Bryan Caplan and David Henderson

April 2010

A Monthly Archive (134 entries)

Rogoff vs. Kling

Finance: stocks, options, etc.
Arnold Kling
Tim Carney likes my financial reform ideas, but Ken Rogoff does not. Rogoff writes, A surprising number of pundits seem to think that if one could only break up the big banks, governments would be far more resilient to bailouts,... MORE

European Monetary and Fiscal Crises

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Sebastian Mallaby and Paul Krugman explain that the PIIGS have monetary as well as fiscal problems. That is, their wages are too high, and there is not enough labor mobility to produce the needed adjustment (hence, as many economists argued,... MORE

Megan McArdle is rationally pessimistic (apologies to Matt Ridley). But get this: Jürgen Stark, executive board member of the European Central Bank, said on Wednesday that restoring sustainability to the public finances was "even harder for the UK, the US... MORE

Time for Cryptonomicon

Money
Arnold Kling
Martin Feldstein writes, In the end, Greece, the eurozone's other members, and Greece's creditors will have to accept that the country is insolvent and cannot service its existing debt. At that point, Greece will default. Feldstein points out that there... MORE

Strange Moments in Marginalism

Microeconomics
Bryan Caplan
From September Dawn, a dramatization of the Mountain Meadows Massacre:Jonathan: Don't do it!  You'll be cursed!Micah: I'm already cursed!... MORE

The Simplest Narrative

Finance: stocks, options, etc.
Bryan Caplan
Arnold ably identifies two main narratives about the 2008 financial crisis.  But he neglects the simplest narrative of all: Once in a century, a once-in-a-century mistake happens.  The end.I know the simplest narrative is unsatisfying.  Nevertheless, it's less unsatisfying than... MORE

Chipping Away at the Narrative

Finance: stocks, options, etc.
Arnold Kling
Russ Roberts has a long narrative of the financial crisis. One excerpt: An unpleasant but unavoidable conclusion of this paper is that Wall Street was (and remains) a giant government-sanctioned Ponzi scheme. Homebuyers borrowed money from lenders who got their... MORE

Intra-National HDI

Cross-country Comparisons
Bryan Caplan
Even though I think the Human Development Index is fairly bogus, I still found this report on intra-American HDI quite interesting.  Most striking factoid: white Americans stand about half-way between the "most-developed" group (Asians) and the "least-developed" group (Native Americans).HT:... MORE

I'm pleased to see one critic of immigration, Richard Hoste, engaging my Comparative Advantage argument for open borders.  In fact, he admits that my point, then objects:Unfortunately, the low IQ masses vote.  They demand free health care, welfare and schools... MORE

Unassorted Links

Economic Methods
Arnold Kling
Denationalize Housing Finance is a slogan I could get behind. The essay, by David Oedel and Ed Pinto, is timely and important. An update on the sovereign debt crisis in Europe. I know that the Senate and the mainstream media... MORE

How Rude

Finance: stocks, options, etc.
Arnold Kling
Charlie Rose interviews Michael Lewis, and the interview just gets better and better as it goes along. Here are some of the phrases that are used to describe the Outsiders, the money managers who were right about the subprime bubble:... MORE

Self-Promotion

Finance: stocks, options, etc.
Arnold Kling
The New York Times hosts me and two other participants discussing the social value, or lack thereof, of financial innovation. I like what I wrote, although it was hard to fit what I wanted to say within the suggested length.... MORE

Survival Investing

Cost-benefit Analysis
Bryan Caplan
My knee-jerk instinct is to laugh at survivalists.  In fact, I'm forecasting an increasingly peaceful future.  Still, if there's even a 1% chance of a major nuclear war in the next 50 years, doesn't it seem wise to allocate at... MORE

Good News on African Poverty

Growth: Consequences
David Henderson
Here's what Columbia University economist Xavier Sala-i-Martin and Columbia graduate Maxim Pinkovskiy wrote: The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality... MORE

Self-Defense on Predatory Lending

Finance: stocks, options, etc.
Arnold Kling
I don't do well in back-and-forth blog spats, but I want to reply to the anonymous blogger at The Economist, who is jumping to the conclusion that I am ignorant, when I believe I know what I am talking about.... MORE

Insiders vs. Outsiders

Finance: stocks, options, etc.
Arnold Kling
Republicans are filibustering for this? Anyone who underwrites a mortgage which doesn't meet minimum underwriting rules would have to retain at least 5% economic interest in the trust. All of their proposals are variations on the ideas in the Democratic... MORE

Russ Roberts Follows the Money

Finance: stocks, options, etc.
Arnold Kling
He writes, John Paulson expected housing prices to go down. The ABACUS vehicle at the heart of the transaction allowed him to profit when they did go down. Who was on the other side of the transaction? Who lost the... MORE

The Credibility of the Roth IRA

Finance: stocks, options, etc.
Bryan Caplan
What is your probability that assets in Roth IRAs remain untaxed by the federal government through 2050?  Why?... MORE

Mundell as Sumnerian?

