EconLog small logo

June 2014

A Monthly Archive (92 entries)

Who Caused the August 1990 Spike in Oil Prices?

Energy, Environment, Resources
David Henderson
Who caused the August 1990 spike in oil prices? If you learned that someone had reduced the supply of oil substantially just before the spike, wouldn't you think that that someone caused the price increase? You might think that I'm... MORE

I'm sure most parents know the horror one feels when one's young child decides to give public nudity a whirl. I was a bit surprised and concerned when I read this from Reason: "Kindergartener Pulls Down Pants, Forced to Sign... MORE

Remembering Ken Minogue

Book Club
Alberto Mingardi
On June 28 one year ago, Kenneth Minogue, Emeritus Professor of Political Science of Political Science at the London School of Economics, passed away on a plane flying between the island of San Cristobal, in the Galapagos arcipelago, and... MORE

Does Bad Science Always Lead to Bad Policy?

Regulation
David Henderson
Mac McCann, on Reason.com, writes: Texas has a lot of things to be proud of. The Republican Party of Texas, however, is not one of them. Turns out everything really is bigger down in Texas, including our embarrassments. He then... MORE

Poverty and "enterprise facilitators"

Entrepreneurialism
Alberto Mingardi
Ernesto Sirolli once worked in the industry of foreign aid - but soon realised he was far from having the impact he dreamt about. In this remarkable TED talk he explains his first hand experience with the sort of attitudes... MORE

When is nominal GDP targeting optimal?

Macroeconomics
Scott Sumner
Commenter Felipe sent me to an interesting Jeffrey Frankel post on NGDP targeting: There are good reasons to think that NGDP targeting is better suited to emerging and developing economies than to industrialized countries. These economies are more frequently subject... MORE

Henderson on Thaler and Sunstein

Behavioral Economics and Rationality
David Henderson
Another issue on which TS [Thaler and Sunstein] are silent--and should not be--is the issue of income tax withholding. The U.S. federal government moved to withholding during World War II because that was when it changed the income tax from... MORE

Why can't the US be more like Europe? Why can't we have decent economic growth and an extremely generous welfare state? Here's one reason: we spend an enormous amount of money on the military. Wikipedia's "List of Countries by Military... MORE

Setting the Record Straight on George Will

Economics of Crime
David Henderson
The wife of a friend of mine wrote a letter to a local publication, the Monterey County Weekly, in which she badly misquoted George Will's recent statement in a column about victimization on campus. My reply to her letter was... MORE

Shall business defend "capitalism"?

Economics and Culture
Alberto Mingardi
John McTernan, a former political secretary to Tony Blair, had an interesting article in the FT. He urges "British businesses urgently need to become actively involved in politics". Mr McTernan is actually urging companies to join the debate on Scotland and the... MORE

Piketty on "merit"

Wealth distribution
Scott Sumner
One thing I noticed while reading Thomas Piketty's new book was the topics that were not covered; progressive consumption taxes, Singapore (or indeed any of the 4 Asian "tiger economies"), and the link (if any) between ethnicity and great wealth.... MORE

Don Boudreaux on the Hockey Stick of Human Prosperity

Growth: Causal Factors
Art Carden
Don Boudreaux of George Mason University and Cafe Hayek offers a short discussion of the explosion in standards of living over the last few centuries, courtesy of Marginal Revolution University:... MORE

Why Does High-Pressure Salesmanship Work?

Behavioral Economics and Rationality
Bryan Caplan
[Warning: Minor spoilers].Just finished The Wolf of Wall St.   Though based on a true story, the ugly facts are usually easy to minimize: Most investment firms aren't run by stoned sociopaths, and most investment firms' customers make money.  But one... MORE

I'm reviewing Adam Smith and Bruce Yandle's Bootleggers and Baptists for the Independent Review. It's a powerful explanatory framework that helps us understand why we get resource-wasting public policies. Here are a few resources on the idea: 1. Bruce Yandle's... MORE

The Economist: Give Tetlock Final Cut

Economic Methods
Bryan Caplan
A year ago, The Economist wrote another stylish but insubstantial editorial.  The topic: the Arab Spring.  The opening:Roughly two-and-a-half years after the revolutions in the Arab world, not a single country is yet plainly on course to become a stable,... MORE

