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December 2017

A Monthly Archive (62 entries)
by Pierre Lemieux We might hope that the faster growth of Leviathan in China will give second thoughts to American politicians and bureaucrats--just like during the Cold War, the fear of resembling the Evil Empire probably had a salutary effect.... MORE

Stephen Williamson and John Cochrane have an interesting discussion of the effects of a corporate income tax. This comment by Cochrane is interesting: So how do you deduct investment and leave something left over to tax? It rests on two... MORE

Money as Coined Liberty

Money
David Henderson
Here is another installment of the questions I asked as discussion leader of a colloquium on Ken Rogoff's and others' proposals to abolish $100, $50, and possibly $20 bills. I've previously posted here, here, and here. (1) On page... MORE

Here's Reuters: Some Bank of Japan board members have called for a debate about raising interest rates or lowering purchases of exchange-traded funds in response to the improving outlook, a summary of opinions expressed at last week's policy meeting showed.... MORE

Tales of Chicago Workshops

History of Economic Thought
David Henderson
A number of economists are posting on Facebook this morning about the article on Princeton economist Anne Case's view on why so few women go into economics. The piece is short and I have nothing to add to it,... MORE

Much ado about very little

Regulation
Scott Sumner
It's been interesting to read the commentary of the left and the right regarding President Trump's first year. While they disagree on whether Trump has improved the country, they do seem to agree that his economic policy changes have been... MORE

Only the Rich

Behavioral Economics and Rationality
Bryan Caplan
The government gives an excludable good away for free: roads, parks, education, medicine, whatever.  Then some economist advocates privatization of one of these freebies.  Technocrats may offer some technical objections to privatization.  Normal people, however, will respond with a disgusted... MORE

Bombing Makes People Mad

Unintended Consequences
David Henderson
This study uses discontinuities in U.S. strategies employed during the Vietnam War to estimate their causal impacts. It identifies the effects of bombing by exploiting rounding thresholds in an algorithm used to target air strikes. Bombing increased the military and... MORE

Mark Steyn Agrees with Bryan Caplan on Immigration

Labor Mobility, Immigration, Outsourcing
David Henderson
about one important factual claim, not about the best policies. My fellow Canadian Mark Steyn wrote recently about what he sees as some of the harmful effects of Muslim immigration into Europe. I hasten to say that I don't disagree... MORE

When people ask me whether QE is effective, I know I'm facing an uphill climb. The question is actually pretty meaningless--like asking whether a shovel is effective. For what purpose? If the question refers to actual real world QE programs,... MORE

Me on Education on Tucker Carlson

Economics of Education
Bryan Caplan
I just appeared on Tucker Carlson's show to talk about The Case Against Education and my piece in The Atlantic.  I have no idea if Tucker knows how far apart we are on immigration.  But he treated me graciously and... MORE

Market Failure or Market Success?

Economic Education
David Henderson
Rising incomes also have contributed to our expanding waistlines. U.S. GDP per capita and calorie intake have risen virtually in tandem since 1970. At the same time, the growth of the service sector and the use of workplace technology have... MORE

What's Wrong With Students: A Guest Post by Dennis Fried

Behavioral Economics and Rationality
Bryan Caplan
Former philosophy professor and successful humorist Dennis Fried sent me some poignant comments on my piece in The Atlantic.  Reprinted with Fried's permission. Dear Dr. Caplan, I just read your article in Atlantic magazine and was blown away by the... MORE

I wish you a very neoliberal Christmas

Free Markets
Scott Sumner
The world is full of problems, and always will be. Thus there are almost an infinite number of causes that I might advocate. I've decided that my time is most effectively used if I focus on two goals, promoting market... MORE

I've posted a few times (here and here) on Kenneth Rogoff's proposals to get rid of the $100, $50, and possibly $20 bill. Here are a few more questions I asked about his writing at the colloquium: On page 93,... MORE

Is Portugal's drug policy a success?

