Interesting stuff


  1. Skies over quarantined cities are remarkably clean. Car sales are imploding. Coincidence?
  2. This obscenity-laden analysis of US government failure is dead right.
  3. Nobody predicted C-19 (obvious if you look at the market’s mid-Feb drop)
  4. When assholes embrace social distancing (comedy)
  5. A Marxist hopes workers might rebel against corona-capitalists
  6. The Amish have a better health care system
  7. How BoJo’s government failed to cope with Corona


  1. The transition to clean energy will be neither clean nor easy
  2. China, proving pessimists right, has taken the “low road” in holding back Mekong water for itself. Food security is falling for downstream countries.
  3. Truck pirates are a thing
  4. Listen to this podcast for the China discussion, not the C-19 angles

H/T to NN

Wagner on Marshall (1891)

I’m taking a little side trip this week, to take a look at a contemporary article reviewing Marshall’s Principles of Economics (1890 first edition).

Adolf Wagner (1835-1917) wrote his review in 1891.

Wagner’s review is relentlessly polite, as was the tradition of the time, but it also highlights the differences and novelties in Marshall’s work.

First, Wagner is at pains to admire Marshall’s contribution from the Ricardian/abstract perspective, which varies from that of Wagner and other German political economists who are so committed, as members of the German Historical School,

…that we point to the need of induction side by side with deduction; that we warn against hasty generalization, against exclusive reasoning on the basis of economic self-interest; that in practical problems we have no faith in any absolute solutions, and insist upon the principle of relativity. But, like myself, many German scholars, old and young, even those whose own researches are directed mainly to economic history, believe it to be false and narrow to go to the other extreme, and to fling aside deduction from assumed motives, and especially from the motive of self-interest. We would not limit political economy to the mere presentation of the various historic stages in the application of labor, nor do away with all abstract thought or abstract statement. [p 320]

From this beginning, Wagner explains how Marshall is using algebra and abstract theory to build reasonable models of what really happens. Thus, Marshall’s work is complementary to the historicists (who would today be named institutionalists).

Second, Wagner makes serious suggestions (in terms of necessary word counts) for additional work, viz.:

No doubt the future volume or volumes will bring the needed additional matter on money, credit, foreign trade… a systematic discussion of economic policy in regard to agriculture, trade, and industry. Further, the discussion of questions of policy in regard to money, coinage, credit, banks, insurance, transportation, should find a place, with some detailed consideration of historical development, of statistics, and of legislation, and with a comparison of the conditions of different countries. [p 326]

What a laundry list! As it turns out, Marshall never officially got around to a second volume.

Third, Wagner praises Marshall for his restraint in the use of mathematics, even as he complains that Marshall might be “cherry picking” (English) history in assembling his “universal” theories of price, cost, value, and so on. Wagner appeals to cultural factors with a jarring example:

Marshall, like many other English writers, seems to me not to lay sufficient stress upon the favorable natural conditions in which its insular position has placed his country.

Indeed, he finds occasion to give praise in several places to the German merchant, who, though supported by the political resources of his country much less than the British merchant, yet has been able to attain a dominant position in foreign countries.

On the other hand, I am unable, judging from our own experience, to concur in the praise bestowed on the German Jew, whether in economic theory or in industry. In the intellectual field, as in others, the Jew is much more apt to be a middleman than an original producer; and in German industrial life his activity is generally harmful. [pp 328-9]

This statement doesn’t just give one pause (or worse) in terms of Wagner’s “own experience” — it highlights a weakness of the German School: a dependency on path-dependent, “just so” stories that lack (or bury) interactions, causal forces, and the aggregation of highly varied actions. Marshall aggregates many supply and demand actions to smooth idiosyncrasies and identify trends. Such analytical (and data-driven) methods strengthened the use of “science” in economics in a way that complemented and challenged the irregular, humanities-dependent perspective of the historicists.

Finally, Wagner comes back to the need to consider the organization of industry, the relation between industry and the State (far friendlier in Germany than in England), the difficulty in assuming that it would always be possible to trade one widget for another (e.g., labor for food, or cash for ventilators), and the role of social values in distributing the gains and losses  of capitalism among various classes. On this last point, Wagner highlights how Germany and England have very different conceptions of an acceptable social balance. It also highlights “Wagner’s Law (1890)” i.e., that the size of the (welfare) state increases as the nation grows richer — a concept compatible with the Simon Kuznet’s (1955) claim that inequality falls as countries move from middle to upper income.