Evidence that EconLog has the Best Readers on the Internet

Econlog Administrative Issues
Art Carden
In one of my first posts after returning to the EconLog team, I wrote: Last Spring, a student came to my class wearing a shirt reading "Basketball Never Stops." I need to get a shirt that says "Economics Never Stops."... MORE

New Immigration Journal from the Hoover Institution: Peregrine

Labor Mobility, Immigration, Outsourcing
Art Carden
The Hoover Institution has launched a new journal titled Peregrine: American Immigration in the 21st Century. According to the introductory essay by Timothy Kane: Peregrine is an online journal with a unique mission. Each issue will address one topic out... MORE

Bonding with Immigrants

Labor Mobility, Immigration, Outsourcing
David Henderson
It was a beautiful scene in so many ways. Such diversity, such shared joy in suffering, such determination to push through and triumph over the odds. We were equal in our provisions: we all had one cot, one blanket, one... MORE

On Friday, the New York Times ran this article by Timothy Egan, which discussed the new Starbucks initiative to pay for associates' college degrees but which was mostly a hit piece aimed at Walmart. Walmart VP of Corporate Communications David... MORE

Evaluating The Arab Spring: What Would Tetlock Say?

Cost-benefit Analysis
Bryan Caplan
I was never optimistic about the Arab Spring.  But the spread of the hellish Syrian Civil War into Iraq leaves the net-effect-so-far quite a bit worse than I expected.  You could say, "You're no expert on this topic, so your... MORE

Jonathan Turley Echoes Milton Friedman

Regulation
David Henderson
As federal agencies have grown in size and scope, they have increasingly viewed their regulatory functions as powers to reward or punish citizens and groups. The Internal Revenue Service offers another good example. Like the patent office, it was created... MORE

Unpersuaded

Income Distribution
Scott Sumner
I recently completed reading Thomas Piketty's new book entitled Capital in the Twenty-First Century. Piketty explains why the distribution of capital is becoming increasingly unequal, why we need higher tax rates on upper income individuals, and also a wealth tax... MORE

A few years ago, Princeton University Press published G.A. Cohen's Why Not Socialism?. I reviewed it for The Freeman and found it unconvincing. I also appreciated these reviews from David Gordon and James Otteson. I wasn't impressed or convinced, and... MORE

France to ban e-cigs

Economics of Health Care
Alberto Mingardi
E-cigarettes continue to be a burning issue. Vapers are still a new product, and therefore call for regulators' attention. The newest is that France is preparing to consider e-cigarettes tantamount to real ones. Apparently, a new bill is going to... MORE

Local politicians and protesters are in a huff about foreign producers "dumping" steel on the US market. They're making the usual noise about protecting communities, foreigners "flooding" American markets, and so on. If you're worried about losing your job because... MORE

A Hardy Weed: How Traditionalists Underestimate Western Civ

Behavioral Economics and Rationality
Bryan Caplan
Last month, I debated Stephen Balch from Texas Tech's Institute for the Study of Western Civilization.  As I perused their website, I realized that despite our differences on immigration, we had a lot of common ground.  This jumped out at... MORE

Low-Carbon Alternatives: Solar and Wind Suck

Energy, Environment, Resources
David Henderson
One of the blogs that I check literally every day is Timothy Taylor's "Conversable Economist." In baseball parlance, his posts are virtually always doubles, triples, or home runs. A recent home run is his "Evaluating Low-Carbon Energy Alternatives." In it,... MORE

The libertarian corner of the internet is aflutter with news that officials in Leawood, Kansas have shut down nine-year-old Spencer Collins' "take a book, leave a book" Little Free Library (HT: Brian Doherty from Reason, originally, and Lenore Skenazy's Twitter... MORE

Another Immigrant Sneaks Across the Border to Take an American Job

Labor Mobility, Immigration, Outsourcing
Art Carden
ESPN confirms a report that Cuban outfielder Yasmani Tomas has defected. According to the Communist Party newspaper Granma, as quoted by ESPN.com: From the same source, Granma learned of the departure from the country, through unscrupulous, illegal human trafficking, of... MORE

Jeff Deist of the Mises Institute interviews one of my favorite writers on cars, Eric Peters. Whenever I teach my Energy Economics course, I spend a little time on how CAFE messes up cars. Peters discusses that in more... MORE

