Bryan Caplan and David Henderson

April 2012

A Monthly Archive (109 entries)

Peter Thiel on the Founding of Companies

Business Economics
Arnold Kling
He is quoted saying, one factor dominates all others. That factor is whether the founders are aligned with each other. This is key both in terms of structure and company culture. If the founders are in sync, you can move... MORE

The Bottom One Percent

Income Distribution
David Henderson
I gave a short talk yesterday at a mixer of the Monterey County Libertarian Party, Libertarians for Peace, and Seaside Taxpayers' Association. I always try to come up wth something a little new that I haven't said before, so I... MORE

Garett Jones Blogs

Central Planning vs. Local Knowledge
Arnold Kling
He is one of my favorite economists. He is only guest-blogging now, for Megan McArdle. I had stopped reading her blog while others were substituting, but Garett is a must-read. Still, his posts could use a bit of refinement, which... MORE

My Thoughts on Technology and Government

Economic History
Arnold Kling
Thanks to Bryan for highlighting and hosting Tyler Cowen's paper. My thoughts: 1. For a long time, I've thought that the technologies of the industrial revolution favored centralization, while the technologies of the information revolution shift the balance somewhat more... MORE

Jason Brennan replies to the critics of bleeding-heart libertarianism, most notably David Friedman.  David feels like he's nailing jelly to a wall:My complaint about the BHL, as may be obvious from the exchanges now going on, is that they insist... MORE

David Friedman on Bleeding Heart Libertarianism

Economic Philosophy
David Henderson
Sometimes a comment on Econlog is so valuable that I think it needs to be highlighted. Most of the people I talk to who read this site regularly but who don't comment, don't read others' comments either. They would miss,... MORE

The Fissaparous Libertarians

Business Economics
Arnold Kling
Look up fissaparous in the dictionary and you will find Inclined to cause or undergo division into separate parts or groups. You will also find a picture of the libertarian movement. 1. At the first Mont Pelerin Society meeting, Mises... MORE

Highlights from "Does Technology Drive the Growth of Government?"

Behavioral Economics and Rationality
Bryan Caplan
Thanks to the half dozen people who sent me copies of Cowen's "Does Technology Drive the Growth of Government?"  The paper's even better than I remember.  Highlights:The puzzle, courtesy of the great Tullock:I start with what Gordon Tullock (1994) has... MORE

A Better Analogy for David Friedman

Public Choice Theory
David Henderson
Motorcycles, not Cars Yesterday, in my Cost/Benefit Analysis course, I covered the highlights of public choice. One of the pieces I like to use is a short chapter from David Friedman's modern classic, The Machinery of Freedom. The chapter is... MORE

Bernanke: Turning Japanese

Monetary Policy
David Henderson
So Bernanke responds that he is being consistent because in Japan there was deflation whereas currently there is none. But as Ryan Avent notes, his research on Japan was about more than deflation--it was about a shortage of aggregate demand.... MORE

Conversation with Ben Casnocha

Business Economics
Arnold Kling
We talked last week, about the book he co-wrote with Reid Hoffman, The Start-up of You. I reviewed it a couple months ago. Since there were just the two of us, you may prefer a podcast. Last time I posted... MORE

"Does Technology Drive the Growth of Government?" Bleg

Books: Reviews and Suggested Readings
Bryan Caplan
"Does Technology Drive the Growth of Government?" is one of my favorite Tyler Cowen papers.  It's on my graduate Public Choice syllabus.  Unfortunately, it has strangely disappeared from the Internet - and Tyler himself can't easily locate the paper.  If... MORE

Matt Mitchell at Mercatus posted an excellent post on this this a.m. I could try to summarize but Matt is a heck of [that's my inner John Madden talking] a writer: both terse and complete. So I won't bother. I'll... MORE

Consumer Surplus: Slam-Dunk Example

Economic Education
David Henderson
I was going over consumer surplus in my class on Tuesday and a student gave me a fresh example that he had learned from his economics professor as an undergrad at the U.S. Naval Academy. Here it is. You go... MORE

The New Geography of Jobs

Books: Reviews and Suggested Readings
Arnold Kling
That is the new book (due out May 5) by Enrico Moretti. My review can be summed up as: Wow. In a very competitive 2012 book market, this vaults to number two on my list (The Righteous Mind is still... MORE

Feeling the Haidt

Books: Reviews and Suggested Readings
Arnold Kling
In this long essay, I write I examine the problem of moral reasoning and offer three proposals for mitigating its damaging effects. The first is to take opposing points of view at face value, rather than attempt to analyze them... MORE

Off Topic, But

Growth: Consequences
Arnold Kling
Last time I did any computer programming, it was using a text editor. So I was really blown away by App Inventor for Android, which is a visual programming environment. Is that pretty standard now? Is there something similar for... MORE

Is Bleeding-Heart Libertarianism Evil?

