standup Economist. Another is a book our ASET group has already read.

FiveBooks Interviews > Tim Harford on Unexpected Economics

The Undercover Economist himself, Tim Harford, says you can find economics lessons in the most unlikely places, including the virtual world of computer games You’ve chosen books that contain economic lessons, but are outside the mainstream of pop-economics literature. Tell me why? Do you feel it’s important that people are better informed about economics?

Yes, and your first choice is seemingly not about economics at all. It’s called Normal Accidents and is by Charles Perrow. He is, I believe, an expert on the safety of systems and, in this book, argues that as technology gets more complex, the odds of tragic accidents occurring are increasing.

Yes. Charles Perrow is still going strong: I think he is now in his eighties. He is a sociologist, but got very interested in unintended consequences, and from looking at those, got very interested in technological disasters.

Let’s move onto For The Win. I was intrigued to see this was classified as young adult fiction, and the assurance that it would “appeal to any enthusiastic player of MMO [Massively Multiplayer Online] games.”

Yes. The author, Cory Doctorow, is a really interesting guy. He is one of the founders of [the blog and former magazine] Boing Boing. He’s a campaigner for internet freedom and fair dealing in intellectual property rights. And he’s also an author – writing these young adult novels. I read this book because I was writing a column about the economies inside computer games – because these games are now so complex they do have their own economies. I read the novel for background, but I really grew to admire it.

Next on your list is a book that certainly is an economics lesson, but takes the form of a cartoon.

This is by Yoram Bauman, who is perhaps better known as the stand-up economist. He sprang to fame because of this lecture – you can see it on YouTube – which was a stand-up comedy routine, based on a parody of one of the most famous economics textbooks, Greg Mankiw’s Principles of Economics. Bauman has a PhD in economics, so he knows a lot of economics, and there’s actually quite a lot of wisdom woven into the comedy routine, but he just lays into economics.

Which takes us onto your next book, The Big Short by Michael Lewis.

This is probably the most popular book on my list, and many people will already have read it.

Lastly, you’ve chosen the Bad Science book by Ben Goldacre. Again, not obviously to do with economics. He’s a medical doctor who also writes a column for the UK newspaper The Guardian.

This is really one of the best books I have ever read. It’s been hugely successful in the UK, and has now been published in the US as well. I thought it was just going to be Ben laying into silly tabloid newspaper stories about how everything in the world either cures cancer or causes it. And he does do that. But if you go through the book as a science writer, which I am (I’m writing about the science of economics, and what economists do) I started becoming increasingly ashamed of myself, at the standards that Ben holds up for writing about what’s going on in academia, versus the standards that I was holding myself up to. You read a paper, you understand a paper, you write a paper up. Ben is saying, “What about the contrary papers? What about the research that contradicts it? How is it that you found this particular piece of research? Have you looked widely enough? Have you thought about publication bias?” He is really thinking about all the different ways we can deceive ourselves that something is true when it really isn’t.

The Next Convergence - Part 2

Sustained high growth in the developing world

7. The high growth developing countries in the post-war period

8. The opening of the global economy

9. Knowledge transfer and catch-up growth in developing countries

10. Global demand and catch-up growth

11. The internal dynamics of sustained high growth

12. Key internal ingredients of sustained high growth recipes

13. Opening up : an issue of speed and sequencing

14. The Washington consensus and the role of government

15. Managing one's currency in the course of growth

16. The middle income transition

17. The political, leadership and the governance underpinnings of growth

18. Low growth economies in the developing world

19. Natural resource wealth and growth

20. The challenge for small states

21. The adding up problem

Part 2 is an extension of the analysis we considered in our previous book club book - Why Nations Fail.

This section of the book considers 2 questions:

Why did this process of rapidly expanding modernization and growth state in the postwar period?

What do developing economies to (and not do) to sustain the high rates of growth and poverty reduction? (55)

In answer to the first, Spence advances: globalization and increased openness and participation to international trade (57)and knowledge transfer (59). These factors lead to the familiar catch up effect that is a mechanism for the convergence that Spence sees as portions of the developing world achieve high growth rates and move from low levels of GDP per capita to higher levels.

The analysis invites a consideration of the problems of transition and last month our work in considering Acemoglu and Robinson's institutional argument seems in line with Spence's view in chapter 17. The scaffolding necessary to support policies of trade openness, knowledge transfer and the incentives to integrate the results of these policies into, what Acemoglu called the "virtuous circle" must support and incentive change. Using China as an example we are told, ". . . the central task for development and growth was learning at all levels, in the private sector and the government."(61) This assertion seems to be to exemplify the notion of emergent order - that the institutions of a society must encourage trial and error and overcome the natural resistance to a dynamic process of exploration. Very Schumpeterian and when Spence writes of "high-speed learning environment" he is hitting on a key element in the process of change.

