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September 2016

A Monthly Archive (68 entries)
Yesterday, co-blogger Scott Sumner wrote an excellent post taking on the Boston Globe columnist Renee Loth's weak case against marijuana legalization. (Her column is from April, but it's still relevant.) The case is even weaker than Scott says. Consider this... MORE

Missing moods at the Boston Globe

Economics of Crime
Scott Sumner
Polls show that 58% of Americans favor the legalization of marijuana. Even Texans support it. But an initiative to legalize pot in (very liberal) Massachusetts may fail. One reason is anti-legalization editorials like the following, in the highly influential Boston... MORE

In a campaign season here in the United States that seems more like a shouting match than politics, this week's EconTalk episode raises an interesting question. According to guest John Cochrane, a.k.a. The Grumpy Economist, the main issue that... MORE

In a very pessimistic essay about America's future, my former Hoover colleague Angelo Codevilla writes: What goes by the name "constitutional law" has been eclipsing the U.S. Constitution for a long time. But when the 1964 Civil Rights Act substituted... MORE

Charles L. Schultze RIP

Central Planning vs. Local Knowledge
David Henderson
Charlie Schultze, Brookings Institution economist and former economic adviser to President Jimmy Carter has died at age 91. Charlie was old-school in the best sense of that term. From what I could tell at a distance, he believed in using... MORE

The Biggest Loser: Lester Holt

Growth: Causal Factors
David Henderson
Although Donald Trump is a very close second. And, I agree with Paul Krugman but he left something out. I tried to watch last night's "debate" between Hillary Clinton and Donald Trump. I really did. Unfortunately, I lasted only about... MORE

Who is Peter Navarro?

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Tyler Cowen linked to a paper by Peter Navarro, which discusses Trump's economic plan. To put it simply, it's a complete mess. Here are just a few examples: Under WTO rules, any foreign company that manufactures domestically and exports goods... MORE

Apolitical Reasons to Hate Politics

Behavioral Economics and Rationality
Bryan Caplan
I hate politics.  Part of the reason, to be honest, is that I'm a libertarian, and libertarian views have almost no influence in the world of politics.  Libertarians don't just lose every election; policy-makers normally summarily reject our position.  Libertarians... MORE

Bernanke on the Bank of Japan

Monetary Policy
Scott Sumner
Here's Ben Bernanke on the recent moves by the Bank of Japan: The most surprising, and interesting, part of the announcement was the decision to target the ten-year JGB yield. As I noted in a previous piece on targeting longer-term... MORE

Contracts often require signatories to submit to binding arbitration.  If a dispute arises, the parties don't go to court; they go to a private arbitrator.  This arbitrator, in turn, makes a definitive ruling neither party can refuse.  The whole point... MORE

I recently listened to a podcast where David Beckworth interviewed Cardiff Garcia, of FT Alphaville. I agreed with most of the things Garcia had to say, including his observations on the recent growth slowdown. He discussed the way that top... MORE

The U.S. Postwar Miracle

Fiscal Policy
David Henderson
Co-blogger Scott Sumner posted yesterday some interesting facts and figures about the post World War II economic boom in the United States that came after the U.S. government cut government spending massively. I wrote a study on this for Mercatus... MORE

Here's Matt O'Brien: Libertarian presidential candidate Gary Johnson is a friendly guy, seems pretty moderate. But he could tank the economy. That's what trying to balance the budget all at once would do. Which, of course, is what Johnson says... MORE

Weekend Grab Bag

Economic Education
Amy Willis
Does Karl Marx still matter? Prominent British leftist historian Gareth Stedman Jones says Marx's influence is waning, and that's OK. His new biography aims to put Marx in his proper historical context. Our own Pedro Schwartz is less sanguine,... MORE

The Humanity of McDonald's

Business Economics
David Henderson
If a government agency were as effective, Hilary and Bernie would never let us hear the end of it. Here's a story that John Strong told on Facebook this morning (reproduced with his permission, along with some slight edits): I... MORE

Paul Romer on Paul Volcker

Macroeconomics
David Henderson
Economist Paul Romer reprints a letter he received from an aspiring graduate student in economics and his response to the reader. There is much that is valuable in the letter. In fact, it's on net valuable. But I will follow... MORE

Epstein on the EU and Apple

Competition
Alberto Mingardi
Richard Epstein has an article taking sides with the EU Commission on Apple. Certainly the Commission couldn't have a more eloquent advocate, and Epstein argues forcefully that the Commission "makes a classical liberal argument in favor of free trade across... MORE

