Edmund S. Phelps Wins Nobel in Economics

Edmund S. Phelps, get your passport out of the drawer:

The 73-year-old Columbia University professor showed how low inflation today leads to expectations of low inflation in the future, thereby influencing decision-making policy by corporate and government leaders.

Phelps also pioneered the analysis of the importance of human capital, or workers themselves, for the diffusion of new technology and growth in the business and corporate world, the academy said in its citation.

More here.

Reason interviews with Nobel-winning economists include:

Vernon Smith, Milton Friedman, F.A. Hayek, and Ronald Coase.

And here's some work we published by a couple of Nobelists: James Heckman, Gary Becker, and James Buchanan.

Comments

[Joe]

Why is that the most competetive countries in the global economy are the high-taxing Nordic countries (at least, according to the World Economic Forum)?

Global Competitiveness Report 2006-2007

Switzerland, Finland and Sweden are the world?s most competitive economies according to The Global Competitiveness Report 2006-2007, released by the World Economic Forum on 26 September 2006. Denmark, Singapore, the United States, Japan, Germany, the Netherlands and the United Kingdom complete the top ten list, but the United States shows the most pronounced drop, falling from first to sixth.

The rankings are drawn from a combination of publicly available hard data and the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum, together with its network of Partner Institutes (leading research institutes and business organizations) in the countries covered by the Report. This year, over 11,000 business leaders were polled in a record 125 economies worldwide.

[Macy]

I'm waiting for Reason to interview me. THEN I'll get that Nobel prize, the million bucks, and all of those Nobel-prize groupies.

That's how it works right? No, I'm pretty sure I'd still be a dumb ass.

[Jennifer]

I don't mean to sound snarky here, but . . . a guy won a Nobel for demonstrating that people tend to think the way things are now is the way things will remain?

Perhaps I can win a prize for my groundbreaking research on why nighttime tends to be darker than day.

[highnumber]

(Capital J) Joe, The Economist examined the economic health of Sweden about a month ago. There are some questions about how robust it really is.
(Subscription required, but I think you can login with a free 1 day pass.)

[ed]

Jennifer,

They don't call it "the dismal science" for nothing.
But I did find Human Action riveting.
Really.

[Mark]

Joe,

The Nordic countries' secret is that their policies, although massive, are minimally distortionary, which is to say that they are executed in a manner most consistent with the operation of a free-market system. The Nordic countries' regulation of firing, for example, is scant, which gives companies the freedom to hire without fear of turning into a GM or Ford, with huge legacy costs. France, by comparison, takes a dim view of layoffs, and its employment suffers by comparison. The same distinction is made in international trade, between trade-distorting subsidies and tariffs and otherwise. All government manipulation of the economy is, of course, distortionary, but it's a question of extent and value.

Hopes this helps,
Mark

[Isaac Bartram]

The Nordic countries' other secret is that they are small and homogenous.

After all a welfare state has to work when you're dealing with a country where everyone is Swedish and a Lutheran.

They are losing that advantage as they become less homogenous and the protestant work ethic becomes less observed.

[highnumber]

The Swede's other secret is massaging the numbers (from The Economist article I referenced above):

Par Nuder, the finance minister, makes much of Sweden's having the highest employment rate in the European Union after Denmark, at just over 70%. The official unemployment rate is 6%. But Sweden is a world champion at massaging its jobless figures, which exclude those in government make-work programmes, those forced into early retirement and students who would prefer to be working. Sweden's suspiciously large number of workers on long-term sick leave are counted as working, and included in the employment rate (sickness benefits account for 16% of public spending). Absenteeism is common.
...
Magnus Henrekson of the Research Institute of Industrial Economics says that Sweden has created almost no net private-sector jobs since 1950. Youth unemployment is among the highest in Europe. The McKinsey boffins conclude that the true unemployment rate is around 15-17%, which puts Sweden among the worst job-fillers in the EU. It translates into more than 1m people without work.
...
In contrast to Denmark's unions, Sweden's also make it expensive to sack anybody, which discourages hiring.

It's a good article. They go on to write about the difficulties of small business owners and the self employed there also.
I'm no expert on Scandinavian economies and politics, but thanks to The Economist, I can feel like one.

[Mark]

Ha... my bust on the cost of firing, but my point, I think, still stands.

[joshua corning]

Why is that the most competetive countries in the global economy are the high-taxing Nordic countries (at least, according to the World Economic Forum)?

oh i know the answer to this one joe:

Bush did it!!!

Now what do I get for answering your loaded question that has nothing to do with this years nobel prize winner?