Public policy and the quality of life: How relevant is economics? Public policy and the quality of life: Market incentives versus government planning Randall G. Holcombe greenwood press, 1995, 190 pp.

This article summarizes and critiques Holcombe's arguments on the influence of private ownership and markets on the quality of life. Holcombe summarizes the free market-oriented literature and provides interesting anecdotes in arguing that markets are superior to public policies and more cost-effective in pursuing social goals such as health care, environmental protection, and housing. This critique argues that Holcombe's approach is much too narrow in that it reduces the quality of life to commercial value, cost minimization, and property rights. Economic analysis can become more relevant to the public discourse by recognizing that social values are broader than cost minimization and efficiency. Public sensibilities on equity, justice, equal opportunity, and human dignity shape the sociocultural context for evaluating the impact of public policy on the quality of life. Ideas are offered for enhancing the relevance of economics to policy discussions on the quality of life.     

Using Simulation and Data Envelopment Analysis to Compare Assembly Line Balancing Solutions

This paper presents a technique for comparing the results of different assembly line balancing strategies by using Data Envelopment Analysis (DEA). Initially, several heuristics--which can be thought of as assembly line balancing strategies--were used to solve seven line-balancing problems. The resulting line balance solutions provided two pieces of information that were of particular interest: the number of workers needed and the amount of equipment needed. These two items were considered inputs for DEA. The different line balance solutions were then used as layouts for simulated production runs. From the simulation experiments, several output performance measures were obtained which were of particular interest and were used as outputs for DEA. The analysis shows that DEA is effective in suggesting which line balancing heuristics are most promising.     

Salary increases for the marketing executive

This article discusses how marketing executives view their pay raise. A study of 491 marketing executives examined their views on what is a meaningful salary increase and the reasons why their companies give pay raises.     

Risk Management,Corporate Governance,and the Search for Long-Term Investors

This discussion explores a number of ways that more effective risk management, corporate governance, and communication with investors can help companies increase their effciency and long-run value. According to one of the panelists, recent surveys of corporate directors suggest that companies should devote more time and attention to three issues—strategy, risk management, and succession planning—and that strategy and risk are the “flipsides of the same coin.” As the panelist argues, “You can't talk about strategy without talking about what risks you're going to take—and what risks you decide to take has to depend on the core competencies that drive the corporate strategy.” In addition to making risk management a critical part of corporate strategy, another notable recommendation is to communicate a company's strategy and business plan as clearly as possible to investors, with the aim of attracting more sophisticated, long-term shareholders. Contrary to popular belief, such a group may well include some hedge funds and other activist shareholders. According to a newly released report on shareholder activism (produced and cited by another panelist), corporate boards should work harder to identify and engage the “largest 10 shareholders in the organization,” with the ultimate goal of cultivating a shareholder base that buys into the company's strategy.     

Dynamic inefficiency in an overlapping generations economy with production

Reichlin [Equilibrium cycles in an overlapping generations economy with production, J. Econ. Theory 40 (1986) 89-102] has shown in an OLG model with productive capital that whenever the steady state is locally indeterminate and undergoes a Hopf bifurcation, it is Pareto-optimal. While these results were established under the assumption of Leontief technology, the author has partially extended them to show that the Hopf bifurcation is robust with respect to the introduction of capital-labor substitution. In this note, we prove that the Pareto-optimality of the steady state does not extend to technologies with capital-labor substitution. When the steady state is a sink or undergoes a Hopf bifurcation, it is characterized by over-accumulation with respect to the Golden Rule—the interest rate is negative—hence not Pareto-optimal. Most importantly, it follows that stabilization policies targeting the steady state leave room for welfare losses associated with productive inefficiency, apart from the very special case of Leontief technology.     

Professor Caldwell on Ludwig von Mises' methodology

The Review of Austrian Economics -