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January 2017

A Monthly Archive (58 entries)

The Pros and Cons of the TPP

International Trade
David Henderson
As a two-armed economist, I'll say that the benefits of the TPP are uncertain. Chop off one of my arms and I'll say that the net benefits are positive. This is from my article "All things considered, TPP would've... MORE

The Chamber of No

Behavioral Economics and Rationality
Bryan Caplan
Once you agree that limited government provides valuable insurance against future bad policies, the next question is: "How can government be limited?"  As my last post mentioned, there's a standard list, with supermajority rules, division of powers, judicial review, and... MORE

Video of My Talk at Kansas State

Income Distribution
David Henderson
I had a great time visiting students and faculty, and giving an evening talk, at Kansas State University in Manhattan, KS. You can watch it here or on Youtube. I was impressed with both students and faculty, and one... MORE

Poverty is a far bigger problem than inequality

Income Distribution
Scott Sumner
Back in the 1960s, progressives talked a lot about poverty. Now they talk a lot about inequality (which perhaps helps to explain the rise of Trump.) This post was triggered by a comment Tyler CowenAlex Tabarrok made, after his recent... MORE

Limited Government as Insurance

Cost-benefit Analysis
Bryan Caplan
Imagine going back in time to January 20, 2009.  Obama's Inauguration Day.  You're a cheering fan.  On that day, an angel appears and makes you this offer: If you give up on Obama's best ideas, none of Trump's worst ideas... MORE

A Wall

International Trade
David Henderson
Before I built a wall I'd ask to know What I was walling in or walling out, And to whom I was like to give offense. Something there is that doesn't love a wall, That wants it down! From... MORE

The retaliation begins

Scott Sumner
One of my lifelong dreams has been to visit Isfahan, said to be one of the world's most beautiful cities. Now it looks like that will not be possible: Iran said on Saturday it would stop U.S. citizens entering the... MORE

James Kwak on Minimum Wage

Price Controls
David Henderson
On my to-do list for the last week or so has been to write a detailed response to University of Connecticut law professor James Kwak's claim that many economists and others have misleadingly and simplistically applied basic Econ 101 analysis... MORE

Puzzled by the border tax

Taxation
Scott Sumner
The recent discussion over a possible 20% border tax/subsidy scheme has me more puzzled than anything else I've seen since I began blogging. Advocates like Martin Feldstein say it would not be a protectionist policy, as the dollar would appreciate... MORE

Trump's Toothless Pipeline Protectionism

International Trade
David Henderson
Tom DiChristopher of CNBC called me yesterday to get my take on Donald Trump's attempt to make builders of the Keystone pipeline use American-made pipe. The result is this excellent report by him, in which he quotes me accurately and... MORE

If a President pardons a single individual for violations of the law, it's generally viewed as a legitimate act, within the President's authority. People might view the pardon as unwise, but they generally don't argue that the act was unconstitutional.... MORE

Vox voxplains leaked drafts of Trump's executive orders on immigration.  Reading the fine print, it's not as bad as I'd expect, but of course this is only the beginning.  The Vox analysis seems careful, except for this:Libertarians sometimes suggest "building... MORE

Happy birthday, Leszek Balcerowicz!

Economic Philosophy
Alberto Mingardi
I'm in Warsaw for a conference that marks and celebrates the 70th birthday of Leszek Balcerowicz, a great economist and a great man. Balcerowicz was chairman of the National Bank of Poland and before that Deputy Prime Minister and Finance... MORE

My Kansas State Speech

Upcoming Events
David Henderson
A reminder. My speech is tonight. Here are the details.... MORE

When I was younger, I associated nationalism with country formation. Poland and Czechoslovakia became countries after WWI, India and Pakistan (and later Bangladesh) achieved statehood after the British left India, and Slovenia and Croatia after the break-up of Yugoslavia. Nationalism... MORE