Wagner’s review highlights the gaps among different schools of economic thought and the importance of learning from a variety of those schools. It also highlights the danger of carelessly extrapolating from an opinion to a generalization.

NB: I have another 7-8 review articles published between 1920-1993, but I will wait to read and comment on those (spoilers!)

Interesting stuff


  1. Department of Ignorance: Arsonists torch cellular towers in NL. They think 5G spreads C-19. NL has not implemented 5G.
  2. Scientists still don’t know if recovered C-19 patients are immune
  3. Female leaders are doing well at protecting their people from C-19
  4. Some clues about what the “1.5 meter economy’ will look like
  5. One American worries “We are destroying the working class to save the elderly,” and American hospitals — accustomed to profiting from “excessive/elective” procedures — are going broke, but the cost of C-19 deaths (based on the value of lost lives) is headed toward $10 trillion.
  6. Are trolls (the same ones that interfered with elections) “helping” Americans die from C-19? Probably… 

Non-Corona (ratio is tipping… a good sign or just bored with C-19?)

  1. Bill Nordhaus, whom I have criticized for missing the boat on carbon pricing, makes a useful proposal on “carbon clubs” as a means of enforcing de-carbonization.
  2. Practice Better writing with common easy words
  3. James Burke on how “scattered” thinking creates new ideas and solutions
  4. “Why the War on Physical Cash Is a War on Freedom

H/T to LS and BW

Book 3, chapter 5: Choice between different uses of the same thing. Immediate and deferred uses.

§1. This chapter begins with the housewife’s dilemma: when to switch between using wool for producing socks to using it for producing vests. Marshall then explains how the housewife wants to balance the marginal value of the last sock or vest, i.e.,

“If a person has a thing which he can put to several uses, he will distribute it among these uses in such a way that it has the same marginal utility in all. For if it had a greater marginal utility in one use than another, he would gain by taking away some of it from the second use and applying it to the first” [p 98].

§2. He then moves from the household to trade between producers of wool and wood, which goes on until both sides are happy with their wood/wool balances, i.e., where the marginal utilities they receive from each commodity are equal. Moving from barter to trade facilitated by money, Marshall states that consumers seek to balance the marginal benefits of all the goods they consume, using money to fine tune the mix. (He then adds an interesting footnote, to the effect that Anglo-American housewives are less able to maximize the benefits of their consumption than French housewives who are able to consume more because they are more skilled at maximizing their production from raw materials. Plus ça change!)

§3. Marshall then explores how we balance between present and future consumption, which depends on three factors. The first is “uncertainty (this is an objective property which all well-informed persons would estimate in the same way)” [p 100] or what economists have called “risk” since Frank Knight defined the difference between risk (measurable in terms of probabilities) and uncertainty (not measurable) in 1921. The second factor is how individuals apply personal discount rates in comparing future and present values. Marshall explicitly states that one’s personal discount rate varys with conditions, that children and impatient people pay less attention to the future (=low discount rates), and how discount rates affect one’s enjoyment of a long-lived good. This last use underlies basic savings and investment decisions. The third factor, often forgotten these days, is that we might be eager to possess something merely for the pleasure, ignoring financial considerations. Although such “possession utility” might be rolled into utility maximization, some people are not so accepting that others might really be better off consuming now rather than delaying their urges.

§4. Marshall ends the chapter cautioning against comparing present to future consumption, which ignores “uncertainty” (risk) and the fact that personal preferences change. That said, he does draw the useful connection between (individual) discount and (market) interest rates, i.e., that borrowers and lenders tend to have discount rates that are higher and lower than market rates, respectively. (Crazy that I am just teaching these ideas to my students!)

Interesting stuff

Corona-related (It’s all corona-related!)

  1. This funny video sums up my online teaching nightmares
  2. The Corona-crisis is hitting supply and demand, which is why we’re headed for a recession and perhaps a depression.
  3. How the food supply chain is (not) dealing with corona-hoarding (“hamstering” in the Netherlands 😉
  4. I started Station 11 on a friend’s recommendation before coronavirus brought “global pandemic” the rest of the world’s attention. It’s a good book (no spoilers) for post-pandemic thinking. Here’s a great interview with its author.
  5. Bats’ amazing immune systems make them dangerous to us
  6. Update from Beijing
  7. 30 predictions on how corona will change the world
  8. How many “excess deaths” are statistics missing?
  9. Good sense on coronaviruses and pandemics from an epidemiologist 
  10. Time for social safety net reform in the US? A few ideas.
  11. Post c-19 panic, incumbents will try to fool us into returning to the Old Normal of buying, stressing and consuming the planet. Don’t accept the Old Normal. Time for a new status quo.

