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August 2016

A Monthly Archive (73 entries)

John Kerry, Anti-Terrorist

Behavioral Economics and Rationality
David Henderson
Remember this: No country is immune from terrorism. It's easy to terrorize. Government and law enforcement have to be correct 24 hours a day, 7 days a week, 365 days a year. But if you decide one day you're going... MORE

#TWET: Why the Law is so Perverse

Books: Reviews and Suggested Readings
Amy Willis
Having recently been diagnosed with kidney disease, you find yourself in need of a transplant. Fortunately (?), several years ago you joined a kidney club, agreeing to donate one of your own sometime in the future should you be... MORE

The Economics of Paid Parental Leave

Labor Market
David Henderson
On her website, Democratic presidential candidate Hillary Clinton calls for "up to 12 weeks of paid family leave and medical leave" for an employee to "care for a new child or a seriously-ill family member." She claimed, in her acceptance... MORE

Community Response to Crises

Entrepreneurialism
Emily Skarbek
Frank Conway interviewed me over at Economic Rockstar about my work on community responses to Hurricane Katrina and historical natural disasters like the Chicago Fire of 1871. We discuss some of the literature on why states often fail to provide... MORE

Animal Farm in Reverse

Behavioral Economics and Rationality
Bryan Caplan
Orwell's Animal Farm parodies Soviet propaganda:On Sunday mornings Squealer, holding down a long strip of paper with his trotter, would read out to them lists of figures proving that the production of every class of foodstuff had increased by two... MORE

In this post I'm going to ask for your advice. I'd like to know why the public, and even the more sophisticated pundits, have so much trouble understanding monetary offset. Stephen Kirchner sent me a Bloomberg piece discussing the sudden... MORE

The Nationalization of U.S. Mortgages

Finance
David Henderson
First, banks have partially withdrawn from the mortgage game after facing swathes of new rules and $110 billion of fines for misconduct. They still own mortgage-backed bonds and they still make home loans to wealthy folk, which they keep on... MORE

Italy's cultural voucher for 18 year olds

Economics and Culture
Alberto Mingardi
Tyler Cowen links to this piece by Cara Giaimo on an initiative of the Italian government: a € 500 euro bonus that youngsters can cash in as they turn 18. If I read him correctly, Tyler is moderately positive... MORE

Closing Comments on Captain Fantastic

Family Economics
Bryan Caplan
[Warning: More spoilers!]Two further comments on Captain Fantastic:1. I know of no other movie that so powerfully captures the fun of large families.  Homeschooling one kid off the grid would feel lonely and dull for parent and child alike.  Homeschooling... MORE

Limbaugh Comes Around on Immigration Policy

Labor Mobility, Immigration, Outsourcing
David Henderson
I was driving home from a hiking trip on Friday and tuned into Rush Limbaugh's show for longer than I usually do. (My morning commute is 11 minutes.) He raised an issue I heard him raise a few months... MORE

I was on WRKO radio in Boston this morning discussing the VAT. Here's the link.... MORE

Commentary on Captain Fantastic

Economics of Education
Bryan Caplan
[Warning: Packed with Captain Fantastic spoilers!]Few movies speak to me more personally than Captain Fantastic.  It's not just a movie about homeschooling; it's a movie about natalist homeschoolers living in a nearly-airtight Bubble.  And psychologically, the movie's patriarch eerily resembles me. ... MORE

Sunday Reading

David Henderson
On Gary's goofs, smugglers solve alleged public good problem, FDA-caused massive deaths, and reparations from descendants of slave owners. These are some of the most interesting things I found on the web this morning. 1. Robert Murphy on Gary Johnson's... MORE

The Monster in the Mirror

Monetary Policy
Scott Sumner
I seem to vaguely recall a horror story where the protagonist searches everywhere for the monster, and at the end sees himself in the mirror, realizing that he is the monster. If there is no such story, there should be.... MORE

In recent months the rest of the world has finally begun to accept the market monetarist view that interest rates are likely to stay low indefinitely. But there's still a lot of confusion as to the reasons why. The Financial... MORE

NGDP targeting in Australia?

