Bryan Caplan and David Henderson

Arnold Kling: June 2008

An Author Archive by Month (59 entries)

Health Care, Management, and Politics

Economics of Health Care
Arnold Kling
An hour-long podcast featuring Russ Roberts and me.... MORE

Crisis of Abundance Watch

Economics of Health Care
Arnold Kling
The New York Times reports, more than 1,000 other cardiologists and hospitals have installed CT scanners like the one Dr. Rosenblatt turned down. Many are promoting heart scans to patients with radio, Internet and newspaper ads. Time magazine and Oprah... MORE

The Big Tent of Happiness

Behavioral Economics and Rationality
Arnold Kling
Reviewing Bruno Frey's latest book, Alan Wolfe writes, Frey proposes what he calls "positive Constitutional economics." ...Federalism would be strengthened by decentralizing power, not to the states but to an entirely new political element that would have limited and defined... MORE

Three Moldbug Quotes

Political Economy
Arnold Kling
This week, he writes, According to this article, for example, there are "over 7500 nonprofits" in the Bay Area, "3800 of which deal with sustainability issues." These appear to employ approximately half of our fair city's jeunesse doree, occupying the... MORE

Regulatory Hindsight and the Housing Bubble

Regulation and Subsidies
Arnold Kling
Martin Wolf says, When house prices are going to rise, or people expect them to rise, by 10 or 12 per cent a year, an additional 1 per cent on the interest rate is not going to stop people from... MORE

If I Thought Oil Prices Would Eventually Fall

Finance: stocks, options, etc.
Arnold Kling
Bryan asks if it is possible to profit from unique knowledge that oil prices will start to fall in three years, given that futures markets only go out three years. I would not call it a sure bet, but if... MORE

Class Discussion Starter

Economic Education
Arnold Kling
The question of whether businesses should be public-spirited is a great one for class discussion. Teachers and professors will want to bookmark Creative Capitalism. Thanks to Tyler Cowen for the pointer. Here is Michael Kinsley's introduction: why not just pay... MORE

Oil: Some Tentative Conclusions and Open Issues

Energy, Environment, Resources
Arnold Kling
James Hamilton writes, The "fundamentals" price of oil depends on a number of factors that cannot be perfectly foreseen. Among these are (1) will the world enter a deep and prolonged recession in 2007, and (2) will global oil production... MORE

A Question for Paul Krugman

Finance: stocks, options, etc.
Arnold Kling
Early in 2007, the price of oil was $60 a barrel. Recently, it has been above $130 a barrel. Which of the following does Paul Krugman believe: (a) market fundamentals justified $60 a barrel then, and they justify $130 a... MORE

Mark Thoma's Question

Finance: stocks, options, etc.
Arnold Kling
He asks, how do you explain the large run up in, say, agricultural commodities which cannot be left "in the ground" until later? Interesting question. Some off-the-cuff observations. 1. The point about the run-up in other commodities raises questions about... MORE

Long Tail of Politics Watch

Political Economy
Arnold Kling
Felix Salmon writes, What’s needed here is not ad-hoc coalitions along single-issue lines, which is what we’ve had until now: a group of mayors against guns here, a livable-streets group there, a green group, a gay-rights group, and so on.... MORE

Reasonable Economics

International Trade
Arnold Kling
Drew Carey goes after trade-bashers in a video that would fit well with an intro economics class.... MORE

My Question for James Hamilton

Finance: stocks, options, etc.
Arnold Kling
The go-to guy on energy markets writes, A key reason why oil prices have been going up is that Asia and the oil producing countries are consuming more while global oil production has stagnated. That means Europe and America had... MORE

My Model of the Oil Market: Option Value

Energy, Environment, Resources
Arnold Kling
Near the end of a "tiny theoretical paper," Paul Krugman writes, the actual data we have on crude oil don’t show the signatures of a market driven by speculative demand. Inventory data don’t show a big accumulation; and the market... MORE

The Westphalian State

Political Economy
Arnold Kling
In 2005, Richard CB Johnsson wrote, the territorially sovereign states of today claim absolute political authority within their respective fixed territories. Wherever you are in the world today, you basically have to yield to the laws of that particular territory,... MORE

My Most Absurd Belief

Growth: Consequences
Arnold Kling
is that human nature has changed in the last few hundred years. If you could go back to 1708 and replace all of the babies at conception with babies conceived today, my prediction is that the alternative history from 1708... MORE

Are My Days of Freedom Numbered?

