EconLog small logo

April 2016

A Monthly Archive (75 entries)

The Uberization of Banking

Finance
David Henderson
But isn't SoFi cherry-picking loans? Absolutely. Why can't banks do this? Because if you use depositor money for loans, as all banks do, you fall under the jurisdiction of the Federal Deposit Insurance Corp. and the Community Reinvestment Act, which... MORE

The Real Adam Smith

Political Economy
Emily Skarbek
I have just come across a nice two part documentary on Adam Smith available at Free to Choose TV. The videos give those unfamiliar with Smith's thought a good introduction to his life and work in both the Theory of... MORE

A new study supports The Midas Paradox

Labor Market
Scott Sumner
In my book entitled The Midas Paradox, I argued that FDR's NIRA wage program set back economic recovery by almost 2 years. Prior to the wage increase, industrial production had surged by 57% in 4 months, mostly due to the... MORE

Zywicki on Debt

Finance
David Henderson
The headlines are alarming. The New York Times panicked that Americans are "Running in Debt" and just a few years later warned that Americans were "Borrowing Trouble." Business Week asked, "Is the Country Swamped with Debt?" and U.S. News and... MORE

The End of Doom and Cost-Benefit Methodology

Behavioral Economics and Rationality
Bryan Caplan
Like all useful tools, cost-benefit analysis is flawed.  After surveying cost-benefit analyses of global warming and warming abatement, Ron Bailey's The End of Doom turns to methodological objections.  From his section on "How Much to Insure Against Low Probability Catastrophic... MORE

Incomes, Spending, and Saving

Finance
David Henderson
Earlier this month, I read two articles that were somewhat eye-opening to me about various Americans' views and actions on income, spending, and saving. One, which got a lot of play, was Neil Gabler's piece in The Atlantic, "The Secret... MORE

Once again, the Fed was wrong

Monetary Policy
Scott Sumner
About 2 years ago, I predicted that 3% NGDP growth was the new normal. At the time, the Fed predicted significantly higher trend growth (both RGDP and NGDP.) The Fed has a big NGDP problem. It's becoming increasingly clear that... MORE

Vargas Llosa on populism and perfectionism

Books: Reviews and Suggested Readings
Alberto Mingardi
Mario Vargas Llosa has recently turned 80: his birthday was saluted with a great celebration in Madrid, with a two-days conference organised by the Fundacion Internacional Libertad. Vargas Llosa gave a splendid speech at his birthday dinner, along the lines... MORE

Global Warming, Cost-Benefit Analysis, and The End of Doom

Books: Reviews and Suggested Readings
Bryan Caplan
I learned Austrian economics over a year before I started learning regular economics.  The Austrians taught me to stonewall all cost-benefit analysis with methodological objections.  It took me years to see the emptiness of their approach.  Cost-benefit analysis is imperfect,... MORE

Here's Matt Yglesias discussing Uber: App-based ride hailing was a game changer in this context, not just because it offered a somewhat better way to get a ride, but because in Uber's earliest cities it exploited loopholes in the way... MORE

Early American Immigrants

Labor Mobility, Immigration, Outsourcing
David Henderson
Scott Alexander has written a fantastic review of David Fischer's Albion's Seed. The book is about early immigration to the Eastern United States. Alexander gives a nice summary of each of the 4 immigrant groups, along with some really interesting... MORE

Two Alienated Questions

Behavioral Economics and Rationality
Bryan Caplan
I am deeply alienated from the society in which I live.  I regard our policies as criminal, and politicians of both major sides as evil people.  My assessment of our society's opinion leaders is similar, though milder and less categorical.Many... MORE

Cordato on Bathrooms and State

Business Economics
David Henderson
UPDATE BELOW The saga of the so-called Charlotte bathroom ordinance -- and the state of North Carolina's response to it -- has taken on a life of its own. At the national level leftists are accusing North Carolina of bigotry... MORE

A few weeks ago, I did a post pointing to an inconsistency in progressive thought. Progressives worry a lot about low wages in Mexico stealing jobs form Texas, but not at all about a $7.25 minimum wage in Texas stealing... MORE