Economic Philosophy
Bryan Caplan
Todd Seavey's awfully unhappy about the rise of bleeding-heart libertarianism.  He begins by describing his recent experience with bleeding-heart non-libertarians:I saw a lecture by (charming, charismatic, funny) Brown professor of Africana studies Tricia Rose last night, and it was a... MORE

The Virtues of Price Discrimination

Microeconomics
Arnold Kling
Jeff Ely writes, the winners and losers from an auction system aren't who you think. Auctions don't favor the deep-pocketed compared to the small guys. Exactly the opposite. The marginal consumer is priced out of the market when a seller... MORE

The Argument from Hypocrisy

Economic Philosophy
Bryan Caplan
I think Will Wilkinson failed to understand Matt Zwolinski's argument about the significance of the miniscule level of voluntary donations to the U.S. government.  But this is also an ideal time to defend a related, underrated argument.  I call it... MORE

Economists on Health-Care Licensing

Economics of Health Care
David Henderson
Milton Friedman triumphs, kind of. Loosening current licensing restrictions on the range of services that nurses, physician assistants, dental hygienists and pharmacists are permitted to perform would help patients on balance, because the additional safety risks would be small compared... MORE

Helping Mortgage Borrowers, Revisited

Finance: stocks, options, etc.
Arnold Kling
Timothy Taylor takes the wrong side of this issue. it seems to me that a modest share of the trillions in federal borrowing in the last few years, along with the trillions of assets that the Federal Reserve has accumulated... MORE

Calvin Coolidge Channels Lysander Spooner

Economic History
Bryan Caplan
Matt Yglesias amusingly mocked Calvin Coolidge's note cards in this video, but the actual speech is remarkable.  The President of the United States sounds only two or three steps short of Lysander Spooner:Taxes take from everyone a part of his... MORE

Why Are Donations to Government So Small?

Economic Philosophy
Bryan Caplan
My new baby has delayed my intended post on the Matt Zwolinski-Will Wilkinson debate, but late is better than never.  Matt kicked it off:[W]hile government is, in principle, able to do some good, there are very often (almost always?) superior... MORE

Scandlen on Individual Insurance

Economics of Health Care
David Henderson
Greg Scandlen has an interesting post today on the market for individual insurance. Many of the comments are informative also. Some highlights: According to a recent report by Milliman, based on new reporting by carriers required by the National Association... MORE

Alternative to Charles Murray

Income Distribution
Arnold Kling
Bo Winegard and Ben Winegard write, A thirtysomething Wal-Mart cashier cannot reasonably expect that his hard work will be rewarded with consistent raises and promotions, terminating, perhaps, in a solid management job. Thus the new lower class is deprived of... MORE

Voluntary Taxes and the Relevant Margin

Political Economy
Arnold Kling
Will Wilkinson writes, Suppose I'm a utilitarian convinced that human consumption of meat causes a huge amount of animal suffering. And suppose I love meat, and giving it up would leave me worse off. I would happily comply with a... MORE

John Cochrane on Taxes

Taxation
David Henderson
Now wait a minute here...The top graph is a tax rate, the percentage of income paid, while the bottom graph is total dollars. To say this is comparing apples and oranges is an insult to fruits. This is one of... MORE

Why Take Yoga Classes?

Economics of Education
Arnold Kling
Matt Yglesias poses the question. It would clearly be cheaper and more convenient to just unroll your yoga mat in your living room and work out while watching yoga videos. The answer that pops into my head is "pre-commitment." When... MORE

Monetary Policy: Giving vs. Buying Redux

Monetary Policy
David Henderson
The Fed doesn't expand the money supply by uniformly dropping cash from helicopters over the hapless masses. Rather, it directs capital transfers to the largest banks (whether by overpaying them for their financial assets or by lending to them on... MORE

