Bryan Caplan and David Henderson

Arnold Kling: April 2011

An Author Archive by Month (51 entries)

Accounting and Financial Crises

Finance: stocks, options, etc.
Arnold Kling
Hernando de Soto writes, Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: "economic facts."... MORE

Two From Mark Thoma

Economic Education
Arnold Kling
1. He points to Noah Smith's description of learning Dark Age Macro. I absolutely don't blame Chris House for teaching what he taught. Our curriculum was considered to be the state of the art by everyone who mattered. Without a... MORE

Soros on Hayek

Austrian Economics
Arnold Kling
Yesterday, I attended an invitation-only event at the Cato Institute, featuring a new edition of the Hayek's The Constitution of Liberty. [UPDATE: now available on youtube]. The panel consisted of Bruce Caldwell, Richard Epstein, and George Soros. In terms of... MORE

How Will I Rejoin the Developed World?

Growth: Consequences
Arnold Kling
MIT Technology Review reports, In 2010 consumers bought more than 300 million smart phones--devices that include complete operating systems, and for which advanced software can be written--plus nearly 18 million tablet computers. (Meanwhile, more than 1.1 billion simpler phone handsets... MORE

A Misconception Worth Emphasizing

Finance: stocks, options, etc.
Arnold Kling
Charles Hugh Smith writes, Back at the top of the bubble, the middle class had $6 trillion more assets on the books. Considering the Mortgaged Middle Class now owns about $6 trillion in net assets, then the bursting of the... MORE

Keynes and Hayek, Round 2

Macroeconomics
Arnold Kling
Wow. Mike Munger, a political science professor at Duke, gives an Oscar-caliber performance as a security guard in the opening scene. Keynes argues that we cannot simply sit back and watch unemployment mount up. Hayek argues that the economy is... MORE

10-year Budget Projections

Economic Methods
Arnold Kling
Will Wilkinson writes (on Facebook), Tell me what you think about the usefulness/uselessness of 10-year budget/deficit projections. You can think of this as three questions. 1. Are the projections useful? I think they are useful if understood as conditional forecasts.... MORE

Choose Your Metaphor

Political Economy
Arnold Kling
I suspect that a lot of the intractability of the disputes between people holding divergent political opinions reflects differences in the metaphors that we implicitly hold about government. It would be interesting to try to make these metaphors more explicit.... MORE

Housing Policy

Political Economy
Arnold Kling
I spoke at a forum on housing finance reform. I have low energy these days, but viewing the talk it is not bad. It starts about minute 3 and goes to about minute 26. One of my themes is that... MORE

Interpreting Data

Economic Methods
Arnold Kling
Two interesting examples. 1. John Taylor attempts to take on Krulong. He writes, For all of 2007, spending was 19.6 percent of GDP. For all of 2021--after the impacts of the recession and the final year of the budget window--the... MORE

Random Recommendations

Income Distribution
Arnold Kling
1. Robin Hanson writes, We humans are much better at coming up with reasons for opinions than at choosing coherent sets of opinions He shows a video of students asked about a proposal to redistribute grade-point averages by forcing the... MORE

Break Up the Banks

Finance: stocks, options, etc.
Arnold Kling
James Kwak writes, There is no inconsistency between this proposal and Macey's general skepticism about regulation. What he is skeptical about is the government's ability to precisely engineer desired market outcomes. Instead, what he prefers is a simple rule that... MORE

Not a Fable, Unfortunately

Fiscal Policy
Arnold Kling
From The Telegraph: On Saturday Jurgen Stark, an executive board member of the ECB, warned that a restructuring of debt in any of the troubled eurozone countries could trigger a banking crisis even worse than that of 2008. Of course,... MORE

Pacifism and Repeated Prisoner's Dilemma

Game Theory
Arnold Kling
Tyler Cowen argues with Bryan on pacifism. There is also a Lucas critique issue of how the bad guys start behaving once they figure out that the good guys are pacifist, and I don't see him discussing that either. I... MORE

Big-Picture Finance Questions

Finance: stocks, options, etc.
Arnold Kling
John Cochrane writes, Most of macroeconomics focuses on variation in a single intertemporal price, "the" interest rate, which intermediates saving and investment. Yet in the recent recession...interest rates paid by borrowers (and received by any investors willing to lend) spiked... MORE

A Fiscal Fable

Fiscal Policy
Arnold Kling
Once upon a time, everyone worked for the MyTeaEst corporation, which produced one million loaves of bread in the year 2000. It paid its workers in bread, and they ate the one million loaves. MyTeaEst also gave half of its... MORE

Where is My Free Lunch?

