Bryan Caplan and David Henderson

February 2011

A Monthly Archive (122 entries)

Unions: Bob Barro's Mistaken Analogy

Labor Market
David Henderson
Labor unions like to portray collective bargaining as a basic civil liberty, akin to the freedoms of speech, press, assembly and religion. For a teachers union, collective bargaining means that suppliers of teacher services to all public school systems in... MORE

Reflections on World on Fire

Behavioral Economics and Rationality
Bryan Caplan
Negative reviews of Amy Chua's Battle Hymn of the Tiger Mother often begin by praising her earlier book, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability.  I was inspired to read it - and... MORE

Who Understands the Causes of Poverty?

Behavioral Economics and Rationality
Bryan Caplan
Me being intentionally provocative on Twitter:The poor rarely understand the causes of poverty; if they did, they wouldn't stay poor for long.I'm aware of the obvious counter-examples, but the basic argument is simple: 1. Most people don't like being poor.2.... MORE

The Hobgoblin of Simple Minds

Growth: Consequences
Arnold Kling
Tyler Cowen notes the apparent inconsistency between supporting both labor unions and aggregate demand expansion during a recession. The one seeks to raise real wages and the other seeks to lower them. I think it is hard to maintain a... MORE

Distribution of Tax Burden by Quintile

Taxation
David Henderson
In comments on my post on Rand Paul and David Letterman, some commenters expressed interest in seeing the data on overall federal tax burden, not just the burden of the federal income tax. As it happens, the Congressional Budget Office... MORE

Rand Paul on Letterman

Economic Philosophy
David Henderson
When Rand Paul ran for the U.S. Senate, my worst case rating of him, out of 10, was about a 4, and my best case was about a 7. One of my biggest concerns was that he seemed to waffle... MORE

Barbara Branden on Atlas Shrugged

Economics and Culture
David Henderson
Along with some other recipients, I received a letter from Barbara Branden last night about her reaction to the movie, Atlas Shrugged. She gave me permission to quote extensively. I couldn't think of anything to cut and so here is... MORE

Gibson on Gold

Money
David Henderson
San Jose State University economist Warren Gibson has an excellent article, "Gold and Money," in the latest Freeman. He lists a number of claims about gold, both positive and negative, and proceeds to do a "True, False, Uncertain, with explanation"... MORE

Benevolent Autocrat Theory

Central Planning vs. Local Knowledge
Arnold Kling
Christopher Faris writes, it's easier to tell and believe narratives about heroic individual leaders than about complex self-reinforcing political and economic systems; Read the whole thing. It summarizes a talk by Bill Easterly. Pointer from...Easterly's co-blogger, Laura Freschi. It is... MORE

John Goodman on Government Failure

Public Choice Theory
David Henderson
Why is our perspective so different from so many other health policy analysts? I think the answer is: the vast majority of people in health policy do not understand the concept of "government failure." For example, health economist Austin Frakt,... MORE

How More Immigration Can Save California

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
I highly recommend Kerr and Kerr's NBER Working Paper, "Economic Impacts of Immigration: A Survey."  Most of the paper just compiles a lot of evidence with which I was already familiar:1. Immigrants have very little effect on native wages.The documented... MORE

Libertarian Tribalism

Economics and Culture
Arnold Kling
In a thought-provoking post on what he calls the libertarian penumbra, Bryan writes, Are there any [beliefs that fall within this penumbra] that make you cringe? I am tempted to say that the question itself is an example of something... MORE

Educational Testing

Economics of Education
David Henderson
In a comment on my post, "Home Schooling and Socialization," Scott writes: Your views are very similar to those of John Taylor Gatto. Are you familiar with his work? Most libertarians I know consider him a hero which is interesting... MORE

Thank goodness for international trade and the web. Glenn Greenwald has an excellent piece telling us what the New York Times essentially told us if anyone cared to notice: the New York Times admits that it enabled the U.S. government's... MORE

Agnostics for Pacifism

Economic Philosophy
Bryan Caplan
A striking observation from my childhood friend Ghassan Bridi:Had we never invaded Iraq, we may have seen the people of Iraq today take to the streets and topple a despotic dictator in the second most populous Arab country on this... MORE