Self-Recommending could-have-been

Books: Reviews and Suggested Readings
Arnold Kling
Concerning Paul Seabright's War of the Sexes, Tyler Cowen writes, Paul is a splendid writer and thinker, and of course this is a topic of importance. That is almost word-for-word Tyler's definition of self-recommending. A subset of self-recommending books are... MORE

Ideas Have Consequences, Valeria Edition

Family Economics
Bryan Caplan
Valeria Jacqueline Caplan, my first daughter, my fourth child, was born one day early yesterday.  Baby and mother are both doing very well.  As usual, I welcome my child's birth with a reading from the book of Julian Simon:One spring... MORE

Blinder on Health Care

Economics of Health Care
David Henderson
Alan Blinder, in today's Wall Street Journal, has an interesting piece attacking Supreme Court judges who would actually seriously consider finding the recent health care law unconstitutional. It's titled, "Life Liberty, and the Pursuit of Insurance." There are so many... MORE

Peter Thiel on Business

Business Economics
Arnold Kling
Blake Masters took notes. Tyler Cowen linked to them. I recommend them.... MORE

Robin Channels Epicurus

Family Economics
Bryan Caplan
The great Epicurus:Yet much worse still is the man who says it is good not to be born, but "once born make haste to pass the gates of Death." [Theognis, 427]  For if he says this from conviction why does... MORE

Watch Your Ratios

Finance: stocks, options, etc.
Arnold Kling
Timothy Taylor writes, The horizontal axis shows total assets of banks as a share of the economy of their home country. The four largest U.S. banks by assets are JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. The vertical... MORE

In Person

Upcoming Events
Arnold Kling
I will be speaking about GSE reform at this event at noon on May 2, close to Capitol Hill. I also am looking into travel to California (Bay Area) first or second week of June.... MORE

Illustrated Primer Watch

Economics of Education
Arnold Kling
Tyler Cowen points to this article on a study of automated essay-grading. "The results demonstrated that over all, automated essay scoring was capable of producing scores similar to human scores for extended-response writing items," the Akron researchers write, "with equal... MORE

I've been trying to figure out what marginal tax rates would be if the so-called "Buffett Rule" were passed. There's an actual Senate bill out there but, as with almost all bills, you have to look at previous law--and know... MORE

Interest Rates: The Strange Interlude

Macroeconomics
Arnold Kling
Russ Roberts pointed me to an essay from last year, by Edmund Phelps. The bond market will see that, in the long run, the pile-up of government debt - and any pile-up of entitlements - will make things much worse... MORE

How "Ethically Risky" Is Creating a Life?

Economic Philosophy
Bryan Caplan
Today I appeared on Anthony Brooks' NPR show to discuss the ethics of having kids (audio now up).  Philosopher Christine Overall, my sparring partner, emphasized that having a child is "ethically risky."  Who knows what this child's life will be... MORE

What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
Imagine: How Creativity Works, by Jonah Lehrer. The worst thing I can say about it is that it seems to promise too much. That is, it seems to suggest that neuroscience has made great strides in understanding creativity. More like... MORE

Robin Hanson reports on a popular article based on a paper by law and economics professors Eric Posner and Glen Weyl in which they advocate a kind of Food and Drug Administration for financial instruments. The paper is titled "An... MORE

The Crisis Response Worked Wonderfully

Finance: stocks, options, etc.
Arnold Kling
So says the Treasury. Below is the chart that proclaims that lending markets were unclogged. Pointer from the indispensable Mark Thoma. A few curmudgeonly remarks: 1. The indicator is the percentage of banks reporting easing or tightening of lending standards.... MORE

To repeat:The "Catholic" approach has extremely high moral standards (e.g. Be celibate; give everything you have to the poor; love everyone), but enforces them loosely.The "Protestant" approach has moderate moral standards (e.g. Don't commit adultery; prudently give to the deserving... MORE

Libertarian Schisms

Political Economy
Arnold Kling
At Cato Unbound, Roderick Long defends Rothbard, Rand, and Mises against charges of absolutism. Daniel Klein expresses his disagreement with Mises and Rothbard. I am keen on liberty as a central principle and analytic fulcrum, and I depend deeply on... MORE

"Catholic" versus "Protestant" Ethics

Economic Philosophy
Bryan Caplan
I've often heard people distinguish between two distinct ethical outlooks.  They usually call them the "Catholic" approach and the "Protestant" approach, but the distinction has little to do with theology.  Instead:The "Catholic" approach has extremely high moral standards (e.g. Be... MORE

