Bryan Caplan and David Henderson

November 2013

A Monthly Archive (76 entries)

David Friedman on the Precautionary Principle

Books: Reviews and Suggested Readings
David Henderson
In the mid to late 1980s, I used to do 5 or 6 book reviews a year for Fortune magazine. My editor then was the late Dan Seligman, a legend at Fortune. He was the most economically literate journalist I... MORE

Illusory Bubbles

Behavioral Economics and Rationality
Bryan Caplan
Scott Sumner succinctly explains how illusory bubbles can appear in a world ruled by the Efficient Markets Hypothesis:How should Bitcoin be priced?  If there is a 95% chance that it will soon be worthless and a 5% chance that it... MORE

Why Buildings Aren't Taller

Political Economy
Bryan Caplan
Whenever Robin Hanson turns to urban economics, I expect to be edified.  A prime example:Urban economics studies the spatial distribution of activity. In most urban econ models, the reason that cities aren't taller is that, per square meter of useable... MORE

An Exemption is not a Credit A steeply progressive income tax combined with generous dependent deductions ($500 originally, later raised to $600) played some unquantifiable part in stimulating the Baby Boom and family stability for a generation after the war.... MORE

Happy Thanksgiving! For What are You Thankful?

Growth: Consequences
Art Carden
We're t-minus 90 minutes from driving to my grandmother-in-law's house on the other side of Birmingham for our first Thanksgiving celebration of the day. For what are you thankful? Here are two things on my "Thankful" list: 1. Hot Showers.... MORE

Rights are Obligations, and That's the Problem

Economics of Health Care
Art Carden
In a consideration of the HHS mandate, Rachel Held Evans (who spoke at my institution a few months ago) asks whether it is OK for firms to refuse to provide contraceptive coverage as a matter of religious conscience. A few... MORE

Means-Testing and Behavioral Econ

Behavioral Economics and Rationality
Bryan Caplan
I'm a big fan of means-testing (see here, here, and here for starters).  Analytically, though, stringent means-testing is indistinguishable from high marginal tax rates.  In both cases, the government takes away a big chunk of every dollar you earn.  Philosophers... MORE

The Swiss overwhelmingly rejected a popular initiative that would have capped executive pay to 12 times the wage of the lowest-paid employee in the same business. Some 65% of the voters came out against the proposal, which was proposed by... MORE

The Pigou Club Reconsidered

Energy, Environment, Resources
David Henderson
Last Friday, I highlighted Ross McKitrick's exposition of the argument that taking account of the "tax interaction effect" (TIE) leads to the conclusion that the optimal Pigovian tax on carbon is less, and possibly substantially less, than the one that... MORE

Rising Male Non-Employment: Supply, not Demand

Income Distribution
Bryan Caplan
Tyler recently approvingly quoted Brad DeLong paraphrasing Larry Summers:My friend and coauthor Larry Summers touched on this a year and a bit ago when he was here giving the Wildavski lecture. He was talking about the extraordinary decline in American... MORE

I'm sharing a room with Frank Stephenson of Berry College at the Southern Economic Association meeting in Tampa. Our room has a coffeemaker that makes one cup at a time. Yesterday morning, Frank made a cup of coffee, then I... MORE

A Crime Beyond Denunciation

Price Controls
Bart Wilson
The works of the roots of the vines, of the trees, must be destroyed to keep up the price, and this is the saddest, bitterest thing of all. Carloads of oranges dumped on the ground. The people came for miles... MORE

Hoxby vs. Dale-Krueger on the Selectivity Premium

Economics of Education
Bryan Caplan
People who attend more selective colleges make more money after graduation.  But students impressive enough to win admission to selective colleges probably would have been relatively successful even if they'd attended a less prestigious institution.  That's ability bias for you. ... MORE

GDP: A Bad Measure of Well-Being

Macroeconomics
David Henderson
Picture this: The U.S. government finally sells the Postal Service. As with other functions moved from the government to the private sector, the privatized post office does what the government did for about half the cost. So, with prices correspondingly... MORE

The art of silly norms

Regulation
Alberto Mingardi
Photographer Olivia Locher (here's an interesting interview) has recently presented a new art project, "I Fought the Law". This photo series captures a selection of what Ms Locher regards as the silliest regulations and prohibitions enacted by U.S. states. Among... MORE

