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August 2017

A Monthly Archive (33 entries)

Just how political is the Fed?

Monetary Policy
Scott Sumner
The Fed likes to portray itself as being a bunch of selfless, well-meaning technocrats, who faithfully try to carry out the mandate they have been given by Congress. Is this true, or has the Fed been politicized? There's a certain... MORE

The Not-So-Curious Absence of American Emulationists in the Third World?

Behavioral Economics and Rationality
Bryan Caplan
Lots of interesting responses to yesterday's puzzle.  The least convincing point to factors (such as European ethnicity) that apply equally well to the Soviet Union.  The best fall into three main categories:1. Anti-market bias.  Despite the far greater success of... MORE

President Trump's Tragic Sunk Cost Fallacy

Behavioral Economics and Rationality
David Henderson
In his recent speech in which he threw out his earlier idea of ending the war in Afghanistan, President Donald Trump stated: First, our nation must seek an honorable and enduring outcome worthy of the tremendous sacrifices that have been... MORE

Never say never

Tax Reform
Scott Sumner
I've been extremely critical of the Trump administration, but if the following Politico story is true it could be a very good sign going forward: President Donald Trump's top aides and congressional leaders have made significant strides in shaping a... MORE

After World War II, virtually every Third World country had a major political faction that looked on the Soviet Union as a model society.  What path should their nation take?  The answer was obvious: Emulate the Soviet Union.  With minor... MORE

The attack in Barcelona has been the latest in a chain of terrorist acts performed following a similar modus operandi to the one in Nice which happened more than one year ago, when a truck was deliberately driven over... MORE

New Reflections on the Evolution in France

Cross-country Comparisons
Bryan Caplan
I just returned from a month in France.  I stand by everything I said during my last visit in 2008, but have plenty to add:1. The biggest change is the ubiquitous police and military presence.  Teams of militarized police and... MORE

Atlantis is on the gold standard. The unit of account is called the "dollar" and it's defined as one gram of gold. Atlantis has a state-owned gold mine with a monopoly on gold production, near limitless reserves, and a very... MORE

Prices and Your Pocketbook

Fiscal Policy
David Henderson
This is another in the series of NBC radio broadcasts that involved Milton Friedman as one of the three panelists. See here and here for earlier posts on the NBC shows. This one shows both Friedman and George Stigler... MORE

Worstall on Robots and Jobs

Labor Market
David Henderson
Tim Worstall, referring to my article that I posted on yesterday, makes an important point I should have made. Here are two highlights: The Keynes point is here in Economic Possibilities for our Grandchildren. What Henderson says about it is... MORE

Henderson on Robots, Jobs, and Productivity

Labor Market
David Henderson
If you're still worried that robots will be too human-like, consider what happened to men's jobs when women, who not only are human-like but also are actual humans, increasingly entered the labor force. Men's jobs didn't decline; they increased. In... MORE

Fifty years ago

International Trade
Scott Sumner
Fifty years ago, the Red Guards were rampaging through the streets of Beijing. Chairman Mao issued weird, over-the-top statements about the evils of American capitalism. Free markets were seen as exploitation, as a sort of winner-take-all. Meanwhile, the US was... MORE

Hummel on the Curse of Cash

Monetary Policy
David Henderson
In "Anti-Paper Prophet: Comments on The Curse of Cash." Jeff Hummel has written an excellent response to Ken Rogoff's response to Hummel's review of his book The Curse of Cash. The whole thing is well worth reading. Here are the... MORE

In recent years, the political situation in the US has become highly polarized. But I'm not convinced that this necessarily prevents the two sides from coming together on monetary policy. Consider: 1. The idea of NGDP targeting has considerable (and... MORE

War Crimes and the Long Run

Behavioral Economics and Rationality
Bryan Caplan
Economists often sing the praises of credibility, also known as "time consistency."  When Kydland and Prescott won their Nobel Prizes in 2004, their citation gives this work pride of place: Finn Kydland and Edward Prescott have been awarded the 2004... MORE

The Ethics of Charles Koch

Business Economics
David Henderson
Charles [Koch] is a true believer, whose free-market beliefs are unquestionably self-interested--but also undeniably sincere. His value system is apparent in all aspects of his company, including Koch's lobbying operation. Until the early 1990s, the company didn't have a Washington... MORE

Sons of Wichita

Business Economics
David Henderson
On my vacation, which is coming to an end, the first book I read was Daniel Schulman's Sons of Wichita. It's subtitled "How the Koch Brothers Became America's Most Powerful and Private Dynasty." Written by an editor of Mother Jones,... MORE

