Bryan Caplan and David Henderson

May 2010

A Monthly Archive (146 entries)

More on the 30-year Fixed Rate Mortgage

Finance: stocks, options, etc.
Arnold Kling
Mark Perry writes, It wouldn't take much of an increase in inflation and short-term interest rates before many banks/thrifts could see their interest margins squeezed, and short-term rates could conceivably even rise above 5% sometime in the next 30 years,... MORE

What the Battle is About

Political Economy
Arnold Kling
Scott Sumner continues the discussion of the merits of neoliberalism. Here are some remarks of mine. 1. This relates to what Arthur Brooks calls The Battle. I have not read Brooks' book, and my guess is that I will have... MORE

Arts, Sciences, and the Future

Growth: Consequences
Bryan Caplan
My colleague Robin Hanson has repeatedly told me that during the next million years, we'll discover all useful science/technology; there's only so much to know, and by then, we'll have it all figured out.  But would Robin see art the... MORE

A Black-Cowen Model of the Recession

Macroeconomics
Arnold Kling
Fischer Black started from a model of efficient markets with diversified investors. However, there is nondiversifiable risk in the economy, there will be times when you get a bad draw. At those times, the value of physical and human capital... MORE

What Financial Re-Regulation?

Finance: stocks, options, etc.
Arnold Kling
In two weeks, I am supposed to speak on a panel entitled "Financial Re-regulation." My question is, what re-regulation? To me, re-regulation means you would reverse some step that you took toward deregulation. But the new financial reform bill does... MORE

Macro Models and Forecasts

Economic Methods
Arnold Kling
Nick Rowe writes, We can't forecast next year's Y unless Statistics Canada tells us next year's X, and they can't. His point is that some variables are outside of the model, and to make a forecast in real time you... MORE

Rent Sucking

Public Choice Theory
David Henderson
Economists use the term "rent seeking" to refer to people investing resources in getting government favors. In the Concise Encyclopedia article I wrote on this, I explain why I think the term is inappropriate. But if rent seeking were the... MORE

Counterstereotypical Fact of the Day

Labor Market
Bryan Caplan
Hispanic men have markedly higher labor force participation rates than white non-Hispanic and Asian men.... MORE

Partners and Liberty

Family Economics
Bryan Caplan
Assortative mating increases family resemblance.  Given my interest in strategic libertarian fertility, then, this suggests another survey question:If you self-identify as a libertarian, please let me know if your spouse/ significant other does as well.Please share.  My answer is in... MORE

How Liberty Runs in Families (I Think)

Family Economics
Bryan Caplan
Thanks to everyone who responded to my Zac Gochenour-inspired poll on parents, children, and libertarianism.  Most of the responses seem consistent with Zac's initial doubts: I'm trying to determine if "strategic fertility" is nonsense or not. I find it one... MORE

The Wheels of Housing Regulation Grind On

Political Economy
Arnold Kling
A news report begins, The Federal Housing Finance Agency (FHFA) has sent to the Federal Register a proposed rule to establish a framework for affordable housing goals for the 12 Federal Home Loan Banks (Banks). The proposed rule implements provisions... MORE

Quibble with Crook on Health Care

Economics of Health Care
Bryan Caplan
I was puzzled when Clive Crook wrote: "Public spending is lower in the US, but not vastly lower once you remember to add state and local spending to federal outlays; the US healthcare anomaly accounts for a lot of the... MORE

How Dems and Reps Differ: Clive Crook Edition

Politics and Economics
Bryan Caplan
Clive Crook's cynical view of America's liberal-conservative divide mirrors my own.  Quoth Crook:Progressives and conservatives alike call the United States a "free-market economy": both sides have an interest in perpetuating this delusion. The idea is ridiculous - as ridiculous as... MORE

Krugman Between the Lines

Economic Methods
Bryan Caplan
I'm officially pronouncing Scott Sumner the master of Krugman exegesis.  Two gems (the first level quotes are me quoting Sumner, the second level quotes are me quoting Sumner quoting Krugman):OK, let's have some fun with this golden oldie from 2005:... MORE

Remarks on U.S. Mortgage Finance

Finance: stocks, options, etc.
Arnold Kling
At a conference yesterday on mortgage finance, I managed to turn a discussion of the future of securitization into a discussion of the 30-year fixed-rate mortgage. I think that the 30-year fixed-rate mortgage is an artifact of government intervention, and... MORE

Parents, Children, and Liberty

Family Economics
Bryan Caplan
One crucial assumption behind strategic libertarian fertility is that the viewpoint actually runs in families.  Incoming GMU Ph.D. student Zac Gochenour's skeptical.  On Facebook, he posed the following questions: [1] If you self-identify as libertarian, please let me know if... MORE

Retirement Policy

Social Security
David Henderson
Co-blogger Bryan Caplan asks: Is there any country on earth that partly bases retirement benefits on the retirees' number of children? I was waiting for one of the commenters to mention the obvious example but no one did. So I... MORE

In response to my recent reflections on liberty in the long-run, Patri Friedman defends seasteading over strategic fertility:As an avowed natalist, I am certainly not going to object to advocating for libertarians to have more kids.  I would love libertarians... MORE

Mankiw's Clarity on Kidney Exchanges

Microeconomics
David Henderson
Mankiw hits a home run in a short space. In a blog post on Sunday, Greg Mankiw hit a home run in discussing the sale of kidneys. It's so well done, and so succinctly done, that there's no point in... MORE

Are Intellectuals Pessimistic?

