Bryan Caplan and David Henderson

November 2012

A Monthly Archive (80 entries)

Friday Night Video: Privatizing Everything

Economic Philosophy
David Henderson
UPDATE: I was wondering if anyone would catch the contradiction between what David says at about the 2:00 point and what he says at about the 5:30 point. Apparently no one did or at least no one who did bothered... MORE

Revealed Preference

Revealed Preference
David Henderson
"Nobody likes to pay taxes. Nobody wants to raise taxes on anybody." This is a quote from a newly elected Democratic congressman from Illinois named William L. Enyart. So, unless he considers himself a nobody, would he advocate raises on... MORE

The Respect Motive

Behavioral Economics and Rationality
Bryan Caplan
Consider a simple model of voter behavior:People vote for whoever respects them more.My immediate reaction: This Respect Motive is a roughly accurate description of over half the electorate.  Furthermore, it's hard to name any socially recognized group whose members do... MORE

In case you missed any segment in The Autobiography of Malcolm X Book Club, here's the full package:Lead-inPart #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... MORE

Terror Profiling

Behavioral Economics and Rationality
Bryan Caplan
Two quick replies to Garett:1. If terrorists were as flexible as he suggests, airport security would be useless.  Terrorists would simply switch to one of the countless undefended targets: trains, sporting events, malls, etc.  Profiling doesn't have to be perfect... MORE

Malcom's Purge, Second Thoughts, and Murder (Chapters 16-19, plus Haley's Epilogue)SummaryBy the early 60s, Black Muslim leader Elijah Muhammad's health is failing, and internal resentment against Malcolm's success is starting to build.  He refuses publicity to calm the jealousy -... MORE

My Election Outcomes: Final Update

Taxation
David Henderson
Or, Did I Optimize or What? I've posted a couple of times now (here and here) about a local election in Pacific Grove in which I took part. The proposal on the ballot, Measure A, would have imposed an added... MORE

Bryan takes me to task for my prediction that free market airline security would still be rigorous and intrusive.  His prediction: ..here's one massive cost-cutting, convenience-raising change I'd predict in a free market: Profiling.  Private security firms would still claim to... MORE

Carnegie on the School Ethic

Economics of Education
Bryan Caplan
Education teaches people to show up on time, sit down, shut up, stay awake, and follow orders.  So it's tempting to say, "School inculcates the work ethic."  But that's not quite right.  School inculcates the school ethic - and while... MORE

British Democracy and the Death Penalty

Behavioral Economics and Rationality
Bryan Caplan
William Feerick emailed me some interesting thoughts on an old EconLog post, reprinted below with his permission.Hello Bryan, I recently came across an article you wrote some time ago on your EconLog blog, where you mentioned Tim Besley's counter-examples to your... MORE

Mark Carney: Like William of Orange, a Political Import

Labor Mobility, Immigration, Outsourcing
Garett Jones
You've heard the news already that the Bank of England is importing a high-quality central banker from Canada.  This continues the tradition begun in 1688 (or was it 1066? or AD 43?) of importing the best talent rather than pushing for... MORE

The False Advertising of the CFTC

Behavioral Economics and Rationality
Bryan Caplan
The U.S. Commodity Futures Trading Commission (CFTC) is suing one of my favorite websites and my primary source of news: Intrade.  The CFTC accuses Intrade of:[O]ffering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and... MORE

Single Parenthood: The Reason Matters

Family Economics
Bryan Caplan
Susan Mayer's What Money Can't Buy concludes by tossing out a fun fact I've often heard repeated.  (I even repeated it myself once in an exchange with Charles Murray).Both low income and single parenthood may in fact be correlated with... MORE

Eliminating Conscription in Singapore

Labor Market
David Henderson
In response to co-blogger Bryan Caplan, John Smith argues that Singapore needs conscription. Here's where economics is really helpful: in helping us understand the distinction between how big a military to have and how to man a military. Smith argues... MORE

Voting, Public Goods, and Free Riders

Public Goods
David Henderson
John C. Goodman has an insightful and relatively short post this morning making the case for voting even when you're virtually positive that doing so won't change the outcome of an election. It reminded me of something I wrote in... MORE

Driving the Cool Kids Out

Business Economics
Garett Jones
Abercrombie and Fitch doesn't carry jeans with a waist size larger than 36 inches.  But the Centers for Disease Control reports that the median American male has a 40 inch waist. Why does A&F give up on so many potential... MORE

Hedengren's Dog

Behavioral Economics and Rationality
Bryan Caplan
Two decades ago, economists started taking intelligence seriously.  Now economists are starting to take conscientiousness seriously.  Unfortunately, most existing data sets don't contain personality tests.  Even when they do, personality tests are only self-reports. Wouldn't it be great if we... MORE

