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November 2014

A Monthly Archive (89 entries)
Rising oil production is likely to lead to faster global growth. Falling oil production is likely to lead to slower global growth. That's because oil is an important input into the production process. However falling oil prices have no implications... MORE

Zachary Bartsch writes: I want to hear more about your religion or parenting beliefs and how your participation in either results in real actions that could be perceived as different from anyone else's. Religion: evangelical Christian with a lot of... MORE

By Request: Factor Price Equalization

Labor Mobility, Immigration, Outsourcing
Art Carden
From Paul Ralley: Please can you describe a plausible 'end game' for price-factor equalisation. I.e. If incomes in each country converge (per skill level) what would the world look like in terms of trade, income distribution etc. I'm not sure... MORE

Saturday Afternoon Video: Dan Klein on Liberalism

Economic Philosophy
David Henderson
I didn't think that a 20-minute video on the origins and use of the words "liberal" and "liberalism" could hold my attention and draw me in. I am notoriously impatient and I have a strong preference for videos that are... MORE

By Request: Externalities

Political Economy
Art Carden
J Scheppers asks: From different perspectives many different external economic impacts could be reported. Is there a way to determine which reference frames are most effective in determining possible economic efficiency? ThomasH asks, in a similar vein: Policy in light... MORE

Robin Hanson's Call for Empirical Research

Economic Methods
David Henderson
UPDATE BELOW: Robin Hanson responds. On November 21, Robin Hanson wrote a piece misleadingly titled "Imagine Libertopia." I say "misleadingly" because he's actually calling on libertarians to do less imagining and more empirical research. It's excellent. I'm posting about it... MORE

By Request: Economics and Christianity

Economics and Culture
Art Carden
Commenter dullgeek offers the following request, which I'll quote in its entirety: CS Lewis wrote the following in The Screwtape Letters: "Above all, do not attempt to use science (I mean, the real sciences) as a defence against Christianity. They... MORE

As I mentioned earlier, Discount Retailing ate my research agenda. Charles Courtemanche and I have written a handful of papers (a couple of them with Jeremy Meiners) about the effects of Walmart (and now Costco) on different aspects of a... MORE

Krugman's On-Again, Off-Again Analysis

Energy, Environment, Resources
David Henderson
Krugman's bashing gets in the way of clear thinking. In his most recent New York Times column, "Pollution and Politics," Paul Krugman fluctuates between claiming one doesn't need to do the analysis and actually doing the analysis. The issue: the... MORE

My latest stint with EconLog ends in a couple of days, and a couple of people wanted to know more about my work on Walmart. I'm happy to oblige as Charles Courtemanche and I are working on a paper about... MORE

Neo-Fisherism converges on market monetarism

Monetary Policy
Scott Sumner
Here's the latest from John Cochrane: To send you off with some more Thanksgiving good cheer, here is another out of the box Neo-Fisherian idea. Perhaps the Fed (or the Treasury) should target the spread between real and nominal interest... MORE

The Piketty Path to Riches

Income Distribution
Scott Sumner
This post is meant to be a sort of opening inquiry into what might become an important issue in the 21st century. I don't have strong views on the question. You may recall that Thomas Piketty assumed that savers can... MORE

Giving Thanks

Economics of Health Care
David Henderson
I'm up early this Thanksgiving day, before my wife and daughter. My daughter came home from San Francisco yesterday afternoon and for that alone I'm thankful. She, my wife, and a friend had a great visit last night. Now to... MORE

First, I want to thank everyone who submitted requests for my last few posts before my EconLog guest stint ends. I'll answer as many as I can and schedule a series of posts for the next few days. Second, Happy... MORE

My Proud "Don't Call the Cops" Moment

Economics of Crime
David Henderson
Most mornings that I don't teach, I go out early to the local Safeway, where there's a Starbuck's, and get my wife a Grande non-fat latte. Tip to men who want a long-term successful marriage: If there are things you... MORE

