Bryan Caplan and David Henderson

June 2011

A Monthly Archive (114 entries)

Perfectionist Parents: Perfect Yourself

Family Economics
Bryan Caplan
I've got a question for perfectionist parents who strive to raise prodigies: Instead of pushing your kids to succeed, why don't you try to perfect yourself instead?  Why don't you start taking piano lessons for three hours a day?  Why... MORE

Is Equality Before the Law Always Good?

Economic Philosophy
David Henderson
In an article today in The Freeman on-line, economist Steven Horwitz makes a case for allowing same-sex marriage. In doing so he makes the following statement: Government must treat all its citizens equally, and nothing paid for with tax dollars... MORE

Tell Me the Value of a Fake Harvard Diploma

Economics of Education
Bryan Caplan
Our story begins with a 22-year-old high school graduate with a B average.  He knows an unscrupulous nerd who can hack into Harvard's central computer and give him a fake diploma, complete with transcript.  In the U.S. labor market, what... MORE

Difference-Makers in Education

Economics of Education
Arnold Kling
Matt Yglesias writes, Sometimes I hear from union-affiliated folks that it's unfair to attribute differences in student learning to differences in teacher skill, because everyone knows that socioeconomic and home environment factors drive a lot of this. Other times I... MORE

On Greece

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I am quoted here. Those experts who say that a default will be a solution are assuming that the default take[s] place as part of an orderly negotiation, so that either private-sector lenders or international institutions are willing to renew... MORE

Four Unrelated Points on Education

Economics of Education
Bryan Caplan
1. Tyler Cowen responds on signaling.  He saved his best argument, though, for this morning's conversation in his office.  Are we really to believe, he asked me, that signaling is the one force that vitiates the rule that everyone earns... MORE

Noah Smith on Education

Economics of Education
David Henderson
Co-blogger Arnold Kling comments on Noah Smith's post on education and Arnold's thoughts, as always, are worth reading. I want to focus on three things in Smith's post, though, that Arnold doesn't highlight. 1. Noah says that schools are prisons.... MORE

Thoughts on Education

Economics of Education
Arnold Kling
Tyler Cowen raises a good argument about the signaling model. Education is good for more than getting a good first job offer right off the bat. Presumably, relying on education as a signal causes firms to make mistakes when they... MORE

Is Social Security a Ponzi Scheme?

Fiscal Policy
David Henderson
A couple of years ago, I claimed on this blog that Social Security is a Ponzi scheme. Various commenters objected but didn't persuade me. This week, John Seater, an economist whom I respect a great deal, wrote that it is... MORE

Not in My Interest

Fiscal Policy
Arnold Kling
Tom Coburn and Joseph Lieberman attempt to forge a centrist proposal on Medicare. "We can't balance our budget without dealing with mandatory spending programs like Medicare. We can't save Medicare as we know it. We can only save Medicare if... MORE

Cannon's Law

Regulation
Arnold Kling
This story got picked up by several outlets. Soon, "mystery shoppers" may come to medicine. And doctors are outraged. The Department of Health and Human Services proposes using them to figure out why so many new patients are having problems... MORE

Ability Bias vs. Signaling Again

Economics of Education
Bryan Caplan
In response to my last post on education, Tyler writes:[Bryan] cites the signaling motives for education and concludes: "Here, the evidence Tyler cites is simply irrelevant."  This is simply not true and indeed these papers are obsessed with distinguishing learning... MORE

The Cutting-Room Floor

Economic Methods
Arnold Kling
Tyler Cowen rejoins the debate on the returns-to-schooling literature. What's striking about the work surveyed by Card is how many different methods are used and how consistent their results are. You can knock down any one of them ("are identical... MORE

Over-Grazing

Regulation and Subsidies
Arnold Kling
In Forty Years on the Regulatory Commons, Bruce Yandle writes, Ours is a regulatory capitalism where regulators and the regulated are intertwined in symbiotic cartel-forming ways that often make working the halls of Congress and regulator offices far more profitable... MORE