Growth: Consequences
Arnold Kling
I'm asking Bryan. "Pessimistic bias" is one of the four biases he finds among people who are ignorant of economics. He also claims that educated people are generally better than the less-educated on economic issues. But in an interview with... MORE

Retirement Policy Question

Cross-country Comparisons
Bryan Caplan
Is there any country on earth that partly bases retirement benefits on the retirees' number of children?... MORE

Ever Hear of the Civil Rights Act of 1875?

Politics and Economics
Bryan Caplan
Me neither:The act was passed by Congress in February, 1875 and signed by President Grant on March 1, 1875. It was declared unconstitutional by the US Supreme Court in 1883... The Act guaranteed that everyone, regardless of race, color, or... MORE

The Actual Civil Rights Act

Labor Market
David Henderson
Over at Marginal Revolution, Alex Tabarrok points out that much of the discussion of the Civil Rights Act is so 20th century. (My words for his thought.) One could even say "so 1960s." The reason: The Act was applied to... MORE

"Why Are Jews Liberals?" Symposium

Politics and Economics
Bryan Caplan
The highlight of this symposium on Norman Podhoretz's Why Are Jews Liberals? comes from Michael Medved.  It's almost Hansonian in its crude reductionism, and fits the facts better than the other stories:For most American Jews, the core of their Jewish... MORE

Various

Politics and Economics
Arnold Kling
I think I got to these either from Mark Thoma or Yves Smith. 1. Wolfgang Munchau writes, I have heard credible reports suggesting that the underlying situation of the German Landesbanken is even worse than those estimates suggest. Last year,... MORE

How Libertarian Was the Civil Rights Movement?

Economic Philosophy
Bryan Caplan
Rand Paul is in the news for expressing (and then apparently recanting) what I've long seen as the standard libertarian view of civil rights legislation: 1. Government discrimination should be illegal.2. Private discrimination should be legal.3. Private discrimination is immoral.In... MORE

Conscientiousness and Poverty: African Edition

Economics and Culture
Bryan Caplan
A while back, I praised Rothbard's view that low conscientiousness is a major cause of poverty.  Today Nicholas Kristof discusses especially grisly African examples:[I]f the poorest families spent as much money educating their children as they do on wine, cigarettes... MORE

If Only: A Review of Arthur Brooks' The Battle

Books: Reviews and Suggested Readings
Bryan Caplan
According to Arthur Brooks' latest book, The Battle, a vocal social democratic minority in U.S. politics keeps foisting its misguided policies on a solid free-market majority:Whether we look at capitalism, taxes, business, or government, the data show a clear and... MORE

Shorter Matt Ridley

Books: Reviews and Suggested Readings
Arnold Kling
The op-ed and the Cato event, the latter with Robin Hanson commenting.... MORE

In today's Wall Street Journal, the editors have an editorial denouncing Kentucky candidate for the U.S. Senate, Rand Paul. It's strange. Here's the ending sentence of the first paragraph: But before we move on, it's important to understand why Mr.... MORE

Sumner on World Economic Growth

Growth: Causal Factors
David Henderson
This morning, Scott Sumner has an excellent post on economic growth and the extent to which it is due to what he calls "neoliberal" reforms. He never defines "neoliberal," but it's clear from the context and the specific policies that... MORE

Shorter Arthur Brooks

Books: Reviews and Suggested Readings
Arnold Kling
His book is not out yet. Meanwhile, you can listen to the talk. I like the analogy (due to his wife) between believing in free enterprise while distrusting business to believing in marriage while distrusting husbands. Or you can read... MORE

Not as Rich as We Think

Macroeconomics
Arnold Kling
Tyler Cowen writes, This is the era of the rude economic awakening, and Greece is simply an extreme manifestation. The new European bailout plan is a denial of this truth rather than recognition of the new reality that a lot... MORE

Kling Interviewed

Macroeconomics
Arnold Kling
by Rob McClendon. The two segments are each less than ten minutes. They cover a range of topics, from what Nick Schulz and I call Economics 2.0 to bank bailouts to the outlook for employment. Part one. Followed by Part... MORE

Jean Tirole and the Silent Revision

Macroeconomics
Arnold Kling
Jean Tirole writes, Economic theory stresses the necessity for the state to boost industrial and financial sectors during periods of liquidity shortage. [here a footnote reads, "This is an old theme, dating back at least to Keynes and Hicks. For... MORE

Milton Friedman on Racial Discrimination

Labor Market
David Henderson
Kentucky candidate for U.S. Senate Rand Paul has made waves lately by saying that he would not have supported the part of the 1964 Civil Rights Act that violates private persons' freedom of association. He stated that the parts of... MORE

Hope for Britain?