Economics of Crime
Scott Sumner
This story seems almost too good to be true: Decades ago, the United States and Portugal both struggled with illicit drugs and took decisive action - in diametrically opposite directions. The US cracked down vigorously, spending billions of dollars incarcerating... MORE

Christmas Gifts Made Far Away

International Trade
Contributing Guest
by Pierre Lemieux Diversity is diversity of something, not diversity of nothing. The North Pole is far away--about 3,500 miles from Kansas City in the middle of the United States. But the international shipping event around this Christmas is not... MORE

My Shortrun Tax Strategy

Taxation
David Henderson
I promised yesterday to say more about the short-run implications of the tax bill for me. I'm not giving advice but some of you might find this helpful. The first major point is that the increase in the standard deduction... MORE

Don't forget about opportunity cost

Cost-benefit Analysis
Scott Sumner
This story in the usually reliable FT caught my eye: It is central London's first new moated building since the medieval era. The new US embassy in Nine Elms is a paradox, a heavily defended delicate glass box. Its architect... MORE

Five Thoughts About the Tax Bill

Taxation
David Henderson
Here are five thoughts about the tax bill: they are from big-picture economic analysis. Later today or tomorrow, I'll post on how I plan to adjust my behavior before December 31, 2017 in response to the tax bill. 1. How... MORE

The Political Economy of Social Desirability Bias

Behavioral Economics and Rationality
Bryan Caplan
Last week, I visited the University of Freiburg for a conference on behavioral political economy.  My presentation: "The Political Economy of Social Desirability Bias: The Case of Education."  The first half, which summarizes The Case Against Education, will already be... MORE

Krugman Talks Sense on Trade and Immigration

Growth: Causal Factors
David Henderson
On December 15, the Business Insider posted an excellent interview by Josh Barro of Paul Krugman. It's excellent in the sense that Josh kept the conversation going quickly, as did Paul, so that they managed to cover a lot of... MORE

Reply to Noah on Sheepskin Effects and Collegiate Consumption

Behavioral Economics and Rationality
Bryan Caplan
Continuing our debate, Noah Smith defends on odd view on sheepskin effects.  Here's my reply.  He's in blockquotes; I'm not.Bryan, and many proponents of the signaling model, believe that sheepskin effects are solid evidence that college is mostly about signaling.... MORE

A penny for your thoughts

Money
Scott Sumner
Tyler Cowen links to a recent study of Canadian grocery store pricing (the first three lines are Tyler): There is the danger that prices will be rounded up more than down. A 19-year-old Canadian, Christina Cheung, has done a study... MORE

UPDATE BELOW: Many tweeters have been making fun of the following Dianne Feinstein tweet: The Republican tax bill caps the mortgage interest deduction at $750,000 for new mortgages. In California, seven counties have average home prices that are more... MORE

Family, Pop Culture, and the Nurture Assumption

Behavioral Economics and Rationality
Bryan Caplan
The central message of behavioral genetics is that modern human beings systematically overestimate the effects of upbringing and systematically underestimate the effects of heredity.  Judith Harris famously called this bias "the nurture assumption."  But why are people so predisposed to... MORE

I can't wait for Ilya Somin's comments on Star Wars: the Last Jedi. Among his many virtues, Somin is a true scholar of Star Wars' politics (listen to him here). As we wait for his in-depth analysis, I'd like... MORE

Reply to Noah on The Case Against Education

Books: Reviews and Suggested Readings
Bryan Caplan
While I was away, Noah Smith replied to my recent Atlantic excerpt from The Case Against Education.  Here's my reply, point-by-point.  He's in blockquotes, I'm not.But Caplan misapplies the theory of signaling. First of all, he says that it represents... MORE

Peace at a 49ers Game

Economics and Culture
David Henderson
Yesterday I attended only my second NFL game. What a game to choose, with the home team winning in the last 3 seconds with a come-from-behind field goal. Field goal kicker Robbie Gould made 6 field goals on 6... MORE

If corporations are greedy, why don't corporations also pass corporate income taxes on to consumers? Why do most people seem to believe the opposite? It's disappointing that so many people uncritically accept the claim that taxes on corporations are... MORE

Tirole on Economics for the Common Good

Books: Reviews and Suggested Readings
David Henderson
In 2014, French economist Jean Tirole, chairman of the Toulouse School of Economics and the Institute for Advanced Study in Toulouse, won the Nobel Prize in Economics. Although he is well known within the increasingly technical economics profession, Tirole... MORE