David Henderson's Persuasive Case

Growth: Causal Factors
Arnold Kling
In his book review, Henderson writes, whatever explanation Cowen comes up with for the slower growth of median family income since 1973 should be one that is consistent with the relatively healthy growth of per capita GDP since 1973. Do... MORE

Me and the Return to Education Literature

Economics of Education
Bryan Caplan
Like Arnold, I take issue with Tyler's claim that:The view that education is mostly about signaling is inconsistent with the established consensus on the returns to schooling and yet the writers at EconLog do not respond to this literature or,... MORE

Medicare: Almost Everybody Loses

Economics of Health Care
David Henderson
John Goodman's health policy blog this morning summarizes the results of a study done for the National Center for Policy Analysis by economists Courtney Collins and Andrew J. Rettenmaier. Goodman's table summarizes the most important points in the longer Collins/Rettenmaier... MORE

Nick Schulz and I talk about the implications of an economy in which health and education are the key growth sectors. Looking to the coming decades, it will simply not be possible to maintain a genuine free market -- or... MORE

The "literature" on returns to schooling

Economic Methods
Arnold Kling
Tyler Cowen writes, The view that education is mostly about signaling is inconsistent with the established consensus on the returns to schooling and yet the writers at EconLog do not respond to this literature or, as far as I can... MORE

Henderson on Cowen's Great Stagnation

Growth: Causal Factors
David Henderson
My review of Tyler Cowen's e-book, "The Great Stagnation," is now out in Regulation. It's titled "Tyler Cowen's Unpersuasive Case." In it, I challenge each of Tyler's 3 factors that he claims are behind the great stagnation and show that... MORE

On July 13 at 7 PM, I'll be debating GMU law professor (and my co-author) Ilya Somin on "What Liberty Implies for Foreign Policy."  Location:George Mason Law School Room 221 3301 Fairfax Drive Arlington, VAI will defend pacifism.  Ilya will... MORE

Is "Mimic the Elite" A Good Rule of Thumb?

Economics of Education
Bryan Caplan
David Leonhardt's defense of education almost totally neglects the strongest argument against education: that much of it is privately profitable but socially wasteful signaling.  But his closing sentence changes the subject in an interesting way:I don't doubt that the skeptics... MORE

College Returns and Nonexperimental Data

Economic Methods
Arnold Kling
David Leonhardt writes, Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses.... MORE

How to Make Me Lose an Ideological Turing Test

Economic Philosophy
Bryan Caplan
I bet I would do relatively well on ideological Turing Tests.  But whenever I say the words "I bet," my mind starts to imagine losing scenarios.  If someone wanted to make me fail an ideological Turing Test, what kinds of... MORE

I Don't Want It, But I Insist on Paying for It

Revealed Preference
David Henderson
House Refuses To Authorize Libyan War, Then Refuses To Defund Libyan War That's the headline on an article by Doug Mataconis yesterday. The House of Representatives voted yesterday not to authorize the use of the U.S. military in Libya and... MORE

Mark Thoma on Privacy

Property Rights
David Henderson
Mark Thoma has an excellent post on privacy. Actually, it's about more than privacy: he highlights a New York Times piece by David Shipler about privacy that is also about more than privacy. Both call privacy a "privilege." But some... MORE

Best Ezra Klein Post Ever

Finance: stocks, options, etc.
Bryan Caplan
Here's the best Ezra Klein post ever.  And here's the best sentence of the best Ezra Klein post ever:What's remarkable about the financial crisis isn't just how many people got it wrong, but how many people who got it wrong... MORE

Orszag on Inequality in Life Expectancy

Economics of Health Care
David Henderson
Few would deny that a few additional years of life would be more precious to most Americans than the extra money they might receive from government transfers. If inequality in things that matter is important, there is a basic inequality... MORE