Up until 2008 I had a sort of "Whig view" of Fed history. They made many mistakes, but learned enough from those mistakes to gradually improve. Now I'm not so sure. Here are 6 policy regimes, all excessively procyclical: 1.... MORE

Embarrass Me Now, Please

Economic Methods
Bryan Caplan
I'm now writing the most number-crunching parts of The Case Against Education: one chapter on education's selfish return, another on its social return.  The work is grueling, and haunted by the fear that I've made an early mistake that invalidates... MORE

Some Questions About Partisan Expulsion

Politics and Economics
Bryan Caplan
Suppose you're an embarrassment to your political party.  In many countries, your party can formally expel you.  This serves three functions.  First, damage control.  The fact that your party expelled the embarrassment mitigates your guilt-by-association.  Second, prevention.  After you're expelled,... MORE

SMBC Features The Greatest Commencement Ever

Economics of Education
Art Carden
The webcomic Saturday Morning Breakfast Cereal gets it. Spoiler alert: there's signaling. I would love to see Bryan Caplan hit the commencement speaker circuit. After Michael Lind called him "Libertarians' scary new star," invitations might be forthcoming.... MORE

Dick Wagner on Buchanan

Economic Education
David Henderson
Shortly before the mid-September start of the semester, all students had to meet with Leland Yeager, then Director of Graduate Studies, to get their programs of study approved for the coming year. First-year students who came directly from their bachelor's... MORE

Occupational licensing is an issue that has come to the fore in recent weeks. Matt Yglesias has written extensively against occupational licensing, and James Bessen offers a card stack on licensing for Vox.com. Daniel J. Smith of Troy University's Johnson... MORE

Huemer's "The Use of Hypothetical Examples"

Economic Methods
Bryan Caplan
Mike Huemer's defense of hypothetical reasoning is so excellent that I feel like I'm cheating EconLog reader when I only quote a few sentences.  So here's his complete discussion, featuring a shout out to David Hume qua economist.  From Huemer's... MORE

I love traveling, and I might be one of the few people on earth who actually enjoys flying. Trouble is, flying is pretty expensive, and it's especially expensive if you want to go overseas. There's an obvious solution: let more... MORE

On Monday, we celebrated our daughter's fourth birthday. Today, we celebrate our younger son's second birthday. On Saturday, we will celebrate my wife's and my eleventh anniversary. When we found out we were expecting our third a few years ago,... MORE

When Do Hypotheticals Cover Their Cost?

Cost-benefit Analysis
Bryan Caplan
Suppose I asked, "Where would you buy steaks if you only shopped at stores starting with the letter Q?"  A few people would wrack their brains for an answer.  But most would dismiss the question: "That will never happen, so... MORE

Tyler Cowen versus Frederic Bastiat

Cost-benefit Analysis
David Henderson
And also versus Julian Simon and Alex Field Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely. This view does not claim... MORE

Econ Journal Watch editor Daniel Klein passes along two calls for papers for symposia in his journal: Classical Liberalism in Econ, by Country Symposium We invite proposals for papers on the status of classical liberalism in the economics profession in... MORE

I like free markets and don't like politics largely because free markets feature better incentives than the political arena. I came across a vivid example while vacationing last week. While flipping through the channels on TV, I came across what... MORE

People on the left like Paul Krugman sometimes suggest that 1934-80 was a sort of golden age of stable banking---after the New Deal regulatory reforms and before the deregulation of the 1980s. I'm not convinced that regulation has much to... MORE

The Missing Arguments

Behavioral Economics and Rationality
Bryan Caplan
Libertarians have a reputation for silly absolutism.  While there's truth in the stereotype, libertarians are at least as likely to make intellectually lazy exceptions to their general principles.  This is especially true when the people losing their liberty are foreigners... MORE

Taxi drivers of the world, unite!

