Bryan Caplan and David Henderson

August 2009

A Monthly Archive (107 entries)

Antitrust Through the Lens of Marginal Revolution

Regulation and Subsidies
Bryan Caplan
Marginal Revolution premiered six years and tens days ago.  Alex and Tyler may not have been the very first academic economists to start blogging, but they still got in at the ground floor.  I don't know how many people read... MORE

Greg Mankiw's Problem

Books: Reviews and Suggested Readings
Arnold Kling
No, it's not that he's going to get fired by Harvard for casually invoking the Great Unmentionable to explain intergenerational income correlations. It's that he is teaching a seminar at Harvard for first-year economics students. What 10 books to assign?... MORE

Some Morning Links

Economic History
Arnold Kling
Profit from bank bailouts--so far. The profits come from banks that have paid back the government, and recall that some banks were forced to take bailout funds in the first place. We will see what happens to the full sample.... MORE

Tyler Cowen, Milton Friedman, and Bailouts

Monetary Policy
David Henderson
In my responses (here and here) to Tyler Cowen's posts (here and here) on whether Milton Friedman would have supported the bailout of banks, I let myself be distracted by Tyler's use of the word "pretend." I accused Tyler of... MORE

Morley Safer Celebrates An Entrepreneur

Human Capital: Returns to entrepreneurs, skills, etc.
David Henderson
in this 60 Minutes segment. This joyous man, Forrest Bird, celebrates his inventions, his life, his pretty young wife, and his wealth. One of my favorite excerpts: And standing tall among them, all 6'4" of him, is Forrest Bird. His... MORE

Ed Leamer's Head Fake

Books: Reviews and Suggested Readings
Arnold Kling
Ed Leamer's new book is called Macroeconomic Patterns and Stories: A Guide for MBA's. I do not know why he positioned it as a guide for MBA's. It is clearly a treatise, aimed at the economics profession, to try to... MORE

Dr. Ouelett on Canada's Medicare

Economics of Health Care
David Henderson
Canadian Defender of Medicare Admits that Waiting Lists in Canada are Long Early this morning (PDT), C-SPAN carried an interesting interview and call-in show with Dr. Ouelett, outgoing president of the Canadian Medical Association. Although Ouelett defended Medicare, Canada's system... MORE

Andy Roddick's Economic Literacy

Revealed Preference
David Henderson
Economist blogger Craig Newmark has linked to a hilarious Andy Roddick press conference. Roddick is so refreshing, answering questions honestly rather than doing the evasion and bulls**t that so many people at press conferences do. There's something else to note... MORE

Hydraulic Macro: A Fable

Macroeconomics
Arnold Kling
I came up with this while thinking of a way to explain the Keynesian model to my high school class. But scroll to the end to see comments related to the recalculation model.... MORE

Apologies to Menzie Chinn

Econlog Administrative Issues
Arnold Kling
He takes offense at my earlier post. I meant to poke fun, not to dismiss Chinn as ranter or an ideologue. What I am poking fun at is the habit that people on the left have of calling themselves and... MORE

Solvency is No Free Lunch

Finance
Arnold Kling
Bryan writes, Suppose for example that you've got $100,000 in assets. You know with virtual certainty that the market will eventually fall from its present level of 100 down to its fundamental value of 50. The catch: You don't know... MORE

Why Do People Oppose Organ Markets?

Economic Philosophy
Bryan Caplan
Will Wilkinson writes:It seems that Bryan thinks most opposition to markets in organs is a function of either ignorance of the likely consequences or perverse and exotic moral premises. This makes me wonder if he has ever debated this issue... MORE

How American Health Care Killed My Father

Economics of Health Care
David Henderson
Not my father: David Goldhill's father. In this stemwinder, Goldhill goes through some of the wacky incentives with which our health care system is laced. The title is somewhat misleading: although he does establish that American health care killed his... MORE

Mencius Moldbug, Sighted but Uncited

Political Economy
Arnold Kling
Edward Stringham writes, In an alternative conception of a non-government monopoly system, which is composed of vertically integrated proprietary communities that provide law, each region may include only one law enforcer but one that is private and motivated by... MORE

How Long Would Peter Pan Live?

