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June 2017

A Monthly Archive (56 entries)

Will antitrust become a geopolitical matter?

Competition
Alberto Mingardi
The EU Commission has fined Google 2.4 billion euros for abusing its dominant position when it comes to its Google Shopping service. This is just one of the Google competition cases going on in Europe right now. In the... MORE

My views on monetary economics

Monetary Policy
Scott Sumner
In this post, I'll use "(e)" to denote a (market) expected value. 1. NGDP(e) is the single most important variable in macro; it should be the centerpiece of modern macro. Unfortunately, it often doesn't even appear in models. 2. NGDP(e)... MORE

What Is Resentment?

Behavioral Economics and Rationality
Bryan Caplan
My Simplistic Theory of Left and Right states that "The left is anti-market."  There are three recurring critiques of my claim.1. "Most leftists don't hate markets."  I agree, but I never said that.  You can be anti-X without hating X;... MORE

Ode to iPhone

Growth: Causal Factors
David Henderson
My former student, friend, and frequent co-author, Charley Hooper wrote the following on Facebook. He titled it "Ode to iPhone." I'm reproducing it with his permission. Now that the iPhone is turning 10, I want to tell a story of... MORE

Verizon's Unaccountability

Business Economics
David Henderson
As regular readers of this blog probably know, I am a strong believer in the importance of commercial accountability. One thing that makes markets work so well is that firms are accountable for their errors. They have a strong incentive... MORE

Reply to Yudkowsky

Behavioral Economics and Rationality
Bryan Caplan
Here's my reply to Eliezer Yudkowsky, point-by-point.  He's in blockquotes, I'm not.Bryan Caplan's Simplistic Theory of Left and Right says "The Left is anti-market and the Right is anti-Left". This theory is half wrong, and will for this reason confuse... MORE

Yudkowsky on My Simplistic Theory of Left and Right

Economic Philosophy
Bryan Caplan
Noted rationalist Eliezer Yudkowsky has written a response to my Simplistic Theory of Left and Right.  With his kind permission, Eliezer speaks:Bryan Caplan's Simplistic Theory of Left and Right says "The Left is anti-market and the Right is anti-Left". This... MORE

Nancy MacLean's Distortion of James Buchanan's Statement

Books: Reviews and Suggested Readings
David Henderson
My Econlib colleague Russ Roberts has pointed to a passage of Nancy MacLean's recent book, Democracy in Chains: A Deep History of the Radical Right's Stealth Plan for America, in which Professor MacLean left key words out of a quote... MORE

Bret Stephens's Attack on Ron Paul

Foreign Policy
David Henderson
As I noted last week, I was at an event at the Commonwealth Club of San Francisco to discuss a forthcoming documentary called "Is America in Retreat?" (The video should be available in a few weeks.) The inspiration for documentary... MORE

How should we measure productivity?

Productivity, Baumol's cost disease
Scott Sumner
The Financial Times has an article claiming that Japanese construction workers are far more productive than American workers. But the data they provide seems to suggest the exact opposite: Reality is the other way around. Despite radically different demographics and... MORE

Boudreaux on the Progressive Mentality

Behavioral Economics and Rationality
Bryan Caplan
My dear colleague Don Boudreaux comments on my recent questions about the absence of libertarian/progressive cooperation:As he so frequently does, Bryan here hits on its head an important nail solidly, cleanly, and with impressive force. I suspect that the single... MORE

Are the Savings from Cutting Medicaid Illusory?

Economics of Health Care
David Henderson
Answer: It depends. Chicago Tribune columnist Steve Chapman, and also my long-time friend, reminds us of one of the most important principles in economics: There's no such thing as a free lunch. Indeed, this principle is so important that I've... MORE

James Buchanan's Work

Books: Reviews and Suggested Readings
David Henderson
There's a lot of buzz on the Internet lately (see here for my recent commentary on Sam Tanenhaus's review) about the recent book by Nancy MacLean, Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America.... MORE

Both Sides Gain from Exchange

International Trade
David Henderson
My friend and blogging competitor Don Boudreaux writes: You say that China's agreement to buy more beef from America is "a big win for us." Well, these beef exports from the U.S. are mostly a win for the Chinese people.... MORE

Nominal exchange rates, real exchange rates and protectionism

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
The three concepts mentioned in the title of the post are completely unrelated to each other. So unrelated that the subjects ought not even be taught in the same course. The nominal exchange rate is a monetary concept. Real exchange... MORE

Is America in Retreat?