The Case for Balance Billing

Economics of Health Care
David Henderson
The problem starts with the Center for Medicare and Medicaid Services (CMS), the federal agency that sets prices for the medical services of Medicare patients. CMS is really a giant central-planning agency. It sets hundreds of thousands of prices. What... MORE

The Backward State of Behavioral Political Economy

Behavioral Economics and Rationality
Bryan Caplan
John Cochrane's grumpy about the state of behavioral political economy.  From his review of Schnellenbach and Schubert's recent literature review: I came away horribly disappointed. Not with the paper, but with the state of the literature that the authors ably summarize.... MORE

A few thoughts on free banking

Finance
Scott Sumner
Izabella Kaminska has a few thoughts on free banking: This week I strayed into the absolutist world of free-banking enthusiasts. Now, it's not like I haven't come across these guys before -- they lurk everywhere -- but this week I... MORE

Immigration Charity Prospect

Cross-country Comparisons
Bryan Caplan
Argentina officially has near-open borders.  At least on paper, you only need an employer or family member to sponsor you.  The country isn't as quite First World, but with per-capita GDP around $15,000, Argentina would be a huge step up... MORE

David Henderson and Tyler Cowen have linked to an interesting interview with Jean Tirole, the newest Nobel laureate in economics: "We haven't succeeded in France to undertake the labour market reforms that are similar to those in Germany, Scandinavia and... MORE

Thank Obama for All He's Done

Economic Methods
Bryan Caplan
While I still harbor doubts about implementation, Obama's recent executive order on immigration exceeds my wildest hopes from two months ago.  Yet to be honest, I'm having trouble feeling thankful.  Not because I'm afraid he's "undermined the rule of law." ... MORE

Carbon Taxes: The Tax Interaction Effect

Energy, Environment, Resources
David Henderson
UPDATE: I made an important mistake. Robert Murphy corrected me in an e-mail. Correction below. Robert P. Murphy, one of the economists who writes frequently for Econlib, has published a number of pieces on the "tax interaction effect." He has... MORE

Mexican Justice Department personnel are disguising themselves as U.S. Marines to take part in armed raids against drug suspects in the United States, according to people familiar with the matter, an escalation of Mexican involvement in battling drug cartels that... MORE

Zycher on Gruber

Economics of Health Care
David Henderson
When L'Affaire Gruber began two weeks ago, Tyler Cowen challenged us to stick to discussing Gruber's economics rather than his personal failings. I took up the challenge here, pointing out that Gruber's willingness to mislead could explain what looked like... MORE

The smart against the dumb: The new Cold War

Cross-country Comparisons
Scott Sumner
Consider the following story: A suicide bomber has killed at least 48 students at a high school assembly in northeastern Nigeria, witnesses say. . . . The region has been in the grip of fighting between government forces and Boko... MORE

Paul Krugman: David Henderson Was Right

Growth: Causal Factors
David Henderson
Ok, Krugman didn't say that; he didn't mention my name. But that's Krugman's MO. He has stated explicitly before--I can't find the link quickly--that he doesn't want to mention the names of people he takes issue with because that would... MORE

Herbert Spencer on Amazon (and Uber)

Book Club
Alberto Mingardi
I've been re-reading some of Herbert Spencer's works, for a LibertyMatters discussion that began with a very insightful article of George H. Smith. In Spencer's The Study of Sociology I've stumbled upon this rather amusing quotation that I'd like to... MORE

The Lawful Neutral Case for Deferred Action

Economic Philosophy
Bryan Caplan
If life were classic Dungeons & Dragons, many opponents of immigration would be Lawful Neutral.  The law is the law; good or bad, everyone has to obey the rules.  In his defense of Obama's deferred action policy, Ilya Somin points... MORE

EconLog Guest Stint #2 Ends This Month: Requests?