Monetary Policy
Scott Sumner
There is a sudden interest in NGDP targeting in Australia. Here's Greg Jericho, in the Guardian: For the most part economic debate can revolve around the margins, with few bold ideas promulgated. This week however, Senator Nick Xenophon proposed a... MORE

Neurotic Politics

Behavioral Economics and Rationality
Bryan Caplan
Neuroticism - the tendency to experience negative emotions like anger, fear, and sadness - is a pillar of the Five Factor Model of personality.  Human beings routinely attribute their emotions to external circumstances.  For proximate causes, they're often right.  The... MORE

Metzger on Headline Dismay Minimization

Behavioral Economics and Rationality
Bryan Caplan
Interesting reaction to Tuesday's post from my friend Perry Metzger.  Perry, with his permission:My biggie is the number of people who die from medical errors and bad hygiene in hospitals. It's thousands a day globally. Unlike the global murder problem,... MORE

#TWET...Slavery & Racism

EconTalk
Amy Willis
Incentives matter, sure. But isn't there a limit to what institutional analysis can (and ought) explain? That's what lingering in my mind after listening to this week's EconTalk episode with everybody's favorite guest, Mike Munger of Duke University. How... MORE

The Fall 2016 Public Choice Center Seminar Series

Economic Education
Bryan Caplan
This academic year, I'm in charge of the Public Choice Center Seminar series.  Seminars are normally on Wednesdays from 12:00-1:15 PM, and are open to the public.  Since I am not a fan of actually-existing seminars, I'm experimenting with a... MORE

The Twenty-Niners

Economics of Health Care
David Henderson
"We're Hiring Economics Writers," says the headline of a post at the web site FiveThirtyEight. Good for them. Then they write: This is a part-time staff position (up to 29 hours per week) and does not offer benefits. Any idea... MORE

Tyler Cowen on NGDP targeting

Monetary Policy
Scott Sumner
Here's Tyler Cowen: The thing is this: whether rationally or not, the American public hates higher rates of price inflation. Perhaps they mis-sample or mis-estimate prices, or perhaps the higher prices really do erode their real wages in a way... MORE

Equilibrium and Foresight

Austrian Economics
Emily Skarbek
A recent piece by Raphaële Chappe discusses the uses and limitations of general equilibrium theorizing. The post is a long-read, but Chappe briefly summarizes the point when she writes: ...the theory lacks explanatory relevance, providing instead a language through which... MORE

Headline Dismay Minimization

Behavioral Economics and Rationality
Bryan Caplan
Evaluate this simple cynical theory of what almost every politically aware person really wants: Minimizing the negative emotions they personally experience when they read/see/hear top news stories.  In other words, the politically aware strongly care about even objectively minor problems... MORE

An ITT I Cannot Pass

Behavioral Economics and Rationality
Bryan Caplan
I pride myself on my ability to fairly and accurately explain views with which I disagree.  I've tried to enshrine this skill in what I call the Ideological Turing Test - the ability of non-believers to mimic believers in a... MORE

Huemer's "Relativism and Tyranny"

Economic Philosophy
Bryan Caplan
The latest installment in my lost works of Michael Huemer series is his 1992 essay, "Relativism and Tyranny."  The paper begins with an infamous quote from 1984, then distinguishes nine theses moral relativists (whether self-conscious or by default) routinely equivocate... MORE

Do Steps Toward Freedom Create Net Benefits?

Regulation and Subsidies
David Henderson
Noah Smith recently wrote a piece titled "Being an Ideologue Means Never Having to Say You're Wrong." It starts out well. He writes: "Communism would have worked, if the Soviet Union had only tried it for real." I must have... MORE

This post will be about macro theory, but let's begin with a related example. You are a libertarian and your best friend is also a libertarian. You tend to see eye to eye on most issues, favoring small government. Then... MORE

Rio Reality Check

Economic Education
Amy Willis
My family has been enjoying watching the Olympics over the past couple of weeks. The spectacle of sport can be inspirational. (And with a young swimmer in the house, we are ALL about Katie Ledecky and Michael Phelps.) If... MORE

