"DRM on ebooks is dead. (Or if not dead, it's on death row awaiting a date with the executioner.)
"It doesn't matter whether Macmillan wins the price-fixing lawsuit bought by the Department of Justice. The point is, the big six publishers' Plan B for fighting the emerging Amazon monopsony has failed (insofar as it has been painted as a price-fixing ring, whether or not it was one in fact). This means that they need a Plan C. And the only viable Plan C, for breaking Amazon's death-grip on the consumers, is to break DRM.
"If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").
"And so they will deep-six their existing commitment to DRM and use the terms of the DoJ-imposed settlement to wiggle out of the most-favoured-nation terms imposed by Amazon, in order to sell their wares as widely as possible.
"If they don't, they're doomed. And all of us who like to read (or write) fiction get to live in the Amazon company town."

"I therefore have no difficulty in defending Elsevier’s right to price its journals as it sees fit. Equally, I have no difficulty in understanding the decisions of individuals and libraries not to subscribe to Elsevier’s journals. What I strongly dislike is the Chief Executive claiming that the objections of Elsevier’s critics are based on “misstatements or misunderstandings of the fact”. He should be honest and state that in many cases his journals have an element of monopoly power which as a commercial, capitalist company he is determined to exploit as fully as possible. I would respect him were he to say that. For him to claim otherwise is simply false – and as a journal editor it is my job to expose those who speak falsely. That responsibility extends to rejecting comments made by my Journal’s publisher’s Chief Executive, just as much as it extends to rejecting articles that make unsubstantiated and unwarranted claims unsupported by the evidence."

"distrust of traditional lending institutions such as commercial banks led some borrowers to seek out brokers from their own communities whom they felt they could trust. But these brokers were operating under high-powered incentives to inflate rates and fees and guide borrowers towards subprime products even when they were eligible for cheaper alternatives. The trust that was placed in the brokers allowed them greater flexibility to respond to these incentives and left borrowers worse off than the would have been if they had been more suspicious or better aware of the incentive structures in place.
"Viewed in this manner, the subprime saga has some broader implications. From the point of view of a company operating in multiple local markets with a diverse customer base, the strategy of giving local employees or contractors the discretion to adjust prices can be very profitable. This is especially so if these employees appear trustworthy to their customers, but are not in fact deserving of such trust. As Groucho Marx is reputed to have said: 'The secret of life is honesty and fair-dealing. If you can fake that you've got it made.' For products involving frequent repeat purchases by the same customer, reputation effects and competition can limit the degree of price discrimination. But the purchase of a home is an infrequent transaction for most people, and the complexity of the loan product precludes easy comparison with alternatives on offer. Trust then becomes a key determinant of pricing and transaction volume, especially when strong and hidden incentives for the betrayal of trust are in place.
"Betrayal also leads to the erosion of trust over time. It could be argued that trust is one of our most valuable public goods, substantially lowering the costs of transacting. In the complete absence of trust, the resources that would need to be devoted to monitoring would be prohibitive and many organizations and markets would simply not exist. Trust also comes naturally to most of us, based on simple cues such as those revealed in Reid's interviews. High-powered incentives to secure and then betray such trust are therefore costly not just to the immediate victim, but also to the community at large. This may be one of the less visible consequences of the subprime crisis."

"This doesn't eliminate the question of whether federal flood insurance is a good idea, whether any of it should be subsidized, or whether the public/private nature of NFIP [National Flood Insurance Program] is a good idea. But it does suggest that NFIP isn't flatly nuts. There are millions of dwellings currently insured for flood damage in over 20,000 towns and cities. There's just no way to take a wrecker to all those houses and raze all those towns. That means insurance has to be available to them, and the only entity capable of spreading the risk widely enough to make flood insurance efficient is the federal government. Thus NFIP."

"For the kind of profession where a practitioner is handling money or valuables for not-necessarily-sophisticated customers, like bail-bondsmen, insurance brokers, real estate brokers or even the auctioneers he mentions, there's a huge potential for fraud that realistically can't be addressed by generic law enforcement, even if the money that's now spent on licensing were redirected to prosecutors. ..."

"Meanwhile, though I’ve seen a lot of people mocking the Mars bit, Chavez is clearly correct that actually existing capitalism is putting the world on a path to catastrophe. If scarce natural resources like water and the atmosphere’s capacity to absorb carbon emissions were actually being priced correctly, there’s no reason hypothetical capitalism would be unsustainable. But that’s not how the contemporary global economic system works, and unless we change it we’re going to face big problems. Unfortunately, the conservative movement in America is rabidly opposed to even modest efforts to conserve fish stocks through a system of property rights, being committed instead to an ideological vision of relentless exploitation of the commons."  --- How much of the right comes down to taking the tragedy of the commons as an instruction manual?

