Bryan Caplan and David Henderson

December 2011

A Monthly Archive (126 entries)

Reflections on My 2011 Blogging

Economic Education
David Henderson
In terms of enjoyment, 2011 has been my favorite year of blogging since I started in late October 2008. In late November I hit 1,000 posts and certainly hope to make it to at least 2,000. I went quickly through... MORE

Reihan Salam on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
He writes, it is not just craven financial elites that clamor for stabilization policies that invariably benefit craven financial elites: it is virtually everyone in the crisis-plagued societies, as financialization gives everyone a stake, direct or indirect, in the fate... MORE

"Wages Must Fall!": Matt Yglesias Edition

Labor Market
Bryan Caplan
With this, Matt Yglesias instantly enters my sadly short list of good Keynesians:The depressing truth is that the easiest way to bring good, high-paying manufacturing jobs back to America is to make them less good and less well-paying...More goodness:[T]he reality... MORE

Mining for PSST

Macroeconomics
Arnold Kling
James Hamilton writes, My suggestion is that America should try to return to what some scholars maintain was the original source of America's success, which came from using North America's abundant natural resources as a basis for a competitive advantage... MORE

The Benefits of Wealth

Regulation
David Henderson
Tyler Cowen has a thoughtful answer to the question, "Does wealth equal power?" (Of course, the obvious answer is "Yes, it equals power over material things but no, it doesn't equal power over other things. It might give one power... MORE

Trends to Watch, Updated

Growth: Causal Factors
Arnold Kling
Following up on last year's post on long-term trends (which in turn followed up on a post from 2005: 1. Productivity growth has tailed off in recent quarters. It varies so much on a year-to-year basis that it takes quite... MORE

Modern Common-Pool Resources

Information Goods, Intellectual Property
Arnold Kling
Timothy Taylor writes, The Milgrom, Levin, and Eilat argument is also intriguing because it points out an inherent conflict between property rights and innovation. For example, those who invent something today and seek out a patent must often be concerned... MORE

Why No Cheap Textbooks?

Economics of Education
Arnold Kling
Timothy Taylor writes, When it comes to textbooks, all choices are equally "free" to the actual decision-maker, who in this case is the professor rather than the student. If students at the college bookstore could choose among equivalent books by... MORE

The Hack

Economics of Education
Bryan Caplan
Arnold makes an intriguing remark about education:If college were truly a utilitarian good, all it would take to turn these edifice-complex campuses into ghost towns is a good hack for the accreditation process. But he's skeptical because:[A]t the high levels,... MORE

Arnold Kling's Paradox of Thrift

Finance
David Henderson
On my list of potential topics to blog about in the last few days was Megan McArdle's excellent post in which she advises people to save more. I've gone after her here, here, and here and so I like to... MORE

Today on the Eurozone Crisis

Finance: stocks, options, etc.
Arnold Kling
Johnn Cochrane makes the case that bank regulators are not up to the job. The last generation of smart MBAs got around capital requirements by pooling risky assets into "AAA" securities that had lower risk weights, and then putting those... MORE

Let's Deregulate all the Lawyers

Labor Market
David Henderson
The authors carefully build their case, first telling of the various restrictions on who can be a lawyer. All but a few state governments, they note, require prospective lawyers to have graduated from a law school that the American Bar... MORE

Megan McArdle is a Vicky

Income Distribution
Arnold Kling
She writes, If you're like, well, almost everybody, you're not saving enough. 15% of each paycheck into the 401(k) is the bare minimum you can get away with If I were to channel my inner David Graeber, I would say... MORE

Most People Are Consequentialist???

Economic Philosophy
Bryan Caplan
Robin blogs a new piece based on a survey of Swedes.  Its conclusion: most people are consequentialist.  I don't buy this for a second.  Consider the response options:How bad an action is, from an ethical point of view, depends primarily... MORE

We're All Heterodox Now

Macroeconomics
Arnold Kling
The Economist writes, They have thrived on the back of massive disillusion with mainstream economics, which held that the economy would grow steadily if central banks kept inflation low and stable, and that there were no great gains in the... MORE

Psychiatry's Disorders

Behavioral Economics and Rationality
Bryan Caplan
Wired has a nice piece on the psychiatric in-fighting behind the new Diagnostic and Statistical Manual of Mental Disorders.  Highlights:1. The arbitrariness of psychiatric diagnoses:The authority of any doctor depends on their ability to name a patient's suffering. For patients... MORE

