Bryan Caplan and David Henderson

January 2013

A Monthly Archive (76 entries)

Henderson on the Libertarian "Thing"

Politics and Economics
David Henderson
Last weekend, our local newspaper, the Monterey County Herald, ran this Associated Press story by Nicholas Riccardi. The article is more interesting than the headline would suggest because its author found libertarian elements in the political shift in the west.... MORE

How to Recover Your Stolen Car

Economics of Crime
Bryan Caplan
Very cool idea from a former taxi driver on MR:[I]f your car is ever stolen, your first calls should be to every cab company in the city. You offer a $50 reward to the driver who finds it AND a... MORE

Wasteful Hiring: When Does It Cut Profits?

Statistical theory and methods
Garett Jones
The boss hires his worthless unemployed nephew for a summer job.  Does that raise GDP or lower it? To keep things simple think of this as ex nihilo hiring: if not for this hire, the person wouldn't have been hired... MORE

Why Applicants Don't Volunteer Their Test Scores: Abigail's Insight

Behavioral Economics and Rationality
Bryan Caplan
EconLog reader Abigail Haddad sent me an interesting email.  I'm reprinting it in full with her permission:Hi Bryan, I commented on "Why don't applicants volunteer their test scores?" last year and suggested that there was a verification problem, since employers... MORE

By now, I assume that everyone has read Michael Huemer's The Problem of Political Authority cover-to-cover.  Well, almost everyone.  Mike has generously agreed to field EconLog readers' questions.  Please post them in the comments, and he'll respond in a separate... MORE

Economics Quote of the Week

Cost-benefit Analysis
David Henderson
Although the week is half over, I bet this one will beat all comers. David Friedman, after analyzing queues and time lost to government bureaucracy in Britain while he was traveling, had an anonymous commenter who said: No offence, but... MORE

Seattle Gun Buyback Backfires

Economic Education
David Henderson
File this under "Gains from Exchange" Police officers in Seattle, Washington held their first gun buyback program in 20 years this weekend, underneath interstate 5, and soon found that private gun collectors were working the large crowd as little makeshift... MORE

Society of Lies

Behavioral Economics and Rationality
Bryan Caplan
Robin Hanson recently inspired me to re-read Tolstoy's "The Death of Ivan Ilych."  In a just world, social scientists of all descriptions would analyze this great work from a hundred different angles.  On my latest reading, though, what struck me... MORE

Cowen on the Multiplier: Is it Really "Worth"?

Fiscal Policy
David Henderson
Tyler Cowen recently wrote: So, in these cases [a government giving aid to to another government], a multiplier of one means that a dollar of aid--the alternative to the fiscal consolidation--is worth a dollar. I find that easy to believe.... MORE

Making You Smarter

Economics of Education
Bryan Caplan
Here's an excerpt from chapter 2 of the current draft of The Case Against Education.  Normal 0 MicrosoftInternetExplorer4 Making You Smarter While educators often promise to teach students how to think, they rarely vow to raise students' intelligence.  Trying to "make... MORE

Boettke on Living Economics

Books: Reviews and Suggested Readings
David Henderson
Some Highlights I tend not to listen to Russ Roberts' Econtalk interviews, not because I don't like them--I've liked every one of the 25 or so I've listened to and usually like them a lot--but because I have a 12-minute... MORE

Henderson on the Future of U.S. Politics

Economic Philosophy
David Henderson
Shortly after the Congressional elections of 2010, talk radio host Terry Gilberg of talk radio station KFYI in Phoenix had me on to discuss some of the implications of the Republican takeover, with the help of many Tea Party candidates,... MORE

Revealing Sentence on Higher Ed

Economics of Education
Bryan Caplan
From the NYT's piece on the financial troubles of higher ed:25 percent of the private colleges that Moody's rated did not raise tuition in fiscal 2011 at or beyond the rate of inflation; 21 percent of rated public universities did... MORE

Sorrow and Anger

Behavioral Economics and Rationality
Bryan Caplan
On Thursday, Casey Mulligan lectured on his The Redistribution Recession at GMU.  Lots of interesting, neglected evidence on the spike in labor market distortions since 2007.  Yet the talk was marred by Mulligan's commitment to a market-clearing model of labor... MORE

Alan Blinder left his position as a Princeton economist to serve as vice chairman of the Fed. After he went back to academia he wrote a great short book that I see as a crypto-memoir, Central Banking in Theory and... MORE