Unintended consequences of hubristic social engineering by ideologues (with finance degrees), vol. CCXIV.

"will assert with truculence and jutted jaw that the derivation of commercially relevant and actionable insurance information from genetics is much, much more difficult than that, and furthermore, will tentatively and politely advance the possibility that to "accurately assess the cost of medical treatment over a lifetime" might end up being at least as much of a tough-nut as the socialist calculation problem.  As the rant linked above tries to point out, the big issue here is the "Titanic problem" (from Hitchcock's aphorism about it being possible to make a suspenseful film about the Titanic given that everyone knows that it sinks - they don't know when). Knowing genetic propensities to develop various conditions is just about one tiny baby step along the way to making a cost estimate ..."

Especially: not knowing what treatments will be available, or how costly, 20--40 years after the genetic test is performed! (Another teaching example for 350, I think.)

Why indeed? "[O]ne of the most-pernicious but least-discussed trends of the past thirty years, the drive to replace defined-benefit pensions with subsidized savings/investment schemes like 401(k)s. ... average people have no real ability to invest money in an effective way. ... the flipside of small investors not being able to manage our own investments in a sound way is that having small investors participate in the market can only serve to undermine financial markets’ role in providing corporate governance and allocating capital. Now defined-benefit pensions have declined in the private sector for some pretty good reasons. It’s both personally liberating and economically efficient for there not to be an expectation that you’ll work at the same place for decades. But the substitutes we’ve dreamed up—tax subsidies for middle class stock ownership—are regressive and don’t really make sense."

"Most work for most people in the developed world is about coordinating their actions with those of others – colleagues, partners, underlings, bosses, customers, distributors, suppliers, publicists, regulators .... Information collection and transfer, while often important and sometimes essential to the co-ordination of actions, is not usually itself the main game." Consequently, we have not an "Information Society" but a "Joint-Action Society, although this does not quite capture all that is intended." Resonates oddly with the recent Cuff, Permuter and Cover paper on "coordination capacity".

"Take Household Finance in the early 2000s. Their aggressive lending practices where people would learn after the fact that they were mislead to how much their total monthly payments were ... led to successful settlements in Colorado, Georgia as well as a $484 million in fines joint settlement with a group of attorney generals, the largest consumer fraud settlement in U.S. history. ... That’s a lot of money, until you divide it among the amount of households that were ripped off. Even after legal fees, its hard to image it wasn’t a profitable experience. So Household Finance has to pay the largest consumer fraud fines in history. I bet you think that the investment community and elite financial institutions wouldn’t look twice at it. ... One month later Household was acquired by HSBC, the London financial giant, for $16.4 billion.... Instead of driving out fraud, the market realized, correctly, that there is a ton of money in consumer fraud, and it rewards it handsomely. "

Stiglitz expounds on the current crisis, under the pretense of reviewing a book about Keynes.

Huge PDF. Looks interesting.

So stylized it hurts; but it makes the point. (Application to prediction markets is obvious.)

"Somewhat more importantly, the idea that the market for gasoline shows that we can trust the private sector to give us "Consumer choice and honest competition" is beyond bizarre. Ever heard of Standard Oil professor Mankiw ? The fact is that it requires constant struggle to preserve competition and a market based approach of offering a public plan has advantages compared to a litigation based approach."

This should make for some ... interesting discussions the next time DeLong gives a talk at Harvard. (Or make sure it will be a long time before he does.)

The remarks about chain bookstores are astute. But I am not sure about the incentives to change. E.g., I don't think there's a hardware store other than Home Depot in a five mile radius of my house. If another one opened, the chain has the resources (by cross-subsidization) to temporarily price it out of the market...

Stiglitz's Nobel Prize lecture, 2001. VERY good, even allowing for the somewhat Stiglitz-centric tone (and the surprising number of typos; you'd think the Bank of Sweden could afford some copy-editors).

James Wimberley calls for more leisure and less vice. (Also, the efficiency-wage-leads-to-longer-hours argument seems like it might form the rational kernel of what Marx was trying to say, in mystified form, by talking about surplus value.)

The description of the folly of the retail part of the auto-market is spot on; I'm afraid I don't agree that letting the automakers themselves die is a good idea.

School vouchers: an experiment in ideology-driven, top-down social engineer which, empirically, fails. At best, the threat of it _may_ have motivated some useful reforms by public schools.