Model Forecasting Performance

Macroeconomics
Arnold Kling
Mark Thoma has the story, from Volker Wieland and Maik Wolters. Basically, the forecasts made in the latter part of 2008 failed to anticipate the severity of the recession. Here are some implications that come to mind: 1. The mainstream... MORE

Educational Counter-Signaling Bleg

Economics and Culture
Bryan Caplan
How successful does someone have to be before he starts bragging, "I never finished college" or "I never went to college?"  Gates and Zuckerberg are clearly there.  How much lower down the ladder of success must you go before such... MORE

From the weekend's op-ed pages

Political Economy
Arnold Kling
1. Ross Douthat speculates that technological advances could change us from civil societarians to meek subjects of an all-powerful state. 2. Chris Mooney talks about personality traits as determinants of ideology. I think that many people will walk away from... MORE

Robert Caro's Hands-On Discovery of Public Choice

Books: Reviews and Suggested Readings
David Henderson
Caro had a further epiphany about power in the early '60s. He had moved on to Newsday by then, where he discovered that he had a knack for investigative reporting, and was assigned to look into a plan by Robert... MORE

New Thinking in Macroeconomics

Macroeconomics
Arnold Kling
The latest essay in my "million mutinies" series says, For mainstream economists, the financial crisis has produced a new intuitive model of the economy which has yet to be articulated in any formal theory. Of course, I do not believe... MORE

Signaling Versus Educational Innovation

Economics of Education
Bryan Caplan
Tyler wants to use my little signaling model to predict the future of online education.  At risk of looking a gift horse in the mouth, I'm afraid a much richer model is required to address Tyler's question.  In the interest... MORE

Ron Bailey on Confirmation Bias

Behavioral Economics and Rationality
Arnold Kling
He wrote, Egalitarian/Communitarians, who are always eager to rein in what they regard as the unjust excesses of technological progress and commerce, see carbon rationing as an effective tool to achieve that goal. Not surprisingly, Hierarchical/Individualists are highly suspicious when... MORE

Stating The Problem: First Attempt

Economics of Education
Arnold Kling
Sebastian Thrun has one scenario. In 50 years, he says, there will be only 10 institutions in the world delivering higher education I do not think that there will be institutions as we think of them. I think that in... MORE

Cowen on College Subsidies

Economics of Education
David Henderson
Tyler Cowen's latest blog post is rich with assertions. This one stood out: Postwar higher education has proven one of America's most effective subsidies, and it has paid for itself many times over. Consider the phrase "many times over." To... MORE

James Surowiecki on Medical Tourism

Economics of Health Care
Arnold Kling
He writes, In addition to exporting patients, we could import doctors. Politically speaking, of course, this all seems improbable, because the medical industry is a powerful lobby and uninterested in competition. But the reality is that, unless we find some... MORE

The Psychology of Theft

Books: Reviews and Suggested Readings
David Henderson
One of my favorite passages from a novel, Assault on a Queen, seems a propos on the weekend during which a lot of people are doing their taxes. For those of you who haven't read it, it's about a small... MORE

Questions at a Conference on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
Mark Thoma links to a conference at the Princeton club, taking place as I write this. I have skimmed the papers, and they raise interesting questions. Foote, Girardi, and Willen ask whether, given expectations for ever-rising house prices, the institutional... MORE

My New Hero and New Villain

Finance: stocks, options, etc.
Arnold Kling
The hero is Edward J. DeMarco, the acting regulator of Freddie and Fannie, who has tried to resist pressure for principal reduction on mortgages. For example, Annie Lowrey reports, Mr. DeMarco warned that allowing principal reduction might encourage some homeowners... MORE

The Intellectual Danger of Label-Avoidism

Behavioral Economics and Rationality
Bryan Caplan
In my defense of labels, I claimed that, "Will's implicit label is "label-avoidism."  Adam Ozimek at Modeled Behavior explains the unique intellectual dangers of this label:[T]o define oneself as, for example, "of no party or clique", as Andrew Sullivan does,... MORE

Intellectual Ability and Educational Difficulty

Economics of Education
Bryan Caplan
Eli has a good comment on my signaling model with changing intellectual ability: The math seems right, but I don't understand why you would assume that K is constant. It should be an increasing function of A, no? My intuition... MORE

Not Necessarily Bad News

Labor Market
Arnold Kling
Mark Thoma reports, The US Has the Highest Share of Employees in Low Wage Work Check out his chart, which shows that other OECD countries have a smaller share of employees doing low-wage work. This seems like bad news for... MORE

Is Rising Education a Symptom of Progress?