Keynes a la Mode

Macroeconomics
David Henderson
Backhouse and Bateman argue, as the book's title implies, that although Keynes wanted a substantial amount of government intervention, he did believe in preserving large elements of capitalism. This part of the book is somewhat persuasive, although their discussion of... MORE

From the Handbook of the Sociology of Education

Economics of Education
Bryan Caplan
[A]lthough employment tests are often biased against minorities (National Research Council, 1989), employers who use them are more likely to hire minorities than employers who lack such tests (Neckerman & Kirschenman, 1991).  Testing may be biased, but the alternatives to... MORE

Bricks, Mortar, and Education

Economics of Education
Arnold Kling
Stephen Gordon writes, Eventually you could have local campuses becoming places where MITx students seek tutoring, network, and socialize - reclaiming some of the college experience they'd otherwise have lost. Phil thought this sounded like college as a giant coffee... MORE

The Mind of Robin Hanson: The Inside Story

Behavioral Economics and Rationality
Bryan Caplan
People occasionally accuse my colleague Robin Hanson of extreme dogmatism.  But they don't know him like I do.  When I first met Robin Hanson, he earnestly believed that voters were rational and selfish.  He rejected any model that violated these... MORE

Tabarrok on Innovation

Growth: Causal Factors
Arnold Kling
Russ Roberts and Alex Tabarrok converse for an hour. Recommended. It brings out/reinforces points from Alex's ebook.... MORE

How to Fix Group Projects

Microeconomics
Bryan Caplan
When I was a student, I always hated group projects.  As a professor, I never assign them.  The source of my antipathy: Group projects provide terrible incentives.  Since everyone gets the same grade, the lazy and incompetent free ride off... MORE

The "Courage Campaign's" False Statement

Taxation
David Henderson
In my state of California, the so-called Courage Campaign is pushing for higher tax rates on high-income people. California now, by the way, has one of the highest top marginal tax rates on income in the country: 10.3 percent. To... MORE

Book Recommendations

Books: Reviews and Suggested Readings
Arnold Kling
From Jason Collins. An interesting list.... MORE

Self-Recommending Books, Not Yet Available

Books: Reviews and Suggested Readings
Arnold Kling
The Craft of Economics, by Ed Leamer. Seems to be expected January 6. Coming Apart: The State of White America, 1960-2010, by Charles Murray. Expected January 31. I mentioned the Murray book during the "virtual meetup" that I held on... MORE

George Stigler's Tenure Call

Labor Market
David Henderson
A friend of mine who used to be a colleague at the Naval Postgraduate School, Patrick J. Parker, was a young student taking his first economics courses at Columbia University in the late 1940s. He was sitting in George Stigler's... MORE

Here's the most fascinating exhibit from the Holocaust Museum's "State of Deception" exhibit:(full-size version) The top and bottom read: "Hate and annihilation to our enemies.  Freedom, justice, and bread to our people."  But it's the four heads of the dragon... MORE

Various Sentences to Ponder

Growth: Causal Factors
Arnold Kling
From Jason Collins: There are some massive externalities to the behaviour of other people. Chrystia Freeland, quoting a Taiwanese-born American executive on the effect of globalization on American workers: "So if you're going to demand 10 times the paycheck, you... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
Tyler Cowen writes, Dodd-Frank left questions of capital and leverage largely to the Basel III international banking agreements, the second piece of the new financial regulatory architecture. Basel III, like its predecessors Basel I and Basel II, encourages banks to... MORE

Patria, Parenti, Amici

Economic Philosophy
Bryan Caplan
Patria, parenti, amici, Voi dunque non avete? Country, family, friends, Possess you none of them? -Giuseppe Verdi, RigolettoI'm a staunch opponent of nationalism.  But I'm also a family man.  Isn't there a direct contradiction between the two?  If I... MORE

Patent Trolls

Information Goods, Intellectual Property
Arnold Kling
James Bessen, Jennifer Ford, and Michael J. Meurer have the ugly data. We find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010. During the last four years, the lost... MORE

Francis Fukuyama Wants a New Ideology

Political Economy
Arnold Kling
He writes, Politically, the new ideology would need to reassert the supremacy of democratic politics over economics and legitimate anew government as an expression of the public interest. But the agenda it put forward to protect middle-class life could not... MORE

Rothbard on Stigler and Friedman

Price Controls
David Henderson
Many of us libertarian economists, even relative veterans such as me, are so used to seeing the late Murray Rothbard attack the "Chicago School." So the following from Rothbard came as somewhat of a surprise: It was in this stifling... MORE

Why No Mini-Recessions?

