Bryan Caplan and David Henderson

Arnold Kling: April 2009

An Author Archive by Month (53 entries)

Obama on Health Care

Economics of Health Care
Arnold Kling
from the Leonhardt interview. I don't know how much that hip replacement cost. I would have paid out of pocket for that hip replacement just because she's my grandmother. Whether, sort of in the aggregate, society making those decisions to... MORE

Obama Doesn't Heart Glass-Steagall

Finance: stocks, options, etc.
Arnold Kling
In this interview, he says, But when it comes to something like investment banking versus commercial banking, the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution... MORE

Libertarians: What Now?

Political Economy
Arnold Kling
Cato Unbound this month deals with a core issue. Peter Thiel writes, I no longer believe that freedom and democracy are compatible... As one fast-forwards to 2009, the prospects for a libertarian politics appear grim indeed. Exhibit A is a... MORE

Recommended Article on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
I would nominate Corine Hegland's piece in the National Journal as the most informative piece I have read on the financial crisis. A few excerpts: Careful regulatory alterations take years, but financial institutions adapt within months. In other words, if... MORE

Barry Eichengreen's Theya Culpa

Finance: stocks, options, etc.
Arnold Kling
Everywhere I go, I see links to this article by Barry Eichengreen. I was expecting to find something good. Instead, it is a classic Theya Culpa, a one-sided exercise in finger-pointing, which educates no one, least of all the people... MORE

Scott Sumner's False Dichotomy

Finance: stocks, options, etc.
Arnold Kling
Bryan likes what Scott says here. Read Scott's whole post yourself, so that you do not necessarily take my reading of it. Anyway, he comes close to saying that you either have to believe in efficient markets or you ought... MORE

Inequality and Segregation

Income Distribution
Arnold Kling
Tara Watson has a paper that sounds interesting, based on the abstract. American metropolitan areas have experienced rising residential segregation by income since 1970. One potential explanation for this change is growing income inequality. However, measures of residential sorting are... MORE

Henry Kaufman's Narrative of the Crisis

Finance: stocks, options, etc.
Arnold Kling
He blames libertarianism at the Fed. But his history is a bit selective. For example, he writes the Fed was highly supportive of securitisation. Actually, the Fed was quite worried about Freddie Mac and Fannie Mae. In general, I think... MORE

Geography as Destiny

Political Economy
Arnold Kling
Robert D. Kaplan writes mostly about politics and conflict. But there is much of importance to economists. Some excerpts follow.... MORE

A Paragraph to Ponder

Economics of Education
Arnold Kling
From Mark C. Taylor, in an op-ed piece many New York Times readers found worth forwarding to one another. Graduate education is the Detroit of higher learning. Most graduate programs in American universities produce a product for which there is... MORE

Tyler Cowen and Alex Tabarrok

Growth: Causal Factors
Arnold Kling
Have a new textbook coming out, with an interesting blog to go with it (presumably with more updates to come once the textbook is published). Here is the web page for the macro text. Here is Alex giving a 15-minute... MORE

Health Care Policy Links

Economics of Health Care
Arnold Kling
A podcast in which I talk about health care policy. Andrew J. Rettenmaier and Thomas R. Saving offer a proposal to control Medicare costs by encouraging higher savings along with higher co-payments and deductibles. John Goodman dissects the notion of... MORE

Financial Crises, Debt Finance, and Emerging Economies

Finance: stocks, options, etc.
Arnold Kling
Ravi Balakrishnan and others write, Evidence from past systemic banking crises in advanced economies (the US in the 1980s and Japan in the 1990s) shows that the decline in capital flows to emerging economies tends to be sizeable. Since then,... MORE

What I Have Not Been Blogging

Behavioral Economics and Rationality
Arnold Kling
I was on travel, including my health care debate in Vermont (Robert Kuttner was sick, and David Corn filled in). Now, I have galleys of two books to go over. One is something I wrote quite a while ago with... MORE

Mark and Me on Macro

Macroeconomics
Arnold Kling
on bloggingheads. We both express some humility about what macroeconomics can do. The New York Times decided to extract the section on bank bailouts.... MORE

This Looks Important

Behavioral Economics and Rationality
Arnold Kling
Tyler Cowen finds research suggesting that the more highly you think of your morals, the less altruistic you are. I could think of so many things to say about this, and how it explains who gives to charity and who... MORE

Medicare and Overfishing

Economics of Health Care
Arnold Kling
Vermont Public Radio reports, [Robert] Kuttner says the first red herring about single-payer health care is that it limits choice for the patient, and if you want proof look at Medicare. Indeed, Medicare does very little to restrict patients' access... MORE

