Bryan Caplan and David Henderson

May 2014

A Monthly Archive (74 entries)

Raise Minimum Wage: Reduce Benefits

Labor Market
David Henderson
At the start of this year, the minimum wage in SeaTac, a city in Washington state, was raised by a whopping 63 percent--from $9.19 an hour to $15.00 an hour. If we critics of the minimum wage, including the late... MORE

As regular readers of this blog will probably remember, I criticized Walter Block's boss at Loyola University back in February for not defending Walter's academic freedom. This is not to say that I will always defend Walter Block. In my... MORE

Can we have confidence in our opinions on immigration?

Labor Mobility, Immigration, Outsourcing
Scott Sumner
Bryan Caplan has a post that discusses a hypothetical eugenic regime: Imagine a Eugenic America where citizens who earn less than median income are forbidden to have children. Enforcement isn't perfect, so 5% of all kids born are "illegals." Over... MORE

A Eugenic Experiment

Behavioral Economics and Rationality
Bryan Caplan
Imagine a Eugenic America where citizens who earn less than median income are forbidden to have children.  Enforcement isn't perfect, so 5% of all kids born are "illegals."  Over time, this leads to a substantial stock of people who weren't... MORE

OpenEurope on the European vote

Eurozone crisis
Alberto Mingardi
OpenEurope has published a thoughtful flash analysis of the European elections. It is well worth reading (here). The two key points: - Share of anti-EU and anti-establishment vote is slightly higher than expected with such parties collectively on course to... MORE

Is the Sharing Economy a Rip-Off?

Regulation
David Henderson
Don't buy Dean Baker's hype The "sharing economy" - typified by companies like Airbnb or Uber, both of which now have market capitalizations in the billions - is the latest fashion craze among business writers. But in their exuberance over... MORE

Dear Nationalism

Behavioral Economics and Rationality
Bryan Caplan
Dear Nationalism,We've grown up together.  In a sense, you and I have been together our whole lives.  In a deeper sense, though, we've never been together.  I've tried to let you down easy a hundred times.  But subtlety doesn't work... MORE

Wolfgang Munchau has a nice article in the Financial Times on inflation targeting. I agree with much of what he has to say, but will offer mild criticism of two points. Here's how Munchau begins: Back in the 1990s... MORE

Partial Response to Yoram Bauman

Energy, Environment, Resources
David Henderson
In his latest reply to co-blogger Bryan Caplan, Yoram Bauman writes: If more economists like Bryan were upfront about their agreements with basic climate science then I would feel better about not having time to respond to people like David... MORE

I offered to give Yoram the last word in our exchange.  Here it is.P.S. Yoram's non-fiction graphic novel officially releases on June 5.  That week, with his kind permission, I'll be posting a few pages from his book. Normal 0... MORE

Frank on Phony Credentials

Economics of Education
Bryan Caplan
Thomas Frank's essay on phony credentials is engaging throughout.  Lead-in: Americans have figured out that universities exist in order to man the gates of social class, and we pay our princely tuition rates in order to obtain just one thing:... MORE

"Rationally Inactive"

Public Choice Theory
David Henderson
In a problem set for an Energy Economics course I'm teaching this quarter, I asked the following question: The U.S. government requires that a certain amount of ethanol be used in gasoline in the United States. There is fairly strong... MORE

Lind's Challenge for Progressives

Economic Philosophy
Bryan Caplan
Several of my friends were annoyed that Michael Lind's profile of me failed to mention my open borders advocacy.  They should be happy, then, that this piece makes the libertarian/open borders connection crystal clear.  Lind even says this:If progressives really... MORE

Frankly Signaling

Economics of Education
Bryan Caplan
Within economics, the idea that education has a larger effect on income than productivity is vaguely right-wing.  Why?  Because economists realize that this premise undermines the textbook efficiency case for governments' massive education subsidies.Outside economics, however, the idea that education... MORE

Tom Brown sent me to an Austrian critique of monetary stimulus (in this case negative interest on reserves): Negative deposit rates" means that the banks will charge the customer for saving money and placing it in the bank. According to... MORE

