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June 2016

A Monthly Archive (78 entries)
As I write this, Britain's FTSE100 stock index is soaring to its highest levels of the year. Admittedly, the domestic indices aren't doing that well, but they are also recovering. So what about all the gloom and doom associated with... MORE

Some Random Reading

Economic Education
Amy Willis
We all know at a general level that (K-12) schooling is legally compulsory...but might it be culturally compulsory as well? Kevin Currie-Knight, for FEE, thinks so. I'm inclined to agree, and will second his recommendation of Ivan Illich's Deschooling Society.... MORE

Could a successful Brexit wreck the eurozone?

Monetary Policy
Scott Sumner
Timothy Lee has an excellent new post: Brexit isn't the most serious threat to the EU -- the euro is One surprising thing about Britain's vote to leave the EU is that the British economy has been doing better than... MORE

Mark Blaug Student Essay Competition

Education
Emily Skarbek
Mark Blaug (1927-2011) was an economist best known for his work in history of economic thought and the methodology of economics. He was a student of George Stigler at Columbia in the 1950s and went on to teach at Yale,... MORE

Tom Friedman on Thank You for Being Late

Cross-country Comparisons
David Henderson
Last Friday, New York Times columnist Tom Friedman gave a talk at the Naval Postgraduate School, where I teach, and I had a front-row seat. Here are some impressions and responses to his talk. First, I arrived with a bias... MORE

Fantasy Granted (Sorta)

International Trade
David Henderson
One of my fantasies is of a classroom in which a tenured economics professor at an accredited institution of higher learning says, "We must have free trade," and a few students leap out of their chairs and shout, "You first!"... MORE

After Brexit - why not unilateral free trade?

Eurozone crisis
Alberto Mingardi
Emily Skarbek has already offered very sound thoughts on Brexit - and David Henderson and Scott Sumner (as well as David Beckworth) are debating whether Brexit constitutes a monetary shock. I would just like to build on the point Emily... MORE

Commenter Matthew Moore asked the following question: Any chance of a post on the likely consequences of GBP devaluation? Ejection from the ERM caused a boom. I realise the UK wasn't deliberately overvalued this time, but are there parallels? In... MORE

Is the Limit on Nuclear Liability a Subsidy?

Law and Economics
David Henderson
My fellow UCLA grad and former Council of Economic Advisers senior economist colleague applies Ronald Coase-type thinking to limits on liability for nuclear power plants. He writes: The same principle applies to nuclear construction. If people and owners of property... MORE

Outline for Poverty: Who To Blame

Books: Reviews and Suggested Readings
Bryan Caplan
My next project is my non-fiction graphic novel on the ethics and social science of immigration, tentatively titled All Roads Lead to Open Borders.  But I've already begun outlining my next big word book, Poverty: Who To Blame.  Here are... MORE

Finding Out the Implications of the Brexit Vote

Public Choice Theory
David Henderson
A straightforward application of public choice theory. Various friends on Facebook have been making fun of Britons who are madly googling to find out the implications of the vote to leave the EU. "Aren't they stupid," "they didn't know what... MORE

Sumnerian luck and monetary reform

Monetary Policy
Scott Sumner
I can't recall how many times I've visited some tropical paradise, only to be told, "that's funny, it usually never rains at this time of year." When I move to California, I can guarantee that their beautiful Mediterranean climate will... MORE

Weekend Grab Bag

Economic Education
Amy Willis
Malcolm Gladwell has a new podcast project, Revisionist History. The second episode relates the RAND/Pentagon study of enemy combatants during the Vietnam war. Can you measure morale??? The world of self-driving cars is getting a lot closer than I thought.... MORE

Is Brexit a Monetary Shock?

Money
David Henderson
Both co-blogger Scott Sumner and blogger David Beckworth argue that the Brexit vote is a large monetary shock. To be a monetary shock, it has to be either (1) a shift in the supply of money or (2) a shift... MORE

One Cost of the Drug War

Economics of Crime
David Henderson
We walk the floor. He stops. We stop. "You know what is stupid?" he says. "I see murderers. I see rapists. I see robbers. And then I see, the vast majority is in here for bein' stupid enough to smoke... MORE

Brexit is not about Britain

Monetary Policy
Scott Sumner
I'm seeing a lot of confusion about the implications of Brexit. Here are two common misconceptions: 1. Some people see it as a real shock, whereas it's primarily a monetary shock. 2. Some see it affecting Britain's economy by disrupting... MORE

