Bryan Caplan and David Henderson

August 2012

A Monthly Archive (84 entries)

"You Didn't Build That"

Human Capital: Returns to entrepreneurs, skills, etc.
David Henderson
I just read the best thing I've read so far on Obama's now-famous line, "You didn't build that." It's by Rachael Larimore, the managing editor of Slate. I recommend that you read the whole thing. I think she's put her... MORE

Why Do Slaves Cost Money?

Economic History
Bryan Caplan
I'm currently revising my notes for labor economics.  Main change: I'm cutting the week on slavery to add a full week on immigration.  It's a tough choice because I'm so fond of my slavery lectures.  But on reflection, the topic... MORE

Conard on Trade and the Trade Deficit

International Trade
David Henderson
I'm working on a book review of Edward Conard's book, Unintended Consequences. I'm over half way through the book and, although there are a few cryptic passages, when he's good, he's very, very good. And he's often good. I hate... MORE

Indian Fertility: A Bet With John Nye

Energy, Environment, Resources
Bryan Caplan
I think that bad economic policy, not "overpopulation," is India's main economic problem.  But whatever you think about the social effects of population growth, it's clear that Indian fertility is sharply declining.  I expect this rapid decline to continue, but... MORE

DeLong vs. Feldstein on Romney Tax Cuts

Taxation
David Henderson
I know that there are not a lot of Brad DeLong fans who read this blog. I'm not one either. But when someone gives a good analysis, I tip my hat. If I understand the analysis of Marty Feldstein (my... MORE

Thoughts on Dickens

Economic Philosophy
David Henderson
Bill, that is, not Charles. Both co-blogger Bryan (here) and many of his commenters (here and here) have done a nice job of handling Bill Dickens' major criticisms of Bryan's views on poverty and the poor. I have a few... MORE

Reply to Bill Dickens on Poverty: Part 1

Behavioral Economics and Rationality
Bryan Caplan
Since Bill Dickens' last reply to me is essay-length, my plan is to write a series of relatively short replies, and spread them out over the next month.  Here's Part 1.  By default, Bill's in blockquotes, I'm not.You subscribe to... MORE

Household Incomes Declined During Recovery

Income Distribution
David Henderson
My guess is that many readers have already seen the articles and blog posts about the study of household incomes done by a firm named Sentier Research. Here's a sample post. The study shows that real median household income declined... MORE

Optimizing Your Family Size in Real Time

Cost-benefit Analysis
Bryan Caplan
Someone recently asked me, "How should you decide how many kids to have?"  Since he'd already read Selfish Reasons to Have More Kids, I thought he deserved a detailed step-by-step answer.  Here's roughly what I told him:Having kids is very... MORE

Discrimination, Liberty, and the Sorites Paradox

Economic Philosophy
Bryan Caplan
The Sorites Paradox works in two directions.Top-down: 1,000,000 grains of sand is a heap of sand; a heap of sand minus one grain is still a heap; therefore one or grain of sand (or zero!) is a heap of sand.Bottom-up:... MORE

Bill Dickens Responds on Poverty

Behavioral Economics and Rationality
Bryan Caplan
A few weeks ago Bill Dickens and I argued about poverty: see here and here for previous rounds.  Now Bill's written a lengthy response to my last post.  Italics indicate that Bill's quoting me.  Enjoy! Normal 0 MicrosoftInternetExplorer4 /* Style... MORE

Gains from Exchange

Economic Education
David Henderson
Last month I received this e-mail from a student I taught in the Spring quarter at the Naval Postgraduate School: Today my [deleted so as not to identify the instructor] instructor pointed out that there was a transfer of wealth... MORE

U.S. Federal Budget Cuts in the 1990s

Fiscal Policy
David Henderson
The Untold Story that Needs to Be Told I've referred on this blog a number of times to "Canada's Budget Triumph," my 2010 study for Mercatus on the successful budget cuts the Canadian government undertook from 1994 to the early... MORE

Eubulides, Wilkinson, and Discrimination

Economic Philosophy
Bryan Caplan
Eubulides of Miletus is best-known for the Sorites paradox:The paradox goes as follows: consider a heap of sand from which grains are individually removed. One might construct the argument, using premises, as follows: 1,000,000 grains of sand is a heap... MORE

The Auto Boom: Healthier Economy or CAFE?