H/T to RP

Treating a mild case of C-19

I don’t normally forward copy-pastas, but this makes sense (and has, reportedly, been checked by another nurse

“CORONA Common Sense

Since they are calling on Respiratory Therapist to help fight the Coronavirus, and I am a retired one, too old to work in a hospital setting, I’m going to share some common sense wisdom with those that have the virus and are trying to stay home. If my advice is followed as given, you will improve your chances of not ending up in the hospital on a ventilator. This applies to the otherwise generally healthy population, so use discretion.

1. Only high temperatures kill a virus, so let your fever run high. Tylenol will bring your fever down allowing the virus to live longer. They are saying that Ibuprofen, Advil, Aleve, Motrin, etc. will actually exacerbate the virus. Use common sense and don’t let a fever go over 103 (39C), if you got the guts. If it gets higher than that, take your Tylenol, not Ibuprofen or Advil ( or any type of anti-inflammatory drugs ) to keep it regulated. It helps to keep your house warm and cover up with blankets so your body does not have to work so hard to generate the heat. It usually takes about 3 days of this to break the fever.

2. The body is going to dehydrate with the elevated temperature, so you must rehydrate yourself regulaly, whether you like it or not. Gatorade with real sugar, or pedialyte with real sugar for kids works well. Why the sugar? Sugar will give your body back the energy it is using up to create the fever. The electrolytes and fluid you are losing will also be replenished by the Gatorade. If you don’t do this and end up in the hospital they will start an IV and give you D5W ( sugar water ) and normal saline to replenish electrolytes. Gatorade is much cheaper, pain free, and comes in an assortment of flavors.

3. You must keep your lungs moist. This is best done by taking long steamy showers on a regular basis. If you’re wheezing or congested, use a real minty toothpaste and brush your teeth while taking the steamy shower and deep breaths through your mouth. This will provide some bronchial dialation and help loosen the phlegm. Force yourself to cough into a wet wash cloth pressed firmly over your mouth and nose, which will cause greater pressure in your lungs forcing them to expand more and break loose more of the congestion.

4. Eat healthy and regularly. You’ve got to keep your strength up.

5. Once the fever breaks, start moving around to get the body back in shape and blood circulating.

6. Deep breathe on a regular basis, even when it hurts. If you don’t, it becomes easy to develope pneumonia. Pursed lip breathing really helps. That’s breathing in deep and slow, then exhaling through tight lips as if you’re blowing out a candle. Blow until you have completely emptied your lungs and you will be able to breathe in an even deeper breath. This helps keep lungs expanded as well as increase your oxygen level.

7. Remember that every medication you take is merely relieving the symptoms, not making you well.

8. If you’re still not improving, then go to the ER.

Book 3, chapter 4: The elasticity of wants

§1. This chapter is famous, as Marshall is credited with popularizing the concept of “elasticity,” i.e., the measure of how fast (elastic) or slow (inelastic) your demand for a good changes in response to its price changing.

§2. He adds that income affects price elasticity, as a rich man is not as worried about a price change as a poor man. (This concept led to, or referred to, “income elasticity”.)

Marshall states that elasticities fall as prices head to zero, contrary to modern economic assumption that they rise (such that infinite quantity is demanded). The difference is explained in his reference to “satiation,” meaning that you would not want more, at any price. This concept is often set aside, via “non-satiation” assumptions, in modern economic theory, probably to allow for easier mathematical assumptions.

Marshall allows for such [unlimited] elasticities in the case of “display goods” but these are often NOT cheap. Hm.

§3. Marshall shows (figures and tables) how aggregate elasticity is composed from the elasticities of various classes: The poor have inelastic demand for basics; the middle class has elastic demand for status goods; the rich have elastic demand for goods that display “social distinction”.

§4. Marshall discusses how elasticity is weak in the short-run for some basic goods (wheat, fish), in the sense that lower/higher prices don’t really affect demand. Years ago, I wrote a paper on demand curves [pdf], and loved this quotation:

“There may be even more violent changes than this in the price of a thing which is not necessary, if it is perishable and the demand for it is inelastic: thus fish may be very dear one day, and sold for manure two or three days later” [p 90].

But wait! Marshall brings up water (my favorite topic 😉

“Water is one of the few things the consumption of which we are able to observe at all prices, from the very highest down to nothing at all. At moderate prices the demand for it is very elastic. But the uses to which it can be put are capable of being completely filled: and as its price sinks towards zero the demand for it loses its elasticity” [p90].