Some thoughts on stock prices and risk of nuclear war

Finance: stocks, options, etc.
Scott Sumner
Lars Christensen and Alex Tabarrok have some interesting posts on the question of how the risk of nuclear war might impact the stock market. A few comments: 1. I basically agree with Alex's post, but would frame it slightly differently.... MORE

Neoliberalism is making the world much more equal

Cross-country Comparisons
Scott Sumner
It's puzzling to me that so many progressives view the term 'neoliberalism' with disdain. A new article by Cardiff Garcia shows that the world is becoming much more equal. And that trend is being spurred by less between country inequality---within... MORE

More markets please

Free Markets
Scott Sumner
I've devoted much of the past ten years to advocating the creation of a highly liquid nominal GDP prediction market. I believe this sort of market would eventually revolutionize macroeconomics. Over time, people would stop thinking of the stance of... MORE

Do criminals obey regulations?

Regulation
Alberto Mingardi
Is deregulation helping terrorists? So thinks The Independent, which points out that "changes made in the Deregulation Act 2015 scrapped an obligation on sellers of dangerous substances" which made "it easier to buy dangerous acids that have been used... MORE

Don't be early in bubble predictions

Finance: stocks, options, etc.
Scott Sumner
Alex Tabarrok has an interesting new post on trends in housing prices: In 2005, I thought housing prices were rising above the fundamentals and I said so. In 2008, as the fall in housing prices was well under way, I... MORE

Milton Friedman on the intellectuals who oppose capitalism

Books: Reviews and Suggested Readings
Alberto Mingardi
Following the valuable advice of co-blogger David Henderson, I've gotten my hands on Milton Friedman on Freedom, a new collection edited by the Hoover Institution. The book will surprise all of us who never properly appreciated the insights and wisdom... MORE

What's in Your Bag?

Behavioral Economics and Rationality
Bryan Caplan
As a consumer, my experiences are exceedingly pleasant.  I don't just receive endless great products for reasonable prices.  I routinely receive gracious, flexible service with a smile.  Small snapshot: When I buy baked goods or produce at Wegmans, the cashiers... MORE

Hooper's Law of Drug Development

Regulation
David Henderson
Moore's Law is optimistic and reflects the ability of humans to "chip" away at a problem, making sequential, cumulative advances. Much of technology fits this pattern. One glaring exception, tragically, is the drug development conducted by pharmaceutical companies. It is... MORE

I warned the Swiss that this would happen

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
After pegging the Swiss franc at 1.2 per euro for a period of about three years, the Swiss National Bank suddenly revalued the franc sharply higher in January 2015, in a surprise contractionary move. They also cut interest rates sharply,... MORE

Good News on Employment

Labor Market
David Henderson
Ben Casselman of FiveThirtyEight writes: Prime-age employment rate hits 78.7%, highest since September 2008. Of course we still have a long way to go to get back to the peak of about 17 years ago.... MORE

The term 'natural' has multiple meanings and even more connotations. It often means something like free from human interference, and sometimes comes with a connotation of better or healthier. When economists refer to a "natural rate of interest", however, those... MORE

Markets for Everything, Minaki Edition

Free Markets
David Henderson
This is at a marina near my cottage at Minaki. HT2 Mike Hammock for helping me rotate the picture.... MORE

Conspiracy and Condemnation

Books: Reviews and Suggested Readings
Contributing Guest
by Art Carden Democracy in Chains author Nancy MacLean and her defenders are promulgating the idea that critics of her book (like me) are part of a sinister conspiracy to discredit her book. It might make a good plot... MORE

Which bus would you take?

Monetary Policy
Scott Sumner
Over at TheMoneyIllusion I did a post discussing the issue of whether central banks should be thought of as "controlling" interest rates. Here's one excerpt: There are powerful cognitive illusions here. The day-to-day Fed "control" over rates creates the illusion... MORE

I, Needle Nose Pliers

Free Markets
David Henderson
Above is a picture of a tool I borrowed from a neighbor (or, should I say "neighbour" since I'm at my cottage in Canada.) The main insight from the classic "I, Pencil" is that no single person knows how... MORE

Stop Thinking Like a Tourist: Macaulay Edition

Behavioral Economics and Rationality
Bryan Caplan
My son Tristan recently quoted this passage from Thomas Macaulay's "Southey's Colloquies on Society" - and I instantly realized that telling people to stop thinking like a tourist goes back over a century: Mr. Southey has found out a way,... MORE

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