The young Keynes was a monetarist

I am continuing my reporting on my survey of monetary thinkers’ book recommendations for students of monetary matters. The next “victim” is Scott Sumner and lets jump right into it. Here is Scott’s book list:

David Hume.  Essays on Economics

Irving Fisher. The Purchasing Power of Money

Keynes.  A Tract on Monetary Reform

Ralph Hawtrey.  The Gold Standard in Theory and Practice

Friedman and Schwartz. A Monetary History of the US

David Glasner.  Free Banking and Monetary Reform

Robert Barro.  Macroeconomics

I had asked for five book recommendations, but Scott gave me seven to choose between, but that doesn’t really matter the important thing is that we inspire people to read these books. Nonetheless Scott told me that if we had to cut it to five we should cut out Hume and Keynes. So my next step is not completely fair – I will focus on Keynes’ “A Tract on Monetary Reform”.

The reason is that Tract is a popular book among many of the monetary thinkers I have surveyed and it is not only Scott who has it on his list. The reason I find it interesting is that Tract is really a monetarist book rather than a Keynesian book. Keynesian here meaning the Keynes is The General Theory – Keynes’ most famous book.

To realise that Tract is very much a monetarist book just take a look at that preface. Here is a photo from my own copy of the book:

Tract

The point Keynes makes here is that in a free market without money the markets will tend to “clear” – supply and demand will match each other. This is basically a Walrasian world. However, once we introduce money there is a possibility that if get a disequilibrium between money supply and money demand this disequilibrium will spill-over into other markets or as Keynes express it:

“But they (other markets) cannot work properly if money, which they assume as a stable measuringrod, is undependable.”

In fact this is very much how Leland Yeager or Clark Warburton would explain macroeconomic disequilibrium – recession, deflation, inflation are results of monetary policy failure. It doesn’t get anymore monetarist than that.

Brad DeLong in an excellent review of Tract from 1996 went so far as to say that it was “the best monetarist economics book ever written”. I wouldn’t go so far as Brad, but I certainly agree that Tract fundamentally is monetarist and that is also is very good book. But it is not the best monetarist book ever written – far from it.

In general I would very much like to recommend Brad’s 1996 review of the Tract. It covers all five chapters of the book and  in my view gives a pretty good description of Keynes’ views from the period prior to he became an “Keynesian”.

Get the monetary framework right and let the market take care of the rest

The overall message in the Tract in my view is that Keynes wants to demonstrate that if you mess up the monetary system you will mess up the entire economy. But if on the other hand ensures a stable and predictable – rule based – monetary system then the free market will tend to work well and the price mechanism will more or less ensure an efficient allocation of economic ressources. This of course has been Scott Sumner’s message all along. The Federal Reserve should conduct monetary policy based on – a predictable rule NGDP level targeting – and then the free market will take care of the rest.

The Federal Reserve and other central banks since 2008 has messed up the monetary system and as a result they have done great economic damage. Keynes has a message to today’s central bankers (also from the preface):

“Nowhere do conservative notions consider themselves more in place than in currency; yet nowhere is the need for innovation more urgent. One is often warned that a scientific treatment of currency questions is impossible because the banking world is intellectually incapable of understanding its own problems. If this is true, the order of Society, which they stand for, will decay. But I do not believe it. What we have lacked is a clear analysis of the real facts, rather than ability to understand an analysis already given. If the new ideas, now developing in many quarters, are sound and right, I do not doubt that sooner or later they will prevail.”

I find Keynes’ words from 1923 extremely suiting for the crisis of central banking today and even more suiting for Scott Sumner’s endless campaign to enlighten central bankers and the general society about the importance of proper “Monetary Reform”. In that sense Scott Sumner follows in the footsteps of the younger Keynes, Gustav Cassel, Leland Yeager and Milton Friedman in advocating radical monetary reform.

And finally I should of course note that later in the year Scott’s great work on the Great Depression will be published. I am sure it will become a classic on its own. I have been so privileged to read a draft version of the book and I hope you all buy it when it is published. Scott tells me the title of the book will be  “The Midas Paradox: A New Look at the Great Depression and Economic Instability” 

PS I just have to share Brad Delong’s great comments about the young and the old Keynes:

“The implicit point of view is that if the value of money is dependable then leaving saving to the private investors and investment to business will work well. The magnitude of the Great Depression of the 1930s would destroy Keynes’s faith in the proposition that stable internal prices implied a well-functioning macroeconomy and small business cycles. But from our perspective today–in which the Great Depression is seen as a unique disaster brought on by an unprecedented collapse in financial intermediation and in world trade, rather than as the largest species of the genus of business cycles–it is far from clear that Keynes of 1936 is to be preferred to Keynes of 1924. Besides, Keynes of 1924 writes better: his prose is clearer, less academic, less formal; his argument is more straightforward, linear, easier to follow; his style is as witty.”

