Now that the U.S. national debt is in the headlines, the media is awash in astronomical numbers such as $14.3 trillion (the current debt). Everyone realizes that this number is incomprehensible. Even back in 1981, when the national debt was only about $1 trillion, the debt was still incomprehensible. Thus, speechwriters for Ronald Reagan created, or at least popularized, a widely used attempt to give it meaning. Speaking to Congress in February 1981, Reagan said:
A few weeks ago I called such a figure, a trillion dollars, incomprehensible, and I’ve been trying ever since to think of a way to illustrate how big a trillion really is. And the best I could come up with is that if you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high.
This comparison is often quoted as a stack of one-dollar bills 67,000 miles high (perhaps because thousand-dollar bills don’t exist). No matter which denomination you use, I give the explanation an A for effort, but an F for performance. For I have little idea of how far 67,000 miles is. I know it’s way too far to walk and even too far to fly (jumbo jets have a maximum range of around 7,000 miles). But is it large as a national debt? I have no idea. Perhaps a large national debt would reach all the way to Mars. The connection to a height has merely replaced one meaningless idea ($1 trillion) with another meaningless idea (a stack 67,000 miles high). Read More »
The Dominique Strauss-Kahn affair has been good business for many journalists and writers, but it’s caused some blowback too. Consider this IMF bloggers’ event that bit the dust:
And then there’s the admiring DSK cover story in Washingtonian magazine, called “The Invisible Man.” From the Washington Examiner:
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“It was actually sitting at the printer, printed, when he was arrested,” explained the publication’s editor, Garrett Graff. … “The most ironic part of this is that the reason we were writing the piece is that nobody had ever heard of this guy,” Graff said. “You could be standing next to him at the supermarket check-out line and not recognize him.”
L’affaire Strauss-Kahn underscores my view that we economists are as immoral—but also as principled—as any other professionals. Innocent until proven guilty, and all that; but I now know of, or even know personally, economists who have engaged in sexual assault, embezzlement, murder and, of course, clearly immoral acts that are not criminal.
Yet it is also true that we are as generous as any other group. As Yezer, Goldfarb and Poppen showed in the Journal of Economic Perspectives, 1996, learning economics makes you no less charitable in your actions (although not in what you profess) than does studying any other discipline. And each of us can recount instances of personal charity and sacrifice by well-known economists, often on behalf of younger, less well-known colleagues.
As with so many other pairs of individual characteristics, the correlation between morality and, in this case, occupational choice is very low.
High-Frequency trading generates $7 billion in profits with closely-held algorithmic codes, and a fiber-optic infrastructure that executes trades near the speed of light. Read More »