I was initially excited to see that progressive Dean Baker has written a piece on "Eight Market-Oriented Proposals That Reduce Income Inequality" for AEI. It begins promisingly by criticizing overly strict occupational licensing for high-skilled workers.  But it then studiously... MORE

Ending the Requirement to Show Drug Efficacy

Economics of Health Care
David Henderson
In my January 14 post, "Why Are Drug Prices So High?", I referenced Charley Hooper's and my proposal that Congress go back to pre-1962 law and have the FDA be a certifier of only safety, not efficacy. In the... MORE

The Many Faces of Means-Testing

Economic Philosophy
Bryan Caplan
Isn't a Universal Basic Income just another name for a negative income tax, such as Tax = -$10,000 + .3*Income?  If so, isn't a Universal Basic Income means-tested by definition?The answer to the first question is Yes.  UBI is just... MORE

My Speech at Kansas State University

Upcoming Events
David Henderson
This Thursday, I will be speaking at Kansas State University in Manhattan, Kansas. Title of Talk: "Economic Inequality: Popular Misconceptions and Important Facts" Thursday, January 26, 2017 6:30 PM Waters 231 Underwritten by Fred and Mary Koch Foundation... MORE

Caplan-Wilkinson Universal Basic Income Debate

Economic Philosophy
Bryan Caplan
At this year's 10th Anniversary Students for Liberty conference, I'm debating Will Wilkinson on, "Should libertarians support a Universal Basic Income?"  My answer is an emphatic no.  Not only libertarians but liberals, conservatives, and reality-based socialists should oppose this populist... MORE

Commenter Bill directed me to an interesting Ben Bernanke post: As a general matter, Fed policymakers view economic or policy developments through the prism of their economic forecast. Developments that push the forecasted path of the economy away from the... MORE

Arrival: Xi Jinping, Davos man

Liberty
Scott Sumner
Last night I saw the sci-fi film "Arrival". (Spoiler alert.) At the beginning of the film, 12 alien spacecraft visit Earth, and there are attempts to communicate with the aliens. The film mostly takes place in Montana, where one of... MORE

Ominous Inaugural Addresses

International Trade
David Henderson
WASHINGTON--President Donald Trump delivered what historians and speechwriters said was one of the most ominous inaugural addresses ever, reinforcing familiar campaign themes of American decline while positioning himself as the protector of the country's "forgotten men and women." In a... MORE

AS/AD: Another suggested interpretation

Macroeconomics
Scott Sumner
Nick Rowe has a post entitled "AS/AD: A Suggested Interpretation". I'm going to offer a very different interpretation, which (interestingly) has almost identical implications. I'm not quite sure why. In my view, the "classical dichotomy" lies at the very heart... MORE

Trumpism in China

Competition
Scott Sumner
Trump's ideas are increasingly popular around the world. Here's an example from Shanghai, China, discussing China's version of Uber: Didi Chuxing, China's dominant car-sharing company, is gutting its fleet of drivers in Shanghai to comply with the city's new regulations... MORE

The Most I'll Admit

Behavioral Economics and Rationality
Bryan Caplan
Since I think that most news is overblown fluff, I have little sympathy for the endless pieces about "What we've learned about the world in 2016."  Against the background of all of human history, 2016 taught us next to nothing. ... MORE

China trade has been a boon to the US, China, and the world.

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Here's Ryan Avent: ECONOMISTS are realising that they have got some things about trade wrong in the past. Just because trade can make everyone better off, doesn't mean it will, for instance (at least without some help from politicians). That... MORE

The Great Californian Bag Surplus

Cost-benefit Analysis
Bryan Caplan
I just got back from a long vacation in my home state of California.  The bad news about California is that its people and government have unusually severe economic illiteracy.  The good news is that their severe economic illiteracy provides... MORE

In a very lively EconTalk episode this week, listener favorite Mike Munger returns to discuss his support for a basic income guarantee, or BIG. It's a pretty heated conversation, especially for BFFs Munger and Roberts...We'd like to know where... MORE

