Sunday, April 26, 2009

The "Green" U.S Military?

In print, my quote in this Los Angeles Times Article on the "green" military" doesn't look too smart. I apologize. The scale of the U.S Military is such that it creates a "big push" for any activity that the Pentagon focuses on. So, if the Generals "go green", then green entrepreneurs will know that there is a credible demand for their end product. This should reduce the uncertainty of the benefits of engaging in costly irreversible R&D research to build the prototypes. Again, there are high fixed costs of entering a green market and there is stochastic demand (i.e gas prices bounce around). If the government can pre-commit to buy green, then the green entrepreneurs enter the industry and endogenous technological change is more likely to take place.

In other news, the Clark Medal to Emmanuel Saez is a great choice. For all of you who moan and groan that modern economics is frivolous or too "mathy" , Saez deflects all of you.

1. He has written "hard" RESTUD papers on optimal tax
2. He has done excellent non-experimental long term descriptive work on income inequality stuff (the stuff that Krugman loves and my parents love). Here he collected unique tax data to study the right tail and has repeated this around the world.

3. He has run some really cool field experiments focused on important topics and teaming up with real world companies to run these experiments such as local learning and retirement program take up rates.

Work in any 1 of these categories would have gotten him tenure somewhere very good. To have achieved all 3 of these is really impressive.

Saez works on important questions and uses the appropriate techniques to make progress on the question at hand. We can all learn from this pragmatic approach to scholarship.