Health Care Debating Points

Economics of Health Care
Arnold Kling
You can hear some of mine in this pre-debate radio interview.... MORE

Libertarians and Public Education

Political Economy
Arnold Kling
A reader asks, Do you believe that it is moral for universities to receive state funds? If so, how would you justify it? As a student that attends a state-funded university, I've had to think about this myself. I remember... MORE

David Henderson on Health Care Costs

Economics of Health Care
Arnold Kling
He writes, what's the relevant distinction between health care spending and spending on airline travel? There is one and it's that so much of health care spending is people spending other people's money This is quite right. I say that... MORE

We all have flaws

Political Economy
Arnold Kling
James Kwak muses, I like to think that maybe there are people on the House Financial Services Committee who are secretly not so sure about the difference between preferred and common stock, and maybe they will read Financial Services for... MORE

AP econ quiz

Economic Education
Arnold Kling
I got 18 out of 18, which is comforting, since I may be teaching AP econ next year. I don't much care for the AP econ curriculum, but I figure 2009-2010 I ought to be able to make something interesting... MORE

Carrying Hyman Minsky's Torch

Macroeconomics
Arnold Kling
Robert J. Barbera's new book is called The Cost of Capitalism. On p. 182-183, he writes, For Minsky, government activism, to thwart the deflationary effects of banking crises, is the cost of capitalism, In the preface, he writes, Minsky's thesis... MORE

Debating Health Care Reform

Economics of Health Care
Arnold Kling
Next Thursday, I will be debating Robert Kuttner in Burlington, Vermont. To be precise, 4-5:30 p.m. on April 23 in the Grand Maple Ballroom of the Dudley H. Davis Center on the University of Vermont campus. Ezra Klein writes, The... MORE

In Defense of Macroeconomists

Macroeconomics
Arnold Kling
Menzie Chinn makes the case. How can one incorporate the idea of the importance of the banking system (separate from its importance to the money creation process)? One very simple static model is provided by a twenty year old paper... MORE

Short Papers on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
From the Cato Journal. Some excerpts below. [update: Also, read an interview with Richard Posner on his new book. Thanks to Tyler Cowen for the pointer. Posner writes, The riskiness of banking can be reduced by regulation. But as a... MORE

Hayek Interviewed

Austrian Economics
Arnold Kling
A quarter century ago, by a pre-white-haired John O'Sullivan, for The Foundation for Economic Education. Very rewarding to listen. For example, a bit over an hour into it, he makes the point that unions that force up wages in one... MORE

Merton on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
A great lecture. Found by Steven Hsu. Pointer from the indispensable Mark Thoma. I enjoyed his comments on asset valuation. He wonders whether the issue is that the assets cannot be valued or that key players (bankers, regulators) don't want... MORE

Why Health Care Reform is Hard

Economics of Health Care
Arnold Kling
Peter Orszag offers a can-do outlook on controlling health care costs. The bottom line is that health care reform must be deficit neutral in the short run and deficit reducing in the long term. We have to have scoreable savings... MORE

Single-Lever Macro

Macroeconomics
Arnold Kling
Scott Sumner has an excellent post on his concerns with IS-LM theory. I endorse most of it, but I want to point out where I disagree. He writes, Michael Woodford and I agree on one thing; changes in the expected... MORE

Notes on Masonomics, 1: Reason without Rationality

Behavioral Economics and Rationality
Arnold Kling
In chapter one of his economics textbook Hidden Order, David Friedman writes, Economics is that way of understanding behavior that starts from the assumption that individuals have objectives and tend to choose the correct way to achieve them. ...For a... MORE

Geanakoplos on Leverage Cycles

Finance: stocks, options, etc.
Arnold Kling
David Warsh points to this lecture. variation in leverage has a huge impact on the price of assets, contributing to economic bubbles and busts. This is because for many assets there is a class of buyer for whom the asset... MORE

What is Health Insurance?

Economics of Health Care
Arnold Kling
The issue gets discussed at Patriot's Quill. Let me offer two choices: (a) Health insurance is the collective provision of all health care. (b) Health insurance is the sharing of extreme risk in health care spending. In my view, (a)... MORE

Status and Contract

Behavioral Economics and Rationality
Arnold Kling
Don Boudreaux writes, progress necessarily involves freeing individuals from their status stations -- freeing persons from stations assigned by circumstances such as skin color, family name, genitalia, sexuality, nationality -- and thereby allowing individuals to determine as best as each... MORE