Macroeconomics
Arnold Kling
Sean Rushton writes, Part Two of Mundell's analysis is the most intriguing and least understood aspect. He argues that, as the real-estate bubble burst, large quantities of fresh liquidity were demanded by the public and banks. In summer 2007, the... MORE

The Cartoon Bandwagon

Economic Education
Bryan Caplan
Mankiw's just blogged two new economically enlightening cartoons, here and here.  Is Yoram Bauman's Cartoon Introduction to Economics blazing a trail?  If so, I want in!  Maybe I should adapt Selfish Reasons to Have More Kids as a graphic novel. ... MORE

Morning Commentary

Business Economics
Arnold Kling
1. Richard Epstein on the SEC suit against Goldman. the SEC complaint makes no mention that Goldman actually took the same side of the deal as ACA, which puts it in the unique position of defrauding itself. Read the whole... MORE

My Policy Trade-Offs Conjecture

Cost-benefit Analysis
Bryan Caplan
A conjecture that seems true to me:1. In economic policy, people under-estimate trade-offs.  When contrarians point out the large hidden costs of "feel good" legislation - protectionism, price controls, Medicare, etc. - the public and politicians furrow their brows in... MORE

How Napoleonic Conscription Came to America

Labor Market
David Henderson
My piece on how conscription came to America, titled "From 'Porous' to 'Ruthless' Conscription: 1776-1917," is out in the latest issue of Independent Review. An excerpt: As Robert Higgs insists, beliefs matter in social affairs (1987, 38). Although this idea... MORE

My Ideal Financial Reform Bill

Finance: stocks, options, etc.
Arnold Kling
A reader asked me for this. 1. Extricate the government from the mortgage market as soon as is practical. I foresee reducing the maximum mortgage amounts that of Freddie and Fannie to zero in stages over a period of three... MORE

Paul Romer on Charter Cities

Institutional Economics
Arnold Kling
Excellent discussion between Romer and Russ Roberts. Romer is quite aware that informal norms matter. In terms of my earlier discussion of law and order, he understands that order and law are different things. The question I would like to... MORE

Why Did We Save the Financial System?

Finance: stocks, options, etc.
Arnold Kling
Steven Randy Waldman explains the infamous Goldman transaction. the notional CDO forms the basis for a thought experiment: Given any performance scenario for debt in the reference portfolio, we can compute the loss that would have been experienced by holders... MORE

Focusing Illusion, Climate Change, and Demagoguery

Energy, Environment, Resources
Bryan Caplan
While reading Schkade and Kahneman's "Does Living in California Make People Happy?," I was shocked to discover the paper's underlying agenda:The original motivation for this study concerned the accuracy with which people could predict the effect of a specified change... MORE

The Myth of Californian Happiness

Behavioral Economics and Rationality
Bryan Caplan
Last week, Jeff Ely remarked:The underlying problem here is that California is simply a beautiful place to live.  It's not just the climate, or the people, or the geography.  It's that something floating around in the air that just makes... MORE

The Decline of Freedom

Regulation
David Henderson
In the January 23, 2010, Los Angeles Times crossword puzzle, one of the clues was "Sassy reply to criticism." The answer: "It's a free country." Why do I find this so striking? For two reasons. First, when I grew up... MORE

The Federal Debt/Income Ratio

Fiscal Policy
Arnold Kling
Country XCountry YFederal Debt$50$100GDP$100$100Debt to GDP50 %100 %State and Local Debt$0$0State and Local Taxes$20$0Federal Taxes$20$40Federal Debt to taxes250 %250 % Think of Country X as a simplified version of the U.S. and Country Y as a simplified version of a... MORE

U.S Government Debt Since World War II

Fiscal Policy
Arnold Kling
In the Washington Post, Joel Achenbach writes, When I spoke to Peter Orszag, the director of the Office of Management and Budget, he expressed optimism that the administration can balance the primary budget -- not including interest payments -- by... MORE

Japan and the World Interest Rate

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
In Rudi Dornbusch's international macro course, there was something called the world interest rate. If the interest rate in dollars is 5 percent, and the interest rate in yen is 2 percent, then to have a world interest rate the... MORE

If Fish Had Wings

Finance: stocks, options, etc.
Arnold Kling
Kevin Drum writes, From a systemic point of view, the real issue is that predatory lending on a large scale helped to massively inflate the housing/credit bubble of the aughts. If the home loan market had been regulated stringently enough... MORE

