EconLog small logo

August 2014

A Monthly Archive (85 entries)

Robert Litan on Microeconomists' Contributions

Microeconomics
David Henderson
Robert Litan gives a nice 15-minute speech in which he highlights some of the main contributions that microeconomists have made that have generated, over 30+ years, hundreds of billions (and possibly trillions) of dollars in consumer and producer surplus. (These... MORE

Meteorological Impossibilities

Economic Methods
Bryan Caplan
The Weather Channel's daily and hourly forecasts often seem logically incompatible.  Consider Oakton, VA's forecast for today.  The current daily prediction says "60% chance of rain."  But several evening hours individually have the same probability of 60%.  Unless I'm missing... MORE

The Wisdom of Chairman Dwight

Economic Philosophy
David Henderson
I had lunch yesterday with Richard McKenzie, one of the co-authors of the Econlib Feature Article that will appear Monday. He gave me a copy of a special little paperback he produced of what he calls "Dwightisms." They're actual sayings... MORE

Should You Take Notes By Hand and Read Paper Books?

Economics of Education
Art Carden
This started as a comment on my post about mandating the teaching of cursive in Tennessee, which got some great comments (as usual; thanks, EconLog readers), but it got long enough that I decided to make it its own post.... MORE

Anthony de Jasay on "rights"

Economic Philosophy
Alberto Mingardi
One of the many treats of Econlib are the articles of Anthony de Jasay. Mostly renowned for his remarkable book The State, De Jasay is among the most brilliant libertarian political thinkers. This month he has a profound article on... MORE

Markets and Prices Allow Us To Use Knowledge We Don't Have

Central Planning vs. Local Knowledge
Art Carden
Another semester is upon us, and in my principles of macroeconomics class at Samford we spent the first week reading Frederic Bastiat's What is Seen and What is Not Seen and Leonard Read's I, Pencil. In class yesterday we considered... MORE

Why Do Government Enterprises Work So Well?

Microeconomics
Bryan Caplan
When I was in high school, Murray Rothbard's analysis of government ownership was a revelation.  Why was my high school a den of waste, incompetence, and stagnation?  Because it was a government enterprise!On the free market, in short, the consumer... MORE

Intellectual decay

Political Economy
Scott Sumner
Tyler Cowen recently linked to a good article by Francis Fukuyama: The two dominant American political parties have become more ideologically polarized than at any time since the late nineteenth century. There has been a partisan geographic sorting, with... MORE

Who Owns the "Right to Recline?" The Airline

Property Rights
David Henderson
I wrote an article to that effect in 2011, noting that airline seats are an excellent case study for the Coase Theorem. This is an economic theory holding that it doesn't matter very much who is initially given a property... MORE

Look-Alikes Don't Look Like Identical Twins

Family Economics
Bryan Caplan
Read this neat NYT write-up of new research by Nancy Segal and co-authors.  Segal, famous for her work on twins, got an idea when she encountered the oeuvre of Francois Brunelle, "a photographer in Montreal who takes pictures of pairs... MORE

In an otherwise excellent reporting piece in the New Republic, Senior Editor Noam Scheiber gives his view about why the governor's race in Wisconsin is so important. To recap, Governor Scott Walker is running for reelection and he's the one... MORE

Schooling and Technology in The Second Machine Age

Economics of Education
Art Carden
I recently read Erik Brynjolfsson and Andrew McAfee's The Second Machine Age, and I will have more to say on it later. This story caught my attention in light of their emphasis on developing skills that are complements to technology:... MORE

Mencken's Appeasement

Cost-benefit Analysis
Bryan Caplan
I just learned that the great H.L. Mencken's Prejudices contains an eloquent plea for appeasement.  From Mencken's "Martyrs": Normal 0 MicrosoftInternetExplorer4 [I]t seems to me sheer vanity for any man to hold his religious views too firmly, or to submit... MORE

