Articles
Articles and analyses from the INET community on the key economic questions of our time.
Adam Smith's first - and last! - book: what rational choice?
I was going to call this blog post ‘Utility maximising agents in Adam Smith’s Theory of Moral Sentiments’ but realised that was much too dull - even if it accurately describes my bedtime reading at the present moment.
The Flummery of Capital-Requirement Repairs Since The Crisis
Government safety nets give protected institutions an implicit subsidy and intensify incentives for value-maximizing boards and managers to risk the ruin of their firms. Standard accounting statements do not record the value of this subsidy and forcing subsidized institutions to show more accounting capital will do little to curb their enhanced appetite for tail risk.
To Boost Investment, End SEC Rule Encouraging Buybacks
The New York Times is having a “Room For Debate” discussion on its Opinion Page about how corporations should handle profits based on the Harvard Business Review article “Profits Without Prosperity” by William Lazonick of the University of Massachusetts Lowell, who is a grantee of the Institute for New Economic Thinking. The discussion features contributions by Bruce Greenwald, Peter Thiel, and Lazonick, among others. Lazonick argues that the capital being used for stock buybacks would be better spent on investment. Lazonick’s “Room For Debate” piece is below. To read the full discussion on The New York Times, click here.