DeLong on Obamacare

Economics of Health Care
David Henderson
Categorize this in the "I wish Brad had asked these questions in 2009" file. In a recent post, Brad DeLong sounds like Obamacare critic and health economist John C. Goodman. Here's an excerpt: But Massachusetts has been walking down this... MORE

How I See Singapore

Cross-country Comparisons
Bryan Caplan
Scott Sumner returns from Singapore with many fascinating observations, including:My guide told me that when western academics come to Singapore, the leftists tend to love the place and the libertarians often go home in disgust.I'm as libertarian as they come,... MORE

Modelling the Marriage of High Virtue and Low Cunning

Behavioral Economics and Rationality
Bryan Caplan
David Brooks praises Lincoln for showing that the "challenge of politics lies precisely in the marriage of high vision and low cunning."  He elaborates: The movie is about pushing the 13th Amendment through the House of Representatives. The political operatives... MORE

In an excellent Singapore econ-travelogue, Scott Sumner writes:My theory is that leftists don't really mind a place where income is unequal, they don't like places where income looks unequal. This is close to what pioneering blogger Mickey Kaus has been pushing... MORE

Arnold Kling's New Blog

Upcoming Events
David Henderson
Many of the visitors to this blog were disappointed when Arnold Kling stopped blogging in August, actually three months ago today. This blog owes a lot to Arnold: he started Econlog under a different name. The good news for Arnold's... MORE

Joseph Schmidt and the Tragedy of Discrimination

Economic History
Bryan Caplan
This Thanksgiving, I'm grateful for Joseph Schmidt (1904-1942), my favorite new-to-me opera singer.  His music is wonderfully sweet (start here and here), and his life story a lesson to us all.  Despite his voice, Schmidt had a problem that seemingly... MORE

Immigration Charity Bleg

Cost-benefit Analysis
Bryan Caplan
Suppose you wanted to spend your charitable dollars to increase the total number of people who migrate from the Third World to the First World.  What approach would give you the biggest bang for your buck?  Are any specific countries,... MORE

My Election Outcomes: An Update

Public Choice Theory
David Henderson
The day after November's election, I posted on my bets and on the results on a local tax increase referendum. Here's what I wrote on the local tax increase: A friend and retired lawyer, Carl Mounteer, and I wrote the... MORE

TARP: A Gift for the Bondholders

Finance
Garett Jones
When the federal government bought shares in the biggest banks, who benefited most: Shareholders or bondholders?  According to co-blogger Luigi Zingales and U Chicago professor Pietro Veronesi, the answer is clear: bondholders. They estimate the total benefit to banks at $131... MORE

When to Trust Your Superiors

Behavioral Economics and Rationality
Bryan Caplan
A while back, James Donald left a somewhat strident comment on EconLog.  The key passage:When the superior rule the inferior, it is not only better for the superior, it is also better for the inferior.Many readers will reject Donald's claim... MORE

Krugman on Scientific Method

Economic Methods
David Henderson
Some of Paul Krugman's best posts are on scientific method, specifically, how do you judge a theory. One of his posts today is beautiful, or, more correctly, would have been beautiful had he dropped the last line. In that line,... MORE

Prosecutorial Persecution

Regulation
David Henderson
Broadcom co-founder Henry Samueli, a Silicon Valley legend, refused to testify for the prosecution and had strong evidence that he could offer Ruehle. But he, too, had been bludgeoned into pleading guilty to a minor felony and so refused to... MORE

Free Market Airport Security

Cost-benefit Analysis
Bryan Caplan
I think Garett's basically wrong about airport security on the free market.  Yes, both markets and politics respond to risk misperceptions.  But the political response is much more likely to ignore cost and convenience, to impose whatever sounds good.  The... MORE

Alex and some of the internet are noting that airline security might cost lives and does cost liberty. Yglesias asks one counterfactual: How many airplanes would be "blown up by terrorists" if there were no airline security?  I might have... MORE

Bloomberg's Moshinsky and Brunsden report: The shadow banking industry has grown to about $67 trillion, $6 trillion bigger than previously thought...The [Financial Stability Board, FSB], a global financial policy group comprised of regulators and central bankers, found that shadow banking grew... MORE

Business Accountability: Good and In-Between

Business Economics
David Henderson
I've had two experiences in the last few weeks in which one business was incredibly accountable and one business was reasonably accountable although its employee was so-so. The good story first. I was traveling home from Miami to Monterey on... MORE

The Mouse's Power: Popularity or Cash?