I very much appreciated Spence's treatment of comparative advantage in chapter 10 was his clarity in contrasting the dynamic nature of comparative advantage with the static view of the world held by some, including many public leaders.

Spence clearly presents the consequence of this dynamic nature: "Sustained growth and structural change go hand in hand." (67).

I am looking forward to our discussion of chapter 11 and the role of government is supporting growth. That discussion will be, I hope, informed by the first two paragraphs on page 71 as well as the contentions outlined in the past paragraph on page 105.

Spence outlines the role that the public sector can play in the investment areas of education and infrastructure. Public education is at the center of our next book The Race Between Education and Technology.

This book provides a careful historical analysis of the co-evolution of educational attainment and the wage structure in the United States through the twentieth century. The authors propose that the twentieth century was not only the American Century but also the Human Capital Century. That is, the American educational system is what made America the richest nation in the world. Its educational system had always been less elite than that of most European nations. By 1900 the U.S. had begun to educate its masses at the secondary level, not just in the primary schools that had remarkable success in the nineteenth century.

The book argues that technological change, education, and inequality have been involved in a kind of race. During the first eight decades of the twentieth century, the increase of educated workers was higher than the demand for them. This had the effect of boosting income for most people and lowering inequality. However, the reverse has been true since about 1980. This educational slow-down was accompanied by rising inequality. The authors discuss the complex reasons for this, and what might be done to ameliorate it.

The recent Institution for International Economics Studies conference had a presentation on point with a comment on the presentation by Claudia Goldin, co author of The Race Between Education and Technology.

Presentation

Comment by Goldin

Returning to Spence's book, he finds 4 attributes of government involvement in society that are positively related to growth (106):

1. The government takes economic growth seriously.

2. The governing group has values that cause it to try to act in the interest of the vast majority of the people

3. The government supports open trade, high levels of investment and a future orientation.

4. Economic freedom is supported by the legal and regulatory policy.

I am looking forward to both the discussion and reaction to point 4 above and an analysis of Spence's chapter 17 analysis.

Spence asks, at the bottom of page 109, ". . . what could be done about failing states."(109). This question bedevils social scientists and policy makers and I wonder, after reading Douglass North, Daron Acemoglu, Michael Spence and other contemporary thinkers and reflecting on Adam Smith's analysis of the causes and conditions of the wealth of nations, what really can be done?

I also wonder, to what extent, there are constructive responses to what Spence sees (third paragraph of page 113) as the common causes of poor economic performance.

Book review of Popper, Hayek and the Open Society by Calvin Hayes

http://defenseofcapitalism.blogspot.com/2011/12/open-societies-and-spontaneous-orders.html

The Next Convergence - Part 1

Part 1 The global economy and developing countries
1. 1950: the start of a remarkable century
2. Static views of a changing world
3. Postwar changes in the global economy
4. The origins of the global economy
5. Economic growth
6. Common questions about the developing world and the global economy

Part 1 is an excellent introduction and framing of the questions posed in the introduction. In particular, chapters 2 and 5 are important and presented in an accessible manner for students of social sciences.
The final paragraph on page 17 provides an insight into a question that our book group has raised during a number of meetings and that continually reflect upon - How do beliefs persist that seem to be in conflict with the world, for example, minimum wage other price controls effectively address questions of economic welfare.

Spence concludes chapter 2:

"Our natural instincts to look for a villain, some human constraint that held in place . . ." I do think that he is on to something here, the notion that there is someone or some organization to blame and the natural follow on to this belief is that there can be a correcting agent - the state, other institutions, or an individual or group of enlightened elites - that can slay the villain and "fix" the problem.

Spence goes on to make an assertion that is attractive to me and I wonder how valid it is. He seems to be saying that the belief mechanism that seems to underlie the instinct for blame is based upon a static or "snapshot" perspective that dominated historical belief systems and continues today. That seems to align with a view that belief systems tend to change very slowly, if at all. The concluding sentence to chapter 2 seems to me to be very true in general and would challenge educators to consider our own process of perspective and belief formation and consider how this might inform our instruction.

Chapter 6 is, important, for the reinforcement of Easterly's aid thesis - that is that foreign aid provides long term (or even short term) benefit to developing countries. Thinking back to the end of chapter 2, I wonder how effective the analysis in this chapter would be to an audience that is primarily operating with a "snapshot" perspective that generates a belief in the efficacy of policies such as aid.