Friday Night Video: McKitrick on Carbon Taxes

Energy, Environment, Resources
David Henderson
If you have paid much attention to the debate about carbon taxes, you know that there is a "Pigou Club," of which Harvard economist Greg Mankiw is a founding member, and that these members advocate a tax on carbon.... MORE

Paul Gregory's Case Against JFK Assassination Conspiracy

Central Planning vs. Local Knowledge
David Henderson
The New York Times versus the New York Times I have known Hoover colleague, economist Paul Gregory, for about 5 years, and gotten to know him better in the last 3. An expert on Russia's economy and increasingly on China's... MORE

Gun Grabbing: A Reversal of Fortune

Economic History
Bryan Caplan
While reflecting on the Briggs-Tabarrok Effect, I stumbled across a shocking Gallup survey.  Back in 1959, Gallup started asking a random sample of Americans the following question:What about the possession of pistols and revolvers -- do you think there should... MORE

I'm at the Southern Economic Association meeting this weekend. We'll be sharing food, fun, laughs, and our research. I'm looking for things to trim off my "Projects" list, so I'm going to start blogging ideas for papers I'll never take... MORE

European Union, which steps forward?

Eurozone crisis
Alberto Mingardi
An almost invariable mantra of European politics is that Europe needs "an ever closer Union". Political centralization is commonly considered the only way out of the crisis - meaning, first of all, centralization of fiscal policies, as an all-powerful Brussels... MORE

GMU economic historian Mark Koyama emailed me some comments on my Industrial Revolution post.  Reprinted with his permission.  Note that Billington's figures imply a work year between 3900 and 4500, even assuming, contrary to Billington's lurid picture, that workers got... MORE

The Economic Illiteracy of High School History

Economic History
Bryan Caplan
In 11th grade, I took Advanced Placement U.S. History.  I enjoyed it at the time.  Once I started studying economics, however, I was outraged by the economic illiteracy of my history textbooks.  Mainstream historians barely mentioned the unprecedented miracle of... MORE

Via my Facebook feed and email, LearnLiberty posts a link to this debate snippet featuring Steven Horwitz and Jeffrey Reiman. The first question asks whether we should work to alleviate the problems of people whose parents make bad decisions. I'm... MORE

Economics and The Rapture

Behavioral Economics and Rationality
Art Carden
Economists are fond of calling environmental doomsayers' bluffs by challenging them to invest in oil futures if they're really afraid we're going to run out of oil within the next few years. I've done this before (here, for example, is... MORE

When you leave out major sources of income, surprise, surprise, you estimate that income is lower than it really is. What about the "other 99 percent," whose income supposedly rose by only 0.4 percent from 2009 to 2012? Piketty and... MORE

Bartender, Cashier, Cook, Janitor, Security Guard, Waiter

Economics of Education
Bryan Caplan
The human capital and signaling stories can both explain the existence of malemployment.  But malemployment research still provides some of the most compelling evidence in favor of the signaling model.  The latest draft of my The Case Against Education explains... MORE

How Staggering is the Briggs-Tabarrok Effect?

Cost-benefit Analysis
Bryan Caplan
Rumor has it that GMU's Justin Briggs and Alex Tabarrok have hammered the final nail into the NRA's coffin.  Zack Beauchamp of Think Progress explains:A new study, coauthored by a libertarian-aligned economist, has found strong evidence that the spread of... MORE

Language and Social Justice

Economic Philosophy
Bart Wilson
Jason Brennan argues that language can be used as an example by which we can judge the moral consequences of a spontaneous order. His argument is to suppose that a language "through no fault of their own" results in some... MORE

Richman: Non-Libertarians Sorta Agree With Us

Economic Philosophy
David Henderson
My Delightful Societal Bubble Libertarians make a self-defeating mistake in assuming that their fundamental principles differ radically from most other people's principles. Think how much easier it would be to bring others to the libertarian position if we realized that... MORE

Matt Yglesias: Health Insurance Doesn't Affect Mortality

Economics of Health Care
David Henderson
In comparing Bush on Hurricane Katrina and Obama on ObamaCare, Matt Yglesias writes: The administration and the Democratic Party writ large had very high aspirations for the Affordable Care Act, viewing it as a legacy-defining major pillar of the American... MORE

