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Obama Nom Economist Wins Nobel Prize

From an elated Associated Press:

3 win economics Nobel for job market analysis

By Louise Nordstrom And Karl Ritter, Associated Press Writers
October 11, 2010

STOCKHOLM – Two Americans and a British-Cypriot economist won the 2010 Nobel economics prize Monday for developing a theory that helps explain why many people can remain unemployed despite a large number of job vacancies.

Well, isn’t that handy?

Federal Reserve board nominee Peter Diamond was honored along with Dale Mortensen and Christopher Pissarides with the 10 million Swedish kronor ($1.5 million) prize for their analysis of the obstacles that prevent buyers and sellers from efficiently pairing up in markets.

Diamond — a former mentor to current Federal Reserve chairman Ben Bernanke — analyzed the foundations of so-called search markets, while Mortensen and Pissarides expanded the theory and applied it to the labor market.

Their work sheds light on why the classical view of markets, in which prices are set so that buyers and sellers always find each other and all resources are fully utilized, doesn’t always apply to the real world.

One example is the housing market, where buyers can struggle to find new homes even though there are a number of unsold properties available.

Another is the labor market. Because searching for jobs takes time and resources, it creates friction in the job market, helping explain why there are both job vacancies and unemployment simultaneously, the academy said.

"The laureates’ models help us understand the ways in which unemployment, job vacancies and wages are affected by regulation and economic policy," the citation said.

The hell you say. Has anyone alerted Mr. Obama and the Democrats in Congress about this revelation?

Their work resulted in the so-called Diamond-Mortensen-Pissarides model, a frequently used tool to estimate how unemployment benefits, interest rates, the efficiency of employment agencies and other factors can affect the labor market.

"One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times," the academy said.

Amazing. How come nobody ever noticed this before? Still, it’s a step up from blaming Bush.

Diamond, 70, is an economist at the Massachusetts Institute of Technology, and an authority on Social Security, pensions and taxation.

President Barack Obama has nominated Diamond to become a member of the Federal Reserve. However, the Senate failed to approve his nomination before lawmakers left to campaign for the midterm congressional elections.

Yet another shock.

Senate Republicans have objected to what they see as Diamond’s limited experience in dissecting the inner workings of the national economy.

But now that he has a Nobel Prize he cannot be denied.

Bernanke was one of Diamond’s students at MIT. When Bernanke turned in his doctoral dissertation back in 1979, one of the people he thanked was Diamond for being generous with his time and reading and discussing Bernanke’s work

That’s reassuring. After all, would we have even have had the wonder of the TARP bailout without the brilliance of Mr. Bernanke?

Diamond wrote a paper in the early 1980s that found that unemployment compensation can lead to better job matches. Workers "become more selective in the jobs they accept" because of the employment aid. And, that makes for better matches and increases efficiency, he found

And here we were thinking that unemployment compensation might help people avoid getting a job. Which is probably why we have never even been nominated for a Nobel Prize in economics.

Clearly, the longer and higher unemployment benefits are, the better off the economy will be in the long run. (Was Nancy Pelosi also considered for a Nobel Prize in Economics?)

He told a Senate committee during his nomination hearing in July that a central theme of his research has been how the economy deals with risks that affect both individuals, and the entire economy.

"In all my central research areas, I have thought about and written about the risks in the economy and how markets and government can combine to make the economy function better for individuals," he said in that hearing.

We can’t wait until Mr. Diamond’s brilliant theories are implemented at the Federal Reserve and the economy skyrockets.

This article was posted by Steve on Monday, October 11th, 2010. Comments are currently closed.

8 Responses to “Obama Nom Economist Wins Nobel Prize”

  1. proreason says:

    Economists – 21st century witch doctors.

    They are particularly skilled at ignoring reality in favor of their pet theories.

    Their favorite word is “unexpected”.

    If you are sick and a doctor says you have appendicitis, but another says you have a brain tumor, and yet another says you have a sprained ankle….you quickly conclude that doctors in your area are worthless and either go somewhere else or refuse to accept any treatment.

    But when economists do the same thing, as they ALWAYS do, they are paid millions and become Nobel laureates.

    And they say the Ruling Class doesn’t always stick together.

  2. GetBackJack says:

    I can analyze the JOB MARKET. It sucks. Why? Because of the federal government meddling in the affairs of business. Because nearly one hundred years of Republican complicity with Democrat c=screwing employers, underwriting Union goons, flipping employers into Give All Provide All piggy banks al,l sides of society then bash with the their Hammers Of Demands to Give Give Give. The job market sucks because business has been legislatively perverted into meals on wheels and Social Services. The job market sucks because the Democrats and their Republican hireling boot licking lackeys choose to force business to corrupt itself in order to try and survive Congress.

    The job market sucks because of Congress.

    There. That wasn’t so hard.

    • untrainable says:

      For those in Rio Linda. The more democrats there are in government, the fewer jobs there will be for everyone outside of government. Creating jobs is simply a matter of putting democrats on the uneployment line.

      We’ll call that the “Untrainable Model of Employment”. YEARS of independent research by several untrained non-scientists has gone into the creation of this model (and a few seconds to read GBJack’s post above) Where’s my 10M kroner check? I’ll split it with ya Jack.

  3. Rusty Shackleford says:

    So, with the prize in-hand, we now have a new “Captain Obvious”. Things that are complete common sense in print. “Economics For Dummies” will soon be out in paperback; Order yours today! $14.95

    Truly, to get this award for stating the plain. And don’t tell me that the triumvirate of “judges” in the Nobel camp aren’t trying to manipulate outcomes.

