Bryan Caplan and David Henderson

September 2003

A Monthly Archive (32 entries)

Libertarian Redistribution

Income Distribution
Arnold Kling
In an essay called Bleeding-Heart Libertarianism, I sketch a system for using a consumption tax with a negative-income-tax feature to replace government-provided health care, education, and income security. Does the bleeding-heart libertarian approach seem harsh? Actually, the Welfare State is... MORE

Meltzer on the Labor Market

Macroeconomics
Arnold Kling
In an earlier post, I asked, What is the likelihood that some of the weak job growth and strong productivity growth of the past two years is in part a statistical mirage? Allan Meltzer says that the likelihood is high.... MORE

Stock Options

Finance: stocks, options, etc.
Arnold Kling
In response to my earlier post on executive compensation, Jonathan Wilde wrote, First, to answer Arnold's question - since all economic values are subjective, there is no question of there being a 'correct' valuation. All voluntary economic exchanges depend on... MORE

California Reality

Energy, Environment, Resources
Arnold Kling
As a dean at Berkeley, Hal Varian has a personal interest in California. In his column today, he offers some plain-spoken economics lessons. Most California voters think the electricity crisis contributed to the state budget deficit. If only things were... MORE

Comment of the Week, 2003-09-24

Energy, Environment, Resources
Arnold Kling
On the subject of the environment and technology, D-squared writes, Future generations cannot make contracts with us, so their preferences about the rate of extraction don't figure in the market price. Suppose that the desire for ivory threatens to make... MORE

Executive Compensation

Human Capital: Returns to entrepreneurs, skills, etc.
Arnold Kling
Two interesting articles in the latest Journal of Economic Perspectives. Lucien A. Bebchuk and Jesse M. Fried focus on the agency problem. Managers have an interest in compensation schemes that camouflage the extent of their rent extraction or that put... MORE

The Case for Price Gouging

Price Controls
Arnold Kling
C.C. Kraemer argues that laws against price gouging are a bad idea. rather than harming the victims, the profit motive actually helps them because the result is an increase in supplies. That assures that everyone who needs the plywood will... MORE

Environment-friendly Farming?

Energy, Environment, Resources
Arnold Kling
Jonathan Rauch says that agriculture tends to abuse the environment. The trade-offs are fundamental. Organic farming, for example, uses no artificial fertilizer, but it does use a lot of manure, which can pollute water and contaminate food. Traditional farmers may... MORE

Productivity and Unemployment

Productivity, Baumol's cost disease
Arnold Kling
In The Labor Market Puzzle, I sketched a one-sector model in which marginal productivity was falling as average productivity was rising. This would account for a drop in employment along with higher average productivity. Paul Kasriel has a more extended... MORE

Minimum Wage and CEO Pay

Income Distribution
Arnold Kling
Marc Brazeau asks (see Steve Antler's site), Two common arguments against raising the minimum wage are possible inflationary effects and job loss. Why aren't these issues raised in relation to executive compensation? I think that the conventional wisdom is that... MORE

The Two Labor Market Surveys

Macroeconomics
Arnold Kling
The U.S. Department of Labor uses two different surveys of the labor market. As Alan Reynolds put it, When government officials asked people if they had a job last month, 137.6 million said "yes." But when employers were asked, they... MORE

Comment of the Week, 2003-09-17

Economics of Education
Arnold Kling
On the topic of college tuition, Andrew Martin writes, I disagree with the idea that tuition is high because the government helps pay for it. UNC, for an instate student is much lower than that $20 grand for the precise... MORE

Friedman Interview

Economics of Education
Arnold Kling
John Hawkins' interview of Milton Friedman touches on many subjects. Friedman is not terribly worried about Social Security. we're a very strong country, lots of able people, lots of active entrepreneurs, and so the Social Security system will be a... MORE

College Tuition

Economics of Education
Arnold Kling
Why is college tuition so high? In an essay, I argue that colleges today offer more lifestyle consumption benefits. college represents a different bundle of services than it did thirty years ago, and part of where the increase in tuition... MORE

The Budget Debate

Social Security
Arnold Kling
The Congressional Budget Office provides an analysis of the long-term Budget outlook. The projections also assume for analytical purposes that aggregate federal revenues will level out at 19 percent of GDP in 2020, reflecting the higher end of the range... MORE

Intellectual Property

Information Goods, Intellectual Property
Arnold Kling
N. Stephan Kinsella argues against the concept of intellectual property. On the utilitarian argument for intellectual property, he says, It is debatable whether copyrights and patents really are necessary to encourage the production of creative works and inventions, or that... MORE