The Inner Life of Julian Simon

Behavioral Economics and Rationality
Bryan Caplan
To my sorrow, I missed my chance to meet Julian Simon.  He lived just minutes away from me, but died during my first year at Mason.  I don't think he would have won the Nobel Prize even if he lived... MORE

Minsky vs. Krugman

Finance: stocks, options, etc.
Arnold Kling
Paul Krugman writes, So I'd suggest that what we did between 1980 and 2008 was to replace a financial system in which profits were created by lack of competition with a system in which profits were created by misinformation and... MORE

China and India

Books: Reviews and Suggested Readings
Arnold Kling
Pranab Bardhan writes, The Indian informal sector (including both farms and household enterprises outside agriculture), much larger than that in China, has been mostly privately owned; even now it employs nearly 94 percent of the labor force. But many of... MORE

I Talk

Finance: stocks, options, etc.
Arnold Kling
But my lips don't move, in this interview. I don't have software on my computer to do web-cam-chat stuff. Anyway, it's five minutes of me talking about what breaking up banks would and would not accomplish.... MORE

Are Americans Really Getting Less Green?

Energy, Environment, Resources
Bryan Caplan
Steven Hayward says that American environmentalism is in steep decline:In 1990, according to an ABC News/Gallup survey series, 75 percent of Americans said they considered themselves to be environmentalists, with only 24 percent saying they did not. The numbers have... MORE

What Went Wrong?

Politics and Economics
Arnold Kling
David Brooks writes, In the first year of the Obama administration, the Democrats, either wittingly or unwittingly, decided to put the big government-versus-small government debate at the center of American life. I would put this somewhat differently. The left decided... MORE

Japan on the Knife Edge

Fiscal Policy
Arnold Kling
Bloomberg reports, "On any measure, Japan is the most indebted sovereign rated by Fitch," Colquhoun, Hong Kong-based director at the company's Asia-Pacific sovereign group, said in a conference call today. ...The yield on Japan's 10-year bond was unchanged at 1.315... MORE

Tyler Cowen on Prohibition

Economics of Crime
David Henderson
Tyler Cowen has written an excellent review of Daniel Okrent's new book, Last Call: The Rise and Fall of Prohibition. Cowen summarizes how the stars lined up in the late nineteen teens for prohibition to occur. One thing he misses,... MORE

My Recollections of the 1970s

Economic History
David Henderson
Bryan's question is tough to answer. In the culture and in the media, things are so much better now, in the sense that the mainstream media feel the need to contend with libertarian and free-market ideas. They didn't feel that... MORE

What I Think About Financial Reform

Finance: stocks, options, etc.
Arnold Kling
My instinct is to call the proposed legislation a "blame deflection bill" rather than financial reform. But I admit that I have not read the whole bill. Has anyone? My impression is that the following things are not in it.... MORE

The Seventies

Economic History
Arnold Kling
Bryan writes, I'm too young to remember much about the politics and economics of the Seventies. From books, though, I get the impression that American political economy was in complete disarray The first thing that I would say is that... MORE

I'm too young to remember much about the politics and economics of the Seventies.  From books, though, I get the impression that American political economy was in complete disarray: high inflation, high unemployment, crazy price controls, regulatory explosion, crushing taxes,... MORE

Cloning for Kids

Family Economics
Bryan Caplan
A reader sent me this funny and touching snapshot from a children's book about cloning.  I wonder if the complete book really exists?Update: The book doesn't exist; it was part of a Wired piece about children's books of the future.... MORE

Monterey Tea Party

Fiscal Policy
David Henderson
There's a short Youtube segment done by a local libertarian activist in which he interviews Lawrence Samuels, the libertarian who got me active in grassroots issues early in the decade, and then interviews me. The segment with me starts at... MORE

Goaded

Family Economics
Bryan Caplan
I'm touched to see Tyler publicly defending me and my clone, and think I ought to respond to his only reservation:If I have any criticism of Bryan, it's that he's pro-natalist (fine in my book) but I've never heard him... MORE

The Fiscal Singularity is Near

Fiscal Policy
Arnold Kling
In my recent paper, I started with budget projections that had debt held by the public reaching 78.8 percent of GDP by 2020. In fact, the most recent CBO projection of the Administration's Budget offers a forecast of public debt... MORE

The SEC-Goldman Flap

Finance: stocks, options, etc.
Arnold Kling
Steven Randy Waldman writes, A CDO, synthetic or otherwise, is a newly formed investment company. Typically there is no identifiable "seller". The investment company takes positions with an intermediary, which then hedges its exposure in transactions with a variety of... MORE

Law and Order

Institutional Economics
Arnold Kling
Bryan writes, It's clear that many existing laws have little or no effect on behavior. An even larger class of laws have little or no effect on most people's behavior. What are the main mechanisms of legal irrelevance? In this... MORE

When Doesn't the Law Matter?

