Banks to Make Customers Pay Fee for Using Debit Cards

New York Times
September 29, 2011

Bank of America, the nation’s biggest bank, said on Thursday that it planned to start charging customers a $5 monthly fee when they used their debit cards for purchases. It was just one of several new charges expected to hit consumers as new regulations crimp banks’ profits.

Wells Fargo and Chase are testing $3 monthly debit card fees. Regions Financial, based in Birmingham, Ala., plans to start charging a $4 fee next month, while SunTrust, another regional powerhouse, is charging a $5 fee.

The round of new charges stems from a rule, which takes effect on Saturday, that limits the fees that banks can levy on merchants every time a consumer uses a debit card to make a purchase. The rule, known as the Durbin amendment, after its sponsor Senator Richard J. Durbin, is a crucial part of the Dodd-Frank financial overhaul law.

Until now, the fees have been 44 cents a transaction, on average. The Federal Reserve in June agreed to cut the fees to a maximum of about 24 cents. While the fee amounts to pennies per swipe, it rapidly adds up across millions of transactions. The new limit is expected to cost the banks about $6.6 billion in revenue a year, beginning in 2012, according to Javelin Strategy and Research. That comes on top of another loss, of $5.6 billion, from new rules restricting overdraft fees, which went into effect in July 2010.

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For the debit cards fee controversy see also here, here, here, here and here.

The Dick Durbin Bank Fees

by Todd Zywicki

Wall Street Journal
September 29, 2011

This Saturday, government price controls on debit card interchange fees (which card issuers charge to merchants) go into effect. The controls are the result of the Durbin amendment to last year's Dodd-Frank financial reform legislation. They were enacted at the behest of big-box retailers such as Wal-Mart and Walgreen's, which stand to gain a multimillion-dollar windfall. But the controls are already transforming the retail banking landscape.

The Durbin amendment tasked the Federal Reserve with establishing the allowable maximum interchange fees. It originally intended to slash them by 70%-80%. In response to a firestorm of criticism, the Fed cut the fees about in half, to about 24 cents per transaction from an average of 44 cents per transaction, including a one-penny allowance for fraud prevention. The new fee limits apply to any bank with more than $10 billion in assets.

Faced with a dramatic cut in revenues (estimated to be $6.6 billion by Javelin Strategy & Research, a global financial services consultancy), banks have already imposed new monthly maintenance fees—usually from $36 to $60 per year—on standard checking and debit-card accounts, as well as new or higher fees on particular bank services. While wealthier consumers have avoided many of these new fees—for example, by maintaining a sufficiently high minimum balance—a Bankrate survey released this week reported that only 45% of traditional checking accounts are free, down from 75% in two years.

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For the debit cards fee controversy see also here, here, here, here and here.

Dick Durbin's Debit Card Fees

Wall Street Journal
September 29, 2011

Mary Kissel on how caps on debit card swipe fees are costing consumers.

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For the debit cards fee controversy see also here, here, here, here and here.

Working in the Dark

by Robert M. Solow

The New Republic
September 28, 2011

I thought I knew what this book was going to be about when I started it, but by the time I came to the end I was no longer sure. There is a prologue that begins with Charles Dickens’s observations and depictions of miserable London poverty, and then moves naturally to the classical Malthusian trap as the only explanation offered by the political economy of the time: any improvement in the general standard of living will be wiped out by increased population, so nothing much can be done except perhaps exhortations of abstinence. Dickens himself entered a plea for a more humane political economy. (This was an interesting piece of news to me. Presumably he intended something more than sugarcoating the pill, but what?) That could indeed be a “Grand Pursuit”: how economics and the economy learned to adapt to sustained growth and rising living standards. Sylvia Nasar’s first chapter almost confirms this idea; it is about Marx and Engels, with more emphasis than is usually given to Engels and his powerful Condition of the Working Class in England in 1844.

