Discussing Euro problem in my 2001 economics class presentation (Benefits and a potential weakness of the Euro)

Wednesday, 26 October, 2011

For Nobel economist Robert Mundell, “Father of the Euro“, it must be heart breaking for him to read headlines like “EU Sets 50% Greek Writedown, $1.4 Trillion in Debt-Crisis Fight” and “Euro zone rescue fund will have firepower of 1 trillion euros“.

In 2001, my MBA economics professor asked us to give a class presentation on something economics related, and I decided to talk about what I knew about Euro (not from the course itself but from readings of my own). I titled my talk Benefits and a potential weakness of the Euro (slides on Google). Here are the few key slides (high res readable version).

2001 presentation re benefits and potential weakness of Euro

The crux of my ideas came from a heated & insightful debate (updated link from internet archive) I read in National Post in Dec 2000 between Nobel economists Robert Mundell and Milton Friedman. The following are quotes from Friedman (emphasis added to original text used in my presentation),

“Bob and my disagreement about the euro is identical with our disagreement about Bretton Woods. The euro encompasses 11 politically independent countries, differing in culture, resources and economic development, and subject to divergent influences. There are bound to develop among them differences about appropriate monetary, fiscal and other policies. Flexible exchange rates offered a way of adjusting to such differences through the market without political conflict. The euro closes that possibility. Bob is confident that other adjustment mechanisms will rapidly develop—greater internal flexibility in prices, regulations, and the like. I hope he is right, but I fear he may not be. If he turns out not to be, the euro will generate more political conflict, not political unity. […]

The members of the euro have accepted restrictions on their fiscal policy, but it remains to be seen whether they will be honored, and if they are not honored, whether the monetary community can enforce them. Those tests are yet to come.

I doubt any of my classmates remember this but it is cool for me to look back and think that I picked an interesting and important topic to discuss even for a simple class presentation. Feel like patting myself on the back a little.

“You might be an economist if you refuse to sell your children because …”

Sunday, 3 January, 2010

I found the following WSJ article and forwarded it to my economist friends as I found it pretty funny. I highlighted a few interesting bits and added some comments. Enjoy.


Secrets of the Economist’s Trade: First, Purchase a Piggy Bank

By Justin Lahart (WSJ)

Academic economists gather in Atlanta this weekend for their annual meetings, always held the first weekend after New Year’s Day. That’s not only because it coincides with holidays at most universities. A post-holiday lull in business travel also puts hotel rates near the lowest point of the year.

Economists are often cheapskates.

The economists make cities bid against each other to hold their convention, and don’t care so much about beaches, golf courses or other frills. It’s like buying a car, explains the American Economic Association’s secretary-treasurer, John Siegfried, an economist at Vanderbilt University.

“When my wife buys a car, she seems to care what color it is,” he says. “I always tell her, don’t care about the color.” He initially wanted a gray 2007 Mercury Grand Marquis, but a black one cost about $100 less. He got black.

Some of the world’s most famous economists were famously frugal. After a dinner thrown by the British economic giant John Maynard Keynes, writer Virginia Woolf complained that the guests had to pick “the bones of Maynard’s grouse of which there were three to eleven people.” Milton Friedman, the late Nobel laureate, routinely returned reporters’ calls collect.

Children of economists recall how tightfisted their parents were. Lauren Weber, author of a recent book titled, “In Cheap We Trust,” says her economist father kept the thermostat so low that her mother threatened at one point to take the family to a motel. “My father gave in because it would have been more expensive,” she says.

Read the rest of this entry »

Rose Friedman Dies at 97 – Two lucky people are now together

Tuesday, 18 August, 2009

Two lucky people are now together.” – as someone put it touchingly

I am deeply saddened to report that Rose Friedman has died of heart failure. She was 97.

Two lucky people” is one of the few books that I special ordered before it is available locally and rushed to pick up from the bookstore when it arrived. I love the way how Milton and Rose wrote the book jointly and also wrote sections individually to add their insights and observations.

In this moment of sadness, allow me to quote a section written in “Two lucky people” by Rose to counterbalance the sadness. I think it shows how lucky we are to have Rose and Milton for all these years. We could have quite a different story without the amazing luck in this story.

{ Rose } “One long stop was unplanned but not unpleasant sojourn in Banff, Canada, because of an accident we had. While I was driving from Jasper to Banff, we hit a wet spot as we came round a curve, and the car skidded and turned over. This was one of the many events that demonstrates to us that we we born under a lucky star. Our car was a convertible and seat belts had not yet been introduced. Fortunately, we had put the top up because of a rainstorm we had just driven through – which was why the road was slippery — but a convertible top is not much protection. Nevertheless, we both crawled out without a scratch though the car was badly damaged. I didn’t hear then, nor in the many years since did I ever hear, a single word of criticism from Milton. He has always said it was not my fault, it was the wet road.

As always happens with any disaster on the road, people stopped, some to see if they could help, others out of curiosity. One comment we have never forgotten: viewer after viewer remarked, “Look, the car is badly smashed, yet the eggs didn’t break!” As it happened, we had some hard-boiled eggs in our picnic basket and when the trunk of the car popped open on impact, they had rolled out. Indeed, they were not broken, only cracked!”

