Bryan Caplan and David Henderson

October 2011

A Monthly Archive (117 entries)
Reason TV has up two parts of an interview that Nick Gillespie did recently with interviewee Ken Burns. Burns has a new 3-part PBS series out on Prohibition, which my economist/historian friend, Jeff Hummel, tells me is excellent. These interviews... MORE

Pre-Tax and Post-Tax Candy on Hallowe'en

Economic Education
David Henderson
Teaching kids about taxes and welfare using Hallowe'en candy Comedian Tim Slagle, whom for some reason I had never heard of, has an excellent video out in which he uses Hallowe'en candy to illustrate taxes. A lot packed into 3... MORE

The Great Debate

Political Economy
Arnold Kling
I've been working on lectures on microeconomics for my AP econ class. I am finished with macro (I hope), although at some point I will put together something on PSST. Anyway, I was cruising along with micro lectures, getting ready... MORE

Yesterday, while reviewing my tax withholdings, I noticed a weird anomaly.  In 2011, for the first time in my life, my employer was paying more Social Security taxes than I was.  I furrowed my brow until I remembered this earlier... MORE

My Segment on Stossel

International Trade
David Henderson
Here's my segment on Stossel. It's the one where he interviews me alone about: Buy American, fair trade, and "sweatshops." But it doesn't have the segment where all 4 segments, including me, respond to the audience and challenge each other.... MORE

Ed Yardeni's Proposal for the Housing Market

Finance: stocks, options, etc.
Arnold Kling
He writes, the Homestead Act that Carl Goldsmith and I proposed this past summer. It would provide a matching down payment subsidy of up to $20,000 for anyone purchasing a home as their principal residence for two million houses. It... MORE

Footnote of the Day

Books: Reviews and Suggested Readings
Arnold Kling
Is at the end of this paragraph, from Eric Brynjolfsson and Andrew McAfee (BM), Race Against the Machine: When SBTC [skill-biased technological change] increases the incomes of high-skill workers and decreases incomes and employment for low-skill workers, the net effect... MORE

Russ Roberts on Aggregate Demand

Macroeconomics
Arnold Kling
He writes, When an economy is not healthy, there is less exchange. There is less buying and selling of goods and services and labor. To describe that unhealthiness as less aggregate demand is just to put the problem into different... MORE

Me on Stossel

Upcoming Events
David Henderson
I just found out that the Stossel show I taped was on this week, not next week as I had thought. It will be shown again tonight at midnight EDT and 9:00 p.m. PDT. I address "Buy American," fair trade,... MORE

The Great Stagnation for College Graduates

Economics of Education
Arnold Kling
Michael Mandel presents an arresting chart on the decline in real earnings of young male college graduates over the last decade, and writes, no one has given me a good explanation yet of why young American college grads should have... MORE

Race Against the Machine Watch

Growth: Consequences
Arnold Kling
Robin Hanson says, We've seen many, many decades of steady progress in automation. We've seen what the rate looks like. We've seen that it's slow, methodical; it takes time to slowly chip away at the kinds of jobs humans do... MORE

Clarity on Clearing Houses

Finance: stocks, options, etc.
Arnold Kling
Mark Roe writes, as many trades move from the banks to the clearinghouse, the clearinghouse itself will become a systemically vital institution. It will be too big to fail. Thanks to Mark Thoma for the pointer. Often I do not... MORE

Bet on Euro

Optimum Currency Areas
David Henderson
I made a bet with Iain Murray, a delightful guy from the Competitive Enterprise Institute with whom I spoke at a big Hillsdale College event in Atlanta today. We were both speakers on the program. He told me he expected... MORE

The Brother's Keeper Bill

Economic Philosophy
Bryan Caplan
Suppose someone proposed a "Brother's Keeper Bill."  According to this BKB, people earning at least double the poverty line would be financially obliged to give 20% of their income to any sibling earning less than the poverty line.I doubt many... MORE

Is This the Cure or the Disease?