Cost-benefit Analysis
Bryan Caplan
In 2005, American kids aged 5-14 had a death rate of 16.3 per 100,000.  Here's one way to think about how incredibly low that is:Suppose a kid could keep that childhood mortality rate forever.  What would be his expected lifespan? ... MORE

Did Armageddon Happen?

Macroeconomics
Bryan Caplan
Several people in both Sweden and the U.S. have asked me if the bail-outs of 2008 saved us from "financial Armageddon" or "financial Götterdämmerung."  My question: What does Armageddon look like?  Suppose there had been no bail-outs, and everything that's... MORE

How often have you heard the quip, "The market can stay irrational longer than you can stay solvent"?  The idea: Even if the market is ridiculously overvalued, you won't make money by shorting it.  You'll probably go bankrupt instead of... MORE

Tyrone on the Bailouts

Political Economy
Arnold Kling
Tyler Cowen (or perhaps his evil twin) writes, So if you're "opposed to financial bailouts," as a libertarian, you're not for the market. You're saying that one scheme for governmental disposition is better than another. Of course you are entitled... MORE

Pile on James Kwak Day

Finance: stocks, options, etc.
Arnold Kling
Many of these links come from the indispensable Mark Thoma. First, we have Gender and banking: Are women better loan officers? by Thorsten Beck and others. And yes, it does strengthen my priors. The Fed's profits are turning higher. Perhaps... MORE

Health Care: Price Controls versus Budgeting

Economics of Health Care
Bryan Caplan
Arnold is worried about economists who would "[t]ry to deal with health care costs by setting health care provider compensation policy in Washington."  I'm not quite sure what Arnold has in mind here.  But when the typical person makes this... MORE

Tyler Cowen's Response

Monetary Policy
David Henderson
On this blog a couple of days ago, I challenged Tyler Cowen on two issues. He responded to both in the comments section of my post and on his own blog today. His responses on both are unsatisfactory. Here's why.... MORE

If the Median Economist Set Health Care Policy

Economics of Health Care
Arnold Kling
Bryan writes, Contrary to Arnold, I think it would be a vast improvement over the status quo. I've talked to plenty of left-wing economists about this topic. On balance, their views are much more reasonable than the median non-economist's. The... MORE

Is Bernanke a Hu Jintao?

Political Economy
Bryan Caplan
Scott Sumner has repeatedly attacked Bernanke for his failure to base his monetary policy on his monetary economics.  But yesterday he argued that leaders in non-totalitarian countries don't make much difference.  Unlike Mao, current Chinese dictator Hu Jintao couldn't start... MORE

Arnold writes:On health care, the irrational public--the ones that want government to keep its hands off their Medicare--is helping to fight the Progressives who want to impose a health plan that is based on what I see as a failed... MORE

Sumner Digest

Economics and Culture
Bryan Caplan
Sumner's latest mini-essay is a thing of beauty.  Highlights:1. Sumner on the Fundamental Attribution Non-Error:I think we all listen to our friends, relatives, and colleagues complain about their predicament, and then silently think, "Well what do they expect?  Their predicament... MORE

Why I am not a Caplanian

Economic Education
Arnold Kling
From Bryan's talk in Sweden. With rational voters, policy-makers have to do whatever the public wants; they can't "make a difference." With irrational voters, in contrast, policy-makers may be able to give the public the policies that it needs, rather... MORE

Kennedy and Airline Deregulation

Regulation
David Henderson
My Hoover colleague, Thomas G. Moore, has a letter on his office wall from Senator Kennedy thanking him for his contributions to transportation deregulation. As many bloggers have noted (here and here), the late Senator Kennedy had a large role... MORE

Torture: Find the Missing Cost

Cost-benefit Analysis
David Henderson
On his blog yesterday, Jeffrey Miron does a rough cost-benefit analysis of torture; I basically agree with his quick analysis. He ends as follows: In that case, the cost-benefit evaluation of torture is trivial: it has certain costs, such as... MORE

Why I am Not a Republican, Continued

Economics of Health Care
Arnold Kling
Jeff Miron explains, Medicare should be reduced or eliminated. Opposing government health insurance by defending government health insurance is disingenuous, at best, and utlimately counterproductive. Read the whole thing. Meanwhile, Nick Gillespie writes about the late Massachusetts Senator, In an... MORE

