Economic cycles have been observed since Biblical times
("Indeed seven years of great plenty will come throughout all the
land of Egypt; but after them seven years of famine will arise, and
all the plenty will be forgotten..." Gen. 41). Then and
now, people would try to adjust and figure out what happened.
Since the economy is complex and not everyone thrives or suffers at
the same time it's difficult to know whether the down- or upturn is
more than just a passing phase. In fact, it takes study and
an official declaration from the National Bureau
of Economic Research to know if we are in or out of a recession.
The current recession is the longest
since the Great
Depression of the 1930s. For a region like upstate New
York, which was already lagging the nation in economic growth, it
has been a time of retrenchment and the loss of some
well-established businesses. (The Triple Cities weathered the
1930s in somewhat better shape than the rest of the nation).
Moreover, today's "Great Recession"
signalled a change in some of the structures and practices that
have been a part of economic activity for many years -- either by
government action or instituted by the business community itself --
and like much else these days it is global in scope. With
crises in investment, real estate, education, government spending
and much else, life will not be the same coming out of this episode
as it was going in.
Neither will the science of economics
go unchanged. Although warnings had been heard for many years
about the vulnerability of such instruments as
subprime mortgages and derivatives,
few expected the general economic collapse that brought down
century-old brokerage houses and brought on massive government
intervention in the United States and elsewhere.
The dislocations suffered by the
markets -- and the widespread personal pain -- has caused real
soul-searching in the field of economics, and a questioning of
the principles and assumptions that economists use. That has
brought behavioral economics into the ascendancy and with it the
ideas of economist Robert
H. Frank. Dr. Frank refers to himself as an "economic
naturalist". He is Henriettta Johnson Louis Professor of
Management and Professor of Economics at Cornell University's
Johnson Graduate School of Management. In a field often
overburdened with charts, formulas and grand designs, Robert Frank
specializes in micro- and behavioral
economics, inquiring into personal motivation and social trends
as much as into classic cost/benefit analyses. Professor
Frank has shaken up the teaching of economics by deemphasizing
mathematical aspects in favor of a case-history aproach. He
also believes that
Charles Darwin's ideas on competition and "survival of the
fittest" are more pertinent to economics today than the seminal
views of Adam Smith.
Robert Frank writes a regular Economic
View column for The New York Times. His earlier
books include
"The Winner-Take-All Society" and "Luxury Fever".
"Principles of Economics" was co-authored with Ben Bernanke,
now chairman of the Federal Reserve and a leader in the study of
macro-economics. Dr. Frank was also a guest on NPR's
"Talk of the Nation".
In
"The Economic Naturalist's Field Guide: Common Sense Principles for
Troubled Times", Robert Frank brings back many of the columns
he's written in the Times during the past dozen years touching on a
wide ramge of subjects, including salaries of hedge fund managers,
Gross Domestic Product as a measure of well-being and income
inequality. The articles about the recent economic downturn
and about health care financing bring the book up to date with
today's major issues. He advocated a single-payer health
insurance system in a Times column in 2007 and followed through on
that proposal:
The first step is to acknowledge that
insurance companies are not evil, that they invested in good faith
under tax laws that favored employer-provided health
insurance. To put them out of business overnight would be
unjust.
Even so, they are not entitled to a
permanent license to operate a system that has become
economically unsustainable. The move to a single-payer system
would save far more than enough to compensate insurance companies
for lost profits. Compensation for losses could start at 100
percent, then be gradually phased out as companies shifted
investments elsewhere. --from "The Economic
Naturalist's Field Guide"
Robert Frank joins Bill Jaker on OFF THE PAGE to
share his common-sense principles and respond to listeners'
questions. To join in the discussion, call during the live
1:00 PM broadcast to 888/359-9754 or post a comment here to OffThePage@WSKG.ORG.
