Bryan Caplan and David Henderson

Arnold Kling: June 2011

An Author Archive by Month (48 entries)

Difference-Makers in Education

Economics of Education
Arnold Kling
Matt Yglesias writes, Sometimes I hear from union-affiliated folks that it's unfair to attribute differences in student learning to differences in teacher skill, because everyone knows that socioeconomic and home environment factors drive a lot of this. Other times I... MORE

On Greece

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I am quoted here. Those experts who say that a default will be a solution are assuming that the default take[s] place as part of an orderly negotiation, so that either private-sector lenders or international institutions are willing to renew... MORE

Thoughts on Education

Economics of Education
Arnold Kling
Tyler Cowen raises a good argument about the signaling model. Education is good for more than getting a good first job offer right off the bat. Presumably, relying on education as a signal causes firms to make mistakes when they... MORE

Not in My Interest

Fiscal Policy
Arnold Kling
Tom Coburn and Joseph Lieberman attempt to forge a centrist proposal on Medicare. "We can't balance our budget without dealing with mandatory spending programs like Medicare. We can't save Medicare as we know it. We can only save Medicare if... MORE

Cannon's Law

Regulation
Arnold Kling
This story got picked up by several outlets. Soon, "mystery shoppers" may come to medicine. And doctors are outraged. The Department of Health and Human Services proposes using them to figure out why so many new patients are having problems... MORE

The Cutting-Room Floor

Economic Methods
Arnold Kling
Tyler Cowen rejoins the debate on the returns-to-schooling literature. What's striking about the work surveyed by Card is how many different methods are used and how consistent their results are. You can knock down any one of them ("are identical... MORE

Over-Grazing

Regulation and Subsidies
Arnold Kling
In Forty Years on the Regulatory Commons, Bruce Yandle writes, Ours is a regulatory capitalism where regulators and the regulated are intertwined in symbiotic cartel-forming ways that often make working the halls of Congress and regulator offices far more profitable... MORE

David Henderson's Persuasive Case

Growth: Causal Factors
Arnold Kling
In his book review, Henderson writes, whatever explanation Cowen comes up with for the slower growth of median family income since 1973 should be one that is consistent with the relatively healthy growth of per capita GDP since 1973. Do... MORE

Nick Schulz and I talk about the implications of an economy in which health and education are the key growth sectors. Looking to the coming decades, it will simply not be possible to maintain a genuine free market -- or... MORE

The "literature" on returns to schooling

Economic Methods
Arnold Kling
Tyler Cowen writes, The view that education is mostly about signaling is inconsistent with the established consensus on the returns to schooling and yet the writers at EconLog do not respond to this literature or, as far as I can... MORE

College Returns and Nonexperimental Data

Economic Methods
Arnold Kling
David Leonhardt writes, Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses.... MORE

Richard Shelby, New Keynesian

Monetary Policy
Arnold Kling
According to the WSJ's Andrew Ackerman, The top Republican on the Senate Banking Committee said Thursday he would urge the Federal Reserve to pursue an explicit inflation target, in the face of renewed interest in the idea. This is exactly... MORE

Loss of Risk-Free Status

Fiscal Policy
Arnold Kling
Maury Harris and Drew T. Matus write, Even a temporary default would eliminate the safe and liquid nature of the U.S. Treasury market, harming this country's ability to exercise its power, to the detriment of the U.S. and the global... MORE

Japanese Central Planners at Work

Economics of Education
Arnold Kling
From Nature: Of all the countries in which to graduate with a science PhD, Japan is arguably one of the worst. In the 1990s, the government set a policy to triple the number of postdocs to 10,000, and stepped up... MORE

My Standard Question for Liberals/Progressives

Political Economy
Arnold Kling
A commenter suggested to me that Charles Sable does not fit my stereotype of liberals believing that government is the magic solution for human imperfection. But I picked out his paper on health care, and I found exactly that. He... MORE

PSST and Fragility

Macroeconomics
Arnold Kling
Ted, in a comment on this post, asks a number of good questions. How similar is your idea of PSST to David Levine's Production Chains? Thanks for point out this paper. There is a lot of overlap, in that we... MORE

Euvoluntary Employment

Labor Market
Arnold Kling
Karl Smith asks, If we accept that the labor market would clear at One Cent Per Year. Then the question is why has the labor market not cleared while at the same time the wage has not dropped to One... MORE