Great Podcast by Michael Spence - The Next Convergence

http://www.international.ucla.edu/burkle/news/article.asp?parentid=125911

Nobel Laureate Michael Spence: The Next Convergence: Developing Country Growth & the Transformation of the Global Economy

The 2012 Arnold C. Harberger Distinguished Lecture delivered by Michael Spence, Nobel Laureate & Professor of Economics at New York University.

This 1 hour 30 minute podcast is a great overview of our October book club book.

Nobel Laureate Michael Spence joined New York University's Leonard N. Stern School of Business as a professor of economics in September 2010. He is a senior fellow at the Hoover Institution and the Philip H. Knight Professor Emeritus of Management in the Graduate School of Business at Stanford University.

Professor Spence, whose scholarship focuses on economic policy in emerging markets, the economics of information, and the impact of leadership on economic growth, was chairman of the independent Commission on Growth and Development (2006-2010), a global policy group focused on strategies for producing rapid and sustainable economic growth, and reducing poverty. He also serves as a consultant to PIMCO, a senior adviser at Oak Hill Investment Management, and as a member of the board of the Stanford Management Company as well as a number of public and private companies. A Rhodes Scholar and the recipient of many honors and awards, Professor Spence was awarded the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal from the American Economic Association in 1981. He is the author of three books and 50 articles, and is a member of the American Economic Association and a fellow of the American Academy of Arts and Sciences and the Econometric Society.

Professor Spence served as Philip H. Knight Professor and dean of the Stanford Business School from 1990 to 1999. Before that, he was a professor of economics and business administration at Harvard University, chairman of its economic department, and dean of its Faculty of Arts and Sciences.

Professor Spence earned a Ph.D. from Harvard University in 1972, a B.A./M.A. from Oxford University in 1968 and a B.A. (summa cum laude) from Princeton University in 1966.

Hayek on Intellectuals

Econ Talk - Bruce Caldwell on Hayek

This is a must listen podcast.

http://www.econtalk.org/archives/2011/01/caldwell_on_hay.html

Bruce Caldwell of Duke University and the General Editor of the Collected Works of F. A. Hayek, talks with EconTalk host Russ Roberts about Hayek, his life, his ideas, his books, and articles. The conversation covers Hayek's intellectual encounters with Keynes, Hayek's role in the socialist calculation debate, Hayek's key ideas, and a discussion of which of Hayek's works are most accessible.

From the end of the interview - Roberts asks Caldwell where one would begin in reading Hayek:

Let's talk about what should people read to get started. "Use of Knowledge in Society." "Individualism, True and False"--article, essay published in 1946, lecture delivered in 1945, lays out contrast between the Scottish enlightenment version of individualism that we've been discussing in terms of unintended consequences, versus individualism that is atomistic. In some ways you can view this as a critique of socialism. But it also could be a criticism of ideas that underly economic theory. This book, Individualism and Economic Order contains a number of great essays. "The Meaning of Competition" is one, where he says: Anyone who has studied microeconomics has learned about perfect competition and the way decisions are made and he says the worst thing you can do is to think that what you want to do is make the world look like that, because actually, where real competition occurs is not equilibrium but out of equilibrium--it's rivalrous competition. So those are three nice essays. Movement from the Road to Serfdom to the Constitution of Liberty can be viewed as a step. If you didn't want to read The Road to Serfdom you could take a look at "The Economic System," his 1939 essay in which he articulates some of the ideas. I would just add "The Pretence of Knowledge," his Nobel Prize lecture, accessible. Then, in the books, what would you read. All of them of course! Some order? The Road to Serfdom because it's so much in the news,

The Next Convergence

Short interview with Foreign Affairs

Globalization and Unemployment: The Downside of Integrating Markets

By Michael Spence

July/August 2011

Foreign Affairs

http://www.viet-studies.info/kinhte/MichaelSpence_Globalization_Unemployment.pdf

Reviews - The Next Convergence

Tyler Cowen

http://marginalrevolution.com/marginalrevolution/2011/05/the-next-convergence.html

I enjoyed reading this book. It is an entirely sensible take on catch-up growth, a topic which is lacking a good popular treatment and yet deserves one. I found each of the short chapters well-written and to the point. Yet I came away from the work with a strange feeling: I don’t have a good sense of why Spence wrote the book. It doesn’t flex his Nobel-quality analytic mental abilities (unlike this recent piece he wrote), nor is it a rank popularization. It doesn’t promote a “big idea” that his name will be attached to, nor is Spence moving in the Stiglitz or Krugman directions, either politically or in terms of level of pitch. I don’t understand what the book is supposed to be signaling.

