Bryan Caplan and David Henderson

April 2009

A Monthly Archive (112 entries)

Obama on Health Care

Economics of Health Care
Arnold Kling
from the Leonhardt interview. I don't know how much that hip replacement cost. I would have paid out of pocket for that hip replacement just because she's my grandmother. Whether, sort of in the aggregate, society making those decisions to... MORE

Obama Doesn't Heart Glass-Steagall

Finance: stocks, options, etc.
Arnold Kling
In this interview, he says, But when it comes to something like investment banking versus commercial banking, the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution... MORE

Libertarians: What Now?

Political Economy
Arnold Kling
Cato Unbound this month deals with a core issue. Peter Thiel writes, I no longer believe that freedom and democracy are compatible... As one fast-forwards to 2009, the prospects for a libertarian politics appear grim indeed. Exhibit A is a... MORE

Richard Epstein on Happiness, II

Economic Philosophy
David Henderson
The word 'friend' is an important word. Last week, I posted about Russ Roberts's interview of Richard Epstein on the happiness literature. This is the second installment. 20:00. Epstein quotes Hayek pointing out that if we try to stabilize the... MORE

Recommended Article on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
I would nominate Corine Hegland's piece in the National Journal as the most informative piece I have read on the financial crisis. A few excerpts: Careful regulatory alterations take years, but financial institutions adapt within months. In other words, if... MORE

Mueller's Theory, Wilkinson's Practice

Political Economy
Bryan Caplan
I've long remembered this passage from John Mueller's Capitalism, Democracy, and Ralph's Pretty Good Grocery:For generations (actually, for millenia) homosexuals have been persecuted both in democracies and nondemocracies, and their defining sexual activity has been routinely outlawed.  This tiny minority... MORE

Cry Panic!

Macroeconomics
Bryan Caplan
Yesterday I quoted Scott Sumner: "I believe that the depression was caused by events that took place in September and October, when the markets actually crashed," and replied:I'm strongly tempted to second Scott.  My main proviso: He's got to let... MORE

Barry Eichengreen's Theya Culpa

Finance: stocks, options, etc.
Arnold Kling
Everywhere I go, I see links to this article by Barry Eichengreen. I was expecting to find something good. Instead, it is a classic Theya Culpa, a one-sided exercise in finger-pointing, which educates no one, least of all the people... MORE

SummarySome libertarians argue that the implications of libertarianism for foreign policy are unclear.  In this chapter, Rothbard argues that libertarianism implies strict "isolationism":Pending the dissolution of States, libertarians desire to limit, to whittle down, the area of government power in... MORE

Unintended Consequences, Chapter 4386

Regulation
David Henderson
In today's Wall Street Journal, travel reporter Scott McCartney has a story that is rife with unintended consequences of government policies. Titled "From Paradise to Hellish Hours on the Tarmac," it's a story about passengers kept on Delta flight #510... MORE

Scott Sumner's False Dichotomy

Finance: stocks, options, etc.
Arnold Kling
Bryan likes what Scott says here. Read Scott's whole post yourself, so that you do not necessarily take my reading of it. Anyway, he comes close to saying that you either have to believe in efficient markets or you ought... MORE

When You Put It That Way, Scott...

Macroeconomics
Bryan Caplan
I can't believe how much excellent material Scott Sumner hides "below the fold."  A prime example: Whenever I read opinion pieces by almost any macroeconomist-- Keynesian, monetarist, new Classical, Austrian, etc, there is almost invariably a point where alarm bells go... MORE

Crisis Dialogue

Macroeconomics
Bryan Caplan
My co-author Scott Beaulier shares a funny but informative dialogue with his lawyer here.  Excerpt:LAWYER: So you're an economist at Mercer?ME: Yep.LAWYER: What do you think of this crisis?ME: Well, I'm really concerned about the long-run effects it will have. ... MORE

Inequality and Segregation

Income Distribution
Arnold Kling
Tara Watson has a paper that sounds interesting, based on the abstract. American metropolitan areas have experienced rising residential segregation by income since 1970. One potential explanation for this change is growing income inequality. However, measures of residential sorting are... MORE

Henry Kaufman's Narrative of the Crisis

Finance: stocks, options, etc.
Arnold Kling
He blames libertarianism at the Fed. But his history is a bit selective. For example, he writes the Fed was highly supportive of securitisation. Actually, the Fed was quite worried about Freddie Mac and Fannie Mae. In general, I think... MORE

