Planet Money

Some days, you just have to wonder why the world is the way it is. Emily Oster is making a career out of training the lens of economics on just that question. Oster talks about her economic of analysis of AIDS and risky behavior in Africa, and she answers a riddle from a Planet Money listener. That riddle: Why, when prices are flat or falling, are restaurants piling more food on our plates?

Does the existence of hope unfulfilled make for a worse life? Medieval historian Philip Daileader says it might. People in places like 12th and 13th century France lived far more constrained economic lives than we do, but they had no expectations that their situations would ever improve.

The cost of health care is rising faster than our economy is growing — it's an economic train wreck waiting to happen. The debate over fixing that situation rests on a couple of key questions, namely how do we get coverage for everyone and how do we control costs. That second question turns out to be much harder to answer. For all the talk about healing, a hospital is also a business. Cutting costs at a hospital falls to a hospital administrator like Daniel Kearns. He worked at a string of hospitals in the Southwest. Kearns says the hardest part of his job was dealing with doctors, like the one who wanted baseball season tickets for his family and the one who wanted a helicopter for transportation. Those may sound wacky, but Harvard health economist Tom McGuire, says neither patients, doctors nor hospitals have real incentives to trim expenses because they're all spending someone else's money.

A lot of folks want to know who's to blame for the Great Recession. Investment manager Liaquat Ahamed says he knows who's to blame for the Great Depression. Ahamed, author of Lords of Finance: The Bankers Who Broke the World, blames that economic collapse on the boneheaded policies of the leading central bankers. Ahamed says much of the problem stemmed with a return to the gold standard.

The recession's showing signs of up, but the credit crisis isn't over. Banks still aren't lending like they used to, to families or businesses. Ira Jersey, head of U.S. interest rate strategy at RBC Capital Markets, can tell you why. Put simply, it's that families and businesses have borrowed too much already. They're continuing the long, slow and painful process of paying the debt down or writing it off.

Congress has been arguing for months now about the best ways to overhaul the American system of financial regulation. It's a tough conversation, because regulation can be bad in a couple of ways. First, regulation can be ineffective, in which case it fails to prevent the outcomes it was designed to block or causes more problems than it solves. Second, regulation can overreach, in which case it stifles financial innovation. After newfangled financial products nearly brought down the global economy last fall, you might think it's not so bad to stifle financial innovation. But financial innovation has also led to prosperity. Atlantic writer Mike Konczal and Columbia Business School economist Charles Calomiris argue the pros and cons of Wall Street creativity.

Almost a year into the financial crisis, we ask foreign policy analyst Ian Bremmer to take stock of America's position in the world. Bremmer, author of The Fat Tail and president of the risk consulting firm Eurasia Group, says America has lost some of its power. Bremmer gives two reasons for that. First, he says, other countries have recovered from the crisis more quickly. The second, he says, is that the crisis has forced U.S. leaders to pay more attention to domestic affairs and play a less active role on the global stage. On the upside, Bremmer says this is a great time to invest in Iraq.

Before governments had regulators with suits and briefcases, says College of William and Mary history professor Philip Daileader, they had knights. The Lancelots of real life went around the kingdom forcing people to pay whatever the knights decided they owed. It was a brutal economic approach. If you think the knights were tough, be thankful you never faced the guild system. It existed to eliminate competition and benefit producers at the expense of consumers. Craftspeople fought each other for control and tried to limit access to the market — at their own expense, it turned out.

Goldman Sachs carries a certain mystique on Wall Street. The firm is known for hiring the brainiest people and paying them well. A number of its former executive have gone into politics, including former CEO Henry Paulson, who became President Bush's Treasury secretary, and former CEO Robert Rubin, an adviser to Presidents Clinton and Obama. This week, Goldman finished paying back its $10 billion federal TARP loan — with taxpayers pocketing a return of 23 percent. The firm also just released a fantastic report on its earnings, totaling $23 billion for the first half of 2009. Goldman is setting aside almost half of that money for paying its 30,000 employees. In rough terms, that amounts to almost $400,000 for each worker. Lucas Van Praag, a Goldman spokesperson, answers questions about other ways Goldman received government help and why it's rewarding the staff so richly after getting a hand from Uncle Sam. Plus: The stunning results from our Economic Radio Story Showdown.

The rational school of economics holds that markets make sense. Sure, some people and businesses trade on raw, crazy emotions, but the mistakes cancel each other out. In the end, the rational school argues, market prices make sense. And then there's real life. Anyone who has spent any time looking at the stock market has to think there's at least a decent chance the whole thing is crazy — prices pinging around, investors making crazy bets, regulators trying to figure out who's flouting the byzantine rules. Justin Fox, a writer for Time and author of "The Myth of the Rational Market," talks about teddy bears, bubbles and Alan Greenspan.

It looks like business lender CIT will be saved from bankruptcy by a $3 billion loan from its bondholders. The bondholders decided to step forward with the offer after the Treasury Department and the FDIC turned down the company's bids for help — apparently the government decided this institution was not too big too fail. Bill Dunkelberg, chief economist with the National Federation of Independent Business, explains how CIT got into trouble in the first place. Details of the deal are still being worked out and there is no guarantee the plan won't fall apart. A collapse of CIT could spell disaster for many of the nation's retailers who depend on the company for financing. National chains like Dunkin Donuts are clients and the company has even touted its aid to donut franchisees. Planet Money intern Matt Katz hit the streets of New York to find out what a world without donuts would look like.

Robert Frank, author of the Economic Naturalist's Field Guide, lays out the benefits and problems of merit based pay using the Planet Money Staff as an example. Plus: we asked you to share your stories about how you get paid. Today we hear from real estate agent Rachel Nelson, who says she likes working on commission, and mechanic Raymond McMormick who pays his staff using a piece rate system.

Adam Davidson, Chana Joffe-Walt and David Kestenbaum visited New York's Fancy Food Show with a directive: bring back the best economics story they could find in just 60 minutes. The starring ingredients: olive oil, vanilla beans, and roquefort cheese. You can listen and vote for your favorite fancy food story at npr.org/money.

As U.S. job losses mount, so do calls for another round of economic stimulus spending by the federal government. So far, President Obama says it's not needed. Stay tuned, says Eurasia Group's U.S. policy analyst Sean West. He argues that the administration will have to take some kind of action to get the economy going again. It's just that they might not call it a stimulus plan. Plus: Sen. Kent Conrad (D-ND) wants to know exactly what caused the economy calamity we're now living through. Conrad sponsored legislation to create the Financial Crisis Inquiry Commission, a panel with economic experts and no elected officials, to study the matter. The group returns with its findings ... in 2010.

The planet's rich nations met this week to discuss, among other issues, ways to help the planet's poor nations. But those poor nations have their own group. It's called the anti-G20, in a nod to the G20 collection of industrialized states. The anti-G20 met at the U.N. last month, where Nobel Laureate Joseph Stiglitz and Martin Khor explained what keeps impoverished countries down. Answer: Their debt to the IMF and wealthier nations. Plus: a second look at the surprisingly complex financial lives of the poor, with a focus on burial societies and very alternative banks.