Stilltitled

Five hundred thousand dollars means taking their kids out of private school and selling their home in a fire sale.

—Holly Peterson

Thanks be to Heaven, we are thus freed from all this terrifying apparatus of economics

—Epigram at the end of Benn Steil’s op-ed in the FT, from Rousseau

In reality, no one spends someone else’s money better than they spend their own.

—Dick Armey’s op-ed in the WSJ 

…and yet…

The clear and present danger is not enough spending. You get more bang for your buck from spending than from tax cuts. There is no coherent economic theory under which more tax cuts would be a good thing.

—Krugman

598k, vs a forecast of 540k lost

7.6%, vs a forecast of 7.5%, a 16 year high

2008 job loss figures adjusted upward by 385k to 3.6m

Last week, the number of Americans filing first-time jobless claims reached a 26-year high, with 626,000 filling out initial applications

—NYT

A broad measure of unemployment — which counts part-time workers who want to be working full time — is now almost 14 percent. At its highest point in 1982, it was just above 16 percent.

–Economix, David Leonhardt

…this isn’t a brainstorming session — it’s a collision of fundamentally incompatible world views…

Democrats believe in something more or less like standard textbook macroeconomics; Republicans believe in a doctrine under which tax cuts are the universal elixir, and government spending is almost always bad.

—Krugman

—Ken Rogoff and Carmen Reinhart in the WSJ

—Recapping their paper from December  

—Which built on a paper from February, last year

“The United States should consider itself quite fortunate if its downturn ends up being a relative short and mild one.”

Experts are always a problem. David Teece, writing on experts and the professional services firm, essentially starts with the following proposition: experts are impossible to manage and will never work for a traditional company. They’re tough to monitor, difficult to pay and they require special attention. But he started LECG.

Teece answers the implicit contradiction by suggesting an answer – something so simple, so elegant, we could consider it the fundamental theorem of compensation. It seems like it works. The stock hits $24 dollars a share. The market cap’s $800mm. And then poof – they’re trading at $3.40.

It begs the question: why did he stop with the equation? Why didn’t he keep the experts outside of the firm – create a virtual firm?

The problem of experts doesn’t seem stop with compensation. It may also be the nature of the firm.

Indeed, if the elegance of the equation obtains, should it not also set in motion the ability to scale expertise outside of the firm – as in a network of experts? And if it is an expert network, should it be defined by his fundamental theorem of compensation?

The problem of experts doesn’t seem stop with compensation. It may also be the nature of the firm. From Coase, whose organizing principle of the firm derives is based on price. It’s cheaper to organize as a firm, and as an employee, it’s better to listen to your boss because they know better. To Schumpeter, who considers the firm in terms of routines.