Macroeconomics
Arnold Kling
Scott Sumner writes, Now here's one of the most striking facts about US business cycles. When the unemployment rate does rise by more than 0.6%, it keeps going up and up and up. With the exception of the 1959 steel... MORE

Proving You're Qualified: Charles Hayes Replies

Books: Reviews and Suggested Readings
Bryan Caplan
Charles Hayes, author of Proving You're Qualified, has graciously responded to my criticism of his book in three separate emails.  Email #1:Prof. Caplan,Thanks, but I think you oversimplify a bit. I just retired from the oilfield after 35 years as... MORE

Proving You're Qualified; or Not

Economics of Education
Bryan Caplan
I was excited when Proving You're Qualified: Strategies for Competent People Without College Degrees showed up on my desk.  Unfortunately, the book fell far short of my high hopes.  You have to read over half the book before the author,... MORE

Libertarian Ideas for the Mainstream

Politics and Economics
Arnold Kling
James Pethokoukis gets snarky about Obamanomics and then offers constructive suggestions, based largely on two e-books, Race Against the Machine and Launching the Innovation Renaissance. 9. Create a patent system with the length of legal protection depending on the cost... MORE

You can try this URL: https://talkgadget.google.com/hangouts/extras/talk.google.com/kling Or go to Google+, try to start a hangout, then select "hangouts with extras" and try to join the hangout Kling. This will start officially at 11 AM eastern time, today (about one hour... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
1. James Hamilton reviews the emergency lending of the Fed from 2008-2011. Phase 4, then, could turn out to be a return to emergency lending as the Fed tries to contain collateral damage from the unfolding European drama. 2. Olivier... MORE

Bauman versus Landsburg et al

Public Goods
David Henderson
In a comment on co-blogger Bryan Caplan's recent post, economist Yoram Bauman writes: If you're looking for another post topic, you could try to mediate between me and Steve Landsburg. (I've given up on him for now :) I thought... MORE

Instructions for Virtual Meetup

Upcoming Events
Arnold Kling
A reminder that I will attempt this on Thursday, Dec. 22, at 11 AM Eastern time, with a topic of "the future of education." I will be using the Google+ hangout feature. That means that you have to be on... MORE

Eurobanking

Finance: stocks, options, etc.
Arnold Kling
Hyun Song Shin writes, My recent research suggests that the 'global banking glut' may have been more culpable for the crisis than the 'global savings glut' I reported on his paper when I first read it (I believe Tyler Cowen... MORE

Robert Hetzel on the Liquidity Trap

Macroeconomics
Arnold Kling
He speaks for me when he writes, The institutional fact that makes a liquidity trap an irrelevant academic construct is the unlimited ability of the central bank to create money. One can make this point in an irrefutable manner by... MORE

Reply to Yoram

Books: Reviews and Suggested Readings
Bryan Caplan
As promised, here's my reply to Yoram Bauman's guest post.  Yoram's in quotes, I'm not:1) What did you think of the page on public choice (p82)? Buchanan got his own Nobel Prize joke, and I thought that was pretty good!One... MORE

Thomas Sargent on Government Default

Fiscal Policy
David Henderson
Tom Sargent's Nobel prize lecture is quite clear and informative. True to form, Sargent shows some equations at first. This reflects his view that the way to be a "real economist" is to use equations. Yet he does pretty well... MORE

Manski and Caplan

Family Economics
Arnold Kling
I just got around to reading Charles Manski on "Genes, Eyeglasses, and Social Policy." Manski is dismissive of heritability studies, and I am curious how Bryan would react, given the importance he places on heritability studies for his argument that... MORE

Virtual Meetup

Upcoming Events
Arnold Kling
I am trying to organize a virtual meetup using a Google "hangout." The time will be this Thursday at 11 AM. OH--Eastern time zone (U.S.) I think you have to be on Google+ to participate. The topic will be the... MORE

An Extended Take on Ignorance

Political Economy
Arnold Kling
from Xerographica. Note the many links, including one to A Jeffrey Friedman paper.... MORE

