Bryan Caplan and David Henderson

March 2009

A Monthly Archive (132 entries)
SummaryIn this six-page chapter, Rothbard makes a sweeping economic case against "government in business."  He begins by noting the power of status quo bias:People tend to fall into habits and into unquestioned ruts, especially in the field of government. On... MORE

Libertarians and Jonah Goldberg

Books: Reviews and Suggested Readings
Arnold Kling
Jonah argues that we have become belated converts to the Liberal Fascism thesis. And Arnold Kling who said my book was in fact written by three people -- "Goldberg the revisionist historian, Goldberg the outraged conservative child, and Goldberg the... MORE

Tyler Cowen Explains Systemic Risk

Finance: stocks, options, etc.
Arnold Kling
in one sentence. If your banks are less risky, often something else is more risky, and vice versa.... MORE

Health Care Expert

Economics of Health Care
Arnold Kling
Guess who? proposals in his book, including a plan to scrap Medicare, Medicaid and employer-based health insurance in favor of vouchers that people could use to purchase coverage. It was not me, although I would be quite happy with those... MORE

Obama Throws the F-Bomb

Central Planning vs. Local Knowledge
David Henderson
No, not that one; I wish. President Obama has done something far more serious. He has already, in less than 100 days, moved the U.S. economy further towards fascism. Sean Hannity and other critics keep criticizing Obama for his socialist... MORE

My favorite section in Ellen Galinsky's Ask the Children has children separately grade (A, B, C, D, or F) their moms and dads in twelve areas:1. Being there for me when I am sick?2. Raising me with good values?3. Making... MORE

A Useful Narrative of the Crisis

Finance: stocks, options, etc.
Arnold Kling
Matt Taibbi writes, What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking... MORE

Weekend Commentary

Finance: stocks, options, etc.
Arnold Kling
John Reed stresses the same issue that I do on the financial crisis: capital requirements, and their perverse encouragement of banks to hold securities instead of the underlying mortgages. One point that he makes that is new to me is... MORE

Criminal Law in Theory and in Practice

Economics of Crime
Arnold Kling
Cato sent me a copy of In the Name of Justice, edited by Timothy Lynch. It's not my field, so I just read Lynch's introduction. He describes a litany of ways in which our criminal justice system takes away Constitutional... MORE

Should Banks be kept Small?

Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen does not see much help in keeping banks small. I agree with Simon Johnson, who thinks that big banks are too powerful politically. I think that the issue does pretty much boil down to political economy. Big banks... MORE

A Letter to the Washington Post

Finance: stocks, options, etc.
Arnold Kling
They printed it (to read my letter, scroll down after you follow the link). Their front-page story on Geithner's regulatory proposal made me lose my Cheerios when I read it. What they printed is a mild effort to correct their... MORE

Health Care Policy Swindle

Economics of Health Care
Arnold Kling
Keith Hennessey writes, You cannot spend $634 B on health IT, preventive care, and outcome measurement. You'll run out of things on which to spend it. Actually, you can spend that much--the recipients of the money will see to that.... MORE

Behavioral Genetics and the Single Economist

Family Economics
Bryan Caplan
In The Limits of Family Influence, David Rowe summarizes some evidence on spousal resemblance:[H]igh spousal correlation coefficients did not appear to be the result of social influence in the marriage; people who had been married a long time were not... MORE

The Nature of Government

Regulation
David Henderson
Kiss the Emperor's Ring The Dallas cop who prevented the NFL player from seeing his mother-in-law before she died has gotten a lot of press. Various people have taken various sides. Bill O'Reilly, true to form, said last night that... MORE

Here's the conclusion of Daniel Akst's Wall St. Journal review of Parentonomics: It's a pity that Mr. Gans misses the chance to cover the most interesting question an economist might address in the parenting arena: Why he decided to have... MORE

Progressive Corporatism and the Resistance

Political Economy
Arnold Kling
Glenn Reynolds comments on the plight of Freddie Mac as reported in today's Washington Post. [The Post reports] When Freddie Mac's executives concluded a few weeks ago that they had to disclose that the government's management of the McLean company... MORE

Simon Johnson on Money and Power

Finance: stocks, options, etc.
Arnold Kling
He writes Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people. But there's a deeper and more... MORE

My Qualified Defense of Greenspan

Monetary Policy
David Henderson
In today's Wall Street Journal is a round-up of views on whether Alan Greenspan caused the housing boom. The lead piece, by me, says that he didn't, for reasons that will be familiar to regular readers of this blog. My... MORE