Edified

Economic Education
Bryan Caplan
My colleagues Tyler Cowen and Alex Tabarrok have published a new economics principles textbook.  It's amazing, then, that Alex is still giving away fantastic economic education for free.  Check out his latest post, and get edified:Imagine that a single employer... MORE

Caplan's Talk in Sweden

Economic Education
David Henderson
There is more than one way to make economics fun, and I hope that future research will compare and contrast the effectiveness of different approaches. Personally, however, I embrace blunt delivery of economic principles, shocking examples, and ridicule of popular... MORE

At the Mont Pelerin Society, the Swedish economist who commented on my paper criticized me for stealth utilitarianism.  Since economics by itself has no policy implications, any economist who gives policy advice requires a moral premise.  Since I didn't explicitly... MORE

Earthquake Science

Economic Methods
Arnold Kling
Mark Thoma writes, even though earthquakes cannot be predicted, at least not yet, it would be wrong to conclude that science has nothing to offer. First, understanding how earthquakes occur can help us design buildings and make other changes to... MORE

Cash for Clunkers in Action

Politics and Economics
David Henderson
This video, and many like it, easily available on YouTube, would have Bastiat rolling over in his grave. As Bastiat put it, "destruction is not profitable" (1.18), at least not for society as a whole. The person in the video... MORE

Tyler Cowen on Pretense

Politics and Economics
David Henderson
On his blog today, Tyler Cowen, who does not usually use harsh language, does use it when referring to libertarians. He writes: By the way, some libertarians like to pretend that Milton Friedman blames the Fed for "contracting" the money... MORE

Bloggers on Video

Business Economics
Arnold Kling
We were filmed in Kansas City in February. My first appearance is at 9:23. One theme of the video is the similarity between blogging and entrepreneurship. Catch Tyler about 18 minutes in (he also speaks earlier in the video).... MORE

Unchecked and Unbalanced Watch

Political Economy
Arnold Kling
Joel Kotkin writes, American cities are at a critical moment. Our competitive, commercial urban tradition certainly has its flaws, but it also has produced the advanced world's most dynamic roster of modern cities and regions. Ceding the power of urban... MORE

The Best Question I Heard Yesterday

Macroeconomics
David Henderson
I sat in on Jeff Hummel's graduate course in Monetary Theory at San Jose State University last night. In the first part of the lecture, Jeff gave a quick tour through macroeconomics: the various schools of thought plus what various... MORE

Incentives Matter: Prison Rape Edition

Economics of Crime
Bryan Caplan
If I had to serve time, I'd prefer to be sent to a for-profit prison factory.  The main reason: I think my employer would make an effort to protect me from severe abuse.  After all, a victimized indentured servant is... MORE

Random Financial Commentary

Finance: stocks, options, etc.
Arnold Kling
Razib points to a paper that supports my hormone-based approach to regulating financial risk. Rocco Huang and Lev Ratnovski say that Canadian banks did relatively well because they relied more on deposits. To me, this says that securitization is not... MORE

Seasteading and Singularity

Upcoming Events
Arnold Kling
The Seasteading Conference is Sept. 28-30, in San Francisco. The Singularity Summit is October 3-4, in New York. I won't be at either, but Robin Hanson appears to be on the bill for the singularity summit. Both of these conferences... MORE

Correction on Corporate Campaign Contributions

Politics and Economics
David Henderson
How's that title for alliteration? On his blog today, Tyler Cowen repeats a standard mistake made by many, including many in the media, about political contributions by U.S. corporations. With the tag line, "Which firms give the most to politicians?,"... MORE

When Americans visit Europe, they see a lot to like: Charming boulevards, delicious food, and historic cities that feel safe.  When Europeans visit the U.S., it's not so pretty: While major American cities are impressive, their inhabitants can be more... MORE

Bagehot vs. Bernanke/Paulson

Finance: stocks, options, etc.
Arnold Kling
David Warsh links to an interesting letter sent by the British Academy Forum on why economists did not predict the financial crisis. They write, A generation of bankers and financiers deceived themselves and those who thought that they were the... MORE

What Would Coase Say?

Property Rights
David Henderson
Ronald Coase won the Nobel prize for, in part, what has become known as the Coase Theorem. According to this theorem, if people could bargain at low cost, there would be no problem of externalities and, indeed, the outcome would... MORE

"Winterspeak" wonders if I would bet on the U.S. defaulting. Here are the alternatives that I can think of, and the odds I would give to them: 1. Muddle through. No major change in policy, and no major change in... MORE

Why oh Why Can't We Have a Better Press Corps?