Mr. Bernanke vs. the Structuralists

Monetary Policy
Scott Sumner
Vaidas Urba sent me an interesting piece from the Financial Times: For macro investors, the end of summer is usually signalled by the Kansas City Fed's annual conference at Jackson Hole. On occasions, former Fed chairman Ben Bernanke used this... MORE

Food, snobbery and anti-capitalism

Economics and Culture
Alberto Mingardi
I'm currently reading a truly interesting book, which some of EconLog's readers may be already familiar with: "The Intellectuals and the Masses. Pride and Prejudice among the Literary Intelligentsia 1880-1939" by John Carey. Carey argues, in his own words, "that... MORE

The Sweet Spot of Freedom

Behavioral Economics and Rationality
Bryan Caplan
No one needs a political philosophy to tell them how to treat people they personally know.  Once human beings forge personal bonds, they understand what to expect from each other.  The main point of political philosophy is to tell people... MORE

The Environment: Own It and Save It

Energy, Environment, Resources
David Henderson
The title of this blog post is the same as the title of one of my chapters in The Joy of Freedom: An Economist's Odyssey. In that chapter, I show how private ownership of resources leads people to take better... MORE

The Veil of Implausibility

Behavioral Economics and Rationality
Bryan Caplan
The veil of ignorance is arguably 20th-century political philosophy's most successful new meme.  On one level, it's easy to see the appeal.  Political philosophy seems morally deadlocked.  The veil of ignorance provides a meta-norm to break this deadlock: We should... MORE

Richard Timberlake on Money

Monetary Policy
David Henderson
EF [Econ Focus}: Let's start with a unifying theme of your work: Your support of a gold standard. Several great neoclassical monetary theorists -- Marshall, Walras, Wicksell, Fisher, and Keynes -- argued that a rules-based fiat money could outperform a... MORE

Never reason from a bond price change

Monetary Policy
Scott Sumner
Here's Brad DeLong: I have to say that most of what I have quoted from Nick seems wrong to me. Yes, in 1982-1983 it was true to say "it became harder than normal to sell other goods for money... MORE

Nominal GDP targeting in developing countries

Monetary Policy
Scott Sumner
Commenters Patrick Sullivan and gofx directed me to a post on NGDP targeting in developing countries, by Pranjul Bhandari and Jeffrey Frankel: Targeting Nominal GDP has been proposed in the context of major industrialised countries. (Frankel, 2012, gives other references... MORE

Greenhouse Gases

Revealed Preference
David Henderson
For many years, Linda Greenhouse covered the Supreme Court for the New York Times. She no longer does, but she has an op/ed in the Times. Her latest op/ed is quite revealing, perhaps intentionally, perhaps not. As regular readers of... MORE

Last night, I did a segment on the John Batchelor Show on the late George Hilton. Here it is. My part starts at 33:10 and goes to the end. One correction: John referred to me as the Features Editor of... MORE

Education Bet Update

Economic Methods
Bryan Caplan
In 2011, my co-blogger David and I bet on the future of higher education.  The terms:I propose that we use the official numbers from the National Center for Education Statistics' Table 212.  2009 is the latest available year of data. ... MORE

Glenn Reynolds, a law professor at the University of Tennessee, better known as Instapundit, writes: The response to Foley's beheading should have been a MOAB dropped on an ISIS-held town. For those of you who don't know, a MOAB is... MORE

Paul Krugman on Why We Fight

Public Choice Theory
David Henderson
I often criticize Paul Krugman's writing on economics. But I also give him credit where credit is due. And credit is due for his excellent recent column on war. Read the whole thing. Some excerpts and my comments: If you're... MORE

What's the Use of Crying Over Spilled Blood?