Economics of Crime
David Henderson
Here's are some excerpts from a speech that Britain's Deputy Prime Minister Nick Clegg gave this week: As we tear through the statute book, we'll do something no government ever has: We will ask you which laws you think should... MORE

Liberal Conflation

Economic Philosophy
Bryan Caplan
Academic political philosophers use the word "liberalism" in a way that would baffle almost anyone else.  (See here and here).  Who counts?  Virtually all the thinkers that normal Americans would call "liberal" + mainstream thinkers who call themselves "conservatives" and... MORE

The Macroeconomic Reversal

Macroeconomics
Arnold Kling
Nick Rowe writes, Regulation and supervision can never eliminate financial instability. If your faith is contingent on being able to prevent financial crises, you have lost the faith. Read the whole thing. I too am struck by the rapid change... MORE

Bartlett on Supply-Side Economics, Continued

Supply-side Economics
David Henderson
Three days ago I posted on part of Bruce Bartlett's excellent chapter, "The Rise and Fall of Supply-Side Economics," in his book, The New American Economy. I promised to get to the fall part. First, though, there's more interesting content... MORE

Income Variability

Taxation
David Henderson
In a post two months ago, I pointed out the important distinction between being high-income and being rich. I gave an example of a friend, and a couple of the commenters suggested that my friend guest blog about his situation.... MORE

Liberty in the Long Run

Politics and Economics
Bryan Caplan
The last topic in the last lecture of my Public Choice class is the "transition problem."  Suppose you accept that radical libertarianism would be a big improvement over the status quo, and stable once established.  How do we get from... MORE

Better Regulation Fails To Strengthen Banks

Finance: stocks, options, etc.
Arnold Kling
That is the conclusion of Asli Demirgüç-Kunt and Enrica Detragiache, two economists with the International Monetary Fund. All in all, we do not find support for the hypothesis that better compliance with BCPs [Basel Core Principles] results in sounder banks... MORE

More Matt Ridley

Economic History
Arnold Kling
From The Rational Optimist, p. 182: Empires, indeed governments generally, tend to be good things at first and bad things the longer they last. First they improve society's ability to flourish by providing central services and removing impediments to trade... MORE

If You Never Miss a Plane...

Cost-benefit Analysis
Bryan Caplan
George Stigler famously observed, "If you never miss a plane, you're spending too much time at the airport."  I heard that he wasn't amused by his secretary's corollary,  "If you never make a typo, you're typing too slow."  But he... MORE

Good News

Public Choice Theory
Arnold Kling
From an email: Dear Grantseeker, One of the best kept secrets in Washington is that the new Health Reform Act is channeling millions of dollars in funding to other areas of vital interest to other nonprofits, tribes and local government!.... MORE

Cato Memories

Economic History
Bryan Caplan
Thinking about this Friday's Cato Intern Alumni Reunion is making me nostalgic.  I worked in the legendary think tank's old building (yes, the old building!) in the summer of 1991.  It was an amazing experience.  The highlights of my youthful... MORE

Impressions of Tea Partiers

Politics and Economics
Arnold Kling
I am missing Matt Ridley, Arthur Brooks, and Jeff Miron speak in DC this week because I am in Indiana. The first leg of my trip was to do a "house concert" for a group of about 35 people, many... MORE

The New Matt Ridley Book

Economic History
Arnold Kling
I picked up a copy at the airport yesterday, and I am about half-way through. It is called The Rational Optimist, and John Tierney has a brief summary. My guess is that a lot of people will want to talk... MORE

Murphy's Law

Cross-country Comparisons
Bryan Caplan
Economist Bob Murphy volunteered to help with Haitian earthquake relief.  It's quite a story.  The peak:[T]he Haitians who interacted with our base was that the locals viewed us with suspicion. In particular, when they would see a team of HODR... MORE

Bruce Bartlett on Supply-Side Economics

Supply-side Economics
David Henderson
Bruce Bartlett's The New American Economy is currently my "Starbuck's book," i.e., the book I keep in my car and read a few pages of every time I'm in line at Starbuck's. I'm almost through and it's really quite good.... MORE

Virtual Federalism

Political Economy
Arnold Kling
Tyler Cowen quotes from an idea that would allow Israelis and Palestinians to live in overlapping neighborhoods, with choice of political allegiance. This is proposed as a way of solving the problem that there are no natural, mutually agreeable boundaries... MORE

The Fed and the Euro

Monetary Policy
Bryan Caplan
CNBC says that Ron Paul blames the Fed's loose money for the Euro's troubles.  Umm, doesn't expansionary Fed policy raise the value of the Euro?  Is there any mechanism under which this makes sense?  Or is Paul's view being misstated? ... MORE

I wrote:Who reasonably expects to gain? On Buchanan's view, the answer should be, "everyone" or "almost everyone."John Thacker responds: But surely it doesn't make sense to expect this to be true of every individual clause, even fully subscribing to Buchanan's... MORE