Hooper and Henderson on Drug Prices

Economics of Health Care
David Henderson
Patients are heavily insulated from the costs of their care partly because of long-term efforts by policymakers and advocates on the political left. The Affordable Care Act was a notable exception to this trend and, according to the Kaiser Family... MORE

Taxing the Rich: Strange Hope for Liberty

Books: Reviews and Suggested Readings
Bryan Caplan
Scheve and Stasavage's Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton University Press, 2016) is a shocking book.  Given the title, I absolutely did not expect it to bolster libertarian morale.  But Taxing... MORE

Chrysler's Disgusting Ad

Business Economics
David Henderson
Last night, I saw one of the most disgusting ads I have ever seen on TV. In it a father played by Jim Gaffigan models for his son a threefer: (1) disrespecting property rights, (2) being unaccountable for it, and... MORE

Education: Free Matters

Behavioral Economics and Rationality
Bryan Caplan
Robin continues our exchange on the origins of educational signaling.  Here's my point-by-point reply, followed by a broader observation.  Robin's in blockquotes; I'm not. Normal 0 false false false MicrosoftInternetExplorer4 Where Bryan disagrees is that he sees government as the... MORE

Market monetarism and market macroeconomics

Economic Methods
Scott Sumner
Here's Scott Aaronson: I love when important decisions fall into the hands of people who constantly second-guess themselves and worry that their own 'tribe' might be mistaken, who are curious about science and have a sense of the ironic and... MORE

That's the title of my review of Jonathan Kay's book Other People's Money. It appears in the latest issue of Regulation. Here's my introductory paragraph: I can't give a AAA rating to John Kay's new book on finance; it's closer... MORE

Market urbanism in Houston

Regulation
Scott Sumner
Over at TheMoneyIllusion I did a recent post on the Texas economic miracle, which has survived the oil bust. Commenter ChargerCarl directed me to a very interesting slideshow (prepared by Barbara Tennant) on market urbanism in Houston, which is famous... MORE

Mea Culpa on Fed and Interest Rates

Monetary Policy
David Henderson
In my recent post on George Elgin's primer on monetary policy, I wrote: Maybe not surprisingly, what I will excerpt here makes the point that Jeff Hummel and I have been making for some time: the Fed does not set... MORE

The Case Against a Basic Income Guarantee

Fiscal Policy
David Henderson
Jason Kuznicki of the Cato Institute has written a piece calling for an "Unconditional Basic Income." (I should note that he did not publish this under the auspices of the Cato Institute. I mention Cato only to identify his affiliation.)... MORE

The Diction of Social Desirability Bias

Behavioral Economics and Rationality
Bryan Caplan
"Sorry, I can't come to your party."  This common excuse is almost always literally false.  You're working?  Unless your boss chains you to your desk, you can come to the party.  You're in Paris, and the party's in DC... MORE

Rajat recently left the following comment, over at TheMoneyIllusion: Scott, I know you don't like Twitter, but there has been a few exchanges going on about your argument: One between Kocherlakota and Vaidas Urba. Kocherlakota seems to think that although... MORE

Selgin on Money

Monetary Policy
David Henderson
George Selgin, over at Cato, is writing a primer on monetary policy and his first installment appeared this morning. It's excellent. Maybe not surprisingly, what I will excerpt here makes the point that Jeff Hummel and I have been making... MORE

Everything You Ever Wanted to Know About Behavioral Public Choice

Behavioral Economics and Rationality
Bryan Caplan
Public choice (also known as political economy) is applying economics to politics.  Behavioral economics is applying psychology to economics.  What happens when you do both at the same time, creating a "behavioral public choice"?  Gary Lucas and Slavisa Tasic's "Behavioral... MORE

For the past seven years, I've been trying to persuade my colleagues that inflation should be removed from macro models. Inflation is often used as a proxy for positive demand shocks, as when economists assume that higher inflation expectations are... MORE

Property Rights Create Harmony

Property Rights
David Henderson
I live in Pacific Grove, California, where we just voted on a measure to change how an area was zoned so that a luxury hotel can be built. I favor property rights and so I voted in favor of allowing... MORE

Against Trolling

Economic Philosophy
Bryan Caplan
I never troll; my sincerity is controversial enough.  In particular, I never (a) misrepresent my actual views, or (b) try to inspire negative emotions for their own sake.  There is nothing transgressive in my heart.  While I often expect my... MORE

What's the matter with western Virginia?