Politics and Economics
David Henderson
Those who read Brad DeLong's blog will recognized his oft-asked question. Here I'm asking it regarding the alleged Lockerbie bomber. Like many Americans, I was incensed when I first heard that he would be released--for compassionate reasons, of all things.... MORE

More Thoughts on the Great Recalculation

Macroeconomics
Arnold Kling
In a comment on an earlier post, Hal Varian writes, The recalculation model is appealing, but is there any empirical evidence for it? I don't think that the 1930s would provide useful evidence since the production patterns after the Great... MORE

Will the United States Default?

Fiscal Policy
Arnold Kling
Someone asked for my comments on the Jeffrey Rogers Hummel piece. I think that the U.S. government would enact a wealth tax rather than default on its debt. Other countries that have defaulted have not had the option of enacting... MORE

Correction on Krugman

Macroeconomics
David Henderson
On May 18, in discussing Paul Krugman's analogy between a baby-sitting coop and the general economy, I wrote, quoting my Reason review of Krugman's The Return of Depression Economics: But nowhere does Krugman mention that another way to solve a... MORE

Back in the fifties, kids didn't even have seatbelts.  My dad tells me that in 1971 I came home from the hospital the old-fashioned way: In my mother's arms.  Nowadays, in contrast, we transport our babies using special infant carriers... MORE

Medical Care Tidbits from a Left-Wing Conference Call

Economics of Health Care
David Henderson
Usually, my blog posts have a policy point to them, implicit or explicit. This one doesn't. It's straight reporting on something that I found interesting. Yesterday, I was on a media conference call in which the speakers were Roger Hickey... MORE

Bernanke Breaks His Arm at Ski Resort

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
His speech today at the famous Jackson Hole conference. This strong and unprecedented international policy response proved broadly effective. Critically, it averted the imminent collapse of the global financial system, an outcome that seemed all too possible to the finance... MORE

Charles Darwin and Adam Smith

Central Planning vs. Local Knowledge
Arnold Kling
Today, generally, Adam Smith is claimed by the Right, Darwin by the Left. In the American South and Midwest, where Smith's individualist, libertarian, small-government philosophy is all the rage, Darwin is reviled for his contradiction of creation. Yet if... MORE

One of the most striking things about Denmark and Sweden: Almost everyone is overqualified for his job.  The guy who sells train tickets doesn't just punch buttons and collect cash; he knows his regional transit network like the back of... MORE

Denmark and Sweden: Expectations versus Experience

Cross-country Comparisons
Bryan Caplan
I'm amazed by how many Swedes knew about my list of Scandinavian expectations.  Now that I'm back, I'm ready to compare expectations to experience:1. Denmark and Sweden will be more aesthetically pleasing than most of the U.S., but markedly less... MORE

Status, Greed, and Power

Behavioral Economics and Rationality
Arnold Kling
Matt Yglesias wonders why politicians are not more strongly motivated by higher ideals. Selling the public good down the river to bolster your re-election chances isn't like stealing a loaf of bread to feed your starving children. The welfare rolls... MORE

Cash for Clunky Ideas

Cost-benefit Analysis
David Henderson
Cash for Clunkers Destroys Wealth Under the current so-called "Cash for Clunkers" program, people who have owned a car for at least a year that gets below 18 miles per gallon can turn in the car as trade for a... MORE

A Fact for Tyler Cowen

Macroeconomics
Arnold Kling
The New York Times reports, While the private sector has shed 6.9 million jobs since the beginning of the recession, state and local governments have expanded their payrolls and added 110,000 jobs For some reason, Tyler buys into the Paul... MORE

Rethinking Macroeconomics, Continued

Macroeconomics
Arnold Kling
Two links to discuss in this post. First, David Altig discusses the "output gap," which I put in scare quotes because it is a concept that I am about to attack. Pointer from the indispensable Mark Thoma, who also provided... MORE

Hummel Predicts U.S. Government Default

Fiscal Policy
David Henderson
San Jose State University economist Jeff Hummel, in Econlib's feature article, predicts that the U.S. government will default on its debt. The other option he considers is that the federal government will monetize its debt. The problem with this second... MORE