Paging Felix Salmon

Finance: stocks, options, etc.
Arnold Kling
Or someone else who is equally on top of the bond market. [UPDATE: an anonymous commenter quickly backed some market values out of the swaptions market. Bravo! I've added the commenter's calculations to the table below, which only had the... MORE

Ideas for teaching economics

Economic Education
Arnold Kling
Kelly Markson writes, In several principles-of-economics textbooks, the first chapter is devoted to the basic elements of economics such as scarcity, tradeoffs, opportunity costs, incentives, marginal thinking, etc. Most instructors spend very little time with this chapter. I spend weeks... MORE

Sacerdote Replies

Family Economics
Bryan Caplan
Bruce Sacerdote has graciously agreed to let me post this reply to my last post.  Here's Bruce:Dear Bryan, thanks for the heads up! I am perfectly happy with your description. I would make two key points. First, my effects are... MORE

Michele Bachmann Gets It; Ron Paul Doesn't

Economic Education
David Henderson
Ms. Bachmann as Air Traffic Controller in a YouTube World When the only way people could watch Congress was via C-SPAN, Congressmen confronting those testifying before their committees rationally, if often boringly, made speeches. Their calculus was surely that someone... MORE

Adjective-Coefficient Disconnect in Sacerdote

Family Economics
Bryan Caplan
I'm now writing chapter 3 of Selfish Reasons to Have More Kids, entitled "Que SerĂ¡, SerĂ¡: The Case for Guilt-Free Parenting."  It's basically a parents' eye guide to behavioral genetics.  As a result, I'm now reading and/or re-reading a bunch... MORE

Chapters for a book on Masonomics

Austrian Economics
Arnold Kling
Should I write it? I do have other projects, but Tyler believes in multitasking. Possible chapters (not necessarily in this order): 1. The love-hate relationship with Austrian economics. Pete Boettke (note that he has co-bloggers) is relatively gung-ho Austrian, but... MORE

Paragraphs to Ponder

Economic Methods
Arnold Kling
From John Mackey, the CEO of Whole Foods, in an essay in Be the Solution, p. 79: the classical economists became enchanted with the efficiency and the productivity of the industrial enterprises that they studied. Industrial and machine metaphors became... MORE

Meeting on Financial Regulation

Economic Methods
Arnold Kling
Last night I gave my talk at a meeting on financial regulation. The meeting was organized by David Evans. I gather that his goal is to put together a group of practitioners in the field of finance and regulation to... MORE

CDS Paper

Finance: stocks, options, etc.
Arnold Kling
Houman Shadab's working paper on credit default swaps is now available. In a previous blog post, I quoted from a draft version. I haven't yet read this latest version, but my guess is that it is even better.... MORE

Taylor Rules

Finance
David Henderson
My book review of John Taylor's latest book, Getting Off Track, appeared on Forbes.com yesterday. Two excerpts from my review: Throughout 2007 and 2008, Fed Chairman Ben Bernanke and others in policy-making positions assumed that the problem was that the... MORE

Morning Commentary

Finance: stocks, options, etc.
Arnold Kling
All pointers courtesy of the indispensable Mark Thoma. First, Hernando de Soto writes, These derivatives are the root of the credit crunch. Why? Unlike all other property paper, derivatives are not required by law to be recorded, continually tracked and... MORE

My Talk on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
It's tonight, to a private audience. I only have ten minutes, which is good, because many of the guests are more knowledgeable and distinguished than I am. What I plan to say: 1. If you look at the sequence of... MORE

SummaryIn 1973, when the first edition of For a New Liberty was published, Keynesians were still sitting pretty.  Five years later, the Keynesians had so much egg on their faces that Rothbard was inspired to add this entirely new chapter... MORE

Tonight I'm going to see Mikhail Gorbachev, last dictator of the Soviet Union.  I've heard he's really boring.  I plan to leave early.  Even so, I'm happy to pay $20 to see the most influential man of the second half... MORE

Investing Wisdom from a Wise Guy

Finance: stocks, options, etc.
David Henderson
Not that kind of wise guy; actually a wise man. Take a look at this extended interview of investment adviser Less Antman, whom I've occasionally quoted on this blog. Apart from his advocacy of diversifying by investing in commodity futures,... MORE

Despite the lack of a consensus in the comments on the right answer to my micro midterm question, I maintain that there's just one right answer.  The key point - and the reason I emphasized the words virtually and before... MORE