Libertarianism: How, not Why

Political Economy
Arnold Kling
The game that I call "trolling for libertarians" seems to be quite popular this week. I guess it's a slow summer. So you make straw-man attacks in order to draw hits. Do you want to dissuade people from taking a... MORE

Three Random Links

Macroeconomics
Arnold Kling
Jason Collins writes, Incarceration removes young men from the mating market during their mating prime. As the propensity to commit crime is heritable, the removal of criminals from the mating market will reduce the frequency of the genes associated with... MORE

Munger on Voluntary Exchange

Economic Philosophy
Arnold Kling
Mike Munger and Russ Roberts discuss what makes an exchange truly voluntary. Munger suggests that if my best alternative to doing business with you is a really lousy alternative, then many people would deny that my decision to do the... MORE

Market Discipline vs. Regulation in Finance

Finance: stocks, options, etc.
Arnold Kling
Ask a lefty what caused the financial crisis, and the answer will be that there was too little regulation and too much reliance on market discipline, which did not work. Ask a righty the same question, and the answer will... MORE

What's Different About Banks?

Finance: stocks, options, etc.
Arnold Kling
I've been at a seminar discussing "too big to fail," so bank regulation issues are top of mind. I think that the most important thing that differentiates banks or bank-like firms from other firms is that it is easy for... MORE

Reductio Ad Absurdum

Politics and Economics
Arnold Kling
David Henderson attacks the political sacred cow of bringing back manufacturing jobs. To me, it is in the same class as "energy independence," "green jobs," or "affordable housing." That is I cringe whenever I hear a politician talk about the... MORE

PSST and the Legal Profession

Macroeconomics
Arnold Kling
From the Wall Street Journal. Mr. Aponte is part of a growing field of itinerant "contract" attorneys who move from job to job, getting paid by the hour, largely to review documents for law firms and corporate clients. These short-term... MORE

Policies for Structural Unemployment

Labor Market
Arnold Kling
Mark Thoma writes, Provide [income support for the unemployed] in return for jobs that do useful things for the community. That is, bridge the time while structural adjustments are underway with useful employment for those waiting for the structural changes... MORE

Shaping the Story

Public Choice Theory
Arnold Kling
The Washington Post reports, A majority of Senate Republicans appeared to break Tuesday with two decades of GOP orthodoxy against higher taxes, voting to advance a plan to abruptly cancel billions of dollars in annual tax credits for ethanol blenders.... MORE

Pennington on Political Economy

Books: Reviews and Suggested Readings
Arnold Kling
A reader recommends Mark Pennington talking about his book Robust Political Economy. The talk is very well organized and concise, and I recommend it (I didn't stick with it through the Q&A). He says that one has to keep in... MORE

Mark Bils on Health Care Prices

Economics of Health Care
Arnold Kling
In this interview, he says, If you had a certain condition and you had $10,000 to get treated at today's health prices, or $10,000 to get treated at 1960s prices with 1960s technology, I don't think it's so obvious that... MORE

Fukuyama on Fukuyama

Books: Reviews and Suggested Readings
Arnold Kling
I think his new book has important ideas. This interview gets at a couple of them. how did these different societies make an exit out of kinship-based social organization into a modern-based state, with impersonal, centralized administration? Europe in that... MORE

Larry Summers vs. PSST

Macroeconomics
Arnold Kling
He gives us a double whammy. He writes in the Financial Times, That the problem in a period of high unemployment, as now, is a lack of business demand for employees not any lack of desire to work is all... MORE

Banks, Government, and Modigliani-Miller

Finance: stocks, options, etc.
Arnold Kling
Perry Mehrling writes, The key point is that money market funding is at lower rates than capital market funding. Society is apparently willing to pay a premium (lower yield) to hold money claims rather than capital claims. Why is that?... MORE

PSST and Long-term Unemployment, 2

Growth: Consequences
Arnold Kling
Richard Florida weighs in. The returns to analytical skill rise consistently across the skill distribution; moving from the 25th to the 75th percentile increases earnings by more than $25,000. The same basic pattern holds for social intelligence skills, like teamwork,... MORE

Divided on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
In an interview, Ricardo Caballero says, it's ludicrous to suggest that anticipation of support (a "bailout") in an extreme systemic event is one of the most significant sources of moral hazard. Pointer from Mark Thoma. Caballero represents one end of... MORE