Origins of the Entitlement Nightmare

Books: Reviews and Suggested Readings
David Henderson
Currently, the U.S. federal government spends about $2.4 trillion per year--about 12% of GDP--on entitlement programs. This amounts to $7,500 per person annually. Only 48% of this spending goes to people officially classified as poor. The federal government provides more... MORE

Three big natural experiments

Politics and Economics
Scott Sumner
Natural experiments in economics don't occur very often, at least not big ones of the sort that interest macroeconomists like me. But today we had not one but three big natural experiments. One is already concluded; the other two will... MORE

Rogoff on How to Deal with Emergencies Without Cash

Monetary Policy
David Henderson
As noted in my previous post, I was discussion leader at a recent colloquium on moving towards a cashless or less-cash society. Here are some quotes from Rogoff, followed by questions I asked. Rogoff: Certainly, a lot of the... MORE

Free Trade Agreements v Unilateral Free Trade

International Trade
Contributing Guest
by Pierre Lemieux In order to be useful...a free trade agreement must further free trade more than it restricts it through international standards and regulatory harmonization. The current renegotiation of the North American Free Trade Agreement (NAFTA) raises two sorts... MORE

Rogoff's Alternative to the Wall

Labor Mobility, Immigration, Outsourcing
David Henderson
Cash also plays a role in the illegal immigration problem that bedevils countries like the United States. It is incredible that some politicians talk seriously about building huge border fences, yet no one seems to realize that a far more... MORE

Doherty on libertarians and Bitcoin

Finance
Alberto Mingardi
I think it was Baron Nathan Rothschild who used to answer the question "how did you get rich?" with "I always sell too soon". That may not apply to Bitcoin early adopters, who are the subject of a fascinating piece... MORE

Tyler Cowen has an excellent new video out that looks at four schools of thought in business cycle theory, with application to the Great Recession. I agree with most of the specifics in the video, but differ in how to... MORE

The Truth Hurts: Public Choice and Liberty

Economic Philosophy
Bryan Caplan
Reagan was worried that Americans were losing their love of liberty.  Here's my depressing talk arguing that Americans love liberty as a vague platitude, but are deeply statist on almost all particulars.I am only a messenger.... MORE

Eugene Volokh on Everything

Free Markets
David Henderson
Nick Gillespie has a good interview with Eugene Volokh of the famed law blog The Volokh Conspiracy. Among the most interesting highlights are his discussion of the cake baker and anti-discrimination laws. Volokh makes the important distinction between whether a... MORE

Is Hiring Jews Evidence of anti-Semitism?

moral reasoning
David Henderson
At first glance, the title of this post seems strange. How could hiring Jews be evidence of anti-Semitism? And yet that is where we are. I got a late start this morning and made the mistake, while on my exercise... MORE

The Will of the People Meets the Man in the Moon

Foreign Policy
Contributing Guest
by Pierre Lemieux The basic reason why there is no such thing as "the will of the people" is that there is no people to have a will. I don't know enough about the Middle East and foreign policy to... MORE

The sad paradox of free markets

Politics and Economics
Alberto Mingardi
In a really interesting post on on zoning and congestion pricing, John Cochrane nails it: The sad paradox of free markets is that free markets do not need people to understand them to work. But democracy does require voters to... MORE

In an article in which he makes a number of good points, on net defending a baker's decision not to bake a cake for a celebration that the baker objects to on religious grounds, Andrew Sullivan writes: And it is... MORE

A Man Called Ove

Economics and Culture
David Henderson
I rarely recommend movies on EconLog but this is an exception. My wife and I saw A Man Called Ove last night and loved it. I would give it a 9 on a scale of 1 to 10. It's a... MORE

For the past nine years I've been promoting market monetarist ideas in the blogosphere. How important is NGDP targeting to the MM agenda? Much less important than many people assume. Kurt Schuler left the following comment in response to my... MORE

My Excerpt in The Atlantic

Books: Reviews and Suggested Readings
Bryan Caplan
I'm on vacation, but I'm delighted to announce that an excerpt from The Case Against Education has just appeared in the latest issue of The Atlantic.  Enjoy!... MORE

The important effect of incentives on allocation over time. One of the differences between the House and Senate versions of the tax cut is whether the corporate tax rate falls in 2018 (House) or 2019 (Senate.) It might look as... MORE

What's my core message?

