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October 2016

A Monthly Archive (76 entries)
On Thursday I posted on the CEA's report on labor market monopsony. On Friday I posted Part II. Here is Part III. I analyze the report seriatim. The Minimum Wage The CEA writes: Economic theory suggests that in competitive markets,... MORE

The zero bound isn't interest rate pegging

Monetary Policy
Scott Sumner
Saturos directed me to a new paper by John Cochrane: This long period of quiet inflation at the zero bound - and Japan's longer period - poses a deep challenge to monetary economics. Old-Keynesian models (including Milton Friedman's 1968 AEA... MORE

Adam Smith's central example of technological change and improvement in consumer-durables was the watch. When writing the Wealth of Nations, he hypothesized that the price of watches fell nearly 95% over the past century. This diminution of price has, in... MORE

Japan refutes old Keynesianism

Fiscal Policy
Scott Sumner
Over at TheMoneyIllusion I have a post lamenting the recent revival of old Keynesian ideas. It occurred to me that Japan is an almost perfect refutation of these theories. In particular, Japan shows that: 1. Inflation is not caused by... MORE

AT&T, Time-Warner and the end of competition

Competition
Alberto Mingardi
The AT&T and Time-Warner merger is attracting considerable attention. The idea of "convergence" between telcos and content providers has been around for quite a while. Still, the idea of "convergence" needs to be tested via the market process. Integrating production... MORE

Yesterday, I posted on the basics of monopsony in the labor market, with a promise to critique the CEA report on monopsony, occasionally referring to Adam Ozimek's excellent, but shorter, critique. In what follows, I go through the CEA report... MORE

Is the data "rigged"?

Economic Methods
Scott Sumner
We live in an age where everything official seems to be distrusted. Trump has suggested that the government's unemployment data is incorrect, and that the actual rate may be as high as 40%. Some economists on the left also question... MORE

Laureate Lessons for Education

Education
Amy Willis
We've reported on this month's announcement of the Nobel prize to Oliver Hart and Bengt Holstrom. (Here is David Henderson's always excellent commentary in the Wall Street Journal.) Since then, this piece in Education Next caught my eye. It... MORE

This month, the President's Council of Economic Advisers issued a 21-page report on labor market monopsony. It's titled "Labor Market Monopsony: Trends, Consequences, and Policy Responses." As with many reports issued by economists who are paid by government, it has... MORE

Yet Another Reply to Huemer on the Ethical Treatment of Animals

Behavioral Economics and Rationality
Bryan Caplan
At risk of taxing readers' patience, here's my rejoinder to Mike Huemer's last guest post on the ethical treatment of animals.  He's in blockquotes, I'm not.My main reactions:I. The argument from insects has too many controversial assumptions to be useful.... MORE

Robert Tollison, RIP

Obituaries
David Henderson
Many people have already done obits and reminiscences of Robert Tollison, a 73-year-old economist who died in his sleep on Monday. My two favorite are Pete Boettke's and this one at the Liberty Mortuary in Liberty, South Carolina. Most... MORE

Cuba Libre?

EconTalk
Amy Willis
Would you like to visit Cuba? If so, what would you expect to find? In this week's EconTalk episode, host Russ Roberts welcomed back Casey Mulligan, who recently had just such an experience. I've always wanted to visit Cuba... MORE

21st century Vikings

Liberty
Scott Sumner
This Washington Post article caught my eye: REYKJAVIK, ICELAND -- The party that could be on the cusp of winning Iceland's national elections on Saturday didn't exist four years ago. Its members are a collection of anarchists, hackers, libertarians and... MORE

Does Stress Over Politics Mean You Need to Get a Life?