Regulation and Subsidies
Alberto Mingardi
On Wednesday last week, taxi drivers all over Europe protested and went on strike against Uber. Uber is set to conquer the European market, in spite of allegations of illegality of the services it provides under current EU regulations. Uber... MORE

Dear Reader Almost Passes the Ideological Turing Test

Books: Reviews and Suggested Readings
Bryan Caplan
Michael Malice's Dear Reader: The Unauthorized Autobiography of Kim Jong Il is not what I expected.  I thought it was going to be a hilarious mockery of North Korean totalitarianism.  Instead, it's an almost pitch-perfect simulation of the autobiography Kim... MORE

Fiscally inefficient monetary policy

Macroeconomics
Scott Sumner
Here is Noah Smith: Abe is the most effective national leader in the world right now. I never thought I'd say this, but he's an example that the rest of the world should be following. This time around, Abe didn't... MORE

Richard Ebeling on "Thick Libertarianism"

Economic Philosophy
David Henderson
I have not engaged in the discussion of "thin" versus "thick" libertarianism. It took me a while even to grasp what people were talking about. Once I had understood the distinctions, I had thought I was a "thin" libertarian. But... MORE

Dan Klein on Liberalism

Economic Philosophy
David Henderson
Two months ago, I posted about Dan Klein and Kevin Frei's project to reclaim the word "liberal." You can read the Liberalism Unrelinguished statement here. This is the bottom line: We the undersigned affirm the original arc of liberalism, and... MORE

The Stockpile Solution

Energy, Environment, Resources
Bryan Caplan
If I were convinced that the fate of mankind hinged on massive reductions in carbon emissions, I would still be pessimistic about unilateral taxes or cap-and-trade.  As I told Yoram:National emissions regulations can have perverse global effects.  If relatively clean... MORE

Sports are Life

Economics and Culture
David Henderson
One reason I'm enjoying the NBA playoffs so much is that I like both teams so much. The San Antonio Spurs have an incredible coach and one of the things I like most about them is their everyday humility--not phony... MORE

Arnold Kling on Well-Being Over Time

Income Distribution
David Henderson
When I was a young assistant professor at the University of Rochester business school in the late 1970s, I had a picture on my desk of a cute dog saying, "I've been rich and I've been poor. Rich is better."... MORE

Never reason from an interest rate change

Monetary Policy
Scott Sumner
I occasionally point out that the European Central Bank raised interest rates several times in 2011, triggering a double dip recession. At other times I argue that interest rates are not a reliable indicator of the stance of monetary policy.... MORE

Krugman's Misleading Post on Coal

Economic Education
David Henderson
There used to be a lot of coal miners, but not any more -- strip mines and machinery in general have allowed us to produce more coal with very few miners. Basically, it's a job that was destroyed by technology... MORE

Is the Social Security Tax Cap Disappearing?

Political Economy
Bryan Caplan
How will the U.S. resolve its long-run budget crisis?  I've long predicted the abolition of the Social Security tax cap.  As I told my Public Choice undergrads back in 2011:I think we've likely to eliminate the Social Security payroll tax... MORE

Bauman Climate Bet

Economic Methods
Bryan Caplan
Yoram and I have digitally shaken on our global warming pause bet.  Via Twitter: @bryan_caplan yes, once we clarify concerns of @wonkinakilt You're betting avg(2015-2029)-avg(2000-2014)<=0.05C, yes? If so I accept!-- Yoram Bauman (@standupecon) June 10, 2014... MORE

Let's think about (left) liberalism over the last 50 years. By the 1960s, income had become relatively equally distributed. Liberal economists grew increasingly skeptical of labor unions. When the UAW demanded higher wages, the money seem to come out of... MORE

The Cato Institute's Randal O'Toole has recently released a Policy Analysis arguing that low-capacity light rail is a bad deal for cities. I found it especially interesting in light of Scott's post last week on "private affluence and public squalor,"... MORE

About That High-Quality Insurance

Economics of Health Care
David Henderson
Paul Krugman writes: the quality of insurance has gone up, too, because canceled policies were canceled because they offered little real protection. Of course, as with much of what Paul writes about ObamaCare, he doesn't back up this assertion. So... MORE

Bauman Climate Bet Bleg

Economic Methods
Bryan Caplan
The Economist confirms that global warming has paused over the last 15 years:Between 1998 and 2013, the Earth's surface temperature rose at a rate of 0.04°C a decade, far slower than the 0.18°C increase in the 1990s. Meanwhile, emissions of... MORE

Reply to Cardinal Rodriguez Maradiaga

Growth: Causal Factors
David Henderson
At a conference titled "Erroneous Autonomy: The Catholic Case Against Libertarianism," Cardinal Oscar Rodriguez Maradiaga attacked the free market, calling it "a new idol." This is my response. I understand that in writing it, I am assuming that in each... MORE

