Krugman says "MMT"

So, Paul Krugman has finally mentioned "Modern Monetary Theory" within the Grey Lady. A bunch of people have commented, including Interfluidity, Dean Baker(!), Corrente/Lambert(?) and probably many more.

So, will this be the crack in the dyke that brings the whole edifice of macroeconomics down? Or will it just vanish down the memory hole like Climategate? My bet is on the latter, but only if Paul stops bringing it up.

The US cell phone market

The excellent Asymco has a great post about the state of the cell phone market in the US. In particular, he wonders whether the proposed AT&T/T-Mobile acquisition should be blocked on anti-trust grounds given the amount of disruption and innovation that is clearly going on in that market:

AT&T’s intent to acquire T-Mobile USA is subject to regulatory approval. Will regulators look at the deal through the lenses of sustaining the traditional industry’s profit allocation or through the lenses of device-led disruption?

In theory, regulators are to make a determination on whether the deal will reduce customer choice. But the question is really choice of what? The focus is presumably on the choice of service plans. That’s understandable, however coupled to that choice is the choice of devices and even more importantly, the choice of platforms.

He goes on to list the usual litany of complaints about US cell phones -- service is spotty, networks are bad, you need to pay to both make and receive calls, you get locked into handsets etc.

All of those are fair, but I think it's also fair to look at the flip side -- using a cell phone in the US is cheap. The only calls you pay for are those made, out of network, during business hours as most plans have free nights and weekends, and free in-network. The per-minute charges are also really low.

Also, the avalanche of innovation Apple launched with the iPhone could only have come from a market where the handset and carrier was tightly integrated because of all the expensive co-investment that needed to be made at the infrastructure level. AT&T originally said "no" to Apple, btw. Cingular ended up saying "yes" because they were a more nimble, innovative company and they needed to differentiate themselves from the big boys. AT&T ended up with the iPhone by accident as a consequence of the Cingular acquisition.

Sometimes you need tight integration to disrupt.

Let the Yen Rise

The Yen is rising, and various nations are acting in concert, with Japan, to bring it back down. This is crazy.

Think about it -- Japan has just suffered a tremendous negative real shock. Buildings, roads, equipment, factories, etc. have all been destroyed and need to be replaced. More tragically, thousands of people have died and aren't there to replace them all. What the country needs is a stronger yet, so it can import more sweat and atoms from abroad to make up for everything it has lost.

Instead, it is devaluing its currency to help its exporters. So atoms, desperately needed at home, will be rearranged by sweat, which could be spent at home, and then sent abroad, in exchange for numbers in a spreadsheet.

Exports are real costs. Imports are real benefits.

Japan and the media

In no way do I want to downplay the tragedy that has struck Japan, and continues to unfold. Nevertheless, my friend in Sendai seems decidedly non-plussed about the conditions, and my high-energy particle physicist relative is non-plussed about the nuclear risks.

Buy N255?

Japan -- from the ashes?

A massive earthquake, a huge tsunami, and now the possibility of a nuclear meltdown. Things are looking grim for poor Japan.

Japan has enormous real problems, having suffered a massive real negative shock. Their ability to "finance" their reconstruction is (thankfully) not a real problem at all. This tragedy makes it very clear: there is a huge amount of real (sweat & atoms) work to be done, and there is a huge amount of real (swat & atoms) labor and capital ready and willing to do it. The Japanese Government can print as many Yen as it needs to to mobilize its available resources and get the country to work. Maybe now, finally, Japan will fund its demand for net private savings (equity) and escape the balance sheet recession it's been mired in for a generation.