Money
Scott Sumner
I am currently working on the final chapter of a book manuscript, tentatively entitled "The Money Illusion: Market Monetarism and the Great Recession." I am trying to identify my core message. What is the essence of my critique of mainstream... MORE

The Shining City on a Hill: Commentary on Reagan

Economic Philosophy
Bryan Caplan
While wrapping up my graphic novel, I wound up reading Ronald Reagan's famous Farewell Address - his "Shining City on a Hill" speech.  Given my broader views, I obviously have some objections.  But I was amazed to read an actual... MORE

A number of friends on Facebook have been discussing whether the federal tax system is "progressive." That word has emotive content--"progressive" seems good--but all it means is that the higher your income, the higher your tax rate. One economist friend... MORE

Why Addicts' Deaths Are Not a Social Cost of Opioid Consumption

Cost-benefit Analysis
Contributing Guest
by Pierre Lemieux ...what does it mean to say that the loss of life is a cost for an individual? The report published last month by the Council of Economic Advisers (CEA) on the cost of the opioid crisis raises... MORE

The Unbearable Arbitrariness of Deploring

Behavioral Economics and Rationality
Bryan Caplan
As a self-identified non-Neurotic man, I'm not surprised by the social ubiquity of anger, sadness, and fear.  When something bad happens, my instinctive reaction is to say, "Calm down, it's OK" - especially if it doesn't personally affect me.  But... MORE

MRU has a video entitled "When the Fed Does Too Much". That led me to wonder, "too much what"? Too much discretion? Too much regulation? Too expansionary a policy? So I decided to watch the video. By conventional standards the... MORE

Measured intelligence (IQ) rose markedly over the 20th century, a robust result widely dubbed the "the Flynn effect."  But what do these rising IQs mean?  The straightforward conclusion is unbridled optimism: just as human beings are taller than they used... MORE

Misconceptions about taxes

Tax Reform
Scott Sumner
In various comment sections, and also in the media, I am seeing lots of misconceptions about taxes. For instance, lots of people wonder why I focus so much on efficiency, and not on "who pays what". I recall once chatting... MORE

The Inverse-Hirschman Scenario

Economics of Education
David Henderson
I call attention to the Inverse-Hirschman scenario's twist for a specific historical reason. It basically describes another historical situation--this one in Charlottesville, Virginia in the spring of 1959, amidst ongoing court orders to desegregate. The Charlottesville school system's attorney... MORE

Me in Switzerland and Germany

Books: Reviews and Suggested Readings
Bryan Caplan
I'm speaking in Zurich, Switzerland this Friday at 6 PM on The Case Against Education.  Hope you can make it!P.S. I'll also be in Freiburg, Germany on December 14-16.  I'll be busy all day and evening, but might be available... MORE

House bill >>>>>>>>> Senate bill

Tax Reform
Scott Sumner
Let's hope the House wins at least a few battles in committee, because the Senate tax bill has a number of disappointing features: Keeps mortgage interest deduction as is: The Senate bill would still let you claim a deduction for... MORE

Vladimir Kogan Replies on Sabotage

Economics of Health Care
David Henderson
Vladimir Kogan, one of the co-authors of the study I recently criticized on Republicans "sabotaging" the implantation of Obamacare, wrote me on November 27. I replied to him on November 29 and he replied to my reply the same day.... MORE

All hail Goushi Kataoka!

Monetary Policy
Scott Sumner
Who's the world's best central banker? I'm not sure, but this guy is certainly a front-runner for the title: Bank of Japan board member Goushi Kataoka said the central bank must expand stimulus further to achieve its price target early,... MORE

Recognizing a Unicorn When You See One

Economic Methods
Contributing Guest
by Pierre Lemieux Individuals are different and assuming the contrary assumes away most of the social phenomena we are trying to understand. There is a good chance that my economist readers will recognize the unicorn. My non-economist readers may have... MORE

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