Finance: stocks, options, etc.
Arnold Kling
From an article on Ricardo Caballero. Because this "insatiable demand for safe debt instruments," as Caballero has called it, was not wholly absorbed by the traditional safe haven of U.S. Treasury notes, it helped spur the growth of the mortgage-backed... MORE

Spot the Reporter's Bias

Fiscal Policy
David Henderson
I don't usually gasp when I read the newspaper because not much surprises me any more. But Juliet Williams of Associated Press made me gasp. In an article on California governor's proposals to rein in the pensions of government workers,... MORE

Freddie, Fannie, and Risky Mortgage Lending

Finance: stocks, options, etc.
Arnold Kling
Charles Calomiris uses internal emails to tell the story of what happened between 2004 and 2008. The turning point was the spring and summer of 2004. Fannie and Freddie had kept their exposures low to loans made with little or... MORE

Nash Equilibrium in Higher Education

Economics of Education
Bryan Caplan
In a Nash equilibrium, every actor maximizes his utility given the behavior of all the other actors.  Arum and Roksa's Academically Adrift contains one of the best (implicit) applications of the concept I've ever read.  They name all the key... MORE

Learning Economics

Growth: Causal Factors
Arnold Kling
That was the title of a self-published book of essays. The title has a double meaning. One meaning is that one can learn (some) economics from reading the book. The other is that an economy is a learning mechanism. Anyway,... MORE

Student Loans

Income Distribution
Arnold Kling
Mike Konczal writes, Because of legal choices we've made in how to set up this relationship, it stays forever, is virtually impossible to discharge under hardship, churns fees when it goes bad, and creditors can get to anything, including Social... MORE

Bill Niskanen, RIP

Public Choice Theory
David Henderson
William A. Niskanen, an economist who held an amazing number of different interesting jobs, died yesterday. Early in his career, he was a Robert McNamara whiz kid. His experience in the bureaucracy led him to write his early contribution to... MORE

The Doctor Might See You Now: Here Comes Rationing

Economics of Health Care
David Henderson
In The Doctor Might See You Now: the Supply Side Effects of Public Health Insurance Expansions (NBER Working Paper No. 17070), Craig Garthwaite finds that after the 1990s implementation of the State Children's Health Insurance Program (SCHIP)--a partnership between federal... MORE

Education: Economic vs. Academic Perspectives

Economics of Education
Bryan Caplan
The more I read about education, the more I realize that social scientists have two radically different approaches.  The first is the economic approach: Judging education by pecuniary return.  According to the economic approach, education is a great success.  The... MORE

Hooper on Personalized Drugs vs. the FDA

Economics of Health Care
David Henderson
My sometimes co-author Charley Hooper has an interesting post on how FDA regulation will hobble the shift to personalized drugs. Two key paragraphs: If each drug takes $1 billion to reach the market and 10 million people use it over... MORE

If Timothy Taylor were Energy Secretary

Energy, Environment, Resources
Arnold Kling
He would champion the Drill-Baby Carbon Tax. On one side, there would be a national commitment to move ahead with all deliberate speed in developing the vast U.S. fossil fuel energy resources that are now technologically available. On the other... MORE

Are the Illegal Drug Suppliers Really Cartels?

Business Economics
David Henderson
I was watching a TV show last night about some of the ingenious ways that drug suppliers use to move drugs across the border: well-built tunnels, a crane lifting a vehicle over the wall, a catapult heaving drugs over the... MORE

My Optimisms and Pessimisms

Growth: Consequences
David Henderson
Some of the comments on Bryan's post about what he is optimistic or pessimistic about motivated me to give a much shorter list. I've always thought I was an optimistic person. Then I met Bryan. Still I have a few... MORE

A View from Yale

Economics of Education
Arnold Kling
A reader points me to an article by a Yale student. The author is troubled when she hears that 25 percent of Yale graduates who have jobs are in consulting. But Annie and Jeff weren't the only two students I... MORE

Bok's Economics of Education

Economics of Education
Bryan Caplan
If Derek Bok were a labor economist, how would he justify the following passage?  Context: Bok is criticizing accountability standards for higher education.[T]he measures used are generally too crude to be helpful.  Some of them track outcomes that are largely... MORE

Another Education Bet?

