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April 2017

A Monthly Archive (40 entries)

Score One for United Airlines

Economics and Culture
David Henderson
With all the negative publicity United Airlines has had lately, I want to share a positive. Yesterday morning, I was flying from Washington Dulles to LAX, with a short time for my connecting flight from LAX to Monterey. We... MORE

Trump and Le Pen

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
The stock market behaved rather strangely in the period before and after the November elections. Before the election, stocks reacted negatively to each Trump surge in the polls, and stock futures fell late in the evening of November 8th, immediately... MORE

Earth 2.0?

Economic Philosophy
Bryan Caplan
The latest Freakonomics Radio is on "Earth 2.0: Is Income Inequality Inevitable?"  I'm pleased to be prominently featured alongside Jeff Sachs and Alice Rivlin.  A few highlights:And we'll remember to keep our eye on the economic ball: CAPLAN: Any time... MORE

Bretton Woods as a "guardrails" approach to monetary policy

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
I now favor a monetary policy rule that I have dubbed the "guardrails" approach, although a more accurate metaphor might refer to the beeper you hear if you are about to hit a car in the front or rear when... MORE

Adam Smith's pins

Book Club
Alberto Mingardi
Any book is the child of its own times, rather obviously. This means that sometimes parts of even great books do not necessarily age well. Examples the author uses to make his case may appear rather obvious to the contemporary... MORE

Crash Pad

Revealed Preference
David Henderson
On a United flight from San Fran to Washington Dulles yesterday, I found the flight attendants particularly professional and courteous. When I went to the back to stretch my legs, I did what I often do: asked a flight attendant... MORE

The "national defense" argument

International Trade
Scott Sumner
The Financial Times reports that the Trump administration is considering steel tariffs: The US has set the stage for a global showdown over steel, launching a national security investigation that could lead to sweeping tariffs on steel imports in what... MORE

The late Kenneth Minogue was a forceful advocate of universities being and remaining peculiar institutions. Their peculiarity should include independence and pluralism for universities to become the instrument of ideological homogeneity, or of political power generally speaking, meant to become... MORE

Two Cheers for Fox News Channel

Competition
David Henderson
Fox News Channel's decision to fire Bill O'Reilly caused me to reread a piece I wrote about Fox back in 2004. Were I to grade Fox, now, independent of O'Reilly, I would give them 1.5 cheers. An excerpt: Back to... MORE

More Highlights from Hayek

Economic Philosophy
David Henderson
As I promised, here are some more highlights from Friedrich Hayek's The Constitution of Liberty. The Role of Accidents: Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are... MORE

IQ With Conscience: Three Followups

Economic Philosophy
Bryan Caplan
Three followups on my last post:1. Most of the brutal policy advocacy I've heard comes from consumers, not producers, of intelligence research.2. Why didn't I name names or link links?  Because the brutal policy advocacy is almost entirely off-the-record.  3.... MORE

Let them eat quality?

Growth: Consequences
Scott Sumner
Bruce Sacerdote has a very interesting new NBER working paper looking at growth in American consumption, income and wages. His study was motivated by the apparent disconnect between reports of stagnant real income and what seems to be rapid improvements... MORE

Hayek on Case for Freedom

Economic Philosophy
David Henderson
As mentioned in my previous post, I had forgotten how good Hayek's Chapter 2 of The Constitution of Liberty is. A large part of his case for freedom is based on ignorance and uncertainty. He makes the case well, but,... MORE

IQ With Conscience

Economics and Culture
Bryan Caplan
I'm an IQ realist, all the way.  IQ tests aren't perfect, but they're an excellent proxy for what ordinary language calls "intelligence."  A massive body of research confirms that IQ predicts not just educational success, but career success.  Contrary to... MORE

Economic Systems: The Fundamental Questions

Microeconomics
Bryan Caplan
Next month, my homeschoolers are taking the Advanced Placement Microeconomics test.  Here's a thought-provoking question from a practice exam:Which of the following constitute the fundamental questions every economic system must answer?I. What goods and services will be produced?II. How will... MORE

Friedrich Hayek and Abba Lerner on General Rules

Economic Philosophy
David Henderson
At a conference at the Property and Environment Research Center in Bozeman, Montana 10 days ago, one of the readings we discussed was "The Creative Powers of a Free Civilization," Chapter 2 of Friedrich Hayek's The Constitution of Liberty. I... MORE

Does trade with China cost jobs?

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Trade with China undoubtedly costs jobs in specific industries. However there is no evidence that it has any impact on the overall number of jobs in the US. Last year I did a number posts criticizing a study by Autor,... MORE

It Takes a Government to Do an Auschwitz

Public Choice Theory
David Henderson
The title of this post is a sentence from Matt Ridley's recent speech at the Association for Private Enterprise Education in Maui, Hawaii. His speech was excellent, by the way. The statement is a good reminder that the most destructive... MORE

Avoid procyclical inflation

Monetary Policy
Scott Sumner
A recent paper by Michael T. Kiley and John M. Roberts (both of the Federal Reserve Board) looks at option for improving monetary policy in light of the zero bound problem: Nominal interest rates may remain substantially below the averages... MORE

The public only thinks it likes low inflation

Politics and Economics
Scott Sumner
Polls show that the public thinks it likes low inflation. But it doesn't. Thinking you like low inflation is reasoning from a price change, which is almost always a bad idea. Thus we should be very skeptical when the public... MORE

Markets, Morals, and United Flight 3411

Economic Education
Contributing Guest
by Steven Horwitz Presumably most readers are now broadly familiar with the recent incident on United flight 3411 from Chicago to Louisville. The short version is that the operator, Republic Airlines which is a United regional carrier, needed four... MORE

1470 Economists Say Immigration is Good for Us

Labor Mobility, Immigration, Outsourcing
David Henderson
We view the benefits of immigration as myriad: Immigration brings entrepreneurs who start new businesses that hire American workers. Immigration brings young workers who help o set the large-scale retirement of baby boomers. Immigration brings diverse skill sets that keep... MORE

The Undermotivated Apostate: Two Post-Libertarian Case Studies

Behavioral Economics and Rationality
Bryan Caplan
Political irrationality is ubiquitous.  Most people irrationally cling to their political views; most of the rest irrationally revise their political views.  This includes, of course, my fellow libertarians.  I know plenty of unreasonable libertarians, but I also know plenty... MORE

What housing supply glut?