Microeconomics
Bryan Caplan
It's clear that many existing laws have little or no effect on behavior.  An even larger class of laws have little or no effect on most people's behavior.  What are the main mechanisms of legal irrelevance?1. People know the law... MORE

Reflections on Competing Visions

Labor Market
David Henderson
After my discussion this morning on KQED, I had an "aha" moment. It was when Craig called in at about the 40:40 point and the ensuing discussion, first by me, then by Sylvia Allegretto. Craig said that he has a... MORE

To Cut or Not to Cut?

Family Economics
Bryan Caplan
When I was finishing up The Myth of the Rational Voter, I weighed whether I should cut the paragraph on restricting the franchise: But what -- if anything -- can be done to improve outcomes, taking the supremacy of democracy... MORE

Saving the U.S. Budget

Fiscal Policy
Arnold Kling
In this paper, I describe an approach that relies on cuts to future entitlement spending. The most important idea is to transform Medicare into a combination of a voucher and extreme catastrophic insurance. Under the proposal here, as the U.S.... MORE

House Concert Recorded

Central Planning vs. Local Knowledge
Arnold Kling
My talk, given at the U. of Tulsa. Perhaps a bit too wide-ranging, but you decide. The main theme is trial-and-error learning, as opposed to central planning. It was supposed to be a house concert, but the host was afraid... MORE

The Cash Nexus

Political Economy
Arnold Kling
Tyler Cowen writes, There's a different way to think about the bailouts, namely that the U.S. government stands at the center of a giant nexus of money raising, most of all to finance the U.S. government budget deficit and keep... MORE

Me on KQED-FM Forum

Upcoming Events
David Henderson
I'll be on KQED-FM tomorrow from 9:00 to 10:00 PDT talking about whether the economy is on the rebound. My gut feel is that it is, but that things like unemployment insurance extensions, the minimum wage increase last summer, government... MORE

The Looting Classes

Political Economy
Arnold Kling
Steven Malanga writes, Consider the California Teachers Association...Soon after Proposition 13 became law, the union launched a coordinated statewide effort to support friendly candidates in school-board races, in which turnout is frequently low and special interests can have a disproportionate... MORE

Will Iceland's Volcano Boost Geoengineering?

Energy, Environment, Resources
Bryan Caplan
When Mount Pinatubo erupted in 1991, I don't think I even heard about it.  But this one event depressed global temperatures by about 1 degree Fahrenheit.  Given all the attention the latest volcano's getting, I thought the predicted effect might... MORE

Nominal Wages and Behavioral Postulates

Macroeconomics
Bryan Caplan
Tyler's not satisfied by the traditional nominal rigidities explanation for continuing high unemployment:It's also the case that the rate of new job creation has been especially low.  Yet the nominal wages on those jobs-to-be are not constrained by previous contracts... MORE

What I Said, Recorded Version

Business Economics
Arnold Kling
The April 14 hearing on the HAMP program (modifying loans for troubled mortgage borrowers). I start some time after 1:31 (that is, one hour and 31 minutes into the hearing). I also got some questions at about 1:53. I actually... MORE

I Kowtow to Barefoot Gen

Books: Reviews and Suggested Readings
Bryan Caplan
The first paragraph of Shane Frederick's essay on Cato Unbound is too good not to twist for my own purposes.  Here goes:Long ago, mankind discovered warfare.  Since then, hundreds of millions of people have died as a result.  A prize... MORE

Canada's Road to Balanced Budgets

Fiscal Policy
David Henderson
Arnold has commented on Tyler Cowen's post on the steps the Canadian government took in the 1990s to reduce budget deficits and turn them into surpluses. The government did it mainly with reductions in the growth of government spending and... MORE

Can Elites Save the United States?

Fiscal Policy
Arnold Kling
Tyler Cowen writes, when I look around the globe for episodes of successful spending restraint I see Canada, Finland, Sweden, and now possibly (probably) Ireland, which is in the midst of fiscal restructuring. I see change coming from elites and... MORE

Christina Romer vs. Bloggers

Macroeconomics
Arnold Kling
The CEA Chairwoman does not take on anyone by name, but She writes, in my view the overwhelming weight of the evidence is that the current very high -- and very disturbing -- levels of overall and long-term unemployment are... MORE

Is Bryan Caplan Hypocritical?