The Economics of the Affordable Car Insurance Act

Economics of Health Care
David Henderson
"The Affordable Car Insurance Act (ACIA), which President-elect Donald Trump and the Republican-controlled Congress have vowed to repeal, was crafted to overcome two basic problems in the provision of car insurance in the United States. First, the costs are incredibly... MORE

My End-of-the-World Bet with Eliezer Yudkowsky

Economic Methods
Bryan Caplan
Famed futurist Eliezer Yudkowsky fears the imminent end of the world at the hands of Unfriendly Artificial Intelligence.  I find this worry fanciful.  Many people in Eliezer's position would just dismiss my head-in-the-sandedness, but he's also genuinely impressed with my... MORE

St. Louis Federal Reserve Bank Vice-President and economist Stephen D. Williamson has written a critical review of Kenneth Rogoff's The Curse of Cash. I use the word "critical" in the sense we academics use it: a balanced critique that... MORE

When I was in grad school in the late 1970s, there was increased interest in the "monetary ineffectiveness proposition", which posited that money was neutral and monetary policy did not impact real variables. There was virtually no interest (at Chicago)... MORE

Liquidity traps and stupidity traps

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Many people are puzzled by the fact that Japan continues to fall short of its 2% inflation target. Some attribute this the Japan being in a "liquidity trap". But surely that can't be the complete explanation. If Zimbabwe can find... MORE

Why Are Drug Prices So High?

Economics of Health Care
David Henderson
Economists have shown that the cost to get one drug to market successfully is now more than $2.8 billion. This cost has been growing at 7.5 percent per year, more than doubling every ten years. Most of this cost... MORE

Was Obamacare truly evil, or just a missed opportunity?

Economics of Health Care
Scott Sumner
I was mildly opposed to Obamacare, but mostly because I thought it was a missed opportunity to reform health care. I was bemused to see very strident opposition to the program on the right, with some pretty hyperbolic language about... MORE

On November 8, Indian prime minster Narendra Modi announced that the two largest denominations of banknotes could not be used for payments any more with almost immediate effect. Owners could only recoup their value by putting them into a bank... MORE

Border tax bleg

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Martin Feldstein had a recent piece in the WSJ that defended the idea of a border tax adjustment, which would be a part of the proposed corporate tax reform. He points out that if imports were no longer deductible, and... MORE

What made the "Great Recession" great? How did its effects, and the policy responses prompted by it, differ from those seen with earlier recessions? This week's EconTalk episode, with Stanford economist and Chairman of the NBER's Business Cycle Dating... MORE

Trump's Trade Trifecta

International Trade
David Henderson
Well, it's now obvious that Canada has not dodged a bullet. One of President-elect Trump's most sincerely held views is that free trade is suspect. He buys into virtually every mercantilist myth, even claiming in a recent tweet, "China has... MORE

James Alexander directed me to a very good Bloomberg article on "monetary offset": Federal Reserve Chair Janet Yellen may well be thinking it. Jeffrey Lacker, president of the Richmond Fed, came close to saying it. "A more stimulative fiscal outlook... MORE

Deficits always matter

Fiscal Policy
Scott Sumner
Paul Krugman has a new post entitled "Deficits Matter Again": Not long ago prominent Republicans like Paul Ryan, the speaker of the House, liked to warn in apocalyptic terms about the dangers of budget deficits, declaring that a Greek-style crisis... MORE

Hugh Hewitt on the Interest Deduction

Taxation
David Henderson
In yesterday's Wall Street Journal, talk radio host Hugh Hewitt has an op/ed titled "Policy Purity is Bad Politics." In it, he argues against capping the mortgage interest deduction. I'll comment on three things: 1. His economic analysis, 2. His... MORE

Gruber on Romney and Obama

Economics of Health Care
David Henderson
I found this 33-minute PBS interview of Jonathan Gruber, one of the architects of both Romneycare in Massachusetts and Obamacare for the United States, interesting. I've posted about Gruber earlier in these 14 posts. The interviewer is lobbing softballs throughout,... MORE

