Bryan Caplan and David Henderson

Arnold Kling: March 2010

An Author Archive by Month (52 entries)

Greg Mankiw on Fiscal Policy

Economic Education
Arnold Kling
He writes, One of the classic hypothetical questions economists ask when referring to healthcare costs is, "Would you rather go back to 1950s medical care and 1950s prices?" If that option were offered at your place of work, my guess... MORE

Health Care Costs and Bankruptcy

Economics of Health Care
Arnold Kling
I wrote on the famous study when it first came out. You should read that article. I have to say that I cannot think of any other study that has had such a high ratio of political impact to substantive... MORE

The Plight of the Unskilled College Grad

Economics of Education
Arnold Kling
I am just beginning to explore the issue of sorting out the economic value of college at the margin, rather than on average. One aspect of this is to distinguish between college graduates with skills and college graduates without skills,... MORE

Average Prices, AS and AD

Macroeconomics
Arnold Kling
Scott Sumner writes, The recession was caused by a severe AD shock, i.e. falling NGDP. If it had been caused by an AS shock then the recession would have been accompanied by higher inflation. It would really help if people... MORE

Friday's Rant

Politics and Economics
Arnold Kling
I need to stop this. I don't want to turn into the Paul Krugman of the right.... MORE

Question for Brad DeLong

Politics and Economics
Arnold Kling
You objected, reasonably, to my attempt to characterize what you might have said about a hypothetical debt-reduction thesis issued by a Republican. Could you state your position on my substantive point, which I will repeat here: Relative to current law,... MORE

Preventing Foreclosures

Finance: stocks, options, etc.
Arnold Kling
I have written, As difficult and painful it may seem in the short run, it probably would be better to work through the foreclosure process and let prices adjust to levels that bring supply and demand into balance in the... MORE

Time Consistency in Bank Regulation

Finance: stocks, options, etc.
Arnold Kling
David Leonhardt writes By definition, the next period of financial excess will appear to have recent history on its side. Asset prices will have been rising, and whatever new financial instrument that comes along will look as if it is... MORE

The Light of Day?

Politics and Economics
Arnold Kling
Not exactly. My op-ed was placed here, where it probably will get fewer readers than this blog post. The public probably does not understand this budgetary legerdemain, but their instinct is to distrust Congress. In this case, the populist instinct... MORE

If a Libertarian Gave a Sermon for Passover

Political Economy
Arnold Kling
As we approach Passover in 2010, many people are unemployed. But in a free society, government does not create jobs. Pharoah created jobs for us. Moses led us away from those jobs. Even though those jobs helped to complete public... MORE

Miscellaneous

Political Economy
Arnold Kling
My talk in North Carolina. During the Q&A, I get attacked from the right. Michael Elsby, Bart Hobijn, and Ayseful Sahin discuss what is happening the labor market in the current recession. Recommended. Anne Applebaum argues that now that health... MORE

Jonah Goldberg on the Tea Party

Politics and Economics
Arnold Kling
I enjoyed this dialog between Glenn Reynolds and Jonah Goldberg. Goldberg argues that conservatives are legitimately skeptical of mass movements, but that as things have evolved, the tea party is looking better and better. This echoes my own evolution. I... MORE

Incentives vs. Intentions

Economics of Health Care
Arnold Kling
As Bryan points out, the incentives in the new health care legislation should discourage people from getting health insurance and discourage employers from providing health insurance. The intent of the legislation is to reduce the number of people who are... MORE

This paper by Jagadeesh Gokhale, which I blogged about when it first came out last year, argued that the European welfare states were not sustainable. He wrote, Generally speaking, older members of the European Union -- including Germany, France, Italy,... MORE

What I'm Reading

Books: Reviews and Suggested Readings
Arnold Kling
Social Security, by Jagadeesh Gokhale. He gave me a copy when we had lunch today, so I'm just getting started. I'll write more when I've read more. Meanwhile, we can deem it self-recommending for someone who wants to be conversant... MORE

What I'm Writing

Finance: stocks, options, etc.
Arnold Kling
I have an article in National Review (April 5 edition) on financial regulation. Notwithstanding the good intentions of policymakers, who no doubt plan to create a stronger regulatory apparatus going forward, large banks will inevitably have too much power for... MORE

Explaining our new Health Care System

Economics of Health Care
Arnold Kling
1. The intent was to leave Medicare and employer-provided health care largely intact. The main effects are supposed to be on the health insurance market for individuals. 2. A major goal is to enable people with pre-existing conditions who fall... MORE

How the Health Care Legislation Will Affect Me

Economics of Health Care
Arnold Kling
My joke has been that what bothers me the most about the fact that health care legislation passed is that now when I give talks on health care I will be expected to be familiar with what is in the... MORE