Economism and Immigration

Microeconomics
Bryan Caplan
In our immigration debate, Mark Krikorian heavily downplayed the relevance of economic arguments.  Instead of focusing on immigration's economic benefits, we should dwell on the damage immigration does to our national solidarity, culture, and politics.  His reply to my post-debate... MORE

Phil Magness on Piketty's U.S. Wealth Data

Wealth distribution
David Henderson
All of that stated briefly, the low point for wealth concentration on Piketty's chart (see the upward kink after the 1970s datapoint on Figure 10.5 above), and the point at which a supposed reversal in US wealth concentration trends begins,... MORE

VA Health Care: The Problems with Government Agencies

Economics of Health Care
David Henderson
Robert P. Murphy, a frequent writer for Econlib, has a good analysis of Kevin Drum's (of Mother Jones) comments on the current scandal with Veterans Administration health care. I'll hit a few highlights and then add some of my own... MORE

Ad Hominem

Economic Methods
David Henderson
Michael Kinsley gives us Exhibit A Abusive ad hominem usually involves attacking the traits of an opponent as a means to invalidate their [sic] arguments. Equating someone's character with the soundness of their [sic] argument is a logical fallacy. So... MORE

Eating out. The wisdom of Tyler Cowen

Book Club
Alberto Mingardi
The way in which we think and the way we write is greatly influenced by the authors we read. This applies especially to those we read daily: journalists, and now bloggers. When their style is distinctive and vivid, we often... MORE

What is Pay? What is Wealth?

Labor Market
David Henderson
I remember talking to Walter Oi about pay in the early 1980s. He had an idea to write up a paper titled "What is Pay?" I don't think he ever did. But here was the issue he led with. The... MORE

Myth of the Rational Voter: The Animated Series, Part 4

Behavioral Economics and Rationality
Bryan Caplan
My Learn Liberty video on anti-foreign bias is now up.  It's the last of the series, probably the best, and certainly the most important.... MORE

Talking More to Mark Krikorian

Economic Philosophy
Bryan Caplan
Last week the Center for Immigration Studies' Mark Krikorian answered my post-debate questions.  Here is my delayed response.  Mark's in blockquotes, I'm not.  My original questions for Mark are in italics.[Caplan's] argument was that treating foreigners in any way differently... MORE

Matt Yglesias has a post suggesting that if the NBA were "any normal industry" it would not be able to get away with collusive schemes like the NBA draft. For those who don't follow American sports, the new players entering... MORE

Cartoon Introduction to Climate Change: Rejoinder to Yoram Bauman

Behavioral Economics and Rationality
Bryan Caplan
Here is my (delayed) rejoinder to Yoram's response to my review of his Cartoon Introduction to Climate Change.  He's in blockquotes, I'm not.As with most academics, Bryan keeps his words of praise to a minimum and instead focuses on criticisms.... MORE

Myth of the Rational Voter: The Animated Series, Part 3

Behavioral Economics and Rationality
Bryan Caplan
I'm back from vacation, and my Learn Liberty video on anti-market bias is up.  Enjoy.... MORE

The Great Society at 50

Book Club
Alberto Mingardi
Fifty years ago, Lyndon Johnson gave his famous "Great Society" address at the University of Michigan. In an interesting essay on "The Great Society at 50", AEI's Nicholas Eberstadt presents a very balanced and nuanced account of the "Great Society",... MORE

The middle class is doing fine

Income Distribution
Scott Sumner
When I start reading an article there are a few red flags I look out for. If the writer starts discussing income inequality data as if it tells us something useful about economic inequality, I know I can pretty much... MORE

Reynolds on Summers and Piketty

Human Capital: Returns to entrepreneurs, skills, etc.
David Henderson
My copy of Thomas Piketty's book, Capital in the 21st Century, sits unopened. I plan to read it in June for a review that's due at the end of June. Meanwhile, though, I've been reading lots of reviews and comments... MORE

Walter Oi on Government Budgeting

Property Rights
David Henderson
In response to my recent pieces on Walter Oi (see here, for example), Walter's widow, Marjorie, sent me an unpublished 26-page, single-spaced reminiscence that Walter wrote circa 1995 about his time as a child in Franklin D. Roosevelt's internment camps.... MORE