The Toxic NCAA Bracket

Finance: stocks, options, etc.
Arnold Kling
Suppose that a week ago I had entered a March Madness pool, paid $10, and filled out a bracket. Suppose that right now my bracket is looking weak, with only about half the teams I picked to make the sweet... MORE

Upcoming Appearances

Upcoming Events
Arnold Kling
April 7: Seasteading. Patri Friedman speaking, Doug Bandow and me commenting. At Cato in Washington, DC at noon. April 23: Health Care debate. Robert Kuttner vs. me. I believe it will be 4 PM at the Dudley Davis Center at... MORE

Question from My Last Ph.D. Micro Midterm

Microeconomics
Bryan Caplan
Here's my favorite question from my 2009 Ph.D. Micro midterm: People occasionally argue that Western consumers are virtually "satiated" - before long, they will have everything they want.  Assume this claim is correct, and that labor productivity continues to improve. ... MORE

Edward Leamer on Housing and Macro

Macroeconomics
Arnold Kling
He has a new book, which sounds very interesting (but expensive). I've been re-reading his 2007 paper. My comments follow.... MORE

The Top One Percent

Income Distribution
David Henderson
I think the average quality of letters to the Wall Street Journal is medium to low, but today's lead letter is quite good. The author writes to elaborate on a point made by Daniel Henninger in a column that I... MORE

Taleb and Empiricism

Economic Methods
Arnold Kling
Russ Roberts talks with Nassim Taleb. I was most interested in the latter third of the conversation, where Taleb talks about his radical empiricism. For example, he argues that medicine makes more progress with trial-and-error than with knowledge of biological... MORE

These Sound Interesting

Labor Market
Arnold Kling
Abraham, et al on the differences between the household survey and the establishment survey of employment. And Glaeser and Gottlieb on the aggolomeration economies of cities. I have not found free online versions of either paper, though.... MORE

Me on New Hampshire TV

Fiscal Policy
David Henderson
Last Wednesday, I did a 23:00 minute interview on MCAM TV23 in New Hampshire. I can't tell the ideology of these two interviewers, which I find refreshing because at the same time they do have strong views. We talked about... MORE

You Will Know the Disgrace

Economics and Culture
Bryan Caplan
[Warning: Battlestar Galactica spoilers!]The series finale of Battlestar Galactica was a disgrace.  Contrary to the propaganda, we still don't "Know the truth," but I'm now confident that the writers didn't actually construct any truth for us to know.  All fanboy... MORE

Did Natasha Richardson Die from Socialized Medicine?

Economics of Health Care
David Henderson
The province of Quebec lacks a medical helicopter system, common in the United States and other parts of Canada, to airlift stricken patients to major trauma centers. Montreal's top head trauma doctor said Friday that may have played a role... MORE

Clyburn Undercuts Own Case

Energy, Environment, Resources
David Henderson
In an otherwise good article in Friday's Wall Street Journal, "How Can Greens Make Themselves Less White?", Journal writer Naomi Schaefer Riley fails to make a telling point against Democratic Rep. James Clyburn. Riley points out that Clyburn is trying... MORE

Good News for Social Security Taxpayers

Social Security
David Henderson
Among the guidelines the IRS issued yesterday was allowing investors to claim their losses from a Ponzi scheme as a theft loss rather than a capital loss, a personal casualty loss or a personal theft loss. This is from here.... MORE

Obama on Leno

Finance
David Henderson
I just finished watching my DVR of President Obama on NBC's "The Tonight Show with Jay Leno." There were some interesting highlights. Of course, Obama was charming: he does that very well. If I judged him only by looks, tone,... MORE

Deception and Signaling

Behavioral Economics and Rationality
Arnold Kling
In Be the Solution, Michael Strong writes (p. 66-69), Are altruists occupationally prone to anger? Well,, it turns out that they are, in fact, biologically inclined to be angry and punitive toward those who they perceive to be not being... MORE

Contest: What to Measure?

Books: Reviews and Suggested Readings
Arnold Kling
Win the Fraser Institute's Money. They want you to enter a contest about what to measure in order to improve public policy. In Be The Solution, Michael Strong cites the Fraser Institute's measures of economic freedom and how well they... MORE

What A Sensible Keynesian Would Say

Macroeconomics
Bryan Caplan
I'm not sure if James Hamilton would call himself a "Keynesian," but this is exactly what sensible Keynesians should say:I emphasize that I am decidedly not suggesting that either fiscal or monetary policy stimulus are capable of solving all of... MORE

