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Here is my contribution to the happy birthday blog posts that were shared on the occasion of Mario Rizzo’s birthday. Mario was a great influence on my thinking, as well as a pivotal influence on Austrian economics. Read all of the contributions, by Andreas Hoffmann, Jerry O’Driscoll, Pete Boettke, Richard Epstein, Israel Kirzner, Dan Klein, Boyan Jovanovic, Steve Horwitz, Tyler Cowen, Frederic Sautet, Vernon Smith, Pablo Duarte, Roger Koppl, Giandomenica Becchio, Larry White, Shruti Rajagopalan, Peter Lewin, Nick Cowen, Sandy Ikeda, Glen Whitman, Malte Dold, and Jeffrey Tucker.

Happy Birthday Mario!


by Mathieu Bédard

On the occasion of Professor Mario Rizzo’s birthday, I’d like to take the opportunity to underline how great an influence he has had on my thinking.

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Puisque le Moodle semble ne pas être disponible pour l’instant, je propose aux étudiants de TSE en Microéconomie: Introduction à l’organisation industrielle L3S5 du diplôme Économie & Société de télécharger le plan de cours/syllabus ici.

Vous pouvez maintenant aussi télécharger les cas vus au dernier cours ici.

Let him who accepts the message there expounded rewrite the history of the French ancien regime in some such terms as these: Louis XV was a most enlightened monarch. Feel­ing the necessity of stimulating expenditure he secured the services of such expert spenders as Madame de Pompadour and Madame du Barry. They went to work with unsurpassable efficiency. Full employment, a maximum of resulting output, and general well-being ought to have been the conse­quence. It is true that instead we find misery, shame and, at the end of it all, a stream of blood. But that was a chance coincidence.

In Schumpeter, Joseph A. 1936. Review of The General Theory of Employment, Interest and Money by John Maynard Keynes. Journal of the American Statistical Association 31 (196) : 791-795.

101 Candles...

This is kind of awesome, a Sylvester the Cat episode that teaches some econ 101. A Wikipedia page says it was the fruit of a collaboration between Warner Bros. and NYU’s Institute of Economic Affairs, and there are actually two more such episodes out there.

Includes Edward J. Kane’s slides on the unfounded taxpayer liabilities that constitute the so-called ‘financial safety net’. It is very interesting to see Kane take such an strong stance on the subject.

Pursuit of Truthiness

I wish that Inside-Job-Style critics of economics could have attended Ed Kane’s keynote address at the Western Economic Association conference last weekend. I’ve never seen a group of academics so ready to grab torches and pitchforks and march on Wall Street.

I don’t know if anyone recorded the session, but his powerpoints are available here:

Globalization of the US Financial Safety Net-6

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The challenge of war meant that something of an inquest took place on Scottish banking. […] The Darwinian idiom was used to describe Scottish banking: it was a ‘naturally evolved system’, and was ‘part of our national life intrinsically interwoven with our Scottish character.’

But as the war went on, as banking practice underwent changes, and as discussion about the new situation that would come with peace deepened, the atmosphere began to change. By late 1917, it was clear that the banks had become, in effect, government agencies, with their own freedom of action very much narrowed. Moreover, the banks had learned to co-operate with one another with a completeness hitherto unknown. The Scottish banks had long had their agreed schedules of rates and charges: now the entire British banking system reacted in an agreed way to the needs of the state.

Checkland, Sydney George. 1975. Scottish Banking: A History, 1695–1973. Glasgow: Collins, p. 55960.

James’ post reflects on a feeling that is common among economists; the weariness of having your discipline’s basic insight completely disregarded by policy makers, even though widely agreed upon and taught everywhere. The same anti-intellectual behavior is rightfully looked down upon with regards to environmental and climate studies, yet somehow remains acceptable when it comes to economics.

Check out his research on Health Economics.

Pursuit of Truthiness

President Obama called for an increase in the minimum wage to $9 in last night’s State of the Union speech. A lot of economists will take this as a personal affront, wondering how people still think this is a good idea after we explain in every MicroEcon 101 class how it will backfire and result in poor people losing their jobs and losing non-wage benefits. If you are determined to support a minimum wage, you could simply ignore all these arguments, but this beginner tactic will leave you looking ignorant.

A more advanced tactic for not having to change your mind about the minimum wage allows you to know two things instead of none. You can know the Econ 101 arguments, and also know about Card and Kreuger’s 1996 empirical study showing how the minimum wage might not affect unemployment. Pull out your pocket copy of Card and Kreuger’s paper…

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“both the Spanish word ‘empresa‘ and the French and Latin expression ‘entrepreneur‘ derive etymologically from the Latin verb in prehendo-endi-ensum, which means to discover, to see, to perceive, to realize, to attain; and the Latin term in prehensa clearly implies action and means to take, to catch, to seize. In short, empresa is synonymous with action.”

Huerta de Soto, Jesus. 2010. Socialism, Economic Calculation and Entrepreneurship. Cheltenham, UK: Edward Elgar. As quoted in Foss, Nicolai J. and Peter G. Klein. 2012. Organizing Entrepreneurial Judgment. Cambridge, UK: Cambridge University Press.

Very interesting discussion on “obscurantism” is social sciences. I can’t tell which kind of obscurantism is more popular in economics in France. One reason for that might be that we definitely have a strong ‘hard obscurantism’ tradition with our economic engineers, also many strands of ‘soft obscurantisms’ that are quite popular, but most of all we have a lot of soft obscurantism fueling hard obscurantism research.

Organizations and Markets

| Lasse Lien |

I recently attended a presentation by the great social scientist Jon Elster, in which he lamented the state of affairs in social science. Elster has – quite nicely, IMHO – coined the terms hard and soft obscurantism as the main problems. To Elster, obscurantism generally refers to endeavors that are unlikely to produce anything of value, and where this can be predicted in advance. This in contrast to more honorable failures, where a plausible hypothesis turns out to be wrong, leaving much effort without much value.

Soft obscurantism is exactly what it sounds like. Unfalsifiable, impenetrable theories which often proudly ignores standards for argument and evidence that elsewhere constitute the hallmark of the scientific method. Examples are post modernism (Latour), structuralism (Lévi-Strauss), Functionalism (Bourdieu, Foucault), Marxism (Badiou) and psychoanalysis.

But there is a ditch on the other side of the road too. Hard obscurantism refers to…

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