Tucker on the Young Unemployed

Labor Market
David Henderson
Consider: Why does any business hire an employee? It happens based on the belief that the business will make more money with the employee than without it. The business pays you, you do work, and, as a result, there are... MORE

Los Angeles Times Distorts

Energy, Environment, Resources
David Henderson
Los Angeles Times reporter Brian Bennett, in the first paragraph of a recent news story, writes: Sen. Marco Rubio of Florida, a GOP star and possible 2016 presidential contender, does not believe human activity is causing climate change, he said... MORE

How People Get Good at Their Jobs

Economics of Education
Bryan Caplan
From The Case Against Education: Normal 0 MicrosoftInternetExplorer4 How People Get Good At Their Jobs If schools teach few job skills, transfer of learning is mostly wishful thinking, and the effect of education on intelligence is largely hollow, how on... MORE

Has Medicaid succeeded?

Economics of Health Care
Scott Sumner
Fifty years ago America spent about 8% of GDP on "national defense" and 0% of GDP on Medicaid. By 2015 spending on both programs is forecast to be about 3% of GDP (roughly $540 billion--including the state portion of the... MORE

Noah Smith on Modern Economics

Economic Philosophy
David Henderson
Do a YouTube search for "Milton Friedman." Most of the hits will be speeches mixing economic theory with political philosophy. You'll see Friedman talking about the value of greed, for example, or holding forth on socialism versus capitalism. Most entertaining... MORE

What is monetary policy?

Monetary Policy
Scott Sumner
When I use the term 'monetary policy' it refers to actions taken by the monetary authority aimed at influencing the supply or demand for base money, with the ultimate objective of influencing a broader set of macro variables, such as... MORE

Williamson on Lind and Caplan; Me on Leonard Read

Economic Philosophy
David Henderson
Kevin Williamson of National Review has written an excellent response to Michael Lind's attack on my co-blogger Bryan Caplan. Here's one excerpt: The ideological Turing test, modeled on Alan Turing's 1950 thought experiment for measuring the approximation of intelligence in... MORE

Half-Staff for Farmers

Labor Market
David Henderson
Each year, America sets aside a week to salute the men and women who do the difficult, dangerous, and often thankless work of safeguarding our communities. Our Nation's peace officers embody the very idea of citizenship -- that along with... MORE

Partial Reply to Yoram Bauman

Energy, Environment, Resources
David Henderson
UPDATE BELOW Co-blogger Bryan has graciously published Yoram Bauman's response to Bryan's critique of his The Cartoon Introduction to Climate Change. As Bryan notes, he will not be able to get around to responding to Yoram soon, and so I... MORE

Yoram Bauman, co-author of The Cartoon Introduction to Climate Change, asked to respond to my review.  I'm about to go to my parents' golden anniversary party, so I probably won't respond until late next week.Here's Yoram: Normal 0 MicrosoftInternetExplorer4 Response... MORE

The Improvident Rich

Economic History
Bryan Caplan
From Larry Summers' review of Piketty:When Forbes compared its list of the wealthiest Americans in 1982 and 2012, it found that less than one tenth of the 1982 list was still on the list in 2012, despite the fact that... MORE

I Feel Blessed

Economic Philosophy
David Henderson
In the last 24 hours, four good things have happened in my personal and work life. Co-blogger Bryan Caplan, with wisdom beyond his years, said, when he was substantially younger, that we should feel gratitude. He's right. I've always thought... MORE

I recall a movie where a guy asks his buddy if his girlfriend is intelligent. The buddy replies "she's average." And the other guy responds "average is dumb." Most people agree. I don't know if that's fair overall (I doubt... MORE

"One has a moral responsibility to disobey unjust laws," so goes the old, venerable quote by Martin Luther King. But what about unjust regulations? Typically businesses play by the rules. Some of them play with the rules, by engaging in... MORE

Myth of the Rational Voter: The Animated Series, Part 2

Behavioral Economics and Rationality
Bryan Caplan
The second video in my Learn Liberty series is now up.  Rejoice in the folly of pessimistic bias!  Yes, Louis C.K. said it better, but humans learn by varied repetition.... MORE