PPS It is Sumner in Skyrup…

Tract white wine

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The books on money that David Laidler would like you to read

As I wrote in my post on Milton Friedman’s “Money Mischief” yesterday I have asked a number of “monetary thinkers” to make a list of around five (or so) books on monetary matters they would recommend for students of economics. I had initially just thought I would make a list of books based on the survey, but it turns out that there is a lot more material than I really had thought about. So I will instead do a number of posts on the book recommendations.

When I started to study economics in the early 1990s at the University of Copenhagen I already had a keen interest in monetarist thinking as I read Milton Friedman’s Free to Choose when I was 16 years or so. Some of my fellow students probably would have said that I had a obsessive interest in money supply numbers (I still have…)

Other than studying money supply numbers I early on found the library at the economics department at the University of Copenhagen. I read everything I could find by and about Milton Friedman and then went on to read other monetarists – such as Karl Brunner and Allan Meltzer. It was also at that time I first read articles by Scott Sumner and Bob Hetzel.

Another book I found at the library was David Laidler’s “Monetarist Perspectives”. I think what made the biggest impression initially by reading Monetarist Perspectives was actually that David termed Robert Lucas’ New Classical business cycle theory a Neo-Austrian business cycle theory (Lucas had used a similar term himself). That was one of the inspirations when I later in my Master thesis tried to formalize mathematically by “merging” rational expectations and Austrians Business Cycle theory (I am not sure I was successful…)

It was not everything in Monetarist Perspectives, which impressed me. In fact I was somewhat upset by David’s discussion of “The Case for Gradualism” (Chapther 5). I wanted shock therapy to end inflation. I reread the Chapter last year I must say I had a very hard time seeing what my problem had been back in the early 1990s.

The reason why reread Monetarist Perspectives is that I was able to get my own copy last year. I got a used copy. In fact my copy used to belong to University of California but was withdrawn from the library there and now it is on my table while I am writing this.

Monetarist Perspectives

Monetarist Perspectives is not the only book written by David Laidler I own. And it is not even my favourite Laidler book – that is instead “The Golden Age of the Quantity Theory”.

Laidler MVPY Golden Age

David Laidler is hence one of the biggest experts on monetary thinking in the world and it was therefore natural that I asked David for his contribution to my book survey.

And I am very happy that David kindly has provided me with five books that he would recommend to students of monetary thinking.

This is David’s list:
W. S. Jevons. Money and the Mechanism of Exchange (1875)
D. H. Robertson, Money (3rd ed, 1928)  (the best edition according to David)
Axel Leijonhufvud, Information and Coordination  (1981)
John Hicks, A Market Theory of Money (1989)
Milton Friedman, Money Mischief (1992)

This is what David has to say about the books on his list:

The common theme here is that the monetary economy performs the allocative and distributive functions usually attributed to the “market” by general equilibrium theory, that it is capable of performing these well, that success in this regard should nevertheless not be taken for granted, and that the way in which issues related to these matters appear evolves over time as monetary institutions evolve in the face of challenges presented by their own successes and failures.

When I went through David’s list and his arguments for choosing these books I actually came to think of another book and that is Robert Clower’s “Money and Markets”. 

The reason I mention Clower is that I think he has been a particular inspiration for particularly Canadian monetarists like Nick Rowe who was very much brought up in a Laidlerian tradition of monetarism. Nick and David are of course both British-Canadian.

Bob Clower

As always David Laidler is a great inspiration and I hope this post and particularly David’s list will inspire my readers to explore some of these great books (including those written by David!)

And finally as Kurt Schuler notes many of the books on money published prior to 1922 are now available for free online. Particularly the Ludwig von Mises Institute has done a great job in making classics available online – including the first book on David’s list Jevon’s “Money and the Mechanism of Exchange “.

Cheers David and start reading all of you!

