Bryan Caplan and David Henderson

Arnold Kling: July 2009

An Author Archive by Month (50 entries)

The Home as ATM

Finance: stocks, options, etc.
Arnold Kling
From Mark Thoma, who in turn saw it on Richard Green, a study by Michael Lacour-Little, Eric Rosenblatt, and Vincent Yao. Here we use public record data to study Southern California borrowers facing foreclosure in late 2006 and 2007. We... MORE

For Business, Against Capitalism

Political Economy
Arnold Kling
Derek Thompson writes, I get the distinct sense from the transcript that [President Obama is] a bit miffed by the accusations that he's anti-business. He emphasizes (possibly even exaggerates) the "great political expense" with which he bailed out the banks.... MORE

Only the Libertarian Fringe Offers Real Health Care Reform

Economics of Health Care
Arnold Kling
Ronald Bailey writes, The health care "reform" currently being hammered out by the Democratic leadership of the House of Representatives already clocks in at $1 trillion and 1,000 pages--and it's nowhere near done. But one thing is clear: the legislation... MORE

Wesley Mouch watch

Political Economy
Arnold Kling
He is going to take care of executive pay. Also, He is going to clamp down on oil speculators. After all, we would not want the private sector to cause energy prices to rise and to promote conservation. Only Wesley... MORE

Violence, Anarchy, and the State

Political Economy
Arnold Kling
Steven Pinker writes the 17th-century philosopher Thomas Hobbes got it right. Life in a state of nature is nasty, brutish, and short--not because of a primal thirst for blood but because of the inescapable logic of anarchy. Any beings with... MORE

This Should be Good

Monetary Policy
Arnold Kling
A Debate Between Scott Sumner and John Cochrane. Sumner thinks that the Fed can hit a nominal GDP target if it wants to. When I heard Cochrane a while back, he was talking about the high rate of substitutability of... MORE

The Financial Crisis: A Different Approach

Finance: stocks, options, etc.
Arnold Kling
I was asked to give a presentation on the financial crisis. I didn't want to just do the same old song and dance, so I came up with....... MORE

What Should Mortgage Finance Look Like?

Finance: stocks, options, etc.
Arnold Kling
Mark Thoma writes, John Taylor and Kenneth Scott argue that "sheer complexity" is at the heart of the financial crisis: We believe their sheer complexity is the core problem and that only increased transparency will unleash the market mechanisms needed... MORE

The Economy and the News Cycle

Macroeconomics
Arnold Kling
Friends of mine have asked me lately how badly President Obama's economic policies are working. My reply is that it is way too soon to tell. I would expect that by now, the effect of Obama Administration policies on unemployment... MORE

What Makes Health Care Different?

Economics of Health Care
Arnold Kling
First, read Robin and Bryan on the issue. My thoughts: 1. I do not think that the economic differences between health care and other goods are as fundamental as the difference between the believers in Expertism and the believers in... MORE

The Insider Narrative

Books: Reviews and Suggested Readings
Arnold Kling
Michiko Kakitani reviews David Wessel's new book, In Fed We Trust. She likes it more than I do. I think it is too much of an insider's narrative. There are two dimensions on which people differ about the financial crisis.... MORE

Neil Barofsky's Dog Whistle

Fiscal Policy
Arnold Kling
Apparently, humans cannot hear what the TARP whistleblower is saying, which is that the government bailouts could wind up costing taxpayers $23.7 trillion. Barofsky's estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in... MORE

Why I am Not a Republican

Economics of Health Care
Arnold Kling
Dana Milbank thinks that he has found a "ventriloquist" providing GOP talking points on health care. Castellanos used the word "experiment" six times to criticize Obama's plan; Steele, the eager pupil, used it 30. Only one thing would have made... MORE

Should the Fed be Audited?

Finance: stocks, options, etc.
Arnold Kling
I want to make a few comments on this issue, which David has touched on On balance, I think I would support auditing the Fed. 1. The conservative case against auditing the Fed is that it will reduce the Fed's... MORE

Reactions to the Treasury Financial Reform Proposals

Finance: stocks, options, etc.
Arnold Kling
Four of us give our reactions: Robert Litan Lawrence J. White Richard Posner and yours truly. I offer eight "audit findings" on the report, including 1. The Report does not offer a comprehensive analysis of the causes of the financial... MORE

Massachusetts Health Reform, Version 2.0?