Economics of Health Care
Arnold Kling
Mark Thoma writes, It seems to me that there is far too much discussion of cutting services, and not enough about how to control costs without affecting services (e.g., using the government's purchasing power to reduce the amount the government... MORE

Stanley Fischer on Moral Hazard

Finance: stocks, options, etc.
Arnold Kling
He says, in a variety of financial crises, I have arrived at the following guide to conduct: if you find yourself on the verge of imposing massive costs on an economy - that is on the people of a country... MORE

The Long-term Debt Issue

Fiscal Policy
Arnold Kling
The NYT Room for Debate on the S&P downgrade includes some posts that I think contain some really misleading statements. The term "room for debate" is rather inapt, since we write on our own, with no opportunity to comment on... MORE

Women Won't Marry Down

Income Distribution
Arnold Kling
So Kay Hymowitz asserts. the biggest reason we probably won't see a lot more college-educated women walking down the aisle with their plumber is one we don't like to say out loud: they want to have smart kids. Educated men... MORE

My Perspective on the Budget Fight

Fiscal Policy
Arnold Kling
I don't think of the long-term budget fight as being between Democrats and Republicans or between rich and poor. I look at it as a fight between people with funded retirements and unfunded retirements. If I have saved enough to... MORE

Mike Munger on Microfinance

Growth: Causal Factors
Arnold Kling
A podcast with Russ Roberts, recommended. I am still trying to unpack the model Munger alludes to at the end, in which it does not pay women to become educated in countries where there is little physical capital. I am... MORE

The Education Hierarchy and Signaling

Economics of Education
Arnold Kling
Lorenzo links to a post by Xavier Marquez. Marquez talks about a personality cult as a signaling device in a dictatorship. One of Marquez' commenters writes, suppose that instead of a single dictator, there is an elite class, which has... MORE

Tyler Cowen on the Euro

Finance: stocks, options, etc.
Arnold Kling
His NYT column is a must-read. The bottom line: the euro, in retrospect, appears to have been a misguided attempt to equalize the values for some very unequal assets, namely the bank deposits of strong countries and those of weak... MORE

Quibbling with Mankiw

Economics of Health Care
Arnold Kling
In this talk, Greg Mankiw says a number of wise things. For instance, he says that in health care, the main issue is whether spending restraint is going to be conducted top-down from government or bottom-up from individual choice. But... MORE

Two Systems

Political Economy
Arnold Kling
Here is an idea I am playing with. It is about two systems for obtaining, retaining, and enforcing status. I need to come up with names for the systems. How Status isSystem ASystem BObtainedmarket acceptancecredentials RetainedcompetitiontenureEnforcedchoiceauthority This table is inspired... MORE

A Suggested Tax Calculator Tool

Fiscal Policy
Arnold Kling
In a comment on this post, Daniel Kuehn explains what is going on with the new government tax receipt tool. It simply allocates Social Security taxes to OASDI and Medicare taxes to Medicare. What is left to allocate are income... MORE

Adding to a High School Economics Course

Economic Education
Arnold Kling
I teach an AP economics course, that covers both micro and macro. I do not much care for the AP curriculum, so I try to do things differently. Here are some thoughts, below the fold, on material that I plan... MORE

A Tax Receipt

Fiscal Policy
Arnold Kling
The government now has a tool that supposedly tells you where your tax money is going. You can try it here. I did not have my own tax data handy, so I used the generic family with $80 K in... MORE

Libertarian Seder Questions

Political Economy
Arnold Kling
With Passover coming, something to ponder. We know that Pharoah was part of a long line of autocrats that ruled Egypt. Passover is sometimes called a "festival of freedom." In that case, 1. Why did the Egyptians not attempt to... MORE

Bleg 2: Science Fiction

Books: Reviews and Suggested Readings
Arnold Kling
I have read hardly any science fiction. However, I have found that it is often easy to explain some of my economic ideas in terms of The Diamond Age or Snow Crash. What other science fiction books do you recommend... MORE

Bleg 1: Economic History

Economic Education
Arnold Kling
Suppose that you were going to teach an economic history course to high school students. The goal is to offer a better perspective on economic growth and macroeconomic issues than one gets from the usual ahistorical approach. What eras/episodes would... MORE

Two Questions for Libertarians

Political Economy
Arnold Kling
These occurred to me after the Association for Private Enterprise Education conference over the past few days. 1. How should libertarians frame government? (a) as a criminal enterprise; or (b) as a service provider that does a bad job, largely... MORE

Greenspan the Deregulator

Finance: stocks, options, etc.
Arnold Kling
John Cassidy writes, Anatole Kaletsky, an economic commentator for the Times of London, made a pertinent point: it was Brown himself who had given an honorary knighthood to Alan Greenspan, the great deregulator. I have a question. If you do... MORE