Social Security Reformer

Social Security
David Henderson
The Committee for a Responsible Federal Budget has come up with a very clever tool. It's called "The Reformer: An Interactive Tool to Fix Social Security." Notice that it's to fix Social Security, not what I would like to see,... MORE

The intellectual as a celebrity

Pop culture
Alberto Mingardi
The Financial Times has published a collective interview on "how to detox digitally in the sun": that is, a set of conversations with famous people on tips to make the most out of your holidays. This is, typically, material for... MORE

The Immigration/Labor Demand Elasticity Puzzle

Economic Methods
Bryan Caplan
While labor demand elasticity is pretty clearly negative, virtually all estimates have an absolute value less than 2.  Yet estimated effects of immigration on native wages are tiny.  Kerr and Kerr's summary is typical.The documented wage elasticities are small and... MORE

Lester versus DiMicco on NAFTA

International Trade
David Henderson
Simon Lester, at Cato at Liberty, has a telling Twitter discussion with Dan DiMicco of Nucor Steel. DiMicco is an adviser to president candidate Donald Trump. According to Time: He [DiMicco] has been an avid supporter of Trump's trade proposals,... MORE

Saving is not a problem

Macroeconomics
Scott Sumner
I recently came across a WSJ article that is a gold mine of teachable moments for EC101 students: KORSCHENBROICH, Germany--Two years ago, the European Central Bank cut interest rates below zero to encourage people such as Heike Hofmann, who sells... MORE

Labor Demand Elasticity: Boredom is Thoughtless

Cost-benefit Analysis
Bryan Caplan
When workers are cheaper, employers want more.  But how many more?  Does a 1% fall in the price of labor entice .1% higher employment?  .5% more?  1% more?  In technical terms, what is labor's elasticity of demand?  So much hinges... MORE

#TWET...But What If We're Wrong?

EconTalk
Amy Willis
Why are we so convinced the things we think are true today will still be true for future generations? I mean, everybody knows The Beatles are the greatest rock group of all time, right? (And while pyroseed13 argues in the... MORE

Open Borders Philanthropy Bleg

Cost-benefit Analysis
Bryan Caplan
Question from a reader.  Any fruitful ideas? Dear Prof. Caplan, I've long been intuitively in favor of open borders, but it is only recently that I have spent a bit of time reading the literature both for and against this... MORE

The new "voodoo"

Macroeconomics
Scott Sumner
Here is Arnold Kling: John Cochrane writes, Economics is a work in progress. But it is certainly brand-new, made-up-on-the spot economics, designed to buttress policies decided on for other reasons. He is describing the economic analysis that claims that policies... MORE

Working Around FDA Regulation

Regulation
David Henderson
Premium cigar makers, racing to pump out new brands before stricter rules took effect this week, have flooded the market with hundreds of new smokes, some a bit "green," with rough labels--one exec put his daughters to work cutting... MORE

Murder Equivalents

Behavioral Economics and Rationality
Bryan Caplan
Economists are often accused of believing that everything - health, happiness, life itself - can be measured in money. What we actually believe is even odder. We believe that everything can be measured in anything. --David Friedman, Hidden OrderEconomists' have... MORE

The Case for Low-Income Housing

Central Planning vs. Local Knowledge
David Henderson
Any discussion of trailer parks should start with the fact that most forms of low-income housing have been criminalized in nearly every major US city. Beginning in the 1920s, urban policymakers and planners started banning what they deemed as... MORE

The Ugly Ugly FDA's Cartel Enforcement

Regulation
David Henderson
E-cigarettes do not contain tobacco. They contain nicotine, a chemical derived from tobacco and other plants. Plain English was never a deterrent, though, to regulators on an empire-expanding mission. The Food and Drug Administration this week rolled out new regulations... MORE

The Perverse Death/Estate Tax

Taxation
David Henderson
Paul Krugman recently posted about Donald Trump's proposal for eliminating the death tax, aka the estate tax. But Paul really only scratched the surface. The death tax has a number of perverse effects, none of which Paul discusses. You might... MORE

Why the monetary policy pessimism?

