Week links (6)

Another edition of some of the finest texts in the blogosphere for the past week or so:

1. "Australian PM makes pitch for budget cuts", Wall Street Journal. Finally a Prime Minister with some sense:

“This will not be a budget for the rich or the poor ... This will be a nation-building budget, even though it cuts spending, because you can’t build a nation spending money you don’t have and that’s more than you need to borrow.”

And this all despite the fact that Australia's budget deficit is far lower than that of the US and most European countries (down at 1.9% of GDP), plus their debt is among the lowest in the developed nations. 

2. "Recovery has created far more low-wage jobs than better paid ones", NY Times, according to the new report from NELP.

Source: NYT

Could insourcing partially explain a part of this trend? Or is the problem much deeper? 

3. Bryan Caplan: "Cowen and Crisis Reconsidered", EconLog - Caplan reevaluates Higgs's growth-of-government-size-during-crisis hypothesis by looking at Sweden and Tyler Cowen's critique of the hypothesis. 

4. Paul Krugman: "Frustrations of the Heterodox" The Conscience of a Liberal (NYT) - Krguman takes a hit at heterodox economists:

"You fairly often find heterodox economists insisting that to accept the idea that capital and labor are paid their marginal products, even as a working hypothesis to be modified when you address things like executive pay, is to accept that high inequality is morally justified ... this complaint is, in its own way, as much of a distortion as the right-wing claim that anyone who so much as mentions inequality is a Marxist."

5. Prasenjit Basu: "China's crisis is coming - the only question is how big will it be", Financial Times. I'm glad to see he's using most of the arguments I've used in some of my previous texts (see here or here), in addition to this one:

"The country is in the middle of by far the largest monetary expansion in history. On one widely used measure, M2, its money supply has tripled in the past six years, an expansion four times as large as that of the US over the same period."

6. Scott Sumner: "A pragmatic view of causation", Econlog.  A few very good points on causality using very different examples.

7. The Piketty reactions - many economists and commentators, from Tyler Cowen at Foreign Affairs to Paul Krugman and David Brooks at the NY Times started publishing their reviews on Piketty's new book "Capital in the 21st century". The books has garnered much attention, even more than the author hoped for, however this is hardly surprising - the reinvigorated left is using it as a main argument to justify high top marginal taxation. 

I have read many both praises and criticisms of the book, yet I haven't read it myself. But I certainly intend to. It will move its way up on my book pile.