Predicting Mortgage Defaults

Finance: stocks, options, etc.
Arnold Kling
In what Tyler Cowen says is a must-read post, Calculated Risk writes, I think it is important to understand that loans with high DTI were an enabler for speculation during the housing bubble, and this speculation pushed up house prices.... MORE

Why I Became an Economist

Economic Education
Arnold Kling
According to data posted by Greg Mankiw, it may be because I went to Swarthmore College, the undergraduate institution that produced the highest number of economics Ph.D's per capita. Clicking through to the study by John J. Siegfried and Wendy... MORE

On Freedom and Democracy

Political Economy
Arnold Kling
Michael Strong has an interesting guest post at a new blog on competitive government. He writes, Another direction that I've been encouraging libertarians to consider is the option of a global free zone industry in which private corporations specialize not... MORE

The Uninsured and the Health Care Debate

Economics of Health Care
Arnold Kling
Keith Hennessey writes, As a policy matter, we care not about the total number of uninsured, but about the subset of that group that we think "deserves" taxpayer-subsidized health insurance. That is a judgment call that involves some value choices.... MORE

Linkfest

Finance: stocks, options, etc.
Arnold Kling
The seasteading discussion. Patri Friedman gives a good presentation. My comments start about half way through, at about the 45 minute mark. Some of my jokes went over well. A reminder that Raghu Rajan understood the fragility of the financial... MORE

Financial Regulation Links

Finance: stocks, options, etc.
Arnold Kling
The Economist has a roundtable on Raghuram Rajan's analysis suggesting that regulatory policy should be countercyclical rather than procyclical. I contributed to the discussion, writing I think that Mr Rajan is off base when he suggests trying to make the... MORE

The Case for Killing Textbook Macro

Macroeconomics
Arnold Kling
Seeing two posts today on macro, I am ready to share Nassim Taleb's despair.... MORE

Some Libertarian Basics

Economics of Health Care
Arnold Kling
In the comments on my health care rationing post, I received many standard attacks as being cold-hearted and willing to deny health care to people who need it. From a libertarian perspective, your generosity is reflected in what you do... MORE

Taleb's Solution

Finance: stocks, options, etc.
Arnold Kling
Mark Thoma points to an op-ed by Nassim Taleb. He and I are on the same page in many ways. However, I wish that Taleb would dial back on the colorful rhetoric in order to focus on substance. More detailed... MORE

Open Source Forecasting

Economic Methods
Arnold Kling
Google's Hal Varian and Hyunyoung Choi write, We find that Google Trends data can help improve forecasts of the current level of activity for a number of different economic time series, including automobile sales, home sales, retail sales, and travel... MORE

Linkfest

Macroeconomics
Arnold Kling
Tyler Cowen is everywhere. Here he gives what I call (borrowing the term from Steve Roach) the tallest pygmy theory of America in the world economy. The major Austrian banks, for instance, have loans to eastern Europe equal to as... MORE

Health Care Rationing

Economics of Health Care
Arnold Kling
Ezra Klein writes, Britain and Canada control costs in a very specific fashion: The government sets a budget for how much will be spent on healthcare that year, and the system figures out how to spend that much and no... MORE

The Chess Game of Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
I lay out the ideas here. Let me know what you think.... MORE

Patri Friedman on Seasteading

Political Economy
Arnold Kling
He writes, When we read in the evening paper that we're footing the bill for another bailout, we react by complaining to our friends, suggesting alternatives, and trying to build coalitions for reform. This primal behavior is as good a... MORE

This Morning's Must Read

Finance: stocks, options, etc.
Arnold Kling
Steven Gjerstad and Vernon Smith on the housing bubble. How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system? The... MORE

Outline for Talk on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
To some folks at Treasury (not Tim Geithner). I'm inclined to try to structure it as a discussion, since I may know less than many of the other attendees. Here is what I might contribute. 1. I predict that in... MORE

The Weekend's Must Reading

Finance: stocks, options, etc.
Arnold Kling
I nominate Tyler Cowen. What the banking system needs is creditors who monitor risk and cut their exposure when that risk is too high. Unlike regulators, creditors and counterparties know the details of a deal and have their own money... MORE

Review Essay on Macroeconometrics

Economic Methods
Arnold Kling
A while back, I mentioned this essay by Jesús Fernández-Villaverde, which at the time was not on line. Now it is there. I think it gives a useful history and perspective on macroeconometrics. Note in particular his discussion of the... MORE

James Hamilton on the Oil shock of 2007-2008

Energy, Environment, Resources
Arnold Kling
Highly Recommended. Back in September, when Congress was getting to ready to vote on TARP, I was in a Congresswoman's office arguing futilely against it. One of my lines was that I thought that most people were more adversely affected... MORE

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