Monetary Policy
Scott Sumner
I've recently noticed a lot of pessimism about what monetary policy can accomplish. For instance, if I discuss a higher inflation target, people will say, "what makes you think the Fed could hit a higher inflation target? After all, they... MORE

Weekend Wanderings

Economic Education
Amy Willis
Lynne Kiesling at Knowledge Problem drew my attention to this first in a series at The Economist on influential articles in economics. This one highlights George Akerlof's famous 1970 paper, "The Market for Lemons." Akerlof's latest book, Phishing for... MORE

Isn't industrial policy an ideology too?

Economic Philosophy
Alberto Mingardi
Those British libertarians who went for Brexit were somehow disappointed by Theresa May easily winning the contest for Tory leadership. It's quite easy to understand why: in her inaugural speech, she longed for an "industrial strategy" for post-Brexit Britain. See... MORE

Common Arguments Against Immigration

Labor Mobility, Immigration, Outsourcing
David Henderson
New research by Harvard professor George Borjas on the effect of the Mariel Boatlift - a giant shock to Miami's labor market that increased the size of its population by 7 percent in 42 days - finds large negative... MORE

Raise your hand if you are a libertarian. Now raise your hand if you think Fidel Castro is a communist. I see exactly the same number of hands in the air. Raise your hand if you are a libertarian. Now... MORE

What I Fail to Realize

Economic Philosophy
Bryan Caplan
I'm a fallible human being, so when people say, "Bryan, what you fail to realize is..." I listen closely.  Precisely what do I fail to realize?  I'd really like to know.Most of the time, though, I'm sadly disappointed.  The things... MORE

My First Seven Jobs

Labor Market
David Henderson
Various friends on Facebook have been posting about their first 7 jobs, but typically without comment. What I would find more interesting, and I encourage you to give your own, is a list of the jobs along with something about... MORE

Fama versus Thaler

Behavioral Economics and Rationality
David Henderson
Normally, when I face a choice between watching a 40-minute video and reading the transcript, I do the latter. My main reason is that I can read the transcript in 5 to 7 minutes. For some reason I made an... MORE

Power corrupts...

Economic Education
Amy Willis
I remain troubled by much of the rhetoric in this US election season... The vitriol often seems to exclude economics. Fortunately, our own Scott Sumner has done some analysis. Here's his take on the economic prospects of a Clinton or... MORE

Johnson Bet

Economic Methods
Bryan Caplan
I have bet Daniel Filan $100 at even odds that Gary Johnson will receive less than or equal to 5% of the 2016 U.S. Presidential popular vote. I hope to lose, since I (a) consider Johnson far less bad than... MORE

Why the new old Keynesians are wrong about trade

International Trade
Scott Sumner
Ramesh Ponnuru directed me to a Greg Ip article, discussing the strange new fascination with protectionism within the Keynesian community. A few decades ago the "dark underworld" of Keynes's General Theory had gone out of favor. Economists still accepted "Keynesian"... MORE

The Huemer-Caplan Exchange

Economic Philosophy
Bryan Caplan
Publication of Michael Huemer's lost works continues.  Today, we have the 1992 Huemer-Caplan correspondence on his philosophical system, which concludes with my ultimately successful effort to convert him to anarcho-capitalism.... MORE

Casey Mulligan Visits Cuba

International Trade
David Henderson
Last month, while on vacation, I missed an excellent trip report by University of Chicago economist Casey Mulligan. He reports the facts seen through the eyes of a first-rate microeconomist. He understands private property and related incentives and the damage... MORE

The Fed is caught in a vise

Monetary Policy
Scott Sumner
I often read the business press, which has a lot of articles on Fed policy. One recurrent theme is that the Fed is sort of kowtowing to the markets. Here's a typical Bloomberg article: It's the Greenspan put gone wild.... MORE

Is TOMS Different?

