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December 2014

A Monthly Archive (67 entries)

Cheap clothes and the marvels of globalization

Austrian Economics
Alberto Mingardi
Jeffrey Tucker, the founder of Liberty.me and a distinguished fellow at FEE, writes beautifully. A scholar of Henry Hazlitt ("The People's Austrian", to quote the title of an old essay of his), Tucker is one of the few people that... MORE

I don't believe you (you're a liar)

Revealed Preference
Scott Sumner
In The Big Questions Steven Landsburg examines the problem of belief. He points out that 96% of Americans believe in God, but most go through their lives acting as if they don't believe in God. That raises the question of... MORE

Communist Medical Care

Economics of Health Care
David Henderson
A former student, an officer in the U.S. Navy, gave me permission to post an edited version of his story of growing up in the Soviet Union and his and his family's experiences with the Communist system of medical care.... MORE

The Evidence of Altruism

Behavioral Economics and Rationality
Bryan Caplan
Economists are notorious for emphasizing the selfishness of human motives.  The immortal words of Adam Smith are the gateway drug:It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from... MORE

FDR Seizes Avery's Yacht

Property Rights
David Henderson
While playing around on the web this weekend, I found the following link. I had known about FDR sending in the National Guard to physically carry Sewell Avery out of his office and, in fact, posted about it earlier this... MORE

The Meaning of Tolerance

Economics and Culture
Bryan Caplan
I'm a fan of tolerance.  But Nathan Smith, one of the smartest people I've ever taught, is not.  Nathan:As for tolerance, it is subject to this paradox: that a society cannot be tolerant without being intolerant of intolerance. To see... MORE

Kevin Erdmann on Houses as an Investment

Tax Reform
David Henderson
Somehow, in all my reading of other people's blogs, I missed Kevin Erdmann, aka, The Idiosyncratic Whisk. My loss. His most-recent post, "Housing policy--please do the opposite," is excellent. In responding to Robert Shiller's claim that houses are a lousy... MORE

So how's the economy doing this year?

Labor Market
Scott Sumner
Paul Krugman says that the reduction in long-term unemployment has been rather disappointing. This is important, because 2014 was a sort of "natural test" of the hypothesis that the extended unemployment insurance program led to higher unemployment. The program ended... MORE

Sunk Costs are Sunk: An Application to a Starbuck's Run

Economic Education
David Henderson
Last month I wrote the following in a blog post: 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... MORE

The Competitive Sieve and the Burden of Proof

Industrial Organization
Bryan Caplan
Normal 0 false false false MicrosoftInternetExplorer4 A great quote, from someone you wouldn't expect.  Your guesses in the comments.Competition is like water held in a sieve.  To argue that competition does not exist because it is absent somewhere is... MORE

Did the North and South Converge?

Economic History
David Henderson
UPDATE BELOW Former Econlog blogger Arnold Kling's latest post is titled "Why Did the South Not Converge?" In it, he quotes from a book by Ira Katznelson and goes on to suggest various factors behind the failure of per capita... MORE

Merry Christmas

David Henderson
To all readers of this blog: If you celebrate Christmas, have a Merry Christmas. If you don't, have a wonderful day anyway.... MORE

What an unmitigated disaster for Pikettynomics! PARIS (Reuters) - When President Francois Hollande unveiled a "super-tax" on the rich in 2012, some feared an exodus of business, sporting and artistic talent. One adviser warned it was a Socialist step too... MORE

Why Florida Is My Favorite State

Cross-country Comparisons
Bryan Caplan
Greg Mankiw wonders why Florida is my favorite state.  I'm happy to answer, but must begin with a methodological preamble.In a revealed preference sense, everyone's "favorite state" almost has to be wherever he resides.  If I really preferred Florida to... MORE

Two Takes on Ebenezer Scrooge

Regulation and Subsidies
David Henderson
One of my favorite movies to watch this time of year is the Alastair Sim version of A Christmas Carol. Watching it many times and then, finally, actually reading the Charles Dickens story, has led me to a view that... MORE

Gruber and Henderson on Health Care Mandates

Labor Market
David Henderson
A couple of weeks ago, I posted a video of Jonathan Gruber and me testifying on the economics of government mandates on employers to provide health insurance. We basically agreed on the analysis: the cost of those mandates is borne... MORE

Outsourced to Scott Alexander

Behavioral Economics and Rationality
Bryan Caplan
I read a ton of old Scott Alexander posts while vacationing in Florida.  I was pleased to discover many topics I don't need to address, because Scott's already explained my views better than I could explain them myself.  Choice selections:1.... MORE

The Brooklyn Cop Killings: A Numerate Analysis

Labor Market
David Henderson
I'll put aside the irony that many people on the right are borrowing a page that many on the left use on other issues by blaming a climate of opinion for the two Brooklyn cop murders. My own view is... MORE