My heart was broken when I read how Rose felt when Milton passed away, “I’ve a lot of time but nothing else“. Looking at the beautiful cover-photo of “Two lucky people“, I know the two luck people are now finally happy together again.

My love and thoughts are with the Friedman children, David and Janet, and the extended family members.

Milton Friedman Institute

Friday, 7 November, 2008

Comments on the naming controversy surrounding the naming of Milton Friedman Institute by Becker and Posner. Here is an excerpt from the piece by Becker who knew Friedman for over 50 years (emphasis added),

A university names an Institute after a former professor because of 1) his contributions to the university, 2) his contributions to scholarship or science, and 3) his intellectual honesty and character. On all three grounds I believe Milton Friedman eminently deserves having this Institute bear his name.

Let me first mention I knew him for over 50 years, first as a teacher, then as colleague and close friend. I admired him enormously at all these different stages.

His main direct contribution to the University of Chicago was as an absolutely superb teacher, by far the best teacher I ever had. He opened my eyes and that of other students, including Eugene Fama, James Heckman, Robert Lucas, and Lester Telser, and George Tolley, all faculty members at the University of Chicago, to how to use economic analysis to understand the real economic world. Both in the classroom, and as a supervisor of doctoral dissertations, he was a blunt and trenchant critic of shoddy analysis, both theoretical and empirical. I along with others took a lashing from him when he thought we did some analysis badly. The effectiveness of his teaching alone could merit having an Institute in his name at our university.

Milton Friedman under attack (again)

Wednesday, 22 October, 2008

Globe and Mail has this report about Friedman under attack. See my previous blog entry about this ill-reasoned attack against Friedman.

Paul Krugman, 2008 Nobel Prize Winning Economist

Monday, 13 October, 2008

Paul, I can’t believe my eyes when I saw you won the 2008 Nobel Prize in Economics this morning for your “new trade theory” and the “new economic geography”. Wow, on top of being a well read New York Times Columnist, you are now a Nobel Prize Winning Economist as well! My warmest and heartfelt congratulations!

Sometimes, I love to brag about the fact that I have been reading about the ideas of Prof. Ronald Coase a few years before he won his Nobel Prize.

Well, now I guess I can add in saying I defended (for a while) a Nobel Prize Winner (Milton Friedman) from some unreasonable attack by another Nobel Prize Winner (Paul Krugman) on Wikipedia.

Congratulations Prof. Paul Krugman in winning the 2008 Nobel Prize in Economics for your analysis of trade patterns and location of economic activity. You kick ass!

P.S. Here is the Nobel website interview with Paul.

P.P.S. Here is Paul’s short note “a funny thing happened to me this morning! And here is New York Times reporting on the win. Plus Freaknomics takes on the win. And what UK Guardian has to say.

P.P.P.S. Paul, my warmest and heartfelt congratulations aside, I still think Edward Nelson & Anna J. Schwartz are right that you are a respected trade theorist but you are no expert in Milton Friedman and monetary economics.

Defending Milton Friedman (on Wikipedia)

Saturday, 2 August, 2008

Before I write about how I (a non-economist) came to defending the Nobel Prize winning Milton Friedman on Wikipedia, let me say that I have been a big fan of Wikipedia for sometime and I often link to its entries to help explain things. And , once in a while, I try to contribute to it by adding things (including new entries) and fixing things.

Here is the story. When I was doing some quick research on Milton Friedman for a previous entry, I noticed a passage from Paul Krugman’s “Who was Milton Friedman?” was quoted in the criticism section of this version of Milton Friedman’s Wikipedia entry. Paul Krugman may be a respected trade theorist, but Krugman is no Milton Friedman nor monetary economics expert as stated by this Edward Nelson & Anna J. Schwartz authored NBER working paper “The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman’s “Who Was Milton Friedman?””. (note: I referenced the NBER paper here because I can’t find a link to the Journal of Monetary Economics final version plus I don’t know if that version is more freely accessible online than the NBER version.)

So I ended up adding a quote from the conclusion in the Nelson Schwartz NBER working paper into this version of the Friedman Wikipedia entry. Now, that was not the end of the story because a Wikipedia discussion was started between another editor and myself which I was still responding to this morning. (note: anyone can edit a Wikipedia entry, so we are all “editors”)

I hope I have not mis-characterized Krugman’s critique or Edward Nelson & Anna J. Schwartz‘s defense, but I hope my free market economist friends will help me set the record straight or improve on what I wrote in a neutral and encyclopedic manner.

P.S. I guess because I am no expert (in free market economics or anything), I did feel a little bit of “In the land of the blind, the one-eyed man is king.” In this case here, I read/scanned/enjoyed the N&S paper and did what I can to defend Friedman a little. I would rather see other experts doing a proper job, until then, I can only do what I can with my limited understanding.

P.P.S. Who am I to defend Milton Friedman? Well, in Wikipedia, any idiot can edit an entry. And the fact that I am defending Milton Friedman just proves that this idiot can edit an entry as well. (big smile)

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