Free the Children

Economics of Education
David Henderson
I mentioned in an earlier post that I had listed, in my book, The Joy of Freedom: An Economist's Odyssey, five ways you could free your child and other people's children from government. Here's what I wrote in 2001: Just... MORE

In one of my talks at the 2011 International Students for Liberty Conference, I argued that the my views on parenting and kids can and should enter the libertarian penumbra.  Yes, a perfectly good libertarian could believe that nurture is... MORE

Schools and Socialization

Economics of Education
David Henderson
Warning: Not for the faint of heart. The following is an outtake from my chapter on education and schools in The Joy of Freedom: An Economist's Odyssey. I was always torn about whether to include it because it was so... MORE

Home Schooling and Socialization

Economics of Education
David Henderson
David Friedman has an excellent comment on home schooling and socialization, in response to another commenter, on Bryan Caplan's recent post. Here are my thoughts, two excerpts from "Freedom and Education Versus 'Public' Schools," Chapter 16 of my book, The... MORE

The Libertarian Penumbra

Economics and Culture
Bryan Caplan
Libertarians are famous for their internal disagreements, but they have far more beliefs in common than their core position requires.  For starters, even non-consequentialist libertarians generally believe that libertarian policies have good consequences.  Almost all libertarians think that free markets... MORE

Job Losses vs. Unemployment

Labor Market
Arnold Kling
Christian Stucchio writes, it looks like job losses in construction and manufacturing are huge! In contrast, job losses in finance or business are much smaller, government is flat, and health and education have actually gained jobs! On his post, you... MORE

You Call this Stagnation?

Information Goods, Intellectual Property
Arnold Kling
Tyler Cowen writes, The deeper point is that the revenue growth/utility growth gradient has fundamentally changed, due to the "real shock" (as they call it) of the internet. Facebook is fun but it doesn't produce a proportional amount of revenue,... MORE

Scary Data on Private Investment

Macroeconomics
David Henderson
Although the financial-market panic that had flared up in late September 2008 began to subside early in 2009, net private investment continued to fall, becoming negative (-$53 billion, annual rate) in the first quarter of 2009 and even more negative... MORE

Kindle Pre-Order Now Available for Selfish Reasons to Have More Kids

Books: Reviews and Suggested Readings
Bryan Caplan
Amazon, the Great Mind Reader, made my new book available for Kindle pre-order shortly before I asked my publisher how to make it happen.   The world really does get better all the time.... MORE

Mubarak, Freddie, and Fannie

Finance: stocks, options, etc.
Arnold Kling
I write in the latest Weekly Standard, Like Mubarak, the GSEs have seen their once formidable political position reduced to one of helpless isolation, abandoned by all former supporters. However, as in Egypt, deposing former leaders does not by itself... MORE

Dude, Where's My Theory of Everything?

Family Economics
Bryan Caplan
Almost all traits run in families.  But why?  People have literally debated the question for thousands of years.  Is the cause nature/heredity/genes, nurture/upbringing/parenting, or some mixture of the two?  Until a few decades ago, the debaters basically just chased their... MORE

Collective Bargaining "Rights"

Labor Market
David Henderson
We're hearing a lot in recent discussions of Wisconsin's government workers' unions about how newly elected Governor Scott Walker plans to limit or end the unions' collective bargaining rights. Here is a discussion by an opponent of Walker's move that,... MORE

What is Freedom of Speech?

Property Rights
David Henderson
Mea Culpa In a post on Friday, I claimed, with the headline, that Secretary of State Hillary Clinton, while criticizing other governments for attacking freedom of speech, went on with her speech even while "goons" (my word) in the auditorium... MORE

The Expert-Hubris Industries

Growth: Consequences
Arnold Kling
Steven Randy Waldman elaborates on some ideas that I set out in response to his initial post. service providers in these industries are themselves uncertain of the value they are able to provide. Yet providers work hard to hide and... MORE

The Bernank on What Caused the Bubble

Finance: stocks, options, etc.
Arnold Kling
Ben S. Bernanke, Carol Bertaut, Laurie Pounder DeMarco, and Steven Kamin write, Europe did not run a current account surplus as did the GSG countries [Global Savings Glut countries, such as China], and thus was not a net exporter of... MORE

Seven Myths about Free Markets

Economic Education
David Henderson
That's the title of a talk I gave to Stephen Hicks's philosophy class at Rockford College on Thursday morning and to economics students of Josh Hall and other economics professors at Beloit College on Thursday afternoon. After my talk at... MORE

