Bank of Ireland headquarters in Dublin.Peter Morrison
A roundup of the best economic posts on the Web
'Bad Irish banks and the Tragedy of the Commons'
Nick Rowe on Worthwhile Canadian Initiative is using the Irish financial meltdown as the basis for his next lecture on common resources:
"Banks are a common pool of funds. They pool risks. And if banks go bad you get the same externalities and under- or over-investment in the common pool as in any common resource. But there's an empirical problem. If bad banks are a common resource, then it could be socially optimal for them to borrow at 8% and lend at 5%. But it could never be an equilibrium for them to have negative spreads like that. Yet in Ireland they do. What the hell is going on?"
Be sure to follow the link to Irish economist Morgan Kelly and his analysis on the grim situation in the former Celtic Tiger.
'Remembering prisoners of war'
Also on Worthwhile Canadian Initiative, Frances Woolley reminds us of an important contribution to economic theory:
"For those of us who have not known war, the words of soldiers can help us understand what Remembrance Day is about. Richard Radford is one such soldier. When war broke out in 1939, he left his studies at Cambridge and joined the British army. Captured in Libya in 1942, he spent the remaining war years in prisoner of war camps. Upon his release, he wrote an analysis of The Economic Organisation of a P.O.W. Camp. It is worth reading today, both for what it says about life during wartime, and for its lessons about 'the universality and the spontaneity' of economic activity."
'How Do You Say "Hypocrite" in German?'
Marshall Auerback, a Senior Fellow at the Roosevelt Institute, writes on New Deal 2.0:
"Before throwing rocks at the U.S. for its spending, Germany should take a look at its own crumbling glass house. ....It is ironic (and more than a touch hypocritical) that Germany chastises its neighbors, like Greece, or its trading partners like the U.S., for their "profligacy", but relies on these countries "living beyond their means" to produce a trade surplus that allows its own government to run smaller budget deficits."
If you missed it on Monday, Economy Lab's Carl Mortished on what Germany really wants.
'Dreaming of a New Edo Era'
At Project Syndicate, French philosopher and economist Guy Sorman, looks at the rise of South Korea and the falling fortunes of Japan and says it would be better for Asia if both economies became stronger:
"More strikingly, stagnation has found its promoters in Japan itself. A leading public intellectual Naoki Inose, who is also Tokyo's vice governor, has declared that 'the era of growth is over.' When Japan was threatened by Western imperialism, he says, the country had to open up (in 1868) and modernize. This process has been completed. Japan is now ready to reconnect with its own tradition of social harmony and zero growth."
'What should we do about cannabis?'
At VoxEU, Stephen Pudney of the University of Essex looks at the problems facing policymakers trying to deal with the marijuana issue:
"An obvious policy aim is to separate the markets for cannabis and harder drugs as far as possible. If cannabis and hard drugs share the same channels of retail supply, there is a risk that cannabis users will come under pressure to migrate to hard drugs, increasing the risk of long-term harm. "