Tuesday's Top 10 with NZ Mint: What money can't buy; Elmo; organised chaos; Europe is toast; coal is the future; a standup economist

Here's my Top 10 links from around the Internet at 10:00 am today in association with NZ Mint. Bernard Hickey is on vacation and won't be back until early May. Hope you had a great holiday weekend and are now ready to get back into it.

I welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

See all previous Top 10s here.

1. What money can't buy
Michael J. Sandel, a political philosopher at Harvard, thinks that today, faith in 'markets' is in question. The financial crisis did more than cast doubt on the ability of markets to allocate risk efficiently. It also prompted a widespread sense that markets have become detached from morals, and that we need to somehow reconnect the two. But it’s not obvious what this would mean, or how we should go about it.

This is a debate we didn’t have during the era of market triumphalism. As a result, without quite realising it - without ever deciding to do so - we drifted from having a market economy to being a market society.

The difference is this: A market economy is a tool - a valuable and effective tool - for organising productive activity. A market society is a way of life in which market values seep into every aspect of human endeavor. It’s a place where social relations are made over in the image of the market.

The great missing debate in contemporary politics is about the role and reach of markets. Do we want a market economy, or a market society? What role should markets play in public life and personal relations? How can we decide which goods should be bought and sold, and which should be governed by non-market values? Where should money’s writ not run?

2. Can 'finance' be about both reducing risk, and reducing inequality?
The work of 'democratising Wall Street' has been a work-in-progress for a while now - since 1811 in fact. Robert Shiller, who is professor of economics and finance at Yale, thinks crowdfunding is an idea that will make a real difference to the way capitalism works. He writes in support of the idea:

The essence of finance is that contracts should benefit all parties. We may be able to revise our entitlement programs, creating them in a more refined way, using data and analysis to account for the life situations of individuals while still retaining the simple concept of fairness.

Likewise, financial innovation can make our responses to catastrophes more intelligent. It can channel our gambling impulses into something more constructive. It can make speculative bubbles less of a problem, and help make prices in financial markets better reflect fundamental information.

3. Making money with Elmo
Sesame Street tries to teach kids the difference between 'wanting' something and 'needing' something. They also tackle the problem of 'saving'. This may be of more benefit to adults (and public policy gurus) than pre-schoolers however. 

4. Rooting for the forces of 'organised chaos'
There is a war under way for control of the Internet, and every day brings word of new clashes on a shifting and widening battlefront. Governments, corporations, criminals, anarchists - they all have their own war aims. Michael Joseph Gross lays out the stakes in a conflict that could split the virtual world as we know it. But the story of the War for the Internet, as it’s usually told, leaves out the characters who have the best chance to resolve the conflict in a reasonable way. Think of these people as the forces of Organised Chaos. They are more farsighted than the forces of Order and Disorder.

Beyond this core agenda, the forces of Organised Chaos, by and large, think that the Internet should be allowed to evolve on its own, the way human societies always have. The forces of Organised Chaos have a pretty good sense of how it will evolve, at least in the short term. The Internet will stratify, as cities did long ago. There will be the mass Internet we already know - a teeming bazaar of artists and merchants and thinkers as well as pickpockets and hucksters and whores.

It is a place anyone can enter, anonymously or not, and for free. Travel at your own risk!

But anyone who wishes can decide to leave this bazaar for the security of the bank or the government office—or, if you have enough money, the limousine, the Sky Club, the platinum concierge. You will always have to give something up. If you want utter and absolute privacy, you will have to pay for it—or know the right people, who will give you access to their hidden darknets. For some services, you may decide to trade your privacy and anonymity for security. Depending on circumstance and desire, people will range among these worlds.

5. The energy source of the future is ...
 ... coal (??!!??). God help us all. Where is the ingenuity? Why do the BRIICS think it is ok to repeat mistakes? I know its easy for middle-class westerners to think dark thoughts about what other countries do to power their economies, but still - it can't end well. We really, really need some ingenuity.

6. The Triumph of the City
Economist Eric Crampton reviews the new book by economist Ed Glaeser. He draws lessons from it for New Zealand, and Christchurch in particular.

7. Why the English gave up some good bits of France to save £10,000
Most historians naturally tend to focus on the more dramatic aspects of Joan of Arc’s life - her inexplicable prowess in battle, her mesmerising testimony at her Trial of Condemnation, her horrific death by fire in Rouen. But her most profound contribution to France's ultimate victory may well have been her impact on English fiscal policy. She had shown up with a ragtag army and beaten the main English army in France.

England was obliged to put a new army hurriedly into the field, and to bribe its ally, the duke of Burgundy, to remain loyal in order to have enough troops to hold Paris.

Taken together, these unexpected expenses gave rise to yet another highly regrettable development. For the first time since the invasion had begun 14 years before, the English royal budget showed a deficit in the amount of £10,000.

Charles was the new king of France and was a fiscal disaster. He was in so much debt that he had to hock the tapestries off his wall to finance his wedding. He couldn’t pay his soldiers. He couldn’t ransom his brother-in-law. He’d been running deficits for so many years he wouldn’t have known a balanced budget if it got down on one knee and paid homage.

But he understood the value of the friendship of the duke of Burgundy, and so did his creditors. Through back channels, Charles offered the duke an enormous bribe to change sides, which the duke graciously accepted. Although it would take another 15 years to push the English out of France completely, in that instant England lost the war.

So, to save £10,000, the English gave up Normandy, Maine, Gascony, Bordeaux and Paris.

8. European fantasy - or, why John Key is wrong
Despite political promises to return Europe to 'growth', it is unlikely to happen. Simple demographics, really. Growth (or at least the sustainable variety) is typically a long time in the baking, and dependent on two main ingredients: more workers and higher worker productivity. And much of Europe is short on the former. That has big implications for Europe’s future. Megan McArdle spells it out clearly:

Pension and other welfare benefits, promised long ago when the workforce was expanding quickly, are at the heart of Europe’s current fiscal convulsions, which are perhaps a harbinger of worse to come.  The 2008 crash and its aftermath have merely moved up a long-inevitable implosion by 10 to 15 years.

European nations “had unrealistic systems that were eventually going to cause a crisis."

These difficulties are why almost everyone who studies the interaction of rich-world demographics and economic growth recommends raising the retirement age and forcing people to save more on their own, well before a debt crisis hits.

“Ageing is a good thing,” Canning says. “It means health improvements and longer lives. We only think it’s a bad thing because we’re trying to hang on to these institutions. We should be welcoming these changes, but changing our institutions to match.” He and Bloom, among others, are urging countries to use their demographic dividends wisely - to reinvest them in the things that make their workforces more productive. If they do that, perhaps living standards can keep rising.

9. Strike called off - for now
The Indian jewellery strike has been called off - for now at least. The last few weeks of the Indian wedding season are underway and are crucial for the merchants. They have been campaigning against new taxes and import duties, and their government has promised to to reconsider their plans. But the merchants say they will resume the strike from May 11 if the tax plans go ahead.

Gold prices have been languishing and one reason given has been this strike.

10. The last laugh
Stand-up economist Yoram Bauman: S*** happens: the economics version. (PG13)