The most important market-oriented thinkers of the 20th century were Ludwig von Mises, F. A. Hayek and Milton Friedman. (T)hey witnessed the rise of socialism, the hegemony of Keynesianism, and the reversal of the laissez faire principle. Each tackled the theoretical and empirical arguments responsible for this ascendency of economic statism... With the current financial crisis timed with a presidential election, we hear of the instability of unregulated markets and the need for regulation and control once again. Statism is on the rise again in rhetoric, and this rhetoric will soon be followed by policy action.
- Peter Boettke
Consumption loans indiadevelopmentblog.com
Logically considering whether microfinance institutions should force/encourage/ask people to use their loans for only “productive” purposes rather than for consumption, I now strongly believe that financial providers can do a great deal of good by providing loans with no strings attached.
Of course, borrowing can lead people to a cycle of debilitating debt or foolish spending, but it is important to focus on the aggregate and not the worst circumstances.
This is not to argue that programmes that give loans with education on how to start a business are not useful or do not have impact, just that they are not the only way to provide social good. Although I have my opinions, the argument about the best and most productive ways to provide loans to the poor is far from settled.
Another issue that needs more discussion and clarity is what exactly counts as a “productive” or “consumptive” use of a loan.
What is buying medicine? Building a latrine? Buying a cellphone (a colleague recently sent me a New York Times article that discusses the cellphone as a development tool)? Paying for a child’s school fees?
It is clear to me that many people do not use their loans solely for starting micro-businesses, and in many cases they probably shouldn’t.
- Dan Kopf
$10 billion Saudi university marginalrevolution.com
(The Saudis) claim the (university) will have both male and female students and Western faculty. A question: How much would it really cost to set up a first-rate university — and not just a technical school — in Asia? Let’s say an Asian businessman were willing to put up $10 billion in endowment: how good would the school be? I see three major problems:
1. Many Asian governments cannot precommit to respecting academic free speech; nor for that matter can the Saudis.
2. An excellent university must be part of an intellectual network near other excellent universities. Arguably, with the Internet this effect is weakening over time. Still, if they tripled my salary I wouldn’t move to Saudi Arabia or for that matter Japan and that is for reasons related to network effects.
3. Such universities could not precommit to the governance systems that have been so effective in bringing American schools to dominate the world rankings. In fact, the more money that one person or government gave, the greater the commitment problem might be. By these governance systems I mean faculty control of appointments, with academic-based monitoring by the dean and provost, independent boards, and presidents willing and able to raise enough money to maintain financial independence for the future. That’s a pretty tall order but you’ll find all those qualities in the successful American colleges and universities.
Long-run financial independence also requires a more general culture of philanthropy which is found only in the US.
Technical schools aside, I do not expect American colleges and universities to lose their leadership role in the immediate future.
And if they do, the real competitors will prove to be Europe, the UK, and Canada, not Asia.
- Tyler Cowen