Economic Systems and Institutions

First, I know it's been a long time between posts - life isn't always what we want. I frequently come across items that should be brought to your attention. But due to other factors, I have to choose. It seems opportunity cost is an operative concept.

I don't know how many of you spend time discussing economic institutions and systems.  While many textbooks seem to bypass the subject or give it short shrift, I always try to spend at least one class period discussing them. And they are revisited throughout the semester. The rules that a society puts in place to influence or control decision-making are important if we are to understand the decisions.

Here is an excellent article from The Daily (HT to Arts & Letters Daily) that really brings the importance of institutions home. What I find particularly interesting is the aspect of traditional economies in a modern setting. One quickly understands how traditions can be an important mold for many choices. And attempts to change the rules, by issuing formal rules to replace informal rules, can have significant costs on many levels. I hope you take a moment to check the article out. And I hope you will share your thoughts.

Honey...I May Have Shrunk the Economy

Actor/writer Rick Moranis has a very amusing piece in the opinion section of today's edition of The Wall Street Journal. What struck me was how good it would be in setting up a discussion of opportunity cost. It really harkened back to Bastiat's "that which is seen and that which is unseen." I strongly recommend it and I hope you comment with your opinion.

The Mark of the Entrepreneur

Which of Schumpeter's five roles of the entrepreneur is/are illustrated here?

Two Items of Interest

First, I'm a bit late with this, but for those of you who haven't sought it out already, PNC Bank has it's CPI (Christmas Price Index) up and running, showing the price changes in the gifts from the carol, The Twelve Days of Christmas.  As always, it's an interesting way to explore how an index works and how the various components fit together to provide a single measure. What's particularly interesting is how many of the components showed no change this year.

Second, today's edition of The Wall Street Journal had a great micro-parody of a macro-event (the recent financial crisis). It's well worth a look and good for a chuckle.

All of my classes are entering their last week of the semester. I suspect the same applies to many of you. So in case I don't get another chance to post before the new year, I wish you happy holidays and more good economic resources.

The Invisible Hand and Thanksgiving

I suspect many of you are busy today.  Our family had our dinner yesterday because one of my sons is working on Thanksgiving Day. But when you get a chance, you might want to review this column by Jeff Jacoby of The Boston Globe. (HT to Carpe Diem for the reminder.)

The market works wonders. And if you're thinking "but turkey was relatively expensive this year"; the market explains that, as well.  Here's an item from Bloomberg.

Happy Thanksgiving.

Putting Things in Perspective ... Thanksgiving Edition

As we approach year's end and the traditional holiday season, and with the failure of the Supercommittee to achieve anything of substance beyond finger-pointing, here is something courtesy of XKCD to fill those odd classroom moments.

From Last Night's 60 Minutes on CBS

Captain Renault is shocked.