Regulation
David Henderson
In a post yesterday, Mark J. Perry writes: Based on new vehicle sales during the first 16 selling days of this month, J.D. Power and Associates is predicting sales during the full month of August to increase by 20% over... MORE

When I talk about my work for Mercatus on the post-World War II economic boom, one of the responses I often get is that a major reason is the fact that European economies were devastated and, therefore, the U.S. economy... MORE

My Last Post

Econlog Administrative Issues
Arnold Kling
Sorry for being abrupt, but this is something I have been thinking about for months. In the future, I plan to do my writing in essay format. As far as blogging goes, I am opting for exit rather than voice,... MORE

Changing the Corporate Form of Organization

Political Economy
Arnold Kling
Concerning U.S. corporate law, Kent Greenfield writes, Compare this to the European model of corporate governance, which requires much more robust social obligation on the part of corporations, embodied not only in cultural norms but also in law. The duty... MORE

Hardline Libertarians?

Political Economy
Arnold Kling
Daron Acemoglu and James Robinson write, Central planning maximizes the extent of control that the state, and the people running the state, exercise. The desire to control others is a constant in history and is part and parcel of the... MORE

Goolsbee on Romney's Tax and Budget Plans

Fiscal Policy
David Henderson
Hard to know, then, if the wider public noticed the spat over a nonpartisan budget think tank's finding that for Mitt Romney's tax plan to avoid increasing the deficit, it would need to raise taxes significantly on the middle class.... MORE

The book club starts today, with future segments every two weeks.  Breakdown:Part #1: Malcolm's Childhood and Entry-Level Jobs (Chapters 1-5)Part #2: Malcolm's Life of Crime (Chapters 6-10)Part #3: Malcolm and the Nation of Islam (Chapters 11-15)Part #4: Malcolm's Purge, Second... MORE

Lee Ohanian on the Great Recession

Macroeconomics
Arnold Kling
He talks with Russ Roberts. A few excerpts: typically in U.S. business cycles, productivity, measured either as total factor productivity or labor productivity--output per hour or output per worker--typically falls significantly during substantial recessions such as those in the 1970s... MORE

Jenkins on CAFE and GM

Regulation
David Henderson
Holman Jenkins has hit a home run with his analysis in today's Wall Street Journal of the CAFE (Corporate Average Fuel Economy) mess. It's titled "GM Faces Its Own Regulatory Cliff." I've written about this here, here, here, and here.... MORE

Failure to Arbitrage: Gasoline Markets

Energy, Environment, Resources
David Henderson
Andrew P. Morriss and Donald J. Boudreaux have an excellent piece in today's Wall Street Journal, which, by the way, has several excellent pieces. (More on that in posts later today.) It's titled "A Coca-Cola Solution to High Gas Prices."... MORE

The Latest Batch from the NBER

Cross-country Comparisons
Arnold Kling
1. Robert J. Barro writes, Convergence at a 2% rate implies that it takes 35 years for half of an initial gap to vanish and 115 years for 90% to disappear. Convergence-rate parameters are important to pin down because they... MORE

How Yglesias Channels Bastiat

Economic Education
Bryan Caplan
I want to persuade Matt Yglesias to give Frederic Bastiat the respect he deserves.  On some level, though, Matt already reveals remarkable respect for my favorite 19th-century French economist.  Imitation is the sincerest form of flattery - and Matt has... MORE

I plan to do my first Autobiography of Malcolm X Book Club post on Friday, August 24.  Hope you're reading along!... MORE

