February 27, 2009 at 11:56 pm
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Will the Obama deficit-spending plan work? Will throwing $800 billion—$500 billion in extra government spending, and $300 billion in tax cuts—at the economy produce a world in which production and employment are higher and unemployment lower than would otherwise have been the case?
The short answer is yes. The short reason is that spending works—eras when some group or other gets excited about future prospects and starts
spending money like water are eras in which production and employment are high and unemployment low. And the government, in this respect, is just like any other group of starry-eyed optimists whose eagerness to spend pulls the economy into a high-employment high-pressure boom. Between 2003 and 2005 the assembled investors of the world discovered the American housing market. Low interest rates produced by the Federal Reserve allowed them to borrow and leverage up cheaply—and the promise of financial engineering that would greatly help them diversify risk made them…
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In a series of papers, Martin Weitzman has proposed a Dismal Theorem. The general idea is that, under limited conditions concerning the structure of uncertainty and preferences, society has an indefinitely large expected loss from high-consequence, low-probability events. Under such conditions, standard economic analysis cannot
be applied. The present study is intended to put the Dismal Theorem in context and examine the range of its applicability, with an application to catastrophic climate
change. I conclude that Weitzman makes an important point about selection of distributions in the analysis of decision-making under uncertainty. However, the
conditions necessary for the Dismal Theorem to hold are limited and do not apply to a wide range of potential uncertain scenarios.
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For the March 2009 issue, Vanity Fair sat down with the members of Spinal Tap, whose genre-defining mock-umentary (directed by Marty DiBergi) just turned 25. Here is an extended remix of the interview with Nigel, David, Derek, and Marty—with audio. Related video: “The Tap Sell Out.”
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As climate change accelerates, policymakers may have to consider "geoengineering" as an emergency strategy to cool the planet. Engineering the climate strikes most as a bad idea, but it is time to start taking it seriously.
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Executive produced by George Clooney and Steven Soderbergh, HBO's latest groundbreaking series is an experimental fusion of reality and fiction–an entertaining, fly-on-the-wall look at government, filmed in and around the corridors of power in Washington. Starring Beltway insiders James Carville, Mary Matalin, Michael Deaver–and a host of political celebrities.
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