Hanson's Predictions: A 5-Page Age of Em Robustness Test

Books: Reviews and Suggested Readings
Bryan Caplan
Robin argues that even if my main criticisms of The Age of Em are correct, most of his predictions remain true.  I'm skeptical.  On Twitter, Robin challenged me to randomly select five pages from his book to inform our dispute. ... MORE

Brexit Bet Comment

Economic Methods
Bryan Caplan
Mark Steyn seems to be declaring victory on our bet.  I now think he will win, but the terms are not yet satisfied.  As I stated last week, I will happily pay as soon as the British Parliament votes for... MORE

The results of the referendum are in and the UK has voted to leave the European Union. The official campaign was littered with awful arguments that play to the public's worst sentiments - and the decision was likely driven... MORE

Bob Murphy reviews The Midas Paradox

Austrian Economics
Scott Sumner
Bob Murphy was kind enough to review my recent book on the Great Depression, in the Quarterly Journal of Austrian Economics. Here are the concluding two paragraphs: Putting aside the detailed statistics, I will end this review with a simple... MORE

Big Day for Britain

Politics and Economics
Amy Willis
Today the United Kingdom will decide via referendum whether or not to remain in the European Union... What's at stake? The New York Times has this good summary of the issue. The Economist offers another good option here. And finally,... MORE

Earlier this year, my Ancestry and Long-Run Growth Reading Club walked through Putterman and Weil's "Post-1500 Population Flows and the Long-Run Determinants of Economic Growth and Inequality." (Quarterly Journal of Economics, 2010)  Quick review: Putterman and Weil measure the ancestral... MORE

Sports Outcomes and Randomness

Statistical theory and methods
David Henderson
One thing I notice in most sports commentary about the game I love watching most on TV, NBA basketball, is how little awareness there seems to be about the role of randomness. The Golden State Warriors and the Cleveland Cavaliers... MORE

Is the Brexit referendum an "abuse of democracy"?

Eurozone crisis
Alberto Mingardi
The UK had a very vigorous debate on Brexit. I found the strategy of the Institute of Economic Affairs, the doyen of European think tanks, to be very smart in allowing its own fellows to argue publicly of the merits... MORE

Last month, I pointed out Paul Krugman's Orwellian use of language. In discussing the Obama administration's rules on overtime pay, he had written: It [government policy] can also engage in what is sometimes called "predistribution," strengthening the bargaining power of... MORE

A few years ago I would have thought the question posed above was absurd. Of course if operated safely, nuclear power can actually be good for the environment. And yet despite the fact that it is an almost carbon free... MORE

In a new paper, Gillian Hadfield and Barry Weingast argue that regimes characterized by the rule of law are only stable equilibria because of a substantial amount of decentralizing private enforcement. Without mutual expectations and the coordinating properties of... MORE

Bastiat Extended

Regulation
David Henderson
But, by an inference as false as it is unjust, do you know what the economists are now accused of? When we oppose making activities illegal, we are charged with being in favor of those activities. Thus, if we ask... MORE

Whenever someone presents growth regressions, a robustness check pops into my head: "What happens if you weight for population?"  Treating China and Grenada as equally probative data points just seems crazy to me.  If you want to understand how human... MORE

Right wing doesn't mean pro-free market

Political Economy
Scott Sumner
I recently did a post discussing the Indian government's decision not to reappoint central bank head Raghuram Rajan. All indications are that he was pushed aside for speaking out against crony capitalism in India, particularly the tendency of state-owned banks... MORE

Great Data but Disappointing Economics

Growth: Causal Factors
David Henderson
Northwestern University economist Robert J. Gordon's latest book is on U.S. economic growth from 1870 to 2014. With his careful sifting of the data, he shows how far we've come over that time span, and especially between 1870 and 1970.... MORE

Italy's Renzi to tinker with retirement age

Eurozone crisis
Alberto Mingardi
My colleague Paolo Belardinelli and I have an article on the Wall Street Journal Europe, on a new Italian pension reform advanced by prime minister Matteo Renzi. The Italian pension system is far from perfect (and far from any "free... MORE

Henderson on Reich's Saving Capitalism

Regulation and Subsidies
David Henderson
The good news is that Saving Capitalism is nothing like Locked in the Cabinet, his earlier memoir about being labor secretary, in which he literally made up stories that made himself look good, as reported by Jonathan Rauch in his... MORE

The Case for a Basic Land Guarantee

Energy, Environment, Resources
David Henderson
Reading Chapter V, "Of property," in John Locke's "Of Civil Government" for a conference a few months ago, I had an idea for getting the federal government to disgorge much of the property it owns: a Basic Land Guarantee... MORE

Just how influential is the USA?

