Greg Mankiw mentioned me today on his [utterly essential] blog, highlighting my enthusiastic review of his introductory textbook. To summarize: I wasn’t a very good student in high school. Then I read Mankiw’s textbook, fell in love with micro-theory, threw myself into math at Carleton College, and now I get to study what I love full-time as a PhD student at Michigan’s School of Information.

The Mankiw mention has led to an unusually large amount of Googling for me, leading folks here. I’m a bit embarrassed that this blog hasn’t been updated in a long while. I’m slightly more active on Twitter. The effort-to-traffic ratio of this blog has never quite justified its existence. Writing Amazon reviews, I’ve realized, actually let me express my thoughts to a larger audience. (Bonus: I’m now a Vine Voice.) Even so, I expect to renovate this site over the summer. This is my most public face. Just as Mankiw’s textbook is his. When something is so personal, it’s worth perfecting.

Dartmouth economist Andrew Samwick has an excellent piece in the Winter 2009 Cato Journal on government policy in the current crisis. His conclusion, under the heading “The Profligate versus the Prudent,” is best quoted at length:

Though their stories seldom make the news, there were borrowers who could have qualified for a new home or a larger home with a subprime mortgage but not a conventional mortgage who chose not to buy the home. There were banks that lost market share to mortgage originators because their lending standards precluded them from extending credit in such a risky manner. There were investors that were willing to forego the additional yield on subprime-backed securities because the opaqueness of their design made them too risky a proposition. There were consumers who lived within their means and tried to save some money for the future, refusing to max out their credit cards or their home equity lines of credit to boost their consumption even further above their income. These were the participants in financial markets who behave prudently.

How have these prudent actors fared in the policy response to the subprime crisis? Banks that first lost market share to reckless lenders are now seeing the government injecting capital into the balance sheets of these same reckless lenders. Their net interest spreads are also being narrowed as the Fed lowers interest rates down close to zero to prop up the value of troubled assets across the economy. Households that delayed a home purchase because the prices were too high now see any number of proposals designed to prop up housing prices, keeping them out of reach and in the possession of the speculators and the profligate. Investors that stayed out of subprime-backed pools now see government programs designed to prop up the value of those pools for those who invested less wisely. Households who did not treat their housing equity like an ATM and faced higher prices for everyday goods and services in competition with those who did now see programs to forgive the debt being proposed. They also face negative real rates of return on their savings. And every entity now showing positive profits or higher income as a result of their prudence must also shoulder the burden of funding the trillion-dollar bailout proposals.

This is a clear way of framing recent events, but there’s one problem: Not all of the profligate knew they were being profligate. Many, no doubt, thought they were being prudent. You could argue that this is because they expected to be bailed out, which would make their profligacy prudent (vis-à-vis their own financial state), but that can’t plausibly explain 100% of the profligacy that took place.

We should all agree in principle that you don’t bail out profligate people who know they’re being profligate. But do you bail out profligate people who think they’re being prudent? That’s a subtler question. If you say yes, unconditionally, then you reward ignorance and naïveté. (To wit, Bernie Madoff’s investors would be made whole by the taxpayers.) So do you refuse, under any circumstances, to bail out the pseudo-prudent? Even pensioners?

I subscribe to The Quotations Page’s Quotes of the Day RSS feed. Today, one of the quotes was:

“I believe that banking institutions are more dangerous to our liberties than standing armies.”  — Thomas Jefferson

Now, I do recall Jefferson and Hamilton butting heads over the First Bank of the United States. But opposing a bank run by the federal government (on constitutional grounds) is clearly different from making a swipe at “banking institutions” in general.

Everyone likes to claim Jefferson as one of their own: liberals and conservatives, socialists and libertarians; so it’s no surprise that the first Google hit for the quote is, as of this writing, a page on a site called EarthHopeNetwork.net, which is apparently both libertarian (it still sports a “Donate to Ron Paul 2008” link) and radically environmentalist. The second Google hit is the entry on The Quotations Page. And the third, thankfully, is the wonderful Jefferson Encyclopedia maintained by the Jefferson Library, which reports that the quote first appeared in 1937. Jefferson did, however, write this in an 1816 letter:

“And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”

Taken in context, the quote isn’t about private banks—it’s about deficit spending!

I should also mention that the Jefferson Encyclopedia has an entry on one of the most popular quotes attributed to our third president: “That government is best which governs least.” The historians’ conclusion: “Although the ideas expressed in this quotation may be in line with Jefferson’s opinions, the exact phrasing is almost certainly not Jefferson’s.”

Following up on my previous post, here are the 10 blogs that I find most valuable:

1. Greg Mankiw, central locus of the econoblogosphere
2. Freakonomics
3. Lifehacker
4. Marginal Revolution, by Tyler Cowen
5. Democracy in America, by The Economist
6. Free Exchange, also by The Economist
7. Will Wilkinson
8. Mashable
9. The Daily WTF (mainly for their regular Error’d feature)
10. EconLog, from the Library of Economics and Liberty

And, as a bonus, my Top 5 Non-Blog RSS feeds:

1. xkcd, the smartest web comic known to man (while Sinfest is the cutest)
2. New York Times – Editorials & Opinion
3. Wall Street Journal – Opinion Journal
4. Slate (yes, all of it)
5. Quotes of the Day from the Quotation Page

TIME recently posted their annual Blog Index. Annoyingly, you can only read the list one by one, page by page, so I’ve reprinted it below.

The list contains some useful tips (I hadn’t heard of Said the Gramophone or Detention Slip; both are now in my RSS reader), many familiar feeds (I’m a long-time fan of Lifehacker), some good calls (Mashable is in the Top 25, TechCrunch is in their 5 Most Overrated), and a lot of, well, more dubious choices. To wit: Tons of liberal blogs (TPM, HuffPost, C&L) and only one even mildly conservative or libertarian blog (Andrew Sullivan). I’m not arguing that they have a responsibility to provide an “unbiased” list—that’s just silly—but does anyone really need to hear that much vitriol from one side of the aisle? I’ll post my counter-list soon. At least they put Kos on the Overrated list, where it belongs.

My only “What’s that doing on the list?” reaction was to Got2BeGreen. It feels like a sop to environmentalists, but it’s not even the right sop. Frankly, any good DIY project they post will be rehashed on Lifehacker anyway. If you want a green blog, TreeHugger is the obvious choice.

But my biggest quibble is with the economics selection. Freakonomics is excellent, but Krugman over Mankiw? Really? And hasn’t Cowen earned a slot? Honestly.

Here’s the TIME list:
1. Talking Points Memo
2. The Huffington Post
3. Lifehacker
4. Metafilter
5. The Daily Dish by Andrew Sullivan
6. Freakonomics
7. Boing Boing
8. Got2BeGreen
9. Zen Habits
10. Paul Krugman
11. Crooks and Liars
12. Geración Y
13. Mashable
14. Slashfood
15. Official Google Blog
16. synthesis
17. bleat
18. /Film
19. Seth Godin
20. Deadspin
21. Dooce
22. Confessions of a Pioneer Woman
23. Said the Gramophone
24. Detention Slip
25. Bad Astronomy