Bryan Caplan and David Henderson

March 2013

A Monthly Archive (65 entries)

David Stockman Screeches

Monetary Policy
David Henderson
David Stockman, Reagan's first director of the Office of Management and Budget, has a strange op/ed in today's New York Times and "Angus" (aka Kevin B. Grier) does a nice take-apart. I don't agree with all of his criticisms, but... MORE

Yglesias on Freedom in the 50 States

Economic Philosophy
David Henderson
The Mercatus Center, for which I have done a few studies, is about to release a study of the degree of freedom in the 50 states of the union. I'll probably have more to say once it's released, but enough... MORE

Milton Friedman's theory of Starve the Beast said that there was a "politically acceptable deficit," so a one-time ex nihilo cut in taxes would have to cause a spending cut to keep the deficit stable.  My commenters have revised (or... MORE

Hummel on Bernanke's New Central Planning

Monetary Policy
David Henderson
The first two lectures cover the origins and history of the Fed. Mr. Bernanke identifies three primary functions of central banks: to conduct monetary policy (i.e., controlling of the supply of money by setting interest rates); to serve as lenders... MORE

The "Starve the Beast" theory predicted that if you gave politicians more revenue, they would just spend it.  However, the last few years in Europe have provided example after example that tax increases are quite compatible with relative spending restraint... MORE

Three Laws of Major Mismatch

Economics of Education
Bryan Caplan
In Being John Malkovich, anti-hero Craig Schwartz whines, "Nobody's looking for a puppeteer in today's wintry economic climate."  The Great Recession has made a lot of college graduates feel like Craig Schwartz.  If you major in philosophy, history, or puppetry,... MORE

Scott Winship on Inequality

Income Distribution
David Henderson
The idea that our economy is held back by inequality is echoed in the claims of some of the nation's most prominent economists. Princeton professor (and Nobel laureate) Paul Krugman and David Card of the University of California, Berkeley, contend... MORE

Policy Implications of the Marriage Premium

Cost-benefit Analysis
Bryan Caplan
In the comments, Thomas Boyle fears that the marriage premium could become an excuse for bad policies: Years ago we heard that homeownership was positively associated with all sorts of socially desirable outcomes. Now we know that public policy to... MORE

In the last few months here in the U.S. we've had a tax increase followed by a sequester.  Tax hikes coupled with slower spending growth: Here on the internet, we call that "austerity." But for decades, much of the American Right... MORE

Career Day: The Life of an Econ Prof

Labor Market
Bryan Caplan
Last Friday, I spoke at my sons' school's Career Day about what's it's like to be an economics professor.  I think I told the unvarnished truth, but please judge for yourself.P.S. I feared this "How to Become an Econ Prof"... MORE

Vignettes from the Armen Alchian Memorial

Economic Methods
David Henderson
On Saturday, I attended the memorial service at UCLA for the late Armen Alchian. I arrived about an hour and a half early and so I was there when Jerry O'Driscoll came in, saying that he and Walter Williams were... MORE

9 Short Observations about the Marriage Premium

Family Economics
Bryan Caplan
In the past, I've faulted economists for ignoring the marriage premium (here, here, and here for starters).  Last week, when Pascal-Emmanuel Gobry and Megan McArdle joined my fault-finding expedition, Justin Wolfers pushed back on Twitter:There's no credible evidence justifying the... MORE

Some Economics of Wal-Mart

Labor Market
David Henderson
Last month, I received an e-mail from a high school student named Kelsey Stolz and I took some time to reply. I think our correspondence would be of wider interest. Here it is. Kelsey: I am a junior in high... MORE

On Human Evil: Concrete Down the Drain Edition

Cost-benefit Analysis
Garett Jones
When people have little incentive to behave well, and when nobody is watching, what do people do?  The last few years have given us millions of opportunities to answer that question as people living in foreclosed homes decided whether to... MORE

Armen Alchian Memorial

Economic Education
David Henderson
In a few minutes I'm flying down to Los Angeles to attend a memorial service for the late Armen Alchian. Most of the short appreciation I wrote out covers issues I've already talked about in the bio linked above and... MORE

Friday Night Video: Henderson on War for Oil

Energy, Environment, Resources
David Henderson
A friend of mine recently found a link to a video that a man named Jim Turney did of a talk I gave in Monterey in February 1991. It's at the annual convention of the Libertarian Party of California. The... MORE