Upcoming Events
David Henderson
This evening Johan Norberg, who, with Free to Choose Media, put together a one-hour video on foreign policy, will be presenting a segment of the video at the Commonwealth Club. There will be a panel discussion after. I will... MORE

Progressive/Libertarian: The Alliance That Isn't

Behavioral Economics and Rationality
Bryan Caplan
My one big disagreement with Ed Glaeser's great piece on housing deregulation is when he says:Reforming local land use controls is one of those rare areas in which the libertarian and the progressive agree. The current system restricts the freedom... MORE

Tanenhaus on James Buchanan

Books: Reviews and Suggested Readings
David Henderson
I have just read the first serious book review I've seen of historian Nancy MacLean's hatchet job book on James Buchanan, Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America. It's by Sam Tanenhaus.... MORE

Build, Baby, Build

Cost-benefit Analysis
Bryan Caplan
Ed Glaeser makes the case for housing deregulation for Brookings:Housing advocates often discuss affordability, which is defined by linking the cost of living to incomes. But the regulatory approach on housing should compare housing prices to the Minimum Profitable Construction... MORE

What's causing the low inflation?

Macroeconomics
Scott Sumner
This article caught my eye: When online retail giant Amazon.com Inc. announced last Friday that it would purchase Whole Foods Market Inc., a plunge in retail and grocery stocks reinforced the disinflationary tone set by three straight months of... MORE

Positive-Sum Diversity

Cost-benefit Analysis
Bryan Caplan
My last post pointed out a fundamental distinction between effects of diversity on trust and effects of demography on trust:If, as in Putnam's original story, diversity per se were really bad for growth, segregation would sharply raise average trust.  Indeed,... MORE

Special Diversity

Economics and Culture
Bryan Caplan
When Robert Putnam runs a proper statistical horserace, one of his favorite predictors of trust - diversity - barely matters.  To recap:Now a diversity skeptic could look at Putnam's results and say: "Fine, diversity per se is no big deal. ... MORE

The tragedy of Grenfell Tower and some Internet demagogues

Politics and Economics
Alberto Mingardi
Last week, Grenfell Tower in North Kensington, London went up in flames. At least 58 people died, including two young Italian architects. In my own country, therefore, the story was quickly picked up in the media - and it is... MORE

Immigration and growth

Labor Mobility, Immigration, Outsourcing
Scott Sumner
There are some indications that the immigration crackdown may slow economic growth: AUSTIN, Texas (AP) -- Though construction is in high demand in Texas' booming capital city, Oscar Martinez's drywall company is suddenly struggling. One-third of the approximately 20 employees... MORE

A Father's Day Tribute

Law and Economics
David Henderson
This tribute is to one of the two people without whom I wouldn't be a father: my daughter. (The other, of course, is my wife.) A little over a year ago, on Mother's Day, my wife and I drove to... MORE

How much did poverty rise under Reagan?

Income Distribution
Scott Sumner
This is from a Jeff Madrick article on poverty in America, in the New York Review of Books: The poverty rate has been as low as 11.1 percent, in the 1970s; it rose under Ronald Reagan to approximately 15 percent... MORE

Milton Friedman: Crusader for Liberty

Books: Reviews and Suggested Readings
David Henderson
In Milton Friedman on Freedom, editors Robert Leeson and Charles G. Palm, both of the Hoover Institution, have put together many of Friedman's most important articles and chapters that make his case for freedom. (Disclosure: I was a friend... MORE

Henderson Review of Schuck

Books: Reviews and Suggested Readings
David Henderson
Three years ago in this magazine, I praised Peter Schuck's Why Government Fails So Often, calling it one of the most important books of 2014. Based on that book, I had high expectations for his latest, One Nation Undecided:... MORE

Trust and Diversity: Not a Bang But a Whimper

Economics and Culture
Bryan Caplan
Robert Putnam, famed author of Bowling Alone, has spent much of his career regretfully publicizing the dangers of diversity.  His most famous claim, of course, is that "social capital" - usually operationalized as "trust" - is vital for a good... MORE

Larry Summers, market monetarist?

