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January 2015

A Monthly Archive (75 entries)
After my previous post, commenters James (in London) and Jeff directed me to the official CBO forecasts of August 2012, with and without austerity: CBO's Baseline: Taking into account the policy changes listed above and others contained in current law,... MORE

On Greece

Eurozone crisis
Alberto Mingardi
The world is pondering the odds of Mr Tsipras and Syriza succeeding. To win an election on a rather populist platform might be easy, but governing and entering into highly complex negotiations with European authorities is a different matter. I... MORE

What is Ray Lopez Missing?

Macroeconomics
David Henderson
Regular Econlog commenter Ray Lopez writes, in response to Scott Sumner: My first objection: aside from the "Open Letter" by the liberal leaning economists, that indeed predicted a 'double-dip recession' if sequestration happened, who else predicted a recession? Not the... MORE

Lawson's Economic Freedom Bet

Cross-country Comparisons
Bryan Caplan
In the face of Jeff Sachs' challenge, Bob Lawson proposes a bet on economic freedom:"Dear Tyler, I read with obvious interest your post (and the paper itself) about the endogeneity of institutions. Leaving aside my issues with the IV literature,... MORE

I'm seeing lots of comments to the effect that the 2013 austerity was not a big deal, and or the dreaded "fiscal cliff" never happened. OK, let's see some numbers. After all, if my critics just know that I am... MORE

Tsipras and electoral reform

Eurozone crisis
Alberto Mingardi
Alexis Tsipras and Syriza have won the Greek elections on a platform that entails, roughly speaking, 12 billion euros of additional public spending. The program (see here) is certainly questionable on many, many points, but it is still a big... MORE

Voltaire Reconsidered

Economic Philosophy
Bryan Caplan
Voltaire never actually said, "I disapprove of what you say, but I will defend to the death your right to say it."  But Voltaire would probably embrace this line - just like legions of other smart, well-meaning people.  Interpreted poetically,... MORE

Some Californians versus the State

Regulation
David Henderson
Against Collectivism In the last year I have made our sister legal blog, Library of Law and Liberty, part of my newsfeed. I read most of their posts and learn from many of them. Today, blogger and George Mason University... MORE

Stone Age Economics

Labor Market
Scott Sumner
Back in 2000, Robin Hanson wrote a paper entitled "Shall We Vote on Values, But Bet on Beliefs?", which offered a way forward for economics in the 21st century. Unfortunately his ideas were ignored (and even ridiculed) and today we... MORE

The Lone Collectivist

Economic Philosophy
Bryan Caplan
When you're a normal member of your society, the appeal of collectivism is easy to understand.  Most people believe what you believe and enjoy what you enjoy.  So wouldn't it be great if society as a whole continuously celebrated your... MORE

A Lesson in Rhetoric

Economic Philosophy
David Henderson
A lesson I learned early in life On Facebook yesterday, an economist friend wrote that, in criticizing work by Thomas Piketty, he was claiming that Piketty is arrogant. He asked me (and others) if I thought that it was a... MORE

The Bolshevik Czar

Books: Reviews and Suggested Readings
Bryan Caplan
From Stephen Kotkin's new Stalin:Peasant expectations of a total land redistribution were intense, and the wartime tsarist government had helped spur them, confiscating land from ethnic Germans living in imperial Russia, which was supposed to be redistributed to valiant Russia... MORE

Monetary offset: Reply to my critics

Fiscal Policy
Scott Sumner
Not surprisingly, there has been lots of criticism of my claim that the Keynesian test of 2013 failed. Let me respond to some of the points: 1. I was accused of cherry picking dates, as I compared growth in the... MORE

The birthplace of democracy

Eurozone crisis
Alberto Mingardi
Italian newspaper Corriere della sera has featured a piece on Greece that included an interview with Feano Fotiu, presented as the person responsible for "solidarity" (meaning the organisation of a parallel safety net, something in itself rather interesting) with Syriza.... MORE

We Are Lucky

Economic Philosophy
David Henderson
One of my pleasures in travel in the United States and Canada is running into, and having short enjoyable conversations with, immigrants from Ethiopia. A little game I play, when I have an interaction with someone--typically in a cab, at... MORE