Hans Rosling and the Washing Machine

Growth: Consequences
David Henderson
Here's a fantastic 9-minute video by Hans Rosling on how the washing machine revolutionized living standards. A personal note: I returned on Saturday from my cottage in Minaki, Canada. My grandfather built it in 1922 when he was 67 years... MORE

Living in Bubbles

Politics and Economics
Arnold Kling
David Warsh writes, I expect the Democrats to dominate this election (and probably the next), the Tea Party to slowly shrink, the caucus of Republican pragmatists to grow, until one day the GOP credibly offers to take over and improve... MORE

Teachers like to think that no matter how useless their lessons appear, they are "teaching their students how to think."  Under the heading of "Transfer of Learning," educational psychologists have spent over a century looking for evidence that this sort... MORE

The Subtle Value-Added of Frederic Bastiat

Behavioral Economics and Rationality
Bryan Caplan
I'm delighted to get Matt Yglesias talking about Bastiat, but I'm afraid he's missing my point.  For Matt, Bastiat's writings are "non-responsive to modern issues."  Matt's example:The candlemakers' petition is a devastating satire of pharmaceutical companies' endless lust for patent... MORE

Yglesias's Off-Target Critique of Caplan and Bastiat

International Trade
David Henderson
In a critique of both Bryan Caplan and Frederic Bastiat, Matt Yglesias badly misses his target. First, on Caplan, Yglesias writes: in a second and much worse post, he kind of posits a broad conspiracy theory as the reason. But... MORE

AA at TJ Redux

Economics of Education
Bryan Caplan
Remember how GMU law professor Lloyd Cohen used the Freedom of Information Act to test for the extent of affirmative action at Thomas Jefferson High School?  Nine years after Cohen filed an official complaint, the Department of Education's Office for... MORE

Nizer on Fascism and Communism

Economic Philosophy
David Henderson
I didn't know that I would generate such discussion with my previous post about Ethel Rosenberg. Just to clear things up, Bryan Caplan's comment is, of course, right. He was referring to the socialist movement, not individuals, as being "born... MORE

The Great Factor Substitution

Growth: Causal Factors
Arnold Kling
The New York Times reports, Even as Foxconn, Apple's iPhone manufacturer, continues to build new plants and hire thousands of additional workers to make smartphones, it plans to install more than a million robots within a few years to supplement... MORE

Coming Apart Watch

Income Distribution
Arnold Kling
Timothy Taylor points to a Pew study of housing segregation by income class. Not surprisingly, it is on the rise. the authors calculate what they call a Residential Income Segregation Index, which comes from "adding together the share of lower-income... MORE

Civil War Watch: Sentences to Ponder

Social Security
Arnold Kling
John Mauldin writes, some people get so angry when you challenge their beliefs. You are literally taking away the source of their good feeling, like drugs from a junkie or a boyfriend from a teenage girl. Keep that in mind... MORE

Think Tank Rumors

Politics and Economics
Arnold Kling
Kauffman Foundation seems to be shutting down its DC operations. I wish I knew more about the goings-on there. I have nothing against Kansas City, but I hope there is no general contraction taking place at Kauffman. Meanwhile, there is... MORE

The 1960s and Today

Politics and Economics
Arnold Kling
In response to my post on Civil War Scenarios, some commenters brought up the 1960s. I actually do not have to read a history of the 1960s--I can remember them. One thing people forget about the 1960s is how many... MORE

Who To Blame: Generalizing Brennan

Behavioral Economics and Rationality
Bryan Caplan
The outstanding Jason Brennan on the Princeton University Press blog:Now, I freely admit that most bad voters do not recognize they are bad voters. If so, one might object, how can they have a duty not to vote? They do... MORE

How Not to Be a Pacifist

Economic Philosophy
Bryan Caplan
I often feel the need to save pacifism from the pacifists.  Though the argument for pacifism is surprisingly solid, flesh-and-blood pacifists often make me cringe with their naive and even intellectually dishonest claims.  Some even shamefully glide from pacifism to... MORE

