Stephen Kinsella

This semester’s bloggy love goes to:

Stephen — Wed, 08 Sep 2010 10:32:50 +0000

Economics students and breathing humans more generally could do worse than reading these blogs. I read a lot of them daily and often share links on twitter, google reader, and delicious, but here’s a simple list for those who couldn’t be bothered to click the above.

Irisheconomy.ie. If you’re not reading this, start. This is the best economics blog in the country, hands down.

Progressive-Economy.ie, another group blog with a lot of UL contributors, this one is focused on the TASC network’s work and social policy, as well as economics.

Trueeconomics, a one-man data avalanche from Dr Constantin Gurdgiev

Ronanlyons.com, the eponymous data hound, Ronan Lyons serves up excellent data-driven commentary, often revolving around Ireland’s property market, or lack thereof.

Antiroom.com, the writing on this blog is so good you could bottle it. This is the best type of blog: it makes you think, it makes you argue, and it makes you come back to read more.

Namawinelake.wordpress.com, the only blog I read for Nama news. The writing is excellent, analysis is timely and clear, and he’s not afraid to show his frustration with the process, while making superhuman efforts to remain calm in the face of it all.

Any more new politics/economics/data blogs out there, I’d love to hear about them in the comments.

Are large complex economic systems unstable ?

Stephen — Wed, 08 Sep 2010 08:34:06 +0000

Short answer, yes. This is a lovely paper by Dr Sitabhra Sinha describing physical analogies to the current crisis, and showing how persistent changes (he calls them oscillations) in the output of the economic system can come about just because of delays in market response due to information or market imperfections, as we see from the diagram below from Sinha’s paper. The price, even in the standard diagram, lags the available supply at any moment, creating surpluses and shortages. This is not a devastating critique of the supply and demand model, but it does provide food for thought, and another way of looking at a familiar picture.

It’s not that technical, economics for business students should definitely have a read of his work.

Two quick thoughts

Stephen — Tue, 07 Sep 2010 22:38:17 +0000

Two thoughts on today’s bond disaster: first, this isn’t the work of one finance professor writing an opinion piece in a newspaper and watching it catch fire on a blog. Really. Second, the spin about ebbs and flows just doesn’t make sense: no one else experienced funding cliffs like this today. We saw spreads on Anglo move out 36% today. We are looking at evidence of a systematic problem.

Economics for Business Lecture 1

Stephen — Tue, 07 Sep 2010 15:36:37 +0000

Here are the slides and the audio for Economics for Business, Lecture 1. Here are the notes for Lecture 2. Bring a copy to Friday’s lecture. Here is a screencast of the mathematics we’ll be going through in lecture 2.

Economics for Business Lecture 1 from Stephen Kinsella on Vimeo.

EC4027, The European Economy, Lecture 1

Stephen — Mon, 06 Sep 2010 08:58:26 +0000

This lecture introduces the module, including the module outline, and the lecture notes for the first lecture. You’ll want to read Barry Eichengreen‘s European Economy since 1945, chapters 1 and 2, for next week.

Click below to look at a screencast for the module, it will explain what the module is about, and perhaps you’ll get a sense of what the module is about.

EC4027 European Economy Overview from Stephen Kinsella on Vimeo.

The economy of bitterness

Stephen — Fri, 03 Sep 2010 21:12:45 +0000

Written for fun after a bit too much bitterness online and in the real world, here’s my attempt to minimise levels of bitterness within organisations.

Abstract. Prolonged bitterness is a bad thing in an individual. When workers experience bitterness, it harms their individual productivity, and, by spreading bitterness to colleagues, excessive and repetitive worker bit- terness can be costly to the firm. This paper proposes a bitterness economy, and derives exact results in the furtherance of a method for limiting the spread of bitterness.

[Download the paper.]

Economics for Business Introductory Screencast

Stephen — Fri, 03 Sep 2010 12:43:15 +0000

With a format shamelessly ripped from the Khan Academy (which I’ll be linking to quite a bit), here is my first screencast for Economics for Business. Expect one a week from now on. The screencasts will cover bits of lectures I forgot, mathematical derivations, some ‘skills’ like graph creation, etc, in Excel, and yes, some ranting.