Economics of Health Care
Arnold Kling
From the Boston Globe. The 10-member commission, which includes key legislators and members of Governor Deval Patrick's administration, voted unanimously to largely scrap the current system, in which insurers typically pay doctors and hospitals a negotiated fee for each individual... MORE

Taking Ezra Klein's Health Care Challenge,

Economics of Health Care
Arnold Kling
He writes that in order to cite the CBO criticism of the Democrats' health care reform proposals, one must do some combination of the following: a) Support, as the CBO says you should, the eradication of the tax exclusion that... MORE

Impossible Mission Commission

Finance: stocks, options, etc.
Arnold Kling
Keith Hennessey writes Yesterday Senate Minority Leader Mitch McConnell (R-KY) appointed me to be a member of a new Financial Crisis Inquiry Commission...The purpose of the Commission is "to examine the causes, domestic and global, of the current financial and... MORE

The Worst Solution to the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
Daniel Indiviglio reports on a chart from the Wall Street Journal that shows more than one quarter of mortgage loan modifications are redefaulting. He comments, Re-default is a huge problem, because it means those homes should have just undergone foreclosure... MORE

Unbent and Unbowed

Economics of Health Care
Arnold Kling
Doug Elmendorf tries to speak truth to power Instead of saving the federal government from fiscal catastrophe, the health reform measures being drafted by congressional Democrats would increase rather than reduce public spending on health care, potentially worsening an already... MORE

Unchecked and Unbalanced Watch

Books: Reviews and Suggested Readings
Arnold Kling
Will Chamberlain writes (Will, not Wilt), Romer, clearly having been influenced by our ideas about bloodless instability, argues that we need to be able to create new countries, without the use of military force, in order to gain access to... MORE

Relative to what a consensus forecast might have predicted last October, it appears that: --Banks are doing somewhat better than expected --GDP has fallen about as far as expected --employment has fallen more than expected If this is a fair... MORE

From Poverty to Prosperity Watch

Political Economy
Arnold Kling
I should hold off on plugging the book until it's closer to publication date, but reading it over gets me really excited. We include interviews with a number of famous economists, and there are little nuggets of insight buried in... MORE

From Poverty to Prosperity Watch

Books: Reviews and Suggested Readings
Arnold Kling
Alex Tabarrok looks at a study showing the increasing churn in the U.S. economy. The topple rate is a measure of how the rank of large firms on return of assets changes over time. The topple rate has increased by... MORE

Will Wilkinson on Inequality

Income Distribution
Arnold Kling
As part of a long, interesting essay, He writes, You can see leveling in quality across the price scale in almost every kind of consumer good.19 At the turn of the 20th century, only the mega-rich had refrigerators or cars.... MORE

One-Party State Watch

Political Economy
Arnold Kling
Simon Johnson thinks that CIT, a troubled lender, will not be bailed out. Traditionally, CIT provided vanilla loans to small and medium-sized business. "But under its current chief executive, Jeffrey M. Peek, a well-liked Wall Street veteran who lost out... MORE

The Financial Crisis: A Matrix

Finance: stocks, options, etc.
Arnold Kling
Nassim Nicholas Taleb and Mark Spitznagel write, The core of the problem, the unavoidable truth, is that our economic system is laden with debt, about triple the amount relative to gross domestic product that we had in the 1980s. This... MORE

Shorter Scott Sumner

Monetary Policy
Arnold Kling
Bryan points to a Scott Sumner's monetarist credo. Think of it as a simplification of the Taylor rule. The Sumner Rule is, if the consensus forecast of nominal GDP growth is below 5 percent, then loosen up. Presumably, if the... MORE

Bruce Charlton on IQ, Education, and Signaling

Economics of Education
Arnold Kling
He writes, ...modern societies are currently vastly over-provided with formal education, and this education has the wrong emphasis. In particular, the job of sorting people by their general aptitude could be done more accurately, cheaply and quickly by using psychometrics... MORE

Pet Health Care Theories

Economics of Health Care
Arnold Kling
Andrew Biggs writes, The chart below shows spending on veterinary care, which I pulled from the Consumer Expenditure Survey, and national health expenditures (for people) from the National Income and Product Accounts. Two things are interesting here: first, the rate... MORE

The Shadow Banking System

Finance: stocks, options, etc.
Arnold Kling
Perry Mehrling says, The idea of the shadow banking system was in some way, not only tolerated by regulators, but encouraged by regulators. They thought, "Let's get some of these risks off the balance sheet of the traditional banking system.... MORE

Ed Glaeser on New York

Growth: Causal Factors
Arnold Kling
He sounds like Richard Florida. New York has bright, creative people, yada-yada. I think that most of the cyclical movement in the economy comes in businesses that are not all that creative--manufacturing, construction, and strip-mall businesses. Folks in Washington have... MORE

Justin Fox on Efficient Financial Markets

Finance: stocks, options, etc.
Arnold Kling
Russ Roberts interviews Justin Fox. Fox became an expert in the process of writing a book on the history of modern financial theory.... MORE