Geography as Destiny

Political Economy
Arnold Kling
Robert D. Kaplan writes mostly about politics and conflict. But there is much of importance to economists. Some excerpts follow.... MORE

A Paragraph to Ponder

Economics of Education
Arnold Kling
From Mark C. Taylor, in an op-ed piece many New York Times readers found worth forwarding to one another. Graduate education is the Detroit of higher learning. Most graduate programs in American universities produce a product for which there is... MORE

Stocks, Flows, and Friendship

Economics and Culture
Bryan Caplan
When a good friend hurts your feelings, what do you do?  I normally chalk it up to miscommunication, and silently forgive them in my heart.  But I seem to be in a minority here.  I often see friends grow apart... MORE

Tyler Cowen and Alex Tabarrok

Growth: Causal Factors
Arnold Kling
Have a new textbook coming out, with an interesting blog to go with it (presumably with more updates to come once the textbook is published). Here is the web page for the macro text. Here is Alex giving a 15-minute... MORE

Health Care Policy Links

Economics of Health Care
Arnold Kling
A podcast in which I talk about health care policy. Andrew J. Rettenmaier and Thomas R. Saving offer a proposal to control Medicare costs by encouraging higher savings along with higher co-payments and deductibles. John Goodman dissects the notion of... MORE

Luck, Wealth, and Immigration

Cross-country Comparisons
David Henderson
In his column in yesterday's New York Times, Cornell University economist Robert Frank writes: Another important message of recent research is that a person's salary depends far more on where she is born than on her talent and effort. For... MORE

Financial Crises, Debt Finance, and Emerging Economies

Finance: stocks, options, etc.
Arnold Kling
Ravi Balakrishnan and others write, Evidence from past systemic banking crises in advanced economies (the US in the 1980s and Japan in the 1990s) shows that the decline in capital flows to emerging economies tends to be sizeable. Since then,... MORE

What I Have Not Been Blogging

Behavioral Economics and Rationality
Arnold Kling
I was on travel, including my health care debate in Vermont (Robert Kuttner was sick, and David Corn filled in). Now, I have galleys of two books to go over. One is something I wrote quite a while ago with... MORE

Mark and Me on Macro

Macroeconomics
Arnold Kling
on bloggingheads. We both express some humility about what macroeconomics can do. The New York Times decided to extract the section on bank bailouts.... MORE

Emmanuel Saez's Medal

Income Distribution
David Henderson
Berkeley economist Emmanual Saez has won the 2009 John Bates Clark Medal, awarded bi-annually by the American Economic Association since 1947 to "that American economist under the age of forty who is judged to have made the most significant contribution... MORE

Richard Epstein on Happiness, I

Behavioral Economics and Rationality
David Henderson
"I'll be miserable for five years as long as you make me wealthy." I've always been a fan of Richard Epstein's thinking. I hadn't known, however, that he had thoughts on the "happiness" literature. I learned a lot about much... MORE

Szasz on the Turing Tragedy

Behavioral Economics and Rationality
Bryan Caplan
When I'm 89, I'll be grateful if I have a quarter of Szasz's insight and writing ability.  Here's his latest - the fascinating tragedy of mathematician and AI pioneer Alan Turning:In 1951 Turing... confessed to his homosexual affair and was... MORE

Why Do Married Men Make So Much Money?

Labor Market
Bryan Caplan
If you've ever played around with wage or income data, you've probably noticed that married men make a lot more money than every other combo of gender and status.  If your econometric model allows marriage to affect men's and women's... MORE

Caplan-Hanson Debate Video

Economic Philosophy
Bryan Caplan
You asked for it; now you've got it.  Thanks to the GMU Econ Society for doing the legwork.... MORE

When I tell parents that twin and adoption studies find small effects of nurture, they often respond, "That's OK.  I'm willing to make a big sacrifice to help my kids a small amount."Frankly, it's not clear what these parents have... MORE

This Looks Important

Behavioral Economics and Rationality
Arnold Kling
Tyler Cowen finds research suggesting that the more highly you think of your morals, the less altruistic you are. I could think of so many things to say about this, and how it explains who gives to charity and who... MORE

Medicare and Overfishing

Economics of Health Care
Arnold Kling
Vermont Public Radio reports, [Robert] Kuttner says the first red herring about single-payer health care is that it limits choice for the patient, and if you want proof look at Medicare. Indeed, Medicare does very little to restrict patients' access... MORE

Can Billions of Parents Be Wrong?