Obama is to the right of Texas on pot legalization

Economics of Crime
Scott Sumner
Here is just one example of the Obama administration's reefer madness: Robert Duncan, who managed marijuana-growing for a collective of Northern California medical marijuana dispensaries, surrendered to federal prison Monday, where he will serve a two-year sentence. Speaking to... MORE

Frank Furedi on euroskepticism

Eurozone crisis
Alberto Mingardi
Sociologist Frank Furedi frequently contributes to Spiked, one of the most interesting on line publications. He is always well worth reading, but I would particularly recommend this article of his on the last European election. Furedi calls out attention on... MORE

Friday Night Video: Mussolini--A Man of the Left

Economic History
David Henderson
My friend, Lawrence K. Samuels, a local libertarian activist in Monterey County, gave a talk in April on his research on Mussolini. The bottom line: Mussolini was clearly on the left and he never wavered from the left. 0 to... MORE

The answer to yesterday's data challenge: full-time, year-round workers can be unemployed, but only very briefly.  You don't have to actually work full-time to be a full-time worker.  "Full-time" workers can be unemployed indefinitely as long as they "usually worked... MORE

According to a report in the Tennessean by way of AL.com, "gains in whiskey sales are outpacing increases in production by 'at least' a 2-to-1 margin...The Jack Daniel distillery announced a $100 million expansion in distilling and warehouse space." Reports... MORE

The Daily Hell of the War on Drugs

Economics of Crime
David Henderson
It's an urgent situation, because Professor Goffman's book shows clearly that the microeconomics of a life on the run are grim indeed. This is the closing paragraph of Tyler Cowen's excellent piece, "The Financial Hazards of a Fugitive Life," New... MORE

The First Fundamental Law of Capitalism

Income Distribution
Scott Sumner
Suppose that I made the following claim: The formula M*V = P*Y is a pure accounting identity. It can be applied to all societies in all periods of history, by definition. Though tautological, it should nevertheless be regarded as the... MORE

While there's much to like in Yoram Bauman's Cartoon Introduction to Climate Change, this page nicely captures my reservations about his approach: He's tolerant of economically illiterate action, but intolerant of economically literate inaction.  (Click to enlarge).[Excerpted from The Cartoon... MORE

I've often heard economists talk about "full-time, year-round workers."  Data challenge: Can such workers also be officially "unemployed"?  Answer tomorrow.... MORE

Cartoon Introduction to Climate Change: Pollution Taxes Illustrated

Books: Reviews and Suggested Readings
Bryan Caplan
Here's another page from The Cartoon Introduction to Climate Change that's worth more than all the demagogic words spoken about pollution taxes.  Now in stores.  Click to enlarge.[Excerpted from The Cartoon Introduction to Climate Change by Grady Klein and Yoram... MORE

One of my favorite passages in the Bible is 1 Corinthians 13:11. In the KJV, it reads "When I was a child, I spake as a child, I understood as a child, I thought as a child: but when I... MORE

Krugman Defends Price Theory

Microeconomics
David Henderson
One of my frustrations when reading Paul Krugman's blog is that I often get the feeling that I'm not reading a post by an economist. We economists tend to talk about relative prices, how prices motivate behavior (incentives), etc. Krugman... MORE

Happy birthday, Adam Smith

Book Club
Alberto Mingardi
Some 291 years ago today, Adam Smith was born. Richard Ebeling has an insightful article that beautifully introduces to the contemporary reader the "father of economics". Scott Sumner pointed out that, according to Thomas PIketty, Smith "had more political prejudices... MORE

Here are two of my favorite pages from The Cartoon Introduction to Climate Change, available starting today!  I've seen hour-long lectures on experimental versus observational studies that were less pedagogically effective.  Click to enlarge.[Excerpted from The Cartoon Introduction to Climate... MORE

Myth of the Rational Voter: The Complete Animated Series

Behavioral Economics and Rationality
Bryan Caplan
All five of my Learn Liberty videos are now up.  The complete series:1. Intro. (thanks to Art for the shout-out).2. Anti-market bias.3. Anti-foreign bias.4. Make-work bias.5. Pessimistic bias.... MORE