Choosing the right tools

Economic Methods
Scott Sumner
Here's the always brilliant Steven Landsburg discussing the importance of theoretical tools: I sometimes hear economists defend the unrealism of their models thusly: "Economics is an infant science. Today our models are unrealistic; a decade from now, they'll be a... MORE

W. Lee Hansen on University of Wisconsin Grading Quotas

Economics of Education
David Henderson
UW-Madison has been moving toward egalitarian grading since 2008 when the university began reporting to departments and instructors the rates of D, F, and drop grades by gender, first-generation college status, and targeted minority status. That sent a message to... MORE

Obama vs. Wall Street Journal on Global Oil Markets

Energy, Environment, Resources
David Henderson
Both Obama and the WSJ are wrong: The WSJ is more wrong. Here's an excerpt from the Wall Street Journal's Review and Outlook (unsigned) editorial, "Obama on Oil Markets: Supply and demand seem to be elusive concepts," on President Obama's... MORE

Paul Krugman has a new post that explains why he is pessimistic about monetary stimulus at the zero bound. He briefly describes his 1998 paper on the zero bound problem. This paper shows that if base money and bonds are... MORE

Good for Michael Vick--or Incentives

Cost-benefit Analysis
David Henderson
"What Michael did was the exception, not the rule," Luzinski said. "He didn't have to do this. The law allows you to skate by and pay your creditors 10 or 20 cents on the dollar, but he thought this was... MORE

Los Angeles Unions' Two-fer on Minimum Wage

Labor Market
David Henderson
When the U.S. minimum wage law was put into effect in 1938, northeastern labor unions gained from it by pricing out their competition. Unions in the textile industry were seeing textile firms move from New England states to southern lower-wage... MORE

France seeks liberalizations, but bans Uber

Eurozone crisis
Alberto Mingardi
Mixed signals from France. The Financial Times, among others, has stressed the potential of the liberalisation plan pursued by the new Economy Minister Emmanuel Macron. The bill aims at lowering barriers to entry in liberal professions--notaries, pharmacists, et cetera. The... MORE

Two Cheers for Obama on Cuba

International Trade
David Henderson
As is probably known to virtually all readers of this blog, President Obama announced today his steps to normalize relations with Cuba. It is long overdue and finally we have a President willing to do something about it. I have... MORE

Central banks should do their job

Monetary Policy
Scott Sumner
The title of this post sounds like a truism, and yet it's actually highly controversial. In my previous post I pointed out that the ECB was not hitting its 1.9% inflation target, and apparently has no plan for doing so... MORE

The Moral Case for Fossil Fuels: Recap

Books: Reviews and Suggested Readings
Bryan Caplan
Everything I've written about The Moral Case for Fossil Fuels, my favorite book this year:1. The thesis.2. We owe civilization to fossil fuels.3. We can live with warming.4. Refining the case.The book's a great Christmas present, all the way down... MORE

I've asked tough questions before. When Leon Panetta, my former Congressman, came to NPS as Secretary of Defense, I asked [here at the 43:40 point] whether, given his own previous statement that Al Qaeda was down to a handful of... MORE

The ECB: Is it a hopeless case?

Monetary Policy
Scott Sumner
Remember the joke about the motorist who gets lost, and then asks for directions to Podunk? The farmer replies, "If I was headed to Podunk, I wouldn't start from here." Yes, and if I was targeting inflation at 1.9%, I... MORE

Starting in January, Californians will pay an added 10 cents or so per gallon of gasoline due to a new law that goes into effect next month. UC Berkeley economist Severin Borenstein writes: Under California's cap-and-trade program to reduce greenhouse... MORE

The Moral Case for Fossil Fuels: Refining the Case

Economic Philosophy
Bryan Caplan
The Moral Case for Fossil Fuels is the best book I've read all year, and makes a great holiday gift.  But there's still room for improvement.1. Epstein centers his moral case around "human life as the standard of value."  This... MORE

Kling on the Constitution and the Common Law

Regulation and Subsidies
David Henderson
According to a legal theory I am about to sketch, the Supreme Court would let stand the subsidies that are being paid to people through the Federal health care exchange, in spite of the language in the law that says... MORE

Speaking of torture . . .