Family Economics
Bryan Caplan
In the comments, Gary asks the $10,000 question:Bryan, I'm mostly on board with Judith Harris's hypothesis, but one thing bothers me: why do parents believe so strongly that they can influence their children? Perhaps parents' intense efforts at influencing their... MORE

Best Ridicule of the Week

Economic Philosophy
Bryan Caplan
If, like Mike Huemer, you oppose both gun control and immigration restrictions, you'll appreciate this fine piece of ridicule from Chris Rasch:Just imagine what would happen if we relaxed gun laws. Poor people would buy guns. Uneducated people would buy... MORE

Do Parents Affect How Long You Live?

Economics of Health Care
Bryan Caplan
Parents - especially moms - spend a lot of time nagging their kids to eat right, get some fresh air and exercise, not smoke, etc.  If nagging changed behavior, and there is some validity to popular perceptions about "what's healthy,"... MORE

Health Care Debating Points

Economics of Health Care
Arnold Kling
You can hear some of mine in this pre-debate radio interview.... MORE

SummaryThis chapter, on "Conservation, Ecology, and Growth," is an early statement of free-market environmentalism.  It begins by ridiculing leftists' decades of contradictory complaints about capitalism: "Stagnation; deficient growth; overaffluence; overpoverty; the intellectual fashions changed like ladies' hemlines," and quoting one... MORE

A Trillion Nazis Versus the Trolley Problem

Economic Philosophy
Bryan Caplan
Last week, I defended the usefulness of moral hypotheticals.  Last night, I dismissed trolley problems as "silly."  Fenn, an Econlog reader, is understandably puzzled: "Silly trolley problems?"Wasn't it just a coupla days ago you were talking about Nazis and defending... MORE

The Book Mike Huemer Should Write

Books: Reviews and Suggested Readings
Bryan Caplan
Here's a note I just sent Mike Huemer:Your latest essay is so wonderful that it gives me an idea:  You should write a book on applied ethics, with the immigration essay and the gun control essay as models.  Instead of... MORE

Is There a Right to Immigrate?

Economic Philosophy
Bryan Caplan
That's the title question of philosopher Michael Huemer's latest essay.  Like his earlier piece, "Is There a Right to Own a Gun?,"  this is a masterpiece of applied ethics.  It begins with an explanation of the general concept of prima... MORE

Tyler Hits a Home Run

Growth: Causal Factors
David Henderson
This piece by Tyler Cowen is a beautiful combination of clarity and passion. I knew that Tyler is a very good writer: I had no idea that he is a great writer. This is great writing. One highlight: In this... MORE

Libertarians and Public Education

Political Economy
Arnold Kling
A reader asks, Do you believe that it is moral for universities to receive state funds? If so, how would you justify it? As a student that attends a state-funded university, I've had to think about this myself. I remember... MORE

David Henderson on Health Care Costs

Economics of Health Care
Arnold Kling
He writes, what's the relevant distinction between health care spending and spending on airline travel? There is one and it's that so much of health care spending is people spending other people's money This is quite right. I say that... MORE

Free Will and Behavioral Genetics

Economic Philosophy
Bryan Caplan
Behavioral geneticists (BGs) don't like to be called "genetic determinists."  "No, no, no," they protest, "all we've shown is that genes exert some influence.  Twin and adoption studies show that environment is important, too."  But what would they say if... MORE

Arnold on Health Insurance

Economics of Health Care
David Henderson
In a post last week, my fellow co-blogger, Arnold Kling, writes about Obama OMB director Peter Orszag's thoughts on controlling health care costs. I think Orszag misses an important point and so does Arnold. First, Orszag. He takes as given... MORE

We all have flaws

Political Economy
Arnold Kling
James Kwak muses, I like to think that maybe there are people on the House Financial Services Committee who are secretly not so sure about the difference between preferred and common stock, and maybe they will read Financial Services for... MORE

AP econ quiz

Economic Education
Arnold Kling
I got 18 out of 18, which is comforting, since I may be teaching AP econ next year. I don't much care for the AP econ curriculum, but I figure 2009-2010 I ought to be able to make something interesting... MORE

