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September 2015

A Monthly Archive (74 entries)

De Rugy et al on Export-Import Bank: Good Article, Wrong Title

Behavioral Economics and Rationality
David Henderson
In the latest issue of Econ Journal Watch, economists Veronique de Rugy, Ryan Daza, and Daniel B. Klein have an article titled "Why Weren't Left Economists More Opposed and More Vocal on the Export-Import Bank?" It's a good article but... MORE

For seven years I've been trying to discuss monetary policy, and commenters (mostly at MoneyIllusion) keep wanting to bring up a completely unrelated topic---banking. Monetary policy works though the hot potato effect, and banking is no more essential to the... MORE

What's Libertarian About Betting?

Behavioral Economics and Rationality
Bryan Caplan
I'm a libertarian and a betting man.  Is there any connection between the two?The facile answer is that "Reality has a well-known libertarian bias."  On some level, I believe this.  But it's a subtle, long-run bias.  Confidently betting on libertarian... MORE

Concrete steps for Mr. Cochrane

Monetary Policy
Scott Sumner
John Cochrane has a post on Japan's long period of near-zero CPI inflation, and then adds this footnote: Update David Beckworth on the same topic. I'm less of a NGDP target fan. It's like saying all the Chicago Cubs need... MORE

About those wacky libertarians

Economics of Education
Scott Sumner
Will Wilkinson has a post discussing libertarianism. He points out that many libertarians are disdainful of politics. They tend to be ideological purists who are so anti-government that they are reluctant to get involved in the rough and tumble of... MORE

Nobility Defined

Cost-benefit Analysis
Bryan Caplan
I occasionally describe people as "noble."  What do I mean by it?  In slogan form: "He would rather be wronged than do wrong."  The noble, as I use the term, hold themselves to exemplary standards of thought, word, and deed. ... MORE

Henderson on Goodman on Obamacare

Books: Reviews and Suggested Readings
David Henderson
If you think that the Patient Protection and Affordable Care Act (ACA, also known as Obamacare) is bad because of its expense, the distortions it causes in the labor market, its failure to provide people what they really want, and... MORE

Our bizarre system of taxing capital

Taxation
Scott Sumner
It's difficult to think of a more bizarre and foolish policy than the practice of taxing capital. Consider: 1. If it were appropriate to pay taxes on capital gains, why wouldn't it be appropriate to pay negative taxes on capital... MORE

Friday Night Video: Government Goes House Shopping

Politics and Economics
David Henderson
This is the 4th in the series of Love Gov. For some reason that I can't put my finger on, I didn't like it as much as the first 3. But I still liked it a lot. It's possible that... MORE

Japan adopts an NGDP target

Monetary Policy
Scott Sumner
Marcus Nunes points to a report that Japan has adopted an NGDP target: Japanese Prime Minister Shinzo Abe vowed on Thursday to raise gross domestic product by nearly a quarter to 600 trillion Japanese yen ($5 trillion), pledging to refocus... MORE

Innumeracy Illustrated

Behavioral Economics and Rationality
Bryan Caplan
I've come across the world's funniest probability illustrations.  Talk about "it's funny because it's true."  Samples:Read the whole thing.  And repent!HT: The noble Vipul Naik... MORE

Minimum Wage Debate: Meer versus Galbraith

Cost-benefit Analysis
Bryan Caplan
Video of Jonathan Meer's debate with James Galbraith on the minimum wage is now up!  Enjoy.... MORE

The Center Will Hold: I'll Give You 10:1

Cross-country Comparisons
Bryan Caplan
Since there appear to be zero takers for my latest bet, I hereby up the odds I'm offering to 10:1.  Thus, if you Paypal me $x, I will send you $11x if the bet goes in your favor.  This provides... MORE

The Wicksellian Natural Rate of Interest

Monetary Policy
Scott Sumner
The Richmond Fed has a new study of the natural rate of interest, by Thomas A. Lubik and Christian Matthes: The natural rate of interest is one of the key concepts for understanding and interpreting macroeconomic relationships and the effects... MORE