Richard Shelby, New Keynesian

Monetary Policy
Arnold Kling
According to the WSJ's Andrew Ackerman, The top Republican on the Senate Banking Committee said Thursday he would urge the Federal Reserve to pursue an explicit inflation target, in the face of renewed interest in the idea. This is exactly... MORE

Obama's Criminalization of Business

Regulation
David Henderson
I'm visiting a friend who does due diligence for his private equity fund's investments in various U.S. companies. As a result, he talks to businessmen every week. For many months now, he has found businessmen complaining about the Obama administration's... MORE

Loss of Risk-Free Status

Fiscal Policy
Arnold Kling
Maury Harris and Drew T. Matus write, Even a temporary default would eliminate the safe and liquid nature of the U.S. Treasury market, harming this country's ability to exercise its power, to the detriment of the U.S. and the global... MORE

The Ideological Turing Test: Religious Edition

Economic Methods
Bryan Caplan
Leah Anthony Libresco is looking for partners and judges for an ideological Turing Test on Christianity and atheism:I'd like to put my money where my mouth is and play in an ideological Turing Test against a Christian blogger. We could... MORE

Jose the Meritorious

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Has there ever been a better poster child for what I call "Meritocracy Without Borders" than Jose Antonio Vargas?  The guy won a Pulitzer prize without the legal right to hold a job.  Imagine what he could have accomplished free... MORE

Japanese Central Planners at Work

Economics of Education
Arnold Kling
From Nature: Of all the countries in which to graduate with a science PhD, Japan is arguably one of the worst. In the 1990s, the government set a policy to triple the number of postdocs to 10,000, and stepped up... MORE

Vargas and Understatement

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
I am in awe of Jose Antonio Vargas.  He has more courage in his little finger than I have in my whole body.  Which makes his understated byline all the more puzzling:Jose Antonio Vargas is a former reporter for The... MORE

Prison Rape: Becker-Acton Model Confirmed

Economics of Crime
Bryan Caplan
The latest U.S. Department of Justice National Inmate Survey confirms my earlier report that prison staff commit more prison rape than prisoners.  Lovisa Stannow of Just Detention International boils down the results in Reason:The U.S. Department of Justice recently released... MORE

Define Courage: The Jose Antonio Vargas Story

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Incredible piece in today's NYT.  Pulitzer-prize-winning journalist Jose Antonio Vargas reveals that he's been illegally living in the U.S. for twenty years:After my uncle came to America legally in 1991, Lolo tried to get my mother here through a tourist... MORE

Two Tries at the Ideological Turing Test

Economic Philosophy
Bryan Caplan
1. DeLong pretends to be Nozickian.2. I pretend to be conservative. Give me more examples of attempts to pass Ideological Turing Tests in the comments; I'll link to them.... MORE

Underestimating Overqualification

Economics of Education
Bryan Caplan
Economists are finally waking up to the fact that many people are overqualified for their jobs.  You don't need a college degree to be a baggage porter or bellhop, but according to the Bureau of Labor Statistics, 17% of them... MORE

My Standard Question for Liberals/Progressives

Political Economy
Arnold Kling
A commenter suggested to me that Charles Sable does not fit my stereotype of liberals believing that government is the magic solution for human imperfection. But I picked out his paper on health care, and I found exactly that. He... MORE

PSST and Fragility

Macroeconomics
Arnold Kling
Ted, in a comment on this post, asks a number of good questions. How similar is your idea of PSST to David Levine's Production Chains? Thanks for point out this paper. There is a lot of overlap, in that we... MORE

Euvoluntary Employment

Labor Market
Arnold Kling
Karl Smith asks, If we accept that the labor market would clear at One Cent Per Year. Then the question is why has the labor market not cleared while at the same time the wage has not dropped to One... MORE

Libertarianism: How, not Why

Political Economy
Arnold Kling
The game that I call "trolling for libertarians" seems to be quite popular this week. I guess it's a slow summer. So you make straw-man attacks in order to draw hits. Do you want to dissuade people from taking a... MORE