Lee Kuan Yew's Immigration Contradiction

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Singapore is relatively open to immigration.  But Lee Kuan Yew has no apparent sympathy for the Vietnamese boat people:In the weeks before Saigon fell, a huge armada of small boats and ships packed with refugees set out across the South... MORE

Carrying Hyman Minsky's Torch

Macroeconomics
Arnold Kling
Robert J. Barbera's new book is called The Cost of Capitalism. On p. 182-183, he writes, For Minsky, government activism, to thwart the deflationary effects of banking crises, is the cost of capitalism, In the preface, he writes, Minsky's thesis... MORE

Debating Health Care Reform

Economics of Health Care
Arnold Kling
Next Thursday, I will be debating Robert Kuttner in Burlington, Vermont. To be precise, 4-5:30 p.m. on April 23 in the Grand Maple Ballroom of the Dudley H. Davis Center on the University of Vermont campus. Ezra Klein writes, The... MORE

Robin Hanson now has an official catechism.  A key passage:I need not accept all clients, but for the clients I do accept I work to suggest deals that, if accepted, would get them more of what they want, relative to... MORE

Notes from the Monterey Tea Party

Politics and Economics
David Henderson
On April 15, I went to one of the few demonstrations I've ever been to: the Monterey, California Tea party. I didn't know what to expect. It happened on what seemed like the coldest day of the year. The temperature... MORE

In Defense of Macroeconomists

Macroeconomics
Arnold Kling
Menzie Chinn makes the case. How can one incorporate the idea of the importance of the banking system (separate from its importance to the money creation process)? One very simple static model is provided by a twenty year old paper... MORE

The more I think about Robin's position on efficiency, the more it puzzles me.  In his talk, he heavily emphasized economists' need to build an iron-clad reputation for "neutrality" in order to persuade a world full of non-economists who distrust... MORE

Sumner's Free Trade Example

Economic Philosophy
Bryan Caplan
I'm pleased to see that Scott Sumner's not just a cool macroeconomist; he also moonlights as an economic philosopher.  Here's a challenge Sumner poses to me inspired by my debate with Robin: Assume that imports of Barbie dolls will eliminate... MORE

My choice: David Friedman's class on "Legal Systems Very Different From Ours."  Other suggestions? ... MORE

Democratic Senator Jay Rockefeller has introduced a bill that would give presidents the power to shut down the Internet. It was introduced on April 1, but it appears to be serious. According to the eweek article above: According to the... MORE

Who Loses From Efficiency?

Cost-benefit Analysis
Bryan Caplan
During last night's debate, Robin repeated an argument many economists have made: In the long-run, maximizing efficiency is actually better for everyone.  If we consistently adopt any policy with benefits greater than costs, then the times that you win will... MORE

Short Papers on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
From the Cato Journal. Some excerpts below. [update: Also, read an interview with Richard Posner on his new book. Thanks to Tyler Cowen for the pointer. Posner writes, The riskiness of banking can be reduced by regulation. But as a... MORE

Are Grotesque Hypotheticals Cheap Shots?

Economic Philosophy
Bryan Caplan
In my opening statement for last night's Caplan-Hanson Debate, I relied heavily on a couple of grostesque hypotheticals:...Robin endorses an endless list of bizarre moral claims.  For example, he recently told me that "the main problem" with the Holocaust was... MORE

Hayek Interviewed

Austrian Economics
Arnold Kling
A quarter century ago, by a pre-white-haired John O'Sullivan, for The Foundation for Economic Education. Very rewarding to listen. For example, a bit over an hour into it, he makes the point that unions that force up wages in one... MORE

SummaryA common reductio ad absurdum of libertarianism is that it implies anarchism.  Rothbard now eagerly bites this bullet.  Indeed, this chapter is the most detailed defense of anarcho-capitalism that he ever wrote.Rothbard begins by sketching how a free market would... MORE

Merton on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
A great lecture. Found by Steven Hsu. Pointer from the indispensable Mark Thoma. I enjoyed his comments on asset valuation. He wonders whether the issue is that the assets cannot be valued or that key players (bankers, regulators) don't want... MORE

Why Health Care Reform is Hard

Economics of Health Care
Arnold Kling
Peter Orszag offers a can-do outlook on controlling health care costs. The bottom line is that health care reform must be deficit neutral in the short run and deficit reducing in the long term. We have to have scoreable savings... MORE

Single-Lever Macro

Macroeconomics
Arnold Kling
Scott Sumner has an excellent post on his concerns with IS-LM theory. I endorse most of it, but I want to point out where I disagree. He writes, Michael Woodford and I agree on one thing; changes in the expected... MORE

Tea Parties Never?