A Reader's Question on Health Care

Economics of Health Care
Arnold Kling
He writes, It seems to me that you are saying two different things about healthcare: 1) the way we think about health care and paying for it is out of whack. 2) the government is not (is not going to... MORE

Rose D. Friedman, RIP

International Trade
David Henderson
As many of you have heard, Rose Friedman died yesterday of heart failure. She was a sweet and graceful, but tough, lady. I first met her at the 1974 Austrian Scholars' conference in South Royalton, Vermont. I sat with her... MORE

Elite Self-Perpetuation

Behavioral Economics and Rationality
Arnold Kling
Robin Hanson pulls together various threads and concludes, So it seems the US has a finance and policy elite defined by college ties and related social connections, an elite with a strong sense that only people in their circle can... MORE

Elizabeth Warren

Finance: stocks, options, etc.
Arnold Kling
talks for ten minutes without saying much that I disagree with. Quite remarkable. Note particularly at the very end, when she suggests that her gut feeling is that the "dinosaurs" helped by Paulson's bailout may not have been as critical... MORE

Hugh Grant on Ends and Means in Medical Care

Economic Philosophy
David Henderson
Warning: Spoilers for the movie, Extreme Measures. In the 1996 movie, Extreme Measures, Hugh Grant discovers a plot to purposely destroy the health of healthy homeless men in order to use them for medical experiments. He confronts the doctor who... MORE

Market Failure or Market Success?

Political Economy
David Henderson
(I got back from Minaki, Ontario last night.) The textbook I use for a Cost/Benefit Analysis course I teach is Public Finance, 8th edition, by Harvey S. Rosen and Ted Gayer. There's much good in that book. I particularly like... MORE

Who Likes Democracy?

Political Economy
Arnold Kling
Alex Tabarrok finds a screed by Bill Maher on the ignorance of voters. People bitch and moan about taxes and spending, but they have no idea what their government spends money on. The average voter thinks foreign aid consumes 24%... MORE

Morning Commentary

Finance: stocks, options, etc.
Arnold Kling
Richard Posner writes, The efficient markets theory, when understood not as teaching merely that markets are hard to beat even for experts and therefore passive management of a diversified portfolio of assets is likely to outperform a strategy of picking... MORE

Flubs

Finance: stocks, options, etc.
Arnold Kling
Here is a fact about the financial crisis that I had missed: the Federal Home Loan banks supplied almost half the funding for two large private lenders, Countrywide and Indy Mac, that later failed. This is from Allan H. Meltzer's... MORE

Real Health Care Reform

Economics of Health Care
Arnold Kling
David Goldhill makes a lot of the points that I have been making. Two excerpts: But fundamentally, the "comprehensive" reform being contemplated merely cements in place the current system--insurance-based, employment-centered, administratively complex. It addresses the underlying causes of our health-care... MORE

One Ply Look-Ahead

Finance: stocks, options, etc.
Arnold Kling
Jacopo Carmassi, et al write, the key to avoiding repeating this crisis is setting adequate capital requirements that cannot be circumvented for all intermediaries able to raise funds redeemable on demand at par. The simple way of doing it is... MORE

Exit, Voice, and Freedom: An Example

Political Economy
Arnold Kling
Following up on this post and this one, let me try to offer a hypothetical example of freedom without democracy. Maybe Will Wilkinson can comment on the example in a way that sheds light on what he is thinking, because... MORE

Exit, Voice, and Real Freedom, Again

Political Economy
Arnold Kling
My impassioned post draws a response from Will Wilkinson that is self-refuting. He writes, I've noticed that Arnold complains a lot about Montgomery Country, MD, but as far as I know hasn't moved. In other words, he would argue that... MORE

I Agree With

Economics of Health Care
Arnold Kling
John Mackey on free-market health care reform; Alex Tabarrok on consumer-driven health plans; and Ken Rogoff that the financial crisis was more than just a loss of confidence.... MORE

The Law of Inflated Expectations

Information Goods, Intellectual Property
Bryan Caplan
Do you want to know the clearest sign that someone is a bad driver?  If they think everyone else is a bad driver.  Why do these people imagine that everyone else is a bad driver?  Because they have unreasonably high... MORE

Banana Republic Watch

Political Economy
Arnold Kling
William D. Cohan gives the play-by-play of the Merrill-BofA-government saga. Lewis said Bernanke told him, "We view you as strong and having acted appropriately in difficult circumstances ... We'll make sure you continue that way ... We want to do... MORE

Not Your Father's Real Business Cycle

Macroeconomics
Arnold Kling
Two helpful critiques of my post on non-hydraulic macro. I will address both of them in more detail below, but let me start by questioning the label "real business cycle model." Back before I tuned out of academic macro, Franco... MORE

What is Real Freedom?