Scott Sumner on the Great Depression

Macroeconomics
Arnold Kling
The talk is here. Very worthwhile. Near the end he makes the point that when there is a large collapse there is a tendency to blame it on huge imbalances prior to the crash. The "huge imbalances" view is what... MORE

Capturing the Dynamic

Politics and Economics
Arnold Kling
Ross Douthat writes, This is the perverse logic of meritocracy. Once a system grows sufficiently complex, it doesn't matter how badly our best and brightest foul things up. Every crisis increases their authority, because they seem to be the only... MORE

The Wall Street Journal's Math

Fiscal Policy
David Henderson
In today's Wall Street Journal, one of the editorials makes the following statement: Arizona got into this crisis because during the boom years--2003 to 2007--then-Governor Janet Napolitano, a Democrat, and Republicans in the legislature let spending climb by more than... MORE

Sovereign Debt and Confidence

Fiscal Policy
Arnold Kling
Robert J. Samuelson writes, In a classroom, limiting government debt in relation to GDP can be defended. The idea is to reassure investors (a.k.a. "financial markets") that the debt burden isn't becoming heavier so they will continue lending at low... MORE

The Obvious Solution on Health Care

Economics of Health Care
Arnold Kling
Why didn't I think of this? Jim Yong Kim and James N. Weinstein write, What will lead to improvements is a multidisciplinary approach that brings the best minds to focus on the problem. Experts in management, systems thinking and engineering,... MORE

Self-Recommending this Week

Upcoming Events
Arnold Kling
Russ Roberts on the financial crisis. Arthur Brooks, speaking on his his new book, which seems to be available, although when I checked for it on Kindle the other day it said it had not yet been released. Jeff Miron... MORE

Finally, Some Good News

Politics and Economics
David Henderson
The Fix is Out During the Clinton years the country edged left on issues of private autonomy (sex, divorce, casual drug use) while continuing to move right on economic autonomy (individual initiative, free markets, deregulation). This is from Mark Lilla,... MORE

Magna Carta Club, Part 1

Book Club
Bryan Caplan
The chief goal of the Magna Carta club is to race Buchanan's "veil of ignorance" view of constitutions against my "lock-in political advantage" view.  I don't deny that Buchanan's view has some real-world relevance, but I doubt it's significant.  Don't... MORE

Magna Carta Club Update

Book Club
Bryan Caplan
I've learned that there are actually several different versions of the Magna Carta.  I originally linked to the 1225 version with 37 clauses, but I think it would be more interesting to stick to the original 1215 version with 63... MORE

Human Ingenuity in Gaza

International Trade
David Henderson
You can get a brand new BMW in the impoverished Gaza Strip, but it'll come in pieces which you'll have to weld together. This is from an article on the effect of restrictions on car imports into Gaza. What I... MORE

Food Pessimism and Liberty: Rhetoric I'll Bet Against

Energy, Environment, Resources
Bryan Caplan
Tyler makes a strong case that libertarians should take "the new food pessimism" seriously:The Julian Simon-savvy crowd that reads MR might not be so impressed, but I wouldn't write off these worries so quickly...  Note that agriculture and land markets are... MORE

David Friedman on Robert Frank

Income Distribution
David Henderson
I posted a few days ago on the debate between David Friedman and Robert Frank about income distribution. Since then, Robert Frank has replied to David Friedman and David Friedman then replied to Frank. Well worth reading for two reasons.... MORE

Back in 2008, some of my favorite economists argued that unemployment wouldn't rise much, even if there were a big nominal shock.  Why not?  "Labor markets are more flexible than they used to be."  Why?  That was a little hazy,... MORE

In a post in February, I made the claim that in the 1981-82 recession, a fall in real wages helped employment recover. Menzie Chinn took issue with that, pointing to a time series showing real wages not falling. On Thursday,... MORE

Macro: the View from Inside the Ivory Tower

Economic Methods
Arnold Kling
Narayana R. Kocherlakota, President of the Minneapolis Fed, writes, modern macro models are designed to be mathematical formalizations of the entire economy. This ambitious approach is frustrating for many outside the field. Many economists like verbal intuitions as a way... MORE

John Goodman's Prediction Coming True

Economics of Health Care
David Henderson
Internal documents recently reviewed by Fortune, originally requested by Congress, show what the bill's critics predicted, and what its champions dreaded: many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to... MORE

Give One Point to Scott Sumner

Macroeconomics
Arnold Kling
David Leonhardt looks at the behavior of real wages in the latest recession. A big reason wages have held up this time is inflation has been nearly absent. As some economic historians have pointed out to me, there is a... MORE

Health Insurance, Kids, and Cut-Rate Coverage

Economics of Health Care
Bryan Caplan
Many employer health plans cover kids for zero or near-zero marginal cost.  This anomaly came up years ago on my now-defunct Armchair Economists' Listserv, and no one had a really good explanation.  Now, as you might have heard, Obamacare has... MORE