Wisest Sentence of the Day

Behavioral Economics and Rationality
Bryan Caplan
From Megan McArdle:Life is rather too short to spend it getting angry at remote strangers.To which I'd add: It's also too short to spend it getting angry at petty slights, not-so-remote strangers, friends, family...You might say, "Unfortunately, it's impossible not... MORE

Who Said It? Larry Summers

Economic Philosophy
David Henderson
In yesterday's post, I gave a long quote from the book, Commanding Heights, by Daniel Yergin and Joseph Stanislaw, and I asked who said it. Two of the commenters answered correctly: Larry Summers. Here's the paragraph that follows the two... MORE

Free Trade Petition

International Trade
Bryan Caplan
My old friend and mentor Tom Palmer urged me to sign this petition in defense of free trade with these words: "It is super important -- to me, but I think to everyone else, too."  The highlight of the petition:But... MORE

Who Said It?

Economic Philosophy
David Henderson
"Three things happened to change people's thinking in recent years," he continued. "First, they have seen how badly the public sector can mess things up. With competition, things seem to go better. Innovation happens. The world is more focused on... MORE

Regulatory Arbitrage, AIG Edition

Finance: stocks, options, etc.
Arnold Kling
In an email, Houman Shadab writes, AIGFP was treated as a bank for its counterparties' risk-weighting purposes, but AIGFP was not regulated as a bank (or an insurance company) for its own CDS credit exposures (had it been, it would've... MORE

Since You Asked

Economic Methods
Bryan Caplan
In his defense of non-betting, Tyler has said this:How would you feel about an obligation (if only a moral one) for scholars and commentators to publicly reveal the content of their investment portfolios?  Those portfolios are their real bets.  Yet... MORE

The Financial Regulation Problem

Finance: stocks, options, etc.
Arnold Kling
The beloved Henry Paulson writes, In March 2008, after conducting a year-long process of study, I put forward a series of comprehensive recommendations to modernise our regulatory architecture in the Treasury's Blueprint for a Modern Financial Regulatory Framework. The blueprint... MORE

Some Morning Links

Finance: stocks, options, etc.
Arnold Kling
On AIG, you might wish to read James Kwak. You should definitely read James Hamilton. But more shocking yet, at least if we measure these things in dollars and cents, is the amount of taxpayer funds that have gone to... MORE

SummaryThis chapter, on "Welfare and the Welfare State," argues that the welfare state gives the poor perverse incentives.  A superficial reader might say, "However original this was in 1973 when it was first written, it's now old hat.  Clinton made... MORE

Tale of Two Islands

Growth: Causal Factors
David Henderson
Stanford University economists Peter Blair Henry and Conrad Miller recently published an interesting NBER Working Paper in which they compare economic policy and economic performance between Jamaica and Barbados. Henry and Miller point out that in Jamaica, the People's National... MORE

Lessons from Mancur Olson

Growth: Causal Factors
Arnold Kling
Philip Greenspun writes, The logical conclusion from reading this book is to prefer a new state to an old state, a newly stable state to a long-stable state, and a new industry to an old one. Read the whole thing,... MORE

Indirect Effects of the Laissez-Faire Family?

Family Economics
Bryan Caplan
Steve Sailer posted an interesting comment on my critique of Love and Economics: Sure, but you're missing the point about how laissez-faire families affect the genes that children wind up with. Identical twin Jane marries a boring guy with a... MORE

Tyler Cowen and Robin Hanson

Economic Methods
Arnold Kling
A bloggingheads dialog. I think it really heats up starting about 30 minutes in. If you want to know what it's like to argue with Tyler or Robin, watching this will show you.... MORE

Love and Economics: A Guide from the Perplexed

Books: Reviews and Suggested Readings
Bryan Caplan
Jennifer Roback Morse was almost my colleague - she left the Public Choice Center in 1996, a year before GMU hired me.  She's a libertarian economist, a blogger, and passionate about the economics of the family.  I've only met her... MORE

Great Lines from Bob Solow

Macroeconomics
David Henderson
On February 25, I posted some lines from an Arjo Klamer interview with Bob Lucas and promised to post some of my other favorites. The interview with Bob Solow of MIT has a lot of my favorites. All of these... MORE

What Does the Betting Norm Tax?