Foreigner Day

Economic Philosophy
Bryan Caplan
Robin Hanson proposed a Capital Day to complement Labor Day. In that spirit, I suggest a Foreigner Day to complement the world's ubiquitous National Days and Independence Days.  Here's how Robin explains the point of Capital Day:[J]ust as on Labor... MORE

Extracting Information from Recent Events

Behavioral Economics and Rationality
David Henderson
In a recent post, co-blogger Bryan Caplan cautions against taking any recent event and glibly asserting that the event shows whatever the person using it wants the event to show. I agree wholeheartedly with that caution. But that doesn't mean... MORE

More on the Modality of Monogamy

Family Economics
Bryan Caplan
Tyler:I say both men and women are understating their number of sexual partners.  Contrary to what is portrayed in this chart, I postulate an American male average of about four.  I do not agree with the common claim that American... MORE

The Keynesian shell game

Fiscal Policy
Scott Sumner
Ever since the spectacular implosion of Keynesian economics in 2013, I've seen increasingly desperate attempts to somehow salvage the model. In this post I'll outline some of the arguments that I run across, and explain why they are misleading. I... MORE

Klein's battle for "liberalism"

Politics and Economics
Alberto Mingardi
Shall we claim the word "liberal" back? David Henderson has already written on Dan Klein's gallant effort to regain the word "liberal" for the "Adam Smith liberals" (see here and here). Klein has a new interview with Jeffrey Tucker, which... MORE

Power Corrupts AND Attracts the Corruptible

Public Choice Theory
David Henderson
I'm traveling this morning from Pennsylvania to Newark Airport to Toronto and so I'll be brief. A friend on Facebook recently cited this quote from Frank Herbert. I had not heard it before: All governments suffer a recurring problem: Power... MORE

The Modality of Monogamy

Behavioral Economics and Rationality
Bryan Caplan
After running last week's abortion regressions, I looked at the General Social Survey's histograms for reported numbers of sexual partners.  They're weird.  Here are the distributions of opposite-sex partners for men and women.Figure 1: Men's Reported Lifetime Number of Opposite-Sex... MORE

The Sheepskin Nightmare

Behavioral Economics and Rationality
Bryan Caplan
Have you ever dreamed that you're suddenly one class, credit, final exam, or semester short of graduation?  Many people, myself included, have this recurring nightmare.  There a whole reddit on it.  A typical case:I've had this kind of dream very... MORE

Ralph Hawtrey

Monetary Policy
Scott Sumner
When I was appointed director of the monetary policy program at Mercatus, I was given the opportunity to name the "chair" I will occupy. Tyler Cowen made several suggestions, from which I chose Ralph Hawtrey, an outstanding British monetary economist... MORE

Against Recent Events

Behavioral Economics and Rationality
Bryan Caplan
There are many tell-tale signs of a demagogue.  Perhaps the clearest, though, is when someone states the words, "Recent events show X."  Which recent events?  Virtually any recent events!  Yes, every century has a few mighty outliers that sway the... MORE

Exchange rate pegs are usually a bad idea

Monetary Policy
Scott Sumner
Tyler Cowen has a post discussing the pressure being placed on the Danish krona, which is pegged to the euro: And if the Danes cut their peg, I am loathe to call this a "mistake" (even though it likely will... MORE

Noah Smith on Brad DeLong

Income Distribution
David Henderson
Noah Smith has an excellent post in which he challenges a key Brad DeLong claim. It's titled "DeLong Smackdown Patrol: How worse off are we really?" Brad DeLong writes: The American economy has done badly over the past generation or... MORE

What Are You Saying, Scott Aaronson?

Economic Philosophy
Bryan Caplan
Scott Aaronson's effort to mediate the virtual war between feminists and nerds has gotten a lot of attention.  But only a handful of people have remarked on a rather strange belief Aaronson has avowed:I believe there still exist men who think women... MORE

The Two Davids Converge

Property Rights
David Henderson
Regular readers of this blog know that I was pretty harsh on David Cay Johnston recently (here and here). But David is persistent. He posted an excellent comment on my first post. If I don't mention it here, it will... MORE

Central banking in a negative seignorage world

Monetary Policy
Scott Sumner
In the standard model, central banks earn seignorage (sometimes called "inflation tax revenue") because their liabilities (cash and bank reserves) pay zero interest and their assets (government bonds) are interest earning. Thus imagine the Fed back in 2007, with a... MORE