Why Bryan Caplan's CEA Veto Wouldn't Work

Public Choice Theory
David Henderson
In which the author shows himself to be more Caplanesque than Caplan I was reading through Bryan Caplan's excellent lecture notes on "Constitutions" for his Public Choice course. (Parenthetically, I'm blown away by the clarity and wisdom of his notes,... MORE

The Econometrics Controversy

Economic Methods
Arnold Kling
Joshua D. Angrist and Jörn-Steffen Pischke write, Empirical microeconomics has experienced a credibility revolution, with a consequent increase in policy relevance and scientific impact. The quote is from the paper, which is gated, and the link is to the abstract,... MORE

Magna Carta Club

Book Club
Bryan Caplan
In my Public Choice lecture on Constitutions, I challenged Buchanan's real (not merely hypothetical) "veil of ignorance" view. My claim:There may be some constitutional rules where a veil of ignorance applies...  But most constitutional rules are about permanently locking in... MORE

Choosing the Right Neighborhood

Family Economics
Bryan Caplan
To me, it's obvious that parents often choose neighborhoods in order to affect their kids' long-run outcomes.  True, they rarely wake up in the morning and say, "Let's move to a higher-income neighborhood to boost Billy's adult income."  But when... MORE

Piggy Banking and Unlimited Government Church

Political Economy
Arnold Kling
A reader asks what I mean by "piggy bank" in reference to a central bank. What I mean is that the central bank, instead of buying safe securities in order to expand the money supply, buys risky securities in order... MORE

Arizona Collectivism

Central Planning vs. Local Knowledge
David Henderson
In a post a few days ago, I pointed out that many people on both sides of the new Arizona immigration law are being collectivists. A particularly flagrant example popped up in Highland Park, Illinois, where a school administrator cancelled... MORE

Marriage and Inequality

Income Distribution
Arnold Kling
Richard Fry and D'Vera Cohn write, In 2007, median household incomes of three groups -- married men, married women and unmarried women -- were about 60% higher than those of their counterparts in 1970. But for a fourth group, unmarried... MORE

Some Bailout Commentary

Finance: stocks, options, etc.
Arnold Kling
James DeLong wonders what the business model is for Wall Street. Or, "We borrow from the government at low rates and lend back to the government at a premium, and for that we get paid a lot." (From the investment... MORE

An interview with Andreas Bergh. Just watch it.... MORE

Rodrik Update

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
In an email, Dani Rodrik writes to correct my misinterpretation. I don't think the world needs a strong government. I think the world needs to ease up on economic globalization, precisely because it cannot have (and should not have, for... MORE

Weight Classes for Prisons Revisited

Economics of Crime
Bryan Caplan
I've learned that I'm not the only person to propose weight classes for prisons.  Here's Philip Ellenbogen in the Columbia Journal of Law and Social Problems:As discussed earlier in this section, a victim of prison rape is often much smaller... MORE

Robert Frank and Progressive Taxes

Taxation
David Henderson
In a debate with Robert Frank, David Friedman has pointed out some huge flaws in Frank's argument for higher taxes on "the rich." I found Friedman's critique devastating. I'll point to one highlight and then point out two criticisms I... MORE

Marginally Less Unreasonable

Economic Methods
Bryan Caplan
Bob Murphy sees a contradiction between my 2008 Bayesian commitment on TARP, my 2009 probability adjustment, and my current views.  In 2008, I said that if the economy tanked, "I still won't be convinced [that TARP is a good idea],... MORE

The Deeper Meaning of the Greek Crisis

Political Economy
Arnold Kling
We are going to argue about this one. Dani Rodrik writes, The choice that the EU faces is the same in other parts of the world: either integrate politically, or ease up on economic unification. I read his essay as... MORE

Extra-curricular Signaling in An Education

Economics of Education
Bryan Caplan
Here's a scene from An Education too good not to include in The Case Against Education:Jenny [girl in high school]: I've got an English essay to do by tomorrow morning.Dad: Right. So, the only sound I want to hear coming... MORE

Shooting War

Books: Reviews and Suggested Readings
Bryan Caplan
Shooting War is a dystopian graphic novel written in 2007... about the world of 2011.  You might think you'd need more than four years' distance to make dystopia credible, but the book does a marvelous job.  It's mostly set in... MORE

Beautiful Cadillac Commercial

International Trade
David Henderson
I get so serious on this blog. So I thought I'd share a lighter moment: three moments actually. Check out this stunning Cadillac commercial from China. HT to Karen Selick.... MORE

Cognitive Failure or Moral Failure

Finance: stocks, options, etc.
Arnold Kling
Claire A. Hill writes, many brilliant and sophisticated market participants with considerable amounts of money at stake and considerable access to information about the securities and about markets generally made the same mistake the rating agencies did. These instruments were... MORE

Musings on Macro

Macroeconomics
Arnold Kling
Russ Roberts interviews Ed Leamer. If you are not already familiar with Leamer's views on econometrics, then you should listen. Leamer has a notion of macro that I think needs more elaboration. He says that in a normal economy, when... MORE

Bailouts: When Will They End?

