Economic Crisis & the War

The economy has pushed the Iraq war off the front pages of our newspapers. But, they are connected. We cannot waste billions in Iraq and expect to have the resources to invest in growing our economy.

Krugman, Institutional Economist

Congratulations to Paul Krugman, another institutional economist to win the Nobel Prize. Why do I say he is an institutionalist? Because his theory is built around economies of scale, that is a key concept in institutional economics.
Standard theory is not comfortable with economies of scale as it conflicts with equilibrium concepts so cherished by the old school. The advantages of countries with econ of scale over smaller economies has no equilibrium, but just evolves.
The information for the public sent out by the Nobel committee tries to soft-pedal the lack of equilibrium by referring to "the basic mechanism specified by Krugman ..." The mechanical metaphor is not apt. At one point the notice states, "Real wages and the supply of goods will then continue to increase even more in that country (the one with econ. of scale), thereby giving rise to further migration, and so on." "and so on" is not an equilibrium concept. You need an evolutionary theory, and that is what institutional economics provides.
Thank you, Paul, there is hope for economics.

Too Liberal?

Since when has the word "liberal" been a take-out label that stops substantive debate? Probably since Reagan and now paraded by McCain. The words "liberal" and "conservative" have become meaningless except in name-calling debate. The present Bush regime is anything but conserving--they would abolish Social Security for example--that is hardly conservative. They have spent and not taxed, raising the national debt beyond recognition--hardly conservative!
I suggest we go "progressive" and "reactionary." Or, maybe, "Real World" and "Imaginary/Mythical."

Financial Crisis Policy & Iraq

There is a connection between the depressed economy and the Iraq War. The best economic policy for the financial crisis is to get out of Iraq as soon as possible. The economy can't recover while we are throwing billions down the bottomless pit of Iraq. The bailouts can't do the job alone. Just think of all the research and development on energy we could be doing with this money. For just one thing, We could build a modern national train system like the Europeans already have.
For those who are still thinking of nothing less than victory in Iraq, my advice is to get over it. It is vainglory at this point. Victory in the usual sense is impossible and even if possible in x years, we can't afford it. Redirecting our economy from war to development is our best road to National Security.