Bryan Caplan and David Henderson

Arnold Kling: February 2012

An Author Archive by Month (56 entries)

Diamandis and Kotler

Books: Reviews and Suggested Readings
Arnold Kling
The book is Abundance: The Future is Better than You Think. I think it is a must-read. 1. I am skeptical of Peter Thiel's view that regulation is holding back progress. I recall Ray Kurzweil's remark that regulations are like... MORE

Planned vs. Emergent

Austrian Economics
Arnold Kling
Gerald O'Driscoll talks about an important difference between planned systems and emergent orders. (It takes a while for him to get started, so you might skip through the first 8 minutes or so.) Planning works well for institutions with definite,... MORE

Solar Power Update

Energy, Environment, Resources
Arnold Kling
MIT Technology Review reports, By the end of the decade, manufacturers in the United States could make solar panels that are less than half as expensive as the ones they make now. Would that be so impressive? Compared with Moore's... MORE

The Chetty Teacher Study and the Hill Criteria

Economic Methods
Arnold Kling
This article discusses a study by Raj Chetty, John Friedman, and Jonah Rockoff on the effect of teacher quality on subsequent earnings. This is a study that has been cited a lot recently, by Alex, among others, as evidence that... MORE

Schools of Macro

Arnold Kling
Simon Wren-Lewis offers a take on this phenomenon from a Keynesian perspective. Pointer from Mark Thoma. My latest essay begins to offer a different take. There are now so many versions of "what's wrong with the economics profession" that, with... MORE

Is Repo Lending Inherently Unstable?

Finance: stocks, options, etc.
Arnold Kling
The blogger at Synthetic Assets (Carolyn Sissoko, I assume) writes, Liquid assets are supposedly "safe" - but for the problem that liquidity itself is inherently ephemeral. How precisely do the regulators imagine that collateral posted by a systemically important financial... MORE

The Elusive Pricing Model for Journalism

Information Goods, Intellectual Property
Arnold Kling
Joshua Gans discusses a pricing model for long-form journalism that appears to be i-tunes-ish. Put simply, $0.99 makes sense in the world of $0.99 but it is less clear it will carry the weight in the would of free. I... MORE

Charles Murray Watch

Income Distribution
Arnold Kling
From Esquire, August 29, 1978: THE DANGEROUS ARROGANCE OF THE NEW ELITE by David Lebedoff -- For the first time, the author contends, there is emerging in America an intelligent elite that genuinely mistrusts the basic tenets of democracy. The... MORE

Discussing Innovation with Alex Tabarrok

Growth: Causal Factors
Arnold Kling
About 18 minutes into the conversation, we get into the topic of innovation in higher education. He thinks we might see a winner-take-all market for professors, and we might see it happen sooner than you think. A podcast version... MORE

Foreclosure Paperwork

Finance: stocks, options, etc.
Arnold Kling
Lifted from the comments: If the shoe were on the other foot, if people who had obviously paid their mortgages were being thrown out of their homes because of some trivial defect in the loan documentation, would these same commenters... MORE

Charles Murray Watch

Economics of Education
Arnold Kling
Helen Ladd writes, when first measured in the early 1940s, the gap in reading achievement between children from high and low income families was about 0.60 standard deviations. It subsequently more than doubled to 1.25 standard deviations by 2000. These... MORE

Headsets

Arnold Kling
From a NYT blog: People who constantly reach into a pocket to check a smartphone for bits of information will soon have another option: a pair of Google-made glasses that will be able to stream information to the wearer's eyeballs... MORE

Life Among the Thetes

Income Distribution
Arnold Kling
Matt Yglesias writes, stagnating real working-class wages are calculated by using a meaningless overall average rate of price inflation. Some things--college tuition, apartments in Manhattan, health care--have gotten more expensive much faster than average. This means that people who buy... MORE

MMT

Money
Arnold Kling
A reader asked me for my thoughts on so-called Modern Monetary Theory, as described here, for example. As I understand it, the central dogma of MMT is that a government that prints its own currency and accepts that currency as... MORE