Fiscal Policy
Bryan Caplan
I've been against bail-outs from the beginning.  So should have all economists.  It's reasonable to debate the merits of contracyclical monetary policy.  It's not reasonable to debate the merits of rewarding failure on a grand scale.Alas, in "practical politics" almost... MORE

On Economic History

Economic History
Arnold Kling
Razib writes, I think it is critical to emphasize why ancient barbarian elites were so keen on conquering civilized states, and why there seems to have been less mass migration of the peasantry. In the modern world when we think... MORE

Arizona Immigration Continued

Labor Mobility, Immigration, Outsourcing
David Henderson
I noticed that none of the commenters on my previous post today commented on the merits of my argument. [Actually, commenter #6, Douglass Holmes, did, but that came in after I started writing this post.] I was disappointed. Instead, most... MORE

Mortgage Market Experts

Upcoming Events
Arnold Kling
will be at George Washington University on May 26. I will also be there, near the end of the day. I once worked with Bob Avery, Lawrence J. White (will he remember?), Ed Golding, and Bob Van Order. All of... MORE

Robin Hanson is Incurable

Economics of Health Care
Arnold Kling
From the Boston Globe. the simplest and least ethically hazardous way to capitalize on the placebo effect is to acknowledge that medicine isn't just a set of approved treatments--it's also a ritual, with symbolism and meaning that are key to... MORE

Bizarre Tales from the Delivery Room

Economics of Health Care
Bryan Caplan
I've cross-examined doctors before, but never like this!  Offsetting Behavior's Eric Crampton remained enough of an economist to argue with the anaesthesiologist while awaiting the delivery of his second child:There was some risk that Sue might wind up needing a... MORE

Go See Matt Ridley

Books: Reviews and Suggested Readings
Arnold Kling
He will speak at Cato and at Mercatus. I will be out of town, unfortunately, but I hope to be able to get hold of a copy of the book as soon as it comes out. It is likely to... MORE

Arizona Immigration: Battle of the Collectivists

Labor Mobility, Immigration, Outsourcing
David Henderson
Your Papers Please It's not hard for me to take sides on whether police in Arizona should be able to stop people simply on suspicion that they're in the United States illegally. I think this is one more step on... MORE

Europe's TARP

Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen writes, 6. Basically the ECB is monetizing bad government debt claims. His other 11 short points also are interesting. Peter Boone and Simon Johnson write, This is a whole new level of global moral hazard - the result... MORE

The Economic Philosophy of Child Abuse

Family Economics
Bryan Caplan
When is loss of custody a morally acceptable response to child abuse?  To clarify the issue, assume (a) the child is too young to express a preference; and (b) the decision-maker faithfully but fallibly follows whatever standard you pick.Then consider... MORE

Happy Mother's Day: EconLog Edition

Family Economics
Bryan Caplan
The sections based on "Parenthood As the Trump of all Past Regret" and "The Lorelai Paradox" might not make the final cut in Selfish Reasons to Have More Kids, but these two posts are still among my favorites.  Happy Mother's... MORE

Odious Debt

Fiscal Policy
Arnold Kling
Barry Eichengreen writes, Only the delusional can believe that, when everyone else is taking swingeing cuts, Greece's creditors can continue receiving 100 cents on the euro. It beggars belief that Greek government debt can top out at 150% of GDP,... MORE

Why Not? Weight Classes for Prisons

Economics of Crime
Bryan Caplan
Why do we have separate men's and women's prisons?  You don't have to envision the alternative for long to have your answer: Co-ed prisons would be a living hell of rape and brutality. Or perhaps I should say: Even more... MORE

From the Vault: My 1983 Memo on Population Growth

Growth: Causal Factors
David Henderson
I came across the following memo that I wrote while a senior economist with President Reagan's Council of Economic Advisers. My main duty in that job was to fight off bad ideas, mainly from within the Administration. If I had... MORE

Has Arizona State University Been Audited?

Politics and Economics
David Henderson
A year ago, in his commencement address at Arizona State University, President Obama engaged in a little gallows humor. After ASU had decided not to give him an honorary degree, Obama joked about payback (at about the 1:17 point) for... MORE

After 9/11: America's War on Terror (2001-)

Books: Reviews and Suggested Readings
Bryan Caplan
If you want a quick, painless, reasonable, graphic history of America's War on Terror, I recommend After 9/11: America's War on Terror (2001-).  It's too mainstream for my taste, and I would have preferred more of an international perspective.  But... MORE

Outsider Academic Journals

Economic Methods
Arnold Kling
Bruce Charlton no longer edits one. While he was editor, he published Robin Hanson's classic article on what we now call Hansonian medicine. Daniel Klein still edits one, and the latest issue features an article challenging Bryan Caplan's view that... MORE

The Minsky-Jones Forecast Looks Good

Macroeconomics
Arnold Kling
Two months ago, I wrote, The standard forecast is, "employment has been less than what we expected, so let's assume it will continue to be less than expected." My forecast is that the recalculation is just getting started, and we... MORE