Come Away With Me

Economic Education
David Henderson
A minute ago, I read Steven Landsburg's beautiful encomium to Deirdre McCloskey. An excerpt: We were dazzled, all of us, all of us who had come here hoping to escape the ordinary, to be touched by greatness, to enter into... MORE

Money is fungible

Monetary Policy
Scott Sumner
Yesterday I discussed one bizarre idea that has popped up in the wake of the Great Recession. Today I'll look at another. The newly elected leader of Britain's Labour Party has proposed a "People's QE". The plan is discussed in... MORE

The Center Will Hold: I'll Bet on It

Economic Methods
Bryan Caplan
Last weekend, I got into a Twitter argument with a fellow who claims that Europe's immigration problem will "inevitably" lead to civil war: @bryan_caplan As a human nature pessimist, I see ethno-cultural balkanization and civil war as inevitable on current... MORE

The past decade has produced some unusual macroeconomic outcomes, and even more unusual new macro theories. One of the very strangest is NeoFisherism. Irving Fisher noted a positive relationship between inflation and nominal interest rates. He suggested that higher rates... MORE

Shocking Quote from Buchanan

Economic Philosophy
David Henderson
Written 35,000 feet above the earth en route to Boston. Aren't technology and somewhat-free markets grand? I'll be the discussion leader at a conference this weekend, an event at which about 14 economists, political scientists, law professors, philosophers, and others... MORE

Why I'm Homeschooling

Behavioral Economics and Rationality
Bryan Caplan
I'm homeschooling my elder sons for middle school.  On the surface, this makes sense: Homeschooling has been in the libertarian penumbra for decades. If you know my books, however, you should be puzzled.1. In Selfish Reasons to Have More Kids,... MORE

The future is soon

Monetary Policy
Scott Sumner
Brad DeLong recently made an interesting observation about interest rates: It was Milton Friedman who insisted, over and over again, that in any but the shortest of runs high nominal interest rates were not a sign that money was tight--that... MORE

Tsipras wins the Greek elections

Eurozone crisis
Alberto Mingardi
Politicians are better at politics than the rest of us. This is a simple truth that those who write on politics tend to forget. And yet the recent Greek elections confirmed it spectacularly. Some observers (me included) thought that Tsipras... MORE

We're Number 16! We're Number 16!

Cross-country Comparisons
David Henderson
Four years ago, when the then latest issue of Economic Freedom of the World was published, I wrote a post titled "We're Number 10! We're Number 10!" The reason: according to the study, the United States had fallen to 10th... MORE

The Power of Distributed Practice

Behavioral Economics and Rationality
Bryan Caplan
If highlighting doesn't help students learn, what does?   According to Dunlosky et al.'s "Improving Students' Learning With Effective Learning Techniques" (Psychological Science, 2013), one of the most effective pedagogical techniques is distributed practice.  Description:To-be-learned material is often encountered on... MORE

Central banks target inflation

Monetary Policy
Scott Sumner
Andrew Sentance has a new post in the Financial Times, which is critical of the Fed's refusal to raise interest rates. The word 'inflation' does not appear in the article. Here's how it begins: These are tough times for monetary... MORE

Switzerland

Cross-country Comparisons
Scott Sumner
Over at TheMoneyIllusion I recently did a post discussing the public policy issues that I thought were most important. These were the top 4: Most important issues (no particular order): 1. US Military intervention (I'm mostly against it) 2. Immigration... MORE

This is Episode 3 of the 5-episode Love Gov series put out by the Independent Institute. It's titled "Love Gov: A Remedy for Health Choice." Highlights 4:00: He protects people from choices. 4:07: Pediatric dental for people without kids. They... MORE

Keynesianism and market monetarism

Macroeconomics
Scott Sumner
Paul Krugman has a new post that summarizes Keynesian economics: I would summarize the Keynesian view in terms of four points: 1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there... MORE

Media, Misanthropy, Murder, and Misery

Behavioral Economics and Rationality
Bryan Caplan
Scott Alexander elegantly bridges two of my pet peeves: media and misanthropy.There are over a billion Chinese people. If even one in a thousand is a robber, you can provide one million examples of Chinese robbers to appease the doubters.... MORE

Values are Subjective

Behavioral Economics and Rationality
David Henderson
As I've often mentioned on this blog, at the start of every course I teach, I cover The Ten Pillars of Economic Wisdom. I tell my students that the 3rd pillar tends to be the hardest one for people to... MORE

What makes you think Li knows the truth?