Fiscal Policy: A Counterexample for Krugman

Fiscal Policy
David Henderson
Blame Canada for contradicting Krugman. Paul Krugman writes: And bear this in mind: no country has driven itself into a debt crisis with stimulus -- nor has any country with significant debt regained investor confidence through austerity. Actually, the last... MORE

Guest Post by Yoram Bauman

Books: Reviews and Suggested Readings
Bryan Caplan
Yoram Bauman, author of The Cartoon Introduction to Economics, asks some questions in the comments.  Consider the following his guest post.  I'll respond soon. On second thought, I miss arguing with you, Bryan, so I'll pick some bones: 1) What... MORE

Cartoon Macro

Books: Reviews and Suggested Readings
Bryan Caplan
Volume 2: Macroeconomics of Grady Klein and Yoram Bauman's Cartoon Introduction to Economics ships this week - a great last-minute stocking stuffer.  Volume 1 was good (see here and here); volume 2 is better.  Chapter 2 ("Unemployment") does a swell... MORE

An Institutional Check on Financial Regulators?

Finance: stocks, options, etc.
Arnold Kling
Ross Levine writes, [We] propose a new institution, which I label the "Sentinel," to act as the public's sentry over financial policies and to help compel financial regulators to act in the public interest, regardless of their private interests. The... MORE

My "Occupy Monterey" Talk, Part IV

Social Security
David Henderson
This is the last installment in my recounting of my "Occupy Monterey" speech. For the earlier parts, see here, here, and here. When my talk ended, we went to Q&A. One of the first questions was about my preferred presidential... MORE

Economists and Influence

Politics and Economics
Arnold Kling
Richard Green asks why economists do not have more influence at the White House. His answer: economists have poor social skills I do not think that is the issue at all. There is diversity among economists, and there are plenty... MORE

My "Occupy Monterey" Talk, Part III

International Trade
David Henderson
For Parts I and II, see here and here. "One big advantage of free markets," I said, "is that they make wars less likely. When there is a lot of trade between countries, both sides have more to lose by... MORE

Bryan Caplan Crosses Nick Rowe

Labor Market
Arnold Kling
Bryan writes, Unemployment is just a labor surplus; since wages are the price of labor, the fundamental cause of unemployment has to be excessive wages. Nick Rowe writes, The only way to increase output in a demand-constrained economy is to... MORE

My "Occupy Monterey" Talk, Part II

Economic Education
David Henderson
To follow this completely you need to read my previous post, "My 'Occupy Monterey' Talk, Part I." (One thing I forgot to mention in that post is that I pointed out that Congress had voted to give the U.S. military... MORE

Income Distribution Policy

Income Distribution
Arnold Kling
Timothy Taylor has a must-read post. (I could say that almost every day, but today I am going to provide additional commentary.) It's long, but here is a brief excerpt. On the tax side, the U.S. tax code is already... MORE

My "Occupy Monterey" Talk, Part I

Regulation
David Henderson
I finally have found time to tell the story of my "Occupy Monterey" talk last Saturday, titled "Crony Capitalism versus the Free Market." My expectations for the success of my talk, on a scale of 10, were 3 to 6... MORE

My Review of Robert Frank

Books: Reviews and Suggested Readings
David Henderson
Ultimately, though, I find his case unconvincing. Moreover, his own reasoning leads to conclusions that even he finds distasteful, and he has yet to find a way out of those unfortunate conclusions. Frank often misstates the libertarian viewpoint, sometimes in... MORE

News Item: Half of American Families are Below the Median

Income Distribution
David Henderson
The title of this post should have been the title of my post yesterday. As one of the commenters, Zach Pruckowski, pointed out, the new poverty measure that the U.S. Census Bureau uses does include food stamps. My bad. But... MORE

The Chess Game of Health Care Regulation

Economics of Health Care
Arnold Kling
Daeho Kim writes, To identify the impact of PPS on cardiac procedures, I exploit the discontinuity in Medicare eligibility at the age of 65. Utilizing data from before-and-after the PPS [prospective payment system] reform, I find a discontinuous change in... MORE

Laboratories of Socialism

Political Economy
Arnold Kling
Gar Alperovitz writes, Local and state governments are likewise changing the nature of American capitalism. Almost half the states manage venture capital efforts, taking partial ownership in new businesses. Calpers, California's public pension authority, helps finance local development projects; in... MORE