A Community Comes Together

Central Planning vs. Local Knowledge
David Henderson
Four years ago, I posted about Rolf Penner, a Manitoba farmer who was fighting the Canadian Wheat Board, the government-run monopsony that bought and then resold the wheat produced by western Canada's farmers. My interaction with him led to an... MORE

Democracy: Trust the system, not the leaders

Political Economy
Scott Sumner
Like Bryan Caplan, I have a strong distaste for politicians. Especially this year. But I have a more favorable view of democracy than Bryan does. I see democracy as being superior to all other systems, for standard "wisdom of crowds"... MORE

Incentives and Get Out the Vote

Public Choice Theory
David Henderson
Although I still think Hillary Clinton is likely to win the presidency, both she and some of her supporters are unwittingly undercutting one of her big advantages: her "get out the vote" effort. Clinton is leaving nothing to chance, putting... MORE

The oil price collapse: Tax cut or reallocation?

Energy, Environment, Resources
Scott Sumner
Just about all economists agree that a sudden dramatic increase in oil prices is likely to be bearish for the US economy. Of course that's not always the case (for "never reason from a price change" reasons), but it's usually... MORE

The Case for Voting

Public Choice Theory
David Henderson
As I noted in "My Case for Activism," I found co-blogger Byran Caplan's objection to voting underwhelming. To be fair, he wasn't saying that other people shouldn't vote; rather, he was saying that he found voting "traumatizing." Six days after... MORE

What does an x-ray of Hitler's skull have in common with a jar of Ronald Reagan's jelly beans? They are both part of the Hoover Institution archives. And they remind us of our human attraction to the material, a... MORE

Globalization is not the problem, it's the solution

International Trade
Scott Sumner
Here's Dani Rodrik: A Chinese student once described his country's globalization strategy to me. China, he said, opened a window to the world economy, but placed a screen on it. The country got the fresh air it needed -- nearly... MORE

Value-Added and Social Desirability Bias

Behavioral Economics and Rationality
Bryan Caplan
Chetty, Friedman, and Rockoff's research on teacher value-added is widely interpreted as an argument for giving good teachers a fat raise.  Obama's 2012 State of the Union speech pulls a dollar figure right out of their abstract: At a time... MORE

One of my favorite newspaper columnists, Steve Chapman of the Chicago Tribune, has written an article titled "Trump's Economic Fraud." It's partly about what the title says it's about but it's mainly about the question I ask in the title... MORE

Cato's Conservative-Libertarian Debate exit survey is fascinating throughout.  The most striking result is on the following question:Q23. Do you favor or oppose a law in your state that would allow businesses to refuse service to customers for religious reasons?Survey says:The... MORE

The Wall Street Journal has a very interesting story on the BOJ, which faces an important policy decision on Wednesday: Until recently, Bank of Japan Gov. Haruhiko Kuroda managed to keep a fragile majority on the nine-member board in favor... MORE

They [Hong Ru and Antoinette Schoar] find that less-educated households were offered higher late fees, over-limit fees, and default penalty rates, as well as more upfront inducements, such as low introductory APRs, cash back, and waivers of annual fees. In... MORE

The Corruption of Politics

Public Choice Theory
David Henderson
Various people have commented on the leaked emails of former Secretary of State Colin Powell. In them, he made candid comments about various major politicians whom he knows and interacted with. Here's the one about Hillary Clinton I found most... MORE

For the Separation of Stadium and State

Taxation
David Henderson
The title of this post is the same as the title of an article by Jonah Goldberg about the Colin Kaepernick incident. (If you haven't been paying attention to the NFL lately, here's the summary: Kaepernick is a San Francisco... MORE

GMU's Visionary

Books: Reviews and Suggested Readings
Bryan Caplan
Last week, my colleague Dan Klein kicked off the Public Choice Seminar series.  During the introduction, I recalled some of his early work.  But only after did I realize how visionary he's been.  In 1999, when internet commerce was still... MORE

The Fed is planning for failure

Monetary Policy
Scott Sumner
Over at Bloomberg.com, Narayana Kocherlakota has a nice post discussing the Fed's plan for the next recession. He provides some graphs showing alternative policy paths: Kocherlakota comments: She [Yellen] views this black-line outcome as a demonstration that the Fed's existing... MORE

Jonathan Lipow on the Role of Government

Economic Philosophy
David Henderson
As such, those on the left or the right of America's political spectrum may regard the proposals I offered in this book as an incoherent hodgepodge. Following my son's advice, I totally deny that and instead make a counteraccusation: many... MORE

