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

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).

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 …”

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.

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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.

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

“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.

• Rose Friedman, Economist Partner of Husband Milton, Dies at 97, Bloomberg
• Remembering Rose Friedman, The Friedman Foundation
• Rose Friedman, R.I.P., reason.com
• Rose Friedman has died, hayekcenter.org

“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

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)

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

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)

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)

Chicago vs. Chicago

May be it is a coincident, but the last time I had so much fun reading a fierce debate in economics, it was also related to Milton Friedman. I will write more on that in a later blog entry.

Here is one University of Chicago professor (John Cochrane) critiquing a protest letter signed by over 100 University of Chicago professors. I personally think John did a wonderful job and cleanly exposed the flaws in the protest letter. The two posts are short, have a quick read as I think you may enjoy it. And then you be the judge if John makes sense?

[HT Byron]

Top Ten List of Steven Cheung Chinese articles

Just or fun, I looked at nine of Steven Cheung’s earlier books (in Simplified Chinese) and picked my “top ten” favourite articles. I wonder if my fellow free lunchers would like to join me and share their favourites?

1. 卖桔者言
2. 私产可养鱼千里
3. 灯塔的故事 & 高斯的灯塔
4. 思考的方法（上）, （中）, （下）
5. 没有兄弟姊妹的社会
6. 给女儿上的一课——也是女儿给我上的一课
7. 赵紫阳与佛利民的对话 & 假若赵紫阳是个独裁者
8. 艾智仁 & 赫舒拉发 & 我所知道的高斯 & 老师普纳
9. 最佳、最劣、最受欢迎的教授
10. 初遇佛利民 & 再遇佛利民 & 佛利民与二十世纪

P.S. OK, I’ve cheated by grouping a few links into one pick. And some of those picks are actually multi-parts articles up to 7 parts like the Coase one. (smile)

Happy Year of the Rat – with Cheung, Friedman & Coase videos

I want to wish everyone a happy and prosperous Year of the Rat.

Please consider the following videos of professors Steven N.S. Cheung, Milton Friedman, and Ronald Coase my Chinese New Year gifts to you. May you be prosperous in the Year of the rat.

1. For those that can understand Mandarin or read Chinese, here are some interview videos of Prof. Steven N. S. Cheung as I discovered from his blog.
2. For those that are more comfortable with English, I highly recommend the late Prof. Milton Friedman’s “Free To Choose” series being freely streamed on the idea Channel.
3. Here is prof. Coase’s 2003 Coase Centennial Speech (500MB QuickTime file, recommend downloading it before you watch it) from Ronald Coase Institute‘s online material section.

In my humble opinion, professors Friedman, Coase and Cheung are great minds to learn from. And if we are to advance, improve, revise or refute the ideas they originated, it makes sense for us to learn and understand what they are trying to say. And to me, it is fun and more engaging to see them explaining their ideas in their own voices and style. Quoting prof. Coase in the above wonderful video, “It is strange for me to give a Coase Lecture. After all, every lecture I give is a “Coase Lecture”. (big laughs)” The 97 years old (93 when the video was shot) is a humorous man. (smile)

Wishing you a happy and prosperous Year of the Rat.

Potential insight on Sub-prime crisis insight from Free to Choose

Thanks a lot to idea Channel,

In honor of Milton Friedman, we are streaming the ground-breaking Free to Choose series as it originally aired in 1980 as well as an updated 1990 version. If you missed the PBS premiere of “The Power of Choice” it is available here.

Pay special attention to Volume 3 – Anatomy of Crisis where Milton expertly discussed many issues including the sequence of unfortunate events (including what the US Fed did) that lead to the fall of Bank of United States. Fascinating stuff.

[thanks to Angela for the streaming video link]

P.S. Not to be ungrateful, I just hope “Free to Choose” will stay free on the streaming network for good. And I love to ask my economists friends if we are indeed seeing “Free Lunch” here? (smile) Of course, in the age of Creative Commons, may be some rules are to be rewritten, including the “Free Lunch” hypothesis. (big smile)

P.P.S. Rather than plagiarizing myself, I am going to just quote myself, “Here is something resembling a transcript of episode of Milton Friedman’s part 3 of Free to Choose, “Anatomy of Crisis”. I don’t know how accurate is this transcript but one may learn something from it.”

Deconstructing “The Telecom Trotskyites” – Part 1 of 2

Dec 23 Update: After some hours of research and writing, I have now completed Part 2 of Deconstructing “The Telecom Trotskyites”.

