Eisenhower on the Military Industrial Complex

President Eisenhower, in his farewell address to the American people in 1961, expressed his concerns that the military industrial complex were getting to powerful in Washington. He was right and the U.S. have taken military actions in about one country per year ever since. Some private military contractors (e.g. Blackwater, Halliburton, KBR and Dyncorp) have got enormous contracts from the government to provide security services, war supplies or rebuild what they have destroyed (the money is usually used to make oil pipelines but not roads for the locals like they promised). They all have one thing in common and that is their ties to politicians. Even worse is how politicians have made profits through investment firms, like Carlyle Group, that specialize in defence. The owners of Carlyle Group are close to 800 families including the Bush family, Bin Laden family, Donald Rumsfeld and John Major.

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The Social Responsibility of Business is to Increase its Profits

http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

According to Friedman, businessman who talk about “social responsibility of business in a free-enterprise system” are preaching pure and unadulterated socialism. In his view, corporate executives shall exclusively strive after increasing the company’s profits. If businessmen don’t act like this, they consequently act in some way that is not in the interest of the employers. “For example, that he is to refrain from increasing the price of the product in order to contribute to the social objective of preventing inflation, even though a price in crease would be in the best interests of the corporation.”

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Do macroeconomists deserve this mistreatment?

Mainstream economics and specially macroeconomists have been highly critized due to the current crisis.

In this article, professor Lucas explains why the market hypothesis is “efficient” even in the current crisis by explaining the actual meaning of Fama’s work. Furthermore, he explains how these so badly critized models actually work by intaking information at everytime.  Few people recognize that Bernanke’s actions, thanks to the outcome of these models, prevented a worse situation for the current crisis. So, are the mainstream macroeconomists really that useless? Must-read article.

http://www.economist.com/businessfinance/displaystory.cfm?story_id=14165405

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“The violence inherent in the system”

I know to most people, the thought of having to watch Monty Python is simply horrifying- but it truly is comedy at its best.

After watching and posting the last Monty Python (and the Holy Grail) clip I decided it was high time to watch the whole movie again. Low and behold, I found yet another excerpt that took my fancy. This clip is rooted in “democratically elected leaders”. It’s quite fitting in the sense that, there are tensions with the recent elections in Afghanistan.

You may wonder about the economics of the clip. Economists are present everywhere- division of tasks, hierarchy and voting strategies. Further, I think Dennis and the lady is a representation of Marx “mandate of the masses”.

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An Economic Perspective on Football Wisdom

What happens when Simon Kuper, a columnist at Financial Times, and Stefan Szymanski, an economist who specialises in sport get together and write a book? According a book review by the Economist, “they combine their skills to entertaining and mostly convincing effect” while exposing many common myths surrounding modern football.

It is often claimed that football supporters are die-hard fans. From the analysis of the authors it appears that only about half of English fans are likely to support the same team, explained by the fact that people are likely to move to other towns.

Another myth they tackle is that clubs cannot buy success. Here they report that almost 90% of the variation in position (in the league table) is explained by wage bills, and so they conclude that it is possible to buy success, as long as money is spent on wages rather than transfers.

Although there appear many more interesting results in this book (have to admit I haven’t read it, yet), it is clear that economic imperialism is going strong and entering new grounds. In the least, this book offers a fresh perspective on the always debated and never concluded sports wisdom.

Link: http://www.economist.com/books/displaystory.cfm?story_id=14209514

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What This Year’s Nobel Prize in Economics Says About the Nobel Prize in Economics

Yesterday the Nobel Prize Committee announced Oliver Willamson and Elinor Ostrom, both from the United States, as the recipients of 2009 Nobel Prize in the field of Economics.  Oliver Willamson is an economist prominent particularly in the area of transaction cost economics.  On the other hand, Elinor Ostrom is a political scientists renowned in the study of common pool resources.  The article highlights how boundaries between economics and other social sciences have become less clearly defined.  While economics exerts great influence over a wide variety of subjects, it seems that the prize is moving toward a Nobel in Social Science, rather than Economics.

http://freakonomics.blogs.nytimes.com/2009/10/12/what-this-years-nobel-prize-in-economics-says-about-the-nobel-prize-in-economics/

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The power of economists

Today we could see a striking example of the power and responsibility of economists. Today a Dutch bank fell after a bank run that was running for a week but the outflow of savings seemed to stop in the weekend leaving the bank in a critical but stable situation. However, when past night the news hit the public that there were liquidity and solvency problems, people started withdrawing savings again on a large scale and the bank fell. Although the bank was already negatively in the news for a while, the initial start of a huge outflow of savings seems to be the television appearance of an econometrist who called upon the clients to withdraw their money from the bank.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aEjFAPw6Ev00

His goal was to benefit customers who are suffering  from excessive lending by the bank. If and how these people will benefit remains to be seen. What is sure however, is that the customers cannot reach their money at the moment and that some of the clients lost their money. With great power comes great responsibility also applies to economists…

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