Bryan Caplan and David Henderson

August 2013

A Monthly Archive (75 entries)
Slate has redeemed itself after that awful piece by Allison Benedikt that co-blogger Art Carden criticized yesterday. One highlight of Ms. Benedikt's piece that caught my attention was this: I went K-12 to a terrible public school. My high school... MORE

I'm Proud to Be a Bad Person

Economics of Education
Art Carden
Perhaps you've read Allison Benedikt's "If You Send Your Kid to Private School, You Are a Bad Person" at Slate. We're homeschooling our kids instead of sending them to the elementary school a few blocks away, so I guess that... MORE

Why Can't Labor Be More Like Housing?

Labor Market
Bryan Caplan
During recessions, demand for both housing and labor plummets.  But the two markets respond in very different ways.In the housing market, we usually see dramatic price falls.  Lots of properties sit on the market for months.  But almost any property... MORE

Only a Biologist Can Go to Universal Humanism

Economic History
Bart Wilson
When I first read the manuscript for The Rational Optimist, Matt Ridley had me hooked on p. 8: And I find a deep incuriosity among trained economists--of which I am not one--about defining what prosperity is and why it... MORE

When Goods Don't Cross Borders, Armies Will

International Trade
David Henderson
One quote that Bastiat lovers--I include myself--love to cite is Bastiat's famous quote, "When goods don't cross borders, armies will." There's one little problem with the quote: he never said it. He should have said it. One can imagine, with... MORE

Farewell to a great historian

Economic History
Alberto Mingardi
Historians, economists, and voracious readers all over the world mourn the passing of David Landes. Landes, arguably one of the greatest economic historians of our time, was a superb writer and captivated readers all over the world. His son Richard... MORE

The Tears of Termination

Behavioral Economics and Rationality
Bryan Caplan
Earlier this year, I argued that Casey Mulligan's theory of labor market contradicts introspection:Ask yourself:When someone gets laid-off, what is his main emotional reaction likely to be?  Sorrow.When someone gets a nominal wage cut, what is his main emotional reaction... MORE

Costco vs. Wal-Mart

Business Economics
David Henderson
In other words, Trader Joe's and Costco are the specialty grocer and warehouse club for an affluent, educated college demographic. They woo this crowd with a stripped-down array of high quality stock-keeping units, and high-quality customer service. The high wages... MORE

The Partialtarian Corporation

Economic Philosophy
Bryan Caplan
Noam Chomsky calls corporations "totalitarian" without a hint of irony (gated version only):...I'd like to strengthen the federal government. The reason is, we live in this world, not some other world. And in this world there happen to be huge... MORE

I'm working on a book I'm co-authoring with Deirdre McCloskey on the economic history of the last few centuries. Here is a choice passage from page 44 of her 2006 book The Bourgeois Virtues: The tempting shortcut of taxing the... MORE

Peace On Earth Is Almost Here

Cost-benefit Analysis
Bryan Caplan
The ceaseless ugliness of the news notwithstanding, the Great Pacification continues.  Check out Wikipedia's latest map of Ongoing Military Conflicts, circa October 2012.The minor wars are usually dwarfed by private crime.  Even most of the major wars would have seemed... MORE

Day One

Economic Education
Bart Wilson
Today is my first day blogging at EconLog. I would like to thank Amy Willis for the invitation to guest blog for the semester and for her generous introduction last week. I also thank the bloggers of EconLog for their... MORE

Solow and Samuelson on the Phillips Curve

Books: Reviews and Suggested Readings
David Henderson
In my critical comment on Robert Solow's slam on Friedman, I pointed out that when I reread Solow's and Samuelson's famous 1960 article on the Phillips Curve as a "menu" for policy makers choosing between low unemployment and low inflation,... MORE

The Alabama Music Hall of Fame has been closed since November. The article linked here points out that over the course of the museum's existence, the taxpayer subsidy has worked out to about $33 per visitor. I skimmed down to... MORE

The Means-Testing Club

Cost-benefit Analysis
Bryan Caplan
We advocates of means-testing need a name for our club.  Singapore and Tyler Cowen (somewhat surprisingly) could be charter members.  Tyler, from Singapore: Normal 0 MicrosoftInternetExplorer4 This is oversimplifying of course, but you can think of the Singaporean system as... MORE

Good Students Rule

Economics and Culture
Bryan Caplan
Most professors like good students, but I idolize them.  For most professors, good students are a joy in the classroom, but a chore outside of the classroom.  For me, good students are a joy through and through.  I like talking... MORE