International Trade
Scott Sumner
The title of this post is a reference to Thomas Frank's "What's the Matter With Kansas?", which analyzed the question of why voters in relatively poor states like Kansas tended to vote GOP, which is (supposedly) against their best interest.... MORE

Last spring, I tried an idea for a question for my final exam in Energy Economics. Here it is: Write an essay of 300 to 600 words in which you do one or both of the following: (i) Pull together... MORE

My Complete Bet Inventory: 2016 Edition

Economic Methods
Bryan Caplan
With the kind volunteer assistance of Dan Osborne, here is an updated list of all my EconLog bets.  All omissions are my fault; if you catch any, please email me.  Here goes: 1. "I've bet my $200 to Walter's... MORE

Bill Gates: Tax Poor People More

Taxation
David Henderson
Developing countries must also find creative ways to increase government revenue. Even the poorest nations today fund the large majority of essential services like health care and education. But many don't have the expertise and resources to raise more money... MORE

A tale of two city-states

Monetary Policy
Scott Sumner
It was the best of times; it was the second best of times. It's natural to want to compare Hong Kong and Singapore. They are among the very richest non-oil producers in the world, at least among economies having more... MORE

She once told an interviewer that the children's book "Peter Rabbit" was an early influence on her political thinking. Her sympathies were with the gardener. "It was his lettuce," she said, "and Peter had no business stealing it." This is... MORE

I recently did a post arguing that it's almost impossible to forecast recessions. Many commenters were surprised by my view, wondering why market monetarism doesn't provide insights into where the economy is going. The simplest answer is that if the... MORE

Lester Thurow, RIP

Obituaries
David Henderson
On March 25, noted economist Lester Thurow died. Here's a good, if brief, obit in the New York Times. He and I had different views on many policy issues. He was a senior economist with Lyndon Johnson's Council of Economic... MORE

Adam Smith on Sincerity and Political Rhetoric

moral reasoning
Emily Skarbek
Adam Smith argues that political leaders rely on decorum to shape their rhetorical appeals, and that voters look for the fit between speech and character to gauge moral trustworthiness. In other words, the audience of a politician is attracted to... MORE

How government worsened inequality by ignoring the EMH

Finance: stocks, options, etc.
Scott Sumner
I often do posts defending the Efficient Markets Hypothesis. Sometimes it's just fun to debate these ideas. But there are also serious real world costs to ignorance of the EMH. Government pension funds have wasted large amounts of public money,... MORE

The Welfare State and Taxes Are Bad, Mmkay

Economic Philosophy
Bryan Caplan
1. I turned my recent "Libertarianism Against the Welfare State: A Refresher" into a talk for the Cato Institute's spring interns.  Here are the slides.  2. In honor Tax Day, here's my op-ed of "Tax Day Reflections," rejected by the... MORE

Milton Friedman on Segregation

Labor Market
David Henderson
Former co-blogger Arnold Kling writes: Barry Goldwater and Milton Friedman (at least if I remember correctly the relevant passages in Capitalism and Freedom) were against Federal intervention to protect African-Americans from segregation, even segregation imposed by state and local governments.... MORE

Biased Behavioral Econ

Behavioral Economics and Rationality
Bryan Caplan
Behavioral economists often use their findings to argue for government intervention.  Critics of behavioral economics often accuse its practitioners of a tacit double standard: Human irrationality is a poor argument for government action because officials are human.  Question: Can behavioral... MORE

Barbara Anderson, RIP

Tax Reform
Scott Sumner
I was saddened to learn that Barbara Anderson recently died: Most important woman in the history of Massachusetts is a high bar. Competitors for the title might include Abigail Adams, a crucial partner and adviser to her husband John in... MORE