The Students for Liberty conference has to be seen to be believed: the attendance (about 500 students), the energy (off the charts), and most remarkably of all, the high social skills.  Twenty years ago, a pack of libertarian students would... MORE

www.bcaplan.com 2.0

Economic Education
Bryan Caplan
My website was very cool back when it launched in 1994.  But during the intervening 17 years, fashions have changed.  Perhaps there's even been some unmeasured progress.  So by popular demand http://www.bcaplan.com (mirror site at http://econfaculty.gmu.edu/bcaplan) has been completely updated,... MORE

Free Speech for Them but Not for Us

Cross-country Comparisons
David Henderson
Does Hillary Clinton Understand Irony? On Tuesday, Secretary of State Hillary Clinton gave a speech at George Washington University in which she criticized foreign governments for cracking down on freedom of speech. In her audience was a retired CIA official,... MORE

Solving Othello: a Follow-Up

Game Theory
Arnold Kling
This is an off-topic response to comments on my earlier off-topic post on the board game Othellotm. I believe that it could be solved using today's computers, by truncating the decision tree whenever a player is in a clear losing... MORE

My Othello Career

Growth: Consequences
Arnold Kling
Mostly off topic, but Tyler Cowen sent me a cryptic email asking about it. I can refer him to this essay.from 1998. With apologies to Robert Fulgum, everything I ever learned about competition I learned by playing Othello(tm owned by... MORE

The Dimensionality, Evolution, and Influence of Punditry

Politics and Economics
Bryan Caplan
Yesterday I discovered a remarkable political scientist, Georgetown's Hans Noel.  I learned a lot from him over lunch, but it was his seminar that blew me away.  He presented results from two papers: "Interpreting Legislative Ideal Points with Help From... MORE

Agent-Based Modeling: Promises and Pitfalls

Economic Methods
Arnold Kling
Which of the following impediments to economic adjustment do you believe to be the most important? a) the cost of establishing a new enterprise b) the cost of integrating new workers and equipment into an existing enterprise c) the cost... MORE

Rescued from the Comments

Economics of Health Care
Arnold Kling
On this post, Shangwen wrote, So far in this project, I've found that for a particular disorder, clinicians employing a rigorous and objective diagnostic tool can cure a patient for about $4,000. Left to their own devices, hunches, and bias,... MORE

A Budget Paradox

Fiscal Policy
Arnold Kling
Consider the following two sentences: 1. It is very difficult to cut Federal government spending, because so much of it is mandatory. 2. It is very difficult to increase Federal government spending, because so much of it is mandatory. Reciting... MORE

Henderson Talk at Rockford College

Upcoming Events
David Henderson
Tomorrow, Thursday, February 17, I'll be giving a talk at Rockford College in Rockford, Illinois. The public is welcome and the money price is zero. Topic: Seven Myths about Free Markets. My host is Rockford College's Center for Ethics and... MORE

Harold Demsetz

Economic Education
David Henderson
In yesterday's post, I said that the thing that turned me around and made me want to get a Ph.D. in economics after finding my one economics course boring beyond belief was a visit to the University of Winnipeg by... MORE

Steve Randy Waldman writes, I think of government, education, health care, and finance collectively as the "information asymmetry industry", and I find it terrifying that many people presume that they are the future growth industries for the United States. Waldman... MORE

Book Marketing Bleg

Books: Reviews and Suggested Readings
Bryan Caplan
Soon I'll start devoting all of my discretionary work hours to marketing Selfish Reasons to Have More Kids.  If you've got practical suggestions for me, please share.  P.S. If you just want to cut out the middleman and buy a... MORE

Will Gay Marriage Lead to the Privatization of Marriage?