Oppression is a Negative-Sum Game

Income Distribution
Art Carden
Oppression is nothing new, and it has caused suffering that echoes across generations. That one group was oppressed does not mean that members of the oppressing group--or at least their descendants--benefited from it. In a post with which I largely... MORE

But when the minimum wage law confronts the law of demand, the law of demand wins every time. And the real losers are the most marginal workers--the ones who will be out of a job. This is a quote from... MORE

Hobbesian Misanthropy in The Purge

Behavioral Economics and Rationality
Bryan Caplan
Remember my Hobbesian thought experiment?Suppose a random person is living on a desert island without hope of rescue. Call him the Initial Inhabitant, or I.I. Another random person unexpectedly washes up on shore, coughing up water. Call him the New... MORE

Ron Paul's Misunderstanding of the CPI

Economic Methods
David Henderson
One of the least discussed, but potentially most significant, provisions in President Obama's budget is the use of the "chained consumer price index" (chained CPI), to measure the effect of inflation on people's standard of living. Chained CPI is an... MORE

I teach our principles and intermediate macro courses at Samford, and when Google Reader shut down I (like many, I suspect) let my RSS feeds die with it. It's time for that to change. What are your favorite macro blogs?... MORE

Would Buy-and-Hold Cut Finance Down to Size?

Behavioral Economics and Rationality
Bryan Caplan
The U.S. financial sector is now 8.4% of GDP.  It grew from about 2% of GDP in the late 1940s to about 8% in 2000; it's been roughly flat since.  From the Wall St. Journal:My question: Suppose buy-and-hold investment strategies... MORE

Coase's last book honored by the Atlas Foundation

Books: Reviews and Suggested Readings
Alberto Mingardi
The Chinese Communist Party's third plenum has "endorsed" the need for market-oriented reforms. In the communique released at the end of the four days conference we can read thatThe key issue is handling the relationship between the government and the... MORE

Last week, David linked to a reprinted press release from Reuters titled "Business Owners Welcome White House Support for $10 Minimum Wage." Here are a few thoughts: 1. I think the headline is meant to create mental disequilibrium for the... MORE

A central bank for Scotland?

Eurozone crisis
Alberto Mingardi
2014 will probably be the year when Scotland and Catalonia vote for their independence. The Catalonian referendum is strongly opposed by the Spanish government, and a date hasn't been set yet. In this old op-ed for the New York Times,... MORE

Nowrasteh on E-Verify

Labor Mobility, Immigration, Outsourcing
David Henderson
In reality, E-Verify will make it harder for hundreds of thousands of legal Americans to get a job. According to a recent independent audit of E-Verify conducted by the firm Westat, between 0.7 to 0.3 percent of all E-Verify queries... MORE

Why Nations Fail: A Contrarian Take

Cross-country Comparisons
Bryan Caplan
Acemoglu and Robinson's Why Nations Fail has been widely praised and extremely influential.  But one of the most brilliant students I've ever taught, Nathan Smith, provides a contrarian perspective.  According to Nathan, it's......one of the most over-rated books I've ever... MORE

I want to add a hearty "amen" to David's post on Michael Cohen's recent article on President Obama's truth-challenged claims about health care. My views on the economic literacy of the American electorate are Caplanian, but Cohen stakes out a... MORE

UPDATE BELOW In selling the health-care plan that bears his name, President Obama has, according to the fact-checking website Politifact, said at least 34 times that "if you like your health care plan, you can keep it." That statement was... MORE

Unz Debate Analysis

Economic Philosophy
Bryan Caplan
I suspect many readers are suffering from post-immigration-debate fatigue.  In the interests of fairness, though, here is my opponent Ron Unz's takeaway.... MORE

Prices are Like Words

Price Controls
Bart Wilson
People who are troubled by markets tend to treat prices as the problem in a market. Whether the price of labor or agricultural commodities is too low, or the price of housing or healthcare or payday loans is too high,... MORE

The Learning of the Wise

Behavioral Economics and Rationality
Bryan Caplan
Non-economists often advertise their ignorance of economics.  Debate opponent Ron Unz is the latest to cross my path:Now, you know, I'm laboring under a disadvantage in this debate because not only am I not a trained economist, I've never even... MORE

