econoblog.info

A roundup of economic news from around the web.

-In Defense of Alan Greenspan: Alex Tabarrok of Marginal Revolution reminds those who blame former Federal Reserve chair Greenspan for shaping policies that helped cause the financial crisis and Great Recession that “it was Alan Greenspan who popularized the term ‘irrational exuberance,’ in a speech in December of 1996…” Mr. Tabarrok writes that despite colleague Paul Krugman’s assertion in a recent New York Times magazine piece that “Finance theorists continued to believe that their models were essentially right, and so did many people making real-world decisions. Not least among these was Alan Greenspan,” Greenspan (and other prominent economists such as Robert Shiller) did express serious concerns about the economy and were hardly marginal voices. “The point,” says Mr. Tabarrok, in considering the profession’s role in the crisis, is that “it’s neither true nor useful to argue that Greenspan and other economists thought the price was always right.”

-Hello Tattooed Fruit: Sara Bonisteel of Slashfood reports that the FDA is expected to approve laser-etching of fruits and vegetables in “the next month or so,” replacing the stickers that currently identify produce (photos of how the new labels will look can be seen through the link). A researcher with the USDA explains the process “just penetrates the few cells of that colored layer and exposes the underlying layer. So it doesn’t go anywhere near the part of the fruit that you eat. It’s just on the peel.” Commenters on the website are largely unhappy, for reasons ranging from possible contamination to dinner-party eyesores to the cost of implementing a laser-based system.

-A Better Measure of Well-Being? Joseph Stiglitz writes in the Financial Times that “a comprehensive measure of well-being” would improve over the shortcomings of gross domestic product, which measures societal progress in terms of output, rather than standard of life, particularly given rising concerns that “a focus on the material aspects of GDP may be especially inappropriate as the world faces the crisis of global warning.” Research in economics and other disciplines suggests the need for “broader, more encompassing measures of well-being,” he writes, that would recognize for example, “that unemployment has an effect that goes well beyond the loss of income it gives rise. Health, education, security and social connectedness are all important to quality of life – but are not adequately reflected in GDP.” Mr. Stiglitz provides no further specifics but urges more work towards a new gauge, noting in particular that “Too often, we confuse ends with means,” and the Great Recession has been a reminder of the lesson that “a financial sector is a means to a more productive economy, not an end in itself.”

-Minsky and Teen Unemployment: In analyzing a Boston Globe piece on the rising popularity of the work of the late economist Hyman Misky, the Econospeak blog looks at what the practical implications of Mr. Minksy’s warnings (that capitalism is inherently unstable) might be. “Part of the solution…is to have the Federal Reserve act as a lender of last resort to distressed firms. Nothing new there. But the other part is more radical: to have the government act as employer of last resort, guaranteeing a job to anyone who wanted one.” This might not be entirely unreasonable, the blogger writes, given the soaring rate of teen unemployment and the sharp decline in teen workforce participation since 2000. “In the context of the youth employment crisis…a far-reaching government jobs program might become politically feasible,” the blogger writes, but says he doubts it would be “economically feasible.”