Economics of Education
Bryan Caplan
Mark Little proposes an interesting bet in the comments:Bryan, I will not take your bet but will offer you the opposite one--that the proportion will be not less that 10% HIGHER. I believe that your signalling theory is correct, but... MORE

Higher Education Bubble?: Getting to Bet

Economic Methods
Bryan Caplan
David Henderson nobly expresses interest in my proposed bet:I might take that bet. But I don't believe on betting on a change in a number without having a good idea of what the number is now. Please tell me the... MORE

Of Bunk and Economics

Books: Reviews and Suggested Readings
Arnold Kling
I was sent a review copy of Debunking Economics, by Australian economics professor Steven Keen. I agree with his view that heterodox economists have something to offer, particularly in the area of macroeconomics. His discussion of a debt bubble and... MORE

Confirmation for Baumeister's Gender Analysis?

Behavioral Economics and Rationality
Arnold Kling
From the Harvard Business Review blog: Men were more confident across all age groups, with 70% of males having high or very high levels of self-confidence, compared to 50% of the women surveyed. Half of women managers admitted to feelings... MORE

The Great Okun's Law Violation

Labor Market
Arnold Kling
Steve Lohr writes, During the last recession, the authors write, one in 12 people in sales lost their jobs, for example. And the downturn prompted many businesses to look harder at substituting technology for people, if possible. Since the end... MORE

Another Post on EFC

Books: Reviews and Suggested Readings
Arnold Kling
I finished reading Engineering the Financial Crisis fairly quickly. In part, it is because it is only 156 pages. In part, it is because I found the analysis so congenial. Actually, if you did not follow the issues closely back... MORE

Stably Wasteful: Why New Tech Won't Gut Higher Education

Economics of Education
Bryan Caplan
If the human capital model of education were true, educators should be worried.  Modern information technology makes it possible to teach skills for a fraction of the traditional cost.  If imparting skills were the main function of schooling, higher education... MORE

Will Higher Education Tip?

Economics of Education
Arnold Kling
Mark Weedman writes, A school in this Google model derives its identity from its faculty and curriculum, or its "software" while de-emphasizing the importance of its infrastructure, such as its classroom, library and other campus facilities. In other words, it... MORE

Mankiw's Strange View of Japan

Fiscal Policy
David Henderson
In his New York Times column today, Greg Mankiw writes: The economists in the Obama administration are also well aware of the Japanese experience [slow growth since the early 1990s]. That is one reason they are pushing for more stimulus... MORE

Newspaper Macroeconomics

Macroeconomics
Arnold Kling
I am not a fan of textbook macroeconomics. But it is a marvel of logical consistency when compared with the macroeconomics that you get from journalists. From the perspective of a macroeconomic textbook, journalists write as if the aggregate supply... MORE

Bryan's Question and Stagnation

Growth: Causal Factors
Arnold Kling
Bryan asked, Suppose half of the sectors of the economy grow forever at 4%, while the rest completely stagnate. I'm strongly tempted to say that this economy's growth rate equals 2% forever. Anyone tempted to disagree? If so, why? He... MORE

Engineering the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
That is the title of the new book by Jeffrey Friedman and Wladimir Klaus. I have just started to read it. Their view is very close to mine in several ways. First, they emphasize the role of capital regulations in... MORE

David on 2nd-Best Immigration Policy

Behavioral Economics and Rationality
Bryan Caplan
David made me think a second time about second-best immigration policy.  My thoughts on his:1. I think Bryan drastically understates the ability of even fairly low-skilled workers to come up with a substantial five-figure admission fee. (I'm assuming the fee... MORE

A Tax and Transfer Company with an Army

Fiscal Policy
David Henderson
That's my relabeling for accuracy of an otherwise-excellent Paul Krugman post today. Two excerpts from his post: But this seems like a good time to repeat, once again, the truth about federal spending: Your federal government is basically an insurance... MORE

Immigration: Taxes vs. Fees

Labor Mobility, Immigration, Outsourcing
David Henderson
Bryan posted a provocative item yesterday in which he made the case for a 10-percentage-point higher income tax rate on immigrants vs. an up-front fee. I have two comments. But before doing so, I emphasize that Bryan and I are... MORE

He writes, There are no solid theoretical foundations for price level theory in a modern economy where hedonics is very important. It's not just that we're not good at measuring price changes for computers and consulting services; it's not even... MORE

True Monopoly or False Dichotomy?