Cost-benefit Analysis
Bryan Caplan
The U.S.-led invasion of Iraq in 2003, you may recall, was dubbed Operation Iraqi Freedom.  Eleven years and over 100,000 civilian deaths later, the name is dark comedy.  The replacement Shiite-dominated government is a close ally of the Iranian theocracy,... MORE

George Hilton, RIP

Obituaries
David Henderson
UPDATE BELOW On August 4, while I was on my vacation, my beloved transportation economics professor, George Hilton, died. Co-blogger Art Carden has rightly singled out one of his best articles in a post earlier today. Here are some of... MORE

In response to my recent blogging about Uber and Lyft, Daniel Klein sent me this paper (gated by JSTOR) by Ross Eckert and the recently-deceased George Hilton. It's a fascinating story of rent-seeking special interests (electric streetcar and railway companies)... MORE

Practical Guidance for Prudent Students

Cost-benefit Analysis
Bryan Caplan
The Case Against Education's chapter on the selfish return to education runs over sixty pages.  Since I suspect that even eager readers may skim all the tables, I end with practical advice in plain English.  Note: Nothing in this section... MORE

When supply is demand

Macroeconomics
Scott Sumner
In order to do good economic analysis, it is important to distinguish between supply and demand shocks. Commenter SG pointed me to this curious post by Paul Krugman: For those new to or confused by the term, secular stagnation is... MORE

Krugman on Health Care: I Advocate Horror

Economics of Health Care
David Henderson
Paul Krugman writes: the attack on Obamacare depended almost entirely on lies, and those lies are becoming unsustainable now that the law is actually working. No, there aren't any death panels; no, huge numbers of Americans aren't losing coverage or... MORE

Canada's Single Payer/Single Problem

Economics of Health Care
David Henderson
Have you seen this sign in your doctor's office? It reads, "One problem per visit, please." An editorial in the Canadian Medical Association Journal says this sign is popping up in the offices of some family physicians. This is from... MORE

Tolerance Before Empathy

Economic Philosophy
Bryan Caplan
Suppose you have a ne'er-do-well cousin.  A long-term alcoholic and drug addict, he's been arrested about thirty times - though never convicted of a felony.  One day he comes to your door, and tells you a largely accurate history of... MORE

Walmart to the Rescue

Economics of Health Care
David Henderson
While away on my vacation in Canada, I missed this story about Walmart and health care. Here's an excerpt: After years of "Will they or won't they?" discussion, Walmart is making its long-awaited move into delivering primary care: The retailer... MORE

Our Poverty and Theirs

Behavioral Economics and Rationality
Bryan Caplan
I regularly praise Nicholas Kristof's courageous essay on Third World poverty.  While First World immigration policies and Third World economic policies cause enormous harm, the global poor exacerbate their woes with grotesquely irresponsible behavior.  Kristof:[I]f the poorest families spent as... MORE

Quarters on the Sidewalk as Stimulus

Politics and Economics
Art Carden
A very brief Twitter exchange from last week: @WesleyVaughn Dropping a million quarters on sidewalks around town would be a better idea.— Art Carden (@artcarden) August 12, 2014 I was jesting, but only sort of. As a friend has suggested,... MORE

Grade deflation, grade illusion, and academic depressions

Economics of Education
Scott Sumner
Standard monetary theory says that changes in the money supply and prices are neutral under certain circumstances, such as in the very long run, and also after monetary reforms where all contracts are automatically adjusted to the change in the... MORE

Causation

Economics of Crime
David Henderson
Which cause should we focus on? One of my favorite editorial writers for the Wall Street Journal, Mary O'Grady, writes (in "A Terrorist Big Fish Gets Away" in the August 11 print edition): America's voracious appetite for illegal drugs has... MORE

Here is The Economist: IF ABENOMICS means anything, it is the promise of the prime minister, Shinzo Abe, to restore healthy economic growth to Japan and end years of deflation. To that end the central bank, sloughing off its... MORE

I'm reading Liberalism. The Life of an Idea by Edmund Fawcett. I like the idea behind the book, which is providing a history of classical liberalism through vignettes of its great champions, but I have some problems with the underlying... MORE

Cryptocurrencies and Mobile Tipping

Alternative Economics
Art Carden
I've gotten better about this in recent years, but earlier today I was sitting in an airport with no cash. That's normally not a problem as I use credit cards for almost everything, but it does become a problem where... MORE