Brian Moore asked me the following question: I have read your site for years, but this is the first time I felt compelled to ask a question: some friends and I were discussing the various benefits to society that would... MORE

Milton Friedman: The Compromise Candidate

History of Economic Thought
Emily Skarbek
As the economics job market is underway and the AEA meetings in Chicago wrap up today, it is perhaps apropos to recount how one of the leading figures of economics in the 20th century was hired. Milton Friedman is one... MORE

McArdle Advocates Paternalism

Social Security
David Henderson
And it's expensive paternalism. Megan McArdle of Bloomberg, who is normally a first-rate analyst of economic issues, has written an inaccurate attack on 401(k) plans and, worse, proposes a huge paternalistic government program for retirement in her column "The 401(k)... MORE

Stigler on Shaw on Income Equality

Income Distribution
David Henderson
I enjoyed rereading George Stigler's 1959 piece "Shaw, Webb, and Fabian Socialism," which I posted about earlier. Here's another excerpt: Shaw and Webb discharged a portion, but only a very small portion. of the duties of a responsible proponent... MORE

What's Wrong with Trade Restrictions in One Graph

International Trade
David Henderson
Timothy Taylor, at the Conversable Economist, has an awesome graph (reprinted above) and an excellent discussion of trade in the modern world. We often picture some companies producing for export but using as inputs almost entirely domestically produced items.... MORE

Kevin Williamson on education and politics

Education
Alberto Mingardi
I've grown fonder and fonder of National Review's Kevin D. Williamson. Williamson thinks clearly and writes clearly. He is witty, ironic, linear, and persuasive in his arguments. His latest column is particularly noteworthy. Williamson, loyal to a version of... MORE

Utilitarianism: beyond victims and villains

Economic Philosophy
Scott Sumner
In a recent post over at TheMoneyIllusion, I criticized the attitude of liberals and conservatives toward the poor. Conservatives often seem to blame the victim, whereas liberals tend to romanticize victims, absolving them of any role in their plight. I... MORE

Trump's Security: Government or Private

Cost-benefit Analysis
David Henderson
DECEMBER 20, 2016 --President-elect Donald Trump is breaking with tradition yet again, this time by retaining his own private security force. In what security experts are calling an unprecedented move, Mr. Trump has continued to employ a private security and... MORE

What sorts of benefits do you receive from your employer that aren't included in your take-home pay or on your income tax returns? We don't all have "free" cafeterias and laundry and fitness facilities, like Google. If you do... MORE

Dave Barry Highlights

Public Choice Theory
David Henderson
Meanwhile, newly released State Department emails cause some people to suggest that the reason a variety of dodgy foreign businesspeople and nations gave millions of dollars to the Clinton Foundation while Hillary Clinton was secretary of state was that they... MORE

Finland's Universal Basic Income experiment

Income Distribution
Scott Sumner
Finland has begun an experiment with a universal basic income (UBI) program: Finland has started a radical experiment: It's giving 2,000 citizens a guaranteed income, with funds that keep flowing whether participants work or not. The program, which kicks off... MORE

The NSR, which many people understand more intuitively from physics, sheds light on the DWL in economics. As I explain below, while the NSR does not literally meet the Mankiw challenge, it does come close: it illustrates that each tax... MORE

Stigler on Shaw on Marx

History of Economic Thought
David Henderson
George Bernard Shaw finds one of two crucial mistakes in Karl Marx; George Stigler finds the other. One of the late George Stigler's many contributions to economics, one that was not recognized by the Nobel Committee when it made its... MORE

The Priority Resolution

Cost-benefit Analysis
Bryan Caplan
News distorts policy priorities.  The primary mechanism: News showcases exciting stories with colorful characters, while ignoring boring stories with big numbers.  One story about Trump's relationship with Ivanka gets more coverage than most trillion-dollar pots of money.  A major secondary... MORE

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