Politics and Economics
Arnold Kling
Adam Schwiebert writes, citizens are told that the only choices they have are to either raise taxes or incur massive layoffs/program cuts. Absent from the False Duopoly is the third option: realign government compensation packages. I agree completely with the... MORE

My Friend Sarah

Economic Education
David Henderson
I still think this is one of the best 3-minute videos on economics.... MORE

Paying to Immigrate: Admission Fees vs. Surtaxes

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
As a half-way measure, pro-immigration economists often argue in favor of charging immigrants an admission fee.  It's better than not letting them in at all.  But there are two big problems:1. Admission fees are especially hard on low-skill immigrants.  Even... MORE

The Construction Sector and the Economy

Macroeconomics
Arnold Kling
Citing work by his colleagues, David Andolfatto writes, the collapse of the construction sector accounts for 46.4% of the decline in U.S. GDP and 51.9% of the decline in total employment (roughly 3.4 million jobs). Pointer from Mark Thoma. There... MORE

Wesley Mouch Update

Politics and Economics
Arnold Kling
Andrew Fox writes, Those Occupy Wall Street-types in their tents at MacPherson Square? If they really, truly are bugged by corporate welfare, they need to schlep their signs and their chants and their anger over to the Mandarin Oriental Hotel.... MORE

How Kahneman Underestimates Luck

Economic Methods
Bryan Caplan
When I received Kahneman's Thinking: Fast and Slow, I opened to a random page, and found a big error:The idea that large historical events are determined by luck is profoundly shocking, although it is demonstrably true.  It is hard to... MORE

Abba Lerner on Consumer Sovereignty

Behavioral Economics and Rationality
David Henderson
One of the deepest scars of my early youth was etched when my teacher told me, "You do not want that," after I had told her that I did. I would not have been so upset if she had said... MORE

Daniel Kahneman's Thinking

Books: Reviews and Suggested Readings
Arnold Kling
The book is called Thinking, Fast and Slow and for me it is one of the best five books of the year. No, he is not attempting to break new ground. It is more like a summing up of his... MORE

Internships vs. Apprenticeships

Economics of Education
Arnold Kling
Timothy Taylor writes, In America, many schools and parents and students will speak out strongly in favor of strong commitments to "community service" and volunteer projects and unpaid short-term internships. But many of these same people tend to recoil if... MORE

Uwe Reinhardt Nails It

Economics of Health Care
David Henderson
I posted recently on John Goodman's and Virginia Traweek's post on nurse practitioners. There ensued on his site a lively debate among those who want to allow more room for NPs to practice and those who don't. Uwe Reinhardt, a... MORE

Quiggin the Pacifist?

Economic Philosophy
Bryan Caplan
My betting partner John Quiggin seems to be in near-perfect agreement with my pacifism:When is violence justified as a response to manifest and apparently immovable injustice? My answer, with Martin Luther King is: Never, or almost never... In large measure,... MORE

The Toothpick Problem

Growth: Causal Factors
Bryan Caplan
Two days ago I posed the following hypothetical:Suppose half of the sectors of the economy grow forever at 4%, while the rest completely stagnate.  I'm strongly tempted to say that this economy's growth rate equals 2% forever.  Anyone tempted to... MORE

Democracy Without Government

Politics and Economics
Arnold Kling
From an article in the Chronicle of Higher Education. The process is what scholars of anarchism call "direct action." For example, instead of petitioning the government to build a well, members of a community might simply build it themselves. It... MORE

Krugman on How Blogs Have Changed Economic Debate

Information Goods, Intellectual Property
David Henderson
Second, even for more academic research, the journals ceased being a means of communication a long time ago - more than 20 years ago for sure. New research would be unveiled in seminars, circulated as NBER Working Papers, long before... MORE