Technology and Higher Education Reform

Economics of Education
Arnold Kling
I attended a dinner discussion on this topic the other night. Matt Yglesias raised two skeptical questions. 1. Since the invention of the printing press, distance learning has been feasible. At the margin, what does the Internet make possible? On... MORE

How Food Stamps Increase Measured Poverty

Income Distribution
David Henderson
The leading story in the Monterey County Herald this morning is titled, "Nearly half in U.S. near poverty or low-income." It is Hope Yen's Associated Press item, and the leading two paragraphs are: Squeezed by rising living costs, a record... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
1. Richard Milne in the Financial Times. the biggest worry is that European leaders appear to be repeating one of the original sins that led to the eurozone crisis in the first place: forcing banks and insurers to load up... MORE

Joseph Stiglitz Crosses Nick Rowe

Macroeconomics
Arnold Kling
Stiglitz writes, At the beginning of the Depression, more than a fifth of all Americans worked on farms. Between 1929 and 1932, these people saw their incomes cut by somewhere between one-third and two-thirds, compounding problems that farmers had faced... MORE

"Wages Must Fall!": What All Good Keynesians Should Say

Behavioral Economics and Rationality
Bryan Caplan
When Keynesians want to gloat, they often point to the overwhelming empirical evidence in favor of nominal wage rigidity.  For the latest example, see Krugman on the Irish labor market.  Their unemployment is 14.5%, but the nominal wage index has... MORE

The Marginal Cost of Perfection

Cost-benefit Analysis
David Henderson
In my Executive MBA class, I use The Economic Way of Thinking by the late Paul Heyne, Peter Boettke, and David Prychitko. In a recent problem set, I used a question from the chapter on externalities. The authors have a... MORE

Does This Work?

Political Economy
Arnold Kling
Here is a video on Crony Capitalism. It offers a number of libertarian talking points on the issue. I agree with many of the individual points, but they are made rather quickly. The argument that regulation was intensified, not cut... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
Tim Worstall writes, We're going to be gearing the eurozone banking system up on sovereign debt. Which means that if anyone does in fact default then the eurozone banking system really will go bust, crash and burn in a great... MORE

SarbOx and MF Global

Business Economics
Arnold Kling
There has been a lot of mention of Sarbanes-Oxley in the context of the failure of MF Global. This might be a good test of whether SarbOx is worth anything. 1. How much of MF Global's behavior was criminal pre-SarbOx?... MORE

Suicide and Sincerity

Economic Philosophy
Bryan Caplan
I just shared the sublime Downfall with my older sons.  It's the German-language movie of the last days of Nazi Germany.  (You probably already to know it from the countless Youtube parodies of Hitler screaming at his generals with funny... MORE

An Annoying Law

Public Choice Theory
Arnold Kling
In New York: This month, thousands of New Yorkers will hand over their apartment keys to strangers, making a few extra bucks by renting out their homes when they head out of town. But they might not know they're actually... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
An entire article on the two-drunks problem. The European Banking Authority ordered the region's banks on Dec. 8 to raise 115 billion euros ($154 billion) by June. Faced with dwindling profits and unable to tap capital markets to sell new... MORE

Donald Trump: The Price is Wrong

International Trade
David Henderson
On The O'Reilly Factor last night, Bill O'Reilly asked Donald Trump for, in order of priority, which were the most important butts to kick. Number 1 for Trump was the Chinese government for keeping the value of China's currency artificially... MORE

Two Papers on PSST

Macroeconomics
Arnold Kling
In the latest issue of Capitalism and Society. I wrote one of the papers, and then Peter Howitt wrote a comment. I recommend both of them, although personally I find Howitt's paper more interesting, because I already knew what I... MORE

Inside the New Poverty Measure

Income Distribution
Arnold Kling
Robert Lerman looks at how the sausage got made. the SPM threshold is a relative concept. It equals what a family with two children at the 33rd percentile of spending devote to food, clothing, housing, and utilities plus another 20%... MORE

The "Virtue" of Low Academic Standards

Economics of Education
Bryan Caplan
Further critique of Goldin-Katz in David Labaree's Someone Has to Fail:Early in the book, the authors [Goldin and Katz] identify what they consider to be the primary "virtues" of the American education system... "public provision by small, fiscally independent districts;... MORE