But this suggested theme does not hold up. The book is not “The Story of Economic Genius” that is promised in the subtitle. It is instead the story of the public and private lives of a handful of major figures in economics, some of them pretty clearly possessed of “economic genius,” at least part of the time, and some of them pretty clearly not, unless one plays fast and loose with the notion of genius. Most surprisingly, there is not much about the evolution of economic ideas in this book, either in the way Dickens hoped or otherwise. There is a lot of quite fascinating biographical detail about a series of interesting economists, and even more about the political, financial, and economic setting in which they functioned. Nasar spends much more time on the public role of her subjects than on their thoughts about economics itself. They were indeed all public figures of one kind or another. Many of them were also important economists, but you do not hear much about that at all; and when you do, the book skimps on intellectual content.

One does not have to wait for an example of this gap. A chapter on Alfred Marshall follows immediately after Engels and Marx. Marshall was one of the founders of modern economics. His Principles of Economics, which appeared in 1890 and went through a total of eight revised editions, was the great general treatise after John Stuart Mill. When I first studied economics in 1940, we were not given Marshall to read as a textbook; it would probably have been an improvement if we had. It is not much remembered today that Marshall was not merely the man who systematized the theory of the firm and the interaction of supply and demand in a competitive market. He was also an assiduous observer of the industrial practices of his time, and the ways in which they often deviated from the neat but necessary abstractions of theory, including his own. He was interested, for example, in the role that perceptions of fairness played in the determination of wages. He knew that rising productivity was the serious answer to mass poverty. You might say that he was starting to give Dickens his wish. So it is surprising to read a forty-three-page chapter about Alfred Marshall that arrives at the Principles of Economics only in its last few pages. By contrast, Agnar Sandmo, the author of Economics Evolving: A History of Economic Thought, an excellent recent history, offers an economist’s-eye view: he devotes a twenty-five-page chapter to Marshall, almost all of which is essentially about the content and the influence of Marshall’s great work.

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Rationality, games and conflict

Robert Aumann interviewed by Romesh Vaitilingam

Vox
September 9, 2011

Nobel laureate Robert Aumann of the Hebrew University of Jerusalem talks to Romesh Vaitilingam about his work on ‘rule rationality’, the development of game theory and its potential for understanding conflict – from the Pax Romana to the modern day Middle East. The interview was recorded in August 2011 at the Fourth Lindau Meeting on Economic Sciences, which brought together 17 of the 38 living economics laureates with nearly 400 top young economists from around the world.

Listen to the interview here

Washington's Antitrust Timewarp

by George L. Priest

Wall Street Journal
September 6, 2011

The Obama administration's suit to block AT&T's acquisition of T-Mobile will harm, not help, our sputtering economy. The administration claims the acquisition "would result in tens of millions of consumers . . . facing higher prices, fewer choices and lower quality products for mobile wireless services." It argues that stopping the buyout "will help protect jobs in the economy" since mergers usually reduce jobs through the elimination of redundancies.

The first of these claims has no factual basis—indeed, the market believes otherwise. The second is indefensible as social policy.

It is very difficult at an abstract level to know what the effects of a merger or acquisition will be on competition within an industry. Firms may merge to create market power and increase prices, though they may also merge to create efficiencies that lower prices.

The Justice Department presumes that the acquisition of T-Mobile (the fourth largest wireless provider) by AT&T (the second largest) will lead to "higher prices . . . and lower quality products" based on the high market share that would result. But market share is a very rough proxy for market power and essentially meaningless in a network industry.

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Fourteen magic words that can increase voter turnout by over 10 percentage points??

by Andrew Gelman

The Monkey Cage
September 4, 2011

Christopher Bryan, Gregory Walton, Todd Rogers, and Carol Dweck did two experiments in which they increased people’s voter turnout in real electionsby over 10 percentage points by simply asking them the following survey question on election day:

• How important is it to you to be a voter in the upcoming election?

In the comparison condition, potential voters were asked:

• How important is it to you to vote in the upcoming election?

Unfortunately, there doesn’t seem to have been a control condition in the experiments, so all they could really do was compare these two treatments to each other.

The gimmick of the experiment is that it harnesses humans’ natural belief in essentialism (see, for example, reference 14 in the link above), the idea that being “a voter” is more essential than being a person who happened to vote.