Econlog Administrative Issues
Art Carden
My second guest stint with EconLog ends this month. I have about a week left and will take requests: what would you like to read about?... MORE

On the Complexity of the World

Cost-benefit Analysis
Bryan Caplan
Confession: I have been enamored of extreme policies for as long as I can remember.  When I was around ten years old, for example, I decided that all smokers should be summarily executed.  Adults' attempts to rebut my visionary proposals... MORE

Two Cheers at Least for Some Politicians

Public Goods
David Henderson
I rarely disagree with Don Boudreaux about any economic, political, or moral issue and so in those rare cases where I do disagree, it's probably worth noting. Here's one. In a post in September, I talked about which U.S. presidents... MORE

I Keep Returning to This Book...

Austrian Economics
Art Carden
If you judge a book's quality by how frequently you come back to it or think about it, Daniel Klein's Knowledge and Coordination: A Liberal Interpretation is a very good book. I keep pulling it off the shelf for different... MORE

A Nice Quote for Obama's Immigration Address

Economic Philosophy
Bryan Caplan
"I want to ask a question. What is a loophole? If the law does not punish a definite action or does not tax a definite thing, this is not a loophole. It is simply the law. Great Britain does not... MORE

The Bottom Line on DACA

Economic Philosophy
Bryan Caplan
When the Deferred Action for Childhood Arrivals policy was announced in 2012, I repeatedly heard that two million would benefit.  The bottom line has been far smaller: as of March 2014, 673,000 requests were filed, and just 553,000 approved.  I... MORE

The New Brownsville U-Turn

Labor Mobility, Immigration, Outsourcing
David Henderson
I flew into the Corpus Christi airport late last night and waited in line for my rental car. Behind me was a young dark-skinned man who appeared to be from India and he was shouting in a foreign language--Hindi, I... MORE

Kakha Bendukidze, RIP

Obituaries
Alberto Mingardi
On November 13, Kakha Bendukidze passed away in London,a result of a cardiac problem. I'd gotten to know Kakha a bit over the years, as he frequently participated in seminars organised by Istituto Bruno Leoni in Italy (my colleague Carlo... MORE

Intertemporal Corruption

Economics of Crime
Bryan Caplan
When I was an undergrad at UC Berkeley, there was an informal norm about professors dating their students: Just wait until after the final exam.  Professors dating their current students?  A recipe for corruption.  Professors dating their recent students?  Only... MORE

Sticky wages and sticky fed funds rates

Monetary Policy
Scott Sumner
Here's another post in my favorite theme, cognitive illusions. Let's start with sticky wages, the easier concept. Suppose hourly nominal wage rates for many workers are renegotiated every 12 months. Also suppose the economy is in equilibrium and nominal wages... MORE

Bechhofer Immigration Bet

Economic Methods
Bryan Caplan
If I were in Obama's shoes, I'd give life-long deferred action to every illegal immigrant, past, present, and future.  I'd also immediately pardon all 20,000+ of the people in federal prison for immigration offenses.  But to belabor the obvious, Obama... MORE

The Margins of Moral Weaseling

Economic Philosophy
Bryan Caplan
Chris Hallquist's recent post begins with a critique of my "Against Human Weakness."  Chris:The problem is that once you've committed to "do the right thing all day, every day," you've given yourself a powerful incentive to rationalize whatever you do... MORE

No matter how hard I try, I can't stop economists from reasoning from price changes. Now I'm seeing more and more economists claiming that at low interest rates we should do more public investment. In fact, there is no necessary... MORE

Congressional Consumers Uber Alles

Public Choice Theory
David Henderson
Celebratory Note: This is my 2,000th blog post. It has been and, I predict, will continue to be, a fun ride. Usually in every microeconomics course I teach, there comes a time when I make the point that there is... MORE

I'm not "the NGDP guy"

Scott Sumner
When I was much younger, right wing macroeconomists like me used to think we were smarter than left wing macroeconomists. The old Keynesian model ran into some pretty severe problems during the 1970s, and the monetarist critique of the model... MORE