Economics of Crime
David Henderson
In a discussion last week about the fact that Bryan Caplan, who opposes government funding of higher education, nevertheless works in a government-funded university, one commenter, Chipotle, wrote: If you were walking home one night and you saw a cat... MORE

Preference Falsification: A Case Study

Economics and Culture
Bryan Caplan
If you haven't read Timur Kuran's Private Truths, Public Lies, you should.  It's a classic of "obvious once you think about it" social science.  In the face of social pressure - or brute force - people pretend to believe and... MORE

A Few Quick Hits

Economics of Education
Arnold Kling
Again, I am pressed for time, so not many comments. 1. Tyler Cowen points to a story about an LSU professor teaching a biology course for non-majors who gave bad grades and was removed from teaching the class. LSU cited... MORE

How Free Are Amish Women?

Economic Philosophy
Bryan Caplan
By modern American standards, the Amish are extremely poor, and subject to intense social pressure.  It's legal to leave, but few do.  The pressure on Amish women is particularly intense.  Even their Rumspringa is heavily monitored by their parents, and... MORE

Concise Encyclopedia in the News

Labor Market
David Henderson
Getting back from the APEE meetings in Las Vegas at midnight Tuesday, I didn't have time to read Tuesday's Wall Street Journal until this a.m. And there, in the top unsigned editorial (the Journal calls it "Review and Outlook"), was... MORE

If I Had More Time

Finance: stocks, options, etc.
Arnold Kling
I would comment more on the following links: WSJ blog post about a warning that the average ratio of government debt to GDP could top 100 percent in Europe in the near future. That's ok. They can fix the problem... MORE

What I Said

Finance: stocks, options, etc.
Arnold Kling
Nick Timiraos writes, "If we modify loans and we have not yet reached a bottom, what we are doing is setting up borrowers and lenders to fail once again," said Arnold Kling It was late in the day when my... MORE

What I'm Saying

Arnold Kling
Some time around this is posted, I will be testifying at a Congressional hearing on mortgage modifications. You know how I feel about the subject. Of course, my testimony will have no effect on anyone in Congress, or anyone likely... MORE

Public Choice Symposium on The Myth of the Rational Voter

Behavioral Economics and Rationality
Bryan Caplan
The video of the 2008 Public Choice Society symposium on my book is now up on Youtube, courtesy of the noble Zac Gochenour.  On the panel: me, Randy Holcombe, Geoff Brennan, Mike Munger, and Art Carden.  Enjoy.... MORE

Schools, Jobs, and Extracurriculars: MR Edition

Economics of Education
Bryan Caplan
Tyler and his readers are trying to solve last week's puzzle: Why do colleges care so much more about extracurricular activities employers?Tyler's answer is that it's an attempt to raise future donations:Colleges want to expand the heterogeneity of the selection... MORE

The Decline of Coverture

Economic History
Bryan Caplan
Most discussions of coverture that I read mentioned that the doctrine was gradually watered down throughout the 19th-century.  Since I couldn't easily find legal details, I decided to take the harder road and offer a qualified libertarian defense of coverture. ... MORE

Postcard from the Gilded Age

Economic History
Bryan Caplan
Since there's much misunderstanding of my argument about women's liberty during the Gilded Age (here, here, and here), I thought I'd write a postcard version.  The key premises are just that in the Gilded Age:1. Taxes were much lower and... MORE

Women's Liberty in the Gilded Age: Further Replies

Economic Philosophy
Bryan Caplan
SydB asks a fair question: I'm confused. The conclusion that "women had more libertarian freedom in 1880 than they do today" is argued by only looking the law or situation in the 1880s. Huh? That's like saying "man A is... MORE

The Looting Scenario

Political Economy
Arnold Kling
David Henderson's synopsis of Tyler Cowen's speech brings up two key factors in the long-term outlook. I want to resurrect a table from one of my classic essays, called The Great Race. Four ScenariosMoore's Law FailsMoore's Law SucceedsMedicare is ReformedLow... MORE

There's been a lot of pushback against my claim that women were freer during the Gilded Age than they are today.  I'm standing my ground.  Replies to leading criticisms:1. I'm ignoring marital rape.  To be blunt, this issue is almost... MORE

Tyler Cowen's Speech at APEE

Growth: Consequences
David Henderson
I heard a very good speech by Tyler Cowen at the Association for Private Enterprise Education conference in Las Vegas today. It was titled "Why Is It Such a Deep and Long Recession?" In it, he not only explained what... MORE

Some Comments on Recalculation

Macroeconomics
Arnold Kling
A friend writes to say that Recalculation sounds like an interesting theory, but he finds it hard to explain to others. Below are some thoughts.... MORE

The Depression that Wasn't

Economic History
Arnold Kling
Burt Folsom, Jr. and Anita Folsom write, [President Roosevelt's] key advisers were frantic at the possibility of the Great Depression's return when the war ended and the soldiers came home. I mentioned this in my post on Roger Farmer's book.... MORE

How Free Were American Women in the Gilded Age?

