It appears to be routine for Lindau to be brushed by greatness announced elsewhere. Associated Press archives have a despatch from September 1958 announcing that the 100m sprint may have just been here for the first time in under 10 seconds,with as much a fifth of a second clipped off the existing world record. Its like the four-minute mile, gushed the correspondent. Alas,that day it was not be for Armin Hary,a young West German precision machinist doubts over the measurement and possible incline kept him off the record books. But he did go on to grab the record,elsewhere,and eventually the Olympic gold. Thats what adds to the open charm of this island town so picturesque and so dainty that it can be circumnavigated in minutes,yet one which greets visitors disembarking from the train with an Alfred Nobel Platz. Since 1951 the island has hosted Nobel prize-winning scientists to interact with young researchers,allowing discussions and debates about the past,present and future. It has,you may say,become the place where the afterglow of Stockholm is found. A take on Lokpal Among the 17 economics laureates who presented their views at Lindau is Roger B Myerson who won the Nobel in 2007 for helping lay the foundations of mechanism design theory. Myerson,who concentrated his lecture on a model of moral-hazard credit cycles,is also a political scientist and has inquired into the fundamentals of state-building and how best to constitutionally distribute power. Following the Lokpal debate in India,he said it was a great idea to have an independent investigator but prosecution should be retained under an elected government. If a body has the power to investigate and prosecute a person for a single type of misdemeanour,he warned,it would have full power over her,including the power of blackmail. The idea of ensuring upright incumbents in political office,he said,is good,but how that uprightness is ensured is tricky. For instance,he added,Pakistans constitution requires a legislator to be of good character,a fair enough expectation the trouble,he argued,is in determining who it is who can issue this character certificate. Election theory Myerson shared the 2007 prize with Eric Maskin,who has worked with Partha Dasgupta to determine how best to structure a voting system to determine the will of the people. In a talk titled elections and strategic voting: Condorcet and Borda,he considered the manipulability of plurality rule (first-past-the-post),majority rule (Condorcets method),rank-order voting (Borda count),and runoff voting. Which of these,he asked,would satisfy these axioms: Pareto property (if all voters prefer candidate x to y,then it would be perverse to elect y); anonymity (if voters exchange preferences,the same result must obtain); neutrality (if names of candidates are permutated,it should not matter); strategy-proofness (that is,a candidate should not feel compelled to vote for a candidate she who is not her first preference). If focus on the independence of irrelevant candidates (marginal contestants who may influence the eventual result dramatically) is removed,the best voting rules turn out to be majority rule and rank-order voting. Defining a crisis Joseph Stiglitz is a star act at any conference,and this time he referred to banners outside the venue (shame on you Nobel economic scientists bringing down the world with your neo-liberal theories) to rally the hall to his submission that it is not just an economic crisis that has been afflicting the world since 2008,it is also a crisis in economics. Attack on a system Edmund Phelps,who won the prize in 2006 for his analysis of intertemporal tradeoffs in macroeconomic policy,affected affable indignation at a newspaper reference to him this week as a free-marketeer. Hes been a critic of the left and right,he said,as he began his commentary on the Arab Spring. He warned of the slow creep of the corporatist system. To quote from his abstract: This system,in which,in principle,the state may intervene at its own discretion without any restraints,poses serious moral hazards. Self-interested legislators are apt to use their votes,and agency heads their powers,to award projects in order to win the support of interest groups that can keep them in office. For those in office dispensing patronage,it is more convenient to award clients and cronies monopoly power than to award them contracts paid with scarce tax revenue. The gain of these insiders disadvantages outsiders,who may be unable to start a business,break into an industry or have a rewarding career whether or not protected with subsidies for medical care,food and heat. This is the burden of extreme corporatism: the deprivations for few or many of basic goods like careers,which are not morally compensated by the spoils of the advantaged,few or many. This is what the young people of Tunisia and Egypt,he argued,were rebelling against and while they may not term it as such,what they seek is the spirit of capitalism.