‘Money Mischief’ – a major inspiration for ‘monetary thinkers’

I am in the process of surveying a number of “monetary thinkers” about their favourite books on monetary matters. I hope to do a number of posts on the survey results.

I had initially planned only to do one post on the survey, but I can see that there is material for a lot more. So I will likely do a number of posts on the topic in the near future. It is vacation time for the Christensen family – so I am a bit focused on reading books.

Among the monetary thinkers in the survey are George Selgin, David Laidler, Kurt Schuler, Josh Hendrickson, Marcus Nunes, Tobias Straumann, Steve Ambler and Douglas Irwin and many more and more will follow.

Milton Friedman’s “Money Mischief” is short, fun and informative

One of my own absolute favourite books on money is Milton Friedman’s “Money Mischief” from 1992. It is a collection of Friedman articles. Most of the articles are about episodes from monetary history. The book is extremely well-written and generally a very easy read.

Money Mischief is being mentioned as an major inspiration by a number of  the monetary thinkers in my survey. Josh Hendrickson calls Money Mischief “a great overview of money for non-economists and economists alike” and Douglas Irwin calls the book “just fun”. Both Josh and Doug have contributed to my survey and in later posts I will return to some of their other book recommendations.

Money Mischief to a large extent is a inspiration for this blog as I always thought that I wanted to write a blog about different monetary episodes in the spirit of Money Mischief to illustrate my views on monetary issues and I had in fact originally thought naming my blog Money Mischief.

Take for example Chapter 9 in Money Mischief“Chile and Israel: Identical Policies, Opposite Outcomes”. In this Chapter Friedman describes how fixed exchange rate policies was a major success in Israel, but a failure in Chile. In the chapter Friedman once again spells out his general opposition to fixed exchanges, but he also acknowledges that fixed exchange rate regimes might work well for certain countries. Friedman mentions Hong Kong’s currency board as an example of a fairly successful fixed exchange rate regime.

In the chapter he also makes a comment that have been a major inspiration to my own thinking about monetary matters. This is the statement (page 241):

“Never underestimate the role of luck in the fate of individuals and nations”.

I have written numerous blog posts inspired by this comment. See for example:

Never underestimate the importance of luck
The luck of the ‘Scandies’
National stereotyping is not an explanation for boom-bust – it is mostly about luck

And this is exactly what my survey of monetary thinkers is about – books that have inspired them and books that they think should be read by students of economics and money.

The survey has also inspired Kurt Schuler to reproduce his extensive reading list on monetary economics. You can see Kurt’s amazing reading list here.

In the near future I will share more survey results.

This is a picture of my own copy of Money Mischief – did you get a copy yet?

Money Mischief

“Bitcoin is Memory”

Bitcoin has been one of the most talked about talked topics over the past year. Despite of this there is relatively little economic research that has been done on the topic so far. However, a new working paper by William Luther and Josiah Olson add important insight to the economics of bitcoin.

This is the abstract for Luther and Olson’s paper “Bitcoin is Memory”:

“We maintain that the crypto-currency bitcoin is a practical application of what is termed “memory” in the monetary economics literature. After reviewing the theoretical literature on money and memory, we offer a brief overview of the bitcoin protocol and argue that, like memory, bitcoin functions as a public record-keeping device. Finally, we provide evidence that — in line with the standard theoretical account of memory — bitcoin use has soared as the expected cost of storing traditional monies increased.”

Have a look and let me hear what you think of Will and Josiah’s paper.

Will is telling me that he and Josiah have more in the pipeline. I will look forward to that – Will never disappoints writing interesting stuff.

Working paper of the day – Straumann et al on Switzerland, the Great Depression and the gold standard

A couple of weeks ago I came across a great paper by Peter Rosenkranz, Tobias Straumann and Ulrich Woitek – “A Small Open Economy in the Great Depression: the Case of Switzerland”. It is great paper. Here is the abstract:

Estimating a New Keynesian small open economy model for the period 1926-1938, we investigate the causes of the slow recovery of the Swiss economy of the Great Depression in the 1930s. Our results show that the decision to participate in the gold bloc after 1933 at an overvalued currency can be identified as the main reason for the unusual long lasting recession. Even the recovery of the world econ- omy starting in 1931/1932, and thus a boost of foreign demand could not offset the negative effects of disadvantageous terms of trade. A counterfactual experiment demonstrates that in case of leaving gold earlier (e.g. together with the UK in 1931), the Swiss economy would have recovered much faster, almost immediately reaching the pre-crisis output level.