NYT's Jeff Sommer's Shoddy Reporting

Macroeconomics
David Henderson
I've been busy in the last week with end-of-quarter classes and two speeches, the latter of which I'll report on today or tomorrow. Which is why I hadn't replied to Jeff Sommer's criticism of me in the New York Times.... MORE

Cheeseburgers Require PSST

Austrian Economics
Arnold Kling
Waldo Jaquith reflects that it's quite impractical--nearly impossible--to make a cheeseburger from scratch. Tomatoes are in season in the late summer. Lettuce is in season in spring and fall. Large mammals are slaughtered in early winter. The process of making... MORE

More on the Anti-Commons

Property Rights
Arnold Kling
From Eli Dourado. If we could be certain that eminent domain would only used when it was efficiency-enhancing, and that adequate compensation would be made to the expropriated, I would have no problem with it. I would regard it as... MORE

Khan!

Economics of Education
Arnold Kling
Salman Khan has interesting thoughts on education. One root of the problem is the fact that the college degree is issued by the same institution that is in charge of setting, and enforcing, the standards of that credential, says Khan,... MORE

Some Motives Revealed

Economics of Health Care
David Henderson
In my chapter on health care in my The Joy of Freedom: An Economist's Odyssey, I had an extensive discussion of government regulations that drive up the price of insurance and . At the end of that discussion I wrote:... MORE

Shorter Dierdre McCloskey

Austrian Economics
Arnold Kling
She writes, What works? Creativity. Innovation. Discovery. The Austrian core. And where did discovery come from? It came from the releasing of the West from ancient constraints on the dignity and liberty of the bourgeoisie, producing an intellectual and engineering... MORE

The Risks of Kidney Donation

Economics of Health Care
David Henderson
In a recent New York Times op/ed that is creating a buzz on the blogosphere, Alexander Berger tries to persuade people that donating a kidney while you're alive is no big deal. He says that donating a kidney is easy,... MORE

Valuing Financial Services

Finance: stocks, options, etc.
Arnold Kling
Christina Wang writes, Making conservative assumptions, we show that the current official method overestimates the service output of the commercial banking industry by at least 21% (amounting to $116.8 billion in 2007:Q4 for example) and GDP by 0.3% ($52.9 billion... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
One report on the latest accord: According to a statement issued after the meeting broke up, governments participating in the agreement will need to have balanced budgets -- which is counted as a structural deficit no greater than 0.5 percent... MORE

Of Models and PSST

Economic Methods
Arnold Kling
Some comments on an earlier post raised a number of issues. 1. Shouldn't the economy just have stayed on its production possibility curve in 1929, rather than go through the Depression? Well, the problem is if it stays on the... MORE

The Julian Simon Club

Family Economics
Bryan Caplan
Art Carden, who is also expecting another child, is inviting economists to join his new Julian Simon Club:Simon's research shows that fears and worries about "overpopulation" are senseless. Further, expressions of those fears and worries in comments like "it is... MORE

Advantage, Sociology: Gender and the Return to Education

Economics of Education
Bryan Caplan
When economists estimate the return to education, they usually limit their sample to workers - or even full-time workers.  This is a serious error.  If you were evaluating the return on business loans, you wouldn't limit your sample to firms... MORE

Random Family and Inequality

Income Distribution
Arnold Kling
Greg Mankiw posts a video of Harvard colleagues discussing the issue of inequality. It's very long, so I did not watch all of it, but I skipped around. The one person on the panel who was new to me was... MORE

Cognitive Hubris

Central Planning vs. Local Knowledge
Arnold Kling
My latest essay weaves together Daniel Kahneman and Jeffrey Friedman. Suppose you were to ask yourself how well you understand the world around you. How accurate is your map of reality? If you interrogate System Two, it might reply, "There... MORE

John Cochrane's Talk at Hoover: His Version

Macroeconomics
David Henderson
On Tuesday, I posted my notes from John Cochrane's December 3 talk at Hoover. When he saw my notes, John sent me his talk and gave me permission to reprint it. Here it is. Comments at "Restoring Robust Economic Growth... MORE

"Socialists Won Over By War"

Economic History
Bryan Caplan
On June 6, 1915, the New York Times ran a fascinating story on the socialist response to World War I.  A few highlights:Karl Kautsky, editor of Die Neue Zeit, and probably the most influential Socialist in Germany today, attempts to... MORE

