Smart Links 18 January 2013

Commentary on irrational economics, austerity is class warfare, no future, adjusting is hard, what questions does Unchained ask, why DC may still win out over AC, and Paul Martin on Idle No More.

(ed's note -- travelling for a week, Smart Links on holiday until January 27)


Silly economists think consumers are rational.

The Atlantic -- The Irrational Consumer: Why Economics Is Dead Wrong About How We Make Choices
Daniel McFadden is an economist. But his new paper, "The New Science of Pleasure," shows the many ways economics fails to explain how we make decisions -- and what it can learn from psychology, anthropology, biology, and neurology.


The New Science of Pleasure

The war on us.

Guardian -- Austerity? Call it class war – and heed this 1944 warning from a Polish economist
This assault on an entire social contract is what Michal Kalecki warned about.


The Political Aspects of Full Employment

We’re f**ked.

Macleans -- The new underclass
Why a generation of well-educated, ambitious, smart young Canadians has no future.

Beg to differ.

Globe and Mail – Guess What? There’s no ‘lost generation’ of grads
It seems de rigeur in journalistic circles these days to claim that today’s youth – especially the bit that is university-educated – represent a “lost generation.”

Changing the structure of the economy is more about politics than economics.

Global Economic Intersection -- Recognizing the Need for Economic Adjustment
In China, I have argued many times, high growth is no longer compatible with a strengthening balance sheet. If China is growing at a rate that approaches or exceeds five or six percent, it is probably a safe bet that debt is rising faster than debt servicing capacity.


“The history of developing countries suggests that most countries fail in the reform and adjustment process precisely because the sectors of the economy that have benefitted from the distortions are powerful enough to block any attempt to eliminate those distortions.”

There’s a lot of history here.

London Review of Books -- At the Movies
This year’s discussions of the Oscar nominations, especially before they were announced, centred on the notion of American history and managed somehow to suggest that this is both a very strange subject for mainstream movies to take on and something they do all the time.

Edison was right.

Economist -- Difference Engine: Edison's revenge
IMAGINE what might have happened if, back in the 1880s, Thomas Edison had devoted his prodigious engineering talents to perfecting a direct-current transformer instead of wasting his energy disparaging the upstart alternating-current system from Europe that was being championed in America by George Westinghouse and his Serbian-American adviser, Nikola Tesla.

Why did he wait?

CBC -- Paul Martin says Ottawa has 'no understanding' of native issues
Former prime minister was the architect of the 2005 Kelowna Accord.

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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.