Great Moments in Labor Supply

Labor Market
David Henderson
I was watching a recent episode of one of my favorite TV shows, Harry's Law. This line was so good that I paused and wrote it down word for word. A father comes to Tommy Jefferson, upset because his dead... MORE

For the Myth of the Macroeconomy File

Growth: Consequences
Arnold Kling
1. I found an ungated version of the John Haltiwanger paper first spotted by Mark Thoma and then praised by Tyler Cowen. Some excerpts and my comments are below the fold. 2. Brian Arthur has a piece on the digital... MORE

Tell Me the Growth Rate

Growth: Causal Factors
Bryan Caplan
Suppose half of the sectors of the economy grow forever at 4%, while the rest completely stagnate.  I'm strongly tempted to say that this economy's growth rate equals 2% forever.  Anyone tempted to disagree?  If so, why?Before you answer: Would... MORE

Rojas' Grad Skool Rulz

Books: Reviews and Suggested Readings
Bryan Caplan
Fabio Rojas' pearls of wisdom for grad students are now available as a concise, information-packed $2 e-book.  Definitely worth the money if you have any noticeable interest in grad school.  My only complaint: He left out my single favorite piece... MORE

Free the Nurses--and the Patients

Economics of Health Care
David Henderson
If a natural disaster hit Oregon, the victims would have fared much better. The state's 8,500 nurse practitioners (NPs) are free to come to the aid of people in need of care, with no legal obstruction. In Oregon, nurses with... MORE

The Profound Sumner

Behavioral Economics and Rationality
Bryan Caplan
Great hard-to-summarize post by Scott Sumner.  Highlights:I'd like to make some observations about inequality.  First as a person, then as an economist.  These are based on 56 years of observing all kinds of people, in all sorts of different situations. [After... MORE

More on Kevin Murphy and the NBA

Business Economics
David Henderson
On September 26, I wrote a blog post titled, "Note to David Stern and the NBA: Be Afraid; Be Very Afraid." In it, I noted that the NBA players' union had hired one of the smartest economists in the world,... MORE

The Rotten Spouse Theorem

Family Economics
Bryan Caplan
Even after a bitter divorce, people often pay their ex a compliment: "He was a bad husband, but he's always been a good father" or "She was a bad wife, but she's always been a good mother."  Gracious, yes.  But... MORE

Steven Jobs and Steven Chu

Political Economy
Arnold Kling
My latest essay. At this point, it seems likely that Jobs will be remembered as having contributed significantly to human progress. Chu's historical legacy is more problematic. Assuming that Chu's efforts at promoting solar power and electric automobiles are no... MORE

Lifted from the Comments

Income Distribution
Arnold Kling
John Nye writes on this post, precisely because the West is much richer, positional or status goods are consequently more important. The struggle over status goods can be masked when you have rapid growth and a lot of mobility. But... MORE

The Myth of the Median Worker

Macroeconomics
Arnold Kling
Russ Roberts continues to engage with Tyler Cowen on whether there has been stagnation. A lot of the argument is over what has happened to the median worker. But that may not be a useful construct. Let us continue to... MORE

The Top 1 Percent Includes You

Growth: Consequences
David Henderson
But if you take a wider and longer view, you reach a striking conclusion: virtually every American who has heard John Kerry or Al Gore speeches is in the top one percent. This includes the middle-class family from Indiana, the... MORE

Russ Roberts on Motivations for Belief

Macroeconomics
David Henderson
Pardon me for coming late to this discussion. I've been sitting on airplanes this week but am now back. Russ Roberts recently wrote: The evidence for the Keynesian worldview is very mixed. Most economists come down in favor or against... MORE

Business Innovation in a Free State

Political Economy
Arnold Kling
Concerning a hypothetical start-up state, Patri Friedman asks, What key freedoms and protections would you create, and what immediate industries would they enable? What business would you start if you moved there? One approach is to think of something that... MORE