Unintended Consequences
Scott Sumner
Noam Chomsky and the neocons don't agree on much, but they do agree on one thing. The US is a very influential superpower. Of course the neocons think it is mostly a force for good, whereas Chomsky tends to see... MORE

Schneiderman as Lebron, Kazman as Ayesha

Business Economics
David Henderson
Eric Schneiderman, Attorney General of New York state, accuses companies that defend their right to free speech of engaging in "First Amendment opportunism." Somehow, probably because tonight's basketball game is on mind, that reminds me of Lebron James's comment that... MORE

Three ways to do a UBI: None are feasible

Income Distribution
Scott Sumner
There's been a lot of discussion about the advantages of a universal basic income (UBI), which might involve giving everyone an income of say $10,000 or $12,000/year. I've written on this before, here I'll just provide a very short and... MORE

Brennan Admits Unintended Consequences of U.S. Intervention

Unintended Consequences
David Henderson
But will anyone listen? In fact, as the pressure mounts on ISIL, we judge that it will intensify its global terror campaign to maintain its dominance of the global terrorism agenda. This is a quote from CIA Director John Brennan... MORE

My Answers for Robin

Books: Reviews and Suggested Readings
Bryan Caplan
Robin asks me:Relative to tenured professors of social science who were hypothetically given my task, and considering average accuracy relative to simple standard academic theories, what do you estimate to be my percentile rank in 1) overall accuracy, and 2)... MORE

Pre-Brexit Bet Clarification

Economic Methods
Bryan Caplan
Back in 2008, I bet:If any current EU member with a population over 10 million people in 2007 officially withdraws from the EU before January 1, 2020, I will pay you $100. Otherwise, you owe me $100.Before the June 23... MORE

The Wall Street Journal's Innumeracy

Cost-benefit Analysis
David Henderson
"Obama frequently reminds his staff that terrorism takes far fewer lives in America than handguns, car accidents and falls in bathtubs do," reports Jeffrey Goldberg in a lengthy profile of the President's national-security thinking in the Atlantic magazine. Islamic State,... MORE

Neoliberalism: There is no alternative

Alternative Economics
Scott Sumner
Margaret Thatcher coined the phrase; "The is no alternative" back in the 1980s. Of course this is not literally true, as the unfortunate residents of Venezuela are now discovering. But the alternative is so unpleasant that Thatcher's claim contains more... MORE

Response to a Regular Reader about Illegal Prostitution

Economics and Culture
David Henderson
In response to my post criticizing Jimmy Carter for his advocacy of keeping prostitution illegal, Stanley Greer wrote me the following (and gave me permission to reprint.) David Henderson criticizes Jimmy Carter for saying prostitutes sell themselves. He insists they... MORE

Deregulation, Voodoo, and Krugman

Economic Philosophy
Bryan Caplan
Many of my friends wistfully contrast the great neoliberal Krugman of the 90s with the leftist ideologue Krugman of today.  But both Krugmans are alive and well in 2016.  A stark case:In "Notes on Brexit" (June 12, 2016), Krugman scoffs... MORE

What to Do about London Housing

Price Controls
David Henderson
Update below. James Jirtle, a long-time reader of Marginal Revolution, recently wrote Tyler Cowen and asked his views about what to do about high housing prices in London. Mr. Jirtle listed 11 proposed responses and asked which Tyler thinks "are... MORE

3 Answers from Robin

Cost-benefit Analysis
Bryan Caplan
Robin's answers to my three questions: Let me emphasize yet again that I present myself in the book as an expert on facts, not on values, so my personal values should not be relevant to the quality of my book.... MORE

Misallocation under Rent Control

Price Controls
David Henderson
On Marginal Revolution this morning, Tyler Cowen addresses the question "How bad is rent control when housing supply is artificially restricted by law?" He leads with this: Many of you have been asking me about this NYT article on the... MORE

3 Questions for Robin

Cost-benefit Analysis
Bryan Caplan
On a 0-10 scale, 0 being hell, 10 being paradise, how do you rate:1. Earth as it currently exists?2. The Age on Em as you describe it?3. The Age of Em if it ends in human extinction within one objective... MORE