Energy, Environment, Resources
Arnold Kling
The Guardian reports James Hansen, one of the world's leading climate scientists, will today call for the chief executives of large fossil fuel companies to be put on trial for high crimes against humanity and nature, accusing them of actively... MORE

Oil Speculation: Paul Krugman Mis-speaks

Finance: stocks, options, etc.
Arnold Kling
Paul Krugman writes, Well, a futures contract is a bet about the future price. It has no, zero, nada direct effect on the spot price. He can't mean that. Think of the foreign currency market. If speculators bid up the... MORE

Economics of Home Ownership Subsidies

Regulation and Subsidies
Arnold Kling
Paul Krugman writes, Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway? It's a good question. Some of the subsidies to homeowners, such as the mortgage interest deduction, tend to go to more affluent... MORE

A Loss of Sovereignty?

Political Economy
Arnold Kling
Benjamin Barber laments the erosion of national autonomy—and, with it, the state’s monopoly over violence, the power to enact binding laws, and other essential aspects of sovereignty. Sovereignty, in turn, is an obvious precondition for democracy (which you cannot have... MORE

A Hazy Question

Economics of Education
Arnold Kling
Stephen Dubner looks at a reader's question of who is the greatest modern thinker. I love this question. It first requires you to define what a “thinker” is, and also raises the question of what incentives exist in the modern... MORE

Trends in Relative Earnings

Income Distribution
Arnold Kling
Ian Dew-Becker and Robert J. Gordon write, Only the top 10% of US earners have seen their incomes grow faster than productivity since 1966. Part of the top-earner income growth is driven by market forces (superstar economics); the only feasible... MORE

Another Intro Econ Book

Books: Reviews and Suggested Readings
Arnold Kling
Eamonn Butler's The Best Book on the Market: How to Stop Worrying and Love the Free Economy gets right down to business, without any introduction explaining who is the target audience and what they should get out of it. Maybe... MORE

Discussion Topics

Finance: stocks, options, etc.
Arnold Kling
Megan McArdle brings up two. First, she writes, Probably the best way to avoid the problem is to keep financial professionals in the game longer. The money and stress of banking means that its titans tend to retire early. Bubbles... MORE

Blaming the Fed

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Bryan writes, the effect of the exchange rate on the price of gas turns out to be enormous. Our present search for scapegoats is deeply misguided, but a few people really are personally responsible for the high price of gas.... MORE

My Ideas on Health Care Delivery

Economics of Health Care
Arnold Kling
A new essay: The autonomous, self-directed doctors produced by our medical schools are not suited to treating complex patients. Instead, what we need are team players, implementing consistent corporate policies. Independent skilled craftsmen, flying by the seat of their pants,... MORE

An Econometrics Lesson

Economic Methods
Arnold Kling
I received an email from a reader who was very excited to find that over the past 70 years the correlation between excess health care inflation (the price of health care relative to the overall CPI) and the proportion of... MORE

Distress, Moral Intuition, and Economics

Books: Reviews and Suggested Readings
Arnold Kling
Earlier, I wrote in praise of The Price of Everything, Russ Roberts' latest didactic novel. I cannot recommend it strongly enough. I thought his other fictional attempts to teach economics were decent, but in my opinion this one represents a... MORE

Bernanke, Orszag, and Kling on Health Care

Economics of Health Care
Arnold Kling
Ben Bernanke, who I think of as center-right, says, Per capita health-care spending in the United States has increased at a faster rate than per capita income for a number of decades. Should that trend continue, as many economists predict... MORE

Bryan raises a profound issue. A common Austrian slogan is that "Neoclassical economists study only cases where people know that they don't know; we study cases where people don't know that they don't know." All of this sounds plausible until... MORE