"But what about the kindergarten study?"  I hear this question all the time.  Questioners are referring, of course, to Chetty et al.'s "How Does Your Kindergarten Classroom Affect Your Earnings?  Evidence from Project STAR."  Fans of the paper often claim... MORE

The Legacy of Sargent and Sims

Economic Methods
Arnold Kling
Some thoughts, beyond my reaction of "eh." 1. Since their work became widely circulated, one can argue plausibly that 99 percent of all macroeconomics papers published, dissertations completed, and tenure decisions awarded have been in the mold of Sargent, Sims,... MORE

Caught My Eye

Trade Barriers
Arnold Kling
Timothy Taylor writes, The single most costly trade barrier concerns rules against importing ethanol. The fact that such rules exist at all, of course, strongly suggests that the key issue in ethanol policy is not how much gasoline we can... MORE

David Leonhardt Signals a Bottom

Politics and Economics
Arnold Kling
He writes, The most worrisome aspect about our current slump is that it combines obvious short-term problems -- from the financial crisis -- with less obvious long-term problems. Those long-term problems include a decade-long slowdown in new-business formation, the stagnation... MORE

Progress, Academics, Streetlights, and Keys

Economics of Education
Bryan Caplan
The best argument against vocational education is economic change.  What's the point of preparing students for occupations that won't even exist by the time they finish their studies?  In Left Back, Diane Ravitch skewers Progressive-era educators for their lack of... MORE

When They Take Over, We'll Be Them

Economics and Culture
Bryan Caplan
True story: A Jewish senior complained to me, "There are hardly any regular Caucasians left."  I couldn't resist pointing out that when he was a kid, Jews weren't "regular Caucasians."  Everyone - Jews and Gentiles alike - saw the Jews... MORE

Comments on Servants

Labor Market
Arnold Kling
I liked the comment thread on this post. A few paragraphs from Michael E. Sullivan's comment: You can get a huge return by hiring a personal assistant if your time is very valuable, but in order to achieve this, your... MORE

David Wessel's Economic Questions

Politics and Economics
Arnold Kling
He wants to ask them to Republican candidates for President, not me. But my answers are in italics. All below the fold.... MORE

Scientific Stagnation?

Growth: Causal Factors
Arnold Kling
David Brooks summarizes some recent articles complaining about stagnation in scientific innovation. The time traveler would be vibrating with excitement. She'd want to know what other technological marvels had been invented in the past 41 years. She'd ask about space... MORE

Henderson on Sargent and Sims Nobel

Macroeconomics
David Henderson
"A Nobel for Non-Keynesians," my piece on the Nobel prize winners, Thomas J. Sargent and Christopher A. Sims, ran in the Wall Street Journal today. I wrote it yesterday a.m., which is why I didn't take time to post on... MORE

Financial Dysfunction: Who Shares the Blame?

Finance: stocks, options, etc.
Bryan Caplan
When people eat and drink too much, most of us blame the consumer.  Businesses don't force anyone to become obese alcoholics; they're just responding to consumer demand.  If people started spending their money more wisely, business would uncomplainingly cater to... MORE

Against Merit Pay for Teachers

Business Economics
Arnold Kling
That would be my position. A government-run system of teacher compensation, based on test scores, would in some ways be the worst of all worlds. It would create incentives for teachers to "game" the system. It would give too much... MORE

The Latest Nobel

Economic Methods
Arnold Kling
Tyler Cowen tells you about Sargent and Sims. My reaction is, "eh." Sort of like Bert Blyleven. Star players, but not historically important, unless you're from Minnesota.... MORE

David Graeber Interview

Economic History
Arnold Kling
Worth a listen. In fact, he almost endorses my most wrong view!! He says that currency and markets emerged from plunder. However, he does say that there were early trading nations that were not plundering empires. He also has provocative... MORE

Robert Solow on Sylvia Nasar

Books: Reviews and Suggested Readings
David Henderson
But this suggested theme does not hold up. The book is not "The Story of Economic Genius" that is promised in the subtitle. It is instead the story of the public and private lives of a handful of major figures... MORE