Richard Cobden and us

Book Club
Alberto Mingardi
LibertyMatters, another of LibertyFund's valuable projects, is now hosting a most interesting and thoughtful online conversation on Richard Cobden and the Anti-Corn Law League. I think this is a particularly fascinating subject for all classical liberals, for at least a... MORE

Henry G. Manne, RIP

Law and Economics
David Henderson
UPDATE Below Henry G. Manne, one of the pathbreaking contributors to Law and Economics, died this morning. I think I first came across his work by following up a footnote in an article in the Journal of Law and Economics... MORE

In most areas of life, lofty goals require hard work. Monetary policy is the exact opposite. The more modest the objective the harder a central bank must struggle to achieve those objectives. For instance, the Reserve Bank of Australia has... MORE

Shortly after economist George Hilton, who had taught me at UCLA, had died, I wrote a short remembrance. Another UCLA alum, Robert Helms, has sent me one more. Here it is: When George got to the part of the course... MORE

The Pigovian Minarchist Tax Formula

Economic Philosophy
Bryan Caplan
Glen Whitman sees a big hole in my Pigovian minarchist tax idea.  He's in blockquotes, I'm not. Pigovian taxes on genuine negative externalities are definitely better than other kinds of tax as a means of funding government, inasmuch as they... MORE

The Pigovian Minarchist

Economic Philosophy
Bryan Caplan
Many minarchists, most notably Ayn Rand, believe their minimal state should be funded by voluntary taxation.  As Rand puts it:In a fully free society, taxation--or, to be exact, payment for governmental services--would be voluntary. Since the proper services of a... MORE

War is the health of the state. I think it would be a big mistake to oppose the objective of global progressive taxation of income and wealth with the objective of class struggle and political fight, for at least two... MORE

Correction on Abortion

Behavioral Economics and Rationality
Bryan Caplan
[Update: Sam Wilson weighs in.]The noble Sam Wilson pointed out a problem with this morning's abortion regressions.  My dependent variable, ABORTION, was constructed by another GSS user.  This user coded people who weren't asked about abortion as "no's."  The true... MORE

I see at least three problems with macro, as practiced at the elite level: 1. Academics who don't know the stylized facts of macro over the past 100 years. (Fifty years is not enough, as most of the great natural... MORE

Uber, taxis and the issue of safety

Regulation
Alberto Mingardi
Were all safety regulations only made for increasing safety, ours will be a much simpler world. But we know from experience that "safety regulations" are often a very tricky game. Such regulations may be imposed for the sake of raising... MORE

How Selfish Are Our Views About Abortion?

Behavioral Economics and Rationality
Bryan Caplan
[Update: Since I wrote this post, Weeden re-did some of his results - including his abortion results - controlling for ideology.  I leave judgment to the reader.][Further Update: I didn't notice that the abortion opinion measure I was using coded... MORE

Last November a lot of pundits were telling us that falling oil prices were good for the economy. I criticized that view: Rising oil production is likely to lead to faster global growth. Falling oil production is likely to lead... MORE

Rejoinder to Weeden

Behavioral Economics and Rationality
Bryan Caplan
[Update: This post originally claimed that Americans keep 97% of their pretax income for themselves, which is impossible given taxes.  I meant to say that Americans only donate 3% of their pretax income.  Thanks to Ross Levatter for the correction].During... MORE

Thumbs Up for "The Interview"

Political Economy
David Henderson
Warning: Multiple spoilers ahead. I won't even try to avoid them. Over the holiday, I rented the Seth Rogen movie "The Interview" on On Demand. I liked it. I didn't love it and I could have done without most of... MORE

There is probably no issue in macroeconomics that is more misunderstood than the zero interest rate environment. Let's go over some of the misconceptions: 1. Most people correctly understand that the zero bound is bad news for monetary stimulus, but... MORE

Henderson at Susquehanna University

Upcoming Events
David Henderson
I will be speaking at Susquehanna University in Selinsgrove, Pennsylvania on January 21. Time: 7:30 p.m. Place: Isaacs Auditorium, Seibert Hall Title of Speech: Seven Myths about Free Markets Here's the announcement by Susquehanna University economics professor Matthew Rousu. Here's... MORE

