Saturday, March 14, 2009

Iceland: Banks & fish

Here's a great article from Vanity Fair's Micheal Lewis about the rise and fall of Iceland's financial industry.

It is a long article, but well worth the read.

Monday, March 2, 2009

More questions on equality, growth and the stimulus

Here's a recent editorial by E.J. Dionne of the Washington Post,

and a column by Caroline Baum from Bloomberg that hits a similar topic.

There are a lot of questions here, but two are directly related to current class topics:

1. Will increasing equality via redistribution (as opposed to or in combination with "bail-out" cash) help get us out of the economic mess we're in in the short-run?

2. What will be the long-run implications for growth?

Dionne does not really address these directly, and basically starts with the (in)equality argument. Baum doesn't focus on the equality argument, but essentially proposes that now isn't the time to fix equality or other matters like the environment. She also questions the efficacy of the TARP funds and bail-outs in general, noting that trying to smooth things out in the short-run could have disastrous long-term consequences.

Based on what we've learned in the past two months, could policy aimed at redistribution (or other matters related to 'development' instead of 'growth') in the immediate term help or hurt the situation? Would policy favoring investment by the wealthy have a more pronounced effect given that those with higher incomes seem to have their money "on the sidelines" right now?