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Read the Paper

The Perils of Price Controls

by Richard A. Epstein

Defining Ideas
August 30, 2011

Last week in the New York Times, veteran health correspondent Gardiner Harris wrote of the recent sharp and puzzling shortages of critical drugs used for treating a wide range of life-threatening cancers and bacterial infections. The total number of shortages has increased from 58 vital drugs in 2004 to 211 in 2010. These shortages have prompted some wholesalers to hoard certain scarce drugs, which has only aggravated the problem.

Harris reports that public officials and policy makers are now anxiously preparing a set of proposals to deal with these shortages. One such proposal calls, not surprisingly, on the federal government to take on a greater role in stockpiling dry ingredients of key drugs, which in times of need could be released to hospitals where pharmacists could then convert them into injectable compounds. A second legislative proposal, introduced by Senator Amy Klobuchar, a Minnesota Democrat, would give the Food and Drug Administration the power to demand that drug companies give the FDA early warnings when they anticipate a cutback in the quantities of goods they ship to the market. Still a third proposal calls for removing restrictions on importing generic drugs from overseas in order to ease the current shortages.

One of the real difficulties in understanding these shortages is that they appear to stem from multiple causes. Some shortages come from the failure of various suppliers to meet FDA inspection standards for safety. Other shortages appear to stem from the scarcity of drugs in their cheaper generic forms. Harris says that the FDA attributes this shortage to "capacity problems at drug plants or lack of interest because of low profits." Low profits follow inexorably from price caps. These caps in turn interact with safety issues, creating possible synergistic effects, Let’s tackle each cause of the drug shortages separately, starting with the pricing issues.

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Sylvia Nasar’s Animated Guide to Econ

The Daily Beast
August 23, 2011

Take a surprisingly entertaining stroll through the pages of economic history with Sylvia Nasar, whose new book Grand Pursuit: The Story of Economic Genius tells the story of modern economics. Watch this animated short that breaks down the key points that got us to where we are today.

An Economic Analysis of Gang Colors

by Christopher Shea

Wall Street Journal
August 2, 2011

Most of us have grown sufficiently used to the idea of gang colors that we don’t bother to ask why they exist. But, if you think about it, they’re paradoxical: Why would people who belong to groups that sell drugs or commit crimes go out of their way to advertise their membership in those groups? A new paper, by Andrew Mell, an economist at Nuffield College, Oxford, attacks that conceptual problem.

He does so by drawing on evolutionary theory and the related issue of coordination between agents. If you’re a criminal, one of your principal challenges involves knowing whom it’s safe to do business with. You don’t want to sell to an undercover cop, obviously, but you also don’t want to sell to an eager-but-clueless criminal who may well get caught and drag you down with him.

Like certain ostentatious displays by males in the animal kingdom, gang colors serve as a handicap, Mell argues: Yes, they make it more likely that the person wearing them will be caught. Yet they semaphore the following message: If I’m still willing to commit crimes when I have this handicap, I must be pretty good at evading the police. Incompetent criminals couldn’t get away with wearing gang colors.

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Read the Paper

See also

Seeking Arrangement: College Students Using 'Sugar Daddies' To Pay Off Loan Debt

by Amanda M. Fairbanks

Huffington Post
July 31, 2011

"I was thinking about going on Match but I needed help financially," says a 25-year-old student at a trade school in New York. When meeting men online, she sometimes goes by the name of Suzanne. "I guess what finally pushed me over the edge was that I needed help to pay off my loans from school."

Earlier this spring, after Suzanne got fired from her job as a waitress at a diner on the Upper East Side, a girlfriend suggested she create a profile on Seeking Arrangement. Suzanne had grown desperate after falling behind on rent. She also needed to come up with $3,000 for a trimester's worth of paralegal classes.

Suzanne already has an associate's degree in elementary education from a community college in New Jersey. Unable to find a job as a teacher's aide, she decided to enroll in paralegal classes at night. But after losing her job, the extra debt proved more than she could afford. She took out $10,000 in loans to pay for a year of school and promptly went on the hunt for a sugar daddy.