Politics and Economics
Bryan Caplan
Jason Sorens hails an historic bill to privatize marriage in New Hampshire:To my knowledge, HB 569 is the first bill ever drafted and introduced in a legislature that would abolish government marriage licensing. The bill is the brainchild of libertarian... MORE

The most common complaint about Tyler's The Great Stagnation is simply that the title is deliberately misleading.  Stagnation means "no growth," not "slower growth" - but the latter is the most that Tyler claims to show.The complaint is entirely fair. ... MORE

More on Blogging and Libertarians

Economic Education
David Henderson
Co-blogger Bryan's take on GMU professors blogging earlier today is one of my 20 favorites of his posts. I have a few things to add from my own experience. One is a shortened version of my own story of how... MORE

I can't resist quoting my colleague Don Boudreaux latest letter to the editor verbatim:To the Editor:David Brooks appropriately devotes today's column to my GMU Econ colleague Tyler Cowen's important new book "The Great Stagnation" ("The Experience Economy," Feb. 15). Mr.... MORE

Why Do So Many GMU Economists Blog?

Economics and Culture
Bryan Caplan
I've heard the question many times: "Why do so many GMU economists blog?"  The number and ratio are indeed extraordinary: I count 9 bloggers out of the 28 tenure-line faculty on the department's homepage - not to mention our students... MORE

David Brooks, Tyler Cowen, and PSST

Growth: Consequences
Arnold Kling
David Brooks writes, In other words, as Cowen makes clear, many of this era's technological breakthroughs produce enormous happiness gains, but surprisingly little additional economic activity. This is Tyler Cowen's Internet story. Lots of value, but not much economic activity.... MORE

Henderson Review of Bryson's "At Home"

Books: Reviews and Suggested Readings
David Henderson
Bryson has pulled off a marvelous feat. He devotes almost every chapter to a room in his Victorian house in England. He then considers why the room is the way it is and what preceded it. In doing so he... MORE

The Market for Dancers

Economics and Culture
David Henderson
The shortage of men at Edgewater Pointe Estates is a perennial fact of life at retirement communities and nursing homes around the country, where women often outnumber men 3-to-1. Forget finding a mate - finding a man to dance with... MORE

What is Economic Activity?

Macroeconomics
Arnold Kling
Maybe I should write something the length of a Kindle single on Patterns of Sustainable Specialization and Trade. Below might be a way to write the opening.... MORE

This is one of his better summaries of his brand of monetarism and how it contrasts with other views. He writes, Rather than assume current changes in M affect future AD with long and variable lags, I assume current changes... MORE

A Scott Sumner Post to Ponder

Politics and Economics
Arnold Kling
He classifies political affinities along a 6-spoke wheel: progressives, pragmatic libertarians, dogmatic libertarians, conservatives, corrupt Republicans, corrupt Democrats. He writes, I would like to argue that most of the really important public policy issues are not even part of the... MORE

Commie Cargo Cult

Cross-country Comparisons
Bryan Caplan
Frank Dikötter's Mao's Great Famine firmly supports a simple but shocking theory of Communism: It was the largest cargo cult the world has ever seen.  Communist revolutionaries were great at seizing power, but if power were their sole aim, the... MORE

The "Right" Amount of Manufacturing

International Trade
David Henderson
Free-trade critic Ian Fletcher argues that the United States has too little manufacturing. Even if manufacturing output is at an all-time high, he argues, it's still too low. So clearly he has in mind some amount of manufacturing that is... MORE

The McCloskey's Speech

Growth: Causal Factors
Arnold Kling
Outstanding, even with the occasional stammer. If you like what Nick Schulz and I call Economics 2.0, you will loves this talk.... MORE

Lessons of Smoot-Hawley

Books: Reviews and Suggested Readings
Arnold Kling
In Peddling Protectionism: Smoot-Hawley and the Great Depression, Douglas A. Irwin writes on p. 99-100: In terms of political strategy, the Smoot-Hawley tariff represented a huge miscalculation by progressive Republican insurgents...to address the farm situation through a tariff revision. The... MORE

Mao's Great Famine and Depraved Indifference

Economic History
Bryan Caplan
In Mao's Great Famine, Frank Dikötter joins the elite club of historians who live up to their duty to impose "the undying penalty which history has the power to inflict on wrong."  On purely literary terms I still prefer Jasper... MORE

The Author of the Administration's Housing Finance Report

Finance: stocks, options, etc.
Arnold Kling
As reporters ask me about the report, I in turn ask them where the real report is. I mean, I cannot believe that such a sketchy, half-baked proposal was given an official seal (two of them, one each from HUD... MORE

My Berkeley Talk

Political Economy
David Henderson
On Wednesday evening, I gave a talk at UC Berkeley to a group called the Students for Liberty, UC Berkeley. I've talked to a number of college audiences, but it has been a while since I've spoken to a campus... MORE