Political Economy
Arnold Kling
Will Wilkinson writes, What the example of Hong Kong communicates is that authoritarian, illiberal, undemocratic regimes need not feel threatened by semi-independent city states with working "liberal" market institutions. It says to rulers that their countries can get rich without... MORE

My Economic Forecast

Macroeconomics
Arnold Kling
It is here. This is a very difficult thing for me to do, because economic forecasting is done under the hydraulic paradigm that I think we should try to abandon. Anyway, a sample: Traditionally, fiscal stimulus would increase the demand... MORE

Progressivism--My Most Generous Interpretation

Political Economy
Arnold Kling
Inspired by Tyler Cowen, let me offer my most generous characterization of progressivism: Progressives are the proud heirs to a tradition of experiments in public policy that brought about significant social improvements. Its antecedents go back before the Civil War... MORE

An Alternative to Hydraulic Macro

Macroeconomics
Arnold Kling
Mainstream macroeconomics is "hydraulic." There is something called "aggregate demand" which you adjust by pumping in fiscal and monetary expansion. I wish to reject this whole concept of macroeconomics. Instead, I want to get economists to think about unemployment in... MORE

One-Party State Watch

Political Economy
Arnold Kling
Mark Thoma highlights a story that I had missed--a bargain between the pharmaceutical industry and the Obama Administration on health care reform.... MORE

Bruno Leoni vs. Paul Romer

Institutional Economics
Arnold Kling
In 1961, Leoni wrote, In reality, the law is something which is not pre-fabricated in some specially-designated place, by some specially-designated producer and with some pre-established technique. In much the same way, no followers of the artificial languages such as... MORE

Financial Regulation and Public Choice Theory

Finance: stocks, options, etc.
Arnold Kling
An outstanding guest post by "bond girl" at Baseline Scenario. I would argue that the fundamental flaw in financial regulation is that it is based on the assumption that regulators are not self-interested individuals like the rest of us. We... MORE

Denmark and Sweden: What I'm Expecting

Cross-country Comparisons
Bryan Caplan
Today I start my trip to Denmark and Sweden.  I'll be lecturing at CEPOS in Copenhagen, and the Research Institute of Industrial Economics and Mont Pelerin Society meetings in Stockholm.  Since I've never visited either of these paragons of the... MORE

Modernity as a Children's Paradise

Family Economics
Bryan Caplan
If you based your worldview on fictional television programs, you would conclude that life was a lot better for kids back in the fifties.  Nothing seriously bad ever happens to kids on Leave It to Beaver.  But on shows like... MORE

Geoffrey Miller: Progressive for Intelligence

IQ in Economics
Bryan Caplan
Overall, I'm critical of Geoffrey Miller's Spent (see here, here, and here).  But I'm impressed that after proclaiming himself "a secular humanist, an antiwar internationalist, an animal-rights environmentalist, a pro-gay feminist, a libertarian on most social, sexual, and cultural issues,... MORE

Paul Romer Video

Arnold Kling
He explains his charter cities concept.... MORE

From Poverty to Prosperity Watch

Books: Reviews and Suggested Readings
Arnold Kling
Tyler Cowen points to a fascinating paper that measures prosperity by looking at how much light shows up on a satellite image. It turns out that Nick Schulz was thinking along the same lines when he suggested that the cover... MORE

Do Progressives Believe This?

Political Economy
Arnold Kling
I am going to write down what I think progressives believe. If I'm creating a straw man, then y'all can correct me where you think I need correcting. You believe that: 1. Unfettered free markets nearly always produce sub-optimal outcomes.... MORE

The Economics and Philosophy of the Wall

Economic Philosophy
Bryan Caplan
I usually dislike movies based on true stories.  But The Tunnel, a tale of five heroes who tunnel under the Berlin Wall to rescue their family and friends, is excellent.  We don't just vicariously enjoy the excitement of digging to... MORE

The Heterogeneous Labor Market

Labor Market
Arnold Kling
The McKinsey Global Institute writes, 71 percent of U.S. workers are in jobs for which there has been a decrease in demand from employers, an increase in supply of eligible workers, or both. I gather that this was as of... MORE

Are Progressives Totalitarian?