Did the Federal Spending Cuts Slow Growth

Macroeconomics
David Henderson
One of Scott Sumner's most important posts in the last few months is his November 8 post, "Mike Konczal: "We rarely get to see a major, nationwide economic experiment at work." Scott quotes blogger Mike Konzcal from last April: We... MORE

Of Fossil Fuels, Forests, and the Future of Prosperity

Energy, Environment, Resources
Art Carden
We live on a heavily-wooded suburban lot in Hoover, Alabama, just outside of Birmingham, surrounded by neighbors and a very short drive from Samford. Periodically, we'll roast hot dogs over sticks and branches we find in the yard (see "heavily-wooded")... MORE

Best. Comment. Ever.

Econlog Administrative Issues
Art Carden
A quote from reader Tom West's comment on Saturday's post about why bad stories stick: Deprived of a narrative when given a bunch of facts, humans will use the facts they're given to compose a narrative, and then adjust the... MORE

Mike Lee's Anti-Supply-Side Tax Cut

Taxation
David Henderson
Arguably, one of the biggest accomplishments of supply-side economist Art Laffer in the late 1970s and early 1980s was to get mainstream economists to take marginal tax rates seriously. We all knew that the deadweight loss from a tax is... MORE

Obama: Government Doesn't Work

Economics of Health Care
David Henderson
You know, one of the lessons--learned from this whole process on the website [healthcare.gov]--is that probably the biggest gap between the private sector and the federal government is when it comes to I.T. [Information Technology] ... Well, the reason [that... MORE

Why Do Incorrect Stories Stick?

Behavioral Economics and Rationality
Art Carden
I want to give up on college sports. I can't. While it doesn't carry national championship implications for LSU, today's Alabama-LSU game is still a pretty big deal. In 2011, they met in the "Game of the Century" that was... MORE

Explaining Burden of a Tax with Words

Taxation
David Henderson
Two days ago, I was talking to one of my allies in our recent successful fight against an increase in the property tax in Pacific Grove. He commented that the tax increase would have hurt renters too because landlords would... MORE

"This is great news. Raising the minimum wage will help America succeed," said Jon Cooper, the President of Spectronics Corporation in Westbury, NY. "Employers like me need to do our part by paying a decent minimum wage - closer to... MORE

"No one benefits from making it more difficult for an individual who owes money to make money." When I teach my Cost-Benefit course, I give out a problem set early in each quarter in which one of the questions is... MORE

Happiness for All

Social Security
Alberto Mingardi
Here's an interesting development, from Venezuela. Last week President Nicolas Maduro, who is following on the footsteps of Hugo Chavez, presented a new government department, the Deputy Ministry of Supreme Social Happiness. Actually, this new government unit appears to be... MORE

We Won!

Taxation
David Henderson
"David, what's wrong?" said my wife Rena last night as she heard me gasping for air shortly after opening my computer while on the couch last night. She thought I might be having a stroke. "I can't believe it," I... MORE

The Decline of Creative Destruction

Economic History
Bryan Caplan
Though I've been a harsh critic of Tyler's Great Stagnation thesis, I was struck by the following figure in Edmund Phelps' Mass Flourishing:At first glance, this confirms a quarter-century of steadily declining creative destruction - falling job creation and job... MORE

McKenzie on Driving vs. Walking

Energy, Environment, Resources
David Henderson
Which is more polluting--driving a mile to work or walking that mile? The easy answer is, of course, driving. Cars have tailpipes; people don't. Far more energy is needed to push a 3,000-pound car along the road than is needed... MORE

An Invitation to Bryan Caplan and Vivek Wadhwa: Care to Debate?