Robert Frank Fails to Connect the Dots

Labor Mobility, Immigration, Outsourcing
David Henderson
Cornell University economics professor Robert Frank has an article in The Atlantic on luck. In "Why Luck Matters More Than You Might Think," he claims that successful people underestimate the role of luck in their lives. I'm quite willing to... MORE

This is a response to Bryan's recent post. I've always been a critic of our income tax regime, which is extremely wasteful for all sorts of reasons: 1. Lots of wasteful paperwork. 2. Leads to wasteful expenditures on rent seeking... MORE

Moneyball

Business Economics
David Henderson
Update below My wife had surgery yesterday and, with the anesthetic taking hours to wear off, had trouble reading. So I read her my favorite front-page story from a recent Wall Street Journal, a story about her and my... MORE

Updated Bet Inventory Bleg

Economic Methods
Bryan Caplan
My Complete Bet Inventory is six years out of date. I'm happy to buy lunch for and profusely thank the first person who updates it.... MORE

The Atlantic, one of America's more respectable publications, has an article entitled "The Pillaging of America's State Universities". Here's the second paragraph: According to the American Academy of Arts and Sciences' recently completed Lincoln Project report, between 2008 and 2013... MORE

Inform Me

Economic Methods
Bryan Caplan
During the last five years, I put many of my concerns on hold so I could finish The Case Against Education.  Now that the project is wrapping up, I'm doubling back.  Many of the tasks are non-academic, like refinishing my... MORE

Message to Michael: There's No Tooth Fairy

Labor Market
David Henderson
In an article today, Shikha Dalmia goes after Democrats' attempts and proposals to raise the minimum wage by a lot. She quotes my thinking about monopsony. But she also made me aware of work by U.C. Berkeley economist Michael Reich... MORE

David Beckworth has a new podcast series

Economic Education
Scott Sumner
David Beckworth just announced a new series of interviews with monetary economists and journalists. I am honored to be the first podcast released, but bigger names are upcoming: Today is the launch of a new podcast series on macroeconomics called... MORE

School Is to Submit: My Critique

Behavioral Economics and Rationality
Bryan Caplan
Robin Hanson and I have long agreed that education is mostly signaling.  But after reading The Case Against Education, my forthcoming book on educational signaling, Robin proposes a bold new theory of what's really going on.  At least on my... MORE

Don't Let the IRS Ruin Your Day

Behavioral Economics and Rationality
David Henderson
In the last week, I've written checks to the IRS for about $9K (for 2015) and $6.2K (2016 quarterly estimated) and to the California state government for $2.5K (for 2015) and $1.4K (quarterly estimated.) I was shocked when I went... MORE

The US reminds me on one of those mafia kingpins, who force other drug dealers out of a neighborhood, so that it can monopolize the business. For years, the US has been the leader in trying to close down tax... MORE

I shall confess that I haven't seen "Batman vs Superman". Yet I'm fascinated by the fact the superhero blockbuster is spurring some political discussion. National Review's Armond White liked the movie, to the point of writing that "Snyder's thrillingly intelligent... MORE

Ungag Expertise

Behavioral Economics and Rationality
Bryan Caplan
Brennan and Jaworski's Markets Without Limits defends the moral principle, "If you may do it for free, you may do it for money."  This is obviously controversial for sex, organs, and adoption.  But speech?  Doesn't the First Amendment ensure freedom... MORE

Hummel on Lowenstein and the Fed

Economic History
David Henderson
A devastating critique of an apology for the Federal Reserve. San Jose State University economist and historian Jeff Hummel has written an outstanding review of Roger Lowenstein's new book, America's Bank: The Epic Struggle to Create the Federal Reserve. It... MORE

Have you ever wondered if you are a progressive? I've come up with a two-part test. If you believe in both of the following propositions, then you qualify as a American progressive, circa 2016: Proposition #1: Free trade with low... MORE

Nationalists are not utilitarians

International Trade
Scott Sumner
Nationalists are not utilitarians, and they often don't care very much about the poorest of the world's poor. Here's an example, from Vox.com: In a new interview with the New York Daily News, Bernie Sanders said something striking -- he... MORE

Autism and the iPad

Liberty
Alberto Mingardi
For Autism acceptance month, Apple has delivered a short, beautiful video concerning how its own technologies (nothing fancier than the iPad and some Apps) are helping people with learning disabilities to live a better life. When we think of how... MORE