Tyler Cowen on ECB policy

Monetary Policy
Scott Sumner
Here's Tyler Cowen commenting on ECB policy options for addressing lowflation: 2. Nominal gdp targeting. In general I like this idea, but which ngdp gets targeted? Eurozone ngdp, presumably. But when you have multiple countries, individual countries can end up... MORE

Last night, I ended up spending an undue amount of time following the #Ferguson feed on Twitter and watching insanity unfold in real time. Here are a couple of papers I've written that might be relevant: 1. "Inputs and Institutions... MORE

Jonathan Chait's bizarre idea of an honest poll

Political Economy
Scott Sumner
Here's Jonathan Chait: And Reason's poll does yield many findings that align millennials more closely with right-wing economic thought than with left-wing economic thought. It does so through the use of crafted language. As noted above, Pew's poll asks a... MORE

I generally agree with Bryan that pacifism and appeasement are greatly under-rated in everyday life and especially in international affairs. While I'm not sure machismo is the fundamental argument against pacifism and appeasement, I'm sure it plays a large role.... MORE

Prohibition: Then versus Now

Books: Reviews and Suggested Readings
David Henderson
This will likely be my final post about Daniel Okrent's excellent book The Last Call: The Rise and Fall of Prohibition. This one, appropriately enough, is about the fall and some of the factors that led to it. There's a... MORE

The Ethics of Individualism

Economic Philosophy
Bryan Caplan
Last question before GenCon: In Haidtian terms, what is an "individualist"?  Insiders' knee-jerk reaction is probably to say "low in Care," or maybe even "low in Fairness."  But per Sebastian Nickel, isn't "low in Loyalty" the better answer?... MORE

Open Borders Bingo!

Labor Mobility, Immigration, Outsourcing
Art Carden
Note: I took this down earlier in response to a thoughtful and provocative comment on ideological bingo cards because I wanted to think about it a little more. I apologize for making the post disappear without the promise of an... MORE

Haidt and the Moral Foundations of the Welfare State

Behavioral Economics and Rationality
Bryan Caplan
Great questions from Sebastian Nickel:I recently asked whether accusations of excessive "selfishness" are to be understood as accusations of insufficient "altruism", or rather as accusations of insufficient "groupishness". A related question: When Jon Haidt asks questionnaire respondents questions meant to... MORE

Choose Your Battles

Cost-benefit Analysis
David Henderson
It's rare that I disagree with much of what co-blogger Bryan Caplan posts. But among those rare posts are his two recent ones (here and here) on appeasement. I don't want to go at them line by line. Other commenters... MORE

I recall a story that scientists are often unable to explain the "tricks" performed by magicians. Scientists tend to be smart, but also rather linear thinkers. They are not used to their test tubes trying to deceive them. Something similar... MORE

Birmingham is just one of many cities in which Uber is fighting to be able to do business their way; they've launched an entire social media campaign centered around it, and local leaders are upset that instead of showing up... MORE

Last month, I read Randal O'Toole's Cato Policy Analysis on rail versus buses in which he concluded that high-capacity buses are preferable to rail in part because they can share roads and highways with cars and trucks and don't require... MORE

Great Moments in Economic Estimation

Books: Reviews and Suggested Readings
David Henderson
Even the great Irving Fisher was, at times, a lousy microeconomist. "In an attempt to memorize poetry," Irving Fisher wrote in 1926, "Professor Vogt of the University of Christiana found that on days when he drank one and one-half to... MORE

The power of wishful thinking?