Three Random Links

Macroeconomics
Arnold Kling
Jason Collins writes, Incarceration removes young men from the mating market during their mating prime. As the propensity to commit crime is heritable, the removal of criminals from the mating market will reduce the frequency of the genes associated with... MORE

Tacitus, Peace, and Desolation

Economic History
Bryan Caplan
One of Tacitus' most famous lines is "They make a desert and call it peace."  What I didn't realize until I read The Agricola is that Tacitus is quoting (or paraphrasing) Calgacus, an enemy of Rome.  The full speech (chaps... MORE

"Likes" as Tipping

Behavioral Economics and Rationality
Bryan Caplan
If your work has a tip jar, conventional wisdom tells you to "seed" it.  Before your first customer shows up, put some of your own money in the jar.  When the marginal person sees money in the jar, he'll feel... MORE

The Ideological Turing Test

Economic Philosophy
Bryan Caplan
In a Turing Test, a computer tries to pass for human:A human judge engages in a natural language conversation with one human and one machine, each emulating human responses. All participants are separated from one another. If the judge cannot... MORE

Munger on Voluntary Exchange

Economic Philosophy
Arnold Kling
Mike Munger and Russ Roberts discuss what makes an exchange truly voluntary. Munger suggests that if my best alternative to doing business with you is a really lousy alternative, then many people would deny that my decision to do the... MORE

Dynamic Free Markets

Information Goods, Intellectual Property
David Henderson
One interesting post and one interesting news article, seemingly unrelated, but actually quite related: both contain evidence of the dynamic wonders of free, or somewhat free, markets. 1. Making markets work even better: LucyPhone, a smart-phone app and an online... MORE

Genetic Determinism vs. Parental Irrelevantism

Family Economics
Bryan Caplan
I think that parents affect their kids in lots of ways.  Parents have big effects on religious affiliation and political party, small effects on many other traits, and a clear effect on the quality of the parent-child relationship.  And those... MORE

Is Iran a Threat?

Upcoming Events
David Henderson
I should have announced this earlier. A panel titled "Is Iran A Threat?" is scheduled for Sunday, June 19 from 3:00 PM to 5:00 PM at the Peace Resource Center, 1364 Fremont Street in Seaside, California. The two panelists are... MORE

Krugman on Favorite Books

Economic Philosophy
David Henderson
Sophie Roell interviews Paul Krugman on his five favorite books. A couple of highlights: I think it's actually a point when you're quite vulnerable, because you are looking for someone who is going to offer you all the answers. Some... MORE

Market Discipline vs. Regulation in Finance

Finance: stocks, options, etc.
Arnold Kling
Ask a lefty what caused the financial crisis, and the answer will be that there was too little regulation and too much reliance on market discipline, which did not work. Ask a righty the same question, and the answer will... MORE

What's Different About Banks?

Finance: stocks, options, etc.
Arnold Kling
I've been at a seminar discussing "too big to fail," so bank regulation issues are top of mind. I think that the most important thing that differentiates banks or bank-like firms from other firms is that it is easy for... MORE

The Weiner Affair

Public Choice Theory
David Henderson
A Public Choice Moment Like many people in the last few weeks, I have given into the temptation to make jokes or listen to jokes about Anthony Weiner. He has the perfect name, and the perfect story, to give rise... MORE

The New York Times on "Lucrative"

Politics and Economics
David Henderson
Neither Ms. Abedin [Anthony Weiner's wife] nor Mr. Weiner earn lucrative salaries, and Ms. Abedin is worried about her husband, who has been in politics much of his adult life, finding work. Mr. Weiner would still be eligible to collect... MORE

Running Scared

Behavioral Economics and Rationality
Bryan Caplan
Daniel Treisman's NBER paper on "The Geography of Fear" is full of entertaining facts, like:[P]redispositions to fear vary systematically across countries, and map the geography of fearfulness, concentrating on Europe for which data are most plentiful. I show that variation... MORE