Unions and Productivity

Microeconomics
Arnold Kling
Ezra Klein writes, It's an article of faith for some on the right that unions wreck productivity. Not in the private sector. I would be surprised if you had lower productivity in unionized firms. You can't have both lower productivity... MORE

The Player and the Referee

Political Economy
Arnold Kling
Mary Anastasia O'Grady writes, neither environmentalists nor Brazilian politicians have raised concerns about exploiting oil in the waters off the Brazilian coast. it is also worth noting that the Brazilian government has a 58% controlling stake in Petrobras's voting shares... MORE

Heckman on Inequality

Income Distribution
Arnold Kling
James Heckman writes, Family environments of young children are major predictors of cognitive and socioemotional abilities, as well as a variety of outcomes such as crime and health. ...Family environments in the U.S. and many other countries around the world... MORE

Gary Becker on Soaring Consumer Credit

Family Economics
Arnold Kling
He writes, Obviously, some individuals borrow too much, and get caught in a spiral of high interest rate payments, bankruptcy, and insufficient assets as they age. Nevertheless, on the whole the growth of credit instruments available to consumers has been... MORE

Jurisdictional Disputes

Political Economy
Arnold Kling
A comment on this post raises a valid issue. I was suggesting that I wanted a sort of anarcho-capitalism in which I can choose the government or governments I wish to operate under. The comment reads, in part Multiple states... MORE

Religious Education

Energy, Environment, Resources
Arnold Kling
S.1389 proposes Climate Change Education Act - Requires the Director of the National Science Foundation to establish a Climate Change Education Program to: (1) broaden the understanding of climate change, possible long and short-term consequences, and potential solutions; (2) apply... MORE

Economics: How to Teach it and How Not To

Economic Education
Arnold Kling
Ruth Lieber says, It's hard to imagine the invisible hand. After all, it's invisible. Leaving things alone, leaving people to their own desires and dreams would seem like the last way to make the world a better place. So most... MORE

Unanimity, Consent, and the Lisbon Treaty

Political Economy
Arnold Kling
Tyler Cowen writes, Some deluded soul in the EU read a copy of John Calhoun instead of Buchanan and Tullock's Calculus of Consent. Hadn't they remembered the history of 17th and 18th century Poland and decided that a unanimity rule... MORE

Entrepreneurs, Government, and Energy

Energy, Environment, Resources
Arnold Kling
The Times (London) reports on a start-up that is using genetically altered bacteria to produce oil, “Our plan is to have a demonstration-scale plant operational by 2010 and, in parallel, we’ll be working on the design and construction of a... MORE

Domestic Issues

Income Distribution
Arnold Kling
Income distribution, education, health care, and oil prices. David Henderson rushes in where few right-of-center economists dare to tread. He talks about the income distribution. The average number of earners per family for the top quintile is 2.16, almost three... MORE

More on Taleb

Finance: stocks, options, etc.
Arnold Kling
From the London Times the good investment strategy is to put 90% of your money in the safest possible government securities and the remaining 10% in a large number of high-risk ventures. This insulates you from bad black swans and... MORE

How Far Back Could You Go?

Growth: Consequences
Arnold Kling
Following up on an earlier post about hypothetical travel back in time, Tyler Cowen writes, I don't think 1700 would be so much easier for me than 1000. Even if I fell into London, patronage would be hard to come... MORE

Globalization and Moral Intuition

International Trade
Arnold Kling
Tyler Cowen writes, most people support their countries to a highly irrational degree in most international questions or disputes. This is part of a long counterpoint to Dani Rodrik on why people oppose free trade. One way to view the... MORE

The Market and the Government

Regulation and Subsidies
Arnold Kling
On the one hand, The Washington Post reports, high fuel prices are having disparate effects: the end of free pizza deliveries at major franchises, a plunge in the sales of sport-utility vehicles, a steep drop in the price of houses... MORE