Alvin Rabushka's Triumph

Tax Reform
David Henderson
On Thursday I was up at the Hoover Institution to do the interview with Erin Ade of RT's BoomBust and I always use those chances to visit some of my favorite Hoover colleagues. One of them is Alvin Rabushka, who... MORE

There is currently controversy in Alabama about whether the University of Alabama-Birmingham (UAB) should drop its football program. Suffice it to say UAB hasn't had the success enjoyed by traditional powerhouses like Alabama and Auburn. Via Twitter, my colleague Darin... MORE

Public choice theory teaches us that small, well-organized special interest groups can often enact legislation that benefits them at the expense of the broader public. The examples are endless; teachers unions, farmers, bankers, taxi companies, auto dealers, lawyers, doctors, etc.... MORE

Erin Ade, on RT (previously called Russia Today), which is funded by the Russian government, does another good interview of me. It seems strange. Other than John Stossel, no other electronic interviewer asks me such good questions. And, as I... MORE

A Lot Happened in 1962

Economic History
Art Carden
This occurred to me last weekend: three major books were published in 1962: Buchanan & Tullock's The Calculus of Consent, Rothbard's Man, Economy, and State, and Friedman's Capitalism and Freedom. At the same time, Walmart, Kmart, and Target all opened... MORE

Best of the Blogs

Economics of Crime
David Henderson
A few highlights from blog posts today that caught my eye. Understatement of the Day Award Tyler Cowen: "The first volume of 949 pp. [of a biography of Stalin] brings the reader up only until 1928. A lot still happened... MORE

Hachette and Amazon made a deal

Business Economics
Alberto Mingardi
I have previously commented on the quarrel between Amazon and Hachette, a cause celebre that brought Paul Krugman to argue against Amazon's "market power." Now the contract dispute has, as it happens with contract disputes, come to an end. The... MORE

A Judgmental Typology

Economic Philosophy
Bryan Caplan
Here's a generalization of my last post.  Let X be any behavior in conflict with common-sense morality: lying, stealing, adultery, drunkenness, murder, etc.  Then two pressing questions about X are: "Is X prevalent in our society?" and "Is X morally... MORE

Jonathan Gruber's Economics

Economics of Health Care
David Henderson
"Why, Sir, if the fellow does not think as he speaks, he is lying; and I see not what honour he can propose to himself from having the character of a lyar. But if he does really think that there... MORE

Let me get my biases out of the way right up front: 1. I strongly disagree with Gruber's views on health economics, for reasons discussed by Bryan Caplan in a recent post. 2. I opposed Obamacare, albeit not quite as... MORE

A few months ago, I posted a bit of advice on my cousin's Facebook page as one of her sons has begun the college search. Here it is in slightly modified form: Forget about "the college experience." It's overrated. Enroll... MORE

I spent Sunday and Monday in Manhattan, so I've been thinking about population density, the extent of the market and what it means for the division of labor, and the deadweight losses of land use. I was pleased, therefore, when... MORE

The Presumptive Puritan

Economic Philosophy
Bryan Caplan
Tyler on GruberGate:It's hardly news that intellectuals who hold political power, even as advisors, very often do not speak the truth.  If anything, I feel sorry for Gruber that he has subsequently felt the need to so overcompensate by actively... MORE

So how many Californians have been arrested for eating the wrong kind of egg? Zero. Not even one? Not one. Actually, the law doesn't take effect until January, but even then egg eaters will have nothing to fear. The reason:... MORE

Imprisoning Immigrants

Economics of Crime
Bryan Caplan
If you read the tables in my last post carefully, you might have noticed that 10.6% of federal inmates - over 20,000 people - are serving time for immigration offenses.  This seems very weird.  Stereotypes say that illegal immigrants are... MORE

Hypothesis: movie theaters often turn a blind eye to those who enter the theater with their own candy and are sometimes inconsistent in their enforcement of rules against theater-hopping. This is a way to price discriminate given that the marginal... MORE