Fiscal Policy
David Henderson
I've decided not to go to any of the tea parties this Wednesday. My reason is that some of the people who have been advertising them don't agree with me on everything. And some of the people who will be... MORE

Notes on Masonomics, 1: Reason without Rationality

Behavioral Economics and Rationality
Arnold Kling
In chapter one of his economics textbook Hidden Order, David Friedman writes, Economics is that way of understanding behavior that starts from the assumption that individuals have objectives and tend to choose the correct way to achieve them. ...For a... MORE

Geanakoplos on Leverage Cycles

Finance: stocks, options, etc.
Arnold Kling
David Warsh points to this lecture. variation in leverage has a huge impact on the price of assets, contributing to economic bubbles and busts. This is because for many assets there is a class of buyer for whom the asset... MORE

What is Health Insurance?

Economics of Health Care
Arnold Kling
The issue gets discussed at Patriot's Quill. Let me offer two choices: (a) Health insurance is the collective provision of all health care. (b) Health insurance is the sharing of extreme risk in health care spending. In my view, (a)... MORE

Pre-Debate Disagreement

Economic Philosophy
Bryan Caplan
In his promo for Tuesday's Caplan-Hanson debate, Robin writes:We don't actually disagree that much; basically we both like debates but couldn't find anyone else to debate us.  So we looked for something we sorta disagree on, and will at least... MORE

Status and Contract

Behavioral Economics and Rationality
Arnold Kling
Don Boudreaux writes, progress necessarily involves freeing individuals from their status stations -- freeing persons from stations assigned by circumstances such as skin color, family name, genitalia, sexuality, nationality -- and thereby allowing individuals to determine as best as each... MORE

Predicting Mortgage Defaults

Finance: stocks, options, etc.
Arnold Kling
In what Tyler Cowen says is a must-read post, Calculated Risk writes, I think it is important to understand that loans with high DTI were an enabler for speculation during the housing bubble, and this speculation pushed up house prices.... MORE

Why I Became an Economist

Economic Education
Arnold Kling
According to data posted by Greg Mankiw, it may be because I went to Swarthmore College, the undergraduate institution that produced the highest number of economics Ph.D's per capita. Clicking through to the study by John J. Siegfried and Wendy... MORE

Singapore's Independence: What Was the Point?

Cross-country Comparisons
Bryan Caplan
In his From Third World to First, Lee Kuan Yew admits that his original political motivation was simply nationalism:The Japanese occupation... aroused my nationalism and self-respect, and my resentment at being lorded over.  My four years as a student in... MORE

A Price on Integrity

Economic Philosophy
David Henderson
In Peggy Noonan's latest weekly column in the Wall Street Journal, she quotes theologian Michael Novak's encomiums to capitalism. The quotes reminded me of an event I spoke at some years ago. The Intercollegiate Studies Institute had sponsored the event... MORE

On Freedom and Democracy

Political Economy
Arnold Kling
Michael Strong has an interesting guest post at a new blog on competitive government. He writes, Another direction that I've been encouraging libertarians to consider is the option of a global free zone industry in which private corporations specialize not... MORE

The Uninsured and the Health Care Debate

Economics of Health Care
Arnold Kling
Keith Hennessey writes, As a policy matter, we care not about the total number of uninsured, but about the subset of that group that we think "deserves" taxpayer-subsidized health insurance. That is a judgment call that involves some value choices.... MORE

Will David Friedman Revise his Book?

Public Goods
David Henderson
David Friedman's The Machinery of Freedom is one of my favorite all-time books making the case for freedom. I like it on at least four grounds: (1) it's tightly written, which reflects David's tight thinking, (2) it shows a great... MORE

Friedman vs. Doherty: Help Me Take a Side

Behavioral Economics and Rationality
Bryan Caplan
I had a strange feeling reading the latest Cato Unbound.  I find Patri Friedman completely convincing when he writes:Our brains have many specific adaptations tuned for the hunter-gatherer environment in which we evolved, which in some ways differs wildly from... MORE

The Banana Subsidy Bubble?