Perhaps you've grown accustomed to EconTalk host Russ Roberts bemoaning the limits of statistical analysis...Well fasten your seat belts and get ready for a data-driven ride in this week's episode with Stanford University's Susan Athey. Athey's research centers on... MORE

The Dynamics of Poverty

Income Distribution
David Henderson
Every year at this time, when the U.S. Census comes out with its report on incomes and poverty, there is a special section titled "The Dynamics of Poverty." It always shows that there is mobility between income categories, even in... MORE

Truman Bewley Comes to GMU

Behavioral Economics and Rationality
Bryan Caplan
Today Truman Bewley comes to GMU.  I've been singing his praises for years; while Bill Dickens is the man who taught me to see to the grave evil of unemployment, Bewley's the man who taught me in great detail how... MORE

I don't follow fiscal policy closely, because I don't think it impacts the business cycle. But most economists disagree with me, and many are recommending fiscal stimulus. I argue that fiscal stimulus has no demand-side effects when the Fed is... MORE

My Case for Activism

Public Choice Theory
David Henderson
The person who says it cannot be done should not interrupt the person doing it. ~ Chinese Proverb "That will be thirteen ninety-nine plus a dollar and one cent for tax," said the clerk at Orchard Supply Hardware. I handed... MORE

For several years I've been gradually pulling my hair out as I read one pundit/commenter after another claim that since the Fed is currently struggling to hit its 2% inflation target, there's no point in setting a higher inflation target.... MORE

Why I Don't Vote: The Honest Truth

Economic Philosophy
Bryan Caplan
I do not vote.  Since I'm an economist, the parsimonious explanation is that (a) I know the probability of voter decisiveness is astronomically low, and (b) I selfishly value my time.  But that's hardly adequate.  I spend my time on... MORE

Good Economics News from Harvard

Economic Education
David Henderson
The [Harvard] College's fourth most popular course, Economics 1017: "A Libertarian Perspective on Economic and Social Policy," saw a significant jump in enrollment to 497 undergraduates from 251 undergraduates last year. Economics senior lecturer Jeffrey A. Miron, who teaches Ec... MORE

From the Cutting Room Floor: The Case Against Education

Economics of Education
Bryan Caplan
When my books are nearly done, I strive to cut 10% of the remaining words.  Sometimes I end up cutting beloved passages that distract from the flow.  Here's one of my favorites from The Case Against Education, building on my... MORE

Ryan Avent asks some very good questions

Monetary Policy
Scott Sumner
Ryan Avent, who writes for The Economist, sent me an email with some very good questions about monetary policy rules. (He was a moderator at the recent Mercatus/Cato conference on monetary policy rules.) Ryan allowed me to reprint them here,... MORE

The Conard Line on the Trade Deficit

International Trade
David Henderson
Tyler Cowen writes: This framework makes Conard a revisionist on the U.S. trade deficit. The traditional story is that Americans buy goods from, say, East Asia, and the sellers respond by investing those dollars back in the U.S., a win-win... MORE

Let Them In

Regulation
David Henderson
Yesterday, over at our sister site, "Library of Law and Liberty," Northwestern University law professor John O. McGinnis had an interesting post. It's titled "The Obama Administration is Helping Raise Your Airfares." In it, Professor McGinnis makes the case that... MORE

Brexit is not about Britain, #2

Monetary Policy
Scott Sumner
It's less that 3 months since the Brexit vote, and thus too early to form any firm conclusions. But one recent article points to the growing belief that Britain may have dodged a bullet, which hit the eurozone instead: Brexit... MORE

Is "neoliberalism" a menace to human rights?

Economics and Culture
Alberto Mingardi
Hillel Neuer has succeeded in getting the UN Human Rights office to delete a tweet that asked whether "market fundamentalism"--namely, "the belief in the infallibility of free market economic policies"--is "an urgent threat." I suppose it means a threat to... MORE

The Ultra-Selective Rationality of Politicians

Behavioral Economics and Rationality
Bryan Caplan
Me back in 2003: Politicians, just like other people, may prefer some beliefs over others. But unlike average voters, politicians often do have a significant probability of affecting outcomes, and their efforts have direct repercussions. A politician who does not... MORE

The FDA's Power Grab

Regulation
David Henderson
But if the FDA gets its way, nitroglycerin will not be obtainable for pennies. The situation was stable until Pfizer went through the time and expense required to test its particular version of nitroglycerin, Nitrostat, which the FDA approved in... MORE

Could allocating more power to the American President result in a more efficient government? Could it result in a smaller government? I admit, I would have had a pretty strong (negative) reaction to those two questions if you'd posed... MORE

