Bryan Caplan and David Henderson

June 2004

A Monthly Archive (28 entries)

Housing Bubble?

Finance: stocks, options, etc.
Arnold Kling
I still contend that we are not in a housing bubble. The drop in the real interest rate of one percentage point from 3 percent should have raised the intrinsic value on stocks and houses by 33 percent! So, if... MORE

Sustainability

Energy, Environment, Resources
Arnold Kling
Michael Lind offers an optimistic assessment of the prospects for sustaining a world population of 9 billion. As affluence grows, the amount of energy and raw materials "consumed" by machinery will escalate even more rapidly than human consumption. But this... MORE

The Productivity Story

Growth: Consequences
Arnold Kling
Is productivity growth the most overlooked economic story? Brad DeLong thinks so, and Virginia Postrel agrees. The productivity story is boring. It isn't really, but editors think it is. There's no obvious conflict, no scandal, no little guy getting hurt... MORE

Asbestos Litigation Costs

Regulation and Subsidies
Arnold Kling
Michell J. White writes, That asbestos was so widely used from the 1950’s to the 1980’s suggests that multiple regulatory systems failed, including workers’ compensation, workplace safety regulation, product safety regulation, and liability law. ...Will the asbestos mess at least... MORE

SEC Taxes Mutual Funds?

Regulation and Subsidies
Arnold Kling
The latest SEC regulation of mutual funds draws fire from Stephen Bainbridge. He quote Cindy Glassman, an SEC Commissioner who dissented, as pointing out that no cost-benefit analysis was done of the proposal to require mutual funds to have an... MORE

The Minimum Wage, Con't

Labor Market
Arnold Kling
Glen Whitman writes, The minimum-wage advocates who have thought much about it (of course, many haven't) usually have in mind some kind of monopsony model - that is, they assume a market in which employers have some degree of monopoly... MORE

Export-led growth?

Growth: Causal Factors
Arnold Kling
Two piece in the Wall Street Journal challenge the idea that export-led growth is the path to economic success. Amar Bhide writes, The Indian software industry now employs around half a million professionals. Under optimistic projections, the industry will add... MORE

The Minimum Wage

Regulation and Subsidies
Arnold Kling
Why oh why can't we have a Brad DeLong who will put the adults in charge of the clown show that is John Kerry's campaign? (For those of you who do not read DeLong, I am borrowing his anti-Bush tropes)... MORE

The Balance of Saving

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Should we worry about what I call the Balance of Saving (our trade deficit)? Don Boudreaux says no. Why should I care if new enterprises are financed out of the savings of a stranger from South Dakota rather than out... MORE

Housing P/E's

Finance: stocks, options, etc.
Arnold Kling
Ed Leamer's analysis of home prices in the San Francisco Bay area is summarized. His findings: In the Bay Area, the average P/E for a house shot up to 13. 8 in the first quarter of 2004, compared with 7.2... MORE

Moore's Law for Storage

Growth: Causal Factors
Arnold Kling
Tyler Cowen points to a historical timeline of the cost of data storage on hard disk drives. According to the timeline, the cost fell below $100 per megabyte in May of 1984. It fell below $1 per megabyte ten years... MORE

Economists' Assumptions

Economic Philosophy
Arnold Kling
Donald J. Boudreaux writes, What about the assumption of self-interest? It, too, is equally inoffensive. All that economists need to be true on this front is that each person generally cares more about himself, his loved ones, and his friends... MORE

The Economics of Immortality

Social Security
Arnold Kling
Aubrey de Grey reviews a Brookings volume on the economics of increased longevity. Aubrey has a more optimistic vision than the authors. rejuvenation research...will anticipate and remedy the life-threatening degenerative changes appearing at newly achieved ages with ever-increasing efficacy and... MORE

Tax Cuts for the Rich

Income Distribution
Arnold Kling
Philosopher Keith Burgess-Jackson dissects the phrase. Nobody, to the liberal, has a valid claim on anything, even his or her talents. Those who produce or acquire wealth do so not because of effort, initiative, creativity, or sacrifice. They're just lucky.... MORE