Income Distribution
Scott Sumner
Here's Paul Krugman in 2013: Joe Stiglitz has an Opinionator piece arguing that inequality is a big factor in our slow recovery. Joe is an insanely great economist, so everything he says should be taken seriously. And given my political... MORE

Krugman and I Agree on the DMV

Economic Philosophy
David Henderson
The DMV is not nearly as good an example of government incompetence as other examples that are out there. Some of those other examples are of government horror. Let's use those examples. Every once in a while I agree with... MORE

A Working Economy of Strangers

Free Markets
David Henderson
When I was young, I didn't travel much, and when I did, I always worried. How will I get where I'm going? When I leave the airport, how will I get to the hotel? Who will take care of me?... MORE

When the straightforward interpretation seems crazy

Economic Philosophy
Scott Sumner
I've recently been working my way through a long set of 2008 blog posts by Eliezer Yudkowsky. It starts with an attempt to make quantum mechanics seem "normal," and then branches out into some interesting essays on philosophy and science.... MORE

Law vs. Legislation

Books: Reviews and Suggested Readings
David Henderson
The repeal of Mullan-Gage did not legalize alcoholic beverages in New York, for the Volstead Act remained in force. Repeal only meant that New York police and New York courts, no longer bound by the state to enforce federal antibooze... MORE

Will lower prices gain Uber support?

Entrepreneurialism
Alberto Mingardi
Uber has been a phenomenal fund-raising success. The company now capitalizes more than Hertz (and not just Hertz, check this out). Now, whatever you may think of Hertz's business model, Hertz has offices all around the globe, an impressive salesforce,... MORE

I'm a fan of the information-economizing value of heuristics, though I certainly recognize that they can get us in big trouble. At a Jack Miller Center event a few years ago, Mike Munger said that whenever we say "the state... MORE

Calvin Coolidge on the Federal Government

Books: Reviews and Suggested Readings
David Henderson
Only in one key respect were the two presidents similar: even considering Harding's belated conversion in Denver, neither man was particularly interested in enforcing Prohibition. In Coolidge's case this was consistent with his general position on the role of government.... MORE

Machismo vs. Appeasement

Economic Philosophy
Bryan Caplan
I suspect that the ultimate objection to pacifism and appeasement is that they are unmanly.  A "real man," brimming over with machismo, stands up for himself no matter what the consequences: Never retreat, never surrender.  The emotional appeal is undeniable. ... MORE

Trust, Even in the Face of Government Hostility

Business Economics
David Henderson
In markets, even illegal ones, we sometimes trust. Seventy miles to the southeast in Quebec's Eastern Townships [DRH note: this is where my grandfather and grandmother grew up in the 1800s: my grandfather was born in 1855, my grandmother in... MORE

The Fiscal Prognosis

Fiscal Policy
Bryan Caplan
Here's how bad the CBO's now expects the long-run fiscal crisis to be:The unsustainable nature of the federal tax and spending policies specified in current law presents lawmakers and the public with difficult choices. Unless substantial changes are made to... MORE

Charles Cooke's lame dismissal of left wing nerds

Politics and Economics
Scott Sumner
Here's Charles Cooke in the National Review: One part insecure hipsterism, one part unwarranted condescension, the two defining characteristics of self-professed nerds are (a) the belief that one can discover all of the secrets of human experience through differential... MORE

The Greatest Invention in History

Books: Reviews and Suggested Readings
David Henderson
In 1922 he [Sam Bronfman] was thirty-three years old, less than five feet six inches tall, with a receding chin, thinning hair, and a fortune among the largest of all in western Canada. He'd already had a liveried chauffeur for... MORE

Great Moments (Almost) in Property Rights

Property Rights
David Henderson
And from the New Republic, no less. The last two tweaks of the Sheppard Amendment [the Amendment to the U.S. Constitution proposed by Senator Morris Sheppard] were connected to each other. In addition to the congressional wets, a few moderate... MORE

The Quantum Leap of Logic

Economic Methods
Bryan Caplan
Quantum mechanics is often used as a club against common sense.  I've heard dozens of variations on Scott's:After all, quantum mechanics doesn't sound plausible either---but it's true.Seriously, though, how does this argument amount to anything more than:Common sense is an... MORE