Scott Alexander IS an Economist

Economics of Health Care
David Henderson
So many other bloggers called attention to Scott Alexander's outstanding post about why the price of EpiPen is so high that I didn't feel the need to. But now he has written another post about drug prices and the harm... MORE

Solve for This Equilibrium

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
Tyler Cowen's fond of admonishing us to "solve for the equilibrium."  His maxim came to mind while reading his Bloomberg column last month:How's this for a simple rule: Open borders for the residents of any democratic country with more generous... MORE

Response to Professor Stephen Gordon

Taxation
David Henderson
Last month, I posted about Professor Stephen Gordon's confusion between a tax and a price. Professor Gordon responded, and I responded to him. Here's an excerpt from my response: Both Foster and I noted that there is an important distinction... MORE

My paper at the monetary rules conference

Monetary Policy
Scott Sumner
Today I will be presenting a paper at a Mercatus/Cato conference on monetary policy rules. Here I'd like to summarize my key themes: 1. The past 10 years have destroyed the pre-2008 consensus on monetary policy. Everything is up in... MORE

Betting Justice

Behavioral Economics and Rationality
Bryan Caplan
My favorite Oliver Wendell Holmes quote, by far:Chauncey Wright, a nearly forgotten philosopher of real merit, taught me when young that I must not say necessary about the universe, that we don't know whether anything is necessary or not. I... MORE

Using "not entirely" in this case is like saying Rocky was "not entirely" about loan collections. On a blog called EconLog, I generally stick to economics. But occasionally I make an exception to deal with other issues. One is media... MORE

How would we know if wages were sticky?

Labor Market
Scott Sumner
I've done a lot of posts on wage stickiness, but misconceptions keep popping up. The sticky wage theory of the business cycle is based on the notion that only a fraction of wages get adjusted each period. This leads to... MORE

Helicopter Parenting and Moral Causation

Behavioral Economics and Rationality
Bryan Caplan
Condemnation is fun, but numbers are boring.  What are we supposed to do, then, when condemnation requires numbers?  Suppose you want to condemn a parent for putting his child in grave danger, but your knowledge of actual risks is hazy... MORE

Honor Laborers

Labor Market
David Henderson
Most Americans think of Labor Day as part of a long weekend and the unofficial end of summer. It was originally meant, though, to recognize the contributions of labor unions. I recommend a third alternative: use Labor Day to... MORE

The interest rate fallacy

Monetary Policy
Scott Sumner
There is a common fallacy that lower interest rates are expansionary. Where does this fallacy come from? I can think of two true facts, each of which contributes to this fallacy. 1. The true fact that if I am thinking... MORE

Reply to Kocherlakota

Monetary Policy
Scott Sumner
I recently did a post over at MoneyIllusion, arguing against the elimination of currency. I suggested that this would have a disproportionate impact on the poor, who often lack access to banking facilities. It would also reduce privacy; the government... MORE

No, Ben Bernanke, He Wasn't

Monetary Policy
David Henderson
Hamilton was without doubt the best and most foresighted economic policymaker in U.S. history. So writes former Fed chairman Ben Bernanke. Monetary economist and fellow UCLA grad Lawrence H. White disagrees. Larry writes: Now that the controversy has cooled we... MORE

Brexit uncertainty and Brexit itself

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Is it too early to evaluate the impact of Brexit? I'd say so, given that Brexit will not occur until at least 2019. How about the impact of Brexit uncertainty, which just a few weeks ago many (most?) pundits were... MORE

P.J. O'Rourke on Math

Books: Reviews and Suggested Readings
David Henderson
Warning: I normally post on one thing at a time. This is more stream of consciousness than I'm used to doing. My favorite P.J. O'Rourke book is Eat the Rich: A Treatise on Economics, written in 1998. In my review... MORE

Vox has a new article on political correctness: Academic freedom is the sine qua non of higher education. Students ought to be challenged, even made uncomfortable, in order to learn in deep and meaningful ways. And, of course, collegiate education... MORE

Apple's principled defense

Competition
Alberto Mingardi
Private businesses very seldom mount a principled defence of their behaviour. This is why libertarians like to stress that they are pro-market and not pro-business. Business people, being self-interested like anybody else, will attempt to make the most of the... MORE

The Math Myth

Cost-benefit Analysis
Bryan Caplan
Math professor David Edwards sent me this short essay on mathematical education.  Printed with his permission. The Math Myth The math myth is the myth that the future of the American economy is dependent upon the masses having higher mathematics... MORE

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