  4. Liberals Demise says:

    I remember when getting the Nobel Prize was worth something.
    A prize for the economy? With dingleBarry steering this ship over the shallow reef?

    Another waste of dead tree material.

  5. U NO HOO says:

    How does paying someone who isn’t working good for the GDP?

  6. hushpuppy says:

    I don’t pay much attention to North American economic advisers or prognosticators. European newspapers have been a hell of a lot more blunt about the state of the world’s economies. Especially the Irish press.

    In fact we’d been reading about Fanny, Freddy and the entire mortgage insanity for about a year prior to it hitting the fan and the media here. The very first European bank to go under was the Royal Bank of Scotland.

    Interviews with the head of the RBS correctly forecasted the chaos that enveloped us. – a great deal of which could be traced back to – you guessed it – bad decisions beginning with Clinton who had signed into law measures to pressure banks into giving loans to anyone who wanted one to buy a home even if they didn’t have the money for a downpayment – or a job – specifically encouraging people on welfare to apply for a loan reasoning that welfare be deemed as a reliable and steady income. To the ever-calculating Democrats the ‘gratitude’ of these new homeowners would translate into votes. Lots of votes.

    Most of this is already well known but there are other factors as well.

    Articles mentioned debt spreads, how much debt and loss was assimilated or bought by other banks as part of the package they bought from still other banks. That way the damage from any theoretical losses would be balanced against money made from good investments and stable interest rates. All banks were aware of the potential losses but they were too busy spreading the liabilities and trusting in assets. That was the theory but not the reality.

    The financial/banking ‘domino effects’ were being written about and warned against by European economists for the better part of a year before anyone here read or saw anything, and well before the Fanny/Freddy scandal broke.

    The European press has run articles stating the US economy is on artificial life support due to Obama’s decisions and his willingness to bankrupt America in the name of ‘spreading the wealth around.’ They know their socialist experiment was a disaster and don’t understand why Obama wants to pursue socialism (or his penchant for bowing to world leaders!)

    If the US Treasury were to stop artificially propping up the economy, the economy would irretrievably flat line and there’d be a global paradigm shift.

    Countries that had traditionally traded with us and acknowledged the strength of the American dollar as world standard currency would begin investing in European trade and commerce knowing it was only a matter of time before it would then out-perform the US dollar.

    Presently countries such as Saudi Arabia and the UAE group have already begun the transition to disengage themselves completely from US-led trade and investment dollars, and are now investing in alternative currencies such as the Euro.

    Should China decide at any time to issue a demand and called their loan against the States for buying our debt, we’d be up a creek unable to repay. As it is China isn’t at all happy at having to continue to buy American debt when they are themselves feeling the pinch of an economic downturn. Obama isn’t helping matters by continuing to insult the Chinese.

    Europe has faced the muslim problem both historically and currently – and have begun to push back against the islamification of their mutual Judeo-Christian traditions. Countries that are heavily islamic include Norway which is now under Sharia law, Sweden – whose cities such as Stockholm and Malmo are almost entirely muslim, France which some estimates place as high as 40% muslim, England, Ireland and Scotland are heavily islamified, and Germany too has a very high rate of muslim infiltration. And it chafes against the traditional Catholic heritage.

    There is a cultural war brewing against islam because even the Pope has been reminding Europe about her Christian roots.

    …although Protestants also see themselves as Christian, the RC Church views them as heretics… and so the Pope has invited all the ‘breakaway’ religions (Protestant, Anglican, Episcopalian, Lutherans et al) to re-unite with the Church at Rome. You’d be amazed at how many churches have gone back and re-joined the Roman Church!

    Part of the ‘family reunion’ of churches also include the Russian, Greek and other Orthodox churches who have embraced the Pope’s invitation to bury the hatchet and be aligned with the Vatican. There are lots of photographs of various church leaders hugging, smiling and embracing the Pope.

    Europe wants to separate herself from America – from the culture, the music, trade, industry, economy, and morals. When the shift from America to Europe occurs, the shift away from the dollar to the Euro occurs, Europe stands ready to take the reins and be the world’s powerhouse again as it was once before, to ‘push back’ against islam’s influences within her borders, and look to the Roman Catholic Church giving Europe her stabilizing influence with the core of power in the EU.

    The end result will be an America completely dead financially with nowhere to turn to for help. If people think the times we’re in are difficult, ‘they ain’t seen nuthin’ yet. Europe ‘sees’ what’s happening to America and the bad decisions Obama is making. They ‘see’ that America is immoral and unstable. That’s why they’re building their own future and head in a direction independant to ours, and why in the end we’ll stand alone and broke.

    This is such the realty that politicians in Europe and within the EU in particular are not only openly discussing it, but are in the process of implementing those changes now. The result will be a prosperous, stable Christian-based economy to the world. Islam will find themselves in the same place they were in vis a vis the Crusades: Europe fought muslims to retain their Catholic heritage and moslems will fight back. If you remember your European history, it was the Germans and Austrians who successfully halted the muslim invasion and to this day every time we bite into a crescent roll it is a symbolic reference to the destruction of the muslim hoards.

    Lesson? Start reading European newspapers – they pride themselves as being blunt and truthful and they have a healthy distrust of political correctness unlike the msm.

    Rush has often quoted from British newspapers, and we’d do well to start paying attention to the warnings emanating from European press. Our economic future is tied into theirs.

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