Economic Methods
Bryan Caplan
Tyler writes:Bryan Caplan believes that scholars should be ashamed if they do not publicly bet their views.  In contrast I fear this requirement would become a tax upon ideas.My knee-jerk reaction is to say, "Yes, a tax upon false ideas." ... MORE

Stossel Clip

Macroeconomics
Bryan Caplan
Alas, none of my words made the final Stossel clip on the bailout, but my colleague Pete Leeson and GMU alumna Lydia Ortega get good lines in.  Next time, maybe I'll get a haircut and see if that helps. :-)P.S.... MORE

Greenspan and CAFE

Monetary Policy
David Henderson
The latest issue of The Freeman: Ideas on Liberty carries two articles written or co-authored by me. The first, "Was Money Really Easy Under Greenspan?," by Jeff Hummel and me, goes after the view that Greenspan conducted a loose monetary... MORE

Waldman on Financial Intermediation

Finance: stocks, options, etc.
Arnold Kling
Read the whole thing. I am proud that he claims to have been inspired by my Future of Macroeconomics post, but he obviously has been thinking about this stuff for quite some time.... MORE

Thinking Outside the Beltway

Books: Reviews and Suggested Readings
Arnold Kling
I'm reading Be the Solution, by Michael Strong. I'm about 50 pages into it. The book combines a passion for capitalism, a passion for solving social problems, and some New Age spirituality. Think Ayn Rand meets Stephen Covey. I see... MORE

Paradox of Thrift

Macroeconomics
David Henderson
Both Arnold and Bryan have weighed in on the paradox of thrift. Arnold's response was to my mention of Bob Murphy's refutation of Steve Fazzari. Jeff Hummel read Arnold, Bryan, and Bob Murphy and wrote me the following: The essence... MORE

The Future of Macroeconomics

Macroeconomics
Arnold Kling
Three predictions: 1. There will be much less emphasis on monetary policy, and much more emphasis on financial institutions and financial regulatory policy. 2. There will be much less emphasis on fiscal policy, and much more emphasis on sectoral reallocation... MORE

William Isaac is Wrong on Market Value Accounting

Finance: stocks, options, etc.
Arnold Kling
David Henderson quotes Isaac to the effect that we would have had thousands of bank failures under market value accounting in the 1980's. That is wrong. If market value accounting had been in place in the 1970's, we would not... MORE

Buffett on Mark to Market

Finance
David Henderson
My favorite Wall Street Journal writer, Holman W. Jenkins, Jr., has an excellent piece today on Buffett's views of Mark-to-Market. It seconds what I quoted Less Antman saying last week and what commenter Patrick Sullivan pointed out. Sullivan linked to... MORE

The Mankiw-Krugman Non-Bet

Economic Methods
Bryan Caplan
Here's news I can use: Krugman talked smack about Mankiw, Mankiw politely proposed a bet, and Krugman ignored his offer.  Which reminds me - I'm still waiting for Andy Kessler to accept my bet on the bailout.I have a dream... MORE

Don't Miss the Next Stossel

Economic Education
Bryan Caplan
The next John Stossel ("Bailouts, Big Spending, and Bull," Friday at 10 on 20/20) is going to be a tour de force.  Not only will you get to see me with big hair and big beard, you'll also learn about... MORE

What Amity Shlaes Got Right

Economic History
Arnold Kling
Matt Yglesias joins the attack squad on Amity Shlaes, author of The Forgotten Man, a history of the Great Depression and the New Deal. For me, the main take-aways from the book are: 1. Franklin Roosevelt had no coherent economic... MORE

Keynes, Probability, and Economics

Economic Methods
Arnold Kling
How one thinks about probability affects how one thinks about economics. Consider the use of the word "probability" in each of the following sentences:... MORE

James Hamilton on AIG

Finance: stocks, options, etc.
Arnold Kling
He doesn't like the distribution of pain. I accept the argument that a complete failure of AIG would have unacceptable consequences. The relevant question then is, what combination of parties is going to absorb the loss? The concern I wish... MORE

Changeling, Feminism, and Szasz

Behavioral Economics and Rationality
Bryan Caplan
Changeling is another counter-example to my rule that true stories make bad movies. (spoilers ahead)  It's a long, sad tale: A child gets abducted, the police say they've found him, the mother says "That's not my son!," the police say... MORE

A Textbook Perspective on Current Events

Macroeconomics
Arnold Kling
James Kwak points to an online chapter by Charles Jones. Like a decadent buffet at an expensive hotel, securitization involves lumping together large numbers of individual financial instruments such as mortgages and then slicing and dicing them into different pieces... MORE

Rent Control and Material Things

Price Controls
David Henderson
In a recent article in the New York Times about people living in rent-controlled apartments in New York city is the following telling section: But having made it through the 15-year real estate boom with their tenancy intact, the O'Neals,... MORE

She writes, though the current recession is unquestionably severe, it pales in comparison with what our parents and grandparents experienced in the 1930s. Last Friday's employment report showed that unemployment in the United States has reached 8.1%--a terrible number that... MORE