Political Economy
Arnold Kling
In comments on this post, SydB argues that I have created a straw-man characterization of Progressivism when I suggest that the Progressive mindset sees a technocratic solution to every problem. He writes, In Mr Kling's analysis, L's are associated with... MORE

How Arnold Underestimates Reputation

Information Goods, Intellectual Property
Bryan Caplan
Arnold writes:I think that reputation matters when exit matters. That is, if people will switch suppliers based on word of mouth, then reputation will be important.This sounds eminently plausible, but it's misleading.  Imagine a world where we all choose our... MORE

When Doesn't Reputation Work Well?

Information Goods, Intellectual Property
Bryan Caplan
Paul Krugman can't believe how much I trust in the power of reputation to keep health insurers honest.  He's right about one thing: I think reputation works wonders - not just in insurance, but throughout modern economies.  I could talk... MORE

Think of three points on an ideological triangle: 1. Point L, where you believe that markets are effective at processing information and solving problems. This position is to take a radically pro-market view, and to let markets fix their own... MORE

Exit, Voice, and Health Insurance

Economics of Health Care
Arnold Kling
Here are my thoughts on the role of reputation in health insurance markets, a topic that Bryan has raised. I think that reputation matters when exit matters. That is, if people will switch suppliers based on word of mouth, then... MORE

Readings on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
From the Stern Business School. Strongly recommended. One excerpt: The whole purpose of securitization is to lay risks off the economic balance-sheet of financial institutions. But the way securitization was achieved, especially during 2003-2Q 2007, was more for arbitraging regulation... MORE

Defending the Massachusetts Plan

Economics of Health Care
Arnold Kling
It's working, according to the Massachusetts Taxpayers Foundation, a non-partisan think tank that consistently advocates higher government spending and taxes in Massachusetts. From a base of $1.04 billion in fiscal 2006, the state is projected to spend $1.75 billion on... MORE

Various Links

Monetary Policy
Arnold Kling
I've been away, mostly in Prague (where the big economic question is why so many older buildings have so many fancy details. My answer is that there must have been a very unequal distribution of wealth, so that rich folks... MORE

Insurance, Reputation, and Caricature

Economics of Health Care
Bryan Caplan
Here's a view Krugman attributes to me:Of course, there's also an alternative universe in which insurance companies would never, never treat their clients badly, because that would hurt their reputations.Here's what I explicitly said in my original piece on insurance... MORE

Insurance, Reputation, and Kristallnacht

Information Goods, Intellectual Property
Bryan Caplan
In 1938, Jewish businesses and synagogues through Germany were burned and looted in a massive pogrom.  Historians call the incident Kristallnacht.  The Nazis naturally blamed the Jews.  So the Nazis were horrified when they realized that Aryan-owned insurance companies were... MORE

Masonomics Watch

Arnold Kling
Robin Hanson describes a new book by Eric Falkenstein. My best guess is that Eric is basically right. In fact, I'd guess lower returns for the highest risk investments come from enough investors being risk-loving in relative wealth; they are... MORE

Scott Sumner vs. Milton Friedman

Macroeconomics
Arnold Kling
Tyler Cowen writes, Professor Sumner's views differ from the monetarism of Milton Friedman by emphasizing expectations rather than any particular measure of the money supply. Allow me to expand on the history of monetary thought embedded in that statement.... MORE

Life Expectancy Statistics

Economics of Health Care
Arnold Kling
Tyler Cowen writes, Matt Yglesias and Paul Krugman weigh in on interpreting life expectancy statistics across the U.S. and the Netherlands. The fact under consideration, from a few days ago, is that the U.S. has low life expectancy overall but... MORE

Best Books on Health Care

Economics of Health Care
David Henderson
Reader Hume asked: What is (are) the definitive free market health care book(s)? Thanks for any recommendations. "Definitive" is tough. It's hard to be definitive in one book. And the ones I recommend are not entirely pro-free market. But these... MORE

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