Reductio Ad Absurdum

Politics and Economics
Arnold Kling
David Henderson attacks the political sacred cow of bringing back manufacturing jobs. To me, it is in the same class as "energy independence," "green jobs," or "affordable housing." That is I cringe whenever I hear a politician talk about the... MORE

The Republican Candidates on Manufacturing

Labor Market
David Henderson
During the Republican debate in New Hampshire on Monday, Mike Patinsky asked how the candidates planned to return manufacturing jobs to the United States. Ron Paul answered first, claiming that we have exported our jobs. He connected it with Federal... MORE

Life in the USSA

Regulation
David Henderson
Steve Horwitz has written an excellent article in which he claims, credibly in my opinion, that the United States is now a police state. Read the whole thing. It isn't long. And while you're at it, read my article from... MORE

PSST and the Legal Profession

Macroeconomics
Arnold Kling
From the Wall Street Journal. Mr. Aponte is part of a growing field of itinerant "contract" attorneys who move from job to job, getting paid by the hour, largely to review documents for law firms and corporate clients. These short-term... MORE

Policies for Structural Unemployment

Labor Market
Arnold Kling
Mark Thoma writes, Provide [income support for the unemployed] in return for jobs that do useful things for the community. That is, bridge the time while structural adjustments are underway with useful employment for those waiting for the structural changes... MORE

Megan McArdle's Best Post Ever

Economics of Health Care
David Henderson
If we measure blog posts by the importance of the issue they address and the cogency of the argument, Megan McArdle's post yesterday on the waning reservoir of antibiotics was her best ever. Rather than repeat her argument, I recommend... MORE

Shaping the Story

Public Choice Theory
Arnold Kling
The Washington Post reports, A majority of Senate Republicans appeared to break Tuesday with two decades of GOP orthodoxy against higher taxes, voting to advance a plan to abruptly cancel billions of dollars in annual tax credits for ethanol blenders.... MORE

Incentives Matter Christopher J. Mayer, Edward Morrison, Tomasz Pikorski, and Arpit Gupta of Columbia University (variously Business School and Law School) find that a mortgage modification program that Countrywide Financial agreed to implement as part of a settlement with U.S.... MORE

Pennington on Political Economy

Books: Reviews and Suggested Readings
Arnold Kling
A reader recommends Mark Pennington talking about his book Robust Political Economy. The talk is very well organized and concise, and I recommend it (I didn't stick with it through the Q&A). He says that one has to keep in... MORE

FDA Goes India

Economics of Health Care
David Henderson
Alex Tabarrok has an important post this morning on the Food and Drug Administration's regulations that have helped to cause shortages of drugs. One of the contributors is the tamely named "Good Manufacturing Practices" regulations that the FDA is enforcing.... MORE

Mark Bils on Health Care Prices

Economics of Health Care
Arnold Kling
In this interview, he says, If you had a certain condition and you had $10,000 to get treated at today's health prices, or $10,000 to get treated at 1960s prices with 1960s technology, I don't think it's so obvious that... MORE

Fukuyama on Fukuyama

Books: Reviews and Suggested Readings
Arnold Kling
I think his new book has important ideas. This interview gets at a couple of them. how did these different societies make an exit out of kinship-based social organization into a modern-based state, with impersonal, centralized administration? Europe in that... MORE

Networks and Growth

Growth: Causal Factors
Bryan Caplan
When more people use a product, firms have a stronger incentive to improve it.  For some products, however, having more users is an improvement.  We call them "network products."  Phones are the classic example; they're useless unless other people have... MORE

Larry Summers vs. PSST

Macroeconomics
Arnold Kling
He gives us a double whammy. He writes in the Financial Times, That the problem in a period of high unemployment, as now, is a lack of business demand for employees not any lack of desire to work is all... MORE

Banks, Government, and Modigliani-Miller

Finance: stocks, options, etc.
Arnold Kling
Perry Mehrling writes, The key point is that money market funding is at lower rates than capital market funding. Society is apparently willing to pay a premium (lower yield) to hold money claims rather than capital claims. Why is that?... MORE

