American Elephants


Carly Fiorina Can Take Care of Herself! by The Elephant's Child

Among  his many intemperate remarks, Donald Trump chose to insult Carly Fiorina. Why not, he’s turned his insults on everybody else. He said something to the effect of “Look at that face. Could you vote for somebody with a face like that for president?” This may not be completely correct as I’m not looking it up. But never mind, Carly can take care of herself.

Smart commercial, and really puts the Donald in his place. Can you imagine having Trump as president, insulting our allies around the world, and remarking on how stupid other world leaders are?



Australia Changes Prime Ministers by The Elephant's Child

150914-turnbullAustralia’s Liberal party has given the Prime Minister’s job to Malcolm Turnbull today, a mere two years after Prime Minister Tony Abbott won a strong election mandate. Their Liberal Party is the conservative one in Australia, opposed by the Labor  Party.

Mr. Turnbull, who won the vote among Liberal MPs 54-44, was also exacting some political revenge. The 60-year-old former barrister and venture capitalist had been the Liberal leader in opposition until late 2009, when Mr. Abbott challenged him and won by one vote. Mr. Turnbull had made the mistake of endorsing the expensive and unpopular carbon tax pushed by the Labor Party government.

Mr. Abbott’s opposition to the carbon tax helped bring the center-right Liberals back to power, and Mr. Turnbull now says he’ll keep the Abbott government’s climate policy. But his earlier support for faddish climate-change regulation illustrates the doubts about his convictions among the Liberal rank and file. He is more socially liberal than Mr. Abbott, which will help among young people on same-sex marriage, but he is also seen as someone without firm convictions.

Mr. Turnbull is closer to the business community than is Mr. Abbott, and he’ll need its help because his main challenge is reviving economic growth. Australia hasn’t had a recession in 24 years as it rode the global commodity boom, but growth slowed to 0.2% in the second quarter thanks to falling Chinese demand and the world-wide commodity bust.

When the world is in turmoil, the people get restless. Australia has been very dependent on commodities and more competitive in a range of global goods and services. Mr. Abbott made policy on the fly, and made decisions to cut spending on areas that he had promised to protect and to raise taxes without preparing the public.

Mr. Turnbull will have to make the case that Australia needs to become less dependent on commodities and more competitive across a whole range of global goods and services. He is a little more left than his predecessor. He says he will keep the Abbott government’s climate policy, though he’s earlier supported climate change regulation. The Aussie’s distaste for a carbon tax is what won the election for Mr. Abbott.

Australia’s ruling party has given the job of Prime Minister to Malcolm Turnbull turning out Tony Abbott a mere two years after Mr. Abbott won the job with a strong election mandate.

Mr. Turnbull, who won the vote among Liberal MPs 54-44, was also exacting some political revenge. The 60-year-old former barrister and venture capitalist had been the Liberal leader in opposition until late 2009, when Mr. Abbott challenged him and won by one vote. Mr. Turnbull had made the mistake of endorsing the expensive and unpopular carbon tax pushed by the Labor Party government.

Mr. Abbott’s opposition to the carbon tax helped bring the center-right Liberals back to power, and Mr. Turnbull now says he’ll keep the Abbott government’s climate policy. But his earlier support for faddish climate-change regulation illustrates the doubts about his convictions among the Liberal rank and file. He is more socially liberal than Mr. Abbott, which will help among young people on same-sex marriage, but he is also seen as someone without firm convictions.



Economics Is Organized Common Sense by The Elephant's Child

From the Archives, 4/20/14

Economists Craig Newmark and AEI’s Mark Perry dug up Nobel economist Thomas Sargent’s shortest U.S. graduation speech ever. A simple list of twelve valuable economic lessons. The speech was delivered at his undergraduate alma mater University of California at Berkeley, May 16, 2007.

“I remember how happy I felt when I graduated from Berkeley many years ago. But I thought the graduation speeches were long. I will economize on words.”

“Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches.”

1. Many things that are desirable are not feasible.

2. Individuals and communities face trade-offs.

3. Other people have more information about their abilities, their efforts, and their preferences than you do.

4. Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.

5. There are tradeoffs between equality and efficiency.

6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.

7. In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. No one will believe those promises because they know that later it will not be in your interest to deliver. The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.

8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.

9. It is feasible for one generation to shift costs to subsequent ones. That is what national government debts and the U.S. social security system do (but not the social security system of Singapore).

10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.

11. Most people want other people to pay for public goods and government transfers (especially transfers to themselves).

12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.

That is a remarkably valuable short list. Pin it up beside the mirror in your bathroom so you can read it every morning until you know it by heart.




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