Today's Reading

• Robert H. Frank, the Cornell economist, asks: Which economic metaphor best describes our future: the winner-take-all economy or the long-tail economy?
• The number of Indian farmers who have committed suicide since 1995 under the pressures of loans they cannot repay is approaching 300,000. They are borrowing money from loan sharks because (a) government subsidies are being cut, (b) competition from imports is surging, and (c) agriculture now requires large investments in costly genetically-modified seeds. The lenders charge interest rates as high as 24 percent. Even suicide brings no relief: the loan falls on the widows and the children. Unlike in rich countries, there is no bankruptcy protection, and no bans on usurious interest rates: rural India is now a haven for pitiless pure capitalism! And government officials are shockingly unsympathetic, blaming the suicide victims for spending too much money on -- wait for it! -- their children's education. Here is one family's story.
• Gregory Clarke, an economist at UC Davis, presents a fascinating summary of his new book on how impervious social mobility is to social engineering.
• This editorial in today's New York Times effectively demolishes the idea that the Obama stimulus (formally, the American Recovery and Reinvestment Act, enacted five years ago) was a waste of money.
• This is a fine summary of recent research that poverty leads to irrational choices, and not just the other way around. I have been following this literature every since the publication of "Scarcity: Why Having Too Little Means So Much" by Sendhil Mullainathan and Eldar Shafir, and I discussed the book with my students last semester. Although the study on Indian sugarcane farmers was known to me, I was unaware of the Great Smoky Mountains study described in this piece.
• Here's another blog post on the same theme.