My "Occupy Monterey" Talk

Upcoming Events
David Henderson
On Saturday, December 10, I'll be giving a talk at Occupy Monterey. Title: Crony Capitalism versus the Free Market Time: Saturday, 1:15 p.m. to 2:15 p.m. Place: Colton Hall lawn, Monterey.... MORE

Hayek and 20th Century Economic Thought

Austrian Economics
David Henderson
How important is the work of Friedrich Hayek in 20th-century economic thought? David Warsh has written an excessively nasty piece on that, which doesn't mean it contains no kernels of truth. Alex Tabarrok has written a defense of Hayek which... MORE

Is Iran a Threat?

Upcoming Events
David Henderson
On Friday morning, I'll be speaking on the topic, "Is Iran a Threat?" at the campus of Cal State University, Monterey Bay. It's open to the public. There's another speaker also and we go from 10:00 a.m. to noon. Here... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
Perry Mehrling writes, Now comes the latest deal over eurozone fiscal rules, presumably the deal that ECB President Draghi asked for last week. It is a deal about sovereign budget discipline. But if I read Draghi's speech right, we should... MORE

Alex Tabarrok Talks His Book

Books: Reviews and Suggested Readings
Arnold Kling
Interviewed by Nick Schulz. there is plenty of risk in sending a kid to college! Forty percent of students don't graduate within six years (and probably never will), many more graduate with degrees that won't help them much in the... MORE

Health Care Dilemmas

Economics of Health Care
Arnold Kling
How Doctors Die, an essay by Ken Murray, has been making the rounds. Almost all medical professionals have seen what we call "futile care" being performed on people. That's when doctors bring the cutting edge of technology to bear on... MORE

A Cursory Rejection of Anti-Natalism

Economic Philosophy
Bryan Caplan
Critics of my kids book occasionally argue that creating new life is, all else equal, morally questionable or objectionable, a position known to philosophers as anti-natalism.  The most extreme proponent of anti-natalism is probably David Benatar, author of Better Never... MORE

John Cochrane's Talk at Hoover

Macroeconomics
David Henderson
At his Friday talk at Hoover, University of Chicago economist John Cochrane went a mile a minute to try to fit a lot into 10 minutes. He succeeded and the talk was outstanding. But because he went so fast, my... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
Felix Salmon writes, The best case scenario is that those countries bite the bullet and restructure their debt now, since to delay is to make any restructuring much more painful and expensive than it needs to be. Pointer from Mark... MORE

The Intellectual Property Mess

Information Goods, Intellectual Property
Arnold Kling
Warren Toomey writes, Although AT&T quickly settled its legal disputes with Berkeley Software Design and the University of California, legal wrangling over intellectual property claims to various parts of Unix and Linux have continued over the years, often involving byzantine... MORE

Boettke on the Lamp Post Problem

Economic Methods
Arnold Kling
I recently came across Where Did Economics Go Wrong? Modern Economics as a Flight From Reality, published by Pete Boettke in Critical Review. Looking at its themes, you can see issues that I have dwelt on considerably on this blog.... MORE

Voter Irrationality in Animal Farm

Books: Reviews and Suggested Readings
Bryan Caplan
I recently talked my sons into reading Orwell's Animal Farm as their bedtime story.  [Warning: spoilers.]  They loved it - my asides on the Soviet allegory included.  Most of the book shows how the pigs twist the egalitarian animal revolution... MORE

The Fed's Secret Handout

Monetary Policy
David Henderson
Remember when Ron Paul was almost the only politician in Washington calling for auditing the Fed? After this latest revelation, one can see what good sense he had in doing so. Co-blogger Arnold Kling has already highlighted this, but it... MORE

Shock Me, Shock Me

Finance: stocks, options, etc.
Arnold Kling
From a new study by Andrew Haughwout and others, At the peak of the boom in 2006, over a third of all U.S. home purchase lending was made to people who already owned at least one house. In the four... MORE

Wolfgang Kasper on the Euro

International Macroeconomics: Exchange Rates, International Debt, etc.
David Henderson
When, as a Senior Fellow at the Kiel Institute of World Economics in Germany, I wrote my PhD thesis about international monetary affairs, it became clear to my colleagues and me that an imposed Europe-wide currency would be a stillborn... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
First, two pointers from Mark Thoma. Jeff Frankel calls this the hour of the technocrat. Obvious disadvantages of some technocrats include lack of managerial experience, lack of perceived legitimacy, and lack of a domestic political powerbase. Monti and Papademos both... MORE