Martin Anderson, RIP

Labor Market
David Henderson
UPDATE BELOW If you are an American male under age 67, you should take a moment and give thanks to Hoover Institution Senior Fellow Martin Anderson, who died on January 3. Why? Because he helped contribute to ending military... MORE

Freewheelers, Ring-Bearers, and Self-Interest

Family Economics
Bryan Caplan
Weeden and Kurzban's The Hidden Agenda of the Political Mind uses two ideal types to explain the Culture Wars: Freewheelers and Ring-Bearers.Freewheelers include people who sleep with more people, are sexually active outside of committed relationships, have more same-sex partners,... MORE

It's all in EC101

Scott Sumner
Here is the mainstream media: WASHINGTON (AP) -- This isn't explained in Econ 101. Month after month, U.S. hiring keeps rising, and unemployment keeps falling. Eventually, pay and inflation are supposed to start surging in response. They're not happening. Last... MORE

How the Web Has Changed Journalism

Information Goods, Intellectual Property
David Henderson
It's probably obvious to most readers just how much the web has changed journalism. But my recent debate with David Cay Johnston both on Econlog (here and here) and over at Cafe Hayek is a nice illustration. Think how the... MORE

Simon Wren-Lewis on expansionary austerity

Fiscal Policy
Scott Sumner
Everyone from market monetarists to Jeffrey Sachs have recently been pointing out that the Keynesian predictions about austerity have been shown to be incorrect. Now Simon Wren-Lewis has a post that tries to salvage the Keynesian model. Unfortunately he fails... MORE

John Lee on Krugman and Cowen on Immigration Restrictions

Labor Mobility, Immigration, Outsourcing
David Henderson
John Lee has written an excellent piece in which he gently chides Paul Krugman and Tyler Cowen (mainly the former) for their unwillingness to advocate "open borders." I put that term in quotation marks because Robert P. Murphy has persuaded... MORE

Sympathy for the top quintile

Income Distribution
Scott Sumner
Paul Krugman often seems more interested in the plight of the America working class than the welfare of much poorer residents of developing countries. For instance, he's argued that lower immigration rates after the 1930s helped the American working class... MORE

Response to David Cay Johnston

Income Distribution
David Henderson
David Cay Johnston has replied, in three lengthy comments (here, here, and here), to my post and other commenters' comments. I want to reply to what he said that challenges my statement that he is confusing poverty and income inequality,... MORE

Some Replies to Me

Economic Methods
Bryan Caplan
While I'm on vacation in L.A., my critics have been hard at work.  Check out:1. Jason Weeden's reply to my review of The Hidden Agenda of the Political Mind.2. Nathan Smith's reply to my defense of tolerance.3. Jason Weeden's reply... MORE

Plus Noise!

Economic Methods
Bryan Caplan
One lovable thing about Weeden and Kurzban's The Hidden Agenda of the Political Mind: When they criticize me, they also quietly hand readers my rebuttal.  Them:Economist Bryan Caplan in his book, The Myth of the Rational Voter, asserted (with his... MORE

Today it was announced that the Japanese eurozone economy had officially slipped into deflation, although as Paul Krugman pointed out the problem is not new at all. If you look at fundamentals such as inflation expectations embedded in the bond... MORE

Tax dodging and currency

Money
Scott Sumner
David Henderson has a recent post discussing the costs and benefits of tax avoidance. Here I'll discuss a similar issue, the pros and cons of hand-to-hand currency. In an earlier post I argued that eliminating currency would solve the "zero... MORE

David Cay Johnston's Confusion

Income Distribution
David Henderson
"Inequality Damages Marriage" is the title of a recent article by David Cay Johnston. But his article shows no such thing. Regular readers of my posts know that I never blame an author for the title of an article run... MORE

Intelligence Makes People Think Like Economists: Further Evidence

Behavioral Economics and Rationality
Bryan Caplan
Caplan and Miller's finding that "intelligence makes people think like economists" (published in 2010, but largely written in 2006) is holding up well.  A mini literature review, courtesy of Duarte, Crawford, Stern, Haidt, Jussim, and Tetlock:[T[he observed relationship between intelligence... MORE

The Greek turmoil

Eurozone crisis
Alberto Mingardi
As you probably know, Greece is marching towards new elections on January 25. The Parliament was dissolved because Prime Minister Antonis Samaras couldn't secure a large enough parliamentary majority to support his candidate for the Greek Presidency. The Greek constitution... MORE

Is Tax Dodging Bad or Good?