What I'm Reading

Austrian Economics
Arnold Kling
Macroeconomic Theory and its Failings, edited by Steven Kates. The publisher, Edward Elgar, prices its hardbacks out of reach for ordinary readers. I assume that their target buyers are libraries. I received a review copy. The book consists of essays... MORE

Big Shakeouts

Growth: Consequences
Arnold Kling
Robert J. Gordon writes, by far the most rapid MFP growth in U. S. history occurred in 1928-50, a phenomenon that I have previously dubbed the "one big wave." MFP = multifactor productivity. Note that the Great Depression takes up... MORE

Banks and Modigliani-Miller

Finance: stocks, options, etc.
Arnold Kling
Greg Mankiw writes, What about the Modigliani-Miller Theorem? Recall that this famous theorem says that a firm's value as a business enterprise is independent of how it is financed. The debt-equity ratio determines how the risky cash flow from operations... MORE

David Brooks Provokes

Finance: stocks, options, etc.
Arnold Kling
with this: The free-market revolution didn't create the pluralistic decentralized economy. It created a centralized financial monoculture, which requires a gigantic government to audit its activities. Yesterday, during my talk at Campbell University, I also used the term monoculture to... MORE

The controversy of the moment is the procedural precedent in the health care bill. No comment on that. What troubles me is the substantive precedent of using future cuts in Medicare benefits as a funding source. This is really weird,... MORE

The Case for Competitive Government

Political Economy
Arnold Kling
Tim Harford writes, What is missing is the political demand for tests of what really works. Too many policies on education, welfare and criminal justice are just so much homeopathy: cute-sounding stories about what works leaning more on faith than... MORE

Influential Books

Books: Reviews and Suggested Readings
Arnold Kling
Recently, Tyler Cowen listed the ten books that have influenced him the most. I have a much harder time coming up with such a long list. I am more inclined to list people (Tyler among them). But here goes:... MORE

Markets vs. Government

Upcoming Events
Arnold Kling
Again, this will be the subject of my talk on Thursday evening March 18 at Campbell University. It is also the subject of this podcast featuring Don Boudreaux and Russ Roberts. Boudreaux says that he does not vote, which I... MORE

Public Sector Unions vs. Taxpayers

Politics and Economics
Arnold Kling
The Washington Post reports on cuts proposed in the budget in Montgomery County, Maryland. The proposed budget cuts in Montgomery, which require county approval, reflect not just the recession but also decisions made by officials over many years. Salaries and... MORE

Accounting Standards

Finance: stocks, options, etc.
Arnold Kling
I have been following, but not writing about the Lehman accounting scandal. Simon Johnson brings up a past scandal (Enron) and a future scandal (Greece). He points out the role of investment banks in designing and/or executing transactions that are... MORE

A Betting Arena

Growth: Consequences
Arnold Kling
Since Bryan is impressed with people who bet on their ideas, I thought I would remind folks about longbets, a site that encourages exactly that, focused on long-term predictions. For example, Kevin Kelly writes, The biggest driver of the shift... MORE

Tyler Cowen on the Future of Health Policy

Economics of Health Care
Arnold Kling
He sees a future of managed care, funded or subsidized by vouchers. He elaborates here. Few people would think that a ne'er do well brother would be justified into taking $50,000 from you to prolong his life (with p =... MORE

Your Public Education at Work

Economics of Education
Arnold Kling
From an extremely interesting report by Adam Schaeffer: the Los Angeles metro area comes in third place for average real spending in our study.23 The average real per-pupil spending figure of $19,000 is a stunning 90 percent higher than the... MORE

Liberals and Markets

Political Economy
Arnold Kling
Will Wilkinson writes, libertarians are liberals who like markets. This is a succinct way of suggesting that libertarians and liberals share similar personalities and outlooks. There is just an intellectual difference concerning markets and government. I will be speaking on... MORE

Baseline Scenario: The Book

Books: Reviews and Suggested Readings
Arnold Kling
Simon Johnson and James Kwak call it 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. It is one of the most valuable contributions to the literature on the financial crisis. Of all the economists, journalists, and pundits... MORE

How to Evaluate Government Pay

Labor Market
Arnold Kling
Budget Director Peter Orszag writes, So the bottom line is: when education and age are held constant, the entire difference in average pay between the federal and private sectors disappears. Let me suggest a different indicator: How far could you... MORE

John Nye on Economic History

Economic History
Arnold Kling
He writes, The greatest achievement of early modern economic growth was not the Industrial Revolution itself, but the way in which the leading Western economies began to move away from highly parochial, narrow networks of personal exchange and came to... MORE

Great Minds Think...Somewhat Differently

Political Economy
Arnold Kling
Ethan Porter writes, Staunch environmentalist? Send some money to the EPA. Believe we need an infrastructure upgrade? Direct your funds to the Department of Transportation. Think we need to ramp up our national defense? Send extra tax dollars to the... MORE

Did the Financial Crisis Matter?