The Age of Em: Reply to Robin

Books: Reviews and Suggested Readings
Bryan Caplan
Here's my reply to Robin's reply to my criticisms of The Age of Em.  I'm the main text; he's in first-level blockquotes; I'm in second-level blockquotes; he's in third-level blockquotes.1. Robin only pretends to dodge philosophy of mind. .. He... MORE

Reply to Jerry O'Driscoll

Monetary Policy
Scott Sumner
Marcus Nunes directed me to a post by Jerry O'Driscoll, which asked the following questions: The specific question I pose for advocates of NGDP targeting is how today will anything the Federal Reserve does to its balance sheet alter the... MORE

The Left, Greece, and The Big Lie

Alternative Economics
Scott Sumner
Scott Alexander recently pointed to the appalling record of the left-leaning media on economic policy: Venezuela is collapsing, with the New York Times describing it as "uncharted territory" for a semi-developed country to be so deep in economic disaster that... MORE

Cornucopia

Growth: Causal Factors
David Henderson
All of these [retail] businesses operated below the radar screen of megacapitalists like the Morgans. Their primary capital expenses were for real estate and inventory, which could be financed by traditional mortgages and bank working capital lines. But that was... MORE

Robin Hanson's The Age of Em: A Succinct Assessment

Behavioral Economics and Rationality
Bryan Caplan
I've criticized Robin Hanson's Age of Em for being needlessly confusing.  To avoid being subject to the same charge, here is my succinct assessment.1. Robin Hanson is a brilliant, delightful thinker, and I'm glad he wrote the book.2. Futurism -... MORE

Rushkoff's nostalgia

Book Club
Alberto Mingardi
Douglas Rushkoff's "Throwing Rocks at the Google Bus" has 38 reviews on Amazon, all but one fairly positive. I got my hands on it because, from the little I got from some non-Amazon reviews, I thought this might be an... MORE

There's a new Congressional proposal for banking reform: NEW YORK - House Financial Services Committee Chairman Jeb Hensarling (R-TX) today unveiled details of the Financial CHOICE Act - the Republican plan to replace the Dodd-Frank Act and promote economic growth. ... MORE

Pluralism and Civil Society

Central Planning vs. Local Knowledge
Emily Skarbek
Jacob Levy was at King's this past week presenting his NBER working paper "Corps Intermediaries, Civil Society, and the Art of Association". The piece is intended to be a chapter in volume by Naomi Lamoreaux and John Wallis that looks... MORE

Does QE reduce the public debt burden?

Fiscal Policy
Scott Sumner
Bill directed me to an article that suggests the answer is yes: Japan for years has been renowned for having the world's largest government debt load. No longer. That's if you consider how the effective public borrowing burden is plunging... MORE

Trump's Trade Fallacies

International Trade
David Henderson
At times, one senses that Trump just dislikes trade, period, whether "fair" or not. In that same July 2015 Las Vegas speech, Trump said: "I just left Los Angeles, thousands of cars, millions of cars coming in [from Japan]. We... MORE

We, Cheap Pencils

International Trade
David Henderson
I went to Staples on Sunday to buy some pencils and a pencil sharpener. I needed new pencils with good erasers that were not all hardened from age. I didn't need to buy a pencil sharpener. The price of... MORE

Margaret Sullivan's Hilarious Piece on Trump

Media Watch
David Henderson
How should the media cover the presidential candidates over the next five months? So asks Margaret Sullivan, media columnist for the Washington Post, in a piece titled "Yes, the media should cover Trump fairly -- but even better, hold him... MORE

Anne Applebaum has written a very important piece, a few days ago on The Washington Post. Building on the recent Austrian presidential election, won by the Green candidate with a handful of votes against the "far right" one, she wonders... MORE

What's Wrong in Robin Hanson's The Age of Em

Books: Reviews and Suggested Readings
Bryan Caplan
[Note: The Age of Em (in italics) refers to Robin's book.  The Age of Em (not in italics) refers to the hypothetical future era when whole-brain emulations become practically feasible.]While I'm thrilled that Robin Hanson has published his first book,... MORE

Why are NYT editorials so staggeringly bad?