Amartya Sen on Women in Science

Economic Philosophy
David Henderson
As I mentioned in a post last week, I was at a Liberty Fund seminar in Indianapolis last weekend at which we discussed Amartya Sen's The Idea of Justice. Before that, I had read only sections of his books and... MORE

Caplan vs. Chua Debate in the Guardian

Family Economics
Bryan Caplan
Tiger Mother Amy Chua and I have this week's Saturday Conversation in The Guardian.  Highlights:BC: Most of my book is based on a summary of 40 years of adoption and twin studies - the usual result is parents just don't... MORE

Wolfers on Kids and Income

Family Economics
Bryan Caplan
Over at Freakonomics, Justin Wolfers has a data-intensive critique of my claim that kids are, appearances withstanding, normal goods.  This naturally makes me nervous.  Wolfers has a disconcerting habit of publicly correcting others.  If I had an unlimited budget, I'd... MORE

Me on Fox News Channel

Fiscal Policy
David Henderson
John Stossel's special, "The Money Hole," will air on Fox News Channel this Sunday. The segment he taped with me, in which I discuss my Mercatus piece on Canada's budget cuts, will be in the last part. It will air... MORE

PSST and Long-term Unemployment, 2

Growth: Consequences
Arnold Kling
Richard Florida weighs in. The returns to analytical skill rise consistently across the skill distribution; moving from the 25th to the 75th percentile increases earnings by more than $25,000. The same basic pattern holds for social intelligence skills, like teamwork,... MORE

Eric Holder's Cognitive Dissonance

Economics of Crime
David Henderson
NOT from The Onion "Do another Season of The Wire," he [Attorney General Eric Holder] said to cheers. "That's actually at a minimum...if you don't do a season, do a movie. We've done HBO movies, this is a series that... MORE

Divided on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
In an interview, Ricardo Caballero says, it's ludicrous to suggest that anticipation of support (a "bailout") in an extreme systemic event is one of the most significant sources of moral hazard. Pointer from Mark Thoma. Caballero represents one end of... MORE

Escape to Mongolia

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
From Nothing to Envy: Ordinary Lives in North Korea:Unlike the Chinese, the Mongolians allowed the South Korean embassy in Ulaanbaatar, the Mongolian capital, to accept North Korea defectors.  In fact, if North Koreans managed to sneak across the Chinese border... MORE

In a post back in January, "McArdle Waves the White Flag," I questioned Megan McArdle's view that it was a good idea for the Illinois government to raise income tax rates substantially. At the time, she saw the tax increases... MORE

The Long Recalculation

Macroeconomics
Arnold Kling
Justin Wolfers writes, Focus on the red line, and you'll see that the recession began in the final quarter of 2006, not the end of 2007. The red line also fell by more, and over a longer period. And today,... MORE

Henderson on Canada's Budget Cuts

Fiscal Policy
David Henderson
I got so busy with my classes in the last month or so that I neglected to highlight a follow-on study I, along with George Mason University student Jerrod Anderson, did for Mercatus. It is titled "Canada's Reversed Fiscal Crisis"... MORE

Random Mortgage News

Finance: stocks, options, etc.
Arnold Kling
This story requires a correction. An unprecedented alliance of organizations from the real estate industry, new home builders, mortgage companies, banks, civil rights groups and other lobbyists have descended on Washington, D.C. lawmakers to push against legislation that would require... MORE

The Fourth Sector

Growth: Causal Factors
Bryan Caplan
Economists traditionally partition output into agriculture, manufacturing, and services.  In this framework, the appeal of "stagnationist" claims is relatively easy to see.  None of these three sectors seems amazingly innovative anymore; the visible progress is "just in computers."But is it... MORE

My review of Jeff Friedman's edited book, What Caused the Financial Crisis?, was published in Policy Review last week. Some excerpts from my review: The most important chapter is the first. This 66-page segment is editor Jeff Friedman's overview of... MORE

Kindred Spirit

Growth: Consequences
Arnold Kling
Kindred Winecoff writes, I do not see a world economy that has stagnated overall. I don't even see a US economy (pre-2008) that has stagnated. I see a redistribution from a certain class of American workers to workers with similar... MORE

A Bet on PSST vs. AS-AD?