EconLog Book Club Resumes Next Week

Book Club
Bryan Caplan
Since it's spring break, I figure we'll take a week off from the EconLog book club.  Next week: Rothbard on the welfare state.... MORE

Change I Believe In

Macroeconomics
Bryan Caplan
Writing in the Washington Times, my former student Ben Powell advocates change I can believe in: America's move to act swiftly and boldly misses the point. Bank bailouts and fiscal stimulus bills don't work because they strive to maintain the... MORE

Recommended Reading

Finance: stocks, options, etc.
Arnold Kling
Ben Bernanke on the future of bank regulation. there is some evidence that capital standards, accounting rules, and other regulations have made the financial sector excessively procyclical--that is, they lead financial institutions to ease credit in booms and tighten credit... MORE

Democracy in Middle Earth

Behavioral Economics and Rationality
Bryan Caplan
Eric Crampton was there with me on opening night for The Fellowship of the Ring.  Now this former EconLog guest blogger is a professor in Middle Earth, a.k.a. New Zealand.  And he's finally started his own blog, Offsetting Behavior, to... MORE

Is Greed in the Genes?

Income Distribution
Bryan Caplan
Behavioral geneticists will tell you that intelligence and personality are highly heritable.  But at least for economists, intelligence and personality are mainly interesting insofar as they predict that variable that "really" counts - income.  How heritable is that?Quite.  This 2002... MORE

Tysonomics

Fiscal Policy
David Henderson
In today's Wall Street Journal, Laura D'Andrea Tyson has a defense of "Obamanomics." At least that's the title the Journal gave it. The article is worth looking at for a number of reasons: 1. In discussing President Obama's spending plans,... MORE

bloggingheads

Finance: stocks, options, etc.
Arnold Kling
Russ Roberts and I discuss current events. I felt awkward, and so I didn't feel particularly good about it afterward. The bloggingheads folks think that the best clip is here. Constructive suggestions welcome.... MORE

Judiciary Dishonesty

Politics and Economics
David Henderson
This weekend, I spoke on free trade at the Club for Growth's annual meeting in Palm Beach this weekend. At dinner last night, I heard an amazing story from Steve King, a Republican congressman from Iowa. I was amazed at... MORE

Eeyore's Economic Outlook

Fiscal Policy
Arnold Kling
Ken Rogoff writes, As debt mounts and the recession lingers, we are surely going to see a number of governments trying to lighten their load through financial repression, higher inflation, partial default, or a combination of all three. Read the... MORE

Systemic Risk, Seen and Unseen

Finance: stocks, options, etc.
Arnold Kling
James Kwak writes, Once investors figure out that bank debt is not safe, they will refuse to lend to any banks, and we are back in September all over again. Nonetheless, I think that zombie banks are create more unseen... MORE

Watchmen Non-Spoiler

Economic Philosophy
Bryan Caplan
I give the Watchmen movie 3.5/4 stars.  This isn't because I'm a big fan of comic book movies.  Indeed, I greatly prefer Rachel Getting Married to the supposedly excellent Spiderman 2.The deal-breaker, for me, is a simple question: "What exactly... MORE

Sociology on One Foot

Economic Methods
Arnold Kling
Tyler Cowen points to Fabio Rojas, who tries to reduce sociology to four issues. Rachel Kling once offered an even quicker summary of every sociological course: "There's poverty and America sucks."... MORE

Two Mea Culpas

Economic Methods
Bryan Caplan
If there's one thing I've learned from Tetlock, it's that you should openly admit your errors and update your beliefs in response to evidence.  So let me now share two mea culpas with you.1. Last September, I wrote:If the bail-out... MORE

DeLong vs. Boldrin

Fiscal Policy
Arnold Kling
Gregory Clark moderates. There is almost no enlightenment, but plenty of rhetorical metaphors. For example, about 38 minutes in, Boldrin says, "If the guy has a broken nose, you don't put a band-aid on his butt." I stopped listening shortly... MORE

Quality Comment

Politics and Economics
Bryan Caplan
Chris Auld just posted an excellent comment on Brad DeLong's blog.  Brad showed his readers a few graphs on the income-voting connection.  Chris went to the original data:Basically, the poor were more likely to vote for Obama, but once household... MORE

College and Inequality

Economics of Education
Arnold Kling
Theda Skocpol and Suzanne Mettler write (free but awkward registration required), in 1970, 6.2 percent of the U.S. population in the bottom income quartile had completed a baccalaureate degree by age 24-and that percentage actually declined slightly, to 6 percent,... MORE

Bob Shiller's Finance Course

Finance: stocks, options, etc.
Arnold Kling
is on line. My inclination would be to read the transcripts, but if you prefer you may either listen or watch.... MORE

Ayn Rand Villains Walk the Earth!