A Certain Misperception

Economic Methods
Bryan Caplan
On Facebook, I just posed the following question:Bryan Caplan is less certain about most things than others believe him to be.  What's the source of the misperception?My starting hypothesis: People confuse bluntness with certainty.If you question the premise, remember: A... MORE

A Kauffman Foundation survey of a non-random sample. I think that the questions may tell you more than the answers: Tyler Cowen asks whether the Chinese economy will crack up in five years. Mark Thoma asks what will happen to... MORE

This afternoon, I'm scheduled to join a press call with Simon Johnson and two Senators discussing a proposed amendment to the financial reform bill. Simon and I have been in alignment since the day we "debated" the issue of nationalizing... MORE

The Journal I'd Most Want to Edit

Economic Methods
Bryan Caplan
I think Sumner's being tongue-in-check, but here's his genuinely good idea for a new journal:Most economists obviously disagree with me.  The top economists are constantly making predictions that violate the EMH.  OK, then why not set up a new journal, the... MORE

IQ and Immigration: Only a Slight Caricature

Economic Philosophy
Bryan Caplan
Mr. Human Biodiversity: The average IQ of immigrants from Mexico is 11 points less than ours.  Therefore, let's hunt them down like animals and cast them back into the fiery chasm from whence they came!Dr. Mainstream Intellectual: Only a monster... MORE

Should the IMF Have Intervened Sooner in Greece?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I'll say right away that I don't know squat about the theory or the practice of the IMF. But the IMF seems to have the power to negotiate deals of the sort that say, "We'll lend you the money, but... MORE

Public Choice Outreach 2010

Political Economy
Bryan Caplan
The Public Choice Outreach seminar is back!  The dates: August 13-15, at GMU.  It's a great chance to learn Virginia political economy straight from the horses' mouths.  The speakers aren't set yet, but I'll probably be one of them.  The... MORE

Libertarians for Obama: Time for Hindsight

Politics and Economics
Bryan Caplan
The penultimate post of the Libertarians for Obama blog (it packed up on November 9, 2008), sure sounds naive in retrospect.  After the author writes, "I encourage my fellow libertarians, no matter who they supported, to join me in the... MORE

Theory vs. History

Fiscal Policy
Arnold Kling
Nick Rowe writes, If it prints money and is not in a recession, or has inflation, then that is a problem. Printing money will make inflation worse, and that's a problem. But it's a negative feedback problem. The inflation will... MORE

Do You Belong to the Church?

Political Economy
Arnold Kling
Make a list of five to ten social issues that you feel are important. Next, make a list of five to ten social issues that you think government should stay out of. What is the intersection of those two sets?... MORE

Counterfactuals and World War II

Economic History
David Henderson
The Symmetry of Counterfactuals Last week, Bryan Caplan raised the issue of what would have happened to the world had Lenin died five years earlier. One of the commenters criticized the idea of considering counterfactuals and, in response, I defended... MORE

Is Obama Libertarians' Fault?

Politics and Economics
Bryan Caplan
My hardest-line Republican friend has been blaming libertarians for Obama's election since November, 2008.  His story in a nutshell: Faced with a choice between Obama and McCain, libertarians chose the greater evil out of spite.  All along, I've been thinking:... MORE

Pricing in Economics Textbooks

Economic Methods
David Henderson
On a list serve that I receive, Warren Gibson, an economics instructor at San Jose State University, recently wrote: Rothbard's Man, Economy, and State discusses bargaining at length but I can't think of another text that does so. Rothbard starts... MORE

A Note on Public Sector Pay

Fiscal Policy
Arnold Kling
Michael Mandel looks at the numbers. The chart shows that public and private sector pay rose in parallel from 2001 to 2004. Then the lines diverged. Since early 2005, public sector pay has risen by 5% in real terms. Meanwhile,... MORE

The Further Fact-Checking of Garett Jones

Cross-country Comparisons
Bryan Caplan
My colleage Garett Jones points out that the "one-third of Greeks work for the government" factoid appeared almost verbatim in a May 1 NYT piece, and still hasn't been corrected: The government's proposals for deep spending cuts pushed by the... MORE

Max Borders on Subjective Value

Microeconomics
David Henderson
The May Econlib article went up yesterday. It's titled "The Relentless Subjectivity of Value" and is written by Max Borders. My favorite paragraph is on Nudge by Thaler and Sunstein. Borders writes: Furthermore, nudgers are usually establishing choice architectures for... MORE

The New Sectarianism in America

Political Economy
Arnold Kling
Richard Cohen writes the very reason most Americans find secularism a strange and useless term is that this country has never had a state religion. I believe that America does have a state religion. I call it the religion of... MORE

Why U.S. Budget History is Not Encouraging

Fiscal Policy
Arnold Kling
My essay claims, there is no precedent for reducing the ratio of debt to GDP by simply growing our way out of it. My general worry is that the essay is incomprehensible to people who have never walked through the... MORE

The Singularity is Not so Near

Growth: Causal Factors
Arnold Kling
Via a Tyler Cowen tweet, Robert Fortner writes, The accuracy of computer speech recognition flat-lined in 2001, before reaching human levels. Raw computer power is not enough to solve complex problems. That is why predicting that we will have brain... MORE

The Voice of the Outsider

Behavioral Economics and Rationality
Arnold Kling
Russ Roberts interviews Nassim Taleb in a fast-paced discussion. They kick around a number of interesting ideas. One of them is that leverage is linked to overconfidence. When you believe you can predict the future, you borrow a lot. When... MORE

The Fact-Checking of Garett Jones

Cross-country Comparisons
Bryan Caplan
My admirable colleage Garett Jones points out that according to my source for German government employment, Greek government employment is only 14% of the labor force, not a third as the New York Times originally reported.The NYT apparently deleted the... MORE

How Should Editors Treat Luis Angeles?