Quotes From a Colloquium

Growth: Causal Factors
David Henderson
A few weekends ago, I attended a colloquium in San Diego at which we discussed readings in economic institutions and economic growth. We discussed a lot of chapters from Daren Acemoglu and James A. Robinson, Why Nations Fail, which I... MORE

Never debate the impact of a price change

Monetary Policy
Scott Sumner
There as been a lot of recent discussion about the "Neo-Fisherite" claim that higher interest rates lead to higher inflation. Noah Smith has a good summary. Unfortunately the debate has been marred by a lack of precision. What is being... MORE

The Cartoon Introduction to Climate Change

Cost-benefit Analysis
Bryan Caplan
Stand-Up Economist Yoram Bauman is back with another non-fiction graphic novel, The Cartoon Introduction to Climate Change.  As with his previous Cartoon Introductions to Economics (micro and macro), there is much to like.  Bauman thoughtfully interweaves physical science and economics. ... MORE

Thoughts on Krikorian

Labor Mobility, Immigration, Outsourcing
David Henderson
In his recent debate on immigration with my co-blogger Bryan Caplan with my friend Alex Nowrasteh, Mark Krikorian makes two interesting points. The first is that the term "open borders" is not an accurate description of what many of us... MORE

Exploring Elitist Democracy: The Latest from Gilens and Page

Behavioral Economics and Rationality
Bryan Caplan
In light of the attention my Gilens posts are getting, now's a perfect time to examine his latest research on who actually runs America.  Co-authored with Benjamin Page, "Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens," (Perspectives... MORE

The paradoxes of applying nationalism to immigration

Labor Mobility, Immigration, Outsourcing
Scott Sumner
Consider two policy options: A. The US admits 1 million immigrants per year between now and 2050. B. The US admits 3 million immigrants per year between now and 2050. Suppose we only cared about the welfare of Americans. Would... MORE

Healthcare... The return of the Singapore model

Economics of Health Care
Alberto Mingardi
Last week, in one of his Undercover economist columns, Tim Harford asked If the US healthcare system is financially incontinent and the UK system is reliant on a centralised and philosophically troubling cost-benefit analysis, is there some other better way?... MORE

Trade Creates Peace

International Trade
David Henderson
"Germany Vexed by Ties to Russia." So reads the headline of a front-page article in the Saturday/Sunday Wall Street Journal by Anton Troianovski. Mr. Troianovski goes on to point out the tension between German Chancellor Angela Merkel's desire to be... MORE

Me, Gilens, and Salon

Behavioral Economics and Rationality
Bryan Caplan
Last year I wrote a series of posts (here, here, and here) arguing that Martin Gilens' evidence on the disproportionate influence of the rich on U.S. public policy is very good news indeed.  Long story short:I find Gilens' results not... MORE

"Hollowing Out": A Global Perspective

Economic History
Bryan Caplan
Stagnationists often complain about the "hollowing out" of the economy: Well-paid middle-income jobs are disappearing.  Normally, they only look at the United States and other developed countries.  As a cosmopolitan, however, I'd rather discover what's been happening to incomes at... MORE

Friday Night Video: Henderson on RT

Economic Philosophy
David Henderson
Last week I recorded an interview with Erin Ade of RTTV's "Boom and Bust." She put me through the paces, and showed that she had obviously read, or at least scanned, some of my writing, which is better than some... MORE

Mitt Romney's True Colors

Labor Market
David Henderson
"I ... part company with many of the conservatives of my party on the issue of the minimum wage," he said in an interview on MSNBC's "Morning Joe." "I think we ought to raise it because, frankly, our party is... MORE

Myth of the Rational Voter: The Animated Series

Behavioral Economics and Rationality
Bryan Caplan
Learn Liberty is doing a four-video series on The Myth of the Rational Voter's four big economic biases.  Production values are very high, and the animators used so many of my visual ideas that I can now justifiably re-classify my... MORE

Great Moments in Federal Government Retirement

Cost-benefit Analysis
David Henderson
On Tuesday, I spent all day at a retirement planning seminar with more than 100 other federal government workers. Talking to a few of my colleagues around my same age (63), I jokingly referred to it as an AARP event.... MORE