The Crack Theory of Inflation

Monetary Policy
Arnold Kling
NPR lets John Taylor make the case against easier money and higher inflation. He says encouraging inflation is a slippery slope. A central bank may just want to raise inflation moderately, but he says, it inevitably gets translated into higher... MORE

He testifies, I have long thought that the Mortgage Interest Deduction is a residual of the 1913 tax code, accomplishes little that its supporters claim for it, pushes capital away from plant and equipment toward housing, and benefits high income... MORE

Misvocational Education

Economics of Education
Bryan Caplan
Progressive education was a mixed bag.  The bag's best item: Its proto-signaling critique of the curriculum.  Progressive educators heaped scorn on the teaching of Latin and Greek - and often history and science as well.  Why?  Because most of the... MORE

Two Interesting Questions

Political Economy
Arnold Kling
1. David Warsh writes about a project in which economists were asked to come up with a long-term research agenda in economics. It appears to me that the suggestions are heavily weighted toward technocratic thinking. If anyone had asked me,... MORE

Notes for the Credentialism File

Economics of Health Care
Arnold Kling
A New York Times Story: Doctorates are popping up all over the health professions, and the result is a quiet battle over not only the title "doctor," but also the money, power and prestige that often comes with it. ...For... MORE

How Important Was Smoot-Hawley?

International Trade
David Henderson
I used to think that the Smoot-Hawley tariff was the fourth most important cause [of the Great Depression]. But Douglas Irwin's new book, Peddling Protectionism, has convinced me that Smoot-Hawley, though bad, was even less important than I had thought.... MORE

Steven Jobs as a Baumeister Male Archetype

Behavioral Economics and Rationality
Arnold Kling
Robin Hanson writes, Now try to imagine a world where everyone actually tried to follow this advice. And notice that we have an awful lot of things that need doing which are unlikely to be anyone's dream job. So a... MORE

Most of the Devils Are Here

Finance
David Henderson
How did Fannie Mae get such political clout? This is one of the best-told stories in the book. McLean and Nocera tell how a well-connected Democrat named Jim Johnson made Fannie Mae almost invulnerable politically. Johnson, who had been Vice... MORE

Did IQ Research Cause U.S. Immigration Restriction?

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
People who believe in the importance of IQ often conclude that they've found a scientific rationale for immigration restrictions.  They're wrong.  But has their mistaken inference led to more restrictive immigration policies?  The Immigration Act of 1924 seems like the... MORE

Who Are the Good Guys?

Political Economy
Arnold Kling
Eric Raymond writes, Community and collectivism are opposites. Community is valuable and powerful; it is individuals freely choosing to cooperate and identify with each other to achieve more than they can individually, as we do in the open-source community. Collectivism... MORE

An Economic Bill of Rights

Institutional Economics
Arnold Kling
What should be in it? I think of it as something less than an abstract principle ("everyone has the right to undertake any transaction that does not involve fraud") and something more than a policy proposal. My thinking is that... MORE

The Anti-Terrorist Bureaucracy

Public Choice Theory
David Henderson
Now that the big kahuna -- Osama bin Laden -- has been killed, the "War on Terror" is much less exciting. Even before Osama's demise, experts sent chills through the massive post-9/11 U.S. government anti-terrorism bureaucracies by concluding that the... MORE

Goolsbee, Friedman, and 1980

Economic History
Bryan Caplan
Milton Friedman's Free to Choose t.v. series is now 30 years old.  To celebrate, PBS is re-running highlights, followed by new panel discussions.  I was just on one of these panels: me, Austan Goolsbee, Amity Shlaes, and Clarence Page.  (Pre-recorded;... MORE

Steve Jobs: Insanely Great

Economic History
David Henderson
I woke up in Turkey at 4:00 a.m. Thursday, went to my computer, and found out that Steve Jobs had died. I titled this post as I did because "insanely great" was the term Jobs loved to use to discuss... MORE

Bruce Meyer on Income Distribution

Income Distribution
Arnold Kling
Outstanding podcast with Russ Roberts. I did not expect to listen to much of it, but I wound up listening to all of it. Important tidbits include the fact that poor people tend to under-report income in surveys. This makes... MORE

Joseph Stiglitz on Recalculation

Macroeconomics
Arnold Kling
He writes, First, America and the world were victims of their own success. Rapid productivity increases in manufacturing had outpaced growth in demand, which meant that manufacturing employment decreased. Labor had to shift to services. The problem is analogous to... MORE

Where are the Servants?