Economic History
Bryan Caplan
I largely agree with David Boaz's recent attack on libertarian nostaglia.  While many Americans were freer in the Gilded Age than they are today, plenty were not.  But precisely who belongs on the list of people who have more libertarian... MORE

Size, Scope, and Fragility

Political Economy
Arnold Kling
Andrew Haldane writes, Complex control of a complex system is a recipe for confusion at best, catastrophe at worst. Complex control adds, not subtracts, from the Knightian uncertainty problem. The US constitution is four pages long. The recently-tabled Dodd Bill... MORE

What I'm Reading

Books: Reviews and Suggested Readings
Arnold Kling
How the Economy Works, by Roger Farmer. The publisher sent me a review copy. Farmer seems to be trying to accomplish what I have tried to do with a series of blog posts on macroeconomics. That is, he wants to... MORE

Marxism as a Senile Industry

Economics and Culture
Bryan Caplan
I've never forgotten Frederick Copleston's blunt take on Marxism's 20th-century success in volume 7 of A History of Philosophy:[Marxism] is accepted, doubtless with varying degrees of conviction, by a great many people today.  At the same time it is arguable... MORE

Group Status and Liberty

Political Economy
Arnold Kling
David Boaz wrote, we'd better stop talking as if we think the straight white male perspective is the only one that matters. For the past 70 years or so conservatives have opposed the demands for equal respect and equal rights... MORE

Greek by 2030

Fiscal Policy
Arnold Kling
Paul Krugman writes, Greece's public debt, at 113 percent of G.D.P., is indeed high, but other countries have dealt with similar levels of debt without crisis. For example, in 1946, the United States, having just emerged from World War II,... MORE

The Side on Which My Bread is Buttered

Behavioral Economics and Rationality
Bryan Caplan
In the comments, chipotle quotes my adage that "Non-profits are crazy," then fires back: Remind me, Dr. Caplan, precisely who your principal employer is and what their relation is to the profit motive?Surely, you could find a nice position at... MORE

Meta Excess

Behavioral Economics and Rationality
Bryan Caplan
Robin's remarks on libertarian paternalism take me back to the great Balan-Hanson "Paternalistic Policy:  Altruism or Arrogance?" debate.  While I agreed with Robin's position, I found his arguments extremely frustrating.  Why?  Because Robin avoided specifics paternalisms (e.g. banning cocaine) in... MORE

Nudged

Behavioral Economics and Rationality
Bryan Caplan
I'd like to thank David for pointing out my oversights on Nudge, and apologize to Sunstein and Thaler for failing to give credit where credit is due.  I based my criticisms on shorter versions of their arguments, rather than the... MORE

What Nudge Really Says

Behavioral Economics and Rationality
David Henderson
Co-bloggers Arnold and Bryan have posted recently on their view that "libertarian paternalism" would be more attractive if its advocates pushed to replace existing paternalist policies with softer "nudging" paternalist policies. Scott Sumner has said something similar. But as I... MORE

The SAT Puzzle

Labor Market
Bryan Caplan
In the comments, Joel cleverly turns a puzzling fact around on me:Colleges care about applicants' SAT scores. Employers don't. What's going on? I'm tempted to just repeat my adage that, "For-profits are crazy," but even for-profit colleges care somewhat about... MORE

The Mystery of Libertarian Paternalism

Economic Philosophy
Bryan Caplan
My reaction to Sunstein and Thaler's "libertarian paternalism" has always been: It would be a massive improvement over the pervasive non-libertarian paternalism of the status quo.  Imagine a world where you could opt out of Social Security by mailing in... MORE

Unable to Simplify

Institutional Economics
Arnold Kling
Clay Shirky writes, Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn't these societies just re-tool in less complex ways? The answer Tainter gives is... MORE

A Simple Reply to Krugman on Austrian Economics

Austrian Economics
Arnold Kling
Paul Krugman writes, why isn't there similar unemployment during the boom, as workers are transferred into investment goods production? He says he has asked this before, and he has. I have answered it before, and he has never responded. The... MORE

My Letter to Wall Street Journal

Economics of Health Care
David Henderson
On Monday, I sent a letter to the Wall Street Journal about its editorial, "The Separation of Health and State." Here it is: The title of your editorial, "The Separation of Health and State" (April 6), was better than the... MORE

Did Bismarck's Anti-Socialist Laws Work?