I’d love feedback in the comments on the audio/video quality, and whether people think this will be useful to students.

You can view this screencast on any mobile device (iPhone/iPad/etc too) as well as computers.

Economics for Business Screen Cast 1 from Stephen Kinsella on Vimeo.

The transformation of private debt into public debt

Stephen — Thu, 02 Sep 2010 13:22:07 +0000

Ireland has guaranteed the assets and liabilities of a large part of its banking system. Parts of this banking system are, to use a technical term, dead. That is, these parts of the banking system will no longer provide credit (for a profit) to the real economy (plumbers who need overdrafts to pay their workers and buy materials). These banks ran up huge losses in a classic property bubble, now their debt is our debt. Hence the following scary chart. A credit default swap is a measure of the perception of riskiness. So when 5-year CDS contracts for Ireland are more expensive than for Iceland, you should take from this the meaning the markets do: the level of private debt is too great to be absorbed into the public debt and be paid off. As Prof. John McHale is very careful to point out:

The bright line between guaranteed and non-guaranteed debt is relevant here. If the credibility of guarantees is retained, guarantees on new funding could be (liberally) used to raise funds in the future.

There is no simple solution here.

We can try to understand what’s going on with a simple example, though. You earn 100 euros a week, you spend 90 euros a week. You’re saving, doing well. Your brother calls. He says his debts are too great for him to handle, will you help him out? He mentions he is 400 euros in debt. You say yes, and you agree to make his debt yours. Then it turns out not to be 400, but 1000. Suddenly your bank sees you differently. Perhaps you don’t get a loan, perhaps you can’t buy something you want. Your living standards suffer. Not because of anything you have done, but because your income can’t possibly sustain the level of debt you have taken on. Simple arithmetic won’t be denied.

Going back to the national stage, people like Merril Lynch estimate the upfront cost of recapitalising the Irish banking sector will be around 24% of 2010 GDP. Over 70% of this relates to Anglo Irish, if that cost of rescuing that stain of a bank is only about 25bn. If the cost of bailout gets larger, as some analysts argue, then Ireland is in deep trouble, and may be financially insolvent, implying that, at some point, we are not going to be able to make payments on our debt, and we will, eventually, default on this debt. Over at Irish Economy, a discussion is going on about the conditions for such a default, on particular types of debt. Head there and learn something. Commentators Boone and Johnson strike a cautionary note as well.

The Future of Education?

Stephen — Wed, 01 Sep 2010 20:02:38 +0000

I’ve blogged here several times[1][2] about using laptops and netbooks instead of paper books. Here’s an interactive textbook platform for the iPad called inkling. I took a look at the economics textbook, and it looks very good, but remember, as good as it is, Inkling is in the first wave of implementations of any kind of software for the iPad. In 2 or 3 years, the possibilities are endless. Take a look at the video, too, it is inspiring. Now if we could just get the students to read the textbook, in whatever format it came, we’d be sorted!

Spot the Myths

Stephen — Wed, 01 Sep 2010 00:11:00 +0000

Myth-making is a delicate art. You need a grain of truth, of course. You need a ready and willing vessel of myth transmission, and you need sustained spin to make the myth become part of the conventional wisdom. Readers should understand the term `conventional wisdom’ is meant in the pejorative sense, as the man who popularized the term, economist JK Galbraith, intended.
The recent Honohan and Regling reports have blown apart the myth that Ireland’s banking crisis was of international origin. We grew it right here at home folks, in the old-fashioned way. Crises like Ireland’s have been happening for at least 800 years. Let the myth die that we need to look abroad for our problems’ origins.

The next myth which is beginning to ferment is that no-one saw this coming. Not so. Look at any report by the National Competitiveness council for 2001, 2002, 2003, 2004, or 2005–they all say the same thing, and in ever-more alarmist language: Ireland is losing competitiveness. Look at the ESRI’s quarterly reports, or their recovery scenarios again, the same messages are there. I probably don’t need to remind you of the writings of people like Alan Ahearne and Morgan Kelly in the nation’s newspapers.

