Bryan Caplan and David Henderson

June 2003

A Monthly Archive (26 entries)

Perspectives on Social Security

Social Security
Arnold Kling
Last year, Stanley Fischer discussed Australia's Social Security system. He found several aspects to be admirable. Australia has already undertaken the key pension system reforms that most of the rest of the industrialized world is now struggling with. The World... MORE

Income Distribution Stories

Income Distribution
Arnold Kling
This week, the topic of income distribution made news. Several news outlets highlighted a report from the IRS on the 400 highest-income taxpayers. annual samples of individual income tax returns for Tax Years 1992 through 2000 were sorted by AGI,... MORE

Comment of the Week, 2003-06-25

Economics of Health Care
Arnold Kling
On my criticism of a physician's proposal to cut prices for prescription drugs, Bruce Bartlett wrote, It would cut medical costs even more if we forced all doctors to work for the minimum wage. I used a similar analogy in... MORE

Housing's P/E Ratio

Finance: stocks, options, etc.
Arnold Kling
Should you rent or buy your house? I've always answered this question using an arbitrage relationship that should obtain between a house's rental rate and the real rate of interest. The rental rate is the ratio of the annual cost... MORE

Quack Remedy

Economics of Health Care
Arnold Kling
If I were to attempt to practice medicine without a license, I could be prosecuted. On the other hand, there is nothing stopping a doctor from pronouncing himself an economic expert and recommending price controls. In today's Washington Post, physician... MORE

Oil Import Tariff?

Energy, Environment, Resources
Arnold Kling
Charles Krauthammer's premise, that reducing demand for oil will reduce terrorism, violates what I call Oil Econ 101. But he does offer the least costly way to achieve the goal. Slap, say, a $5 (or $10--the bazaar is open) tax... MORE

IRA's to the Rescue?

Social Security
Arnold Kling
Asymmetrical Information points to a paper by Michael Boskin. Roughly $400 billion a year is contributed to various tax-deferred saving vehicles, and the amount is likely to grow with nominal income growth and the increased limits on tax-deferred contributions recently... MORE

Bubbles and Macroeconomics

Macroeconomics
Arnold Kling
In this essay, I discuss two alleged bubbles and what they might imply for U.S. macroeconomics. Why do foreign investors invest so heavily in dollar-denominated assets and bear the risk of a decline in the dollar? Personally, I think it... MORE

Comment of the Week, 2003-06-18

Efficient Markets Hypothesis
Arnold Kling
On the topic of resisting efficient markets, 'rvman' wrote, Put all of your money in index funds. For five years, pick stocks and invest with monopoly money, matching your real original investment in your fake portfolio. If you can beat... MORE

Common Sense Macroeconomics

Macroeconomics
Arnold Kling
Robert Solow favors common sense over exotic theory. On the concerns about deflation in the U.S., he writes, If you look at the hundreds of prices that are tracked by the Bureau of Labour Statistics as elements of the consumer... MORE

Bond Market Bubble?

Finance: stocks, options, etc.
Arnold Kling
Followers of the market for U.S. government bonds have started tossing around the term "bond bubble" with increasing frequency. The concern is that interest rates on long-term Treasuries have gotten so low that investors face high risk (if interest rates... MORE

Ethanol Mandate

Energy, Environment, Resources
Arnold Kling
Lynne Kiesling points to this article by Joel Schwartz on the ethanol mandate. what if our elected officials ... forced you to pay $180 more each year for gasoline that contains an antiquated additive you don't need, and that could... MORE

Drug Price Discrimination?

Information Goods, Intellectual Property
Arnold Kling
Derek Lowe compares the fact that prescription drugs cost less outside the U.S. to the phenomenon of price discrimination by airlines. Most consumers [of pharmaceuticals] in the US don't realize that they're subsidizing the lower prices for everyone else, whereas... MORE

Resisting Efficient Markets

Efficient Markets Hypothesis
Arnold Kling
Columnist James Glassman discusses the Efficient Markets Hypothesis with John Allen Paolos, author of A Mathematician Plays the Stock Market. If you believe in the EMH, you understand that highly successful stock selections are really just lucky guesses... But, to... MORE

Comment of the Week, 2003-06-12

Trade Barriers
Arnold Kling
On the subject of globalization, 'achilles' writes There is a burgeoning movement that seeks to blame rising unemployment in the United States on the "export" of jobs to cheaper lands overseas. That is version 2.0 of the old mindset that... MORE

Social Security Privatization

Social Security
Arnold Kling
Peter Ferrara claims that Social Security could be gradually privatized and the future deficit eliminated without reducing benefits. This is a free lunch of staggering dimensions. Among other things, it relies on the following assumption. The long-term real rate of... MORE

Germany

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
The German economy is in bad shape. Brad DeLong points to a paper by Adam S. Posen that assesses Germany's potential to go into a long slump like Japan. For an advanced economy to perpetually stagnate, its political economy must... MORE

Protesting Globalization

Trade Barriers
Arnold Kling
Given her credentials as a conservative icon, Phyllis Schlafly is one of the stranger bedfellows of the anti-globo movement. Here is her protectionist proposal: Congress should reject all attempts to extend the current number of H-1B visas and allow the... MORE

Oil Econ 101

Energy, Environment, Resources
Arnold Kling
I once wrote an essay called Oil Econ 101, in which I argued that while we can lower our consumption of oil, that would not reduce our dependence on Saudi oil. Ram of postpolitics.com suggested I might want to comment... MORE

Health Care Madness

Economics of Health Care
Arnold Kling
Why is health care regarded as something that the market cannot provide? In this essay, I argue that the problem is mental illness. Anyone who believes that we can afford collectively what we cannot afford individually is delusional... Suppose that... MORE

Comment of the Week, 2003-06-04

Income Distribution
Arnold Kling
This week, there were a number of interesting comments on the topic of measuring income inequality and income mobility. In response to a question I raised about whether a measure of wealth should include expected future earnings, D-squared wrote, Absolutely... MORE

The Challenge to Cut Spending

Fiscal Policy
Arnold Kling
Recently, Kevin Drum issued this challenge to those who claim to prefer lower government spending. Let's hear what you want to cut. And remember, for bonus points you have to include some programs that you yourself benefit from. I was... MORE

Academic Salaries

Economics of Education
Arnold Kling
Stephen Karlson points to this story about resentment among humanities faculty of higher salaries in professional schools. While many academics have accepted the inevitability of the differences, others believe that salaries in professional schools are out of control. Critics worry... MORE

The Poor Get Richer

Income Distribution
Arnold Kling
Daniel Drezner assembles several items that refute the conventional wisdom that in the United States the poor get poorer as the rich get richer. If you care only about income, the poorest percentage of the population made great strides during... MORE

Wesbury on Tax Cuts

Supply-side Economics
Arnold Kling
Brian Wesbury makes a supply-side case for tax cuts. One point he makes that I agree with is that when we think of the government "crowding out" the private sector, we should focus on spending rather than taxes: Spending must... MORE

Economic Attribution Error

Fiscal Policy
Arnold Kling
In this essay, I argue that the importance attached to the President or the Fed Chairman in determining economic outcomes may be an instance of what psychologists call the fundamental attribution error. During the Clinton administration, the projected Budget surplus... MORE

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