Macroeconomics
Bryan Caplan
Remember the Fable of the Banana Subsidy?  Government subsidizes bananas.  People buy a ton of bananas and store them on their roofs.  The bananas weigh so much that their roofs collapse.  Then people say, "It's the government's fault!" - which... MORE

Linkfest

Finance: stocks, options, etc.
Arnold Kling
The seasteading discussion. Patri Friedman gives a good presentation. My comments start about half way through, at about the 45 minute mark. Some of my jokes went over well. A reminder that Raghu Rajan understood the fragility of the financial... MORE

Democracy: What We Want Is What We Get

Political Economy
Bryan Caplan
Today I got a wonderful coincidental birthday present: I met Patri Friedman.  I also got to enjoy his Cato Unbound essay on "Folk Activism."  It's highly recommended, but here's a passage I've got to criticize:In the modern world, however, bad... MORE

Financial Regulation Links

Finance: stocks, options, etc.
Arnold Kling
The Economist has a roundtable on Raghuram Rajan's analysis suggesting that regulatory policy should be countercyclical rather than procyclical. I contributed to the discussion, writing I think that Mr Rajan is off base when he suggests trying to make the... MORE

Will Obama Consider Geoengineering?

Energy, Environment, Resources
Bryan Caplan
EconLog readers will already be familiar with geoengineering.  Now Obama's science advisor says the idea on the table:John Holdren told The Associated Press in his first interview since being confirmed last month that the idea of geoengineering the climate is... MORE

Last week, Arnold approvingly quoted Tyler's one-sentence explanation of "systemic risk": If your banks are less risky, often something else is more risky, and vice versa. This morning it just occured to me that this is precisely the opposite of... MORE

The Case for Killing Textbook Macro

Macroeconomics
Arnold Kling
Seeing two posts today on macro, I am ready to share Nassim Taleb's despair.... MORE

From the Preface of My Next Book

Family Economics
Bryan Caplan
Who This Book Is For When I tell people that I'm writing a book called Selfish Reasons to Have More Kids, the most common response is, "Because they'll take care of you in your old age?"  Now's a good... MORE

Obama's View of Service

Politics and Economics
David Henderson
In a strange ad on TV, President Obama encourages us to serve. My purpose in this post is not to make a point I have already made elsewhere (here and here), namely, that everyone who produces a product or a... MORE

Some Libertarian Basics

Economics of Health Care
Arnold Kling
In the comments on my health care rationing post, I received many standard attacks as being cold-hearted and willing to deny health care to people who need it. From a libertarian perspective, your generosity is reflected in what you do... MORE

Taleb's Solution

Finance: stocks, options, etc.
Arnold Kling
Mark Thoma points to an op-ed by Nassim Taleb. He and I are on the same page in many ways. However, I wish that Taleb would dial back on the colorful rhetoric in order to focus on substance. More detailed... MORE

Open Source Forecasting

Economic Methods
Arnold Kling
Google's Hal Varian and Hyunyoung Choi write, We find that Google Trends data can help improve forecasts of the current level of activity for a number of different economic time series, including automobile sales, home sales, retail sales, and travel... MORE

SummaryIn this chapter, Rothbard advocates the abolition of publicly-owned streets and roads:Abolition of the public sector means, of course, that all pieces of land, all land areas, including streets and roads, would be owned privately, by individuals, corporations, cooperatives, or... MORE

Linkfest

Macroeconomics
Arnold Kling
Tyler Cowen is everywhere. Here he gives what I call (borrowing the term from Steve Roach) the tallest pygmy theory of America in the world economy. The major Austrian banks, for instance, have loans to eastern Europe equal to as... MORE

Health Care Rationing

Economics of Health Care
Arnold Kling
Ezra Klein writes, Britain and Canada control costs in a very specific fashion: The government sets a budget for how much will be spent on healthcare that year, and the system figures out how to spend that much and no... MORE

The Chess Game of Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
I lay out the ideas here. Let me know what you think.... MORE

Patri Friedman on Seasteading

Political Economy
Arnold Kling
He writes, When we read in the evening paper that we're footing the bill for another bailout, we react by complaining to our friends, suggesting alternatives, and trying to build coalitions for reform. This primal behavior is as good a... MORE