Housing Finance Reform: My Most Cynical Take

Finance: stocks, options, etc.
Arnold Kling
If you know your Murray Edelman, then you know that politics is a game in which insiders divide up the goodies while giving the broader public symbolic reassurance. That framework can be used for housing finance. In housing finance, the... MORE

The Obama Administration on Housing Finance

Finance: stocks, options, etc.
Arnold Kling
The long-awaited report has been released. I will have extended comments below the fold. Overall, I was disappointed to see that the report is heavily waited toward strategy and tactics, without adequate consideration of objectives. Nobody seems to want to... MORE

Weather and Turn-Out

Politics and Economics
Bryan Caplan
When I was finishing up The Myth of the Rational Voter, I needed citations on a fact that "everybody knows" - that bad weather depresses voter turnout.  I was surprised by how little evidence I found.  But last night, my... MORE

Ron Paul's First Hearing

Monetary Policy
David Henderson
Congressman Ron Paul, a man I admire a great deal, held his first hearing on February 9. I posted on one aspect of it here. I was surprised at his choice of one of witnesses, Tom DiLorenzo. Although I defended... MORE

Housing Finance Reform

Finance: stocks, options, etc.
Arnold Kling
While I await the release later today of the Administration's white paper, I have received from Princeton University Press an advance copy of Guaranteed to Fail, a new book by Viral Acharya, Matthew Richardson, Stijn Van Nieuwerbergurgh, and Lawrence J.... MORE

In a hearing before a House Subcommittee headed by Congressman Ron Paul on February 9, Democratic Congressman William Lacy Clay attacked an economist who testified on monetary policy because the economist had written, among other things, the following: And as... MORE

The Great Pacification

Economic History
Bryan Caplan
Suppose you grant every nostalgic memory about the wonder of the Fifties.  Stipulate that America was packed with happy prosperous one-earner families, cozily protected by their unions and patriotic employers.  There's still one wee problem to worry about: nuclear war... MORE

Selfish Reasons to Have More Kids Website

Books: Reviews and Suggested Readings
Bryan Caplan
My official book website, http://www.havemorekidsbook.com, is up.  If you've got suggestions for improvement, please share.... MORE

Anti-Foreign Bias versus Charter Cities

Behavioral Economics and Rationality
Bryan Caplan
From David Wessel's Honduran charter cities piece in the WSJ:"A good idea from an economic point of view," says Antonio Tavel Otero, a Honduran businessman. "But I don't think you can sell this: Telling Hondurans our laws are so bad... MORE

Jewish versus Chinese Parenting

Family Economics
Bryan Caplan
A reader sent me this email reflecting on my critique of Amy Chua.  Reprinted anonymously with his permission:Dear Dr. Caplan,You speculate as to why Jews are, on average, successful, and as to whether or not parenting has anything to do... MORE

Compensation of Bank Executives

Business Economics
Arnold Kling
Simon Johnson writes, New evidence in favor of the second interpretation [that bank executives were evil] has just become available, thanks to the efforts of Sanjai Bhagat and Brian Bolton. These researchers went carefully through the compensation structure of executives... MORE

Peter Berkowitz on Elites

Political Economy
Arnold Kling
He writes, today more than ever conserving liberty and maintaining democracy require an elite whose members possess advanced learning, professional expertise, and wisdom born of extended experience. ...To obtain the elites we deserve, nothing is more urgent than redoubling reform... MORE

Public Policy Bounty Hunting?

Central Planning vs. Local Knowledge
Arnold Kling
David Leonhardt writes, nonprofit groups like foundations pay the initial money for a new program and also oversee it, with government approval. The government will reimburse them several years later, possibly with a bonus -- but only if agreed-upon benchmarks... MORE

Foreclosures and House Prices

Finance: stocks, options, etc.
Arnold Kling
Atif R. Mian, Amir Sufi, and Francesco Trebbi write, We show that states that require judicial process for a foreclosure sale have significantly lower rates of foreclosures relative to states that have no such requirement. Using state laws requiring a... MORE

GSE Reform and Tail Risk

Finance: stocks, options, etc.
Arnold Kling
The Wall Street Journal reports that the Administration is going to release its overdue white paper on Friday. The administration's proposal to Congress is likely to assess the merits and drawbacks of each of the three options. The most conservative... MORE