Economics of Reconstruction

Institutional Economics
Arnold Kling
Given the situation in Iraq, an economic analysis of the problem of developing political institutions would seem timely. Tyler Cowen and Christopher J. Coyne have drafted a paper on the topic. They write, Our core thesis is the following: reconstructions... MORE

Comment of the Week, 2003-09-11

Economics of Education
Arnold Kling
On school vouchers, John Thacker wrote, Vouchers, depending on implementation, should decrease the strength of the link between housing and good schooling, since schooling would be less determined by where one lived. One would then expect the price of housing... MORE

Cancun Trade Talks

International Trade
Arnold Kling
I've always thought of these world trade meetings as being no more significant than the anti-globalization protests that they spawn, but I'll defer to others, who think that they matter. Peter Gallagher owns the issue in the blogosphere (at least... MORE

Grading the President in Macro

Macroeconomics
Arnold Kling
What grade should President Bush earn in macroeconomics? Brad DeLong writes, As a short-run employment- and demand-generating program, an objective grade would be a D if not an F. It was about cutting the taxes of the rich, improving incentives... MORE

Mortgage Depreciation

Finance: stocks, options, etc.
Arnold Kling
With Freddie Mac, a major mortgage lender (and once my employer) gripped by scandal, it might be useful to go over some basic economics of the mortgage business. In particular, I want so describe how mortgages are a depreciating asset.... MORE

Politics vs. Economics, II

Supply-side Economics
Arnold Kling
(Note: this continues the discussion from Politics vs. Economics.) Another topic on which politics and economics can be separated is "supply-side tax cuts." The meaning of this phrase has changed somewhat over the years. During the Reagan era, a supply-side... MORE

Two-Handed on Vouchers

Economics of Education
Arnold Kling
What would a new economics blog be without "on the one hand...on the other"? Marginal Revolution's Tyler Cowen writes, If we are going to move forward with vouchers, I would like to know what the plan will look like, once... MORE

Labor Market Puzzle

Macroeconomics
Arnold Kling
The latest labor market data show that aggregate hours worked fell again in August. This means that LUCY, my indicator of labor capacity utilization, also dropped. The longer that this productivity-cushioned recession continues, the more of a puzzle it presents... MORE

Politics vs. Economics

Growth: Causal Factors
Arnold Kling
On one of the comment threads, a reader asked me if I disagreed with the economics of Lawrence Kudlow. "Honestly, I never thought he had any to disagree with," was how I began my reply. Let me revise and extend... MORE

Economics of Content

Information Goods, Intellectual Property
Arnold Kling
Clay Shirky writes that the Internet helps to break the link between fame and economic success for writers. For an author to be famous, many people had to have read, and therefore paid for, his or her books. Fortune was... MORE

Imputed Income

Income Distribution
Arnold Kling
Jeff Madrick discusses the work of Elizabeth Warren and Amelia Warren Tyagi on the plight of middle-class two-income families with children. what families spend a lot more on, the authors calculate, is a house in a safe neighborhood with a... MORE

The Civility Plea

Econlog Administrative Issues
Arnold Kling
'Jane Galt' and Kevin Drum have made "civility pleas" on their web logs. What they are saying is that people's comments ought to treat opponents with respect. Let me add a similar plea to this blog. I've always felt that... MORE

Structural or Cyclical Unemployment?

Macroeconomics
Arnold Kling
I continue to think that the term jobless recovery should be replaced by productivity-cushioned recession. Meanwhile, Erica L. Groshen and Simon Potter have written more about the phenomenon. we look for evidence that structural change played a dominant role in... MORE

Comment of the Week, 2003-09-03

Regulation and Subsidies
Arnold Kling
Regarding the New Deal, Boonton wrote, how much of the New Deal has survived? While national economic planning seems to have finally been discredited...the bulk of the New Deal remains firmly established not only in the US but in most... MORE

Manufacturing Crisis?

International Trade
Arnold Kling
On Labor Day, President Bush announced that there would be a new Assistant Secretary of Commerce charged with addressing the decline in manufacturing employment. This prompted a number of skeptical responses. Yesterday, Daniel Gross wrote, The new assistant secretary must... MORE

Government Incentives

Cost-benefit Analysis
Arnold Kling
Does the absence of a bottom line affect government behavior? Consider this story from the Washington Post about the "busy season" for GTSI, a company that sells technology products to government agencies. Fall is coming, and for GTSI that means... MORE

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