Galbraith Opposes Cronyism

Books: Reviews and Suggested Readings
David Henderson
In John Kenneth Galbraith: His Life, His Politics, His Economics, Richard Parker writes: The following year [1951], at the invitation of Puerto Rico's reform-minded governor, Luis Munoz Marin, Galbraith and a small team of researchers paid repeated visits to the... MORE

Kitty Galbraith on Keynes

Books: Reviews and Suggested Readings
David Henderson
Kitty Galbraith makes Hayek's mistake (although check the big caveat below) This is my next installment on Richard Parker's book on John Kenneth Galbraith: His Life, His Politics, His Economics. From a footnote, a quote from Galbraith's wife Catherine (Kitty)... MORE

The stupidest letter a US Ambassador ever received

Eurozone crisis
Alberto Mingardi
The following letter (kindly translated into English by my colleague David Perazzoni) was sent to the American Ambassador in Rome by seven Italian MPs (Michele Anzaldi, Marina Berlinghieri, Matteo Biffoni, Luigi Bobba, Lorenza Bonaccorsi, Federico Gelli, Ernesto Magorno), who apparently... MORE

Introducing Bart Wilson

Econlog Administrative Issues
Amy Willis
Please join all of us at EconLog in welcoming Chapman University's Bart Wilson as our newest guest blogger. Wilson brings a keen eye for economic history and human behavior, and we very much look forward to his contributions, starting next... MORE

Lake Wobegon on the Job

Behavioral Economics and Rationality
Bryan Caplan
Neat stuff from Baker, Jensen, and Murphy's "Compensation and Incentives: Practice vs. Theory" (Journal of Finance, 1988):The lack of financial incentives reported by Medoff and Abraham [32] and summarized in  able I is surprising, but even more surprising is the... MORE

Yesterday's post on what I've read recently provoked two interesting comments on the title of Michael Adams' Letters to a Young Progressive, one from ThomasH, the other from none other than David Friedman (!!). They made me wonder: which group... MORE

The Tragedy of Economath

Economic Education
David Henderson
Co-blogger Bryan has done an admirable job of critiquing "economath" here and here. What follows from his critique is what I call "the tragedy of economath." Over my 30+ years of teaching mainly Masters students, I come across really good... MORE

I Was Wrong: Avik Roy was Right

Central Planning vs. Local Knowledge
David Henderson
Avik Roy and I went back and forth by e-mail throughout the day yesterday about my blog post on his article. I still thought he was wrong. But what convinced me was the comment on my post by "Handle." I... MORE

Recent Reading

Books: Reviews and Suggested Readings
Art Carden
Here are a few things I've read (and re-read) recently: 1. Charles Murray, American Exceptionalism: An Experiment in History. This is a short and useful tract--it's 50 pages and pocket-sized--on what made the US unique, what continues to make it... MORE

We're Number 12! We're Number 12!

Information Goods, Intellectual Property
David Henderson
In its ratings of economics blogs, "Top 200 Influential Economics Blogs - Aug 2013," Onalytica Indexes ranks Econlog as 12th out of 200! Congratulations to my fellow Econ(b)loggers.... MORE

The People of Economath

Behavioral Economics and Rationality
Bryan Caplan
Paul Krugman graciously responds to my economath post, but demurs:It turned out -- and still turns out -- that people's economic intuition, if untutored by models, missed a major possibility that is in fact probably the main story.My question for... MORE

Economath Fails the Cost-Benefit Test

Behavioral Economics and Rationality
Bryan Caplan
Paul Krugman responds to Noah Smith's tale of disillusion with mathematical economics:I share much of his cynicism about the profession, but I think he's missing the main way (in my experience) that mathematical models are useful in economics: used properly,... MORE

I am pleased to announce that on October 30, I will be debating before Intelligence Squared.  The resolution: "Let Anyone Take a Job Anywhere."  The teams: Vivek Wadhwa and me for the resolution, Ron Unz and TBD against.The event is... MORE

Bitcoin and libertarians in "the great machine"

Eurozone crisis
Alberto Mingardi
Bitcoin is now recognized as financial instrument under German banking rules. The Guardian writes: Germany's ministry of finance has formally recognised the digital currency Bitcoin as a "unit of account" which can be used for private transactions - meaning that... MORE

Can Higher Limits of Out-of-Pocket Costs Help Consumers?