Monetary Policy
Scott Sumner
Not quite there yet, but getting very close. Let's take a look at his new Financial Times piece: Many of my friends have recently issued a statement asserting that the Fed should change its inflation target. I suspect, for reasons... MORE

Larry White on Monetary Economists and the Gold Standard

Central Planning vs. Local Knowledge
David Henderson
Why isn't the gold standard more popular with current-day economists? Milton Friedman once hypothesized that monetary economists are loath to criticize central banks because central banks are by far their largest employer. Providing some evidence for the hypothesis, I... MORE

What a Bet Shows

Behavioral Economics and Rationality
Bryan Caplan
Whenever I win a bet, critics rush to say, "This doesn't prove you know better than me."  They're right: Bets "prove" nothing.  But that's a silly standard.  For empirical questions, definitive proof is unavailable, so we have to settle for... MORE

In previous comment sections, I've seen a lot of confusion over the concept of "monopsony power", which means the buyer can influence the price of what they buy. It is the buyer side equivalent of sellers having "monopoly power". Many... MORE

Forcibly Paid Parental Leave

Labor Market
David Henderson
When is a policy not a policy? When it's the policy you disagree with. The AEI-Brookings Working Group on Paid Family Leave has published its report, "Paid Family and Medical Leave: An Issue Whose Time Has Come." HT2 Timothy Taylor.... MORE

The Fed needs a new "theory"

Monetary Policy
Scott Sumner
Caroline Baum directed me to a WSJ article on the Fed. It begins as follows: The Federal Reserve's interest-rate increases aren't having the desired effect of cooling off Wall Street's hot streak. That's already got me worried, as "Wall Street"... MORE

Immigration Charity at Work

Cost-benefit Analysis
Bryan Caplan
I'm still looking for cost-effective ways to promote freer immigration.  But one EconLog reader, who prefers to be known solely as "Isaac," is forging ahead with the best tools he's got.  Reprinted with Isaac's permission...Bryan: Based entirely on following your... MORE

How Much Pee in Your Pool?

Incentives
David Henderson
The scientists calculated that one 220,000-gallon, commercial-size swimming pool contained almost 20 gallons of urine. In a residential pool (20-by-40-foot, five-feet deep), that would translate to about two gallons of pee. It's only about one-hundredth of a percent, but any... MORE

Preach What You Practice

Competition
David Henderson
Using a borrowed credit card, the blonde Caroline Biden set up an unauthorized customer account at Bigelow Pharmacy on Sixth Avenue in Greenwich Village, and racked up the six-figure bill over the course of a year, according to a... MORE

Does tribalism breed extremism?

Politics and Economics
Scott Sumner
Imagine that 80% of voters prefer normal sensible candidates, and 20% prefer wild extremists. Who would come out ahead under a democratic system of government? It might seem like the sensible candidates had the advantage. And that was certainly the... MORE

The WSJ on the German trade surplus

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Ramesh Ponnuru directed me to a couple of Wall Street Journal pieces on the German trade surplus. The first, by Greg Ip, argues that President Trump was partly correct in pointing to this as a problem: President Donald Trump took... MORE

A Small but Significant Step Away from Peronism

Public Choice Theory
David Henderson
Jeff Sessions's attack on corruption. I posted last December about Trump's first picks for his cabinet and stated that one of his worst picks, in what was a surprisingly good domestic lineup, was his Attorney General Jeff Sessions. But... MORE