Economic History
Bryan Caplan
Lately I've been reading a lot about the politics of the German Empire (1870-1918).  I was already vaguely familiar with Otto von Bismarck's Anti-Socialist Laws, but I was surprised by the details.  The first of these laws passed in 1878;... MORE

Extracurricular Puzzle

Economics of Education
Bryan Caplan
Colleges care about applicants' extracurricular activities.  Employers don't.  What's going on?  I'm tempted to just repeat my adage that, "Non-profits are crazy," but even non-profit employers don't seem very concerned about how you spend your spare time.  Theories?... MORE

My Question for Nudgers

Behavioral Economics and Rationality
Arnold Kling
Richard Thaler writes, we advocate policies that maintain people's freedom to choose at as low a cost as possible. My question is this: why is it that soft paternalism is always applied to areas where the nudgers want more government... MORE

Plight of the Unskilled College Grad, Long Term

Economics of Education
Arnold Kling
Another survey available here allows us to look at income from work in 2002 by undergraduate major for graduates in 1993. Here are the 25th and 50th percentiles, respectively: Major50th percentile25th percentileHumanities3800024500Social Science4500029764History3960025000Biological Sciences4300030000Math5000035400Public Affairs3900029500Engineering6900053000Education 3400022500Business5100034100Health4700031000Psychology3800024000other4250027700overall4499829764 Note that income from... MORE

John Goodman on Equality in Health Care

Economics of Health Care
David Henderson
John Goodman did a nice job yesterday in his blog on health care. Here is an excerpt: Suppose the Cleveland Clinic announced an opening for surgery tomorrow morning at 8:00 a.m. (prepping begins at 6:00 a.m.). I have a better... MORE

Plight of the Unskilled College Grad, Con't

Economics of Education
Arnold Kling
Following up on a suggestion by Fabio Rojas, I went to this page and selected the study that looked at college graduates from 1999-2000 and interviewed them in 2001. I just did a simple table of annual job income by... MORE

Against Libertarian Nostalgia

Economic History
Bryan Caplan
David Boaz has a very nice attack on libertarian nostalgia in Reason:The Cato Institute's boilerplate description of itself used to include the line, "Since [the American] revolution, civil and economic liberties have been eroded." Until Clarence Thomas, then chairman of... MORE

Presentation in Las Vegas

Upcoming Events
David Henderson
Next Tuesday, April 13, I'll be making a presentation in Las Vegas at the annual meetings of the Association for Private Enterprise Education (APEE). My topic is "Is the Middle Class Disappearing?" Unusually for me, I actually have the final... MORE

Watch Out, Tulsa

Upcoming Events
Arnold Kling
I will be speaking on April 15th at the University of Tulsa, in Lorton Hall 207 at 7 PM. The address is 2820 E 5th Place. I don't have a clever title for the talk, but I plan to bring... MORE

Is Pictures of the Socialistic Future Satire?

Politics and Economics
Bryan Caplan
Instapundit linked to my recent excerpt from Eugen Richter's Pictures of the Socialistic Future, then posted the following update:UPDATE: A reader emails that the quoted segment is satire. Nothing to that effect at EconLog, though.It's true that the quote comes... MORE

Singaporean Pragmatism

Cross-country Comparisons
Bryan Caplan
Deputy Prime Minister Teo Chee Hean has joined the club of Singaporean officials who enlist me in the defense of their status quo.  From The Straits Times:IT WAS on his first visit here in 2008 that American economist Bryan Caplan... MORE

How Much is Government Costing Us?

Fiscal Policy
David Henderson
A few months ago, in the comments on one of Bryan's posts (I can't remember which one), Bob Murphy asserted that real income per capita would rise by a large double-digit percent within a year or two if the size... MORE

Explaining Socialism's Moral Decay

Politics and Economics
Bryan Caplan
I'm now finishing up a new introduction for a reissue of Eugen Richter's Pictures of the Socialistic Future.  In writing it, I identified three distinct answers to the question: "How could a movement founded to liberate workers from capitalist oppression... MORE

Is Transparency the Answer?

Finance: stocks, options, etc.
Arnold Kling
Responding to my break up the banks piece, Andrew Redleaf and Richard Vigilante write, The credit system -- not surprisingly, given its name -- operates on trust. The government's bizarre position has been that this trust rests more securely on... MORE

More Thoughts on Market Socialism

Central Planning vs. Local Knowledge
Arnold Kling
My first thoughts were here. Below are some further thoughts.... MORE

NCAA Fesses Up--in Prime Time

Labor Market
David Henderson
The (subsidized) fix is in. There are over 400,000 NCAA student athletes. And just about all of us will be going pro in something other than sports. While the NCAA, with the above as its advertising line for the last... MORE

Market Socialism and the iPad

Austrian Economics
Arnold Kling
Recently, I wrote about market socialism. Why don't individual firms use market socialism? That is, instead of managing through command and control, senior management could set shadow prices for various inputs and outputs, and then allow the managers of individual... MORE

Balan-Caplan Debate Resources

Economics of Health Care
Bryan Caplan
The resource page for the Balan-Caplan Debate is now up, including our opening statements, my Powerpoint slides, and complete video.  Enjoy.... MORE