Economics of Health Care
David Henderson
UPDATE BELOW: Avik Roy replies. I got back from my vacation early Monday morning, a vacation on which I had limited Internet access. That's why I didn't respond to this Avik Roy article earlier. Still, I thought that by the... MORE

I, Beef Jerky

Central Planning vs. Local Knowledge
Art Carden
Yesterday morning, I opened a bag of beef jerky that reads "MADE IN THE U.S.A." at the bottom of the front of the bag. On the back of the bag--and I found this interesting--one reads that the jerky Contains beef... MORE

Galbraith's Imposition of Price Controls

Books: Reviews and Suggested Readings
David Henderson
In 1941, Leon Henderson (no relation), the head of the Office of Price Administration, chose John Kenneth Galbraith as his economist to control prices. This was a few months before the U.S. government officially entered World War II. Galbraith learned... MORE

Japan Bet Bleg

Economic Methods
Bryan Caplan
Scott Sumner has kindly agreed to bleg my request to help craft a bet with Bill Dickens:Bill Dickens wants to bet me that looser Japanese monetary policy won't boost Japanese NGDP.  What victory conditions should a market monetarist consider prudent... MORE

Dehiring: Win-Win-Lose

Labor Market
Bryan Caplan
Suppose your firm has a mediocre employee.  He's not ridiculous, but he's worth a lot less than you pay him.  What does your firm do?Econ professors' knee-jerk answer is, "Fire him."  But people with real jobs often notice a rather... MORE

Daniel Kuehn, in the comments on my recent post on Galbraith's criticism of Keynes, and in his own blog post, has pointed out that Keynes did not commit the error that Galbraith accused him of. To refresh your memory, Galbraith... MORE

Expressive Voting, Emigration, and Alsace-Lorraine

Behavioral Economics and Rationality
Bryan Caplan
In 1871, the German Empire annexed the French territory of Alsace-Lorraine, known to the Germans as Elsass-Lothringen.  The inhabitants were overwhelmingly German-speaking, but most clearly resented absorption into the new German Empire.  What is striking, however, is how differently this... MORE

Galbraith's Criticism of Keynes

Books: Reviews and Suggested Readings
David Henderson
This is next in my continuing series of posts about Richard Parker's John Kenneth Galbraith: His Life, His Politics, His Economics. In May 1941, John Kenneth Galbraith had an article published in the prestigious Review of Economics and Statistics. It... MORE

Did Galbraith and Steinbeck Ever Discuss This?

Books: Reviews and Suggested Readings
David Henderson
John Kenneth Galbraith was well aware that President Franklin D. Roosevelt's agricultural policy was to pay farmers not to grow in order to drive prices up and to destroy various crops to drive prices up. One obvious consequence was that--prices... MORE

Sunstein Goes Straight to Coercion

Regulation
David Henderson
Time out from posting on Galbraith to note a current discussion. My next post on Galbraith will appear this afternoon. Co-blogger Bryan Caplan has posted recently and cogently about libertarian paternalism and outright coercion. As it happens, I have a... MORE

Hayek as read by Chinese communists

Books: Reviews and Suggested Readings
Alberto Mingardi
I've just run into a very curious document. You can now download to your Kindle "The Introduction to the Communist Party of China's Translation of F.A. Hayek's The Road to Serfdom", conveniently translated into English by Matt Dale. The Road... MORE

Friday Night Video: Good Advice from Ashton Kutcher

Economics and Culture
David Henderson
Yes. You read that right. Here's the link. It's less than 5 minutes long. It's advice for young people, but it's good advice for everyone. HT to Bob Murphy.... MORE

Galbraith and the Southern Sharecroppers

Books: Reviews and Suggested Readings
David Henderson
"I am astonished how little we were concerned." In the mid-1930s, under the Franklin Roosevelt-inspired Agricultural Adjustment Act, the U.S. government paid farmers not to grow. Richard Parker, in John Kenneth Galbraith: His Life, His Politics, His Economics, writes: If... MORE

The Programmatic Paternalist

Cost-benefit Analysis
Bryan Caplan
Suppose you were a free-thinking, hard-core paternalist.  Regardless of the forms of paternalism that people in your society will accept, you're determined to give them forms of paternalism they need.  If coercing people for their own good will in fact... MORE

Galbraith on Helping Farmers

Books: Reviews and Suggested Readings
David Henderson
In his book John Kenneth Galbraith: His Life, His Politics, His Economics, Richard Parker tells us that Galbraith's first specialty in economics was agricultural economics. As a result of earning his Ph.D. in ag econ at Berkeley and having the... MORE