The Great Unmentionable

IQ in Economics
Arnold Kling
Richard Lynn and Tatu Vanhanen write (large .pdf) We do not assume that national IQ is the only factor capable to explain global disparities in access to clean water and sanitation facilities; we only assume that it is probably the... MORE

Making Populism Serious: The Case of Social Security

Behavioral Economics and Rationality
Bryan Caplan
Almost everyone thinks that Social Security is a great program.  Why?  Because they've been convinced by the kind of arguments Bastiat would mock.  Arguments like:"Old people can't work anymore; government should give them money so they won't be poor.""If Social... MORE

Atul Gawande on Health Care Administration

Economics of Health Care
Arnold Kling
He writes, The theory the country is about to test is that chains will make us better and more efficient. The question is how. To most of us who work in health care, throwing a bunch of administrators and accountants... MORE

The Mind and the Market

Behavioral Economics and Rationality
Arnold Kling
Pascal Boyer writes, I am surprized, nay flabbergasted that there is no study of folk-economics in the social science literature. No-one (except Caplan and a few others) seems to study what makes people's economic modules tick. In psychology we have... MORE

Civil War Scenarios

Politics and Economics
Arnold Kling
Peggy Noonan writes, I suspect some conservative used the Romney campaign's listless response as a stand-in for what they'd really like to say to Mr. Romney himself, which is, "Wake up, get mad, be human, we're fighting for our country... MORE

Who Loves Bastiat and Who Loves Him Not

Behavioral Economics and Rationality
Bryan Caplan
Thanks to everyone who responded to my query about Bastiat's "What Is Seen and What Is Not Seen."  For me, his essay is the pinnacle of economic profundity.  You can call it obvious.  But when I first started learning economics... MORE

Ethel Rosenberg: Born Bad?

Economic Philosophy
David Henderson
In a number of posts, co-blogger Bryan Caplan has argued that many socialists are "born bad." I can't find the references quickly: I'm on a friend's computer and it just isn't working the way mine does. Of course, I don't... MORE

GMU vs. Chicago

Economic Methods
Arnold Kling
Gary Becker and James Heckman argue for more government support for economic research. In the other corner are Don Boudreaux and Tyler Cowen. Indeed, Tyler was in really good form in writing his post. There is not much left of... MORE

Brink, Me, and Human Capitalism

Income Distribution
Bryan Caplan
Brink Lindsey replies to my comments on an earlier draft of his new book, Human Capitalism.  Highlights and brief rejoinders follow.  Brink's in blockquotes, I'm not:Thanks to Bryan I dove into that literature and found that it does indeed offer... MORE

Paul Krugman Chooses a Word Carelessly

Social Security
Arnold Kling
He wrote, Your federal government is basically an insurance company with an army. You and I would read that as an insurance company backed by coercion. Frances Woolley took it that way, and started into the pros and cons of... MORE

Bastiat's "What Is Seen and What Is Not Seen": Who Says "Meh"?

Behavioral Economics and Rationality
Bryan Caplan
Free-market economists almost always love Frederic Bastiat's classic essay, "What Is Seen and What Is Not Seen."  But the central theme of the essay - opportunity cost - is hardly ideological.  It seems like all economists, regardless of ideology, would... MORE

Can America Learn?

Economics of Education
Arnold Kling
Timothy Taylor, the economics blogger with by far the highest signal-noise ratio, has another valuable post, this time spotlighting a piece by Martin West on Global Lessons for Improving U.S. Education. I'll snip from Taylor's excerpt: [T]here are three broad... MORE

Speaking of Foreign Languages

Eurozone crisis
Arnold Kling
How do you say "Have a nice day" in Japanese or French?... MORE

Harry Byrd on Keynesianism

Macroeconomics
David Henderson
When I'm at my cottage in Canada, as I am now, I do a lot of reading. I just finished Robert Caro's new book, The Years of Lyndon Johnson: The Passage of Power. It's good, but for those with limited... MORE

Are Monolingual Americans Missing Out?