Book of the day – Nunes and Cole

Not much time for blogging, but this is ‘book of the day’ – it just arrived in the mail. Maybe you should buy it as well – do it here (ebook) or here (paperback).

nunescole

See also here.

Reading recommendations for Charles Goodhart

Charles Goodhart undoubtedly is one of the leading authorities on monetary policy, theory and history in the world. So when he comes out and speak out against NGDP level targeting he deserves an answer.

In his new article Central banks walk inflation’s razor edge on FT.com Goodhart speaks out against NGDP targeting. Unfortunately Goodhart comes across as being quite badly informed about what NGDP level targeting really is. Scott Sumner has already commented on Goodhart’s article and fundamentally agree with Scott’s reply to Goodhart. However, I will add a bit more in the form of some reading recommendations for Charles Goodhart. It is reading recommendations for some of my previous blog posts.

Here is Goodhart:

Not all change, though, represents progress. Of particular concern is the increasing desire of officials to tie monetary policy to real outcomes. This is best exemplified by the instructions handed down on January 11 by Shinzo Abe, the prime minister of Japan: “We would like the BoJ to take responsibility for the real economy. I think that means jobs. I would like the BoJ to think about maximising jobs.” The Fed’s setting of a threshold for the unemployment rate, and the suggestion that the UK adopt a nominal income target, whereby real output growth and inflation get equal weights, go in the same direction.

Goodhart should know that there is a fundamental difference between targeting real GDP growth or (un)employment and targeting nominal GDP. Any Market Monetarist would agree that it is highly problematic if a central bank tries to target a real variable. However, Goodhart very well knows that nominal GDP is not a real variable, but a nominal variable and furthermore NGDP targeting is not giving “equal weights” to inflation and real out. NGDP targeting is exactly about NOT even trying to determine the “split” between real output and prices.

Here is what I earlier have said about this issue:

So just to make it completely clear….

…It is STUPID to target real variables such as the unemployment rate 

There is no doubt of my position in that regard and that is also why I and other Market Monetarists are advocating NGDP level targeting. The central bank is fully in control the level of NGDP, but never real GDP or the level of unemployment.

With sticky prices and wages the central bank can likely reduce unemployment in the short run, but in the medium term the Phillips curve certainly is vertical and as a result monetary policy cannot permanently reduce the level of unemployment – supply side problems cannot be solved with demand side measures. That is very simple.

And even earlier:

…I don’t think the Fed’s mandate is meaningful. The Fed should not try to maximize employment. In the long run employment is determined by factors completely outside of the Fed’s control. In the long run unemployment is determined by supply factors. In my view the only task of the Fed should be to ensure nominal stability and monetary neutrality (not distort relative prices) and the best way to do that is through a NGDP level target.

Of course I would not have expected Charles Goodhart to have read what I have written about NGDP targeting, but I do worry that he is making his argument without having read any of the Market Monetarist bloggers. Had he done that then he would have known that NGDP targeting is not about targeting real variables – in fact it is quite the opposite.

Back to Goodhart’s article:

But observations of policy-making over the years raise doubts that an ad hoc entry into a new policy regime will be followed by a nimble exit when the appropriate time comes. The fear is that, once the sell-by date of these initiatives passes, central bankers will be acting contrary to everything learnt, painfully, in the 1970s. They will be relating monetary management to real variables on a longer-term basis. In the end, any short-term benefit will be dwarfed by the long-run pain as they push inflation higher in the vain pursuit of a real economic objective.

I can fully understand Goodhart’s concerns about returning to the discretionary monetary policies of 1970s. However, what Goodhart seems to forget is that what we have had in the major countries of the world over the past five years has exactly been that – discretionary monetary policies. Neither the Federal Reserve nor the Bank of England have been following a rule based monetary policy. Instead monetary policy has been extremely discretionary. The same can by the way be said about the way the ECB has conducted monetary policy. NGDP targeting on the other hand would be a return to the rule based monetary policies of the Great Moderation.

Hence, NGDP level targeting is not about some kind of “ad hoc stimulus” rather it is about ensuring a rule based framework for monetary policy or as I have expressed it in an earlier post:

Market Monetarists are often misunderstood to think that monetary policy should “stimulate” growth and that monetary policy is like a joystick that can be used to fine-tune the economic development. Our view is in fact rather the opposite. Most Market Monetarists believe that the economy should be left to its own devises and that the more policy makers stay out of the “game” the better as we in general believe that the market rather than governments ensure the most efficient allocation of resources.