Macroeconomics
Arnold Kling
Karl Smith is interested in some sort of bet. I, however, will predict that the US will achieve an average 5% real growth [rate] over a sustained period [of] say 12 quarters [or] more starting within five years. Tim Pawlenty... MORE

Kids Are Normal Goods for Both Genders

Family Economics
Bryan Caplan
v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} Normal 0 MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman";} My Cato Unbound exchange with my... MORE

PSST and Long-term Unemployment

Macroeconomics
Arnold Kling
From CBS news: About 6.2 million Americans, 45.1 percent of all unemployed workers in this country, have been jobless for more than six months - a higher percentage than during the Great Depression. I read this as saying that, relative... MORE

Government and the Financial Sector

Finance: stocks, options, etc.
Arnold Kling
Perry Mehrling writes, The important point is that, to the extent the market-centered credit system is here to stay, the institutions that support the liquidity of that market system are also here to stay. Even more, to that extent we... MORE

Gorman on Attendant Services Under Medicaid

Economics of Health Care
David Henderson
Recipients of agency care, that is, care provided by certified agencies, have little control over who enters their homes, when they will come, what they will do, and how they will do it. Theft is a constant problem. In addition,... MORE

Where is Fred Kahn When We Need Him Again?

Regulation
David Henderson
Follow us on banana. French anchors on television can't mention specific social networking sites unless a story is about them because of a 1992 law, highlighting the difficulty of legislating in the Internet age. The host of a news or... MORE

Cowardly Positions

Economic Philosophy
Bryan Caplan
One common criticism of pacifism is that it is "cowardly."  What might this mean - and is it true?1. "Pacifism is cowardly" = "Pacifists are cowards."  Given the unpopularity of pacifism - and the extreme unlikelihood that your pacifism tips... MORE

Timothy Taylor Does Have a Blog

Finance: stocks, options, etc.
Arnold Kling
He started it a while ago. Two weeks ago (his first post?), he wrote, This graph needs a short explanation of what net lending is (that is, new lending minus repayments and charge-offs). But seeing a graph that goes up... MORE

Sen on "Methodological Individualism"

Economic Methods
David Henderson
I'm at a weekend conference in Indianapolis that started last night and goes through tonight. About 14 people, roughly evenly split between philosophers and economists, are working our way through Amartya Sen's The Idea of Justice. One of the things... MORE

Population and Chess

Growth: Consequences
Bryan Caplan
Population doesn't just predict Olympic gold medals and movie production; it also predicts the average ranking of countries' top-ten chess players.  In a multiple regression, population and per-capita GDP both matter, just like Julian Simon and New Growth Theory tell... MORE

Disrupting College

Economics of Education
Arnold Kling
That is the title of a white paper by Clayton Christensen and others. The theory of disruptive innovation has significant explanatory power in thinking through the challenges and changes confronting higher education. Disruptive innovation is the process by which a... MORE

Immigration and the Welfare State

Political Economy
Bryan Caplan
I still looking for the time to respond to Tino Sanandaji.  In the meanwhile, though, here's Henry Farrell on a new APSR paper on the political economy of the welfare state:[T]hey argue that if one tries to hold racial and... MORE

Crime Statistics and The Village

Economic History
Bryan Caplan
[Warning: Spoilers for a 2004 movie].At the end of M. Night Shyamalan's The Village, we discover a bizarre conspiracy: In the 1970s, a group of people whose loved ones were murdered move to the middle of nowhere in order to... MORE

Great Moments in Free Choice

Economics of Health Care
David Henderson
Kaytal [acting solicitor general of the United States] responded by noting that the there's a provision in the health care law that allows people to avoid the mandate. "If we're going to play that game, I think that game can... MORE