Economics and Culture
Bryan Caplan
Many found my statement here outrageous:To understand why Americans don't learn foreign languages, simply reverse this reasoning.  We don't learn foreign languages because foreign languages rarely helps us get good jobs, meet interesting people, or enjoy culture.To me, it's just... MORE

Competitive Government

Political Economy
Arnold Kling
The Economist reports, This experiment in radical outsourcing began back in December 2005, when Sandy Springs went from being merely a part of Fulton County--which also includes most of Atlanta, Georgia's capital and largest city--to an incorporated city itself. CH2M... MORE

Thoughts on Second Language

Cost-benefit Analysis
David Henderson
Like Bryan Caplan, I think that most investment in learning a second language is a waste. Yes, I've benefited, when traveling abroad, by knowing some French (learned from 8th grade through 12th grade plus first year of college, all in... MORE

Price Discrimination Explains Everything

Microeconomics
Arnold Kling
I've said this many times. I was reminded of it by this story from John Scalzi about tortillas priced higher when priced as "wraps," which Matt Yglesias suggests provides a means for price discrimination. In terms of efficient pricing, one... MORE

The Degree and Origin of Foreign Language Competence

Economics of Education
Bryan Caplan
If you're curious about the underlying numbers for my last post, here they are.  The table shows every logically possible combination of (a) how well people speak a foreign language and (b) where they learned the foreign language.  Percentages should... MORE

The average high school graduate spends two years studying a foreign language. (Digest of Education Statistics, Table 157)  What effect do these years of study have on Americans' actual ability to speak foreign languages?I started by looking at the Census,... MORE

In a recent e-mail alerting me to an important 2011 piece by Alan Greenspan that I somehow had missed ("Activism," International Finance 14:1, 2011: pp. 165-182), Jeff Hummel writes the following: One of the unusual features of the current recession... MORE

Randal O'Toole on Housing

Books: Reviews and Suggested Readings
Arnold Kling
The book is American Nightmare, and it is iconoclastic. Some excerpts: Glaeser and Avent each profess to oppose coercive policies aimed at forcing people to live in higher densities than they wish. Yet their often-erroneous arguments lend credence to those... MORE

The President's Roanoke Speech

Politics and Economics
Arnold Kling
Reihan Salam points to two of the strongest reactions to President Obama's Roanake speech ("You did not build that"). Virginia Postrel writes, The president's sermon struck a nerve in part because it marked a sharp departure from the traditional Democratic... MORE

Why Repo Exists

Finance: stocks, options, etc.
Arnold Kling
Nick Rowe asks the question. My answer is based on Marcia Stigum's Money Market, a book that more economists need to read. Securities dealers are dealers, sort of like auto dealers. If you go to an auto dealer, you expect... MORE

Brink Lindsey, in case you missed it

Books: Reviews and Suggested Readings
Arnold Kling
Bryan's comments on Brink Lindsey's new book are valuable. I am just annoyed that nobody seems to have noticed my own review.... MORE

Human Capitalism: Comments on Brink Lindsey's Draft

Books: Reviews and Suggested Readings
Bryan Caplan
Brink Lindsey sent me a draft of his just-released Human Capitalism (now available for purchase) back in February.  Here's what I told him then, reprinted with his permission.  From what I understand, Brink took some of my suggestions to heart,... MORE

China's Economic Growth

Central Planning vs. Local Knowledge
David Henderson
The spontaneous reforms in agriculture meant that new supplies of food products needed markets and that markets needed infrastructure. Rural dwellers created a private trade network, and, within one year, most state food stores were out of business. Rural entrepreneurs... MORE

Was Roosevelt the real Hoover?

