Bryan Caplan and David Henderson

Arnold Kling: April 2003

An Author Archive by Month (30 entries)

Comment of the Week, 2003-04-30

Fiscal Policy
Arnold Kling
On the subject of job-creation arithmetic, Paul Zrimsek writes, It's a pity that the great divide-by-ten controversy has diverted everyone's attention from what ought to be the main point: that the comparison Krugman drew between tax losses to the government... MORE

Stock Market Regulation

Finance: stocks, options, etc.
Arnold Kling
'Jane Galt' casts doubt on the deterrence value of the settlement in which Wall Street investment firms agreed to pay a large fine. I don't want this to be the opening act in some morality play, directed by Spitzer, in... MORE

Regulatory Pollution

Energy, Environment, Resources
Arnold Kling
Discussing a forthcoming study of air pollution by Joel Schwartz, Ronald Bailey writes, For example, [Schwartz argues that] a proposal to raise the prices of conventional cars and use the extra money to lower the prices of electric cars—which are... MORE

The Budget Debate, IX

Fiscal Policy
Arnold Kling
Jonathan Rauch has a nice summary of the issues in the Budget debate. The economists note that if tax cuts are paid for through higher deficits instead of lower spending, the government borrows back from the economy the capital that... MORE

Spend Less on Education?

Productivity, Baumol's cost disease
Arnold Kling
Sometimes, an economist argues against conventional wisdom, as in this essay, where I question the view that the government needs to increase its spending on education. If we combine the limited extent to which education is a public good with... MORE

Job-Creation Arithmetic, II

Fiscal Policy
Arnold Kling
On his web site, Paul Krugman has posted the textbook macroeconomics of fiscal policy for stimulating employment. In a related post, Krugman explains how this basic macroeconomic model explains what some people (like me, for instance) found puzzling about a... MORE

Savings, Capital Deployment, and Growth

Growth: Causal Factors
Arnold Kling
I was taught in graduate school that economic growth has two main drivers: the savings rate, which determined the steady-state capital-labor ratio; and the efficiency of labor, which increases over time due to technological change and better human capital. Yesterday... MORE

Trading with Weasels

Trade Barriers
Arnold Kling
In this essay, I argue against excluding France, Germany, and Russia from trading with Iraq. Private-sector companies from France, Germany, and Russia should be allowed to compete for Iraq's business, along with other private-sector companies. Even if we have a... MORE

Basic Supply and Demand

Microeconomics
Arnold Kling
Reading this story about unemployment among computer programmers left me feeling amused and vindicated. "This is the worst I've seen," said ... an out-of-work systems integration analyst, who has been involved in the tech industry since 1974. "I'm running into... MORE

Comment of the Week, 2003-04-23

Economics of Education
Arnold Kling
On the subject of productivity in the government sector Scott (no last name included) wrote, ...All of the educational proposals currently in vogue specifically involve reducing productivity. They keep looking for smaller class sizes and higher teacher pay with the... MORE

Optimum Currency Areas

Optimum Currency Areas
Arnold Kling
Martin Feldstein explains why Europe is not an optimum currency area, even though the United States is one. First, American employees move within the country when demand is relatively weak in a particular region, facilitated by a common language and... MORE

Job-Creation Arithmetic

Fiscal Policy
Arnold Kling
Paul Krugman writes, The average American worker earns only about $40,000 per year; why does the administration, even on its own estimates, need to offer $500,000 in tax cuts for each job created? Krugman's arithmetic is to take the ten-year... MORE

Cost Disease

Productivity, Baumol's cost disease
Arnold Kling
If the government is taking more in taxes than it did forty years ago, then why does the typical citizen not feel that he or she is getting more in services? Kevin Drum proposes an answer. In fact, most of... MORE

Leftist Austrian Economics

Austrian Economics
Arnold Kling
I don't know how else to describe this article by Richard Florida (recommended with reservations by Stephen Karlson). In the later 20th century, the pace of creativity quickened while the profit from routinized production plummeted. A new version of capitalism... MORE

Fishy Economics

Energy, Environment, Resources
Arnold Kling
How can we deal with the problem that unrestricted access to fish leads to over-fishing? This is almost a textbook exercise in Coase economics. One solution is fish farming, in which a business owns the fish that it breeds in... MORE

