Lean Government

There is no difference between men and women in risk taking, altruism, fairness concern or trust

Anne Sibert discusses as one of the causes is the impact of the banking crises as a result of gender inequality i.e. too much testosterone leading to risky behavior.

I am so sorry to have to tell her that that hypothesis ha now been proven wrong. A study done by Stockholm School of Economics and a leading the research hospital Karolinska.

Sex hormones do not affect economic behavior

A new study published in the April 6 advanced online issue of the Proceedings of the National Academy of Sciences (PNAS), shows that neither testosterone nor estrogen had any effect on financial risk taking.

Neither had it no effect on other “economic behavior” (altruism, fairness concerns or trust).

It is well established that women are more reluctant to take financial risks than men are; women for instance are less prone to invest their retirement savings in the stock market. It has been argued that these differences are due to sex hormones. Particularly, testosterone has been thought to increase risk taking and estrogen has been thought to decrease risk taking.

To test the hypothesis that sex hormones affect economic behavior a team of researchers at the Stockholm School of Economics and Karolinska Institutet conducted a double-blind randomised clinical trial. In the study women in the ages 50-65 years were randomly allocated to treatment with, testosterone, estrogen, or placebo. After 4 weeks of treatment, the women participated in a series of economic experiments to measure financial risk taking, altruism, fairness concerns, and trust. But no difference in behavior between the groups was discovered.

Thanks to Freakonomics


May 20, 2009 Posted by | Uncategorized | Leave a comment

“Those that manage their credit well will in some degree subsidize those that have credit problems”

The hard paternalist do not deny themselves. As soon as a small minority fails to manage their lives, the imprudent; regardless of it is about sex, alcohol, drugs, dropping out of schools it is those that can handle their lives, the prudent get hit. It seems that the 90/10 rule is universal.

The hard paternalist legislator refuses to address the issue at source i.e. address the issue of lack of skills and adequate behavior. They instead punish the hard working and prudent by tougher rules and restrictions making life more difficult and more expensive. Not only that the bill for these further restrictions as well as the bill for bailing out the imprudent is burdening the prudent and the careful.

in a just society the bill for these costs in form of higher taxes, higher interest rates, higher fees and more restrictions should fall more havely on those causing it. In a paternalist society the prudent get hit, time after time.

Från NY Times: Overhaul Likely for Credit Cards

Banks are expected to look at reviving annual fees,
curtailing cash-back and other rewards programs and charging interest
immediately on a purchase instead of allowing a grace period of weeks,
according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the
chief executive of the American Bankers Association, which has been
lobbying Congress for more lenient legislation on behalf of the
nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.” [min kursiv]


May 19, 2009 Posted by | Uncategorized | Leave a comment

Sustainable Energy without Hot Air

I am an incurable techo-optimist I have always held that most of humanities problems can be fixed with an application of scientific knowledge och scientific methods. I have even thought that the issue of global warming could be solved with the application of more efficient solar panels as well as with the development of fusion energy. Tim Harford apparently had the same thoughts but after reading, download it,  Sustainable Energy – Without the Hot Air, by Professor MacKay. Tim Harford writes in his blog post Switch to renewable energy? If only it were that simple:

Professor MacKay makes this point very simply by sidestepping the
economics altogether. Technological progress and economic growth loosen
the corset of cost-benefit analysis, but not the laws of physics. No
matter how cheap and efficient solar collectors become, there is only
so much solar power available per square metre of land. Hydroelectric
energy is constrained by the quantity of rainfall and the height of
reservoirs above sea level. The most perfectly designed windmill is
limited by the energy of the wind. It would barely be possible to make
the numbers add up even if renewable energy generators were free

May 16, 2009 Posted by | Uncategorized | Leave a comment

To predict politics by Game Theory

Political scientist  Bruce Bueno de Mesquitas game theory models can with a 90 % accuracy predict complex business and political scenarios. He presents his technique and at TED.

Thanks to inslag.se

May 14, 2009 Posted by | Uncategorized | Leave a comment

Has the Rule of Law been abandoned in the US?

I have always admired the US Constitution in general but most of all the strict adherence to the principle of Rule Of Law. This principle now seems fast to be eroding. During George W Bush the Rule of Law as regards to individual privacy all but disappeared  and now the Obama administrations behavior in the Chrysler bankruptcy has made it go away in business life as well.

Todd Zwycki writes in today Wall Street Journal and it makes me aghast, totally horrified.

Chrysler and the Rule of Law-The Founders put the contracts clause in the Constitution for a reason.

The rule of law, not of men — an ideal tracing back to the ancient Greeks and well-known to our Founding Fathers — is the animating principle of the American experiment. While the rest of the world in 1787 was governed by the whims of kings and dukes, the U.S. Constitution was established to circumscribe arbitrary government power. It would do so by establishing clear rules, equally applied to the powerful and the weak.

Fleecing lenders to pay off politically powerful interests, or governmental threats to reputation and business from a failure to toe a political line? We might expect this behavior from a Hugo Chávez. But it would never happen here, right?

Until Chrysler.

The value of the rule of law is not merely a matter of economic efficiency. It also provides a bulwark against arbitrary governmental action taken at the behest of politically influential interests at the expense of the politically unpopular. The government’s threats and bare-knuckle tactics set an ominous precedent for the treatment of those considered insufficiently responsive to its desires. Certainly, holdout Chrysler creditors report that they felt little confidence that the White House would stop at informal strong-arming.