The Long Recalculation

Macroeconomics
Arnold Kling
Justin Wolfers writes, Focus on the red line, and you'll see that the recession began in the final quarter of 2006, not the end of 2007. The red line also fell by more, and over a longer period. And today,... MORE

Random Mortgage News

Finance: stocks, options, etc.
Arnold Kling
This story requires a correction. An unprecedented alliance of organizations from the real estate industry, new home builders, mortgage companies, banks, civil rights groups and other lobbyists have descended on Washington, D.C. lawmakers to push against legislation that would require... MORE

Kindred Spirit

Growth: Consequences
Arnold Kling
Kindred Winecoff writes, I do not see a world economy that has stagnated overall. I don't even see a US economy (pre-2008) that has stagnated. I see a redistribution from a certain class of American workers to workers with similar... MORE

A Bet on PSST vs. AS-AD?

Macroeconomics
Arnold Kling
Karl Smith is interested in some sort of bet. I, however, will predict that the US will achieve an average 5% real growth [rate] over a sustained period [of] say 12 quarters [or] more starting within five years. Tim Pawlenty... MORE

PSST and Long-term Unemployment

Macroeconomics
Arnold Kling
From CBS news: About 6.2 million Americans, 45.1 percent of all unemployed workers in this country, have been jobless for more than six months - a higher percentage than during the Great Depression. I read this as saying that, relative... MORE

Government and the Financial Sector

Finance: stocks, options, etc.
Arnold Kling
Perry Mehrling writes, The important point is that, to the extent the market-centered credit system is here to stay, the institutions that support the liquidity of that market system are also here to stay. Even more, to that extent we... MORE

Timothy Taylor Does Have a Blog

Finance: stocks, options, etc.
Arnold Kling
He started it a while ago. Two weeks ago (his first post?), he wrote, This graph needs a short explanation of what net lending is (that is, new lending minus repayments and charge-offs). But seeing a graph that goes up... MORE

Disrupting College

Economics of Education
Arnold Kling
That is the title of a white paper by Clayton Christensen and others. The theory of disruptive innovation has significant explanatory power in thinking through the challenges and changes confronting higher education. Disruptive innovation is the process by which a... MORE

PSST vs. Potential GDP

Macroeconomics
Arnold Kling
The AS-AD paradigm includes a concept called potential GDP. Mainstream macroeconomists sort of force-feed macroeconomic history into AS-AD by talking about "cyclically-adjusted productivity" when they talk about AS and "trend-adjusted GDP" when they talk about AD. Consider the following types... MORE

Worth Reading

Energy, Environment, Resources
Arnold Kling
Michael Lind on the abundance of fossil fuels. Jason Collins on Oded Galor's theory of population, genetics, and economic growth. More on Galor from Tyler Cowen. Megan McArdle on the failure of Obamacare to enlist the uninsured with pre-existing conditions.... MORE

Law, Legislation, and Medicare

Economics of Health Care
Arnold Kling
Bryan points to a 9-person forum on reforms to cut Medicare spending, which includes many good suggestions. He asks, Is it "government rationing of food" if you can't buy cigarettes with food stamps? The Hayekian answer is "yes," if people... MORE

Entering the Market

Economic History
Arnold Kling
Cambridge University reports on research by economic historian Sheilagh Ogilvie. In some communities in Germany, people recorded their possessions at the time of marriage. This can allow Ogilvie to reconstruct the development of the German economy from 1600 to 1900... MORE

Administrative costs in Health Care

Economics of Health Care
Arnold Kling
There is a symposium on health care spending in the latest issue of the Journal of Economic Perspectives. David M. Cutler and Dan P. Ly write, In the United States, there are 1.5 administrative personnel per hospital bed, compared to... MORE

State Formation and Tax Collection

Political Economy
Arnold Kling
In Francis Fukuyama's latest book, he talks a lot about the problem of collecting taxes over a wide area. This is one of those processes that we take for granted now, but several hundred years ago it was quite difficult.... MORE

Why do Depressions Occur?

Macroeconomics
Arnold Kling
Brad DeLong writes, When you ask believers in "recalculation" what pattern of production and trade proved to be unsustainable in 2007, they answer: "building so many houses." When you ask believers why the market economy has been unable to sort... MORE

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