Travis Vanderbilt Kalanick

Regulation
David Henderson
The idea worked. How could Mr. Kalanick tell? Four months after the launch in San Francisco, Uber was served with a "cease and desist" order from the California Public Utility Commission and the San Francisco Municipal Transportation Agency. "Given my... MORE

When labor economists say "work experience," they usually just mean (Age-Education-5).  Industrial psychologists are far more subtle.  Quiñones, Ford, and Teachout, "The Relationship Between Work Experience and Job Performance: A Conceptual and Meta-Analytic Review."  (Personnel Psychology, 1995) begins by distinguishing... MORE

Government Hiring: Raising GDP by Definition

Economic Methods
Garett Jones
GDP, Gross Domestic Product. The number gets a lot of attention, deservedly.  You'd be foolish to use it as your sole economic statistic but you'd be just as foolish to ignore it and go with your gut.  Today I'd like... MORE

Welfare as a Magnet for Immigration: Some Evidence

Labor Mobility, Immigration, Outsourcing
David Henderson
The focus in the [1996] welfare reform legislation on scaling back the safety net for immigrants was, in some part, a response to concerns that generous public benefits lead to in‐migration to the U.S. and interstate flows of immigrants responding... MORE

Huemer's Common-Sense Libertarianism

Economic Philosophy
Bryan Caplan
My very favorite section from Mike Huemer's The Problem of Political Authority begins by distancing himself from other libertarian philosophers:The ideas of this chapter will strike many as too extreme and far too libertarian. Are we really forced to accept... MORE

The Thriving Middle Class

Growth: Consequences
David Henderson
Don Boudreaux and Mark Perry have an excellent piece in the Wall Street Journal today, "The Myth of the Stagnant Middle Class." They cover a lot of interesting ground on how standards of living are rising even in the last... MORE

When is a Spending Multiplier "Big"?

Fiscal Policy
Garett Jones
We're still debating how extra government spending influences the short run economy.  How it influences the long run is a more important question but that's a topic for another blog post.  Recently there's been some buzz that multipliers are on... MORE

Lefty's Laffer Curve

Taxation
David Henderson
Golfer Phil Mickelson, aka "Lefty," recently hinted that he was thinking of leaving California because of the high tax rates there that, combined with federal income and payroll taxes, make his tax rate (I'm pretty sure he meant marginal, not... MORE

Acemoglu on Human Capital and Signaling

Economics of Education
Bryan Caplan
My colleague Mark Koyama pointed me to Daron Acemoglu's lecture notes on human capital and signaling.  Mostly theory, but with some neat empirical points mixed in.Highlight on human capital:But there is some evidence that could be useful to distinguish between... MORE

Russ on Progress and Signaling

Information Goods, Intellectual Property
Bryan Caplan
Russ Roberts replies to my recent post on progress and signaling:Bryan wants to argue that conformity ossifies our behavior, but the world around us is full of non-conformity that eventually becomes no big deal. The first few people who bought... MORE

The ObamaCare-Induced Shift to Part-Time Work

Economics of Health Care
David Henderson
Then House of Representatives Speaker Nancy Pelosi, in pushing for the Affordable Care Act, aka ObamaCare, said, "We have to pass the bill so that you can find out what's in it." We're finding out what's in it and we're... MORE

Jonah Goldberg tries to play missionary to his Socially Liberal Fiscal Conservative friends.  He promisingly begins:Dear Socially Liberal Fiscal-Conservative Friend...[Y[ou know who you are. You're the sort of person who says to his conservative friends or co-workers something like, "I... MORE

Acemoglu and Robinson on Global Warming

Energy, Environment, Resources
David Henderson
I'm spending a large part of my day writing a book review of Daron Acemoglu and James A. Robinson's Why Nations Fail. Given the main theme of the book, which I like to focus on in reviews, I can't find... MORE

What Will the Neighbors Say? How Signaling Ossifies Behavior

Behavioral Economics and Rationality
Bryan Caplan
Suppose you suddenly discover a far better way of doing X.  Your discovery uses fewer resources, yields higher quality, and even has more positive externalities than Ye Olde Standby.  There's just one catch: your discovery is a discovery.  By definition,... MORE

Krugman Speaks Truth to Stiglitz

Fiscal Policy
David Henderson
And, moreover, uses some of Milton Friedman's best work to do so. First, Joe [Stiglitz] offers a version of the "underconsumption" hypothesis, basically that the rich spend too little of their income. This hypothesis has a long history -- but... MORE