The Duty to Give Away Everything You Don't Need

Economic Philosophy
Bryan Caplan
Many moral philosophies seem to imply a duty to give away everything you don't need.  Consider this statement by Nicole Hassoun over at Cato Unbound:I do not have property rights that extend so far that they allow me to withhold... MORE

Corinne Sauer on U.S. Subsidies to Middle East

Political Economy
David Henderson
After getting various comments on my post about ending U.S. government aid to the Middle East, I asked Corinne Sauer if she would read the comments and give me her take. She has done so. To recall, Corinne Sauer is... MORE

Brick's Insight on Childhood

Economics of Education
David Henderson
I watched a rerun of one of my favorite TV shows, "The Middle," last night and one segment was so good that I DVRed it and then transcribed the dialogue. (See here for some of the highlights.) In case you... MORE

The Rights of the World's Poor

Economic Philosophy
Bryan Caplan
Over at Cato Unbound, philosopher Nicole Hassoun prompted me to sketch the main argument I plan to make in Part II of Poverty: Who To Blame.  Namely: We should view people in the Third World as victims of First World... MORE

"Get Married and Stay Married"

Cost-benefit Analysis
David Henderson
I'm glad that co-blogger Bryan Caplan raised the issue of the marriage premium. When I was writing a review of Dwight Lee's and Richard McKenzie's excellent book, Getting Rich in America: 8 Simple Rules for Building a Fortune and a... MORE

Was the Iraq War About Oil?

Energy, Environment, Resources
David Henderson
Reader warning: If you do not "do" nuance, then please don't read this post and especially don't comment. On this 10th anniversary of the U.S. government's invasion of Iraq, there have been many articles assessing the war. I wrote a... MORE

Premia and Double Standards

Family Economics
Bryan Caplan
Why are economists so quick to encourage college and so slow to encourage marriage?  Pascal-Emmanuel Gobry has a good story:[E]conomists' "cosmopolitan perspective" (as Cowen puts it) makes them not feel good at the idea of public policy that would interfere... MORE

Adam Ozimek has an interesting objection to my claim (here and here) that empirical work on the disemployment effect of the minimum wage contradicts empirical work on the wage effect of low-skilled immigration:Bryan's immigration example is missing an important point.... MORE

Assorted Tweets: Cyprus Speed Bankruptcy Edition

Public Choice Theory
Garett Jones
1: Is the Cyprus bank levy a crude approximation of bankruptcy?  Actually, the bank levy is probably better for depositors than bankruptcy....The reason it's probably better than bankruptcy is because in return for haircuts, Cypriot banks will get cheap money from... MORE

The Hoover/Mellon Tax on Checks

Money
David Henderson
It's heartening to see that virtually everyone who has blogged on the proposed tax on bank accounts in Cyprus has pointed out that this is a set-up for a run on Cyprus banks. I have little to add to that... MORE

End Military Aid to Israel and Egypt and ...

Game Theory
David Henderson
Corinne and Robert Sauer, founders of the Jerusalem Institute for Market Studies, have taken up a proposal put forth in 2003 by Erez Raphaeli, an independent researcher. He contended that ending the nearly $5 billion in annual U.S. military aid... MORE

Mises on Death Panels (Implicitly)

Cost-benefit Analysis
Bryan Caplan
Unlike most opponents of Medicare, I think that restricted reimbursements and so-called "death panels" are great ideas.  If the government is paying the bills, saying "We'll pay for whatever you want" or "We'll pay whatever it takes to save you"... MORE

Some theories of the business cycle say that booms and recessions are caused by shocks to the supply of key inputs: a wave of new high-tech ideas, a rise in oil prices, big changes in labor law.  In supply-side stories, it's easy... MORE

Cowen on Immigration

Labor Mobility, Immigration, Outsourcing
David Henderson
Tyler Cowen's latest New York Times column, "A Profession with an Egalitarian Core," is one of the best short pieces he's written in the last year or so. HIs overall point is that economists have been on the forefront in... MORE

Scott Sumner on Real Causes of Business Cycles

Macroeconomics
David Henderson
Scott Sumner has a first-rate post this morning and one of the most important ones you can read if you want a quick look at why real changes in the economy rarely cause large business cycles. Here are the first... MORE

The video of the John Stossel show for February 28 has now been released and is here. In the fourth segment, starting at about the 26:00 point, Veronique de Rugy discusses France's failure to cut government spending and I talk... MORE

