The Economics of Tomorrow

I found this Piece by Paul De Grauwe which should seriously be Read by Graduate Students in Economics and Above. It tries to critique DSGE-models which ordinary people should ignore, else tainted with a Faith which would be misplaced. The basis for these models assume that there is a rational ‘Perfect’ Player, who has immediate and competent assessment of Market forces, and therefore can make highly accurate judgement calls within the Market in Real Time. This rational Player has not gulped that Coca-Cola to drown the hangover of the Night before, has read a half-dozen Trade papers on the Ride to Work, and has not been asked for a judgement call from a subordinate prior to his turning on his Computer. His Secretary has not forgotten the Stock Quote opens he had asked to be tracked at Close of Trading the Day before. He most definitely does not wish he had been so impulsive as to have put in the near-Close Buy order yesterday, as he examined the Commodity price quotes of the Day. He is so Perfect that the Market is only a backseat Driver following him around. The DSGE-models say that this Dude exists.

Arnold Kling presents a rundown of good articles which tap a select list of Topics. Why does Wealth always think that they work harder than other People? Pro Sports stadium bleachers are not filled with Welfare brats–at $60/Ticket. Would turning College Education into another Derivative market really work? College Students have rarely liked to repay their Student loans, and Academia may be searching for a new Sucker. I wish that Conservatives would finally accept that what is wrong with Health Care is not Demand, an normative universal, but excessive bundling of Rent-Seeking on the Supply side. We need 100,000 Doctors making $60k per year, not 10,000 Doctors making $600k per year. No one is going to come up with another 12 million barrels of Oil per day by 2015, so the growth of China and Oil seems a little academic.

Singapore is a great place to live, if One has the wherewithal to enjoy the bounty created by the economy. It lacks only a few things to spur future growth: cheap labor, cheap access to materials, and expandable Transport facilities. Singapore has yet to endure the Reconstruction radix where Capital has to be destroyed to build new Business. Singapore has a Planned City, if not a Planned Economy, and is constrained for space. The future may be bright for Singapore, but it could also contain hazards. lgl