Comments Worth Reading

Books: Reviews and Suggested Readings
Arnold Kling
Eric Falkenstein is not such a fan of The Black Swan and its author. Taleb’s style is to criticize experts of all sorts severely, while implying that both he and his reader or listener are exempt from their many biases...deflating... MORE

Tyler Cowen writes, Insofar as I am conservative (debatable) I would rewrite the definition: A realization that we will do best by building on the strengths of the particular habits, mores and institutions of the United States (and other successful... MORE

Billers, Players, and Income Inequality

Business Economics
Arnold Kling
Another Nassim Nicholas Taleb quote: A scalable profession is good only if you are successful; they are more competitive, produce monstrous inequalities, and are far more random, with huge disparities between efforts and rewards--a few can take a large share... MORE

A Sentence Too Good to Miss

Economics of Education
Arnold Kling
a donation to Harvard is an act of conspicuous consumption by the rich, a bit like buying the watch that doesn't tell time. Tyler Cowen, and there is more with reading.... MORE

Timothy Carney writes, Julian Robertson, the legendary hedge fund manager, has placed a big bet on the long-term decline of the U.S. economy. Additionally, Robertson is invested in the nuclear energy industry and in Chinese biofuels. He’s also launched an... MORE

Notes from the Portable Bookstore

Books: Reviews and Suggested Readings
Arnold Kling
I Kindle-bought Simon Winchester's The Man Who Loved China. The "Needham question" is why, if China was so advanced technologically up to 1400, was it so behind 400 years later. That is a fascinating question, but the book is all... MORE

Who is Freedom's Enemy?

Political Economy
Arnold Kling
This Symposium offered many choices (all the papers are available at the link). Several years ago, I went to a Pop!Tech conference where each speaker was saying, in effect, "My research opportunity needs more attention." Today's symposium was more like... MORE

Irreversible Climate Change Policy

Energy, Environment, Resources
Arnold Kling
Megan McArdle writes, Ryan Avent has been doing some great posting on cap and trade versus carbon taxes. With all information known, the two are theoretically identical. But in the real world they will differ; the question is how much.... MORE

Parsing Senator McCain

Politics and Economics
Arnold Kling
Voters should read this speech by Republican Presidential candidate John McCain. It includes things that excite me and things that concern me.... MORE

Arnold Kling Doesn't Get It

Institutional Economics
Arnold Kling
John Fonte writes, For some (clearly not all) libertarians opposition to the “state,” even the constitutional democratic nation-state leads to an affinity to transnational (as opposed to international) politics. Indeed, on Cato’s website, adjunct scholar Arnold Kling...“proposes” an “alternative ideology”... MORE

Robin Hanson Watch

Growth: Consequences
Arnold Kling
The IEEE Spectrum symposium that I mentioned in the previous post includes Robin's thoughts on The Economics of the Singularity. in each economic era the question of whether growth speeds up or slows down depends on two competing factors. Deceleration... MORE

Ray Kurzweil Watch

Growth: Consequences
Arnold Kling
John Tierney writes, Do you have trouble sticking to a diet? Have patience. Within 10 years, Dr. Kurzweil explained, there will be a drug that lets you eat whatever you want without gaining weight. At least once at a Milken... MORE

Follow-up Question for Modern Liberals

Political Economy
Arnold Kling
My earlier post elicited some responses denying that free-market liberalism is an oxymoron. My view is that modern liberalism is an ideology of government expansion. Let me re-iterate that the ideology of government expansionism invokes the following: 1. X is... MORE

Learn to Love the Liberal Welfare State?

Political Economy
Arnold Kling
Will Wilkinson makes the case. Freed to be full-on social liberals, many libertarians are left sensing a much deeper cultural affinity for the left than the right. And this leads naturally to seeing more clearly their ideological affinities with welfare... MORE

Efficiency or Rent-Seeking?

Institutional Economics
Arnold Kling
The Washington Post reports [New Jersey Governor John] Corzine, who presided over mergers and acquisitions as chairman of Goldman Sachs, is telling hundreds of New Jersey's smallest towns and boroughs that they are too small to exist. Multiple layers of... MORE

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