My Tax Dollars at Work

Politics and Economics
Arnold Kling
Crime in the work place is a problem, whether it takes place in the public sector or the private sector. But one advantage of having goods and services provided by private firms rather than by government is that you put... MORE

My Morning's Web Reading

Books: Reviews and Suggested Readings
David Henderson
I found a lot of good and informative pieces on the Web this morning and so, rather than pick one to highlight in depth, I'll name a few and say a little about, or quote a little from, each. Ivan... MORE

Classics from the American Economic Review

Economic Education
Arnold Kling
This list, compiled by a committee that includes Kenneth Arrow and several other superstars, consists of twenty articles. I think one could make a pretty good case that a professional economist ought to be familiar with every article. For example,... MORE

Gelman on Me, Chua, and Cowen

Family Economics
Bryan Caplan
Andrew Gelman's got an awfully interesting post on the contrast between me, Amy Chua, and Tyler Cowen.  He's certainly got my number, anyway: Without any personal knowledge of these people (well, I did meet Caplan once and gave him comments... MORE

The Entrepreneurial Mind

Business Economics
Arnold Kling
Inc Magazine writes, Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest. Corporate leaders, by contrast, decide they... MORE

Empathizers and Systemetizers

Political Economy
Arnold Kling
Mike Rizzo reminds me of one of my classic essays. I wrote, The analytical brain uses the principles of science. It learns to make predictions of the form, "When an object is dropped, it will fall toward the earth." The... MORE

Excellent Sentences

Macroeconomics
Arnold Kling
From Karl Smith: Getting a job decreases the amount of work it takes to live. That's why jobs are good. This is very consistent with the PSST story. Economic activity consists of people specializing and doing things for one another.... MORE

Geithner and Debt: A Better Analogy

Fiscal Policy
David Henderson
I posted last week on the dispute between Treasury secretary Tim Geithner and U.S. Senator Pat Toomey and argued that Toomey got the best of Geithner in the debate. I quoted this argument that Geithner used against "prioritizing" federal government... MORE

The Wallison Dissent

Finance: stocks, options, etc.
Arnold Kling
In his dissent from the Financial Crisis Inquiry Commission majority report, Peter Wallison writes, in other developed countries--many of which also had large bubbles during the 1997-2007 period--the losses associated with mortgage delinquencies and defaults when these bubbles deflated were... MORE

A Graduation Rate Experiment

Economics of Education
Bryan Caplan
One of the worst problems with conventional return to education estimates is that they ignore drop-outs.  That's like a bank ignoring defaults when it calculates its return on loans.  According to a recent experiment, a lot of parents ignore drop-out... MORE

A Thought to Ponder

Finance: stocks, options, etc.
Arnold Kling
From Jeremy Siegel: The major reason for the dramatic drop in these real yields is the unprecedented - and in my opinion unwarranted - level of pessimism and risk aversion that has gripped investors since the financial crisis. Siegel argues... MORE

Henderson on KQED-FM

Upcoming Events
David Henderson
I'll be on KQED-FM on Tuesday morning at 9:00 a.m. PST. I'll be discussing Obama and his talk to the U.S. Chamber of Commerce. The other guest will be Robert Kuttner. Here's the link to the show. I haven't found... MORE

Beaulier-Caplan Links

Behavioral Economics and Rationality
Bryan Caplan
"Behavioral Economics and Perverse Effects of the Welfare State," my 2007 Kyklos paper with Scott Beaulier, has been getting belated attention lately thanks to Karl Smith.  Check out comments from Mike Konczal (Rortybomb), M.S. (the Economist), and James Kwak (Baseline... MORE

The Grateful Tiger Daughter

Family Economics
Bryan Caplan
Unlike most critics of Tiger Mother Amy Chua, I expect her kids to turn out fine.  Why?  Because their genes come from two Yale professors, and contrary to Tiger Mother and her critics alike, upbringing has little long-run effect.  I... MORE

Murphy on Airline Security

Central Planning vs. Local Knowledge
David Henderson
Are you tired of having naked pictures taken of you and/or being groped at the airport in this "land of the free," but still worried about a terrorist hijacking of the airplane you're on? Is there a way out of... MORE