Exactly because we believe more in the market than in fine-tuning and government intervention we stress how important it is for monetary policy to provide a transparent, stable and predictable “nominal anchor”. A nominal GDP target could be such an anchor. A price level target could be another.

In fact Market Monetarists like myself are advocating that central banks basically are replaced by a Milton Friedman style “computer” in the form of a futures based NGDP targeting regime where the central bank will give up ALL discretion and simply let the price of an NGDP future determine the monetary policy stance. I dare Charles Goodhart to come up with any monetary policy proposal that is more rule based than that.
Finally, I am happy that such a respected and insight scholar as Charles Goodhart has entered the debate on NGDP level targeting, but I also hope that he will give the idea a closer examination. After all NGDP level targeting as advocated by Market Monetarists is as far away as you can get from the discretionary paleo-keynesian monetary experiments of the 1970s.
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PS David Glasner comments on another Goodhart article on NGDP targeting.

New book on Market Monetarism from Nunes and Cole

I don’t have much time for blogging, but buy this new book written by my good friends Marcus Nunes and Benjamin Cole:  Market Monetarism Roadmap to Economic Prosperity

here is the book description:

Market Monetarism – Roadmap to Economic Prosperity takes readers though a succinct, entertaining and accessible history of United States monetary policy in the postwar era, and how the Federal Reserve Board propelled the nation into The Great Inflation (think 1960s-1970s), a brief Volcker Transition (early 1980s), then a pleasant sojourn to The Great Moderation (mid-1980s-2007), before a trip to The Great Recession (2008–). Abundant charts clearly and amply illustrate monetary and economic events. The concepts of Market Monetarism and nominal GDP targeting are also introduced, which provide a policy framework for the Federal Reserve Board and other central bankers to avoid future inflationary and recessionary traps.

And here is what I have to say about it on the cover of the book:

“Nunes and Cole have written the first fully Market Monetarist account of post-second world war US monetary history. They forcefully demonstrate the monetary nature of both the Great Inflation and the Great Recession. They show that the Federal Reserve is to blame both for the high inflation of the 1970s and the horrors of the Great Recession. I gladly recommend this book to the layperson and the economist alike who would like to understand why and how failed monetary policy caused the present crisis.”

 

Update: Scott Sumner also comments on the book.

Alex Salter’s (friendly) critique of Market Monetarism

Alex Salter just sent me his latest working paper “Not All NGDP is Created Equal: A Critique of Market Monetarism”. I haven’t read the entire paper yet,  but Alex is always writing interesting stuff – including as a guest blogger at this blog – so I want to share it with my readers already.

Here is the abstract:

Market Monetarism, with its policy rule of NGDP targeting, has in common with free banking that both seek to avoid monetary disequilibrium. One might conclude that these are different approaches to achieving the same end. The purpose of this paper is to show that the proximate ends are in fact conceived differently: Stable NGDP as an object of choice by a central bank is different from NGDP as the emergent outcome of the market process. Furthermore, well-known insights on knowledge, the pricing process, and the institutional context of economic activity suggest that this difference has important implications.

I don’t have time to write a reply to Alex’s paper today, but hope to get back to it soon – or maybe some of my co-Market Monetarist bloggers might. But please have a look – it might be a critique of Market Monetarism, but coming from Alex it is always meant as a friendly critique.

Papers about money, regime uncertainty and efficient religions

I have the best wife in the world and she has been extremely understanding about my odd idea to start blogging, but there is one thing she is not too happy about and that is that I tend to leave printed copies of working papers scatted around our house. I must admit that I hate reading working papers on our iPad. I want the paper version, but I also read quite a few working papers and print out even more papers. So that creates quite a paper trail in our house…

But some of the working papers also end up in my bag. The content of my bag today might inspire some of my readers:

“Monetary Policy and Japan’s Liquidity Trap” by Lars E. O. Svensson and “Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rate” by Bennett T. McCallum.

These two papers I printed out when I was writting my recent post on Czech monetary policy. It is obvious that the Czech central bank is struggling with how to ease monetary policy when interest rates are close to zero. We can only hope that the Czech central bankers read papers like this – then they would be in no doubt how to get out of the deflationary trap. Frankly speaking I didn’t read the papers this week as I have read both papers a number of times before, but I still think that both papers are extremely important and I would hope central bankers around the world would study Svensson’s and McCallum’s work.