Macroeconomics
Scott Sumner
There is a great deal of skepticism about Chinese economic data. I believe that some of the skepticism is justified, but much of it is greatly overdone. This FT article discusses the critique that I find most plausible: However, doubts... MORE

Fred Smith reviews Charles Murray

Books: Reviews and Suggested Readings
Alberto Mingardi
Fred Smith, the founder and former President of the Competitive Enterprise Institute, has an interesting review of Charles Murray's "By the People: Rebuilding Liberty without Permission" at CapX. It is a thoughtful and interesting article (also recommended is this review... MORE

Somin on the Backlash to Desegregation

Cost-benefit Analysis
Bryan Caplan
Ilya Somin emailed me this response to my post on the backlash to desegregation.  Reprinted with his permission. As you know, I rarely disagree with you about immigration issues. But I think the backlash against desegregation was a much bigger... MORE

As you know if you follow presidential politics, there are 2 "debates" today among the candidates for the Republican nomination for president. Here's the question I would like one of the questioners to ask: Some of you advocate compulsory E-Verify,... MORE

Highlighting a Waste of Time

Behavioral Economics and Rationality
Bryan Caplan
Garett Jones' top catchphrase is, "If only there were a vast empirical literature on X."  When you're well-aware of the vast empirical literature to which he's alluding, it's funny.  Whenever you discover a new-to-you vast empirical literature, though, it's humbling. ... MORE

Asking the wrong question

Growth: Causal Factors
Scott Sumner
I saw this in the Financial Times: Many economists think the government can help a weak economy by convincing people the rate of price increases is poised to accelerate. In theory, households will spend more whilst businesses will boost their... MORE

Harold Demsetz on the Draft as an Externality

Property Rights
David Henderson
Perhaps one of the most significant cases of externalities is the extensive use of the military draft. The taxpayer benefits by not paying the full cost of staffing the armed services. The costs which he escapes are the additional sums... MORE

Big Government is young. Let's not forget it

Books: Reviews and Suggested Readings
Alberto Mingardi
I am reading Charles Murray's "By the People. Rebuilding Liberty Without Permission". By the way, It is quite an engaging read. Right at the beginning of the book, Murray struggles to give some measure of the extent of increase in... MORE

Where Was the Backlash Against Desegregation?

Economic History
Bryan Caplan
Many moderately pro-immigration thinkers, most notably Tyler, see the Open Borders movement as self-defeating.  Why?  Because excessive immigration provokes nativist backlash.  In effect, there's a policy Laffer Curve; when you ask for too much immigration, you get less immigration than... MORE

Dan Ariely: Where's My Quarter Pizza?

Economic Philosophy
David Henderson
Dan Ariely and Michael Norton write: Picture three people splitting an 8-piece pizza. How should they divide it? The possibilities are endless, from the very unequitable -- one person eats the whole pie -- to the more equitable -- say,... MORE

Who benefits from a wage subsidy?

Labor Market
Scott Sumner
One of the basic principles of public finance is that it makes no difference whether a tax is legally borne by the buyer or seller. The burden of the tax will depend on the relative elasticity of supply and demand,... MORE

The Prohibition of Evacuation

Economic Philosophy
Bryan Caplan
When disaster looms, governments routinely evacuate their citizens.  At minimum, they urge them to leave the danger zone.  They normally supplement this cheap talk with stronger nudges like the Emergency Alert System and official door-to-door warnings.  Governments occasionally even require... MORE

Are Latino Immigrants More Anti-Economic Freedom than Native Whites?

Labor Mobility, Immigration, Outsourcing
David Henderson
One argument made by many opponents of substantially increasing immigration--and it is one of the few that I have found somewhat persuasive--is that immigrants do not understand the value of economic freedom and will vote away the economic system that... MORE

Did the copper SOE help Chile develop?