My Fourth Statement

Family Economics
Bryan Caplan
When I was promoting Selfish Reasons to Have More Kids, one of the most common questions I heard was, "Are you going to have any more?"  I always avoided a definite answer.  But now I'm pleased to announce that my... MORE

What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
Moonwalking with Einstein by Joshua Foer. It is about a year that he spent honing his memory sufficiently to win the U.S. memory championships. Most of the book is about memory and its relationship, if any, to intelligence. He never... MORE

David Friedman on Consensual Government

Political Economy
Arnold Kling
Speaking at the Cato Institute, David Friedman breezed through a number of deep issues concerning the nature of government. The talk itself is only 30 minutes, but you might have to listen multiple times. I was planning to attend, but... MORE

Greenspan on Dodd-Frank: Start Over

Finance
David Henderson
As I noted yesterday, in his Friday talk at the Hoover Institution, Alan Greenspan advocated two policies. The second is to scrap the Dodd-Frank financial regulation law and start over. The law, said Greenspan, "is unimplementable." He went on to... MORE

Greenspan: Let Them In

Labor Mobility, Immigration, Outsourcing
David Henderson
Alan Greenspan, along with George Shultz and John Cochrane, gave short speeches at a Hoover lunch yesterday and took questions and answers. All the speeches were good: Cochrane's was outstanding. I'll be posting in the next day or two, mainly... MORE

The PSST Just-So Story

Arnold Kling
I will put this below the fold. It is from an essay that I am drafting.... MORE

Comments on Eurozone Solutions

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen writes, When it comes to debt, the periphery countries simply don't want to pay up. Their national wealth is many times their gdp and thus much much greater than their debts, even for Greece. It's amazing how many... MORE

Seth Roberts on Education and Evaluation

Economics and Culture
Bryan Caplan
Seth Roberts has an interesting response to "The Magic of Education" - that I don't go far enough:Professors are terrible at evaluation. Their method of judging student work is very simple: How close is it to what I would have... MORE

Mankiw: We Need Fiscal Hawks, Monetary Doves

Macroeconomics
Arnold Kling
He writes, If I understand the news coming out of Europe correctly, the new head of the European Central Bank is offering a simple deal: If fiscal policy becomes hawkish, monetary policy will be dovish. In other words, as government... MORE

Are These Recessions All the Same?

Labor Market
Arnold Kling
Here are some data on job losses in each recession since 1970 (I grouped together the two recessions in 1980-1982). I look at total losses in nonfarm payroll employment and losses in employment in the durable goods sector. The figures... MORE

Hail IJ: Bone Marrow Sales Are Now Legal

Economics of Health Care
Bryan Caplan
Back in June Robert McNamara of the Institute for Justice told me about their battle to legalize bone marrow sales.  Just six months later, it looks like they've won.  Despite the text of NOTA (the National Organ Transplant Act), the... MORE

Thinking About CEO Pay

Business Economics
Arnold Kling
Tyler Cowen writes, Keep in mind that we are already juggling a few margins here, including "getting this CEO to work harder or better" and "this CEO vs. another." Read the whole thing, as well as his previous post. Some... MORE

Tabarrok's Roadmap Out of the Slight Stagnation

Books: Reviews and Suggested Readings
Bryan Caplan
Alex Tabarrok's gem of an e-book, Launching the Innovation Renaissance, releases today.  It's a TED book, but don't mistake it for a mere transcription of a TED talk.  It's an original and powerful work of popular scholarship that aims to... MORE

Betty Friedman Nails It

Politics and Economics
David Henderson
"People talk about Main Street vs Wall Street. It should be Main Street vs the Beltway." David Friedman's latest post is so to the point that I'll simply quote the whole thing: Reading Google News this morning, I noticed a... MORE

John Goodman on the Health Care Olympics

Economics of Health Care
Arnold Kling
I refer to the attempt to measure national health care efficiency by comparing outcomes to expenditures as the international health care Olympics. The conventional wisdom is that the U.S. does poorly. John Goodman disagrees. On spending, he writes, the U.S.... MORE

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