Economic History
Arnold Kling
Price V. Fishback and John Joseph Wallis write, Federal budget outlays in real dollars rose 88 percent under Hoover between 1929 and 1932, faster than the growth in the first three years under Roosevelt (although starting from a lower base).... MORE

Status Quo Bias and Conformity Signaling

Behavioral Economics and Rationality
Bryan Caplan
All societies reward conformity.  Yes, there's often a sweet niche for eccentric geniuses.  But everyone else faces a stark trade-off: the more you want to succeed, the more you have to submit to social norms.  On an emotional level, this... MORE

Classifying a Helicopter Drop

Macroeconomics
Bryan Caplan
A question for economists of all factions:What would you call a "helicopter drop" of cash: "monetary policy" or "fiscal policy"?Please explain your answer.... MORE

Austro-Keynesianism

Austrian Economics
Arnold Kling
About four years ago, I described myself as an Austro-Keynesian. Recently, I have been asked about that concept. One way to put it is that I accept and reject some major tenets of each camp. From the Keynes camp, I... MORE

The Rip Van Winkle Effect

Growth: Consequences
Arnold Kling
I have been working on some educational software--nothing revolutionary,, and nothing ready to show just yet. It is interesting to see how different the software world is from when I left it in 1999. I'll put the rest of this... MORE

The Interaction Between Status Quo Bias and Signaling

Behavioral Economics and Rationality
Bryan Caplan
Human beings suffer from status quo bias: When they face different default options, they make different choices.  Offering "a burger and fries for $10, with $3 off without the fries" is economically equivalent to "a burger for $7, and fries... MORE

Getting Rich in America

Finance
David Henderson
Sometimes, when the person beside me on an airplane finds out that I'm an economist, he/she will ask, "What's going to happen to the economy?" I answer, "I don't know." If the person is somewhat more sophisticated, he will ask... MORE

Fed Forecasting Errors

Macroeconomics
Arnold Kling
Evan Soltas writes, A disparaging but not unfair comparison would be to little orphan Annie. "The sun'll come out tomorrow," Annie sang. "Bet your bottom dollar that tomorrow there'll be sun." The 3-to-4 percent recovery growth we've been long promising... MORE

Friday Night Video: Henderson on His Case for Freedom

Economic Philosophy
David Henderson
HT to LibertyPen.... MORE

Stocks: the Long-Term Outlook

Finance: stocks, options, etc.
Arnold Kling
Michael Mandel writes, an investment in the stock market becomes a bet on innovation. Do you think that the U.S. or the global economy has another wave of disruptive innovation coming? Then buy stocks. But if you think that we... MORE

Steve Randy Waldman writes, Idle unemployment is a problem in societies that are highly productive but very unequal. Here basic goods (food, clothing) can be produced efficiently by the wealthy via capital-intensive production processes. The poor do not employ one... MORE

What It Takes to Pop a Higher Education Bubble

Economic History
Bryan Caplan
There is no "bubble" in American higher education.  I'll bet on it - or to be precise, I have bet on it.  Nevertheless, while reading the Digest of Education Statistics (Table 208), I discovered a surprising fact: During my lifetime, a... MORE

The Case for Government

Politics and Economics
Arnold Kling
A new publication from the Boston Fed informs us. Time will tell. But universal public education still stands as one of America's most successful government programs. America's public schools have taken their share of criticism, and some of it may... MORE

Autobiography of Malcolm X Book Club?

Book Club
Bryan Caplan
I first read The Autobiography of Malcolm X in high school, and just re-read it for the fourth time.  It may sound like an eccentric choice, but I'm thinking of starting a new EconLog book club on this work.  AMX... MORE

Are You Asking or Telling?

Economic Methods
David Henderson
I had a smart aleck friend in high school, Jack McKay, who, when a teacher ordered us to go to the principal, whispered "Are you asking or telling?" I laughed out loud and, if I recall, got in deeper trouble.... MORE

Gillespie and de Rugy on Generational Warfare

Social Security
David Henderson
I get some of my best uninterrupted reading done on long flights and on a recent flight I read the latest issue of Reason magazine (August/September) cover to cover. It's excellent. I found virtually every article valuable. The highlight was... MORE

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