The "War on Drugs" and crime rates

Economics of Crime
Scott Sumner
Bryan Caplan has a new post discussing the impact of drug legalization on the overall crime rate. In the absence of the War on Drugs, many non-drug offenses would never have been committed. Without prohibition, gang-related violence - and related... MORE

George Selgin recently quoted Keynes, from late 1933: "Rising output and rising incomes will suffer a set-back sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can... MORE

There are over 1.5 million people in American jails and prisons.  Why are they there?  Take a look at the latest numbers from the Bureau of Justice Statistics.  Here is the offense breakdown for state-level incarceration for 2012, which continues... MORE

Two Tullock Stories

Economics and Culture
Bryan Caplan
Here are my two favorite Gordon Tullock stories, filtered through my admittedly imperfect memory.Story #1It's the summer of 1993.  Gordon Tullock gives a guest seminar for interns at the Institute for Humane Studies.  A random democratic failure comes up, and... MORE

The problem of population

Labor Mobility, Immigration, Outsourcing
Scott Sumner
Tyler Cowen has a column in the New York Times that discusses the issue of population. I mostly agree with his policy recommendations, but what interests me is the underlying assumptions. What is the optimal global population? What is the... MORE

Henderson on Piketty, Part 6

Books: Reviews and Suggested Readings
David Henderson
This is my final installment from "The Unintended Case for More Capitalism," my review of Capital in the Twenty-First Century by Thomas Piketty. Piketty, not to his credit, sometimes uses ad hominems in place of actual argument. I note two.... MORE

Here's Brad DeLong on June 30th 2008, commenting on the Bush administration's decision to enact an emergency unemployment insurance program when the unemployment rate was at 5.5%, roughly the current estimate of the natural rate: The rule of thumb, IIRC,... MORE

Henderson on Piketty, Part 5

Books: Reviews and Suggested Readings
David Henderson
For Piketty and, presumably, Solow to calmly countenance the possibility of stagnating real wages just to keep capital's share from increasing, they would have to see some large problems with increasing inequality. Solow does not point out any such problems,... MORE

How Europe did a "1937"

Monetary Policy
Scott Sumner
In macroeconomics, "1937" is a metaphor for tightening too soon, before an economy has recovered from a deep slump, and falling back into another downturn. Here's the FT blog Alphaville discussing what went wrong in Europe: The Riksbank faced this... MORE

Stateless Reality 2.0 as a Substitute for Tyranny in Physical Reality

Information Goods, Intellectual Property
Art Carden
Changing technology means that more and more of our interactions with one another will take place through online platforms and games like Facebook and Minecraft. We're just now scratching the surface of what virtual lives will look like, but it's... MORE

Sunstein on Hayek

Politics and Economics
Alberto Mingardi
Anticipating the Republicans' victory in the U.S. mid-term elections, on Monday Cass Sunstein wrote a passionate plea to the new Republican majority. His appeal can so be summarized: be libertarian, not conservative. For bloggers and readers at Econlog, he is... MORE

Most of the payoff from education comes from credentials, not mere years of class time, a regularity known as the sheepskin effect.  A quick look at crime as a function of education suggests a strong sheepskin effect for crime as... MORE

Spencer matters

Economic Philosophy
Alberto Mingardi
LibertyMatters is hosting a discussion over a fascinating article by George H. Smith, on Herbert Spencer's sociology of the state. David Levy, Roderick Long and yours truly will comment on Smith in the next few days. I am sure it... MORE

Richard McKenzie on Gordon Tullock

Public Choice Theory
David Henderson
I'll have some of my own reminiscences of Gordon Tullock sometime in the next few days. But I'm traveling to Montreal tomorrow and don't have time. But Richard McKenzie sent me four of them. Here they are. Gordon was on... MORE

I often argue that people should never reason from a price change. Interest rates are also a price. Here Noah Smith gets into trouble by considering the impact of a change in interest rates: But what if QE had the... MORE