Eli Dourado on the Mercatus Master's Fellowship

Economic Education
Garett Jones
@EliDourado tweets:Kind of hard to believe, Mercatus will pay you $20k/year to get an MA in Economics. Plus you might "get" to be my RA. He's right.  You might also "get" to take master's level macroeconomics with me: I'm teaching it... MORE

From the Archives: Comments on Huemer's Book Draft

Books: Reviews and Suggested Readings
Bryan Caplan
A year ago I sent Mike Huemer the following comments on his book draft, then titled Freedom and Authority.  He's incorporated many of my suggestions, but if you're curious to peer inside the revision process, enjoy.  (Detailed comments using the... MORE

Alan S. Blinder is one of America's leading economists. One of the few economists who write really well, he is also a master storyteller. In "After the Music Stopped," Mr. Blinder, previously a vice chairman of the Federal Reserve Board... MORE

Billie Holiday, arguably the greatest jazz vocalist of all time, was also a heroin addict.  After serving her first prison term for narcotics possession, she endured further punishment at the hands of the nation's occupational licensing system.  From her autobiography,... MORE

Social Security and Time Horizons: Reply to Krugman

Social Security
David Henderson
As regular readers of my posts know, I'm not someone who dismisses Paul Krugman or who thinks that he has nothing worthwhile to say. Indeed, I think he's one of the smartest bloggers around. So that's why his post yesterday... MORE

Zero Price, Today Only: *Copyright Unbalanced*

Information Goods, Intellectual Property
Garett Jones
Today is the first anniversary of Wikipedia's SOPA Blackout: A 24-hour shutdown to protest the Stop Online Piracy Act.  To commemorate the anniversary, the Mercatus Center is making Copyright Unbalanced: From Incentive To Excess available free for today only.  Download... MORE

A Conversation With Michael Huemer

Books: Reviews and Suggested Readings
Bryan Caplan
Michael Huemer, author of The Problem of Political Authority, has kindly agreed to take EconLog readers' questions about his new book.  To get maximum value from the exchange, read the book first ($30.40 on Kindle, $37.72 in paperback on Amazon... MORE

Rockefeller's Railroad Rebates

Business Economics
David Henderson
I had always wondered why John D. Rockefeller would get rebates on railroad shipments, not of his own oil--that I understand--but of his competitors' oil. Such rebates were called "drawbacks." Here's the answer that Michael Reksulak and William F. Shughart... MORE

Money for Morals

Economic Philosophy
Bryan Caplan
Over at Overcoming Bias, Robert Wiblin offers a tempting reward:Personally, I would like to think I take doing the right thing seriously, so I am willing to offer a monetary prize of £300 for anyone who can change my mind... MORE

The Problem of Political Authority by Michael Huemer

Books: Reviews and Suggested Readings
Bryan Caplan
I've read almost every major work of libertarian political philosophy ever published.  In my view, Michael Huemer's new The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey is the best book in... MORE

Great Moments in Cost Cutting: Rockefeller Edition

Business Economics
David Henderson
Rockefeller was relentless in ferreting out ways to cut costs. During an inspection tour of a Standard Oil plant in New York City, for instance, he observed a machine that soldered the lids on five-gallon cans of kerosene destined for... MORE

The New York Times Wins Bryan's Challenge

Labor Market
David Henderson
Last week, co-blogger Bryan Caplan posed a challenge: "Tell me how to sell the abolition of the minimum wage to the typical Feeling American." The next day, Bryan gave what he saw as the best responses. I thank commenter Phil,... MORE

Don't Let Your Boss Hold You Back

Business Economics
David Henderson
One of the most-powerful pieces of advice that Dwight R. Lee and Richard B. McKenzie give in their book, Getting Rich in America: 8 Simple Rules for Building a Fortune and a Satisfying Life, is: Don't Let Your Boss Hold... MORE

Will The End of Sleep Reduce Wages?

Wages and Salaries
Garett Jones
Jon M at Sociological Speculation reports: ...new drugs such as Modafinil appear to vastly reduce the need for sleep without significant side effects (at least so far). Based on reports from users, it seems that people could realistically cut their sleep... MORE

Obama's Mistake on Social Security

Social Security
David Henderson
There he goes again. If congressional Republicans refuse to pay America's bills on time, Social Security checks, and veterans benefits will be delayed. That's a statement President Obama made at today's press conference. See here for transcript. It's not true,... MORE

Better Than Plowing

Economic Philosophy
David Henderson
That's the title of James Buchanan's autobiography. I reviewed it in Reason in January 1993. Much of my review covers ground that will be familiar to those who have been reading the various blogs on Jim Buchanan over the last... MORE