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Deconstructing “The Telecom Trotskyites“ (Part 2) will be my blog entry that attempts to take apart and critique, in a professional manner, the arguments presented by Mr. Terence Corcoran, editor of the Financial Post, in his column of the same title.

In the next few days (in between my other obligations and some needed R&R), I will spend some time doing some research and write the part 2 of this post.

Although I am in no way of comparing myself to one of the greatest monetary economist Anna J. Schwartz (92-years-young this year), it is my full intention to steal and emulate some of her rigour and intensity when she co-authored the NBER working paper formally providing a rejoinder to Paul Krugman’s essay “Who Was Milton Friedman?“.

In my humble opinion, there are no room for resorting to loaded-labels such as “Trotskyites” in an argument that deserves serious discussions, especially for someone with Mr. Terence Corcoran‘s years of experiences. I expected a much more insightful discussion from Mr. Corcoran (even I may totally disagree with his view).

Links: 2007-09-02

• Teen cracks AU$84 million porn filter in 30 minutes
• A wonderful conversation with Milton Friedman (in May 2006) (video) [via Paul Kedrosky] – I don’t agree with a few things Milton said (e.g. health care) but I don’t think I have the intellect to debate him though.
• Sample Lab – a lab that lets you try things out in Japan. I wonder if North Americans are adventurous enough to give this idea a try. And what kind of startup and running cost for the business.
• Why Kevin Smith is *not* going to direct an episode of Battlestar Galactica ? – What an interesting and insightful read. I fully enjoy Kevin’s tone and writing style.
• Career Law Clerks v. Recent Law-School Grad Clerks (in U.S.) – Interesting.
• Legal threats halt iPhone software crack – I like the quote, “Here’s to hoping that, should UniquePhones not find themselves able to actually sell their software, at very least the unlock method they’ve discovered gets opened up to the public.“
• Law Blog lawyer of the day – Lisa Murtagh – Winner of Rose of Tralee (not a beauty pageant)

Web 2.0 versions of Ronald Coase

I’ve enjoyed and read the ideas of Prof. Ronald Coase for over 20 years (see note 1), I hope he won’t be too offended by me in picking a few new Web 2.0 versions of him. (smile)

I am no economist, but if I am allowed to create a Web 2.0 Coase-look-alike list of economists (in terms of abilities to shed light in a Web 2.0 way), I will pick Steven D. Levitt, Gary Becker, and then Steven N. S. Cheung. (In my subjective view of their contributions, I will rank them the other way around — Cheung, Becker, and then Levitt.)

Levitt and his co-“author & blogger” Stephen J. Dubner, because of their book and blog “Freakonomics“, have created an impressive group of readers and followers of their ideas around the world. They managed to make Economics and numbers (lots of boring numbers) look sexy and exciting. And they are asking some interesting questions. In my book, good and interesting questions are the foundations and building blocks of good work.

Becker and his co-blogger Judge Posner have started a serious economics analysis of “everyday” economic issues in their joint blog in a pretty straight forward manner. Very readable. But can be technical at times.

Cheung has written thousands of Chinese articles in recent decades, and he is still writing. His economics analysis has lead to wide spread academic and public discussions in forums and various blogs in China. His articles are behind a paid-wall (which I paid to read) but since it is so widely pirated and made freely readable in blogs and forums, it is as if he has a blog. The main draw back is that he mostly writes in Chinese in the recent years and his economics are less well known in the west by the general public and even economics researchers.

Now, a few subjective words on their “contributions”. And why I ranked them the other way around — Cheung, Becker, and then Levitt.

I think Cheung (his Chinese Wiki page has more stuff) has contributed so much to the understanding and analysis of Chinese economic systems and “teaching” and “affecting” the Chinese scholars and politicians so much that he deserves a Nobel prize. But then I also realize the “challenges” (legal troubles, writing in Chinese, etc.) Cheung faced could be larger than what John Nash (the Nobel economist) had to deal with.

I think and hope Becker won’t mind me ranking him behind Cheung. After all, they know each others for decades and both have learned much from the likes of Milton Friedman and Ronald Coase .

At the moment, Levitt may be the most popular kid on the block because of his book and blog. But in face of “giants” like Cheung and Becker, I think he might be happy to come third. I don’t know Levitt so I am just guessing. (smile) Plus it is just little me having some fun and making this list up.