Economics of Education
Bryan Caplan
Workers in some countries are a lot more productive than workers in other countries.  One of the main differences is that people in more productive countries have more education.  When we hear that education in a country is going up,... MORE

The Ten Pillars of Economic Wisdom

Economic Education
David Henderson
A few times I've referred to "The Ten Pillars of Economic Wisdom" that I teach at the start of every economics course I give. I've usually linked to someone's restatement of them from my book, The Joy of Freedom: An... MORE

Economic Activity, Outsourcing and Cities

Labor Mobility, Immigration, Outsourcing
Arnold Kling
Alex Tabarrok writes, I was surprised at how close the association is between state level GDP and the urbanization rate GDP measures economic activity. Economic activity is outsourcing. If my daughter does her own laundry, her work does not get... MORE

Are Political Labels Uniquely IQ-Draining?

Economic Philosophy
Bryan Caplan
Will Wilkinson replies to my defense of labels against his attack:Bryan has sort of wrongly inferred that my aversion to specifically political labels flows from a much more general aversion to naming one's convictions. At the limit, Bryan makes it... MORE

My Review of Groseclose's Left Turn

Books: Reviews and Suggested Readings
David Henderson
Virtually all of us who identify ourselves as libertarians or conservatives (I'm the former) have believed, for as long as we have been paying attention, that the mainstream media, whether print or electronic, have a left-wing bias. The late columnist... MORE

Confidently Uncertain

Finance: stocks, options, etc.
Arnold Kling
The latest IGM forum question asks renowned economists to guess whether, prior to the crisis, Freddie and Fannie passed many benefits through to mortgage borrowers. The economists are also asked to rate their confidence in their answers, on a scale... MORE

The Liquidity Crisis Story

Finance: stocks, options, etc.
Arnold Kling
It keeps coming up. Mark Thoma points to Perry Mehrling, who invokes Fischer Black but also cites his own paper. A market-based credit system, however, relies on market liquidity and hence ultimately on dealer of last resort to ensure the... MORE

In Vino Hateful Ranting?

Behavioral Economics and Rationality
Bryan Caplan
I never heard of John Derbyshire until a few days ago, but The Nation's inventory of his earlier controversies got my attention.  The most interesting: The Nation accuses Derbyshire of "defending Mel Gibson's racist comments."  A more accurate summary is... MORE

Concentrated vs. Dispersed Interests

Public Choice Theory
David Henderson
From my former student, Michael Williams: What I am wondering, or maybe proposing, is that as communications become easier and require less effort (i.e. writing an email as opposed to writing a letter) and information becomes easier to access will... MORE

Private-Sector Urban Renewal

Political Economy
Arnold Kling
from Ikea. The Globe and Mail reports Where once they placed a couch in a living room, the Swedes now want to place you and 6,000 neighbours into a neglected corner of your city, design an entire urban world around... MORE

The 2012 Vote That Really Matters

Politics and Economics
Bryan Caplan
A tempting speculation: The Supreme Court's vote on Obamacare will have larger effects on policy than the American public's vote on the presidency.  My thinking: If Obama wins, there will be divided government, and if Romney wins, he'll be too... MORE

The Wise Pluralism of David Friedman

Economic Philosophy
Bryan Caplan
This month's Cato Unbound discusses Matt Zwolinski and John Tomasi's "Bleeding Heart History of Libertarianism."  David Friedman's response is good enough to make me see utilitarianism in a more favorable light.  Friedman agrees with Zwolinski and Tomasi that pre-20th-century libertarians... MORE

Tyler Cowen on Stories

Behavioral Economics and Rationality
David Henderson
Commenter Ken B's positive comment on Tyler Cowen's TED talk motivated me to watch the whole thing. I agree that it's excellent. The talk is about 15 minutes long and moves along at a good pace. The basic message: don't... MORE

I Doubt the Business Model

Business Economics
Arnold Kling
Tech Crunch reports, Benchmark Capital made its largest seed investment to date -- $25 million -- in a startup/university called The Minerva Project. Pointer from Tyler Cowen. Jordan Weissmann also has coverage. The goal seems to be to compete with... MORE

Consistency and IQ

IQ in Economics
David Henderson
Bryan Caplan's latest post is a great response to some assertions made by Will Wilkinson and Tyler Cowen. When Michael Kinsley was writing regularly for The New Republic during the first Bush administration, he was brilliant. He usually attacked Bush... MORE

Do Labels and Good-versus-Evil Stories Drain IQ?