How to Trust Government Data (or not)

Growth: Consequences
Garett Jones
I recommend Russ's recent EconTalk with Morten Jerven.  Jerven's forthcoming book, Poor Numbers, shows that GDP estimates in sub-Saharan Africa are fraught with error. Jerven, who visited many statistics offices in the region firsthand, concludes that poorly staffed offices and... MORE

Travels of a T-Shirt

Books: Reviews and Suggested Readings
David Henderson
In an e-mail, Jeff Hummel wrote a book review that's good enough to post. Here it is: Pietra Riovoli's THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY: AN ECONOMIST EXAMINES THE MARKETS, POWER, AND POLITICS OF WORLD TRADE was... MORE

Cronyism in D.C.

Economics of Crime
David Henderson
While in D.C. these last few days, I've been following more closely the David Gregory case. In case you haven't, here's a recap. David Gregory, the host of NBC's Meet the Press, displayed an illegal 30-bullet capacity gun magazine on... MORE

Buchanan: Seeing With New Eyes

Public Choice Theory
Garett Jones
One of the starting points for public choice theory was Kenneth Arrow's Impossibility Theorem. Arrow proved that as long as people are diverse in their opinions, and as long as everyone's opinion counts, it is impossible to create a voting... MORE

Feeling vs. the Minimum Wage: A Hard-Headed Assessment

Behavioral Economics and Rationality
Bryan Caplan
The best response by far to yesterday's challenge was a pair of tweets by Dan Lin:@bryan_caplan Find a person who got laid off from a charity after minimum wage increase. She tearfully says "I just want to help people."@bryan_caplan Oprah... MORE

Further Notes on James Buchanan

Public Choice Theory
David Henderson
In my haste last night to post on Jim Buchanan, I neglected to point out that a large percent of his work is on-line for free at Liberty Fund's Online Library of Economics and Liberty. Go here and scroll down... MORE

Feeling vs. the Minimum Wage

Behavioral Economics and Rationality
Bryan Caplan
Last week, I argued that some ideas are inherently hard to sell to people with "Feeling" personalities:If you're trying to sell libertarianism to Feeling people, "hard head, soft heart" ideas are more persuasive than "hard head, hard heart" ideas.  But... MORE

James M. Buchanan, RIP

Economic Philosophy
David Henderson
I found out on my smart phone, shortly before boarding a flight from San Francisco to Washington, D.C. today, that Jim Buchanan has died. He was a good man and one of the most important economists of the last half... MORE

Americans Used To Move A Lot

Labor Mobility, Immigration, Outsourcing
Garett Jones
Over the holidays some of my relatives lamented the changes going on in America.  One of the lamentations: the decline of dynamism, the rejection of the frontier spirit.  Is there something to this?  One piece of evidence: We just don't... MORE

Marriage, Kids, and Party

Family Economics
Bryan Caplan
Lately I've often heard that family is the key divide between Democrats and Republicans.  Democrats are supposed to be single and childless, Republicans married with kids.  So I decided to check this out for myself in the General Social Survey. ... MORE

IHS Fellowships

Upcoming Events
David Henderson
The Humane Studies Fellowship is a non-residency fellowship program that awards $2,000-$15,000 per year to each participant, and provides individual advising and a support network to foster academic success. Is the Humane Studies Fellowship right for me? The fellowship is... MORE

Henderson on Rich-Hunt

Books: Reviews and Suggested Readings
David Henderson
In Rich-Hunt, philosopher Roger Donway tells the detailed story of how [Greg] Reyes ended up in this position and how little the prosecutor cared about truth, let alone justice. The result is a chilling page-turner. If you don't know much... MORE

Two Soul-Searching Questions

Behavioral Economics and Rationality
Bryan Caplan
1. Suppose you lived in a society with a massive, age-old injustice.  Think slavery.  Are you the kind of person who would staunchly oppose this injustice anyway?2. Suppose a colorful, feel-good movement advocating a massive, new injustice suddenly became fashionable. ... MORE

Wage Rigidity in Of Human Bondage

Behavioral Economics and Rationality
Bryan Caplan
When economists say "wage rigidity," they almost always mean downward wage rigidity.  Nominal wages almost never come down.  Yet in W. Somerset Maugham's Of Human Bondage, set in late 19th-century England, upward wage rigidity plays an interesting role in the... MORE