Finance: stocks, options, etc.
Arnold Kling
Dean Baker says no. Spain is noteworthy because it now has an unemployment rate of more than 19%, the highest rate in any of the wealthy countries. Spain did not have a financial crisis. In fact, its well-regulated financial system... MORE

Fannie and Freddie and Friends

Finance: stocks, options, etc.
Arnold Kling
Mark Thoma points to a series of presentations from the Roosevelt Institute, a left-oriented think tank. What struck me was Raj Date arguing for the elimination of Freddie Mac and Fannie Mae. He is quite firm on the point. He... MORE

Keynesians vs. Rogoffians

Economics of Health Care
Arnold Kling
A letter in the London Times, signed by Ken Rogoff, among others: in order to be credible, the government's goal should be to eliminate the structural current budget deficit over the course of a parliament, and there is a compelling... MORE

The Real Health Care Debate

Economics of Health Care
Arnold Kling
If you ever want to see a real debate on health care policy, schedule an event featuring Daniel Callahan and me. Callahan is very anti-market, but he and I start from a baseline level of agreement about what the health... MORE

The Sixties and the Tea Party

Politics and Economics
Arnold Kling
David Brooks sees similarities, while Jonah Goldberg sees differences. The similarity between today and the 1960's is that our country seems highly polarized. On the other hand, I think there is one enormous difference between the 1960's and today. In... MORE

From Poverty to Prosperity Watch

Economic History
Arnold Kling
I am interviewed on Australian radio. Also, Don Boudreaux recommends this talk by Stephen Davies. I assume that the "surprising prediction" to which Don refers is that young people today will live hundreds of years. I have been making that... MORE

Robin Hanson on Long-term Growth

Growth: Causal Factors
Arnold Kling
Those of us who know him are familiar with his outlook for a sudden transition to what would seem to us like hyper-growth. The rest of you will find this talk new and mind-blowing.... MORE

Forecast for a Minsky-Jones Economy

Macroeconomics
Arnold Kling
The Wall Street Journal reports: The Monster Employment Index surged in February, with increases across a range of geographies and job categories, suggesting that employers are starting to emerge from a long hibernation. The Index, compiled by online job service... MORE

Kahneman on Happiness

Behavioral Economics and Rationality
Arnold Kling
He speaks here. He raises a number of issues with self-reported happiness. An example he gives is someone moving to California because he thinks he will be happier there. If you ask him if he is happier in California, he... MORE

Opting for Enslavement

Political Economy
Arnold Kling
One of the intriguing short chapters in Africa: A Biography of the Continent is called, with irony, "Merrie Africa." It discusses the issue of slavery within Africa. A history of slavery in Africa claims that between 30 and 60 percent... MORE

What I'm Reading

Books: Reviews and Suggested Readings
Arnold Kling
Africa: A Biography of the Continent, by John Reader. An excerpt (p. 306): Six terms referring to horn shape, and "not fewer" than seventeen cattle colour terms were coined between AD 800 and 1450 in...[southern Africa]...So much linguistic innovation over... MORE

From Poverty to Prosperity Watch

Business Economics
Arnold Kling
Nicholas Bloom and John Van Reenen write management practices vary tremendously across firms and countries. Most of the difference in the average management score of a country is due to the size of the "long tail" of very badly managed... MORE

sentences to ponder

Political Economy
Arnold Kling
Will Wilkinson writes, Average self-reported life satisfaction rose with GDP per capita over the last several decades in almost all wealthy liberal democracies, but not so much in the U.S. The idea that the unusual composition of U.S. government spending... MORE

The Road to Health Care Serfdom

Economics of Health Care
Arnold Kling
If Massachusetts is any indication, we are on it if we adopt reforms similar to theirs. Last month, Democratic Governor Deval Patrick landed a neutron bomb, proposing hard price controls across almost all Massachusetts health care... average Massachusetts insurance premiums... MORE

Canada Wins

Finance: stocks, options, etc.
Arnold Kling
According to Mark Perry, this recent financial crisis isn't the first time that Canada's banking system showed greater signs of stability and less exposure to stress than U.S. banks. In the 1930s, when 9,000 U.S. banks failed during the Great... MORE

African Poverty Declines

Growth: Consequences
Arnold Kling
Xavier Sala-i-Martin and Maxim Pinkovskiy write, The poverty rate in 1970 was 0.398. That is, close to 40% of the entire population lived with less than one dollar a day in Africa in 1970. After a small decline during the... MORE

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