Labor Mobility, Immigration, Outsourcing
Art Carden
I still haven't watched the Intelligence Squared debate on immigration, but I have followed the fallout here on EconLog. I propose that we settle this...with a debate. I invite Bryan Caplan and Vivek Wadhwa to Samford University for a debate... MORE

Based upon last fall's Humanomics course, Gus Gradinger and I are submitting the following chapter proposal for a book on teaching with The Wire. If it doesn't fit with the editors' vision for the volume, we plan to work out... MORE

The New Colossus, Vivek Wadhwa Version

Labor Market
David Henderson
Watching co-blogger Bryan Caplan's debate on immigration and seeing Vivek Wadhwa's performance, and then reading his post-debate comment to Bryan, I asked myself: If Wadhwa were in the position of poet Emma Lazarus, how might he have written her famous... MORE

Play and Exit

Economics and Culture
Bryan Caplan
I've now read Peter Gray's Free to Learn twice.  To be honest, he's the first unschooler to deeply impress me as a thinker and a writer.  Before I discuss the heart of his book, I plan to read his key... MORE

The Pre-Existing Condition Exaggeration

Economics of Health Care
David Henderson
One of the claims that many supporters of ObamaCare made during the debate in 2009 and early 2010 is that many people could not get insurance because of pre-existing conditions. I was always skeptical of this claim for a simple... MORE

Vivek Wadhwa Responds

Economic Philosophy
Bryan Caplan
My debate teammate Vivek Wadhwa accepted my offer to post a response to my analysis of the debate.  Vivek:Bryan, feel free to post what you like. I am in favor of legalizing all the workers who are in the US... MORE

Peter Gray, Free to Learn: Why Unleashing the Instinct to Play Will Make Our Children Happier, More Self-Reliant, and Better Students for Life. Gray's son went to Sudbury Valley School, where education was kind of a free-for-all in which self-organizing... MORE

What I've Been Reading Lately

Book Club
Art Carden
Among the hats I wear, I'm a Senior Research Fellow for the Institute for Faith, Work, and Economics and a Fellow with Samford University's Center for Science and Religion. This means I get to read a lot of books at... MORE

Normal 0 MicrosoftInternetExplorer4 It's hard to believe we're even debating "Let anyone take a job anywhere."  If someone said, "The law should prevent women from working," or "The law should prevent Jews from working," or "The law should prevent... MORE

At risk of sounding like a sore loser, I've claimed that many Intelligence Squared participants initially voted metaphorically.  The resolution said "Let Anyone Take a Job Anywhere," but many attendees voted For simply because they are pro-immigration by mainstream American... MORE

How to Deal With Those You Disagree With

Property Rights
David Henderson
Brown University, where I had a civil debate in 1980 with an advocate of conscription, had a shameful event last week. New York City Police Commissioner Ray Kelly was there to speak, but some thuggish people in the audience shouted... MORE

The Naik Strategy

Behavioral Economics and Rationality
Bryan Caplan
An interesting Facebook post by the noble Vipul Naik, reprinted with his permission.  Vipul:I think Bryan Caplan could have won the Intelligence Squared debate by pandering to his audience in the following ways: (1) Stated that "America is a nation... MORE

Friday Night Video: Why No Milton Friedman Today

Economic Philosophy
David Henderson
As many readers of this blog probably know, the Mercatus Center had a panel in September on why there is no Milton Friedman today. I enjoyed all the presentations. The one I enjoyed most was David Colander's. Professor Colander's explanation--these... MORE

If You're So Smart . . .

Labor Market
David Henderson
In a recent blog post, my friend Don Boudreaux writes: In short, monopsony power in labor markets keep workers underpaid. With all those underpaid workers out there--and because there are no government-enforced prohibitions on starting companies that employ low-skilled workers--a... MORE

Debate Analysis: Unz, Wadhwa, and Me

Economic Methods
Bryan Caplan
Two of my co-debaters, Vivek Wadhwa and Ron Unz, sent out newsletters analyzing the debate.  Opponent Ron Unz:As a useful means of gauging the impact of the arguments, the organizers take before and after votes of the large New York... MORE

Normal 0 MicrosoftInternetExplorer4 "Let anyone take a job anywhere."  Given current policy, it sounds radical.  But notice: The resolution does NOT say "Let anyone become a citizen anywhere," "Let anyone collect government benefits anywhere," or "Let anyone vote anywhere." ... MORE

Let's Meet at the Southerns, or, Want to Read My Manuscript?

Books: Reviews and Suggested Readings
Art Carden
I'm working on a book with the venerable Deirdre N. McCloskey on the economic history of the last few centuries, and I've arranged a session at the Southern Economic Association conference in Tampa in which I'll receive comments from Steven... MORE

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