Labor Market
Arnold Kling
In an economy where some folks are very rich and many folks are unemployed, why are there not more personal servants? Why don't Sergey Brin and Bill Gates have hundreds of people on personal retainer? I pose this question as... MORE

Business Reality vs. Wonk Theory

Business Economics
Arnold Kling
Felix Salmon writes, And while the state attorneys general -- at least in states like New York and California -- might have a more aggressive stance towards the big banks than Treasury does, the fact is that they, too, are... MORE

Miscellaneous

Political Economy
Arnold Kling
Russ Roberts writes, Who really writes the latest financial regulations, where the devil is in the details? Who has a bigger incentive to pay attention to their content -- financial insiders such as the executives of large financial institutions or... MORE

The IS-LM Model Attacked and Defended

Macroeconomics
Arnold Kling
Tyler Cowen writes, Every time you write down an IS-LM model you should hear a clock start ticking in your head. The longer the clock ticks, you more you need to worry about this problem because the more that a)... MORE

Personality, Gender, and Economics

Behavioral Economics and Rationality
Arnold Kling
I have been reading Is There Anything Good About Men? by Roy Baumeister (co-author of the newer book, Willpower.). A few remarks here, with more below the fold. 1. If you are a zero-tolerance reader ("I stopped reading on page... MORE

Tales from the Job Market

Labor Market
Arnold Kling
This WSJ Story (you may have to News-Google it) is mostly about workers with the wrong skills for the current market. But I note this: BestCare Home Health Agency, a Fresno, Calif., nonprofit that provides nursing and other in-home health... MORE

Leon Louw's Talk at Mont Pelerin

Economic Philosophy
David Henderson
One of the highlights of the Mont Pelerin Society meetings that are ending in Istanbul tonight was a talk by Leon Louw of the Free Market Foundation in South Africa. Some high points: 1. He led off by stating, "I... MORE

On the History of Money

Money
Arnold Kling
David Graeber writes, Anthropology is full of examples of societies without markets or money, but with elaborate systems of penalties for various forms of injuries or slights. And it is when someone has killed your brother, or severed your finger,... MORE

Joshua Hall on the Decline of Conscription

Labor Market
David Henderson
This month's Feature Article on Econlib is "The Worldwide Decline in Conscription: A Victory for Economics?" by Beloit College economics professor Joshua C. Hall. Josh, who is a co-author of Economic Freedom in the World, shows that one component of... MORE

Grading the Four Faces of Progressive Education

Economic History
Bryan Caplan
Ayn Rand raised me to despise Progressive education.  Now that I'm reading Diane Ravitch's Left Back, though, I'm learning that "Progressive education," like Walt Whitman, contained multitudes.  Ravitch identifies four distinct - and often conflicting - trends:First was the idea... MORE

Nothing to the Rumor

Tax Reform
Arnold Kling
Herman Cain apparently has proposed a tax reform along lines I once suggested. I made the case from a public choice perspective that single-digit tax rates would reduce the incentive to lobby for tax breaks. Still, there is nothing to... MORE

Revisiting the 1930s

Economic History
Arnold Kling
1. Stephen Williamson gives a platform to Harold Cole and Lee Ohanian to defend a recent controversial op-ed. most of the increase in per-capita output that occurred after 1933 was due to higher productivity - not higher labor input. The... MORE

From the Vault: My Response to Victor Fuchs

Economics of Health Care
David Henderson
Stanford University health economist Victor Fuchs wrote an op/ed in the Wall Street Journal on January 26, 1996, titled "The Tofu Triangle." Here is my letter in response. The Journal published it on February 22, 1996, titling it "Equal Justice."... MORE

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