Last Spring, a student came to my class wearing a shirt reading "Basketball Never Stops." I need to get a shirt that says "Economics Never Stops." David's recent post on uncertainty and global warming was a good reminder. Public policy... MORE

My Small Victory

Property Rights
David Henderson
People in my area of California yesterday voted on Measure O. Here's the exact wording of the measure: Shall the ordinance, Measure O, which directs the Monterey Peninsula Water Management District to adopt a policy to move toward public ownership... MORE

Private affluence, public squalor, high taxes

Public Choice Theory
Scott Sumner
Every time I visit New York I think about John Kenneth Galbraith's famous remark about American private affluence and public squalor. There is impressive new residential construction. Townhouses in areas like Brooklyn are being fixed up. But the subway system... MORE

Uncertainty Can Go Both Ways

Energy, Environment, Resources
David Henderson
In a recent response to Byran Caplan on global warming, Yoram Bauman rested part of his argument against cost/benefit analysis on the issue of uncertainty. Bauman wrote: Reason #1 is that CBA has trouble dealing with uncertainty: if there's a... MORE

Voter Biases, Explained with Video

Labor Mobility, Immigration, Outsourcing
Art Carden
People all across Alabama are voting today in a primary election. Many of them who claim to want more economic growth will vote enthusiastically for candidates espousing policies that will make us poorer. What gives? Just in time, The Institute... MORE

The Difficulties with Lying

Economic Philosophy
David Henderson
Co-blogger Bryan Caplan, in his post, "Frank on Phony Credentials," points out a big problem with cheating on credentials. He writes: [W]hile telling an isolated lie comes easily to human beings, most human beings are bad at living a lie.... MORE

Why Sailer Scares

Behavioral Economics and Rationality
Bryan Caplan
The full text of Steve Sailer's response to my Eugenic Experiment post reads: According to Gregory Clark's research on wills in England from 1200 to 1800, that's pretty much how English society worked: the richer you were, the earlier you... MORE

Unemployment Insurance Bleg

Labor Market
Bryan Caplan
As far as I can verify via Google, workers under the age of 18 remain fully eligible for U.S. unemployment insurance.  Am I missing anything?  Please show your work.... MORE

Reverse Mortgages in Organs

Price Controls
Art Carden
Bryan's post below inspired me to think about an idea Mike Hammock and I first talked about while we were colleagues at Rhodes College that, I think, carries Zac Gochenaur's* argument a bit further: reverse mortgages in organs (here's an... MORE

It's Great to Be Back With One of My Favorite Blogs!

Econlog Administrative Issues
Art Carden
Greetings, everyone. I'm thrilled to be back for a second guest-blogging go-round with one of the world's premiere outlets for incisive commentary and analysis of Big Picture economic issues. Liberty Fund is one of my favorite organizations, I am fortunate... MORE

The Problems with Bans on Insider Trading

Regulation
David Henderson
It is startling to note that at least five-sixths of all insider trading scenarios (it would be practically impossible to measure actual cases) could never be prosecuted, even with a policeman shadowing each and every insider. Why? Consider how inside... MORE

Piketty on Kuznets

Income Distribution
Scott Sumner
I've started reading Thomas Piketty's now-famous Capital in the Twenty-First Century. Over at MoneyIllusion.com I have some observations on the opening chapter (which is all I have read so far.) Here I'd like to focus on one section of the... MORE

The Fungible Kidney

Economics of Health Care
Bryan Caplan
After I made my animated case for a free market in human kidneys, Zac Gochenour - my co-author and soon-to-be assistant professor at Western Carolina University -  originated a rather clever argument.  Quick version: Suppose you're now poor and healthy. ... MORE

John Blundell on the Rebirth of Austrian Economics

Austrian Economics
David Henderson
Starting in 1974, the Institute for Humane Studies (IHS), based at that time in Menlo Park, California, began an ambitious plan to resurrect the then near to dead Austrian school of thought in economics. The first three steps were... MORE

Welcome Back, Carden

Upcoming Events
David Henderson
Art Carden, who guest blogged for Econlog in 2013, will be back as a guest blogger starting tomorrow. For my farewell notice to Art, in which I highlight two of my favorite of Art's posts, see this. I look forward... MORE

Return to top