Michael Lewis on AIG

Finance: stocks, options, etc.
Arnold Kling
Compelling, as usual. I'll post some excerpts below the fold, but I recommend reading Lewis' whole piece. Lewis writes it very much as a suits-vs.-geeks story. He portrays the head of AIG financial products, Joseph Cassano, as a suit who... MORE

In the Press

Economics of Health Care
Arnold Kling
David Leonhardt talks about the real issue in health care spending (it's not administrative costs). Tyler Cowen calls the column "superb." I would give it no more than a B, because the question is posed in terms of which centralized... MORE

Thoughts on Administrative Costs in Health Care

Economics of Health Care
Arnold Kling
Do we want to eliminate the middle man in the health care industry? I do, but what I want to see is consumers pay providers directly. More thoughts: [UPDATE: see also Ezra Klein, who agrees with me that a lot... MORE

Strands of Libertarianism

Political Economy
Arnold Kling
Tyler Cowen lists five major strands, taking a swipe at one. 3. Mises Institute nationalism. Gold standard, a priori reasoning, monetary apocalypse, and suspicious of immigration because maybe private landowners would not have let those people into their living rooms.... MORE

Statistical Significance, Again

Economic Methods
Arnold Kling
Science, Ziliak and McCloskey say, needs to learn both whether and how much. But the putatively common practice of ending the empirical analysis by checking whether a calculated test statistic does or doesn't reject the null hypothesis according to... MORE

Robert McNamara

Political Economy
Arnold Kling
Today's Washington Post has six op-ed pieces. Three are on Sarah Palin, who resigned as governor of Alaska the other day. The other three are on Robert McNamara, who died yesterday. Palin is known for hunting moose. McNamara is known... MORE

The Economist's blogger (the magazine has a policy against signed articles, and they have stupidly decided that the same policy has to apply to their blog) writes, there is every indication that recovery from this recession, when it arrives, will... MORE

Caplan vs. Sowell

Books: Reviews and Suggested Readings
Arnold Kling
A commenter points to Bryan's critique of A Conflict of Visions, which makes a number of good points. Bryan concludes, What really puzzles me is why Sowell did not try a much simpler typology. Why not simply distinguish between advocates... MORE

New Commanding Heights Watch

Growth: Consequences
Arnold Kling
Tyler Cowen says, An ever-larger share of our personal satisfaction will come from free or near-free sectors of the economy, as I explain in my new book "Create Your Own Economy". But those same sectors won't comprise such a large... MORE

Sowell's A Conflict of Visions

Books: Reviews and Suggested Readings
Arnold Kling
My excuse for not reading A Conflict of Visions by Thomas Sowell was that I had already read a fair amount of his other work, and how much new could he have to say? But John Baden pressed me to... MORE

Personality and Ideology: A Quick Rejoinder

Economic Methods
Arnold Kling
Bryan writes, Suppose someone had the personality least favorable to economic conservatism: a 0 on Extraversion, 1 on Agreeableness, 0 on Conscientiousness, 0 on Stability, and 1 on Openness. According to the same regression referenced earlier, this person is expected... MORE

The Indispensable Mark Thoma

Economic Education
Arnold Kling
is profiled by David Warsh.... MORE

Statistical vs. Material Significance

Economic Methods
Arnold Kling
I appreciate Bryan's pointer to an article by Alan Gerber and others on personality and ideology. However, the article illustrates what I consider to be a methodological error. That error is to use statistical significance as a metric. Statistical significance... MORE

Social Science and Public Policy

Political Economy
Arnold Kling
How do economists and other social scientists influence public policy? Yesterday, I recommended Jeffrey Friedman's article on the financial crisis. Its theme is regulatory hubris, and Friedman disparages "economism," which might be described as a belief that wise economists can... MORE

Jeffrey Friedman on the Financial Crisis

Finance: stocks, options, etc.
Arnold Kling
Critical Review is publishing a special issue on the financial crisis. I have uploaded Jeffrey Friedman's introduction. I strongly recommend the entire issue. The paper by Acharya and Richardson is the one that most closely reflects my own views. Friedman's... MORE

Virtual Secession

Political Economy
Arnold Kling
Patri Friedman launches secession week, a discussion of secession. In one of my forthcoming books, Unchecked and Unbalanced, I discuss a number of mechanisms for limiting the power of government. You can think of these as mechanisms for achieving virtual... MORE

Casnocha on Tyler's Next Book

Books: Reviews and Suggested Readings
Arnold Kling
Reviewing Tyler Cowen's Create Your Own Economy, Ben Casnocha writes, when culture is free and a click away, as it is on blogs and Twitter and the broader Internet, we sample broadly and consume it in smaller chunks: "When access... MORE

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