Economics of Health Care
Scott Sumner
Here's the New York Times: I TRIED magic mushrooms out of curiosity and in middle age. I'd been on the amateur mycological circuit for a couple of years, but hallucinogenic species were rarely mentioned at the foraging expeditions and conferences... MORE

The Man of One Study

Economic Methods
Bryan Caplan
Another great piece by Scott Alexander:So here's why you should beware the man of one study. If you go to your better class of alternative medicine websites, they don't tell you "Studies are a logocentric phallocentric tool of Western medicine... MORE

Boudreaux on capitalism and slavery

Book Club
Alberto Mingardi
Don Boudreaux has an insightful letter to Slate. Let me just single out one sentence, which beautifully summarizes Don's arguments: If slave-grown cotton were a key spur to capitalism, it's difficult to understand why a booming capitalist revolution never occurred... MORE

Friday Night Video: Gruber and Henderson

Labor Market
David Henderson
In July 1994, Jonathan Gruber, then an assistant professor of economics at MIT, and I, then the John M. Olin Fellow at Washington University's Center for the Study of American Business, testified on the economic effects of government mandates on... MORE

My Apologies

moral reasoning
David Henderson
As someone who has made a lot of mistakes and who tries hard to admit them and apologize when I think apologies are in order, I have become somewhat of a student of the apology. I think it's important, if... MORE

John Cochrane on modern macro

Macroeconomics
Scott Sumner
When John Cochrane writes on finance I prefer him to be "the grumpy economist." When he writes on macro, I prefer the less grumpy version. His new (non-grumpy) post on macro is outstanding, full of so many important insights that... MORE

The Moral Case for Fossil Fuels: We Can Live With Warming

Books: Reviews and Suggested Readings
Bryan Caplan
Rolling Stone (ahem) includes Alex Epstein, author of The Moral Case for Fossil Fuels, on its list of top "global warming deniers."  Epstein:[T]hose who dispute catastrophic global warming are accused of denying the greenhouse effect and global warming. I experienced... MORE

Cotton, slavery and capitalism

Book Club
Alberto Mingardi
I am still waiting for my copy of Sven Beckert's "Empire of Cotton: A Global History", which Amazon promised me for January. But I have read Eric Herschthal's review in Slate, and I am a bit perplexed. Herschthal offers qualified... MORE

The Inanity of the Welfare State

Cost-benefit Analysis
Bryan Caplan
When most people stare at this table (courtesy of Greg Mankiw), they see strong evidence that the U.S. tax system is highly progressive.If you calmly peruse the table, however, a stranger pattern emerges - a pattern neither liberals nor conservatives... MORE

The Moral Case for Fossil Fuels: We Owe Civilization to Fossil Fuels

Books: Reviews and Suggested Readings
Bryan Caplan
According to this popular cartoon, getting rid of fossil fuels is a free lunch.The wise will roll their eyes at this wishful thinking.  But no one exposes its sheer absurdity better than Alex Epstein in The Moral Case for Fossil... MORE

Campaign Spending Not that Effective

Politics and Economics
David Henderson
Binyamin Applebaum has an excellent article in the New York Times today, titled "Who Wants to Buy a Politician?", on the ineffectiveness, on the margin, of spending on political campaigns. Excerpt: One reason is that buying elections is economically inefficient.... MORE

War on crime? Or war on the poor?

Economics of Crime
Scott Sumner
Intellectuals on the far left will sometimes argue that the entire criminal justice system is engaged in a vast right wing conspiracy to repress the poor. I'm not quite that paranoid; violent crime is a serious issue, for which we... MORE

The Moral Case for Fossil Fuels: The Thesis

Books: Reviews and Suggested Readings
Bryan Caplan
When Alex Epstein's The Moral Case for Fossil Fuels arrived in my mailbox, I expected it to be bad.  For two reasons:1. In my experience, readable books about climate change usually just demagogically preach to the choir.2. I correctly surmised... MORE

The Wonder of Competition

Competition
David Henderson
I make myself one large strong cup of coffee early every morning. I use 2 tbsp. of Peet's Major Dickason's Blend. But that's a little too bitter. So I add almost 1 tbsp. of Gevalia Chocolate Mocha. The result is... MORE

An Awkward Question About Blurred Consent

Behavioral Economics and Rationality
Bryan Caplan
Lately I've repeatedly heard two claims about rape:1. False accusations are extremely rare.2. Consent to sex is often "blurred."Many people seem to believe both claims.  But can they both be true?  If consent is frequently unclear, then whether a person... MORE

Why debates over inflation are pointless

Macroeconomics
Scott Sumner
In a recent post I suggested that one could argue that the entire increase in per capita income over the past 50 years was pure inflation (and hence that real GDP per capita didn't rise at all.) But also that... MORE

Friday Night Video: Henderson on RT

Regulation and Subsidies
David Henderson
A few weeks ago, I did an interview with Erin Ade of RT's "Boom and Bust." The first segment aired a few weeks ago and the second segment a few days ago. In this segment, I discuss: a taxpayer-paid for... MORE

He Who Wills the End Wills the Means

Economics of Crime
David Henderson
In an otherwise excellent segment on the tragic Eric Garner case, in which some New York cops choked to death a man selling loose cigarettes, Jon Stewart, generally a smart man, either misunderstands or plays to his audience's ignorance. Either... MORE

What (if anything) can we learn from 1921?