Three Amusing Links

Labor Market
Arnold Kling
1. AOL buys Huffington Post for over $300 million. I did not realize that April 1st came in February. 2. A License to Shampoo. The WSJ covers a topic that would be my focus is somebody made me "jobs czar."... MORE

My Talk at Berkeley

Upcoming Events
David Henderson
This Wednesday, February 9, I'll be giving at talk at UC Berkeley. Title: The Costs of War. The talk is sponsored by the Students for Liberty, UC Berkeley. The details are here.... MORE

Existence, Enhancement, CPI Bias, and Progress

Growth: Consequences
Bryan Caplan
Almost all economists agree that the official Consumer Price Index is biased upwards.  Two key flaws with the CPI: It imperfectly accounts for (a) quality improvements, and (b) new products.  The Boskin Commission famously estimated that the official annual CPI... MORE

Now versus 1973

Growth: Consequences
David Henderson
There's been a lot of discussion in the blogosphere lately about whether we're better off--and if so, by how much--than our counterparts in 1973. Scott Sumner has added his thoughts. Here are my further thoughts--prompted by Scott and by some... MORE

Another Half-Baked Model

Labor Market
Arnold Kling
This is an attempt to get at the notion of real adjustment costs in a model of Patterns of Sustainable Specialization and Trade. It is something like the Fischer Black model of macro, which influenced Tyler Cowen and me to... MORE

The most interesting question to come out of Tyler's Great Stagnation debate is: Why are free-market types so hostile?  Early on, Tyler remarked:I do not hold the view that relative stagnation will last forever, only that it has lasted for thirty-seven... MORE

My Philosophy of Teaching

Economic Education
David Henderson
I just finished watching, for about the fourth time, the movie Stand and Deliver. It made me think of this talk I gave in 1997 when I won the Naval Postgraduate School's Schieffelin Award for best teacher on campus. It... MORE

Steve Miller on Stagnation

Growth: Consequences
Bryan Caplan
My co-author Steve Miller's comments on stagnation are not to be missed.  So I'm re-posting them in full.  Here's Steve: This isn't about ideology, for Tyler, Bryan, or anyone else except maybe the progressives giving Tyler's book such glowing reviews.... MORE

Good Ol' Day Time Machine

Growth: Consequences
Bryan Caplan
Tyler Cowen's critics include many who think he doesn't go far enough.  One says:it's clear to anyone who grew up in the 50s that if we've havent stagnated, we've regressed...most in my neighborhood had large families which were able to... MORE

Tyler Cowen Versus My Co-Bloggers

Growth: Consequences
David Henderson
Yesterday, my co-bloggers, Arnold Kling and Bryan Caplan posted critical comments on Tyler Cowen's "Great Stagnation" thesis. Tyler replied as a commenter to both. Tyler insisted to Arnold that he is being misunderstood. The growth in economic well-being for the... MORE

CPI Bias Deja Vu

Growth: Consequences
Bryan Caplan
I completely agree with Arnold when he remarks:I personally do not think that the stagnation hypothesis can survive the thought experiment in which you offer somebody the choice between (a) today's median income and today's array of goods, services, and... MORE

The Debt Limit Debate

Fiscal Policy
David Henderson
On January 6, 2011, Treasury Secretary Tim Geithner sent a letter to Harry Reid in which he stated: Failure to raise the [debt] limit would precipitate a default by the United States. In context, it's clear that by "the United... MORE

Ideology and Tyler Cowen's Stagnation Thesis

Growth: Causal Factors
Arnold Kling
In this interview with Nick Schulz, Tyler Cowen discusses his stagnation hypothesis. He complains that he is getting unexpected pushback from market-oriented economists, but he does not complain about unexpected support from journalists on the left. Perhaps one reason for... MORE

Mankiw vs. PSST

Macroeconomics
Arnold Kling
A commenter on this post points to a paper that Greg Mankiw wrote on real business cycle theory. If workers were unemployed voluntarily in recessions because they were moving to new jobs in other sectors, we would expect high unemployment... MORE

The Housing Market

Finance: stocks, options, etc.
Arnold Kling
Tim Cavanaugh writes, So what will this mean when the last moratorium is lifted, the last show-me-the-note lawsuit gets thrown out of court, and the last loan modification has failed? Well by that time you'll probably be able to buy... MORE

