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Archive for December 18th, 2009

Some Friday Links

Here are a few quick hits on some longer posts and articles you should read.

First, Daniel Little posts on Robert Merton’s sociological theory of science. There’s a relevant chunk here for economists:

…the conduct of science is driven by the values that the institutions of science inculcate and enforce; the incentives created by the scientific institutions shape and motivate the behavior of scientists; and the product of science is the result of the constrained activities of scientists shaped and motivated in these particular ways.

Steve Keen writes that post-Keynesians need to formalize and mathematize their models, after attending a recent conference:

 We can and must do better than that. But to do so, non-orthodox economists have to find tools that can express their vision of the economy analytically, either as mathematical or computer models. If we don’t, then whatever might be said by “Critical Realists” about the inappropriateness of mathematical analysis in economics, or how one can’t model open systems mathematically, the critics will be sidelined in a not too distant future by those who do use such models–and who care a good deal less about realism than the critics do. Yet again, the critics may win the philosophical battle, only to lose the methodological war.

Finally, Teresa Ghilarducci, who is a former professor of mine and now at the New School, says the current social security/pension scheme is inadequate and unfair:

[Obama’s plan] does not actually fix the worst flaw of the 401(k) system, and the flaw is this: 3% of pay is not enough for people to supplement their Social Security; if people want to maintain their standard of living for the rest of their lives and they are in the middle class or above income brackets, they are going to have to save 7 to almost 20% of their income, depending upon family circumstances. . . .  Also, these accounts are managed by for-profit, mutual-fund brokers.  Charles Schwab, Vanguard, Fidelity — these are all commercial accounts that actually charge you hefty brokerage fees, hefty management fees, for your retirement accounts…

We should not have tax breaks for the retirement savings that go to people in the very top bracket — it doesn’t make any sense.  If the government is going to lay out money to help people accumulate their retirement funds, they should do it for lower-income and middle-income groups.  The other principle they had is that retirement contributions should be pooled and professionally managed. . . .  It minimizes costs and also smoothes out financial risks.

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