Yglesias on Narcissism

Economic Philosophy
David Henderson
UPDATE: Paul Krugman makes the point that Matt Yglesias and I make. Personal Experience and Principle Various friends on Facebook this morning were celebrating the fact that Republican Senator Robert Portman has come out (no pun intended) in favor of... MORE

In early January, I wrote a post whose subtitle was "Pssst: Someone tell the Republicans they won." The gist of it was that the Republicans got the Bush tax cuts made permanent for all but the very highest-income Americans. An... MORE

Inescapable Intuition

Economic Philosophy
Bryan Caplan
Mike Huemer replies to his critics on Cato Unbound.  My favorite part is his common-sense defense of common sense.  His begins by methodically laying out the problem: [T]he recommendation to "rely on common sense morality" is just another way of... MORE

That is the title of an article by Michael Sivy sent to me by a frequent reader of Econlog. I have heard other people ask the same thing, so I'll answer. First, let me point out that authors of popular... MORE

Rand Paul's Filibuster

Central Planning vs. Local Knowledge
David Henderson
Every once in a while, I depart from strictly economic education and information, the purpose of Econlog, to comment on important things that are happening in the political world. My latest article on antiwar.com discusses the Rand Paul filibuster. This... MORE

Designing Men vs. Spontaneous Order

Economics of Health Care
David Henderson
The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation... MORE

The Myopic Empiricism of the Minimum Wage

Economic Methods
Bryan Caplan
Unlike most opponents of the minimum wage, I admit that David Card and Alan Krueger's famous research on the topic is well-done.  How then can I continue to embrace (and teach!) the textbook view that the minimum wage significantly reduces... MORE

New York City's plan to ban large sugary drinks from restaurants, movie theaters and other establishments was invalidated by a judge on Monday, the day before the new law was to take effect. State Supreme Court Justice Milton Tingling in... MORE

Thomas C. Leonard on Nudge

Behavioral Economics and Rationality
David Henderson
See Update Below. While web surfing the other day, I came across work by Princeton economist Thomas C. Leonard. There's a lot of good work there. In this post, I want to highlight his review of Nudge by Richard Thaler... MORE

Dr. Henderson in Africa

Economics of Health Care
David Henderson
There has been a lot of discussion on this blog lately about why there are so few doctors in America. (If you want to follow the discussion in order, see here for Garett, here for me, and here for Bryan).... MORE

There's an old story about a mathematician asking Paul Samuelson for one idea in economics that was simultaneously true and not obvious.  Samuelson's answer is here.  Today, I've got another: The Chamley-Judd Redistribution Impossibility Theorem.  Chamley and Judd separately came... MORE

How I Raise My Children

Economic Philosophy
Bryan Caplan
Tonight I screened The Sixth Day, Schwarzenegger's 2000 cloning flick, for my twin sons.  After the movie was over, I had them read this passage aloud:If you think clones are contrary to nature, think twice. Identical twins are naturally occurring... MORE

Friday Night Video: Henderson on Economic Myths

Fiscal Policy
David Henderson
Last November, in his final show before the Presidential election, John Stossel devoted most of the hour to election issues. One segment was on economic myths that the candidates believe or, at least, say they believe. Sallie James of Cato... MORE

"One might as well be hanged for a sheep as a lamb." Antiproliferators are playing counterproductively with the status issue in another way by seeking to dumb down the definition of a nuclear weapon state. Commonly, this designation has been... MORE

Student Motivation: A Reply to Gelman

Economics of Education
Bryan Caplan
Gelman responds to my post on student motivation in the comments.  He's in blockquotes, I'm not:First, yes, I do expect things are different at Columbia and Harvard than at GMU, in some ways better (Ivy League students are better prepared)... MORE

TARP Bet Bleg

Economic Methods
Bryan Caplan
As far as I can tell after a quick read, this OMB report says that I'm on track to win my TARP bet in 2013.  But I'd rather outsource this to outside readers.  Anyone?Update: Does anyone dispute that this is... MORE

Gelman the Education Optimist

Economics of Education
Bryan Caplan
Andrew Gelman's reaction to an excellent post by Alex Tabarrok:[W]e have different goals when doing the following two things: 1. Attending a lecture, reading a textbook, or watching a lecture video. 2. Attending a concert or listening to broadcast or... MORE

Bad Social Science: A Consequence of Consequentialism

Cost-benefit Analysis
Bryan Caplan
From my response to Mike Huemer's target essay on this month's Cato Unbound:As a free bonus, Huemer dulls the urge consequentialist libertarians often feel to stretch the truth, to make stronger claims about the benefits of libertarian policies than the... MORE