Microeconomics
Scott Sumner
Kevin Erdmann's blog has made me much more aware of the very strange way we look at housing. Here's an example from the Financial Times: More than a million new apartments have sprung up across the US in a post-crisis... MORE

The Undermotivated Apostate

Behavioral Economics and Rationality
Bryan Caplan
People rarely revise their beliefs on issues they care about.  Even when confronted with strong counter-evidence, they usually manage to weasel out somehow.  When you encounter someone who has revised his beliefs, therefore, it's tempting to conclude that he's highly... MORE

Murphy and Smith on NGDP and politics

Politics and Economics
Scott Sumner
Ryan Murphy has a post discussing a paper he wrote with Taylor Leland Smith, testing my claim that sharp NGDP declines lead to governments with statist polices: In a forthcoming paper at Review of Austrian Economics, co-authored with Taylor Leland... MORE

A Keynesian Conundrum

Macroeconomics
Bryan Caplan
This year, I'm prepping my 8th-grade homeschoolers for the Advanced Placement tests in European History, Microeconomics, and Macroeconomics.  The Macro test is less Keynesian than it used to be, but its Keynesian origin remains blatant.  And after years away from... MORE

Supply and demand both matter

Macroeconomics
Scott Sumner
There's an unfortunate tendency for economists to align themselves into "supply-side" and "demand-side" camps. Many conservatives in Europe denied that the ECB's tight money policy caused a double-dip recession, leading to a dramatic rise in unemployment between 2008 and 2013.... MORE

Might Trump actually end up promoting liberalism?

Labor Mobility, Immigration, Outsourcing
Scott Sumner
I suppose the title to this post sounds like wishful thinking. And perhaps it is. Nonetheless, I am seeing increasing signs that Trump's unpopularity may be tending to discredit some of his policy ideas. Here's The Economist: EU deals with... MORE

I'm starting to clean out my office, and I keep finding interesting old articles that I clipped out of the newspaper. Some of the stuff from 2008 and 2009 is absolutely mind-blowing. Here's a January 31st, 2009 article from The... MORE

Scott Alexander's Self-Evaluations

Economic Methods
Bryan Caplan
I just learned that blogger Scott Alexander starts ends the year by scoring the accuracy of his numerous annual predictions: here are the results for 2014, 2015, and 2016.  Since he assigns probabilities to each prediction, Scott can graph his... MORE

Henderson and Hooper on Flawed Climate Models

Energy, Environment, Resources
David Henderson
If someone with a hand-held stopwatch tells you that a runner cut his time by 0.00005 seconds, you should be skeptical. If someone with a climate model tells you that a 0.036 Wm-2 CO2 signal can be detected within an... MORE

In the 1936 election, Roosevelt claimed that 85 percent of the newspapers were against him. In the standard work on the subject, historian Graham J. White finds that the actual percentage was much lower and the print press generally... MORE

What were the "costs and risks" of QE?

Monetary Policy
Scott Sumner
One of the puzzles of the Great Recession is why the Fed did not move more aggressively to promote recovery in NGDP growth and/or inflation. Many observers, including Christina Romer and Lawrence Ball, noted that the Fed's passivity seemed to... MORE

The Big Problem with the Ultimatum Game

Game Theory
David Henderson
I'm enjoying some reading for a conference I'm going to later this week. Two of the readings are by Matt Ridley. I loved the first; I don't love the second. Here's a quote about the Ultimatum Game from the second... MORE

What's Wrong With the Rationality Community

Behavioral Economics and Rationality
Bryan Caplan
I disagreed with most of what Tyler Cowen said in his recent interview with Ezra Klein, but this part launched a vociferous internal monologue:Ezra Klein The rationality community. Tyler Cowen Well, tell me a little more what you mean. You... MORE

Education, Politics, and Peers

Economics and Culture
Bryan Caplan
From The Case of Education.  Written pre-Trump. Abundant research confirms education raises support for civil liberties and tolerance, and reduces racism and sexism.[1]  These effects are only partly artifactual.  Correcting for intelligence cuts education's impact by about a third.[2]  Correcting... MORE

The Economics of Political Balderdash

Behavioral Economics and Rationality
David Henderson
It would not be a satisfactory economic explanation to simply hypothesize that Trump is an idiot in the sense of being cognitively impaired. As David Friedman reminds us, it is better to assume that Trump--or any other politician--is a... MORE

The title of this post is not a trick question. I think the obvious answer is no. But William P. Shughart II, co-author of a recent policy analysis, says yes. In "Liquidating Federal Assets: A Promising Tool for Ending the... MORE

Heterodoxy at the AER

Alternative Economics
Scott Sumner
Years ago I used to enjoy reading Scientific American. Once in and a while, however, they did articles on economics. It was clear that the editors of Scientific American had a very low opinion of orthodox economics, as they would... MORE

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