Public Choice Theory
David Henderson
On his other blog, co-blogger Scott Sumner quotes a news article as follows: For all their sharp differences, supporters of Hillary Clinton and Donald Trump have one thing in common: election-related stress. Nearly half of all likely voters in the... MORE

My former colleague Robert Tollison has passed away.  I still remember the tour of Carow Hall he gave me when I was interviewing in 1997.  Though we only overlapped at GMU for one year, he was an unforgettable personality.  My... MORE

Elections Are Surveys: The Case of AIP

Behavioral Economics and Rationality
Bryan Caplan
My Myth of the Rational Voter argues that elections are surveys.  The essence of a survey is that you state an opinion, secure in the knowledge that your stated opinion is non-binding.  While there remains an off-chance your vote changes... MORE

Every so often I need to push back against common misconceptions regarding saving and investment. The comment section of my previous post provided a few examples, starting with "pyroseed13": In a less risk-averse and more economically free environment, savings would... MORE

Canada Can't Dodge Two Bullets

International Trade
David Henderson
At this writing, the odds that Hillary Clinton will defeat Donald Trump for the U.S. presidency are very high. If your concern is trade between Canada and the United States, Canada dodged a bullet. Donald Trump is hostile to trade,... MORE

The WSJ's odd critique of the Fed

Monetary Policy
Scott Sumner
This article in the Wall Street Journal left me scratching my head: The Fed, Not the Market, Is Stifling Growth That's the title, and I eagerly looked forward to an explanation, perhaps a criticism of the Fed rate increase last... MORE

The Huemer Graph

Bryan Caplan
The latest reply from Mike Huemer on the ethical treatment of animals, this time with a cool graph.Bryan Caplan posted this further comment on animal welfare arguments on his blog. I didn't have time to address this earlier (partly because... MORE

Two approaches to macroeconomics

Macroeconomics
Scott Sumner
Here's an abstract from a paper by Erich Pinzón-Fuchs: This paper discusses a longstanding debate between two empirical approaches to macroeconomics: the econometrics program represented by Lawrence R. Klein, and the statistical economics program represented by Milton Friedman. I argue... MORE

Paul Krugman, in a post today titled "Debt, Diversion, Distraction," argues, as his title implies, that we get diverted and distracted from more important issues if we worry about the coming high deficits and debt. His reasoning is faulty. First,... MORE

Bio of Paul Krugman

International Trade
David Henderson
In 2008, U.S. economist Paul Krugman won the Nobel Prize in Economic Sciences. Krugman, one of the best-known economists in the world, is familiar to the public mainly through his regular column in the New York Times and for his... MORE

Long time readers know that I am a huge fan of the Efficient Markets Hypothesis, mostly for pragmatic reasons. (As with all social science theories, I do not believe it is literally true---just approximately true.) Now it appears that the... MORE

I Want to Know How the Transporter Works

Behavioral Economics and Rationality
Bryan Caplan
In our debate, Robin bemusedly observed that I'm one of those odd people who wouldn't step into a Star Trek transporter.  My actual view is more moderate: Before I'd use the transporter, I'd like to know how it works. Does... MORE

What Has Congress Ever Done for Us?

Political Economy
David Henderson
I've been catching up on Wall Street Journal issues that piled up over the summer. One particularly good unsigned editorial (the Journal calls these "Review and Outlook") was the July 19 (July 20 print edition) editorial titled "What Has Congress... MORE

Is the Fed a firefighter or an arsonist?

Monetary Policy
Scott Sumner
Most economists view the Fed as a sort of firefighter, an institution that pushes back against "shocks" that mysteriously arise in the private sector. Bob Hetzel and Josh Hendrickson have a different view. Here's Josh: The predominant difference between this... MORE

Huemer's "Answer to Searle on the Mind-Body Problem"

Economic Philosophy
Bryan Caplan
Just posted the last item in my lost works of Michael Huemer series.  In this essay, Huemer critiques the great John Searle's strange attempt to avoid both eliminative materialism and dualism.P.S. If philosophy of mind strikes you as very far... MORE

Against Robotic Panic

Growth: Consequences
Bryan Caplan
Monday I debated Robin Hanson for the Soho Forum on the following resolution:"Robots will eventually dominate the world and eliminate human abilities to earn wages."Video will be available eventually, but you can enjoy my slides (in pdf format) now.The main... MORE

One Congressman Can Sometimes Do a Lot, Part II

Public Choice Theory
David Henderson
I posted yesterday about Justin Amash's Cato University speech. Below is most of the rest of it. I'm putting his parts in block quotes. The italics are his. My comments follow where appropriate. I'll end with comments on Public Choice.... MORE

Global warming phonies

Energy, Environment, Resources
Scott Sumner
I seem to be one of the relatively few right-of-center intellectuals that worry about global warming. In previous posts I've argued that if the GOP were smart (no jokes please) they would propose the following policy: 1. Global warming is... MORE

One Congressman Can Sometimes Do a Lot, Part I

Public Choice Theory
David Henderson
This is from a recent speech given by Justin Amash, a member of the U.S. House of Representatives from Michigan, at Cato University. His speech is block quoted and the italics are his. My comments follow where appropriate: What's a... MORE

Does AD influence AS?

