Economics today

• Falkenstein on regulation :

  When you try to micromanage a complex system, the most important virtue is humility.

• Kling on Fannie and Freddie:

  Markets achieve a spontaneous order. The opposite of order is disorder. Price controls in the oil market created disorder, to the point where fights broke out in lines at gas stations.

  Government interference in housing markets, which helped produce the disorder known as the financial crisis, is still producing disorder

  
  
• TJICistan:

  Wherever there are strong property rights, there is wealth and happiness.

  Wherever there are no or weak property rights, there is overuse, destruction, and misery.

• Scott Sumner on Milton Friedman vs. the WSJ:
  

  when I researched the Great Depression, I was shocked at how the conservative Wall Street establishment hated dollar devaluation, despite the fact that the stock market obviously loved it. I noted (to myself) that “at least the modern WSJ is much better; they often use the market reaction to policy announcements as a way of establishing their likely effects.” I guess the WSJ has reverted back to the primitive pattern of the 1930s. “Yes, the markets are screaming for easier money, probably because it will boost the economy. But we can’t have that because it might make Obamanomics look successful. Plus ca change . . .
  

  
  
• Scott Sumner on The Federal Reserve contains Idiots:

  This isn’t rocket science. When the AD curve shifts to the left then NGDP falls (relative to trend, as in the excellent Cowen/Taborrok textbook.) That’s an adverse demand shock. We have seven members of the Fed who don’t even seem to understand the basics of AS/AD theory. Who have concocted all sorts of bizarre structural theories to explain away their failure to boost NGDP enough for a robust recovery. This is EXACTLY what happened at the Fed in the Great Depression.

• Scott Sumner on The Enormous success of Liberaltarianism:

  Sure the recent crisis has created setbacks, such as the government takeover of GM. But the long run trend around the world has been strongly liberaltarian, and will almost certainly remain so for the foreseeable future. Just the other day Denmark decided to cut unemployment benefit eligibility from 4 years to 2 years. Think about what that means. Two French researchers (Algan and Cahuc) found that Danes had the most liberal/civic-minded attitudes on Earth. They argued that Denmark was the country most suited to have social insurance programs, because the non-deserving would be less likely to abuse the programs in Denmark than in any other country. Yet even in ultra-honest Denmark it was found that a large number of workers mysteriously found jobs immediately after their unemployment benefits ran out. So they are cutting back. Denmark already has the freest markets in the world, and now they are shrinking their welfare state. No wonder the Danes are so happy, despite dreary weather.