Growth: Causal Factors
Scott Sumner
Tyler Cowen says yes: One reason the Chilean reforms went well was that the state had nationalized the copper mines. That provided a steady flow of money, thus minimizing the need for revenue-raising distorting policies elsewhere. More generally the revenues... MORE

Ben Wright on the euro

Eurozone crisis
Alberto Mingardi
This promises to be a rather turbulent autumn for the single currency. Greek elections are is coming in ten days, the Portuguese one will follow in October, and then Spain (and Catalonia) will go to the polls in December. The... MORE

Do George Mason Students Forget 9/11?

Unintended Consequences
David Henderson
"Americans Swore They Would 'Never Forget 9-11.' But College Students Asked Why It Happened Have No Idea." So reads the caption on a YouTube video put out by the Young America's Foundation. The interviewer questioned students on the campus of... MORE

The standard story of the Great Recession has housing play a key role. There were lots of subprime mortgages, and when the housing bubble burst there was a big increase in defaults. This led to a banking crisis and a... MORE

Last Friday, I posted the first video in a series of five called "Love Gov." Today I watched the second and it's as good as, if not better than, the first. In it, the personified government tries to protect the... MORE

Here's a question I'm confused about. I think I understand that Keynesians believe that fiscal stimulus is expansionary and fiscal austerity is contractionary. But what do they believe is the effect of fiscal stimulus if it's called supply-side economics? Does... MORE

Henderson on Trump

Politics and Economics
David Henderson
You don't have to follow Republican politics for very long to realize that Trump hit two "third rails" in one month. And yet, here he is, as I'm writing this in late August, leading all other Republican candidates for president... MORE

Civilization Bets Considered

Economics and Culture
Bryan Caplan
My civilization bet with Garett Jones fizzled out.  Now it's time to review all my other offers. Richard writes: The hardest, fairest measures I can think of are low birth rates plus increasing wealth. Might want to use polity scores... MORE

Sticky wage model test: The results are in

Labor Market
Scott Sumner
In October 2009, the US unemployment rate peaked at 10%. By January 2012, it was down to 8.3%. But in January 2013 it was still 8.0%. (And "austerity" was about to be implemented.) It was during this period that a... MORE

Caplan Family School Attendance Contract

Economics of Education
Bryan Caplan
My wife and I have decided to homeschool our elder sons for middle school.  I homeschooled them during the last five weeks of summer vacation as an experiment, and we're all happy with the results.  I'll blog my rationale for... MORE

Open Borders Meetup November 21

Economic Education
Bryan Caplan
Supporters and fellow travelers of the Open Borders movement are invited to a November 21 meetup at my house in Virginia.  If you're interested in attending this or any future meetups, join the permanent Facebook group. ... MORE

The Decline in Labor's Share of U.S. Income

Labor Market
David Henderson
Last month, Timothy Taylor, the Conversable Economist, posted an interesting item on the decline in labor's share of income. First some background. I've taught economics since 1975, except for about 4 years (1979-1980 when I was a senior policy analyst... MORE

A Stillborn Civilization Bet

Economic Methods
Bryan Caplan
When I solicited bets on Western civilization, my former co-blogger Garett Jones zeroed in on economic freedom. A possible "hardy weed" bet, @bryan_caplan: if 2 or more OECD countries will have their freedom scores fall 10+ points by 2035, I... MORE

Would Conscription Reduce the Odds of War?

Labor Market
David Henderson
Note: I wasn't planning a special Labor Day-oriented blog post. I wanted to write this one. Then I realized that this is a Labor Day-oriented blog post. What better defense of labor could there be than a defense of laborers'... MORE

Warm Fuzzies May Have Scientific Support

Economics and Culture
David Henderson
Back in March, in a post about cooperating with and helping others, I ended with this: So I helped make things work better. Here was my interesting physical reaction. I actually felt a part of my brain feel warm and... MORE

Peter Ireland and Michael Belongia have a couple of very good posts on monetary policy, at the "E21" website. Here they discuss the recent Jackson Hole meetings: By quick count, the foregoing discussion suggests that, as a group, Fed officials... MORE

Google vs the EU

Competition
Alberto Mingardi
Google has been targeted by the European Commission, for abusing its dominant position. Philip Booth and I wrote on the subject (here) a few months ago. The EU is concerned that "the company has given an unfair advantage to its... MORE

Friday Night Video: An Education in Debt

moral reasoning
David Henderson
The Independent Institute has produced a 5-video series called "Love Gov." It's a series of humorous skits in which the government is personified. I've seen only the first but it's excellent. It also hits one of co-blogger Bryan Caplan's main... MORE

Do we really want to control health care costs?