My Hoover Obit on Gary Stanley Becker

Obituaries
David Henderson
Here's a long excerpt: One major problem that Becker addressed in his column was the drug war. He did not shrink from advocating a free market in illegal drugs, a good that he, I'm confident, did not buy. He saw... MORE

Last night I debated Stephen Balch of Texas Tech's Institute for the Study of Western Civilization.  Here's my opening statement. Normal 0 MicrosoftInternetExplorer4 Meant for Each Other: Open Borders and Western Civilization The Institute for the Study of Western Civilization... MORE

The Great Grandson Also Rises

Growth: Causal Factors
David Henderson
Our former co-blogger, Arnold Kling, has an excellent review on Econlib of Gregory Clark's latest book, The Son Also Rises. The review is titled "The Heritability of Social Status." You may have noticed that Clark, an economist historian at UC... MORE

When ideologies change

Labor Market
Scott Sumner
Over the past 5 years I've done a number of posts discussing a strange phenomenon. My views on money/macro are in many respects quite close to the consensus view of 2007: 1. Fiscal stimulus is ineffective. 2. Monetary stimulus can... MORE

Gary Becker, A Reminiscence

Economic Education
Lauren Landsburg
I am sitting in front of a notebook from Econ 302, one of the graduate economics courses I took from Gary Becker in the late 1970s at the U. of Chicago. Thumbing through it reminds me of many stories.... MORE

Broadly speaking, there are three approaches to stabilization policies and business cycles: 1. Stop the excesses: In this view, monetary policy is too expansionary at certain times. Some people worry about excessive real GDP growth. Others worry about asset prices... MORE

My Moment with Gary Becker

Family Economics
Bryan Caplan
From Selfish Reasons to Have More Kids:In 1992, Gary Becker won the Nobel prize in economics for one big idea: "Economics is everywhere." He saw economics in discrimination; employers hire people they hate if the wage is right. He saw... MORE

Robert P. Murphy on Capital

Austrian Economics
David Henderson
However, the classical understanding of capital and its place in economic theory was muddled. Even though it was refined in light of the new marginal productivity theory of pricing, the increasing formalism of economics in the 20th century led many... MORE

Three Graphs About Trying and Failing

Cost-benefit Analysis
Bryan Caplan
The true return to college heavily depends on the probability of successful completion.  That probability in turn heavily depends on pre-college academic performance.  How heavily?  Check out these three graphs from Bound, Lovenheim, and Turner's "Why Have College Completion Rates... MORE

Gary S. Becker, RIP

Obituaries
David Henderson
Becker's unusually wide applications of economics started early. In 1955 he wrote his doctoral dissertation at the University of Chicago on the economics of discrimination. Among other things, Becker successfully challenged the Marxist view that discrimination helps the person who... MORE

Demagoguery Explained

Behavioral Economics and Rationality
Bryan Caplan
In the dictionary, "demagogues" are bad by definition.In Merriam-Webster, a demagogue is "a political leader who tries to get support by making false claims and promises and using arguments based on emotion rather than reason."In the Oxford Dictionary, he's "a... MORE

Friday Night Video: Daniel Hannan on Socialism

Economic Philosophy
David Henderson
I didn't have time to get permission to repost the Daniel Hannan video on Econlog, but you can go here to watch it. It's very good. It's about 13 minutes long. HT to Dan Klein.... MORE

The correct reason to oppose high MTRs

Tax Reform
Scott Sumner
In a recent post I suggested that relatively high marginal tax rates on consumption of the ultra-rich might be justified as part of a tax reform package that abolished the personal income tax, and also abolished the corporate income tax,... MORE

On his other blog, The Money Illusion, my co-blogger Scott Sumner argues for an 80% marginal tax rate on consumption for high-consumption people. I admit my surprise at seeing Scott advocate that, which is why it has taken me a... MORE

Suppose firms could publicly opt out of sexual harassment law.  Would they choose to do so?  The simplistic answer is, "Since sexual harassment laws were forced on firms, they'll all opt out as soon as they get the chance."  But... MORE

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