Finally, I wish the best of health, energy, and happiness to Prof. Ronald Coase. The world of economics can still use so much of your insights. And last I read, Prof. Cheung is still taking your request to translate his three volumes Economics Analysis to English (so that you can read them) very seriously. It is amazing but not surprising that at 96 years young, you are still reading and enjoying Economics and then still thinking how can the next generation of economists can be positively impacted. Thank you so much.

Note 1: I feel obligated to clarify this at least once. True, I have read the ideas of Ronald Coase, Milton Friedman, (mostly via Cheung’s Chinese writings and recent years in Coase’s and Friedman’s original words) and Steven Cheung for over 20 years. But I have never claimed that I fully understand their ideas for over 20 years! (big smile) For all you know, I might not have understood a single idea from these great men. May be to show you that I am not a complete idiot, let me share a story with you. (smile)

In one of my first MBA class, I got into a discussion with a classmate who got an undergrad honours’ degree in economics. One thing lead into another, we came to discuss the topic of public goods. And then I mentioned the standard example of lighthouse as an often quoted (but wrong!) example of public goods. And to my big surprise, my classmate insisted that lighthouse was an example of public goods. At the end of the day (and not willing to enter into a long, and likely fruitless, debate), I gave up my attempt to convince my classmate. To me, the fact that my Econ grad classmate not knowing the classic 1974 The Lighthouse in Economics paper by Ronald Coase is almost unforgivable. Of course, may be that 1974 Coase paper was too advanced for an undergrad Econ degree? But then, I had read that paper just for fun!

Again, for the careful reader, I may have shown you I am not a complete idiot. How much of an idiot I still am, who knows? (smile) On my serious days, I like to think like Toyota, and see my life as a journey of Relentless Pursuit of Excellence. On some other less serious days, I will settle with seeing life as a journey of Relentless Pursuit of Less Idiotic. (smile) Take your pick, both works for me. (big big smile)

Readings: 2007-03-05

• The many way of saying thanks in Cantonese
• Hong Kong and Milton Friedman – I doubt Friedman didn’t know about these “overlooked” facts and he probably had a good reply to them too. But it is worth thinking about them anyway.
• India’s great leveler: cell phones
• Questions for Ira Glass – This American TV Show (free reg) [via Jeff Jarvis] Also see my previous entry about Ira Glass.
• A Wikipedia Reversal – follow up story of Essjay, a Wikipedia administrator who lied about his academic credentials in this New Yorker article. Here is a note from Jimbo Wales.
• Contracts with clarity – nice piece about contracts.

Memorial service for Milton Friedman Webcast

Here is a video webcast of the memorial service for Milton Friedman on 29 Jan, 2007.

The Power of Choice

Chicago has declared today, 29th January, 2007, as Milton Friedman Day to honour the “Nobel Prize-Winning Economist’s Impact on Economy and Spread of Freedom“.

The new documentary “The Power of Choice: The Life and Ideas of Milton Friedman” will be showing on PBS on most cities including Calgary tonight (please check local PBS for local listing time in this PDF file). For further information, check here.

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Jan 30 Update: I watched the doc last night and it was great as expected.

Milton Friedman Day – 29 January, 2007

I have been waiting for sometime before I blog about this. Chicago has declared 29th January, 2007, as Milton Friedman Day to honour the “Nobel Prize-Winning Economist’s Impact on Economy and Spread of Freedom“.

“The Power of Choice: The Life and Ideas of Milton Friedman” is showing on PBS January 29, 2007 (check local PBS for local listing time). For more information, check here.

An Appreciatioin of those that left us in 2006

Here is Charlie Rose – An appreciation of those who died in 2006. Here are more on some of the people featured on the show – Gordon Parks (starts 45:25), John Kenneth Galbraith (starts 45:08), RW “Johnny” Apple Jr., Ed Bradley, Milton Friedman, and Robert Altman.

Milton Friedman – How to stay free ?

I just finished the wonderful 10-part PBS series called Free to Choose (free on Google Video) by Milton Friedman. The 10 half-hour documentaries were just insightful to watch. And the 9 discussions/debates followed episodes 1-9 were really eye-opening. The last half-hour of the last episode “How to stay free?” was an insightful one-on-one interview with the eloquent, insightful, and principled Milton Friedman.

P.S. You can find more info here about a new PBS program “The Power of Choice: The Life and Ideas of Milton Friedman” airing on PBS Monday, January 29, 2007 (check your local listing).