What’s the myth after that? Here I’m going to take a guess. It will have to be a myth that helps the incumbent political party stay in power, it will be a myth that is grounded in reality, and it will be a myth that will need to be dispelled, immediately, by those with facts and access to an internet connection. The myth will be of mass moral hazard. Nothing needs to be done, because it will change the populace’s relationship with debt, and alter their behaviour as a result. Debt-forgiveness for households is not on the cards, nor will it be for some time, as I’ve argued elsewhere. Yet, because debt, like most balance sheet phenomena, is PR and Spin-resistant, it will become a major issue in the next few years. Those with facts at hand should take strenuous efforts in dispelling this dangerous myth.

SMEs in a Globalised World

Stephen — Wed, 01 Sep 2010 00:04:12 +0000

My UL Colleagues Helena Lenihan and Bernadette Andreosso-O’Callaghan have just published a new book on SMEs in a Globalised world. The book shows how small and medium enterprises (SMEs) from some of the traditionally less dynamic peripheral economies of the ‘old’ EU – namely Ireland, Italy, Portugal and Spain – have responded to the twin challenges of globalisation and industrial restructuring. Through a series of unique case studies the contributing authors discuss how these economies, and in particular the SME sector, can be transformed.

Click the image below to find out more.

Understanding Ireland’s Economic Crisis

Stephen — Tue, 31 Aug 2010 23:54:47 +0000

My next book, with Tony Leddin, is called Understanding Ireland’s Economic Crisis. You’ll be hearing a lot more about it, trust me.

Economics for Business Data Project Guidelines

Stephen — Tue, 31 Aug 2010 23:50:40 +0000

Instructions. The data project for Economics for Business is designed to encourage you, the student, to apply the economic theory and quantitative methods you’ll see in this module to applied topics. The objective of this project is to give you the ability to communicate effectively and clearly in written and oral formats using a quantitative approach. To get a good grade, you’ll need to demonstrate a basic competency in the analysis, interpretation and presentation of economic data.

All printed submissions are due Monday December 6th, to the box near KB 3-22a, and by email to stephen.kinsella@ul.ie, with the file called yourstudentnumber_yourname_datanalysisprojectec4004.doc. Your work will be checked for plagiarism using Turnitin.com. Please be assured that if you do plagiarise and I catch you, I’ll throw the book and a bookshelf at you. For guidance on plagiarism, please refer to UL’s handbook. The project is to be a minimum of 4 pages and a maximum of 5 pages, including graphs. Submit your project in Times New Roman, 1.5 spacing, 1 inch margins, with a title, your name, and your student number on a cover page. Staple the pages, please don’t use any other covers. This project is worth 25% of your final grade for this module. You must submit your work on your own, lateness will carry a penalty of 10% lost per day.

Students should consult the following works:

Gary Klass, Just Plain Data Analysis: Finding, Presenting, and Interpreting Social Science Data (New York: Rowman and Littlefield Publishers, 2008), and its companion website.
Gary Koop, Analysis of Economic Data (Wiley and Sons, 2009)
Prasenjit Saha, Principles of Data Analysis, (Cappella Archive, 2003). (This is quite advanced material)
Deirdre McCloskey, Economical Writing, (Waveland Pr Inc; 2 edition, May 1999), or as a poor substitute my notes for the book. This book is required reading for all of my students in all courses.

There are four datasets to analyse, pick one below. Each is in .xls format.

Data Sets

Right click and choose ‘save as’ to download the file.

Data set 1: Costs of Doing Business

Data set 2: Historical prices and economic growth

Data set 3: Productivity in the EU

Data set 4: Unemployment and Growth in the OECD.

Use your report to ask the following questions of your data. You’ll get help from the TAs in answering these questions. Here are excellent notes on using Excel for economics. You should consult them when making your report.

What are the range and domain of the data? What is this data about?
What is the context for this data? How big is the sample size? Is it microeconomic, macroeconomic, time series, or panel data?
Compute correlations, bar charts, scatter plots, histograms. Visualise the data. Try to understand the relationship between the data series you’re looking at. Compute descriptive statistics. Are the data positively related? Negatively? What does that suggest to you? Does any of what you’re seeing make sense to you? If not, why not?
Ask yourself: how does the data relate to Ireland’s current economic experience? Can you see the relevance of this data analysis for the present crisis? If so, why? If not, why not?
Ask what lessons you’ve learned from trying to understand this data. Do your findings match the theory you’ve been learning? Do your findings contradict them? Explain why, in either case.