Monetary Policy
Scott Sumner
TravisV directed me to a recent speech by Janet Yellen: The Influence of Demand on Aggregate Supply The first question I would like to pose concerns the distinction between aggregate supply and aggregate demand: Are there circumstances in which changes... MORE

In 1992, I went to San Francisco's Candlestick Park to see the Giants play the Cincinnati Reds. To get into the baseball spirit, I wore my blue L.A. Dodgers helmet. (I root for both the Giants and Dodgers, but... MORE

The Pride of Homeschooling

Economic Philosophy
Bryan Caplan
I finally got my hands on the script for Captain Fantastic, and can now share my favorite scene.  Subtle it's not, but for me, awesome always beats subtle.  The stage: Homeschooling dad Captain Fantastic and his six kids are visiting... MORE

Consumer Surplus and the Presidential Election

Economic Philosophy
David Henderson
I woke up this morning at 4:30 a.m. and, as is my wont, reached for my iPhone. On it was a message I've never seen before. It told me that there was an activation lock on my phone. When I... MORE

Why America can run trade deficits forever

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Here's the Financial Times: China's provision of development finance to the emerging world has always been about much more than building infrastructure to reap a commercial return. It has also been about changing destinies. Beijing selected countries that it aimed... MORE

Open market operations vs. helicopter drops

Monetary Policy
Scott Sumner
Patrick Sullivan directed me to Brad DeLong: Bernanke (2000): Contrary to the claims of at least some Japanese central bankers, monetary policy is far from impotent today in Japan... Why is it not impotent? Because of: what amounts to an... MORE

Theresa May's anti-libertarian turn

Eurozone crisis
Alberto Mingardi
Theresa May's speech at the Tory national conference has generated little enthusiasm among British conservatives of a libertarian bent. On the other hand, it cautioned some people on the left, who found Mrs May is perhaps ready to steal the... MORE

Hanson-Caplan Robot Debate this Monday in NYC

Growth: Consequences
Bryan Caplan
Right after Mike Huemer speaks at GMU on Monday, I'm rushing to New York City to debate Robin Hanson on the resolution, "Robots will eventually dominate the world and eliminate human abilities to earn wages."  As you might expect, Robin's... MORE

The one and only Michael Huemer is speaking at the Public Choice Seminar at noon on MONDAY (not the usual Wednesday) on his new paper, "The Devil's Advocate."  My continuing disagreements with Mike on the ethical treatment of animals notwithstanding,... MORE

Further Reply to Huemer on the Ethical Treatment of Animals

Behavioral Economics and Rationality
Bryan Caplan
The conversation continues.  Huemer's in blockquotes, I'm not.My response to Bryan Caplan, on the ethical treatment of animals:As far as I understand it, Bryan's argument is something like this:1. Killing bugs isn't wrong. Sub-argument:1a. Even animal rights advocates don't think... MORE

Deltas

Economic Methods
David Henderson
I often get the impression from various people's comments on my posts that they think that when I write words to the effect that "Person X didn't do this bad thing," "Person Y did this bad thing," "Person Z did... MORE

Why it's hard to give good advice to the Fed

Monetary Policy
Scott Sumner
This Washington Post story (by Ylan Mui) from a couple months back makes me kind of sad: During the long recovery from the Great Recession, the central bank kept its benchmark interest rate at virtually zero and pumped trillions of... MORE

The Most Important Economic Idea

Economic Education
David Henderson
Questioner: If there was one economic idea you could explain to everyone on earth, what would it be? Economist Steve Horwitz: The idea that prices are knowledge surrogates. Prices aren't mere numbers--they are [a] form of communication that goes beyond... MORE

Inequality, Trade, and Robin Hood

EconTalk
Amy Willis
Is it really true that the poorest Americans are magnitudes better off than the poor in the developing world? Should we care more for our fellow citizens- even if they are better off- than about people far away? Is... MORE