Highlights from Hummel's Macro Class

Macroeconomics
David Henderson
In 2009, I taught Jeff Hummel's Masters class in Macro at San Jose State University while he was on sabbatical. I did so to relearn macro and to learn what's new in macro. It worked. However, the segment I was... MORE

An Unwritten Minimum Grade Law Exists

Economics of Education
Garett Jones
The more I think about Boudreaux's Minimum Grade Law proposal, the more I realize it has already been quietly enacted. The names of the departments vary from university to university, but there's almost always a department or two willing to pass... MORE

Bill Dickens vs. Me on Huemer

Economic Philosophy
Bryan Caplan
I've been having an extended Facebook argument with Bill Dickens about Mike Huemer's The Problem of Political Authority.  To be fair, Bill is only responding to Huemer's piece on Cato Unbound, not the actual book, which he has not read. ... MORE

Michael Barone's Mistaken Prediction

Regulation
David Henderson
We should be happy when "Ain't it Awful" Predictions Don't Come True Often, when I make the points I made in my recent post, "Why Am I So Cheerful?", people hand me their distress. That is, they argue back about... MORE

The Robber Barons: Neither Robbers Nor Barons

Economic History
David Henderson
But a careful reading of the economic research on the "robber barons" leads to a diametrically opposite conclusion: the so-called robber barons were neither robbers nor barons. They didn't rob. Instead, they got their money the old-fashioned way: they earned... MORE

Assorted Tweets: Minimum Grade Law Edition

Labor Market
Garett Jones
1.  My colleague Don Boudreaux wrote a faux news article where politicians pushed for a "minimum grade law" to help struggling students. It's just a matter of simple fairness, of course.  I tweeted:Extra bonus of Boudreaux's Minimum Grade Law: banning... MORE

Christina Romer on the Minimum Wage

Labor Market
David Henderson
Former Obama economist Christina Romer--she was the chairman of the President's Council of Economic Advisers--has a good, though not excellent, piece on the minimum wage in the New York Times. In it, she departs from her ex-boss's views and points... MORE

What's driving the high price of doctors: market inequality or government entry restrictions?  My co-bloggers' debate reminds me of a random encounter with some striking evidence: The Digest of Education Statistics' Table 294.If you peruse this table, you'll discover that... MORE

The Air Travel Revolution

Regulation
David Henderson
Derek Thompson's "How Airline Ticket Prices Fell 50% in 30 Years (and Why Nobody Noticed)" is a nice round-up of the facts about the effects of airline deregulation. People who know the story well--I guess Derek would call us "nobodies"--won't... MORE

Signaling Rules: Today Hollywood, Tomorrow the World

Behavioral Economics and Rationality
Bryan Caplan
My dear friend and colleague Tyler Cowen thinks the signaling model of education is, roughly speaking, empirically irrelevant.  He's repeatedly urged me to stop barking up what he sees as a very wrong tree.  I was pleasantly surprised, then, to... MORE

There are some ideas I love to believe in despite a lack of evidence.  Among my favorites: That the business cycle is partly a self-fulfilling prophecy: You go to the party you think everyone else is going to, you stay... MORE

Why Am I So Cheerful?

Economics and Culture
David Henderson
After we taped a segment for the John Stossel show last Tuesday, John and I took the subway to his beautiful apartment on the Upper East Side, where he had invited me to dinner with him and his lovely wife.... MORE

The GiveWell-Clemens Brainstorm

Cost-benefit Analysis
Bryan Caplan
Call it the nobility summit: The noble charity evaluator GiveWell brainstorms with the noble immigration researcher Michael Clemens.  The highlight for me (Clemens speaking):CITA is a non-profit organization in Yuma, AZ founded by Janine Duron, which aims to match Mexican... MORE

Garett Jones on the Supply of Doctors

Labor Market
David Henderson
Which is the binding constraint? My co-blogger Garett Jones posted this week on the supply of doctors, suggesting a new way of thinking about them. He used the idea of opportunity cost: if potential doctors face a high opportunity cost... MORE

Tim Kane and Means-Testing

Behavioral Economics and Rationality
Bryan Caplan
Whenever an economist or libertarian opposes means-testing of Social Security and Medicare, I immediately ask: "So should we extend all currently means-tested programs to the entire population?"  Listeners often admit that it's a persuasive challenge.  At our last lunch, however,... MORE

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