Milton Friedman vs. PSST

Macroeconomics
Arnold Kling
The "natural rate of unemployment, in other words," is the level that would be ground out by the Walrasian system of general equilibrium equations, provided there is imbedded in them the actual structural characteristics of the labor and commodity... MORE

Government Workers

Politics and Economics
Arnold Kling
Iain Murray tries to count how many there are. When we add up the true size of the federal workforce -- civil servants, postal workers, military personnel, contractors, grantees, and bailed-out businesses -- and add in state- and local-government employees... MORE

Dead Ends and Double Standards

Economics and Culture
Bryan Caplan
Many activities are Dead Ends.  Dead Ends have the following in common:1. They are extremely labor intensive.2. They attract extremely talented and dedicated people.  You have to be absolutely amazing just to be relatively average.3. Despite #1 and #2, Dead... MORE

Health Care Story

Economics of Health Care
David Henderson
This is one of my very few posts in which I'm not trying--or, at least, not trying hard--to draw a moral or a lesson or illustrate an economic principle. I just found it fascinating. If I were trying to extract... MORE

Me and the Students for Liberty: Immigration Webinar 2/9, Conference 2/18-2/20

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
On Wednesday, I'm doing a Students for Liberty webinar.  The topic: "Immigration Restrictions: A Solution in Search of a Problem" - or as SfL calls it, "Why Immigration Restrictions are Wacky."  Anyone can sign up to participate here.  There will... MORE

Real Adjustment Costs

Macroeconomics
Arnold Kling
I am disappointed by some of the reactions to my macro play. People are not being deliberately obtuse, but they are being obtuse. That is what happens when you are committed to one paradigm and someone tries to suggest something... MORE

A Macro Play in Three Acts

Macroeconomics
Arnold Kling
The characters: Bao, Esteban, Leroy, and Marcel Act One (the boom): Bao and Leroy have opened a restaurant, as have Esteban and Marcel, serving curried baked beans and Pupusas in mushroom-wine sauce, respectively. There is a lot optimism and economic... MORE

Grist for Bryan

Economics of Education
Arnold Kling
Lauren Rivera, an assistant professor at Northwestern's Kellogg School, has written a paper on the way that elite employers screen resumes (no ungated version found). Her claim is that top law firms and investment banks select for prestige in academic... MORE

My Consumer Surplus Story

Business Economics
David Henderson
I said here that I would tell my consumer surplus (CS) story that I often tell when I teach the concept. Here it is. In September 1972, my friend Harry Watson (aka J.W. Henry Watson) and I were traveling from... MORE

Win Jason Furman's Money

Labor Market
Arnold Kling
Or something like that. Via Greg Mankiw, I learn that the Hamilton Project has launched a prize competition to identify new and innovative thinking about policies to create jobs in the United States and enhance productivity. My suggestion would be... MORE

Two Good Sentences

Finance: stocks, options, etc.
Arnold Kling
Via email, from John Hempton: Frannie is a terribly inefficient way to generate subsidies for people in the 60th income percentile (ie very marginal home buyers). I am sure I could do better with cash and a helicopter and some... MORE

The Tiger Mother versus Cost-Benefit Analysis

Family Economics
Bryan Caplan
One of my favorite economists urged me to cut this passage from Selfish Reasons to Have More Kids:Before you do something for your child, try asking yourself three questions.1. Do I enjoy it?2. Does my child enjoy it?3. Are there... MORE

Communism, Revolution, and Optimism

Cross-country Comparisons
Bryan Caplan
The worst thing you can say about a revolutionary situation is, "Things couldn't possibly get worse."  Things can always get worse.  If you have trouble imagining how, just wait for the revolution to unfold.  Events will usually oblige you: see... MORE

Clarification on Consumer Surplus

Business Economics
David Henderson
Commenters on my previous post on consumer surplus (CS) raised some questions that I want to respond to. 1. Philo points out that in figuring out our consumer surplus, our baseline matters crucially. So, for example, my CS from one... MORE

What I'm Watching

Microeconomics
Arnold Kling
This MIT symposium. In the first session, Jerry Hausman winds up talking about a paper he did on the demand for energy-efficient air conditioners. For what it's worth, I was the research assistant for that paper. He found that consumers... MORE

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