Behavioral Economics and Rationality
Bryan Caplan
I'm a libertarian, a natalist, an atheist, a credentialist, an economist, an optimist, a behavioral economist, an elitist, a public choicer, a dualist, a Szaszian, a moral realist, an anti-communist, a pacifist, a hereditarian, a Masonomist, a moral intuitionist, a... MORE

Should Medicare Be Cut?

Economics of Health Care
David Henderson
One of the things that I thought I had in common with my free-market allies was our views on Medicare. But some postings from some friends on Facebook (and, because it's FB, I will respect their privacy and not name... MORE

Gains from Exchange

Labor Market
David Henderson
One of the most powerful principles in economics, so powerful that I list it in my "Ten Pillars of Economic Wisdom," is that both sides gain from exchange. This helps resolve the issue stated by commenter "harold" on this earlier... MORE

This is Your Mind on Politics

Behavioral Economics and Rationality
Arnold Kling
Will Wilkinson writes, It turns out politics not only makes us stupid. It also makes us callous. He cites a study showing that we are less likely to project our own feelings on those with whom we have political disagreements.... MORE

Britain in the 1840s

Economic History
Arnold Kling
Andrew Odlyzko sees parallels with the U.S. today. Britain managed its huge national debt by relying on debt instruments ("consols" and similar bonds) that were perpetual yet callable. That meant that sudden spikes in interest rates, associated with wars or... MORE

Mainstream Views of School Vouchers

Economics of Education
Arnold Kling
The economists were asked about the statement The main drawback to allowing all public school students to take the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could... MORE

Unbroken--and the Bomb

Central Planning vs. Local Knowledge
David Henderson
Like co-blogger Arnold, I'm a big fan of Lauren Hillenbrand's book, Unbroken. I highly recommend it. I was shocked and disappointed, though, by the following statement from Arnold: When the inevitable movie arrives, it will be interesting to see whether... MORE

What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
1. Unbroken, the story of Louis Zamperini, an American airman who was shot down, captured, and tortured by the Japanese during the second World War. It was written by Laura Hillenbrand, the impairment-fighting author of Seabiscuit, and it is at... MORE

Check Your Base

Economic Methods
David Henderson
In our book, Making Great Decisions in Business and Life, my co-author, Charles Hooper, and I have a chapter titled, "Biases Affect the Best of Us." I thought of one section of that chapter when I read co-blogger Arnold Kling's... MORE

Obama is a Social Darwinist

Behavioral Economics and Rationality
David Henderson
President Obama recently called a House Republican budget plan "thinly veiled social Darwinism." This, incidentally, from a man whose own budget plan was voted down last week in the House by a vote of 0-414. (The vote was on a... MORE

Passover Thoughts

Political Economy
Arnold Kling
Robert Higgs writes, I have been struck repeatedly by a certain fact about episodes of sudden or extraordinary expansion of the state: when push came to shove, those who resisted--often to the death--tended to be people of faith. In U.S.... MORE

Local Knowledge in Monterey

Central Planning vs. Local Knowledge
David Henderson
As regular readers of my blog posts know, I'm a big fan of Friedrich Hayek's insight about "knowledge of the particular circumstances of time and place," or what more-modern economists, applying his insight, often call "local knowledge." The basic idea... MORE

Face-Saving and the Business Cycle

Macroeconomics
Arnold Kling
From a new paper by Steven R. Grenadier, Andrey Malenko, and Ilya A. Strabulaev. When decision makers face the unappealing task of revealing unsuccessful outcomes that impact their reputations, delay may be their first instinct.1 Delay becomes even more enticing... MORE

Econ Bloggers in Kansas City

Fiscal Policy
Arnold Kling
Videos here. Panel 2, on the budget, includes Ezra Klein. He argues that the budget is, in the grand scheme of things, not such an important problem. I would agree that in the universe of problems, others are worse: unemployment,... MORE

Political Economy of the Zero Bound?