Over the past few months, Suzanne says she's gone on more than 40 dates with men from the site. She's not interested in getting wined and dined every single time. At a minimum, she hopes for at least a modicum of attraction. She's already turned down a man who weighed 400 pounds, as well as the advances of countless married men. Though desperate, Suzanne says a homewrecker she is not.

Following numerous emails and chats on the phone, Suzanne generally schedules a first meeting with a man in a public place -- a crowded restaurant, cafe or bar.

After nearly giving up on finding an arrangement, Suzanne recently met a 39-year-old college professor from Dover, N.J. So far, the two have gone on three dates. They typically meet at his house, where he usually cooks her dinner. Afterwards, they have sex.

"After all the assholes I've met, this guy's a real gentleman," says Suzanne, during a break before class. "At the end of the night, he usually gives me $400 or $500 bucks. It's not bad money for a night." While the men typically pay per meeting, Suzanne is hoping to set up an ongoing hookup. Mostly, she doesn't want the men thinking she's only seeing dollar signs, pegged to when her rent or tuition money is due.

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Π. Καρκατσούλης, "Ρύθμιση, Απορρύθμιση, Μεταρρύθμιση: Μεταλλαγές του Κανόνα Δικαίου στην Εποχή της Παγκοσμιοποίησης"

Το παρόν έργο αποτελεί μια πραγματεία για τη σχέση κράτους και δικαίου μέσα από τη μελέτη δύο διαχρονικών παθολογιών τους: της πολυνομίας και της εκνομίκευσης.

Οι ρυθμιστικές αυτές ανακολουθίες μελετώνται μέσα από την εμπειρική διερεύνησή τους στην Ελλάδα για διάστημα μιας τριακονταετίας και τα συμπεράσματα συγκρίνονται με εκείνα αντίστοιχων ερευνών σε δύο κεντρο-ευρωπαϊκές χώρες: τη Γερμανία και την Αυστρία. Η πολυνομία και η εκνομίκευση ερμηνεύονται μέσα από τη νομική και διοικητική επιστήμη, την κοινωνιολογία του δικαίου, τη νομική πολιτειολογία, την κοινωνική ψυχολογία και την πληροφορική. Επιχειρείται μια συγκριτική αξιολόγηση των απαντήσεών τους και διακρίνονται εκείνες που προσφέρουν το καταλληλότερο, υπό την έποψη της απαιτούμενης περιπλοκότητας, ερμηνευτικό πλαίσιο.

Η κεντρική ιδέα του βιβλίου είναι ότι οι διαφοροποιήσεις των κοινωνικών υποσυστημάτων επιφυλάσσουν μία διαφορετική θέση στον κανόνα δικαίου, ο οποίος αποβάλλει τον παρεμβατικό του χαρακτήρα και μετατρέπεται σε ιδιο-σύστημα, επιτρέποντας την έμμεση ρύθμιση των συστημάτων με τα οποία αλληλεπιδρά.

Thinking Like an Economist—About Superman

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Hat tip: WSJ

Nobel Prize-winning economist Vernon Smith on Experimental Economics, Adam Smith, the housing bubble, and his journey towards libertarianism

Interview by Nick Gillespie

Reason.tv
July 20, 2011

Vernon Smith is a pioneer, discovering a whole new way to study economics and winning a Nobel Prize for doing so.

Smith sat down with Reason.tv's Nick Gillespie to discuss a variety of topics, including growing up in Kansas during the Great Depression, his ideological journey from socialist to libertarian, how and why some of Adam Smith's most important intellectual contributions are overlooked, and what experimental economics has to say about the collapse of the housing market.

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Toying With Deregulation

Wall Street Journal
Editorial
July 20, 2011

Here's a question for White House regulatory czar Cass Sunstein: Do Presidential executive orders mean anything? Only last week President Obama asked independent agencies to examine existing rules and get rid of the duds, but nobody is listening.