Israel, Palestine, and the Enlightened Preference Approach

Cross-country Comparisons
Bryan Caplan
A while back, I gave EconLog readers a primer on the "Enlightened Preference" approach to policy.  The key idea is that you give subjects two surveys.  The first tests objective knowledge; the second elicits policy preferences.  The idea is to... MORE

Bob Lucas's Talk

Fiscal Policy
David Henderson
Bob Lucas's talk at the Council on Foreign Relations is well worth reading. Here are some of the nuggets. After pointing out that the forecasted rate of growth of nominal GDP for 2009 is zero percent, he states: So if... MORE

This Morning's Must Read

Finance: stocks, options, etc.
Arnold Kling
Steven Gjerstad and Vernon Smith on the housing bubble. How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system? The... MORE

Outline for Talk on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
To some folks at Treasury (not Tim Geithner). I'm inclined to try to structure it as a discussion, since I may know less than many of the other attendees. Here is what I might contribute. 1. I predict that in... MORE

J.P. Morgan v. Obama

Central Planning vs. Local Knowledge
David Henderson
It isn't that common any more to find evidence of one of the bailed-out banks making a good decision with its money in the face of government pressure. But the weekend Wall Street Journal reported on such a case. J.P.... MORE

Hong Kong: The Envy of Lee Kuan Yew

Cross-country Comparisons
Bryan Caplan
In Lee Kuan Yew's massive From the Third World to the First: The Singapore Story, 1965-2000, there is only one country that he positively seems to envy: Hong Kong.  In his view, Hong Kong had a less favorable starting point... MORE

The Weekend's Must Reading

Finance: stocks, options, etc.
Arnold Kling
I nominate Tyler Cowen. What the banking system needs is creditors who monitor risk and cut their exposure when that risk is too high. Unlike regulators, creditors and counterparties know the details of a deal and have their own money... MORE

Response to Susan Lee

Monetary Policy
David Henderson
Economist and economic journalist Susan Lee has written an attack on Alan Greenspan and a review of John Taylor's recent book that is implicitly a response to my defense of Greenspan and review of Taylor's book. You can read both... MORE

Joe Sacco's Palestine: Some Unanswered Questions

Books: Reviews and Suggested Readings
Bryan Caplan
Last year, I bought The Rough Guide to Graphic Novels, which in turn led me to buy dozens of its recommendations.  I'd like to blog virtually every one, but only a handful have enough social science to review at EconLog. ... MORE

Short Debate with Jane Orient, M.D.

International Trade
David Henderson
I have long been a fan, at a distance, of Jane Orient, who has carried on a years-long battle against government regulation of health care. (I note, though, that I have never seen her state her opposition to government licensing... MORE

Review Essay on Macroeconometrics

Economic Methods
Arnold Kling
A while back, I mentioned this essay by Jesús Fernández-Villaverde, which at the time was not on line. Now it is there. I think it gives a useful history and perspective on macroeconometrics. Note in particular his discussion of the... MORE

James Hamilton on the Oil shock of 2007-2008

Energy, Environment, Resources
Arnold Kling
Highly Recommended. Back in September, when Congress was getting to ready to vote on TARP, I was in a Congresswoman's office arguing futilely against it. One of my lines was that I thought that most people were more adversely affected... MORE

My Daughter's Thoughts on Economic Policy

Public Goods
David Henderson
My wife and I were cleaning out a closet last weekend and came across some of our daughter Karen's writing from elementary school. This is a letter that she wrote to President Clinton on May 26, 1994. She was nine... MORE

Harris: The Postcard Version

Family Economics
Bryan Caplan
For clarification, I sent Judy Harris one last email:Me: One last question.  Are the following two propositions a correct summary of your view? 1. Shared *family* environment has virtually no effect on personality or outcomes (income, education, health, etc.). AND... MORE

Econo-Spirit

Regulation
David Henderson
His view is that most people who complain about Spirit fail to grasp how it's different from other airlines -- like visiting Wal-Mart and expecting Nordstrom-level service. You want Spirit's fares? You'll have to play by Spirit's rules. This is... MORE

A Conversation With Judy Harris

Family Economics
Bryan Caplan
[My apologies for formatting problems. Let me know if this still doesn’t look right. - B.C.] Since there was some disagreement about whether I was correctly interpreting Judy Harris‘  The Nurture Assumption, I decided to go straight to the source. ... MORE

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