Economic Methods
Bryan Caplan
Luis Angeles nobly confessed to a serious coding error in his paper on kids and happiness.  At least to me, that's a (moderately) negative signal of competence and a (strongly) positive signal of honesty.  If you were a journal editor,... MORE

Capitalism: A Confused Story

Political Economy
David Henderson
Last week, I watched Michael Moore's latest movie, Capitalism: A Love Story, with two of my students. I took notes and we stopped at various points to discuss it. Some highlights: 10:40: He has a segment about a firm in... MORE

The (Potential) Enemies List: Two Thoughts

Family Economics
Bryan Caplan
Thanks for all your comments on my "enemies list."  Two thoughts:1. Many thanks to Sam for pointing out Luis Angeles' retraction.  Since the thrust of my discussion of kids and happiness is that the observed effect is negative but small,... MORE

Slacker U

Economics of Education
Arnold Kling
Philip Babcock and Mindy Marks write, We find a 10 hour decline in the average weekly study time of full-time college students at four-year colleges in the United States, from about 24 hours per week in 1961 to about 14... MORE

What's the Greek Economy Really Like?

Cross-country Comparisons
Bryan Caplan
Scott Sumner was talking about Greece months before its fiscal woes put it on the front page.  This passage was so vivid it stuck with me:Before delving into the numbers, I'd like to first try to dissuade you from thinking... MORE

Government Fraud

Fiscal Policy
Arnold Kling
Andrew G. Biggs writes, State pension funds are underfunded by over $3 trillion; this is more than six times the $438 billion in underfunding the plans themselves report. Pension shortfalls far exceed explicit state debts. Current state pension accounting practices... MORE

In 12th grade, I took a one-semester economics course.  My high school didn't have A.P. econ (though I took the test on my own initiative), so the course was a little dumbed down.  Actually, to be blunt, the teacher didn't... MORE

Four Principles of Human Action

Political Economy
Arnold Kling
I stretched to make them fit into a framework of A, B, C, and D. Think of this post as a follow-up to both the government menace post and the Ropke post. A stands for Altruism. B stands for Business.... MORE

Amartya Sen vs. Dan Klein on Adam Smith

Economic Philosophy
David Henderson
Last week the New York Times blog had a post referencing an article on Adam Smith by Amartya Sen. Those of Sen's thoughts that sounded correct were not news and those that sounded like news were ones that I wasn't... MORE

The U.S. Welfare State

Income Distribution
Arnold Kling
I was invited to contribute to a British booklet called Small State, Big Society. Feeling contrarian, I refused to describe the U.S. as a small state. Instead, I wrote, The United States has a surprisingly large welfare state. The American... MORE

What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
1. Wilhelm Ropke's Political Economy, by Samuel Gregg. On p. 52, he describes three ways of allocating resources and assigns moral values to each method. The first moral position was described by Ropke as 'the ethically negative' method: that is,... MORE

Is Government a Menace?

Political Economy
Arnold Kling
Yesterday, President Obama said, When our government is spoken of as some menacing, threatening foreign entity, it ignores the fact that in our democracy, government is us. We, the people -- (applause.) We, the people, hold in our hands the... MORE

The (Potential) Enemies List

Family Economics
Bryan Caplan
I expect Selfish Reasons to Have More Kids to be controversial.  In fact, I think it will have enemies.  I'm going to stick to my policy of unilateral friendliness, but I'd still like to improve my forecast of who's going... MORE

History and Counterfactuals

Economic History
David Henderson
In response to Bryan Caplan's excellent post, "What If Lenin's Stroke Came [sic] Five Years Sooner," historian Susan, in the comments section writes: I'm setting aside the major problem of engaging in historical counterfactuals, which as a historian I find... MORE

May Day Remembrance 2010

Economic History
Bryan Caplan
It's once again May Day, and therefore once again time for grateful bloggers to dance on the grave of Marxism.  As usual, Jonathan Wilde of Distributed Republic has volunteered to be lead choreographer of this annual May Day Remembrance.  My... MORE

What If Lenin's Stroke Came Five Years Sooner?

Economic History
Bryan Caplan
In November, 1917, Lenin overthrew the first democratically elected government in Russian history.  In May, 1922, Lenin suffered the first of three strokes, finally dying in January, 1924.  What would have happened if Lenin had a fatal stroke in mid-1917?It's... MORE

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