Washington Post

Spence’s use of data and history is as impressive as his avoidance of empty sloganeering. Rather than offer deterministic and hopelessly naive bromides, Spence offers deep insights with a winning, refreshing humility rarely seen in Nobel Prize-winning economists. He seems to have taken to heart the advice of another Nobel laureate, the Danish physicist Neils Bohr, who famously said, “Prediction is very difficult, especially about the future.” While Spence has written a book about what will happen in 2050, he concludes by similarly conceding that all crystal balls are hazy. “We do not know, and probably cannot calculate, what the medium-term destination will be,” he writes. “It is not that the principles and forces aren’t understood. It is rather that the system is too complex to lend itself to forecasting.”

http://www.washingtonpost.com/entertainment/books/michael-spences-the-next-convergence-the-future-of-economic-growth-in-a-multispeed-world/2011/06/27/gIQAagtU9I_story.html

Financial Times

http://www.ft.com/cms/s/2/32fb8a62-9a59-11e0-bab2-00144feab49a.html#axzz252xpBjhX

I greatly admire the lucidity, scope and tone of the book. Readers will learn a great deal. But that does not mean I agree with everything.

Prof Spence believes, for example, that emerging market economies have insured themselves by accumulating the liabilities of western governments. This is a strange form of insurance! He also underplays the role of such reserve accumulations in the imbalances that helped create the conditions for the financial crisis.

More important, the analysis of the resource requirements of a world in which 6bn-7bn people live as 1bn people do now is superficial and over-optimistic. True, he is in good company. But I wonder whether such a world will prove sustainable. Certainly, far more rigorous analysis is needed.

Finally, while I want to be optimistic about the capacity of emerging countries to sustain rapid growth and of high-income countries to accommodate their rise, much can go wrong. As the book concludes: “We, and future generations, will have to invent our way through and around the potential roadblocks along the way.” Is humanity capable of such wisdom? I too hope so. But hope is very far indeed from confidence.

On Hayek

http://economix.blogs.nytimes.com/2012/08/28/why-hayek-isnt-paul-ryans-guru/

While the context is contemporary politics, this short editorial is worth a look for a better view of Hayek . . .

Hayek, who told the Cornell political scientist Theodore Lowi that Rand angrily called him “a compromiser” on the only occasion they met.

ASET Book Club - Oct. 24 - The Next Convergence

                                                              ASET Book Club 

Join the Arizona Society of Economics Teachers Book Club to discuss current popular economics books. 

Upcoming Dates:          
Thursday,Wednesday, October 24, 2012: The Next Convergence by Michael Spence 
Thursday, December 6, 2012: The Race Between Education & Technology by Goldin and Katz


Time:          5:45 - 7:45 p.m.
Location:    Arizona Council on Economic Education office
                    3260 North Hayden Road, Suite 207
                    Scottsdale, Arizona 85251

http://www.amazon.com/The-Next-Convergence-Economic-Multispeed/dp/1250007704/ref=sr_1_1?ie=UTF8&qid=1346342885&sr=8-1&keywords=the+next+convergence

Table of Contents:

The global economy and developing countries

1950: the start of a remarkable century

Static views of a changing world

Postwar changes in the global economy

The origins of the global economy

Economic growth

Common questions about the developing world and the global economy

Sustained high growth in the developing world

The high growth developing countries in the post-war period

The opening of the global economy

Knowledge transfer and catch-up growth in developing countries

Global demand and catch-up growth

The internal dynamics of sustained high growth

Key internal ingredients of sustained high growth recipes

Opening up : an issue of speed and sequencing

The Washington consensus and the role of government

Managing one's currency in the course of growth

The middle income transition

The political, leadership and the governance underpinnings of growth

Low growth economies in the developing world

Natural resource wealth and growth

The challenge for small states

The adding up problem

The crisis and its aftermath

Emerging markets during and after the global crisis

Instability in the global economy and lessons from the crisis

Stimulus in the crisis and the need for cooperative behavior

Rebalancing the global economy and its consequences for growth

The excess savings challenge in China

The openness of the global system and the WTO

Legacies of the crisis : slow growth and sovereign debt issues in advanced countries

Periodic systemic risk and investment behavior

The future of growth

Can the emerging economies sustain high growth?

China and India

India's growth, diversification and urbanization

Brazil's growth reset

Energy and growth

The challenge of climate change and developing country growth

Information technology and the integration of the global economy

European integration and transnational governance

Global governance in a multi-speed world

The G20, the advanced countries and global growth

Sustaining growth : the second half century of convergence.

INET interview (video) with Spence.

http://ineteconomics.org/blog/inet/michael-spence-next-convergence

Great resource for Hayek

http://hayekcenter.org/