Balan on the Immigration Bet

Economic Methods
Bryan Caplan
The noble David Balan emailed me the following observations on our immigration bet.  With his kind permission: I do agree that Bryan has won our bet.  But I will commit the following violation of the Bettor's Oath. In the blog... MORE

Sunstein Backs Down on Libertarian Marriage

Regulation
David Henderson
In the most recent Econ Journal Watch, Cass Sunstein states that he has changed his mind about one of the most libertarian proposals he and co-author Richard Thaler make in their book Nudge: Improving Decisions About Health, Wealth, and Happiness.... MORE

Unfortunately, I Win My Obama Immigration Bet

Economic Methods
Bryan Caplan
Two and a half years ago, I made the following bet with Nathaniel Bechhofer:If, by June 1, 2017, the New York Times, Wall St. Journal, or Washington Post assert that one million of more additional illegal immigrants have actually received... MORE

David Beckworth has a new post discussing the implications of declining interstate mobility for whether or not America is an optimal currency area. Adam Ozimek has a post suggesting that lower labor mobility might imply a need for additional monetary... MORE

The "free market" strain of conservatism is considered obsolete pretty much everywhere, a relic of the past, particularly among conservative politicians. These latter aim to provide voters with more energetic plans to action, a robust vision of the role of... MORE

Mean Reversion and the Permanent Income Hypothesis: Suggested Answer

Behavioral Economics and Rationality
Bryan Caplan
Yesterday I asked:Suppose you - and you alone - discover that the stock market is mean-reverting.   True, False, and Explain:  If you are rational, you will NOT obey the permanent income hypothesis.To review: If the stock market is mean-reverting, low... MORE

The Nightmare in Your Future

Social Security
David Henderson
The title of this post is the subtitle of a talk I gave in about 2004 at Santa Clara University. The whole title was "Social Security: The Nightmare in Your Future." I had two goals: (1) to get students paying... MORE

Mean Reversion and the Permanent Income Hypothesis

Behavioral Economics and Rationality
Bryan Caplan
800x600 Here's a question from my last Ph.D. Microeconomics exam.  Post your answers in the comments, and I'll share my suggested answer tomorrow.Suppose you - and you alone - discover that the stock market is mean-reverting.   True, False, and... MORE

"Now there's [sic] many, many options that people are replacing chains with," Victor Fernandez, the executive director of insights at the restaurant-industry tracker TDn2K, recently told Business Insider. Many of these options involve cooking at home. Grocery chains are increasingly... MORE

Real and nominal shocks

Macroeconomics
Scott Sumner
Last July, Arnold Kling made the following observations: Tyler Cowen on Brexit, Steven Pinker, and Joseph McCarthy Posted on July 22, 2016 by Arnold Kling And also other topics. The link goes to a Twitter post with a video. Judge... MORE

Trade Deficit or Stuff Surplus?

International Trade
David Henderson
Notice that if imports exceed exports, as they have done for decades in the United States, then, on net, more dollars leave the United States by Americans' purchases of imports than come in by Americans' sales of exports. Such... MORE

Cents and Sensibility

Energy, Environment, Resources
David Henderson
Princeton University Press has recently published Cents and Sensibility: What Economics Can Learn from the Humanities. Chapter One is on line here. The book is by literary critic Gary Saul Morson and economist Morton Schapiro. Their basic message, as the... MORE

Two new picks for the Fed?

Finance
Scott Sumner
The NYT reports that President Trump is about to nominate two people for the Board of Governors: The Trump administration has selected candidates for at least two of the three open positions on the Federal Reserve's Board of Governors, according... MORE

Cook vs. Cass on Global Warming

Energy, Environment, Resources
David Henderson
I wouldn't have even noticed the National Review debate between Oren Cass and John Cook, if a creepily worded article title at Vox hadn't caught my attention. The title: "Scientists are testing a 'vaccine' against climate change denial." The author... MORE

Imagine a banking system where the public would lend money to the Treasury at X% interest, and the Treasury would then lend the same funds to commercial banks at the same X% interest rate. All bank deposits were held by... MORE

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