What Some People Like About Donald Trump

Public Choice Theory
David Henderson
He fights back. "Cet animal est tres mechant; quand on l'attaque, il se defend" ("This animal is very wicked; when you attack it, it defends itself.") I've read various articles about why people like Donald Trump, or, even if they... MORE

Huemer Replies on the Ethical Treatment of Animals

Cost-benefit Analysis
Bryan Caplan
Guest post by Mike Huemer begins... now.My response to Bryan Caplan, on the ethical treatment of animals: As far as I understand it, Bryan's argument is something like this: 1. Killing bugs isn't wrong. Sub-argument: 1a. Even animal rights advocates... MORE

Henderson Review of a Peter Navarro Book

International Trade
David Henderson
Adam Davidson, in the New Yorker, highlights the thinking of Peter Navarro, a Ph.D. economist who is on Donald Trump's economic team.* In 2010, I reviewed Seeds of Destruction, a book by Glenn Hubbard and Peter Navarro, and quoted some... MORE

A few weeks ago I presented a graph that showed the trade-off between a big central bank balance sheet and faster NGDP growth: Now I'd like to use this framework to discuss why so many people confuse easy and tight... MORE

A Great Paragraph from Arnold Kling

Regulation
David Henderson
Now, journalists want to paint Greenspan as a great free-marketeer, as if he spent his career fending off cries for more financial regulation. In fact, there was a consensus in the 1980s that inter-state banking had to arrive and that... MORE

To understand their work, start with a pillar of economics that I teach on the first day of class: Incentives matter. Mr. Hart and Mr. Holmstrom take that principle and run with it, seeking to understand incentives within both individual... MORE

Reply to Huemer on Ethical Treatment of Animals (including Bugs)

Behavioral Economics and Rationality
Bryan Caplan
Here's my reply to Mike Huemer's reply to my challenge to animal rights.  Huemer's in blockqutes, I'm not. I don't think the best way of determining whether x is true is by seeing whether x-advocates are hypocritical or morally flawed.I... MORE

My Writing Tutor: Dan Seligman

Entrepreneurialism
David Henderson
Looking over my posts in the last few years, I realized that I had promised to tell my story of dealing with the toughest editor I ever had: the legendary Dan Seligman of Fortune magazine. I'll tell it in two... MORE

Are robots taking our jobs?

Labor Market
Scott Sumner
Tyler Cowen and Alex Tabarrok have a new debate on "Econ Duel", discussing whether robots are taking our jobs. Who's right? I don't think we know. Tyler argues in the affirmative, and suggests that this problem will increase over time.... MORE

Schneider's The Deadly Sins

Behavioral Economics and Rationality
Bryan Caplan
This Wednesday, former EconLog blogger James Schneider is coming to GMU to present a draft of his amazing new book, The Deadly Sins: An Exploration of Behavioral Health Economics.  Schneider, a true polymath, interweaves research in economics, medicine, and psychology... MORE

Weekend Grab Bag

Economic Education
Amy Willis
Seems like a new theme...Again this week, I was happy to see Jason Zweig's post on his experience with "one of the best interviewers anywhere," our very own Russ Roberts. And it turns out that this week's guest is... MORE

The myth of Italian instability

Eurozone crisis
Alberto Mingardi
On December 4th, Italy is going to vote in a referendum on the constitutional reform recently enacted by the Parliament. Together with the fate of a constitutional reform, Mr Renzi's government is at stake - and for this reason... MORE

The Financial Times has a report that Americans are becoming increasing supportive of globalization: While Donald Trump has called for a rewrite of US trade deals and moots the imposition of tariffs on imports from China and Mexico, two in... MORE

Five Victims of Joseph Stalin

Economics of Crime
David Henderson
My Hoover colleague Paul Gregory, an economist who studied and still studies the Soviet Union, has put together a book, Women of the Gulag: Portraits of Five Remarkable Lives. Now a film is being made about these 5 women... MORE

Non-materialistic millennials and the Great Stagnation

Growth: Causal Factors
Scott Sumner
When I was a teenager in the early 1970s, I looked forward to getting a nice stereo system, with a receiver, amp, turntable and big set of speakers. My 17-year old daughter also likes music, but has no interest in... MORE

Weapons of Math Destruction

EconTalk
Amy Willis
We've heard a lot about the power of Big Data lately on EconTalk. But this week, host Russ Roberts invited a skeptic- who's also a data scientist- to discuss some of its possible dangers. Cathy O'Neil (who was also... MORE

Do we need more antitrust?