Economic Philosophy
Bryan Caplan
Last night I was part of a John Stossel panel of bailout/stimulus critics.  It's supposed to air a week from Friday; you'll definitely see my face, but whether you'll hear my voice is up to the editor.During the session, I... MORE

Sober Words from Barro

Macroeconomics
David Henderson
In yesterday's Wall Street Journal, Bob Barro points out that the stock market crash could portend another depression. I had never been able to answer students who asked me what distinguishes a depression from a recession except that it's more... MORE

The Art of Equanimity

Economics and Culture
Bryan Caplan
Alan Moore notoriously refuses to watch the film adaptations of his graphic novels.  His main rationale:If a thing works well in one medium, in the medium that it has been designed to work in, then the only possible point for... MORE

Banana Republic Economics, Again

Finance: stocks, options, etc.
Arnold Kling
Read the latest from Simon Johnson. Read it now.... MORE

Productivity Measured in Goods

Growth: Consequences
Arnold Kling
Mark Perry crunches some numbers. In 1950, it would have taken almost 8 months of full-time work at the average manufacturing wage to earn the $1,650 needed to purchase the 16 items above at the retail prices in 1950 (or... MORE

Mark to Market

Finance
David Henderson
Economist Jeff Hummel sent out the following to a large e-mail list. I'm reprinting the whole thing here and appending my comments. Jeff's e-mail: Mark-to-market accounting has received a lot of criticism during the current financial crisis. But a recent... MORE

Individualism, Institutions, and Growth

Growth: Causal Factors
Arnold Kling
William Easterly writes, values across different cultures lie along a spectrum between two separate poles: (1) valuing individual autonomy, believing in equal treatment of individuals, reliance on formal law, the same moral standards apply to all, enforcement of morality is... MORE

Signs of Deflation

Macroeconomics
Arnold Kling
That is how I read Michael Bryan and Brent Meyer. the sharp drop in the flexible component of the core CPI is another clear indication of the strong disinflationary pressure on retail prices in recent months. Over the past four... MORE

The Monetary Mechanism

Macroeconomics
Bryan Caplan
Arnold continues to surprise me. In reply to Scott Sumner, my co-blogger asks: "[I]f you suddenly found yourself with twice as much cash in your wallet, would you double your spending?"This is a good question, but it has a standard... MORE

More on Mandel, Austrianism, and Keynesianism

Austrian Economics
Arnold Kling
My take is this: there was some productivity growth but much of it fell outside of the usual cash and revenue-generating nexus. Maybe you will live until 83 rather than 81.5 and your pain reliever will work better. In... MORE

Two Perspectives on Deficits and Debt

Fiscal Policy
Arnold Kling
First, from columnist Steven Pearlstein Two trillion dollars sounds like a lot of money, but in a pinch we could pay it all back in just one year if we were willing to reduce household and government spending by about... MORE

Can you say "rent-seeking?"

Public Choice Theory
Arnold Kling
Ed Kane writes, TARP recipients paid out $76.7 million on lobbying and $37 million on federal campaign contributions in 2008 and (through Feb 2, 2009) received access to $295.2 billion in TARP funds. The ratio of lobbying expense to TARP... MORE

SummaryIn this chapter, Rothbard makes the case for the abolition of public schooling.  While he somewhat surprisingly views Friedman's voucher system as "a great improvement over the present system in permitting a wider range of parental choice and enabling the... MORE

On Monetarism

Macroeconomics
Arnold Kling
In a comment on this post, Scott Sumner writes, If the Fed doubled the money supply would you suddenly change your preferences and want to hold twice as much cash in your wallet? To which I retort: if you suddenly... MORE

Greg Mankiw Gets Technical

Economic Methods
Arnold Kling
He writes, The purpose of this picture is to show that deeper-than-average recessions are followed by faster-than-average recoveries. (Similar evidence was compiled in the 2005 Economic Report of the President, Chapter 2.) This evidence might be taken as evidence in... MORE

Jim Rogers: What He's Saying, Where He's Gone

Macroeconomics
Bryan Caplan
Jim Rogers, investment biker and co-founder with Soros of the Quantum Fund, says we should let AIG fail:"Suppose AIG goes bankrupt, it is better that AIG goes bankrupt and we have a horrible two or three years than that the... MORE

Vertical LM is Not Vertical AS

Macroeconomics
Bryan Caplan
Arnold writes:I think it really is possible to have fluctuations in employment. Bryan's thinking applies in a frictionless economy that is always at full employment, but I don't think it applies in reality.Frankly, this is a straw man.  I believe... MORE

Is U.S. Defamation Law Going Singaporean?