Galbraith Bests Henderson: AEA Edition

Finance
David Henderson
Note: Because it's hard to get on line at my cottage, I'm not as responsive to comments on my posts as I normally am. I will say, though, that I thought Mike Davis's comment yesterday was excellent. I said in... MORE

Economics offers a lot of cool and counterintuitive insights. One of the most fun, I think, is the independence of the legal incidence and the economic incidence of a tax. In other words, if demanders are not very responsive to... MORE

Summer Readings: "We" by Evgenij Zamyatin

Books: Reviews and Suggested Readings
Alberto Mingardi
Dystopian novels are typically congenial to libertarians. Some of them are of course very well-known: Huxley's Brave New World, Orwell's 1984, and in some circles Ayn Rand's Anthem. Others did not enter the canon. While one of my favorite dystopian... MORE

Gaming on EconLog: A History of Nerddom

Economics and Culture
Bryan Caplan
Today I'm taking my twins to their first GenCon, the world's biggest gaming convention.  In honor of this glorious day, here are my top gaming related EconLog posts.1. The Secret of Good Games2. The Sociology of RPGs3. The Social Science... MORE

What Happens to Women Who Are Denied Abortions?

Behavioral Economics and Rationality
Bryan Caplan
In Joe Colucci's thoughtful response to my "Nudge and Abortion," he writes:[D]ata saying that women are generally happy with their children, even after unplanned pregnancies, are unlikely to be representative of the population we're. More relevant evidence comes from the... MORE

Richard Parker on John Kenneth Galbraith

Books: Reviews and Suggested Readings
David Henderson
I'm on vacation at my cottage in Minaki, Ontario and, because the weather until recently has not been up to par, I'm doing more reading than usual. The book I'm currently working my way through is John Kenneth Galbraith: His... MORE

We got together with some neighbors last month and held a yard sale. A good number of our customers were Spanish-speaking immigrants. Co-blogger Bryan Caplan discusses research suggesting that more immigrants make for higher real estate values in the Cato... MORE

Nudge and Abortion Followup

Behavioral Economics and Rationality
Bryan Caplan
"Nudge and Abortion" has sparked a lively Twitter debate.  Leigh Caldwell has most thoughtful reaction:Leigh: @BafMacro but: @bryan_caplan's arg holds IF his preference premise is true. Regretting NEVER having kids != regretting an abortion @R_ThalerMy response to Leigh: I didn't... MORE

Huemer Symposium at BHL

Books: Reviews and Suggested Readings
Bryan Caplan
The Bleeding Heart Libertarians symposium on Mike Huemer's The Problem of Political Authority starts today.  Don't miss it!... MORE

On Re-Reading Hayek's The Road to Serfdom

Austrian Economics
Art Carden
I'm spending the week at a Liberty Fund conference on Hayek dubbed "Hayek Boot Camp." One of the assigned readings was, not surprisingly, The Road to Serfdom. The first time I read it was right before I started grad school,... MORE

Nudge and Abortion

Behavioral Economics and Rationality
Bryan Caplan
Here's my ongoing Twitter exchange with Richard Thaler: Thaler: As @CassSunstein and I say repeatedly in Nudge, the goal is to improve outcomes for people AS JUDGED BY THEMSELVES, not policy maker's tasteMe: .@R_Thaler @ATabarrok @CassSunstein So what existing *hard*... MORE

Where no publisher has gone before

Business Economics
Alberto Mingardi
As he already revolutionized logistics, floored old fashioned retailers, and made a bookstore a thriving business, expectations are very high for Jeff Bezos as the new publisher of Washington Post. Certainly newspapers might need a little bit of creative destruction,... MORE

Why No Slippery Slope? Because Paternalists Start at the Bottom

Behavioral Economics and Rationality
Bryan Caplan
If libertarian paternalism is a slippery slope, why aren't we sliding?  Don Boudreaux provides the obvious answer: Because almost all paternalism is coercive from the get-go:One reason why the empirical record isn't more full of nudges turning into diktats is... MORE

Stephanie Herman, a "homeschooling mom of two boys who has taught high school economics in a homeschool coop," was kind enough to send me a review copy of her book Cost Benefit Jr., which provides "an economics curriculum for young... MORE

Sympathy for the Citizenist

Behavioral Economics and Rationality
Bryan Caplan
Citizenists strike me as extraordinarily angry people.  But I have to admit: If I were them, I'd be angry too.  Consider their intellectual situation: Every orthodox moral theory - utilitarianism, Kantianism, egalitarianism, libertarianism, wealth maximization, Rawlsianism, Christianity, and Marxism for... MORE