Competition
Emily Skarbek
Poverty, Inc. is the title of a recent documentary created by the Acton Institute. The documentary aims to raise awareness about problems of foreign aid that undermine lasting economic development in African countries. The issue warrants attention. There are things... MORE

Friday Night Video: Ben Powell on Sweatshops

Labor Market
David Henderson
This talk by Ben Powell is NOT a home run. It is about 3 or 4 home runs: analysis, data, presentation, humor. It's all there. He gave this talk at the Mises Institute in Alabama late last month. I'm... MORE

Obama: Stop Me Before I Regulate Again

Energy, Environment, Resources
David Henderson
After decades of talk, we finally began to wean ourselves off foreign oil. We doubled our production of clean energy. This is from President Obama's speech at the Democratic National Convention, a speech that most commentators rightly hailed as optimistic.... MORE

Weekend Wanderings

Economic Education
Amy Willis
I'm still thinking (a LOT) about last week's EconTalk episode with Angela Duckworth on "Grit." Specifically, "grit" seems one of those oh-so-common-sensical notions...But how, I still wonder, can I teach grit to my son? Or somehow ensure he possesses... MORE

A Carbon Tax Is Not a Price

Taxation
David Henderson
But carbon already has a price, or, more exactly, multiple prices. Natural gas has a price; oil has a price; coal has a price. And their prices are related to the valuable carbon component of those fuels because it's carbon... MORE

Thomas Schelling Bio

Game Theory
David Henderson
Schelling's early work was on the most important issue of the Cold War: preventing it from becoming a hot war. In his classic 1960 book, The Strategy of Conflict, Schelling laid out some important applications of game theory to the... MORE

"Fund" and games with fiscal policy

Fiscal Policy
Scott Sumner
I recently did a post suggesting the new political divide in the world is not small and big government, but rather open and closed societies. A new Bloomberg article reminded me about how far to the left the GOP has... MORE

Paid Parental Leave: No Free Lunch

Labor Market
David Henderson
When the government mandates one component of compensation, other components adjust. Various friends on Facebook have expressed the view that government-mandated paid parental leave, which seems to have been advocated by Donald Trump supporter Ivanka Trump and is advocated by... MORE

I now consider myself to be a Libertarian

moral reasoning
Scott Sumner
I've always been a small "L" libertarian, but have had an up and down relationship with the Libertarian Party. I was a member when younger, but then let the membership lapse. I continued to vote Libertarian, but mostly to try... MORE

Huemer's Letter to Brian Doherty

Economic Philosophy
Bryan Caplan
Next in the early unpublished writings of Michael Huemer, we have this long letter to Brian Doherty, who subsequently wrote the wonderful Radicals for Capitalism.P.S. If you see Team Caplan here at GenCon, please say hi. :-)... MORE

Harry Markowitz on Armen Alchian

Microeconomics
David Henderson
I am about to order this book. I have just read its quite favorable reviews, and I am not a bit surprised at their being impressed by Armen Alchian's writings. I was a colleague of Armen's, at the Rand Corporation... MORE

I watched much of the Republicans' and Democrats' conventions, as my long-suffering wife can ruefully attest to, so that you didn't have to. What you have may heard about the Republicans' convention is that it was so negative and... MORE

What if everything doesn't go as expected?

Fiscal Policy
Scott Sumner
I like a good contrarian argument. So I was open to Ryan Avent's post on Trump's fiscal policy proposals (which combine massive tax cuts with big spending increases.) On the demand side, permanent tax cuts for the very rich would... MORE

Is It Really Conscious?

Behavioral Economics and Rationality
Bryan Caplan
In The Age of Em, Robin Hanson tries to sidestep philosophical questions, especially, "Would your Artificial Intelligences (AIs) actually be conscious?"  But if you seek to evaluate the world of the future, everything revolves around this infamous philosophical challenge.  Suppose... MORE

It's Not Just About the Money

Labor Market
David Henderson
But West was not the only Spurs player to take a pay cut. Spurs superstar Tim Duncan "slashed his salary in half before the 2013 season, then won his fifth NBA title." And before the 2015-2016 season, he "cut his... MORE

Tolstoy, Hypocrisy, and Puritanism

Books: Reviews and Suggested Readings
Bryan Caplan
This summer I'm reading Leo Tolstoy's War and Peace for the third time.  It's the greatest novel of history's most patiently observant novelist, and every reading unearths further greatness.  This time, I was struck by this passage exploring puritanism and... MORE

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