Comments on Two Columns

Political Economy
Arnold Kling
Peter Berkowitz writes, Given the importance that the French Constitution attaches to liberty and the seriousness of the threat to peace and public order posed by the large, restive and nonassimilating portion of its Muslim population, the veil represents a... MORE

Thoughts on Market Socialism

Austrian Economics
Arnold Kling
I am reading a draft of The Clash of Economic Ideas, by Lawrence H. White. (Googling for it landed me here). One of its topics is the socialist calculation debate, which revolved around the idea of "market socialism," an idea... MORE

The Common-Sense Case for Pacifism

Economic Philosophy
Bryan Caplan
I used to call myself an isolationist, but I recently realized that pacifist is a much better description of my position.  All of the following definitions aptly describe what I believe:pacifism: The doctrine that disputes (especially between countries) should be... MORE

Two Links for Hayek Fans

Austrian Economics
Arnold Kling
1. A New Web Site, launched by Jeffrey Friedman. 2. Glenn Harlan Reynolds writes, The United States Code -- containing federal statutory law -- is more than 50,000 pages long and comprises 40 volumes. The Code of Federal Regulations, which... MORE

Book Lists and Signaling

Books: Reviews and Suggested Readings
Arnold Kling
Austin Bramwell writes, Cowen's Influential Books Game gave bloggers an excuse to promote themselves by composing lists designed to excite the maximum of reader admiration. Which is not to say that any lists were insincere: on the contrary, the top... MORE

Turley on Constitutionality of Obamacare

Economics of Health Care
David Henderson
One of my favorite legal scholars, Jonathan Turley, has weighed in on the constitutionality of the Obama health insurance scheme. Here's a key paragraph: With this legislation, Congress has effectively defined an uninsured 18-year-old man in Richmond as an interstate... MORE

Sexual Harassment Under Socialism

Labor Market
Bryan Caplan
From Eugen Richter's Pictures of the Socialistic Future: In old days, in the stillness and purity of the maternal home, the young maiden used to carry on her business as a milliner, selling her wares for the most part to... MORE

Group Identity and Fiscal Conservatism

Politics and Economics
Arnold Kling
Will Wilkinson analyzes the generation gap. I suspect that the more strongly certain libertarian ideas and tendencies are associated with the cultural politics of Baby Boomer conservative Republicans, the more strongly young people with libertarian inclinations will tend to identify... MORE

The Difficulty of Measuring Bank Capital

Finance: stocks, options, etc.
Arnold Kling
Steven Randy Waldman writes, he capital positions reported by "large complex financial institutions" are so difficult to compute that the confidence interval surrounding those estimates is greater than 100% even for a bank "conservatively" levered at 11× tier one capital.... MORE

Avatar Follow-Up

Property Rights
David Henderson
I posted on Avatar as a defense of property rights in January. I commented that during the movie, I had whispered to one of my friends, "This is the Kelo decision." Various people pushed back on this site and on... MORE

Dick Rutan on Aeronautical Progress and Government

Regulation and Subsidies
David Henderson
I've just returned from a 2.5 hour presentation by Dick Rutan, the man who, with Jeana Yeager, flew the first non-stop non-refueled flight around the world. They did so in December 1986. It was an amazing show that I recommend... MORE

The Case Against Big Banks

Finance: stocks, options, etc.
Arnold Kling
My National Review article is now online. I've been getting some love from leftwing blogs and some pushback from right-wing blogs. A few points 1. I don't want to bring back the 1920's, or even the 1950's, with all of... MORE

Another Look at Higher Education at the Margin

Economics of Education
Arnold Kling
Mark Thoma piqued my interest in a new paper by Jenny E. Brand and Yu Xie. For some individuals from socially advantaged backgrounds, college is a culturally expected outcome. For this group, college is less exclusively and intentionally linked to... MORE

Gokhale on Social Security

Social Security
Arnold Kling
As I mentioned, I have been reading Social Security, by Jagadeesh Gokhale. He has developed a forecasting model for Social Security that is more fine-grained than the one used by the system's own actuaries. Some excerpts below.... MORE

The Ugly Side of Financial Reform

Finance: stocks, options, etc.
Arnold Kling
Venture Beat reports, Dodd's bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an "accredited... MORE

House Prices Are Regional

Finance: stocks, options, etc.
Arnold Kling
Phil Izzo of the Wall Street Journal's blog mentions a study showing that much of the country was insulated from the housing boom and bust. We like to mock the finance industry folks who said that a nationwide housing bust... MORE

Congress Messes Up

Economics of Health Care
David Henderson
One of the reasons to have hearings on legislation is so people who comb through it can point out hidden traps, ambiguous language, unintended consequences, etc. But large parts of the Senate bill on health care that went into law... MORE

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