Within days of the executive order, the Consumer Product Safety Commission voted 3-2 that it is "technologically feasible" to impose a lower limit on lead content in children's products, reducing the level to 100 parts per million from 300 parts per million. The new limit, which will go into effect August 14, will mean one more round of hair-pulling for small business owners who will have to change their manufacturing processes and junk existing products that don't meet the new standard. The three votes in favor came from Mr. Obama's chairwoman Inez Tenenbaum and two other Democratic commissioners.

The Consumer Product Safety Improvement Act passed in 2008 in a frenzy of concern over lead content in toys from China, and it has since tormented anyone who makes or sells bicycles, books, children's jewelry and so much more. Its strictures have imposed costs for testing, recalls and other inconveniences without any reasonable correlation to the risks to children. "No sweetheart, don't eat that bicycle!"

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Μείωση αστυνόμευσης οδηγεί σε περισσότερα τροχαία

Το Βήμα
15 Ιουλίου 2011

Δεκαέξι νομοί της χώρας χαρακτηρίζονται, σύμφωνα με έρευνα του Πολυτεχνείου Κρήτης, ως οι περιοχές που έχουν πρόβλημα ατυχημάτων και η απόδοση της τροχαίας δεν είναι ικανοποιητική βάση των σχετικών στατιστικών στοιχείων της Τροχαίας για το 2010.

Η έρευνα, που παρουσιάζει σήμερα Το Βήμα, με τίτλο «Τροχαία αστυνόμευση και οδική ασφάλεια» πραγματοποιήθηκε από τους Κωνσταντίνο Ζοπουνίδη, καθηγητή του Εργαστηρίου Συστημάτων Χρηματοοικονομικής Διοίκησης, Μιχαήλ Νικολαράκη, Διδάκτορα και Μιχάλη Δούμπο, Επίκουρο Καθηγητή.

Κατά την έρευνα από την μελέτη των στοιχείων προκύπτει πως όπου βεβαιώνονται ελάχιστες παραβάσεις του Κώδικα Οδικής Κυκλοφορίας σημειώνονται και πολλά τροχαία ατυχήματα ενώ όπου ο αριθμός των παραβάσεων είναι υψηλός μειώνονται τα ατυχήματα.

Οι νομοί αυτοί, κατά την έρευνα, όπου κατεγράφησαν πολλά τροχαία ατυχήματα και λίγες παραβάσεις είναι οι: Θεσσαλονίκης, Δωδεκανήσου, Έβρου, Εύβοιας, Ζακύνθου, Ημαθίας, Θεσπρωτίας, Καβάλας, Καρδίτσας, Κυκλάδων, Λακωνίας, Μεσσηνίας, Πρέβεζας, Φθιώτιδας, Φωκίδας και Χανίων.

Οι ερευνητές σημειώνουν πως στις περιοχές αυτές η αυξημένη αστυνόμευση δεν έχει φέρει αποτελέσματα και έτσι απαιτούνται άλλες λύσεις όπως βελτίωση του οδικού δικτύου, της κυκλοφοριακής αγωγής κλπ ενώ παράλληλα χρειάζονται ειδική μελέτη από συγκοινωνιολόγους.

Αντίθετα οι νομοί με τα λιγότερα ατυχήματα και τις πολλές βεβαιώσεις παραβάσεων είναι: Κιλκίς, Λασιθίου, Πέλλας, Πιερίας, Ρεθύμνης, Σερρών, Φλώρινας και Χίου. Αυτές είναι οι περιοχές, όπως σημειώνεται στις οποίες η αυξημένη αστυνόμευση φαίνεται πως είχε αποτελέσματα.

Περισσότερα

Barry Eichengreen - Why Economics Needs History

interview by Perry G. Mehrling

Institute for New Economic Thinking
July 11, 2011

What challenges will China have to surmount in order to make its currency a true international currency? To answer this question and others, Barry Eichengreen studies history. In the old days, he says, historians and theorists worked smoothly together and saw one another as serious scholars. But those days are gone, and nowadays the profession largely neglects historical and institutional research. That's why Barry Eichengreen is running the Berkeley Economic History Lab to educate a future generation of scholars -- a generation that is historically literate and does policy-relevant research. These are the seeds of new economic thinking.