Economics of Health Care
Scott Sumner
In America, the government heavily subsidizes the provision of "health care." (The scare quotes will be explained later.) For example, roughly 40% of the cost of health insurance for middle class families is paid for by the government, via tax... MORE

The Germans Are a Comforting People

Labor Mobility, Immigration, Outsourcing
David Henderson
Those of you who, like my wife and me, are big fans of the TV show The Big Bang Theory, might get a kick out of this title. I've changed the "have always been" that Sheldon says in this segment... MORE

Funny Bargains

Behavioral Economics and Rationality
Bryan Caplan
The worker-employer bargain has many funny features.  Scott Alexander points out a few:1. Employers sometimes yell at workers for small mistakes; workers aren't supposed to yell at employers no matter how big the employers' mistakes.2. Employers sometimes demand job applicants'... MORE

Are the Greeks bored by Tsipras?

Eurozone crisis
Alberto Mingardi
A few weeks ago, Alexis Tsipras called a new election in Greece, appealing to voters for a new leadership mandate. Most of the mainstream press praised this move of Tsipras, who rapidly moved from the persona of wanna-be communist revolutionary... MORE

Slaying the Myths about Plastic Bags

Central Planning vs. Local Knowledge
David Henderson
Though it was meant as irony, there was an essential (if accidental) truth behind the speech [in the movie American Beauty]. The technology behind plastic grocery bags is so useful it won a Nobel Prize. Employing an unimaginably small amount... MORE

Answers: Maybe, and no. Tyler Cowen linked to a recent paper by Jonathan L. Willis and Guangye Cao, out of the Federal Reserve of Kansas City. Here's the opening paragraph: Over the past three decades, the U.S. economy seems to... MORE

A Bet with Rick Moran

Behavioral Economics and Rationality
David Henderson
Over at PJ Media, Rich Moran writes: Since there is a pretty good possibility that Prime Minister Benjamin Netanyahu and Israel are likely to "take" a nuclear bomb down the gullet thanks to the ignorant naivete of the president and... MORE

Markets are self-aware

Scott Sumner
Markets are just amazingly wise. But that shouldn't be surprising, because they must be smarter than us in order to make it tough to get rich. And that's because if it were easy to get rich we'd quickly run out... MORE

To recap my last post, Scott Alexander's critique of libertarian labor economics amounts to a critique of mainstream labor economics itself.  If Scott were in my labor economics course, I could spend hours of classtime responding to his thought-provoking critique. ... MORE

Questions for Luigi Zingales

Finance
David Henderson
Over at Marginal Revolution, Tyler Cowen has asked people to propose questions for him to ask Luigi Zingales next week. I'm a big fan of Zingales's book A Capitalism for the People: Recapturing the Lost Genius of American Prosperity. I... MORE

Pseudo-recessions and actual recessions

Macroeconomics
Scott Sumner
Last year I did a number of blog posts criticizing the consensus view that Japan had fallen into a recession. Many people assumed that two consecutive declines in real GDP meant that Japan was in recession. I argued that the... MORE

A Counterexample for Scott Alexander

Business Economics
David Henderson
I enjoyed Bryan Caplan's post early this morning. In my view, the best comments so far are by Daniel Fountain and by Thomas B, although Mike Hammock and Hasdrubal make good points also. I look forward to reading Bryan's responses... MORE

Scott Alexander on Labor Economics

Economic Education
Bryan Caplan
Whenever a new semester begins, I thank the universe for good students.  Good students have four key traits:First, good students genuinely want to learn.  They don't study material merely because they see it on the syllabus or expect it on... MORE

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