Tribalism, Misanthropy, and the Lesser Evil

Behavioral Economics and Rationality
Bryan Caplan
I've long attacked tribalism and misanthropy as grave evils.  Only recently, though, have I had two epiphanies:1. Tribalism without misanthropy is fairly harmless.  If you're optimistic about the potential of the typical human, you'll see out-groups as opportunities for mutually... MORE

Open Borders Logo Contest

Economics and Culture
Bryan Caplan
The Open Borders blog is sponsoring an Open Borders logo contest.  Fab Rojas explains:The Open Borders movement seeks a symbol that embodies the spirit of free migration. To achieve that goal, we are sponsoring a logo contest. The winner of... MORE

Upstart Bleg: Help Paul Gu Help You

Business Economics
Bryan Caplan
Paul Gu, one of the winners of Peter Thiel's 20under20 fellowships, has co-founded a company called Upstart.  In this guest post, he explains his idea, pre-answers common questions, and solicits novel questions.  And now... Paul Gu! Human Capital Contracts for... MORE

Capitalism is awesome

Economic Philosophy
Alberto Mingardi
Chris Berg, a research fellow with the Institute of Public Affairs in Melbourne, has contributed a masterful little article to the Cato Policy Report. It is entitled "Why Capitalism Is Awesome," and it elegantly makes some very important points. Writes... MORE

Many people worry that a majority of the voting-age population will soon pay no federal income tax and will, therefore, be motivated to vote themselves even more federal transfers. Undoubtedly, most of those paying little in taxes want more government... MORE

I got a lot of great comments on last week's post about what would happen if tipping became the norm at McDonald's. See especially these comments by Eric Rall, Jeff (nice catch, but I'm using "McDonald's" as a stand-in for... MORE

Do Wage Cuts Reduce Communal Purchasing Power?

Behavioral Economics and Rationality
Bryan Caplan
I'm frankly stunned that Krugman would approvingly quote the following passage from Keynes:[I]f a particular producer or a particular country cuts wages, then, so long as others do not follow suit, that producer or that country is able to get... MORE

Henry Hazlitt, public intellectual

Economic Education
Alberto Mingardi
Can a public intellectual try to develop original insights, besides popularizing the ideas he holds dear? Paul Krugman recently lambasted Henry Hazlitt, who "has been wrong about everything for more than 80 years, and is still regarded as a guru".... MORE

Libertarianism as Moral Overlearning

Economic Philosophy
Bryan Caplan
"Overlearning" is a key idea in educational psychology.  One good explanation:Overlearning is a pedagogical concept according to which newly acquired skills should be practiced well beyond the point of initial mastery, leading to automaticity.In experiments, researchers often test the effects... MORE

Proposed hikes to minimum wages and improvements in working conditions are not free lunches, and at least part of the cost gets passed on to consumers in the form of higher prices. The reply from advocates of the higher minimum... MORE

Immigration, Misanthropy, and the Holocaust

Behavioral Economics and Rationality
Bryan Caplan
The Museum of Jewish Heritage in NYC features an outstanding exhibit on European Jewry's struggle to escape from Hitler's clutches.  Throughout the 1930s, the Nazis officially encouraged Jewish emigration.  The catch: By definition, every emigrant from Nazi territory had to... MORE

Business Brainwashing and Vocational Education

Behavioral Economics and Rationality
Bryan Caplan
I'm a huge fan of child labor, also known as "vocational education."  Almost everyone would be better off if students in the bottom half of their class began full-time apprenticeships after elementary school.  If you hate sitting still and you're... MORE

Tuesday's article about McDonald's and minimum wages got a decent amount of attention and a lot of comments of varying quality. Before my article appeared, Forbes staff writer Clare O'Connor had published a piece borrowing estimates from the University of... MORE

Who's Second-Guessing

Behavioral Economics and Rationality
Bryan Caplan
The issue from yesterday post was... drug policy.  The author, Scott Morgan, is reacting to Mark Kleiman's disinterest in the legalization option.  Kleiman:But there are things we can do about drug policy that would reduce the number of people in... MORE

The new future of television?

Trade Barriers
Alberto Mingardi
Google is launching a new device, Chromecast, which has been hailed as a potential "game changer" for the television market. If I get it right, Chromecast basically allows you to bring your web streaming to your television. This would allow... MORE

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