Economic History
Scott Sumner
There has a been a recent flurry of blog posts on the 1921 depression--especially why it was so much less severe than the Great Depression. One unfortunate aspect of the dispute is that it has become linked to a misleading... MORE

Krugman's Cursory Case Against Open Borders

Cost-benefit Analysis
Bryan Caplan
Paul Krugman exemplifies the standard progressive position on immigration.  He strongly supports amnesty for existing illegal immigrants, but strongly opposes open borders.  His case for amnesty is not novel:[T]oday's immigrants are the same, in aspiration and behavior, as my grandparents... MORE

Robert Murphy on the 1920-21 Depression

Fiscal Policy
David Henderson
Paul Krugman has recently reraised the topic of the 1920-21 Depression. It was a very deep depression but it ended quickly. Robert Murphy has an interesting response. Some highlights of Murphy's response. First, how he got interested in the issue:... MORE

Bloggers >>>>>>>>>> Central banks

Monetary Policy
Scott Sumner
Over the past 6 years the blogging world (especially market monetarists) has been highly critical of central banks. Outsiders might have trouble discerning who's right. After all monetary policy is highly complicated. Why should we care about the views of... MORE

Nathaniel Branden, RIP

Obituaries
David Henderson
I just learned from a friend on Facebook that Nathaniel Branden died this morning. He was 84. I learned a lot from his weekend "intensives" and the second one I went to gave me the courage to leave the University... MORE

Government Regulation vs. the Market

Regulation
Russ Roberts
This past summer I did a lot of EconTalk episodes related to the sharing economy. In the first one, with Mike Munger, we talked about how reputation established by users at Uber and AirBnB could substitute for direct regulation by... MORE

Rape Culture or Nationalist Culture?

Economics and Culture
Bryan Caplan
[Warning: Mild Fury spoilers]The idea that the modern U.S. is a "rape culture" has always struck me as ridiculous.  I've never met a person who claimed to have raped anyone.  I don't know anyone who intellectually defends rape.  I don't... MORE

Here's Brad DeLong: Two Questions for Scott Sumner: First Question: Why has nominal GDP targeting not already swept the economics community? It really ought to have. Second Question: I believe in nominal GDP targeting--especially if coupled with some version of... MORE

Charles Davis is Half Right

Information Goods, Intellectual Property
David Henderson
Over at Salon, Charles Davis has an article titled "Amazon's frightening CIA partnership: Capitalism, corporations and our massive new surveillance state." In it, he quotes from, and criticizes, a post I wrote titled "The Amazon Boycott: Blaming a Victim." Davis... MORE

Desrochers on synthetic dyes

Central Planning vs. Local Knowledge
Alberto Mingardi
Pierre Desrochers abridged a 2008 article of his into a most interesting article for "Spike" on the development of synthetic dyes. The following is its conclusion: Sustainable-development theorists' aversion to, and environmental activists' dislike for, synthetic products, long-distance trade and... MORE

Who to Fear

Economics of Crime
Bryan Caplan
While writing The Case Against Education's section on education and crime, I came across an interesting FBI table on victim/perpetrator demographics for homicide.  "Homicides" includes murder and manslaughter, but excludes "justifiable killings" by authorities or private citizens.First, the racial breakdown... MORE

A Strange Critique of Libertarianism

Economic Philosophy
David Henderson
Contrary to libertarian and Tea Party rhetoric, evolution has made us a powerfully social species, so much so that the essential precondition of human survival is and always has been the individual plus his or her relationships with others. This... MORE

McKenzie on Tullock

Obituaries
David Henderson
Gordon Tullock was, in James Buchanan's words, a "natural economist" who saw economics as his way of understanding all of life. He talked and wrote much about personal interest and profit as motivations in markets and politics. Yet he gave... MORE

The IMF hits a new low

Monetary Policy
Scott Sumner
The IMF has a reputation (perhaps undeserved) of always getting the policy mix wrong during crises. They also have a reputation for learning from their mistakes---that reputation is definitely undeserved. Here's an example from a recent IMF report: The IMF's... MORE

Farewell, Art Carden

Econlog Administrative Issues
David Henderson
Last December, I bid farewell to our guest blogger Art Carden. And last June I welcomed him back. As Art has already announced his recent stint as a guest blogger is up. This does not mean that he won't be... MORE

The Puzzling Idealism of the Geneva Convention

Behavioral Economics and Rationality
Bryan Caplan
I recently read the 1929 Geneva Convention for the first time.  The terms are shocking.  It's almost as if a quixotic pacifist deliberately wrote the agreement to ban war by stealth.  It begins with typical high-sounding diplomatic rhetoric:  Art. 2.... MORE

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