Not from The Onion, Affordable Care Act Edition

Economics of Health Care
Garett Jones
In the 1990's and 2000's, as more violent criminals were thrown into prison and, partly for that reason, violent crime rates fell, the media had a wave of stories with titles like this: "Despite falling crime rate, prison populations rise."In... MORE

Horwitz on Hoover's Economic Policies

Regulation
David Henderson
Many historians, most of the general public, and even many economists think of Herbert Hoover, the president who preceded Franklin D. Roosevelt, as a defender of laissez-faire economic policy. According to this view, Hoover's dogmatic commitment to small government led... MORE

Murphy on Fiscal Austerity and Higher Tax Rates

Fiscal Policy
David Henderson
UPDATE: Market monetarist Lars Christensen responds. As these quotations from [Paul] Krugman and [Christina] Romer illustrate, many of today's proponents of Keynesian policy do not simply disagree with their critics, but go further by leading the general public to believe... MORE

Pax Libertaria

Behavioral Economics and Rationality
Bryan Caplan
As a rule, I dislike shouting matches.  But I especially dislike shouting matches between people I largely agree with.  As a libertarian, this puts me in an uncomfortable position, because many libertarians seem to relish shouting matches - even, or... MORE

Henderson on Red Plenty

Books: Reviews and Suggested Readings
David Henderson
Francis Spufford has pulled off a marvelous stunt. His book, Red Plenty, is not quite a documentary, although it's full of verified facts and actual historical figures, and not quite a novel, although it contains fictional characters. The British Sunday... MORE

Women, Liberty, Marketing, and Social Science

Economics and Culture
Bryan Caplan
Steve Horwitz and Sarah Skwire have restarted a long-standing debate about the shortage of libertarian women.  They make a very fair point: Libertarians should have been friendlier and more respectful to women - and turn over a new leaf forthwith. ... MORE

Great Moments in Public Choice: LBJ on Paul Douglas

Public Choice Theory
David Henderson
Senator Paul Douglas of Illinois was one of Johnson's more vocal critics. One afternoon LBJ beckoned me to his Senate desk with a grin. "I think I've found a way to defuse Paul Douglas. He was an economist, you know.... MORE

Vipul Naik of Open Borders sent me a very insightful email on the non-pecuniary returns to education.  He's kindly given me permission to reprint it.  Vipul speaks:I've been thinking more about your human capital/signaling/ability bias theories of education. It seems... MORE

In that order: 1.  U.S. and UK regulators are trying to find a workable way to shut down big international banks.  If they find a solution it would remove one of the the big barriers to ending Too Big To Fail.... MORE

Thoughts on the Latest Tax Bill

Taxation
David Henderson
Pssst: Someone tell the Republicans they won. Now that I've had time to reflect, I do have some thoughts on the tax bill that differ a lot from thoughts of others who are usually my political allies. Most of the... MORE

If This Be Aspergers

Behavioral Economics and Rationality
Bryan Caplan
I've often heard people dismiss my dear friend and colleague Robin Hanson for his "Aspergers," his blindness to the way that most human beings feel and think.  They're not entirely wrong, but Robin's latest post, a review of a Peter... MORE

My Path to Open Borders

Economic Methods
Bryan Caplan
My open borders autobiography is now a guest post at Open Borders.  Since I strove to truthfully and unstrategically describe my intellectual evolution, even my harshest critics may enjoy it.  Highlights:Until I was seventeen, my views on immigration were completely... MORE

How I Was Wrong About Government Debt

Fiscal Policy
Bryan Caplan
When an individual owes three times his annual income, we think it questionable: Okay for recent home-buyers, but probably a bad idea.  But when a government owes 300% of GDP in peacetime, we think it blatantly irresponsible.  I've often been... MORE

Update: Scott Sumner responds. Sometime in the next 24 or so hours, I'll give my thoughts on the latest tax and budget deal between Congress and President Obama. I find that one's first thoughts are not typically one's best. There's... MORE

Democracy in Singapore

Cross-country Comparisons
Bryan Caplan
The Singaporean blog TR Emeritus recently reprinted my "How I See Singapore," prompting critical response.  The main complaint is that I ignorantly claim that Singapore is a democracy.  I understand the pushback.  Singapore gets mediocre scores on international democracy ratings... MORE

Hummel on Moss on Limited Liability

Finance
David Henderson
San Jose State University economist Jeffrey Rogers Hummel sent the following capsule review of David A. Moss, When All Else Fails: Government as the Ultimate Risk Manager (Cambridge: Harvard University Press, 2000). Jeff writes: Limited liability remains a subject of... MORE

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