Naik on Credentialism and Immigration

Labor Market
Bryan Caplan
Occupational licensing is bad, but doesn't explain the financial rewards of seemingly useless education.  Except, Vipul Naik points out, for foreign workers.  Here's Vipul, reprinted with his permission:I think Bryan is broadly correct that government regulations in United States employment... MORE

Implicit Advice from a Nine-Year Old

Competition
David Henderson
We are hearing more and more about 18-to-22 year old college students demanding "safe spaces" on campuses where not only they won't be insulted or verbally attacked but also their most cherished views will not be challenged. Various people who,... MORE

The First Great Moderation

International Trade
Scott Sumner
I just read a fascinating NBER paper by Joseph Davis and Marc Weidenmier, on the first Great Moderation; from 1841 through 1856: First, both moderations experienced a change in the structure of the economy. The First Great Moderation witnessed the... MORE

Approaching Infinity by Michael Huemer

Books: Reviews and Suggested Readings
Bryan Caplan
My favorite philosopher has just published a new book on metaphysics and philosophy of mathematics, entitled Approaching Infinity.  While I have little intrinsic interest in infinity, I can't imagine a better book on the topic.  I devoured the whole thing... MORE

Boudreaux on Prosperity Pools

Growth: Causal Factors
David Henderson
With important exceptions, such as antibiotics, commercial air travel, air conditioning, and the Internet, most of the goods and services that define our modern prosperity are akin to Pool Noodles. Each one, individually, adds only a minuscule amount of well-being--or... MORE

Vietnam War Draft Resistance: Huemer Worked

Cost-benefit Analysis
Bryan Caplan
In high school, I foolishly registered for the draft.  I had already arrived at the Huemerian theory of civil disobedience, according to which it is morally permissible to break unjust laws and evade the punishment for doing so.  Since I... MORE

Grossman on NGDP shocks as policy indicators

Monetary Policy
Scott Sumner
I'm starting to clean out my office at Bentley, and throw away lots of old journals. (I dread having to soon throw away lots of my old economics books---I'm of the generation that values things more than experiences.) I came... MORE

Does Science Need Common Sense?

Economic Philosophy
Bryan Caplan
Does science need philosophy?  Jason Brennan incisively critiques philosophers' case for the affirmation.  How the "gotcha" works:A: "Science doesn't need philosophy! Science gets by on its own." B: "How do you know that the universe is uniform? How do you... MORE

Take That, Madame Secretary

Regulation
David Henderson
Basic economics works. Maerker: In Mexico, there are those who propose not keeping going with this battle and legalize drug trafficking and consumption. What is your opinion? Clinton: I don't think that will work. I mean, I hear the same... MORE

Extreme outliers: How meaningful are they?

Economic Methods
Scott Sumner
This post is about the way I think about extreme outliers. It's very unscientific, but I hope the comment section will help me to better understand this issue. Suppose you have two variables, X and Y, which are (supposedly) positively... MORE

Buyer Licencing of Illegal Drugs

Regulation
Emily Skarbek
"The uncertainties associated with the precise nature of legalization regimes and with their expected outcomes sometimes are used to justify the maintenance of drug prohibition. This paper details the role that buyer licensing and exclusion might play in implementing a... MORE

Olivier Gergaud, Morgane Laou√©nan and √Čtienne Wasmer present in a Vox.eu column a most fascinating work. They "collected a database of 1,243,776 notable people and 7,184,575 locations (Geolinks) associated with them throughout human history (3000BCE-2015AD)". Their findings are also available... MORE

What's so Great about Free Trade? Lots

International Trade
David Henderson
In a post yesterday, my former UCLA graduate student colleague David Glasner asks "What's so Great about Free Trade?" It's a long, well-written piece and I can't completely summarize it in a few sentences, but here goes. David argues that... MORE

Two Terror Graphs

Cost-benefit Analysis
Bryan Caplan
Is there anything seriously wrong or deeply misleading in either of these graphs?From Datagraver:From Statista:... MORE

Return to top