Debt Makes College a Risky Investment

Our findings, especially those that examine household decision-making, emphasize that while the return to higher education is high, it is not a safe investment for many households. The deterrent effect of risk survives the ability of agents to feasibly debt finance college with student loans. The main force here is that debt makes higher education riskier for student borrowers, suggesting that alternatives that are mindful of risk may be more effective. In turn, the focus of the policy experi...

 How the Finance Industry Hurts the Economy

In perhaps the starkest illustration, economists from Harvard University and the University of Chicago wrote in a recent paper that every dollar a worker earns in a research field spills over to make the economy $5 better off. Every dollar a similar worker earns in finance comes with a drain, making the economy 60 cents worse off. [...] ...the growth of complex financial products has served primarily to boost income for the firms themselves, Philippon said. A new paper from researchers in t...

 The Web of Causation

...complex systems, such as financial markets or the Earth’s biosphere, do not seem to obey causality. For every event that occurs, there are a multitude of possible causes, and the extent to which each contributes to the event is not clear, not even after the fact! One might say that there is a web of causation. For example, on a typical day, the stock market might go up or down by some fraction of a percentage point. The Wall Street Journal might blithely report that the stock market move...

 The Origin of Interest

The international trading became the most profitable of all enterprises, and great land-"owners" with clear-cut king's "deeds" to their land went often to international gold moneylenders. The great land barons underwrote the building of enterprisers' ships with their cattle or other real wealth, the regenerative products of their lands, turned over to the lender as cccollateral. If the ship did come back, both the enterpriser and the bankers realized a great gain. The successful ship ventur...

 Government Maps the Terrain for Private Enterprise

There is fundamentally no business case for private enterprise to advance a space frontier. When you advance a frontier, you are making mistakes that the capital markets choose not to value. You have to create patents to enable things that you don't know will work. Anytime you are the first person to do something on that scale, the history of human civilization has demonstrated that the only funding available to do that via governance. And so what then happens is the patents get issued. The ...