Economics and Culture
Bryan Caplan
Law prof legend Richard Epstein just escaped a ridiculous defamation suit.  His offense was writing the following blurb for the back cover of Bulldozed: "Kelo," Eminent Domain and the American Lust for Land:Like a Greek tragedy unfolding, Carla Main's book... MORE

New Commanding Heights

Growth: Consequences
Arnold Kling
Michael Mandel breaks down the change in consumer spending over the past year. While other categories declined, spending on education, health care, and recreation increased. Nick Schulz (who pointed this out to me) and I call these areas "the new... MORE

Murphy on the Paradox of Thrift

Macroeconomics
David Henderson
Fellow blogger Arnold Kling has weighed in on the paradox of thrift. Arnold states: Robert P. Murphy and Bryan seem to me to be confusing things. Murphy starts with an illustration of the paradox of thrift from Keynesian economist Steve... MORE

Back to Basics

Macroeconomics
Arnold Kling
Robert P. Murphy and Bryan seem to me to be confusing things.... MORE

Why People Hate the Octomom

Family Economics
Bryan Caplan
I assumed it was mostly anti-population Greens, but on closer examination the main haters seem to be fiscal conservatives.  But if she gets her own reality show and makes millions, will they withdraw their complaints?  Critics might respond that Octomom... MORE

The Wonder of Economic Freedom

Growth: Consequences
David Henderson
I was reminded of this by Don Boudreaux's latest. In it, he cites a nice short piece by Robert Higgs and a great comedy riff by Louis C.K. Listening to the comedy sketch reminded me of what I wrote in... MORE

Fiscal Futility: Helping Brad Understand

Macroeconomics
Bryan Caplan
Brad DeLong pleads perplexity:I simply do not understand their arguments that government spending cannot boost the economy. As far as I can tell, they are simply burying their heads in the sand.At the start of 1996, the US unemployment rate... MORE

Department of Double Standards

Macroeconomics
Bryan Caplan
All ideology aside: If the government had followed a laissez-faire policy for the last six months, and output, employment, housing, and financial markets stood exactly where they stand today, what fraction of people would conclude that "Events decisively prove that... MORE

Me on Obama and Brown

Labor Market
David Henderson
Just up on Forbes.com is an article by me on tomorrow's meeting between President Obama and Prime Minister Brown. It's titled, "Will Obama and Gordon Brown Cook Up a Tax Cartel?" In it, I talk about what they, as good... MORE

Taking Krugman's Side

Monetary Policy
Arnold Kling
Goodness knows, I don't want to. I still think he owes me a correction--and in fact an apology--in his column for putting in quotation marks an inaccurate, misleading, and distorted version of something I said. But here is Tyler Cowen... MORE

Morning Commentary

Finance: stocks, options, etc.
Arnold Kling
Tim Duy: For Bernanke and Geithner, there are no bad assets. Only misunderstood assets. Read the whole thing, and follow the link to Yves Smith. Thanks to Mark Thoma for the pointer. Tyler Cowen: No one wants to say it,... MORE

Scott Sumner Cries Out

Macroeconomics
Arnold Kling
He wants the Fed to do whatever it can to try to get prices headed up rather than down. His best argument: What do we have to lose?: We can get rid of interest on bank reserves (and consider a... MORE

Jim Hamilton Says He's Happy Owning Stocks

Finance: stocks, options, etc.
Arnold Kling
The argument is here. I don't think that the future is going to resemble the past. That doesn't mean I'm out of stocks, but I'm not going to buy an index fund the way I used to. I think a... MORE

Morning Commentary

Finance: stocks, options, etc.
Arnold Kling
Two links from the indispensable Mark Thoma. First, Tyler Cowen writes, A newbank rescue plan may be more crucial right now than the fiscal stimulus package enacted last month. Yet we don't seem capable of finding a clear path toward... MORE

Shlaes and Mandel

Macroeconomics
Arnold Kling
At the Kauffman forum that I attended in Kansas City the other day, I thought that the most interesting comments, neither of which I agreed with, were offered by Amity Shlaes and Michael Mandel, who blog here and here, respectively.... MORE

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