Brink Lindsey on Innovation and Growth

Growth: Causal Factors
Arnold Kling
The Kauffman Foundation describes a new paper. According to the paper, when countries are poor and less advanced, the economic future is relatively predictable. The example of rich countries allows policymakers in less developed countries to peek into the future... MORE

If You're Happy and You Know it

Politics and Economics
Arnold Kling
You are more likely to be libertarian. At least if the James Lindgren paper cited by Tyler Cowen says what I think it does. Apparently, the phrase "angry left" contains a redundancy. I find this a plausible story. David Henderson... MORE

David Leonhardt quotes economic historian Alexander Field: In 1941, the U.S. economy produced almost 40 percent more output than it had in 1929, with virtually no increase in labor hours or private-sector capital input Sounds like a jobless recovery. The... MORE

Garett Jones on Ultramasculine Economics

Macroeconomics
Arnold Kling
I heard him give a talk yesterday. He commits what he calls the "Summers heresy" and suggests that there are important gender differences. On mathematical/spatial reasoning, men have a higher mean and, more important, a higher variance. So the upper... MORE

Corporate Profits

Macroeconomics
Arnold Kling
In the comments on other posts, I have seen questions addressed to me about "excessive corporate profits." I am going to answer this question in very basic terms. The way that national income accounting works, we have: net private saving... MORE

Morning WaPo

Politics and Economics
Arnold Kling
Two items caught my attention. 1. A front-page story on the prospects for requiring higher down payments on mortgages. The story is all about how horrible this would be. It makes extensive use of quotes from an organization called the... MORE

NCH Watch

Economics of Health Care
Arnold Kling
Mark Whitehouse of the WSJ blog writes, Annual public and private health-care spending in the U.S. stands at $7,538 per person, 2.41 times the OECD average and 51% more than the second-biggest spender, Norway. Meanwhile, average U.S. life expectancy is... MORE

Recommended Reading

Politics and Economics
Arnold Kling
1. Bryan's 40 aphorisms. 2. The latest Robin Hanson aphorism. many economically-puzzling regulations and policy inclinations tend to make everyone act like high status folks act, regardless of how appropriate that is for their situation. I think that describes the... MORE

If Economists Designed Health Policy

Economics of Health Care
Arnold Kling
They would come up with something like this. 1. All Americans receive a voucher each year to purchase a standard plan from the private-plan provider of their choice. 2. Vouchers are individually risk-adjusted; those with higher expected healthcare costs, based... MORE

What would Scott Sumner Say?

Labor Market
Arnold Kling
Patricia Minczeski writes on the WSJ blog, U.S. wages as measured in the Labor Department's employment report have been largely stagnant over the past few months, despite improvements in the job market. In fact, many industries saw more wage growth... MORE

What I'm Reading

Economic Methods
Arnold Kling
A review copy of Markets on Trial: The Economic Sociology of the US Financial Crisis, edited by Michael Lounsbury and Paul M. Hirsch. One of the essays, by Ezra Zuckerman, says, sociologists' opposition to neoclassical economics generally, and to the... MORE

Morality and Medicare

Fiscal Policy
Arnold Kling
M.S. writes (for the Economist blog), Mr Ryan's plan ends the guarantee that all American seniors will have health insurance. The Medicare system we've had in place for the past 45 years promises that once you reach 65, you will... MORE

The KC Bloggers' Forum

Growth: Consequences
Arnold Kling
The videos are here. When you follow the link, you can watch Tyler and/or scroll down to choose other speakers. In terms of recommendations for videos to watch, I thought that Bryan and Megan gave the must-see presentations. Tyler's presentation... MORE

The Employment Report

Labor Market
Arnold Kling
I may not have access to a computer when the employment report comes out today. It will be a very important report. The number to watch will be the three-month average of private sector job gains. This will include revised... MORE

Tune In, No Fooling

Upcoming Events
Arnold Kling
Yes, it's April 1st, but I still am one of the speakers at the bloggers' forum, even though you won't see my name on the program. Due to some last-minute changes, the after-lunch session starts at 1:15 central time (2:15... MORE

What Would Robin Hanson Say?

Books: Reviews and Suggested Readings
Arnold Kling
I continue to read The Blind Spot, by William Byers. On p. 137-138, he writes, Until recently, the conventional scientific view was that mind could be reduced to brain, that the physical brain was primary phenomenon and the mind was... MORE

Jeff Frankel Channels Bryan Caplan

Fiscal Policy
Arnold Kling
Jeff writes, Whenever a candidate promises to "give the American people a government as good as they deserve," I can't help thinking, "no, no; don't do that!" Pointer from Mark Thoma, who is not only indispensable but is blogging from... MORE

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