On the one hand (wait, can’t say that!). Right. So Marshall talks about the very real elasticity of demand for water. He’s also right about demand not rising too much when water is cheap or free in some circumstances. In an English house, that’s probably true, but it’s not true when people add lawns, irrigate crops where there’s no rain, or where water is scarce and thus rivers, aquifers, and lakes are drained for human uses, because the price of extraction is low or non-existent.

Ahhh… he’s onto me:

“Generally speaking those things have the most elastic demand, which are capable of being applied to many different uses. Water for instance is needed first as food, then for cooking, then for washing of various kinds and so on. When there is no special drought, but water is sold by the pailful, the price may be low enough to enable even the poorer classes to drink as much of it as they are inclined, while for cooking they sometimes use the same water twice over, and they apply it very scantily in washing. The middle classes will perhaps not use any of it twice for cooking; but they will make a pail of water go a good deal further for washing purposes than if they had an unlimited supply at command. When water is supplied by pipes, and charged at a very low rate by meter, many people use as much of it even for washing as they feel at all inclined to do; and when the water is supplied not by meter but at a fixed annual charge, and is laid on in every place where it is wanted, the use of it for every purpose is carried to the full satiety limit” [p91]

He even mentions drought, so he probably considered my “some circumstances” comment above!

§5. Marshall explains that time, income, prosperity, and so on impact elasticity. Economists often invoke ceteris paribus to ignore these factors.

§6. Marshall adds that demand fluctuates with fashion, substitutes, complements, and — often overlooked — familiarity and market development. He discusses how coal replaced wood/charcoal, and was likewise displaced by petroleum. These dynamics are driven by prices but those reflect the increasing range of uses for petroleum, which make it simultaneously more attractive and cheaper to gain utility from.

Elasticity also varies with a good’s replacement rate. A change in the price of shoes (replaced annually) will not have a big impact compared to a change in the price of meat (purchased daily). Toilet-paper hoarders will  learn these dynamics if they try to sell off their stockpiles!

§7. Marshall adds more caveats for the variety of buyers and sellers (more of each increases competition and information) and the difference between wholesale markets for traders and retail markets for consumption.

§8. Marshall ends the chapter with what seems an outdated discussion of how merchants have a much better notion of the separate components contributing to demand (weather, wealth, holidays) as well as the difficulties of explaining how different classes demand different “baskets” of goods. Both concerns are often overlooked by modern economists focussed on single aggregated numbers, which is a pity for those who want to understand what actual (not median) people are doing.

Interesting stuff


  1. Why you should wear a mask (assuming you can get one!)
  2. Good news: Air pollution is dropping (almost as fast as economic activity)
  3. Be careful what you wish for: Amsterdam tourism crashes, but the streets are cleaner. Will the future bring “sustainable” tourism or a return of unruly mobs?
  4. Americans seem to understand C-19 risks thorough their political beliefs (Rs are taking more risks).. That’s charming but C19 will kill Republicans, Democrats and independents.
  5. Will Peru’s politicians use C-19 to grab power? (Orban already did.)
  6. The Netherlands needs to do more to really be food secure.
  7. Will the quarantine help us reconsider our lives?


  1. A nice proposal for graduated income taxes that complements my idea for taxing wealth (via property taxes)
  2. National Geographic looks at the bad news/good news futures of the Earth fifty years after Earth Day. Fun fact: No advertisers for the “bad news” side. For the good news side, the advertisers are Dow chemical and the Alliance to Stop Plastic Waste (sponsored by plastic manufacturers).
  3. A really good discussion of the “three languages of politics” that was recorded before C-19 hit. Then, and now, it’s important to consider the different “life perspectives” of conservatives, progressives and liberals.

Interesting stuff


  1. Poor countries will have a hard time with C19
  2. Sanity in the time of corona
  3. Should we trust experts or politicians? Some tradeoffs
  4. The US faces the worst case of coronavirus. How will it end?
  5. What do infection and death statistics mean in the Netherlands?
  6. Mr Money Moustache says hold steady on your investments
  7. Silicon Valley “techbros” shorten the facemask supply chain


  1. One man embodies the 52/48% reality of Brexit
  2. How land regulation makes housing unaffordable
  3. Some creative perspectives on legal rights

Stable Murdering Genius

Just a few memes to keep in mind, as Americans die.

(I’m pretty sure things will get worse, especially if Jared and Donny indeed conspired to hand massive profits on PPE to private companies.)

The Economist on Trump’s “strategy”: “But unlike the pseudo-crises of his administration, this real one cannot be badgered or blustered into submission.