“Regime Uncertainty – Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War” – by Robert Higgs.

My regular readers will know that I believe that the key problem in both the US and the European economies is overly tight monetary policy. However, that does not change the fact that I am extremely fascinated by Robert Higgs’ concept “Regime Uncertainty”. Higgs’ idea is that uncertainty about the regulatory framework in the economy will impact investment activity and therefore reduce growth. While I think that we primarily have a demand problem in the US and Europe I also think that regime uncertainty is a highly relevant concept. Unlike for example Steve Horwitz I don’t think that regime uncertainty can explain the slow recovery in the US economy. As I see it regime uncertainty as defined by Higgs is a supply side phenomena. Therefore, we should expect a high level of regime uncertainty to lower real GDP growth AND increase inflation. That is certainly not what we have in the US or in the euro zone today. However, there are certainly countries in the world where I would say regime uncertainty play a dominant role in the present economic situation and where tight monetary policy is not the key story. My two favourite examples of this are South Africa and Hungary. I would also point to regime uncertainty as being extremely important in countries like Venezuela and Argentina – and obviously in Iran. The last three countries are also very clear examples of a supply side collapse combined with extremely easy monetary policy.

Furthermore, we should remember that tight monetary policy in itself can lead to regime uncertainty. Just think about Greece. Extremely tight monetary conditions have lead to a economic collapse that have given rise to populist and extremist political forces and the outlook for economic policy in Greece is extremely uncertain. Or remember the 1930s where tight monetary conditions led to increased protectionism and generally interventionist policies around the world – for example the horrible National Industrial Recovery Act (NIRA) in the US.

I have read Higg’s paper before, but hope to re-read it in the coming week (when I will be traveling a lot) as I plan to write something about the economic situation in Hungary from the perspective of regime uncertain. I have written a bit about that topic before.

“World Hyperinflations” by Steve Hanke and Nicholas Krus.

I have written about this paper before and I have now come around to read the paper. It is excellent and gives a very good overview of historical hyperinflations. There is a strong connection to Higgs’ concept of regime uncertainty. It is probably not a coincidence that the countries in the world where inflation is getting out of control are also countries with extreme regime uncertainty – again just think about Argentina, Venezuela and Iran.

“Morality and Monopoly: The Constitutional political economy of religious rules” by Gary Anderson and Robert Tollison.

This blog is about monetary policy issues and that is what I spend my time writing about, but I do certainly have other interests. There is no doubt that I am an economic imperialist and I do think that economics can explain most social phenomena – including religion. My recent trip to Provo, Utah inspired me to think about religion again or more specifically I got intrigued how the Church of Jesus Chris Latter day Saints (LDS) – the Mormons – has become so extremely successful. When I say successful I mean how the LDS have grown from being a couple of hundreds members back in the 1840s to having millions of practicing members today – including potentially the next US president. My hypothesis is that religion can be an extremely efficient mechanism by which to solve collective goods problems. In Anderson’s and Tollison’s paper they have a similar discussion.

If religion is an mechanism to solve collective goods problems then the most successful religions – at least those which compete in an unregulated and competitive market for religions – will be those religions that solve these collective goods problems in the most efficient way. My rather uneducated view is that the LDS has been so successful because it has been able to solve collective goods problems in a relatively efficient way. Just think about when the Mormons came to Utah in the late 1840s. At that time there was effectively no government in Utah – it was essentially an anarchic society. Government is an mechanism to solve collective goods problems, but with no government you have to solve these problems in another way. Religion provides such mechanism and I believe that this is what the LDS did when the pioneers arrived in Utah.

So if I was going to write a book about LDS from an economic perspective I think I would have to call it “LDS – the efficient religion”. But hey I am not going to do that because I don’t really know much about religion and especially not about Mormonism. Maybe it is good that we are in the midst of the Great Recession – otherwise I might write about the economics and religion or why I prefer to drive with taxi drivers who don’t wear seat belts.

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Update: David Friedman has kindly reminded me of Larry Iannaccone’s work on economics of religion. I am well aware of Larry’s work and he is undoubtedly the greatest authority on the economics of religion and he is president of the Association for the Study of Religion, Economics and Culture. Larry’s paper “Introduction to the Economics of Religion” is an excellent introduction to the topic.

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