Economics: Weekly Summary (June 02-8, 2025)

A Glimpse into the Past: Economics in the Rear-View Mirror

Let's start with a little trip down memory lane, shall we? Irwin Collier takes us back to the early 20th century with his posts on historical economics exams from Harvard and UCLA. It's like peeking into a time capsule of academic rigor. The Harvard exam from 1908-1909, taught by Professor Thomas Nixon Carver, dives into the agricultural history of the United States, touching on urban and rural population growth, the law of diminishing returns, and the role of the Federal Government in agriculture. It's fascinating to see how these topics were framed back then, and it makes you wonder how much has changed—or hasn't—in the way we think about agriculture and economics today.

Then there's the UCLA Ph.D. qualifying exam from 1980, which gives us a snapshot of monetary economics at the time. It's a bit like looking at an old family photo and realizing that some of the faces and themes are still familiar today. Irwin Collier also introduces us to Dorothy Beal Christelow, an economist who worked for the Federal Reserve Bank of New York and specialized in Japanese economics. Her journey from journalism to economics is a reminder of the diverse paths people take in their careers.

The Modern Economic Landscape: Conferences and Policies

Fast forward to the present, and we find ourselves at the Hoover Monetary Policy and Taylor Conference, as summarized by John H. Cochrane. This gathering of economic minds delves into monetary policy, financial markets, and fiscal sustainability. It's like a big family reunion where everyone has strong opinions about the future of the economy. The discussions are rich with insights, and if you're curious about the nitty-gritty details, it's worth checking out the full post.

Meanwhile, Bryan Caplan takes a critical look at Milton Friedman's list of government policies he deemed worthy of abolition. It's a bit like going through a garage sale of ideas, picking up each one and deciding whether it's a keeper or not. Caplan agrees with some of Friedman's suggestions but finds others to be a bit off the mark. It's a reminder that even the most respected economists can have their quirks.

The Crypto Conundrum and Trade Tensions

In the world of crypto, Peteris Erins argues that our industrial society's excessive consumption could be addressed through crypto's potential for creating conditional commitments. It's like trying to fix a leaky faucet with a new kind of wrench—innovative, but will it work? Erins suggests that crypto could support a megaproject-driven economy, but society needs an update to make it happen.

Trade tensions are also a hot topic, with Evan Carroll debunking the claim that Trump cut the trade deficit in half. It's a bit like peeling back the layers of an onion to reveal the truth underneath. Carroll explains that the decrease was due to pre-tariff stockpiling and post-election fears, not any action by Trump. Aaron Rupar adds to the conversation by discussing Trump's use of tariffs as a weapon to renegotiate trade deals and the legal challenges that ensued.

Sanctions, Dividends, and Economic Challenges

Peter Garicano explores how a mix of sanctions against Russia inadvertently saved Putin's regime. It's a bit like setting a trap and finding out it caught the wrong prey. Garicano argues that export sanctions would have been more effective, highlighting a missed opportunity to impose a full energy embargo.

On the home front, Political Calculations reports on the negative developments for dividend-paying stocks in May 2025. It's like watching a slow-motion train wreck, with the number of firms cutting dividends rising and those increasing dividends falling. The downward trend points to continuing stress in the market, even if it's not quite recessionary yet.

The Housing Crisis and Global Supply Chains

The housing market is another area of concern, with population.news declaring America's suburban building boom dead. It's like a ghost town where new homes should be. The research by Edward Glaeser and Joseph Gyourko shows a collapse in supply elasticity and a decline in homebuilder establishments, leading to a housing affordability crisis.

Meanwhile, Mike "Mish" Shedlock highlights the irony of automakers considering moving parts production to China to avoid factory shutdowns. It's a bit like trying to escape a storm by running into another one. China's control over rare-earth magnets has given it a significant advantage in trade wars with the US, and the situation has escalated to a point where nobody wins.

The Future of Money and AI's Impact

In the realm of finance, Ashlee Vance discusses the future of money, focusing on the success of the Collison brothers and their company Stripe. It's like watching a new chapter unfold in the story of commerce. The use of stablecoins and the impact of AI on the economy are key themes, and it's clear that the financial landscape is evolving rapidly.

Elena Verna adds to the conversation by highlighting how AI startups are surpassing revenue milestones that traditional SaaS companies could only dream of. It's like watching a new breed of athlete break records that seemed unbreakable. AI-native companies are designed for speed and agility, and they're changing the game in ways that are both exciting and a little intimidating.

Political Maneuvering and International Relations

On the political front, Dean Blundell discusses Canada's decision to ban US steel and aluminum in response to Trump's tariffs. It's a bold move, like a chess player sacrificing a piece to gain a strategic advantage. The aim is to boost the domestic industry and assert strategic sovereignty.

Naked Capitalism explores the changing international relations between Israel and China, as well as the responses of other countries to Israel's actions in Gaza. It's a complex web of alliances and tensions, with economic ties playing a crucial role in shaping global politics.

Reflections on Economic Theories and Practices

Finally, Domo Futu and Ruben Schade offer reflections on economic theories and practices. Futu discusses the End-of-History Illusion, a cognitive quirk that convinces people they've reached their final form, despite evidence of continuous change. It's a bit like thinking you've reached the top of a mountain, only to find there's another peak ahead.

Schade, on the other hand, delves into the concept of externalities, those pesky costs not paid by the buyer or seller but imposed on others. It's like the hidden fees that show up on your bill, reminding us that our actions have broader impacts on society and the planet.

And there you have it—a whirlwind tour of the latest discussions in the world of economics. There's so much more to explore, and each post offers a unique perspective on the challenges and opportunities we face today. So, if you're curious to dive deeper, the authors' pages are just a click away.