Politics and Economics
Arnold Kling
Tyler Cowen offers a theory. The greater the number of protected service sector jobs in an economy, the more likely those citizens will oppose inflation. Inflation brings the potential to lower real wages, possibly for good. The wages that are... MORE

I Was a Chinese Laborer

Labor Market
David Henderson
FLA [Fair Labor Association] found that during some periods over the past 12 months, workers at all three facilities worked an average of more than 60 hours per week, exceeding the FLA code and Apple's own standard. The audits found... MORE

The New Yorker on the Ethics of Fertility

Family Economics
Bryan Caplan
Elizabeth Kolbert has a fun piece on the ethics of fertility, featuring Christine Overall, David Benatar, and me.Kolbert on Overall:Of course, people do give reasons for having children, and Overall takes them up one by one. Consider the claim that... MORE

Introduction to Microethics

Economic Philosophy
Bryan Caplan
When they teach their subject, economists almost always start with microeconomics.  Why?  Because it's easier to reach clear-cut answers when you start small.  Once you know what you're talking about, you can build on it.  When economists can't give their... MORE

1. As Mark Thoma points out, for individual workers in given jobs, nominal wages are sticky downward. 2. As Pedro Silos and Lei Fang point out, workers who change jobs after being unemployed during a recession tend to take lower... MORE

What I'm Reading

Books: Reviews and Suggested Readings
Arnold Kling
The Coming Prosperity, by Philip E. Auerswald. Never before have more people had a greater opportunity to create value for society, and for themselves, than we do today. New technologies of communication and collaboration are enabling not just lone innovators,... MORE

A Guide to Budget Rhetoric

Politics and Economics
Arnold Kling
Because the budget is so far from being sustainable, budget rhetoric needs to be re-interpreted. When their side refuses to cut spending because it would be "cruel," they are ensuring that future spending cuts will be even crueler. When our... MORE

Should restaurants allow smoking or not? Should schools teach evolution or intelligent design or both? Should insurance companies cover contraception? Should I be able to take off my shoes in your living room? This is the opening paragraph of the... MORE

The Idea Factory

Books: Reviews and Suggested Readings
Arnold Kling
It is a book about the great discoveries made at Bell Labs. The author is Jon Gertner, and I read it on Tyler Cowen's recommendation. It is definitely worth reading, although not in the elite class of new books. It... MORE

Cities and Governance

Political Economy
Arnold Kling
Esther Dyson writes, Most cities evolved blindly, and have ended up semi-workable, whereas a city that is started from scratch can, in theory, benefit from intelligent design. But, even with long-term investors, to build a viable city at scale nowadays... MORE

Tyler Cowen on America's Future

Growth: Consequences
Arnold Kling
He writes, the static sector consists of the protected services (a big chunk of health care, education and government jobs), and the dynamic sector is heavily represented in U.S. exports, often consisting of goods and services rooted in tech, connected... MORE

Weighing the Coerciveness of Marital Law

Economic Philosophy
Bryan Caplan
I've been having an extended Twitter discussion about the history of women's liberty with Cato's Jason Kuznicki (@JasonKuznicki), the Atlantic's Megan McArdle (@asymmetricinfo), and others.  I find some of the issues hard to address in 140 characters, so I'm moving... MORE

Of NWW and Fukuyama

Books: Reviews and Suggested Readings
Arnold Kling
Here is my comparison of North-Weingast-Wallis with Fukuyama. Neither book makes one optimistic about the near-term prospects for seeing liberal democracies emerge out of the "Arab Spring." Instead, they suggest that sudden revolution from below is not the route to... MORE

Evolution and Economics

Behavioral Economics and Rationality
Arnold Kling
Jason Collins offers a reading list. I have read most of the books but few of the articles. I will want to pursue the articles.... MORE

All-Volunteer Matrimony

Economic Philosophy
Bryan Caplan
The end of the draft is arguably the greatest policy success of libertarian economics.  Libertarians still have plenty of complaints about the U.S. military.  But libertarian complaints about the way the military treats its manpower have virtually ceased.  It's an... MORE

Happy April Fools Day

Economic Methods
Arnold Kling
Unfortunately, this story came out on March 28th, and it is not a joke. During a decade as head of global cancer research at Amgen, C. Glenn Begley identified 53 "landmark" publications -- papers in top journals, from reputable labs... MORE

My Tribute to Bill Niskanen

Books: Reviews and Suggested Readings
David Henderson
The latest issue of Regulation contains a special section of tributes to the late Bill Niskanen. Scroll down for mine, which is the last. A few excerpts: The main, though not the only, way that I'll show my respect for... MORE

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