SOME ECONOMIC CONSEQUENCES OF ANTICIPATING TECHNICAL ADVANCE

Using a simple model of a long run profit maximizing firm, we investigated the consequences of foreseeing future technical advance upon the adoption of new technology, scrapping of old, and for price and output of the firm's product. To simplify the analysis and highlight the conclusions, we assumed all technologies embodied in equipment and all equipment infinitely durable. It was shown that the often-used formulas for the unit cost of using capital over a finite (rkj/(l — a^T)) or infinite (rkj) life are appropriate only if the equipment does not become outmoded during its economic life and if there are no demand shifts in that time interval. Otherwise, the current cost of using capital (ex ante) must reflect future lesser or greater earning power of that capital due to outmodedness or demand shifts. Anticipation of technical advance tends to delay scrapping of old equipment and retard installation of new, with current output smaller and price higher than if technology is stagnant. Selection among currently competing technologies is also affected by the course future technical advance is expected to follow. The economic lifetime of capital equipment is independent of the elasticity of demand for the firm's output. On the other hand anticipation of demand expansion tends to partially or wholly offset the effect of anticipating future technical advance, while expected demand decline tends to reinforce it. Uncertainty about when improved technology will appear tends to retard adoption of current best practice technology, to retard scrapping of outmoded technology, restrict output and elevate price, in comparison with pptimal policy when the time of availability is believed known. The optimal policy is unaffected when it is the magnitude of the improvement rather than its timing which is unknown.     

What Makes a Good Decision? Robust Satisficing as a Normative Standard of Rational Decision Making

Most decisions in life involve ambiguity, where probabilities can not be meaningfully specified, as much as they involve probabilistic uncertainty. In such conditions, the aspiration to utility maximization may be self‐deceptive. We propose “robust satisficing” as an alternative to utility maximizing as the normative standard for rational decision making in such circumstances. Instead of seeking to maximize the expected value, or utility, of a decision outcome, robust satisficing aims to maximize the robustness to uncertainty of a satisfactory outcome. That is, robust satisficing asks, “what is a ‘good enough’ outcome,” and then seeks the option that will produce such an outcome under the widest set of circumstances. We explore the conditions under which robust satisficing is a more appropriate norm for decision making than utility maximizing.     

Cornish identities and migration: a multi‐scalar approach

Abstract In this article we argue that theories of transnationalism have value in exploring the historical context of migration and that historical contexts help to shape such theoretical conceptualizations. Historians of migration have now begun to engage more directly with the literature of transnationalism, focusing on the networks that linked settler and home communities. Here we add to this by examining a nineteenth‐century migrant community from a British region through the lens of transnationalism, applying the concept to the case of the Cornish, whose economic specialization produced culturally distinct Cornish communities on the mining frontiers of North America, Australia and South Africa. In doing so, we bring together the issues of scale and time. We review the multiple levels of the Cornish transnational space of the late nineteenth century, which exhibited aspects of both core transnationalism and translocalism. This waned, but in the later twentieth century, a renewed interest in a transnational Cornish identity re‐emerged, articulating with changing identity claims in Cornwall itself. To capture better the experience of the Cornish over these two very different phases of transnationalism we identify another subset of transnationalism ‐ that of transregionalism.     

COULD STABLE MONEY HAVE AVERTED THE GREAT CONTRACTION?

We test the hypothesis that the Great Contraction would have been attenuated had the Federal Reserve not allowed the money stock to decline. We simulate a model that estimates separate relations for output and the price level and assumes that output and price dynamics are not especially sensitive to policy changes. The simulations include a strong and a weak form of Friedman's constant money growth rule. The results support the hypothesis that the Great Contraction would have been mitigated and shortened had the Federal Reserve followed a constant money growth rule.     

Should Firms Go “Beyond Profits”? Milton Friedman versus Broad CSR1

When attempting to articulate the nature and scope of corporate social responsibility (CSR), a variety of opinions emerge. The primary CSR issue appears to be: Should firms go “beyond profits”? In order to address this normative question, this article will explore the theoretical underpinnings of CSR and its practical application. Part one of the paper begins by discussing common CSR definitions. Part two outlines the CSR debate in terms of the “narrow view” of CSR (as represented by Milton Friedman) versus the “broad view” (i.e., beyond profits). Part three applies both the narrow and broad approaches to CSR in analyzing two classic business and society cases: (1) the Ford Pinto; and (2) Merck's river blindness pill. The article concludes with a proposed synthesis of the CSR approaches discussed.     

INTERNATIONAL DEBTS: WHAT'S FACT AND WHAT'S FICTION: PRESIDENTIAL ADDRESS TO THE WESTERN ECONOMIC ASSOCIATION, JULY 2, 1988

From the vantage point of 1988, the 1982 judgment that the troubled foreign country debtors had a liquidity problem, not a solvency problem, appears to have been fiction. The fact is that troubled debtors did not use productively the resources they borrowed. Further loans to them only add to the burden of their existing debt. Retaining the loans at face value on the books of the creditor banks is a fiction that financial markets see though. Intervention by regulators and international lending agencies has impeded bilateral bargains between the debtors and the banks.