Income Distribution
Scott Sumner
The New York Times might be the best newspaper in America; it's certainly one of the best. So how are they able to write editorials like this: In the United States, nearly one-third of adults, about 76 million people, are... MORE

In Praise of Debt

Finance
David Henderson
But borrowing doesn't have to dull husbandry. Indeed, it can sharpen it. Taking on substantial short-run debt can be a great way to save for your retirement. Really? Going into debt to save? Isn't that a contradiction? Bear with me.... MORE

Regret and the Status Quo

Behavioral Economics and Rationality
Bryan Caplan
Zeelenberg et al's "The Inaction Effect and the Psychology of Regret" (Journal of Personality and Social Psychology 2012) opens with a fascinating fact:A study of verbal expressions of emotions in everyday conversation revealed that regret was the second most frequently... MORE

Yay, Switzerland!

Income Distribution
David Henderson
Swiss voters have overwhelmingly rejected a proposal to give the entire population of the country enough money to live on, according to exit polls. A projection provided to the public broadcaster RTS said 78% had voted against all Swiss citizens,... MORE

Uber Is Even More Valuable Abroad

Central Planning vs. Local Knowledge
David Henderson
In Lima, taxis don't have meters. To use one, you need to negotiate a fare (in Spanish) to your destination. Sometimes they seem to operate collectively, taking on additional passengers. Thanks to Uber, we haven't had to try and navigate... MORE

Which direction for macro?

Macroeconomics
Scott Sumner
Marcus Nunes directed me to a post where Olivier Blanchard recommends some changes in the way we teach macro. In my view, all of these changes are in exactly the wrong direction, although I don't doubt that far more economists... MORE

What Does Tyler Cowen Mean by Freely?

Economic Philosophy
David Henderson
In an otherwise good analysis of the split between work and leisure, Tyler Cowen writes: Women are working far more than they once did, and probably more than they would choose to do, if they were able to balance their... MORE

The Slippery Slope Not Taken

Economics of Health Care
David Henderson
Two slippery slopes diverged in a wood, and I-- I took the one less traveled by, And that has made all the difference. --David R. Henderson, with apologies to Robert Frost Like my co-blogger Scott Sumner, I hope that certain... MORE

Slippery slope? Let's hope so

Economics of Health Care
Scott Sumner
The Washington Post has an interesting article on the shortage of organs available for transplant. The article actually quoted something I wrote on the subject, and then goes on to discuss other views: From Sally Satel of the American Enterprise... MORE

Cash for Health Care

Economics of Health Care
David Henderson
Fed up with declining payments and rising red tape, a small but growing number of doctors is opting out of the insurance system completely. They're expecting patients to pony up with cash. Some doctors who have gone that route love... MORE

What's Right in Robin Hanson's The Age of Em

Books: Reviews and Suggested Readings
Bryan Caplan
Today is the official release date for Robin Hanson's first book, The Age of Em.  In far mode, I'm delighted.  Robin is one of my favorite minds in the universe, a perpetual motion machine of intellectual delight.  I've long been... MORE

In "To curb prostitution, punish those who buy sex rather than those who sell it," Washington Post, May 31, former president Jimmy Carter advocates what the title says. His case is unpersuasive. By his case, I mean his case against... MORE

Chuck Norris vs Communism

Liberty
Emily Skarbek
Irina Nistor has one of the most famous voices in Romania. While working as a translator of censored television programs in Romania under the Communist regime, she secretly dubbed over 3,000 banned movie titles on VHS tapes smuggled in... MORE

The infrastructure illusion

Central Planning vs. Local Knowledge
Scott Sumner
In recent years, progressives have increasing advocated more spending on infrastructure as part of a broader strategy of fiscal stimulus. I've argued that their proposals are not well thought out, for a variety of reasons: 1. Fiscal stimulus would not... MORE

Kibbe on Venezuela for Millenials

Economic Philosophy
Alberto Mingardi
My friend Matt Kibbe is doing some frequent video-comments for Conservative Review, where he brings a strong libertarian perspective. Here's his last video, on Venezuela, "socialist hellhole" The video is simple and clear. It may not please those who are... MORE

Exclusion: The Uncanny Moral Valley

Behavioral Economics and Rationality
Bryan Caplan
Suppose the people of group X are a blight on society.  They may not be uniformly bad, but statistically speaking, they're trouble.  Perhaps they're criminals.  Perhaps they're parasites.  Perhaps they're bad voters.  Whatever the specifics, they're proverbially "screwing up America"... MORE

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