Competition
Alberto Mingardi
Do we need more antitrust enforcement? The Economist presents a number of interesting research papers. Among the most striking insights, the authors find that income inequality is "explained by a growing dispersion in average wages paid by firms," as opposed... MORE

Minogue on the Accountability Flip

Economic Philosophy
David Henderson
My concern with democracy is highly specific. It begins in observing the remarkable fact that, while democracy means a government accountable to the electorate, our rulers now make us accountable to them. Most Western governments hate me smoking, or eating... MORE

Michigan State Debate

Economic Philosophy
Bryan Caplan
Tomorrow I'm debating the Center for Immigration Studies' Stanley Renson on "Open versus Closed Borders" at Michigan State.  Details here.  Hope to see you there!... MORE

All Roads Lead to Open Borders: A Caplan/Weinersmith Collaboration

Books: Reviews and Suggested Readings
Bryan Caplan
I am overjoyed to announce that I will be collaborating with famed artist Zach Weinersmith, best known for Saturday Morning Breakfast Cereal.  Our project, tentatively titled All Roads Lead to Open Borders, is a non-fiction graphic novel on the philosophy... MORE

A Nobel Prediction

Incentives
David Henderson
I have my wishes about who will win the Nobel Prize in Economics on Monday. But I always distinguish between what I want and what I expect. I have never predicted the Nobel accurately, after trying for over 20 years.... MORE

Brexit: What I got wrong, and what is still uncertain

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Immediately after the Brexit vote, I used the knee jerk reactions of various markets to try to estimate the impact. After 14 weeks, it looks like one key market reaction was wrong. Here's the FTSE250, a stock index with a... MORE

The New York Times Overpaid

Taxation
David Henderson
The New York Times, which apparently broke the law by publishing some of Donald Trump's 1995 tax return, overpaid a tax accountant. Here's the relevant NYT statement in a news report by NTY reporters David Barstow, Susanne Craig, Russ Buettner,... MORE

Mike Huemer, my favorite philosopher, responded to yesterday's post on Facebook.  Huemer's words, reprinted with his permission:I don't think the best way of determining whether x is true is by seeing whether x-advocates are hypocritical or morally flawed. (Btw, on... MORE

The Case for Allowing Cash

Monetary Policy
David Henderson
There is a possible universe in which these arguments against cash would be true. In such a world, politicians and bureaucrats would know and single-mindedly pursue the public interest (that is, what is in the interest of everybody), economists and... MORE

Infrastructure is not fiscal policy

Fiscal Policy
Scott Sumner
A recent comment started off as follows: Suppose someone had a fetish for fiscal policy and infrastructure Using the construction of infrastructure for fiscal policy purpose does NOT get you any more infrastructure than not using it for fiscal policy... MORE

Bugs

Cost-benefit Analysis
Bryan Caplan
The most compelling objection to animal rights, to my mind, has long been... bugs.  Bugs are animals.  Every human being directly kills bugs just by walking - and indirectly kills bugs by renting and buying constructed housing.  Yet I've never... MORE

Gary Johnson has received lots of flack for being unable to name the world leader that he most admires. Here's Matt Yglesias: The closest thing you will find to a US-style libertarian abroad is what are called "liberal" parties in... MORE

Look past the labels

Monetary Policy
Scott Sumner
Commenter CA directed me to a recent post by Roger Farmer: We are stuck in a low inflation liquidity trap, caused by the fact that money and short term securities are currently perfect substitutes. The way out of the liquidity... MORE

Moving Across My Monitor

Economic Education
Amy Willis
I loved reading John Cochrane's reflections on his EconTalk conversation with Russ Roberts (this week's episode) on his blog, The Grumpy Economist. Who doesn't want affordable housing? Reforming zoning codes to encourage more is easy...in theory. The Nobel prize... MORE

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