Taxation
David Henderson
Your answer will depend on your values and your model of government. Whether dodging taxes is "good" or "bad" is a value judgment that takes us outside the field of economics. But surely one's value judgment will depend, at least... MORE

Be skeptical, be very skeptical

Macroeconomics
Scott Sumner
I just returned from vacation and have some catching up to do. In the meantime let me point to a post over at Coyote Blog that relates to my recent post on the US recovery. The post begins by pointing... MORE

Conspiracy Theory: The Hidden Agenda of the Political Mind

Books: Reviews and Suggested Readings
Bryan Caplan
Does self-interest explain individuals' political views?  Surprisingly, political science's standard answer is No. While self-interest occasionally plays a role, it poorly predicts both issue positions and voting behavior.  Unlike most economists, I strongly endorse political scientists' consensus.  Their research doesn't... MORE

NYPD's Reverse Washington Monument Strategy

Public Choice Theory
David Henderson
Here's what Richard L. Stroup writes about the Washington Monument Strategy (WMS): A perennial case in point is the "Washington Monument strategy" of the National Park Service. At budget time, the service frequently threatens to curtail visiting hours at its... MORE

In defense of cash

Politics and Economics
Alberto Mingardi
John Cochrane has a great post in defense of cash, reacting to hypotheses of phasing out banknotes. He makes several illuminating points and, most importantly, he doesn't shy away from a rather unpopular (at least, among legislators and policy wonks)... MORE

In the comments, the admirable Scott Alexander responds to my advice to Shy Male Nerds.  I reply point-by-point.  Scott's in blockquotes, I'm not.Even on the purely academic/intellectual level, this [Caplan's Bubble stategy] is difficult. I have got a bunch of... MORE

Henderson on Weidenbaum

Obituaries
David Henderson
My first article of 2015 is out. It's "A Feel for Economics: Murray Weidenbaum, 1927-2014," Regulation, Winter 2014-15. Some highlights follow. The opening paragraph: I first met Murray Weidenbaum at the 1974 American Economics Association meetings in San Francisco. I... MORE

Diversity of the Mind

Behavioral Economics and Rationality
Bryan Caplan
A bunch of my favorite social scientists, including Philip Tetlock, Jonathan Haidt, Lee Jussim, and Charlotta Stern, have co-authored an amazing article on the scarcity and value of political diversity in social psychology*, forthcoming in Behavioral and Brain Sciences.  Full... MORE

Slate.com linked to a group opposed to the penny: According to the U.S. Mint's 2011 annual report, the current cost of a penny is 2.4 cents per coin. With nearly 5 billion pennies minted in 2011, the U.S. spent almost... MORE

Can't We All Just Get Along? Daniel Klein has one of the most unusual minds of all the libertarian intellectuals I know. He will get on a subject where I see nothing there, and then, with fairly simple exposition and... MORE

The Wonder of Economic Freedom

Business Economics
David Henderson
Like fellow blogger Alberto Mingardi, I appreciate Jeffrey Tucker's writings on the "marvels of a free market economy." The other person I would put in the same category is Don Boudreaux over at CafeHayek. And another blogger who contributed mightily... MORE

Shy Male Nerds and the Bubble Strategy

Economics and Culture
Bryan Caplan
Scott Alexander keeps writing intellectually powerful critiques of radical feminism's War on Shy Male Nerds (SMNs).  His latest:When feminists say that the market failure for young women is caused by slut-shaming, I stop slut-shaming, and so do most other decent... MORE

The biggest problem for libertarians

Politics and Economics
Alberto Mingardi
A couple of years ago, John Stossel wrote a brilliant essay for Reason, aptly entitled "Why We're Losing". Stossel's main point was that Liberty is counterintuitive. It takes hard work to overcome the brain's attraction to simple-sounding solutions. It's not... MORE

Re-welcoming Scott Sumner

Econlog Administrative Issues
Lauren Landsburg
We are pleased to announce that Scott Sumner will be continuing with EconLog for the coming year and is moving from a guest blogger role to being a regular blogger alongside Bryan Caplan and David Henderson. Scott's background in macroeconomics... MORE

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