Economics for Business: Book Reviews

Stephen — Tue, 31 Aug 2010 23:48:14 +0000

Instructions. You must produce a 5 page book review of one of the books below, and submit the hardcopy to the box marked “EC4004 Book Reviews”, near the Department Office, KB 3-22a, by Monday, November 1st, at 3pm.

You must also email a copy of your .doc file to stephen.kinsella@ul.ie by that date and time, using the file naming convention EC4004_BookReview_Yourname_yourstudentnumber.doc. No lateness will be tolerated. You will lose 10% of your mark per day of lateness. This is worth 25% of your grade. You must relate the subject matter of the book to Ireland’s current economic situation. What is there in this book that could inform the current government, or its policy makers? To get a good grade, you must show that you’ve thought about the book’s relevance to today’s Irish economy. I do not want regurgitated wikipedia articles. I want your thoughts. Do not plagiarize, I will check for plagiarism using Turnitin.com. You’ll receive written feedback on your book review. I urge you to buy the book, read it several times, write notes, talk about it with your friends, think about the book, and write a review of not less than 4, and not more than 5, A4, typed pages, with 1.5 line spacing, 1 inch margins, in font Times New Roman, with your name, your student number, your email, and the title of the book at the top of the first page. Staple the pages together in the top left hand corner. There is no need for report booklets or binding. The links below take you to bookdepository.co.uk, a source of cheap books. The price of shipping is included in the price you see. Of course feel free to get the books wherever is cheapest. I want you to buy them, because they are classics, and because you should return to them over the years. That’s why they are not bought for you en masse in the library. Because I don’t know how many of you will choose each book, I haven’t pre-ordered them for you in the bookshop. You’ll have to go online, or go looking for a book yourself. A few copies may be held by the bookshop.

Books. Buy (and I mean buy) one of:

JK Galbraith, The Great Crash of 1929.
Nassim Taleb,The Black Swan.
Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds.
John Steinbeck, The Grapes of Wrath.
Robert Heilbroner, The Worldly Philosophers.
FA Hayek, The Road to Serfdom.
Neil Postman, Amusing Ourselves to Death.

Here are some tips on writing your book review.

Guidelines for Writing Book Reviews

A book review is not just a summary of a book. It is a digestion. You are to read the book, discuss it with friends, if you have any, with imaginary ones if you don’t. You are to make copious notes, think about the book when out doing other things, and try, as much as possible, to relate your own experience (and, importantly, the experience of the Irish economy today) to the book’s subject matter. You will find many things online about these books. Ignore them. I want what *you* think about the book, and what you take from the book. If you give me a report taken from wikipedia or somewhere else, I’ll fail you instantly. Remember, I’ll be checking each review through our plagiarism-spotter, Turnitin.

How do I write a book review?

First, just read the book. Don’t take any notes, just read it as you would any other book. Get a sense of it.

Second, re-read the book, only this time, with a pen and a pad beside you. Take notes, now that the text is familiar to you. This will be much quicker than trying to read and understand and take notes all at once. Ask yourself: What is the structure of the book? How does the author develop their argument? What is the context of the book? When was it written? Why does the author choose to address that particular problem, or use that particular subject?

Now, begin talking about the book with other people. Tell your parents and friends about the book. Describe it to them, ask them for their thoughts on the subject matter of the book. Note what they say. Remember your job is to make the connections between this book and today’s Irish economic experience.

Begin writing. Open a word processor, save the file after the first word to at least 2 places. Call the file EC4004_Bookreview_Yourname_Yourstudentnumber.doc. Keep saving the thing in 2 different places (USB key, email to yourself, Dropbox, whatever) every 10 minutes. Remember, your implied reader is another classmate who hasn’t read the book. First, in a paragraph or two, summarise the book. Then, write about the author. An author is a part of their book, and vice versa. Now tell us what you think about the book: does it achieve its aims? Is it well written? Don’t tell me if you enjoyed it or not. That will be obvious from the prose. Tell me your thoughts on the book (this will be helped immensely by your discussions with friends). Tell me how, exactly, you think this book can help explain or inform what is going on in the Irish economy at the moment.

