We're not very good at addressing risk: Accept that fact, then try to accommodate
A rather perceptive article about the oil spill in the Gulf of Mexico makes the fine point that we tend to be really, really bad at comprehending catastrophic risk. We understand that bad things can happen, but we seem to be good at burying our concerns about the "worst that could happen" and living in blissful ignorance. Blissful, that is, until something goes horribly wrong, like it did in the Gulf, and causes a catastrophe. And those catastrophes can have massive repercussions that are hard to forecast as well: American politicians are clamoring for BP to set aside a $20 billion reserve account to pay for damages caused by the oil spill -- a curious challenge to the Constitutional notion that government can't just take what it wants without a due legal process. What could be truly extraordinary about the BP situation is that, if the US government pushes hard enough, it could shove BP right into insolvency. The whole idea of forcing the company to set aside money for victim compensation and punitive damages before there has been a due court process is unprecedented -- and dangerous to the notion of government staying within its prescribed limits. And if BP were to be pushed into insolvency, the people who would suffer the disproportionate burden of the consequences are not the executives working at the company, but rather the huge number of British pensioners who rely upon dividends from BP to help pay their power bills and buy groceries. Whether we imagine bumbling incompetence in the management of the spill, the reality of business today is that the people whom we'd like to hold personally accountable are rarely the ones who will suffer the consequences if the business itself is punished.
Japan's prime minister worries the country will "collapse" under public debt
Relative to the size of its economy, Japan has about twice the amount of government debt that the US has. Due to its extraordinarily high private savings rate, they probably have a lower total debt burden (public and private combined) than the US does, but the fact is that a country cannot go on borrowing at an increasing rate forever. That which cannot go on forever must eventually stop. The hope must be that the "stop" can be achieved reasonably and in a measured way -- and not with civil unrest or violence. The eruption of civil war in Kyrgyzstan appears to be the result of the breaking of peace between opposed ethnic groups. It's scary stuff.
The things people are willing to do with their free time
(Video) A stop-motion video of Mario Brothers, apparently made of Post-It Notes, should provide sufficient evidence to anyone who wonders that there's plenty of untapped brainpower sitting around, under-used, in America today. Which is what makes inducement prizes such an attractive idea: If we can find a few problems that we really want to solve and concentrate the benefits to finding the answers, perhaps some of the people currently dinking around making goofy videos might occasionally spend some of that leisure time trying to answer tough questions instead. It really just requires a little incentive, which is what the prizes are good for doing.
Humor for economists
Even one of the driest of all social scientists can provide fertile ground for laughs
Podcast: The sorry state of state budgets
Podcast: The future of hive-minded vehicles
After a long struggle with shortage, Lincoln finally has enough water for a summer