Elastic Economy

Growth: Consequences
Arnold Kling
In this essay, I suggest that the economy has grown more diverse over the past fifty years, making it more elastic. One way to describe the elastic economy is that it has become more complex. Human wants continue to be... MORE

More Tax Day Thoughts

Tax Reform
Arnold Kling
Virginia Postrel writes, most Americans want the tax system to do three things: to be progressive, to treat households with the same incomes equally, and to treat all individuals with the same incomes equally, whether or not they're married. The... MORE

Tax Day Thoughts

Tax Reform
Arnold Kling
April 15th is an appropriate day to consider the complexity of the tax code. Here is a piece by Chris Edwards written in October of 2001 on the case for a consumption-based tax. The key factor that causes rising income... MORE

Economics of Hydrogen, II

Energy, Environment, Resources
Arnold Kling
Lynne Kiesling quotes an engineering analysis of hydrogen as a fuel source for automobiles. I can assure you that there is no way that spending heat energy to make hydrogen to be burned to make heat energy can be anything... MORE

Sports Stadiums

Cost-benefit Analysis
Arnold Kling
The Atlantic Monthly points to this survey of the economic impact of pro sports stadiums. The verdict from many economic studies is that the marginal contribution of a sports team to a local economy is small, and perhaps negative. When... MORE

Measuring Tax Progressivity

Income Distribution
Arnold Kling
The May issue of The Atlantic Monthly pointed to this study of tax progressivity at the state level. The authors write, Our primary finding is that most state and local tax systems take a much greater share of income from... MORE

Agricultural Trade Barriers

Trade Barriers
Arnold Kling
Paul J. Gessig makes the case for dismantling U.S. agricultural subsidies. According to Organization for Economic Coordination and Development (OECD) data and calculations from Dan Griswold of the Cato Institute, completely eliminating the current web of subsidies and tariffs would... MORE

Reconstructing Iraq

Macroeconomics
Arnold Kling
The future of Iraq's economy is suddenly a topical issue. I wrote, The new government in Iraq should encourage the growth of a private sector, by keeping taxes and regulation on businesses to a minimum. However, for the next several... MORE

Comment of the Week, 04-09-03

Information Goods, Intellectual Property
Arnold Kling
The signal-to-noise ratio in our comments continues to be very high. See the Economics of Hydrogen thread and the imperfect markets thread, for example. But I give the comment of the week award this week to Robert Musil. A brief... MORE

Lessig on Copyright

Information Goods, Intellectual Property
Arnold Kling
In 1998, Congress extended copyright terms on both new and existing works. Lawrence Lessig tried unsuccessfully to have this extension overturned by the Supreme Court. In this interview, Lessig explains the weakness of the economic argument for the copyright extension.... MORE

Defending Imperfect Markets

Austrian Economics
Arnold Kling
Sean Gabb explains how Austrian economics differs from Anglo-American economics. the standard economics textbooks provide an utterly unrealistic defense of the market. They begin with the claim that markets are efficient, and then define efficiency as it does not and... MORE

Internet Bubble and Growth

Growth: Causal Factors
Arnold Kling
Brad DeLong argues that the failure of many Internet-based enterprises does not imply a social loss. profits are not the same thing as social value...Profit is primarily a signal about the size of a set of enterprises: If too small,... MORE

Surveys Vs. Revealed Preference, II

Revealed Preference
Arnold Kling
In a previous post, I mentioned Richard Layard's critique of economics, based on survey research. Now, I have written an extended response to Layard. An excerpt: [Layard] is saying that you cannot trust people's behavior as an indicator of their... MORE

Comment of the Week, 2003-04-02

Efficient Markets Hypothesis
Arnold Kling
On the issue of index investing, Yasser Mawji wrote Surely there's a problem of aggregation that's inherent to index fund investing. If most investors are blindly purchasing index funds without any regard for valuation, then those stocks which constitute the... MORE

The Budget Debate, VIII

Supply-side Economics
Arnold Kling
Be careful what you wish for. Some supply-siders have asked for "dynamic scoring" of tax cuts, to take into account supply-side effects. The Congressional Budget Office has done this analysis. CBO's analysis suggests the proposals, on net, would probably increase... MORE

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