Finally, once you’ve finished your first draft, spell check it, print it out, and read it out loud to yourself. When a sentence sounds odd, change it. Reread it again. Now read Deirdre McCloskey’s Economical Writing (or my one page notes of her book) to polish your submission.

Closed: Back to blogging September 1st

Stephen — Tue, 08 Jun 2010 15:44:30 +0000

I love writing this blog, and keeping in touch with interested and interesting people through it, but this blog isn’t my main priority–my research is. Try as I might, blogging/tweeting/etc does get in way of doing serious work, partly because it uses the same part of my head as research, partly because of the time it takes to keep everything updated, and partly because blogging is a lot easier to do than research. So, to get some serious work done in the next 3 months before teaching starts again, I won’t be tweeting, blogging, or even emailing. No media-whore stuff either. Everything about ‘out there’ will have to wait for a while. I hope everyone understands, and I look forward to talking with you again soon.

Steve, 8/6/10.

Update. So, massive success on the no-twitter or blogging policy. Massive fail on the no-media whoring. Managed to ‘appear’ in the LA Times, the Examiner, the S/Indo [1][2], the SB Post, which I can’t find a link for, the Rabo Blog, the Storyful Blog, and a few other places like UL Links. Did a fair few radio gigs for RTE, Newstalk, and Clare FM as well, even when I didn’t want to. Those radio producers are charmers, it’s true. Back to regular twitter/blog service, with a new blog skin and a different angle, next week.

Irish Debate: The Role of Economists in Irish Public Life

Stephen — Tue, 08 Jun 2010 15:08:40 +0000

You can watch my first Irish debates here.

Here (.pdf) are the notes I made before the talk, maybe they’ll help you make more sense of what I was trying to get across during the talk. Thanks again to everyone who showed up to comment & engage, and thanks to Joe Garde for facilitating the event and providing the service the debates take place on.

Teaching Economics to Journalists

Stephen — Tue, 08 Jun 2010 15:02:13 +0000

An Audioboo on teaching journalists the rudiments of economics, finance, and perhaps how not to be a sucker when it comes to listening to economists do their thang. Data is the way forward folks.

4 minutes on curriculum redesign

Stephen — Fri, 04 Jun 2010 14:02:55 +0000

Simon Halliday asked for my thoughts on curriculum redesign. So Simon, combined with audioboo and a very busy day trying to get a book written, is responsible for what follows. More than happy to discuss these ideas, or lack thereof, in the comments.

The basic idea comes down to trusting the experts to know what’s best in their subject areas, but to force them to iterate a curriculum every 7 years or so. Leave loads of space for faculty and students to develop their own modules and seminars within any new curriculum, and never sacrifice the practical elements of any course (such as UL’s COOP). Or something.

Audio Boo and the Choice of a Textbook

Stephen — Wed, 02 Jun 2010 12:55:51 +0000

Hold your horses folks, it’s not quite as boring as it sounds. Choosing a textbook for 300+ students is no joke, which is why I’m thinking about it on June 2, 2010, 4 months before the course starts. Bernie Goldbach also introduced me to audio boo today, so here’s my first ‘boo’ on the subject of choosing a textbook. I’m not sure what I’ll use this thing for, but it’s really easy to set one up and get started, and I may bring this into my lectures next semester, we’ll see.

The role of economists in Irish public life

Stephen — Tue, 01 Jun 2010 15:59:20 +0000

My first Irish Debate will go ahead on Tuesday, June 8th, at 10am. All are welcome to log in and discuss this issue. Let’s focus in this first debate on the role of economists in Irish public life. They are frowned upon, looked up to, looked down upon, cited, feted, ignored, championed, embraced, and, occasionally, they get listened to. Does the economics profession deserve its position in Irish public life? Should economists with poor track records be listened to at all? What about economic analysis? Should there be more of it in Irish public life, or are economists just apologists for the mainstream?

Looking forward to talking with you.