From Galbraith to Spitzer

Growth: Causal Factors
Arnold Kling
In an essay on the past and present positions of those who advocate big government, I write, The view that only large industrial enterprises matter seems preposterous now. If Galbraith had been right, then the industrial structure of the 1960's... MORE

Rational Decisions and Pharmaceutical Regulation

Economics of Health Care
Arnold Kling
Today's Washington Post contains another op-ed piece by a physician, and of course he is in favor of price controls on prescription drugs. The pharmaceutical industry will intone its familiar mantra: The cost of drugs is a relatively small percentage... MORE

Future of Education

Economic Education
Arnold Kling
I speculate on the future of education. The first ongoing trend, one that affects the demand for education, is rapid technological change. As the pace of change continues, or even accelerates, it causes all human capital to depreciate more rapidly.... MORE

U.S. vs. Europe

Growth: Consequences
Arnold Kling
Steve Antler points to a study by Fredrik Bergström & Robert Gidehag of various indicators of prosperity in the U.S. relative to countries of the European Union. Most Americans have a standard of living which the majority of Europeans will... MORE

Medicare Proposal

Economics of Health Care
Arnold Kling
Laurence Kotlikoff suggests this. All Medicare participants would receive individual-specific vouchers on October 1st of each year to purchase insurance coverage for the following calendar year. The size of the voucher would be based on the participant's current medical condition... MORE

Run Out of Oil?

Energy, Environment, Resources
Arnold Kling
George Will quotes Cafe Hayek's Russ Roberts' pistachio example. Of course, oil supplies are, as some people say with a sense of profound discovery, "finite.'' But that distinguishes oil not at all from land, water or pistachio nuts. Russell Roberts,... MORE

Inappropriate Annuities

Social Security
Arnold Kling
Are annuities appropriate for the elderly? The Securities and Exchange Commission and the National Association of Securities Dealers say not necessarily. The SEC also today issued an alert to remind investors that variable annuities are not suitable for all consumers,... MORE

Lucas on Growth

Growth: Causal Factors
Arnold Kling
Robert E. Lucas, Jr. (Nobel, 1995), sounding much like Brad DeLong, gives a historical overview of economic growth which is Malthusian up until around 1800 (meaning that population growth ate up, so to speak, increases in production), followed by a... MORE

Reagan's Economics in Context

Supply-side Economics
Arnold Kling
I decided to put my thoughts into a longer essay. When Ronald Reagan defeated Carter's re-election bid, "incomes policies" were a proven failure. Notwithstanding Milton Friedman's comments quoted above, by 1980 it took a lot less courage to stand by... MORE

Ronald Reagan's Economics

Supply-side Economics
Arnold Kling
Jane Galt writes, High inflation was the result of a dozen years of bad fiscal and monetary policy under two Republicans -- Nixon and Ford -- and two Democrats -- Johnson and Carter -- that was brought under control only... MORE

What Determines Exchange Rates?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen meditates on the topic of exchange rates. I am headed back from Poland to France, for one more day in Europe. I cannot help but wince at the especially high prices in France, compared to the United States.... MORE

Milton Friedman on health, education

Economics of Health Care
Arnold Kling
In an interview, Milton Friedman explains why shifting education and health care from the market to the government is inefficient. There are four ways in which you can spend money. You can spend your own money on yourself. When you... MORE

Health Insurance Idea

Economics of Health Care
Arnold Kling
Brad DeLong writes, now the Kerry campaign has dusted off and brought forward a very clever idea from Brandeis's Stuart Altman...Have the government take its task of social insurance seriously, and reinsure private insurers and HMOs: construct a 'premium rebate'... MORE

Gas Tax Debate

Energy, Environment, Resources
Arnold Kling
David Ignatius is pro: The best plan I've seen for doing the politically impossible comes from an energy economist named Philip Verleger. ...Verleger favors what he calls a "prospective gasoline tax," which would allow the country four years to get... MORE

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