And what if the next time it is a politically unpopular business — such as a pharmaceutical company — that’s on the brink? Might the government force it to surrender a patent to get the White House’s agreement to get financing for the bankruptcy plan?

May 13, 2009 Posted by | Uncategorized | Leave a comment

Renewing classical liberalism? Part 1. The libertarian Democrat Manifesto

Terry Michaels on what he thinks liberalism ought to be if you are a Democrat.

He writes:

What’s the story behind today’s Democrat brand? I continue to be a partisan Democrat, but I’m not sure. I believe it’s something like: “Government isn’t all that bad; look at Social Security and Head Start. America isn’t always that good; we try to impose our will on a multi-cultural world. The marketplace is full of bad guys who need to be restrained, including their greed-driven political speech. Hey, we’re religious, too. And, not just equal opportunity for all, but re-distributive social justice entitlements for special “minority” victims, because, except for me and my friends, racism endures.”

Terry Michaels asks about a renewal of the Democrat party.

1. Centrist

2. Old time religion , offered by the economic policy reactionaries overly represented in the party’s congressional wing, preaches a return to an “old-time religion,” “complete-the-New-Deal” ideology.

That Fifties and Sixties battle cry might have made sense once. But it is mis-matched for today’s smarter voters, who want to make decisions from their homes, or at least their states.

Social welfare left-liberals often peddle a kind of middle-class neo-populism, a William Jennings Bryan appeal to folks with SUVs and satellite TV, with selective-memory imagery of the good life of the 1950s (again, see Bob Samuelson’s book.)

Sometimes they push class warfare, a version of which the ultra-ambitious John Edwards now seems to be selling as the self-appointed trial lawyer for the underclass.

Old-time religion seems to move (or at least receive lip service from) the Dupont Circle, K Street and AFL-CIO Washington-based wings of the base, but usually leaves the hinterland center cold. And the Beltway-based lefties have lost their nerve on non-interventionist foreign policy, so afraid of that “soft-on-defense” Cold War scarecrow the DLC neo-cons have been peddling for two decades that they allowed Bush’s elective war to commence without engaging any real debate.

So what is Terry Micheals suggestion. Become Jeffersionain liberals or as he in his libertarian Democrat Manifesto says;

We need a new story. Here’s a rough cut, a little more than can fit on a bumper sticker, assembled around the three fundamental issue frames of politics – economic, social, and foreign policy:

“Government: assure liberty by staying as far away as possible from our bank accounts, our bedrooms, and our bodies. Spread pluralistic democracy and free markets by example, understanding that neither can be planted by force on political real estate lacking indigenous cultivators for their growth. Restore the moral authority of mid-20th century “civil rights,” fashioning public policy around individuals, not tribal identity groups.”

May 7, 2009 Posted by | Uncategorized | Leave a comment

The Blind fighting the Blind – Obama Keynesians vs Bush Keynesians

The nearly unimaginable problem we find us in now was caused by Keynesian and Neoclassic macroeconomic theories. The belief that by adjusting levers and micro tinker the economy you can smooth the economy i.e. cooling a overheating economy and heating up a recession. Both Neoclassic and Keynesian economics theory uses as its base the rational individual. The Neoclassic believe in Homo Economicus on an individual level and the Keynesian, nowadays also Behavior Economic theory, believe in the rational politician, bureaucrat, the illusion I call Homo Illuminatus.

In fact we are all individuals and we all behave, and if an individual is not behaving rationally how can an individual that is a politician, bureaucrat be assumed to behave more rationally? This is the fallacy of the Neoclassic theory that individuals always behave rationally but an even greater fallacy is the assumption that individuals always behave irrationally. Individuals in fact behave rationally most of the time, irrational behavior is rare but it exists and causes problems.

We have seen time after time since WWII that the effects of trying to manipulate, adjust the economy has led to the opposite of the intended effect. Overheating an already hot economy and supercooling an already cold economy. In fact in the US since Bill Clinton have had two types of Keynesian, conservative and liberal. The Conservative Keynesians has cut taxes to stimulate the economy but has not cut spending, George W. Bush Liberal Keynesians, as we have now, focus on public spending and has no focus on cutting future deficits.

We are now witnessing the Obama NeoKeynesian and Behavior Economic theorists talking down Neoclassical theories. They perceive that Neoclassic theory has brought us her and refuse to see that Keynesian ideology is equally or perhaps even more at fault. Instead of a moratorium on tinkering, manipulating they once more is intending to to impose the Enlightened planner, the Homo Illuminatus. Hayek has already explained that there can be no individual nor politician, bureaucrats that can no all preferences over time for all individuals.

The Use of Knowledge in Society
F.A. Hayek AER, 1945


What is the problem we wish to solve when we try to construct a rational economic order? On certain familiar assumptions the answer is simple enough. If we possess all the relevant information, if we can start out from a given system of preferences, and if we command complete knowledge of available means, the problem which remains is purely one of logic. That is, the answer to the question of what is the best use of the available means is implicit in our assumptions. The conditions which the solution of this optimum problem must satisfy have been fully worked out and can be stated best in mathematical form: put at their briefest, they are that the marginal rates of substitution between any two commodities or factors must be the same in all their different uses.

This, however, is emphatically not the economic problem which society faces. And the economic calculus which we have developed to solve this logical problem, though an important step toward the solution of the economic problem of society, does not yet provide an answer to it. The reason for this is that the “data” from which the economic calculus starts are never for the whole society “given” to a single mind which could work out the implications and can never be so given.

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May 1, 2009 Posted by | Uncategorized | Leave a comment