FDL Book Salon Welcomes David Stuckler and Sanjay Basu, The Body Economic: Why Austerity Kills: Recessions, Budget Battles, and the Politics of Life and Death

Welcome David Stuckler (University of Cambridge) (Twitter), Sanjay Basu (FSI Stanford Univ) (GlobalHealthHub.org) (Twitter) , and Host Mark Thoma (University Oregon) (Economist’s View) (Twitter)

The Body Economic: Why Austerity Kills: Recessions, Budget Battles, and the Politics of Life and Death

David Stuckler and Sanjay Basu’s new book The Body Economic: Why Austerity Kills is a thorough examination of the toll that recessions take on people’s health. They show, convincingly, that there are many, many channels through which health outcomes can deteriorate when the economy goes into a deep recession. They also show that the manner in which the government reacts to an economic downturn is a critical factor in determining health outcomes. Deterioration in health in a recession, though common, is far from inevitable.

When economists examine these types of questions, they are not able to conduct laboratory experiments to test their theories in the way that a chemist or physicist would do. Instead, economists must rely upon historical data and hope that “natural experiments” – historical episodes that have laboratory experiment like features – allow them to discriminate between different theories about the macroeconomy. (more…)

FDL Book Salon Welcomes Robert H. Frank, The Darwin Economy: Liberty, Competition, and the Common Good

Welcome Robert H. Frank, (Robert-H-Frank.com) and Host Mark Thoma (Economist’sView.com).

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. – bev]

The Darwin Economy: Liberty, Competition, and the Common Good

The Aggregate Expression of Individual Behavior

The case for government intervention in the private economy is often based upon the need to correct market failures. When problems such as monopoly power, asymmetric information, or adverse selection cause significant departures from the purely competitive ideal markets found in textbooks – departures that cause these markets to deviate in important ways from the outcomes society would prefer – government intervention can correct the problems and improve social welfare. Thus, when consumers are vulnerable to exploitation because, say, they lack information on the value of medical treatments, the government can stop shady characters from selling them snake oil through regulations that require claims to be justified by reliable evidence.

Libertarians and market fundamentalists more generally do not accept this argument. In their view, it is almost always the case that government intervention creates more problems than it solves. And who needs the government in any case? According to this view, markets will fix these problems by themselves. People selling bogus products will quickly be revealed and driven out of business, some businesses will develop a reputation as trustworthy, information on effective treatments can be provided on the web, and so on. There’s no need for government. But what if the products cause permanent damage, should we leave it to the market then? Where should we draw the line?

The proper role of government in society hasn’t been settled after centuries of debate, and this particular facet of the debate – the role of the government in ensuring that markets produce outcomes that maximize the social good – won’t be settled anytime soon either. [cont’d.] (more…)

FDL Book Salon Welcomes Robert H. Frank, The Darwin Economy: Liberty, Competition, and the Common Good

Welcome Robert H. Frank, (Robert-H-Frank.com) and Host Mark Thoma (Economist’sView.com).

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. – bev]

The Darwin Economy: Liberty, Competition, and the Common Good

The Aggregate Expression of Individual Behavior

The case for government intervention in the private economy is often based upon the need to correct market failures. When problems such as monopoly power, asymmetric information, or adverse selection cause significant departures from the purely competitive ideal markets found in textbooks – departures that cause these markets to deviate in important ways from the outcomes society would prefer – government intervention can correct the problems and improve social welfare. Thus, when consumers are vulnerable to exploitation because, say, they lack information on the value of medical treatments, the government can stop shady characters from selling them snake oil through regulations that require claims to be justified by reliable evidence. (more…)

FDL Book Salon Welcomes Robert Kuttner, A Presidency in Peril: The Inside Story of Obama’s Promise, Wall Street’s Power, and the Struggle to Control our Economic Future

Welcome author Robert Kuttner, and host, Mark Thoma.

[As a courtesy to our guests, please keep comments to the book.  Please take other conversations to a previous thread. – bev]

A Presidency in Peril: The Inside Story of Obama’s Promise, Wall Street’s Power, and the Struggle to Control our Economic Future

It’s possible to give two very different interpretations of the Obama presidency so far. The first is a relatively positive interpretation. Proponents of this view argue that even though Obama has faced a united GOP willing and able to use filibusters to thwart initiatives, and even though he has had opposition within his own party to progressive initiatives, he has still managed to rack up an impressive list of achievements. Take health care as an example. The health care legislation wasn’t all that progressives wanted, not by a long shot. But the legislation is an impressive start and, importantly, it leaves the door open to further change. Though people forget, programs such as Social Security or Medicare weren’t perfect at first, but were improved substantially over time. (more…)

FDL Book Salon Welcomes Robert H. Frank, The Economic Naturalist’s Field Guide: Common Sense Principles for Troubled Times

 robert-h-frank-econ-naturalist-field-guide.thumbnail.JPG[Welcome Robert H. Frank, and Host, Mark Thoma – bev]

The Economic Naturalist’s Field Guide: Common Sense Principles for Troubled Times 

Economics attempts to understand how societies solve a very basic problem. Because our resources are limited, people cannot have everything that they desire. Given that reality, how do we decide what to produce, how to produce it, and how to distribute the output? Economics strives to understand how societies and individuals make choices about how to allocate their scarce resources over the nearly unlimited wants of individuals within the society.

The Economic Naturalist’s Field Guide, written by Robert Frank of Cornell University, a well-regarded economist, author, and New York Times columnist with a knack for asking interesting questions, argues persuasively that traditional economic models do not properly capture the choices that people make in many common situations. One of the main points of the book — a series of columns from the New York Times and elsewhere spliced together almost seamlessly into a series of thematic chapters — is that social context matters when people make decisions. This is a very basic and important insight, but it’s also one that the economics profession has largely ignored. To use an example from the book, if someone is interviewing for a job, it may be in their best interest to buy clothes that are better quality than average to improve their chances of success. But if everybody does this, nobody gains an advantage over anyone else, all that happens is that everyone spends more money on clothes than before leaving them all less to spend on things they might enjoy more. Thus, they are all worse off. (more…)