Public Choice Theory
Garett Jones
Alex notes that once again, the Mouse appears to have won a copyright battle (he won a big one back in 1998).  So, is this evidence that most political outcomes are driven by cash?  Is this evidence that, contrary to... MORE

Some Unpleasant Immigration Arithmetic

Economic Philosophy
Bryan Caplan
Let C=total number of immigrants - legal and illegal - who annually enter the U.S. under existing laws.Let F=the total number of immigrants who would annually enter the U.S. under open borders.Under perfectly open borders, C=F.  Under perfectly closed borders,... MORE

Towards the end of my debate with Steve Pearlstein, he posed an intriguing question.  My paraphrase: Suppose half of higher education really is pure waste.  What's the efficient government response?  Should government should cut its subsidy by 50%?  Or what?Steve's... MORE

One advantage the United States has that Canada didn't is low interest rates. Interest rates today are much lower than when the Canadian government altered course. The yield on the ten-year Treasury bond in late June 2010, for example, was... MORE

It's not Go Galt: It's Go to Texas. As I have noted before, the Laffer Curve--the curve that relates tax revenues to tax rates--must be correct. The relevant question is where we are on the Laffer Curve. Are we on... MORE

Would the Private Sector Make You Wear an Airplane Seatbelt?

Behavioral Economics and Rationality
Garett Jones
This week I tweeted:What argument do defenders of government-mandated airline seatbelt paternalism use? It can't be that plane crashes aren't salient to buyers.Note that I'm asking why the government has to mandate seatbelt usage.  Since people overestimate the chance of... MORE

What Makes People Think Like Economists About Inflation?

Behavioral Economics and Rationality
Bryan Caplan
Tyler blogs this 2001 Bryan and Venkatu piece on systematically biased beliefs about inflation:In the roughly 20,000 responses we have received from our telephone survey since August 1998, the average rate at which respondents thought prices had risen over the... MORE

John Kay on Manufacturing Fetish

Human Capital: Returns to entrepreneurs, skills, etc.
David Henderson
UPDATE BELOW The rear cover of the iPhone tells you it is designed in California and assembled in China. The phone sells, in the absence of carrier subsidy, for about $700. Purchased components - clever pieces of design such as... MORE

Correction: Total Government Spending on Higher Education

Economics of Education
Bryan Caplan
Last night I realized that I repeatedly used an incorrect figure for government higher education spending in my debate with Steve Pearlstein.  I said "Taxpayers heavily subsidize higher education - about $500 billion dollars per year."  But ~$500B is in... MORE

Friedman on Immigration History

Labor Mobility, Immigration, Outsourcing
David Henderson
Correction below. Did the United States begin in 1875? A little checking turned up the following information: 1. Ellis Island was only established as a federal immigration point--the first such--in 1890. 2. The first federal restrictions on immigration were passed... MORE

The Coming Tax Increases

Fiscal Policy
David Henderson
Remember when critics of the Romney tax plan claimed that under his plan, the middle class would face tax increases of about 2,000 per family? [Here's just one of many examples.] Well, unless state and local government plans for their... MORE

Outsourcing My Critique of Left-Libertarianism

Economic Philosophy
Bryan Caplan
Despite many areas of agreement, I think that left-libertarianism is basically wrong.  One day I'll post an in-depth critique.  Until then, I'm outsourcing the job to Daniel Shapiro and Steve Horwitz.Shapiro highlights:Being one's own boss is quite a risky proposition,... MORE

Tax hikes, according to IMF research praised by Paul Krugman. The surprising thing is this is an IMF study that usually gets cited to show that spending cuts don't grow the economy---that "expansionary austerity" is a mere theorist's dream.  But this same research also provides evidence... MORE

Center Libertarian?

Public Choice Theory
David Henderson
For years, conservative commentators on the Fox News Channel and elsewhere have said that the United States is a "center right" country. They seem to say it more insistently when the voters elect a left-wing Democrat as President. But James... MORE

Brennan's Libertarianism: What Everyone Needs to Know

Books: Reviews and Suggested Readings
Bryan Caplan
As expected, Jason Brennan's latest book, Libertarianism: What Everyone Needs to Know (Oxford University Press, 2012) is excellent.  The format works well for the blog age: thoughtful libertarian answers to a hundred and five frequently asked questions.  My admittedly somewhat... MORE

Learning and Retention in Medical School

Economics of Education
Bryan Caplan
Peter Wei, a medical student at Duke, has some interesting thoughts on my post about learning and retention.  Here's Wei, reprinted with his permission:You're right, there's a substantial literature on learning loss, yet this doesn't seem much lamented and educators... MORE