Third Parties in Congress: Props to Jon Murphy

Behavioral Economics and Rationality
Art Carden
Last year, I offered to bet $100 against someone's $20 that no third party candidate would win a seat in the House or Senate. This was in response to a Politico article touting "record demand for third party." This morning,... MORE

Gordon Tullock, 1922-2014

Books: Reviews and Suggested Readings
Bryan Caplan
I am saddened to report that the great Gordon Tullock, professor emeritus at GMU econ and law, has died.  While I often disagreed with him, everything he wrote is worth reading.  Start with this excellent compendium.  Unlike many "interdisciplinary" economists,... MORE

Me in NYC on Thursday

Economics of Education
Bryan Caplan
This Thursday I'm speaking at the monthly Junto meeting in New York City on "The Case Against Education."  Open to the public, hope to see you there.... MORE

Reminiscences of Walter Heller

Labor Market
David Henderson
Yesterday, in a comment on my post about the Taylor Rule, Patrick R. Sullivan reminded readers of the famous debate between the late Milton Friedman and the late Walter Heller about the relative potency of monetary and fiscal policy. Friedman... MORE

The "it doesn't matter" theories

Economic Methods
Scott Sumner
Economics is a much less beautiful and elegant field than physics. But it does have some theories that I've always found attractive. I'm going to call these the "It doesn't matter" theories. Here are a few: In my own field... MORE

1. Jason Brennan, "The General Challenge to People Who Believe There's a Duty to Vote" Brennan argues that it is disrespectful to call non-voters "free riders" on good governance. Abstention, however, can be an exercise in virtue. The non-voter who... MORE

I doubt The Case Against Education will spend more than two pages on the effect of education on crime.  But I've already spent a month getting ready to write those two pages.  Why so long?  Because (a) so much has... MORE

What's Wrong with the Taylor Rule?

Monetary Policy
David Henderson
Economists have long debated whether rules or discretion should govern monetary policy. But after inflation declined in the 1980s, the debate partly subsided as many began to favor what are called "feedback rules." With strict rules seen as too rigid... MORE

Non-voting is a right too

Politics and Economics
Alberto Mingardi
I can't recommend enough this blog post by Jason Brennan. Brennan, who authored The Ethics of Voting, a truly illuminating book, deals here with the silliest argument people use to convince others to go the ballot box: if you don't... MORE

Two Skeptical Questions About State Capacity

Political Economy
Bryan Caplan
Many economists I know, especially the fans of Douglas North, appeal to the concept of "state capacity" to explain economic development, human rights, health, and other social outcomes.  In their stories, with few exceptions, high state capacity leads to good... MORE

You Should Compromise With Me

Public Choice Theory
David Henderson
Cleaning out my office on Friday, I came across an interesting piece by Gerald F. Seib. He's a Wall Street Journal reporter who covers Washington politics. The piece is about ending gridlock in Washington, and Seib argues that that will... MORE

The title of this post has probably angered 90% of the profession, and perplexed another 9%. Obviously I'm taking a few liberties here; both individuals died long ago. And it's not even clear their policies caused the Great Recession. But... MORE

DeLong on How Income Has Grown in all Quintiles

Income Distribution
David Henderson
In a post entitled "Material Well Being in America Since 1979," Brad DeLong points out that average real income in all quintiles has grown since 1979. He quotes data from the Congressional Budget Office. Here's his quote: [American] real after-tax... MORE

Can Labeling Compound Erroneous Beliefs?

Information Goods, Intellectual Property
Art Carden
I've been keeping an eye on social media chatter about laws in some states that would mandate labeling for products containing genetically modified organisms. I'm not a biologist or a food scientist, but my understanding of the scientific consensus is... MORE

Good bye to tax competition

Taxation
Alberto Mingardi
Tax competition may well be a thing of the past. The OECD tax conference in Berlin has ratified a new tax deal between fifty countries, to allow automatic exchange of tax information. German finance minister Wolfgang Schäuble rejoiced at this... MORE

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