Common Sense: As True As It Seems

Behavioral Economics and Rationality
Bryan Caplan
Scott once again scoffs in the face of common sense economics:Common sense is almost useless in the field of economics. Never dismiss an economic theory because the assumptions about human behavior don't sound plausible.Notice, though, how Scott tries to persuade... MORE

Prohibition for Thee but Not for Me

Books: Reviews and Suggested Readings
David Henderson
OK, then I'll turn into a "thee" But the competitors figure out how to adjust. Among the provisions of the Raines [John Raines was a New York State politician] Law, as it became known, was a Sunday closing rule aimed... MORE

A Patron Saint for entrepreneurs

Business Economics
Alberto Mingardi
In a Financial Times article, Luke Johnson searched for "a patron saint for entrepreneurs". For Catholics, that's Saint Homobonus. The fact that the patron saint of business is emphatically named "Good Man" is in itself remarkable, and should be reminded... MORE

Bootleggers and Baptists in Alabama Politics

Politics and Economics
Art Carden
I think Bruce Yandle's "Bootleggers and Baptists" theory of regulation has an enormous amount of explanatory power. My review of his new book on the subject will appear in the Independent Review at some point. Yesterday, we got to see... MORE

My Life of Appeasement

Cost-benefit Analysis
Bryan Caplan
Morally speaking, I think taxation is theft.  The government has a lot of bad excuses for taking my money without my consent, but no really good reasons.  Still, every year, I pay my taxes.  Why don't I stand up for... MORE

Economics: Truer than it seems

Macroeconomics
Scott Sumner
One thing that economists and non-economists have in common is that they underestimate the power of economic theory. More specifically, they aren't able to accurately connect the predictions of economic theory with the behavior that they (wrongly) think they observe... MORE

Boudreaux on Piketty

Business Economics
David Henderson
Piketty reasonably assumes that if government finances its expenditures with taxes, then the rich would pay a disproportionately large share of those taxes. But he unreasonably assumes that debt financing of government expenditures not only allows the rich to escape... MORE

I've decided to include a few pages about ride-sharing and regulation in a project I'm working on, and I thought I'd reach out to EconLog readership for assistance: does anyone have a good lead on traffic accident rates for ride-sharing... MORE

Mike Huemer, my favorite philosopher, has a new working paper on the ethics of legal advocacy.  Lawyering may never be the same, for Mike challenges the central dogma of the adversarial system: Lawyers should use all legal means to help... MORE

Last week, I asked which essential skills will someday be obsolete. From the comments, it looks like there's a clear consensus on cooking. I expect my kids' generation will cook the way my generation sews: as a hobby. I wouldn't... MORE

You Know You're an Economist When . . .

Economic Philosophy
David Henderson
It was an obvious evolutionary step. As pasteurization, refrigeration, and an efficient network of rail lines developed, so did national brewing companies. This is from Daniel Okrent, Last Call: The Rise and Fall of Prohibition, which I blogged about last... MORE

Think tanks, idea factories no more?

Economics and Culture
Alberto Mingardi
Robert J. Samuelson has an interesting, and rather pessimistic, piece on "the future of think tanks". Samuelson deals specifically with the Heritage Foundation, particularly because Stuart Butler, for 35 years a senior researcher at Heritage and "among the most visible... MORE

If something can't go on forever, it will

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
You may recall a famous saying by Herb Stein: If something can't go on forever, it won't. I don't quite believe that, although I must admit that Stein has me beat on logic. But I've noticed that when people say... MORE

Over lunch one day, colleagues and I were talking about students' handwriting (mine is positively atrocious), and one of my colleagues suggested that students learn to write decently as they will at the very least need to be able to... MORE

Immigrants Are Good for Cosmopolitan Tolerance

Behavioral Economics and Rationality
Bryan Caplan
When I debated Mark Krikorian, he bemoaned immigrants' effect on Americans' patriotic solidarity.  I think he's making a mountain out of a molehill, but Mark's concerns were much on my mind during my recent visit to New York City.  I... MORE

Return to top