Coming ObamaCare Challenges

Economics of Health Care
David Henderson
John Goodman had an excellent post yesterday discussing the coming challenges in implementing the Affordable Care Act. One of his major points is that the Affordable Care Act makes health insurance less affordable: Adding to the problem is that the... MORE

Money Has Little Influence on U.S. Politics

Public Choice Theory
Garett Jones
Yesterday I tweeted:Will the reality-based community vocally embrace the repeated finding that money has little influence in U.S. politics? http://ow.ly/fbOXd The link is to Tyler's discussion of a great lit review on money in politics.  Levitt has another good lit review with more... MORE

Higher Education: Time to Cut the Cord

Cost-benefit Analysis
Bryan Caplan
Should government withdraw from an active role in promoting and subsidizing higher education?  I recently debated Pulitzer Prize winner Steve Pearlstein on this very question.  Here's the debate resource page, including full audio.  I've also published a correction: total government... MORE

Social Intelligence: The Wisdom of Muawiya

Economic Philosophy
Bryan Caplan
My favorite quotation in the entirety of Larry Gonick's magisterial Cartoon History of the Universe series is from the Caliph Muawiya.  Behold social intelligence:I never apply the sword when the lash suffices, nor the lash when my tongue is enough. ... MORE

Intermediate Hypothetical Bleg

Cost-benefit Analysis
Bryan Caplan
I asked Steve Sailer:Steve, would you please name a few examples of citizenist policies that you think go slightly beyond the limits of our moral obligations to outsiders?  A few examples of such policies that you think are just barely... MORE

Sailer on Fundamental Moral Obligations

Economic Philosophy
Bryan Caplan
I'm pleased to see Steve Sailer engaging my 3 AM Dorm Room hypotheticals (here and here):"Biased in favor of" is hardly the same as "recognizes no moral obligations to non-citizens" and does not imply Poisoning Children. I also do not,... MORE

Immigration, Trespassing, and Socialism

Economic Philosophy
Bryan Caplan
To trespass is to enter a piece of land without the owner's consent.  What should we infer, then, when people argue that illegal immigrants are guilty of trespassing?At first glance, the trespassing shoe doesn't fit.  The typical illegal immigrant:1. Occupies... MORE

My Veterans Day Tribute

Economic History
David Henderson
Every Veterans Day, I try to do something special to remember or honor a veteran. I don't like the standard flag-waving event that this day has become for many people. In many Veterans Day speeches, the speakers talk about the... MORE

Brinksmanship and the Obama-Bush Tax Cuts

Fiscal Policy
Garett Jones
Matt Yglesias is claiming that POTUS and Congressional Democrats can safely ignore John Boehner: To take the bargaining process seriously at this point you have to believe that come 2013, House Republicans would actually refuse to cut taxes on the grounds... MORE

China's Empty Cities: A Family Affair?

Public Choice Theory
Garett Jones
This week I returned from a trip to Shanghai and Nanchang; the latter is in Jiangxi province, and as a GMU aside, the food in Jiangxi was stunning.  I was in Nanchang to give some lectures at Jiangxi University of... MORE

Romney's Get out the Vote Epic Fail

Public Choice Theory
David Henderson
It's easy to point fingers after a loss and I wouldn't normally do it, but consider what happened. Project Orca was supposed to enable poll watchers to record voter names on their smartphones, by listening for names as voters checked... MORE

We're Going Too Far

Behavioral Economics and Rationality
Bryan Caplan
Question for you: When was the last time you openly worried about "your side" treating "their side" unjustly?  This could mean:1. "Your side" intellectually misrepresenting "their side."2. "Your side" politically oppressing "their side."3. "Your side" embracing positions that, taken seriously,... MORE

Barack Beane Obama

Public Choice Theory
David Henderson
One of my favorite books of the last decade was Michael Lewis's Moneyball. It's about how Oakland A's general manager Billy Beane used statistical analysis to offset the advantage of more heavily funded teams and make his small-market team into... MORE

A Question for Steve Sailer's B-School Professor

Economic Philosophy
Bryan Caplan
An interesting vignette from Steve Sailer:By "citizenism," I mean that I believe Americans should be biased in favor of the welfare of our current fellow citizens over that of the six billion foreigners. Let me describe citizenism using a business... MORE

My Election Outcomes

Public Choice Theory
David Henderson
One winning bet, three losing bets, and one election won. First, my winning bet. In July, I bet a local prominent Republican, Peter Newman, $50 that Obama would be re-elected. Second, my three losing bets. 1. Last week, I bet... MORE