Barry Eichengreen is the George C. Pardee and Helen N. Pardee Professor of Economics and Professor of Political Science at the University of California, Berkeley, where he has taught since 1987.

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Income = Happiness? A Strangely Tough Sell in Aspen

by Justin Wolfers

New York Times
July 8, 2011

I spent last week at the Aspen Ideas Festival, talking about Betsey’s and my research on the Economics of Happiness. You might think that my message - that income and happiness are tightly linked - would be an easy sell in Aspen, which is the most beautiful and most expensive city I’ve ever visited. But in fact, it’s the millionaires, billionaires and public intellectuals who are often most resistant to data upsetting their beliefs. You see, the (false) belief that economic development won’t increase happiness is comfortingly counter-intuitive to the intelligentsia. And it’s oddly reassuring to the rich, who can fly their private jets into a ski resort feeling (falsely) relieved of any concern that the dollars involved could be better spent elsewhere.

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Do Britain’s Strict Press Laws Actually Encourage Bad Behavior?

by Bradford Plumer
July 8, 2011

And just like that, the News of the World is gone. Never mind that Rupert Murdoch’s racy tabloid was the best-selling and most profitable weekly in Britain, with a circulation of some 2.6 million. After the paper was caught hacking—repeatedly, and flagrantly—into the phones of everyone from the royals to a child murder victim, and once advertisers started fleeing en masse, a death sentence was the only option left.

The NOTW meltdown has led to lots of focus on the bizarre, hyper-aggressive world of Britain’s red-top tabloids—and, for that matter, Britain’s broadsheets, which often aren’t all that better behaved. While NOTW may have been particularly egregious, odds are decent other papers could have scandals lurking. (As Nick Davies, who broke open the phone-hacking story, noted in his 2009 book Flat-Earth News, more than a dozen British papers have hired private investigators to suss out confidential personal info, often through legally dubious means.) But even setting aside potential lawbreaking, many of Britain’s papers were famous for their reckless pursuit of stories at any cost, their thin regard for accuracy, their adventures in outright libel. No wonder American journalists have been feeling awfully smug this week.

So how did the British press get so irresponsible—especially compared to its (relatively) staid and sober cousins across the Atlantic? It’s especially curious when you consider that U.S. newspapers enjoy sweeping First Amendment freedoms, while the British press has to operate under some of the strictest defamation and libel laws on the planet. Is it possible that Britain’s stricter press laws actually encourage bad behavior?

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Το Θεσμικό Έλλειμμα

του Αριστείδη Χατζή

Φύλλα Ελευθερίας
Forum για την Ελλάδα
Ιούνιος 2011

Η Ελλάδα βρίσκεται στο μέσο της χειρότερης πολιτικής, οικονομικής και θεσμικής κρίσης μετά την μεταπολίτευση. Η κρίση είναι κυρίως οικονομική αλλά είναι και πολιτική, καθώς προφανώς θα οδηγήσει μεσοπρόθεσμα στο ριζικό μετασχηματισμό του κομματικού συστήματος που διαχειρίστηκε την Ελληνική δημοκρατία τα τελευταία 35 χρόνια. Η οικονομική και η πολιτική κρίση όμως αποτελούν τα συμπτώματα της πολύ σοβαρότερης θεσμικής κρίσης.

Μια επιδερμική προσέγγιση της θεσμικής κρίσης θα την απέδιδε στην απίσχναση της πολιτικής νομιμοποίησης, στην απαξίωση θεσμών όπως το κοινοβούλιο, η κυβέρνηση, η παιδεία, ακόμα και η δικαιοσύνη. Πρόκειται όμως και πάλι για τα εμφανή συμπτώματα μιας βαθύτερης θεσμικής κρίσης που συνοδεύει την ελληνική πολιτεία από την ίδρυσή της. Η κρίση αυτή οφείλεται στην θεσμική ανωριμότητα της ελληνικής κοινωνίας. Η θεσμική ανωριμότητα, για τους σκοπούς αυτού του σύντομου κειμένου, ορίζεται απλά ως υπανάπτυξη των θεσμών.

Θα βρείτε εδώ την συνέχεια του κειμένου