PSST vs. Potential GDP

Macroeconomics
Arnold Kling
The AS-AD paradigm includes a concept called potential GDP. Mainstream macroeconomists sort of force-feed macroeconomic history into AS-AD by talking about "cyclically-adjusted productivity" when they talk about AS and "trend-adjusted GDP" when they talk about AD. Consider the following types... MORE

Worth Reading

Energy, Environment, Resources
Arnold Kling
Michael Lind on the abundance of fossil fuels. Jason Collins on Oded Galor's theory of population, genetics, and economic growth. More on Galor from Tyler Cowen. Megan McArdle on the failure of Obamacare to enlist the uninsured with pre-existing conditions.... MORE

Medicare Rules: Bring 'Em On

Economic Philosophy
Bryan Caplan
David Henderson argues that (thanks to the Gipper, no less), Medicare imposes price controls on health care:But what made it a system of price controls was that the government, along with DRGs, made it illegal for hospitals to charge even... MORE

Medicare, Food Stamps, and Rationing

Economics of Health Care
David Henderson
Bryan raises a good question: Is it "government rationing of food" if you can't buy cigarettes with food stamps? The answer is no. What makes health care different is the current system of price controls imposed by, wait for it,... MORE

Law, Legislation, and Medicare

Economics of Health Care
Arnold Kling
Bryan points to a 9-person forum on reforms to cut Medicare spending, which includes many good suggestions. He asks, Is it "government rationing of food" if you can't buy cigarettes with food stamps? The Hayekian answer is "yes," if people... MORE

Medicare, Rationing, Food Stamps, and Cigarettes

Economics of Health Care
Bryan Caplan
Robin wasn't available for lunch today because he had a deadline.  If this is what he was working on, my loss was the world's gain.  From the NYT's Room for Debate:The British control costs in part by having the will... MORE

The Junker Problem

Economic History
Bryan Caplan
The Junkers didn't just make a noble attempt at tyrannicide in 1944; according to Exceptional People, Imperial Germany's landed nobility were also good on immigration:Faced by labor shortages because of Germany's economic boom, Prussian landlords recruited Poles and Ukrainians to... MORE

Fun Facts of Gilded Age Migration

Economic History
Bryan Caplan
More from Exceptional People:On average, 5 percent of the populations of Britain, Ireland, and Norway emigrated every decade between 1850 and 1910, which increased to 14 percent of the Irish population emigrating between 1890 and 1910.  By the turn of... MORE

Entering the Market

Economic History
Arnold Kling
Cambridge University reports on research by economic historian Sheilagh Ogilvie. In some communities in Germany, people recorded their possessions at the time of marriage. This can allow Ogilvie to reconstruct the development of the German economy from 1600 to 1900... MORE

Administrative costs in Health Care

Economics of Health Care
Arnold Kling
There is a symposium on health care spending in the latest issue of the Journal of Economic Perspectives. David M. Cutler and Dan P. Ly write, In the United States, there are 1.5 administrative personnel per hospital bed, compared to... MORE

State Formation and Tax Collection

Political Economy
Arnold Kling
In Francis Fukuyama's latest book, he talks a lot about the problem of collecting taxes over a wide area. This is one of those processes that we take for granted now, but several hundred years ago it was quite difficult.... MORE

Why do Depressions Occur?

Macroeconomics
Arnold Kling
Brad DeLong writes, When you ask believers in "recalculation" what pattern of production and trade proved to be unsustainable in 2007, they answer: "building so many houses." When you ask believers why the market economy has been unable to sort... MORE

If I Could Ask Amy Chua One Question

Family Economics
Bryan Caplan
If I could ask Amy Chua one question, I'd start by quoting two passages from Battle Hymn of the Tiger Mother.  In Passage #1, Chua describes her in-laws' parenting style:As parents, Sy and Florence were determined to give their children... MORE

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