Reality Check

Behavioral Economics and Rationality
Bryan Caplan
The lessons people want to draw from Romney's defeat:1. He would have have won if he were more/less socially conservative.2. He would have won if he were more/less economically conservative.The lessons people should draw from Romney's defeat:1. He would have... MORE

A Bet I Forgot to Make

Economic Methods
Bryan Caplan
Just one election cycle ago, Tyler embraced a conclusion I found implausible on the basis of a model I found absurd:When it comes to marijuana legalization, I believe that the "anti-" forces will muster as many parental votes as they... MORE

William of Orange, Political Import

Public Choice Theory
Garett Jones
In the corporate world, it's common for top executives to be recruited from outside the firm, even outside the industry.  But in American politics, convention and sometimes law require politicians to have longstanding ties to the geographic areas they ostensibly... MORE

Open Borders and Global IQ Bleg

IQ in Economics
Bryan Caplan
Another bleg from the tireless Vipul Naik of Open Borders.  Vipul's words:What impact would open borders have on global IQ within a generation or two? Even hardcore IQ hereditarians concede some sort of Flynn effect and the role of malnutrition... MORE

FDA Breaks Its Own Regulations

Regulation
David Henderson
Most people believe that the FDA needs to ensure that the medicines we Americans consume have been proven to be safe and effective long before we ever get a chance to use them. Yet the Makena story gives us a... MORE

Ohio and the Auto Bailout

Regulation and Subsidies
Luigi Zingales
The presidential election seems to come down to Ohio and the vote in Ohio is likely to come down to one issue : the auto bailout. With one out of eight workers employed in the auto industry, it is hardly... MORE

Self-Correction in Markets and Politics

Behavioral Economics and Rationality
Bryan Caplan
We can't stop our minds from jumping to conclusions.  If we smell smoke, we jump to the conclusion, "Fire."  If metal glitters, we jump to the conclusion, "Gold."  If a person smiles at us, we jump to the conclusion, "Friend." ... MORE

Tim Taylor on Minimum Wage Increase

Labor Market
David Henderson
Tim Taylor, aka, the Conversable Economist, has a good post on the minimum wage. He makes one crucial error, though. Quoting from his own book, he writes: Here's an insight for opponents of a higher minimum wage to mull over:... MORE

The Present Value of Learning, Adjusted for Forgetting

Cost-benefit Analysis
Bryan Caplan
Suppose learning marginal fact F increases your productivity by V.  What is the present value of learning F?  Economists will be tempted to mechanically apply the standard present value formula.  Using discrete time to keep things simple: PDV(F)=V + V/(1+r)... MORE

Optimal Open-Mindedness

Behavioral Economics and Rationality
Bryan Caplan
Lately a few people have accused me of being "closed-minded."  As they'd predict, I reject the accusation.  I say my degree of openness is close to optimal.  Consistent with Bayesian reasoning, I am as reluctant to claim vindication by events... MORE

Woodrow Wilson's Public Choice

Public Choice Theory
David Henderson
At a Liberty Fund conference I just finished up in Miami, in our book of readings was the following quote: The best rulers are always those to whom great power is interested . . . . It is, therefore, manifestly... MORE

Spontaneous Order in New York City

Central Planning vs. Local Knowledge
David Henderson
The traffic in the blackout areas of Manhattan is lawless in the most literal sense: the traffic lights aren't working, so the law cannot be applied as usual. But "lawless" doesn't seem to be a fitting description; the driving seems... MORE

TSA: A Slight Glimmer of Hope

Regulation
David Henderson
And please, don't tell me in the comments how I'm making a big deal about this: I'm making a small deal. I report bad things; I also like to report good things, even slightly good things. I fly out of... MORE

The Outlook for New York, Continued

Supply-side Economics
Arnold Kling
The New York Times reports, The storm damage had a synergy of its own. Efforts to pump floodwaters from subway and automobile tunnels were slowed by electrical shortages. Hastily arranged car pools became bogged down on highways and city streets... MORE

Henderson on Stossel

Upcoming Events
David Henderson
I was supposed to go to New York earlier this week to tape a segment for John Stossel's show on Fox Business Network. Obviously, that didn't happen. So I did it from the Stanford studio on Wednesday. The other person... MORE

You Should Repeatedly Read Cochrane's "After the ACA"

Economics of Health Care
Bryan Caplan
Soon after I finished my Ph.D. at Princeton, I started going to academic conferences.  When I met senior professors at these gathering, they were often surprised to discover my pedigree.  Regardless of the subject at hand, I habitually revealed exactly... MORE

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