Another Book Review

Books: Reviews and Suggested Readings
Arnold Kling
This one I actually plan to finish. It's The Start-up of You, a self-help business book by Reid Hoffman and Ben Casnocha. Hoffman is famous as the founder of Linked-In, although in my circles Casnocha is better known. They write,... MORE

Bryan and Scott respond, sort of

Labor Market
Arnold Kling
Bryan responds to my question. Scott Sumner also responded in the comments on my original post. My question is how to reconcile low employment with low unit labor costs. Presumably, low unit labor costs would cause labor demand to be... MORE

Maladjustment

Finance: stocks, options, etc.
Arnold Kling
1. Todd Zywicki writes, the average home in foreclosure has been delinquent for 674 days--a delay that has doubled since the exposure of the robo-signing scandal ground the foreclosure process to a halt. In Florida, the time from default to... MORE

Segregation

Income Distribution
Arnold Kling
The indispensable Timothy Taylor writes, Take the two most common measures of residential segregation, the "dissimilarity index" and the "isolation index" (both explained further in a moment). Apply them to the 10 largest American cities using Census data The pattern... MORE

Grouchy Book Reviews

Books: Reviews and Suggested Readings
Arnold Kling
In general, I lean toward, "If you don't have anything nice to say, then don't say it." But several books that I was sent to review made me grouchy, because of what they did not include. Note: I could not... MORE

Is the NAIRU 8.5 percent?

Macroeconomics
Arnold Kling
Mainstream macro in the 1970s (which a lot of people seem to have gone back to) held that there was a NAIRU, meaning the non-accelerating inflation rate of unemployment. If unemployment was above that, inflation would fall. If it was... MORE

The Political Report of the President

Politics and Economics
Arnold Kling
Today the Economic Report of the President was released. As I remember the report in past years, the introductory chapter was typically political, while the rest of the report is focused purely on economics. These chapters often have been very... MORE

Adaptation and Economics

Books: Reviews and Suggested Readings
Arnold Kling
Jason Collins reviews Tim Harford's Adapt. The concept of "normal accidents", taken from a book of that title by Charles Perrow, is compelling. If a system is complex, things will go wrong. Safety measures that increase complexity can increase the... MORE

Nick Rowe's Continuity Question

Macroeconomics
Arnold Kling
He asks, Assume I am an individual household or small firm, and that I have perfectly flexible prices. How am I affected if all the other households and firms around me have sticky prices, and there is a monetary shock... MORE

The Hill Criteria and the Stimulus

Economic Methods
Arnold Kling
This week's IGM forum is on whether the stimulus produced more jobs. Most of the panelists agree that it did. I wonder how many of the panelists are familiar with the Bradford Hill Criteria for making inferences based on observational... MORE

Conversation with David Weinberger

Books: Reviews and Suggested Readings
Arnold Kling
Below is a teaser. The full conversation is here. Nick Schulz and I discuss with him Too Big to Know, his new book. Yes, there will be a podcast version. I just need a place to put it--my own web... MORE

Regional Variations in the Recession

Labor Market
Arnold Kling
Atif Mian and Amir Sufi write, The aggregate demand channel for unemployment predicts that employment losses in the non-tradable sector are higher in high leverage U.S. counties that were most severely impacted by the balance sheet shock, while losses in... MORE

Revisiting Goldin and Katz

Growth: Causal Factors
Arnold Kling
David Autor and Daron Acemoglu have a long review article. Much of it is focused on shifting from a model in which there are only two skill levels (high and low) to a more nuanced model, with at least three... MORE

Limited Liability and Banking

Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen says that they do not go well together. If a shareholder invests a dollar in a big bank, why not make that shareholder liable for the first $1.50 -- or more -- of losses as insolvency approaches? In... MORE

What is Bernanke Saying About Housing?

Finance: stocks, options, etc.
Arnold Kling
Ben Bernanke says, the housing sector continues to suffer from serious imbalances--a marked excess supply for owner-occupied housing accompanied by a stronger rental markets. If this is true, then there must be some institutional barriers to converting housing stock from... MORE

Sabrina Tavernise writes, Professor Reardon is the author of a study that found that the gap in standardized test scores between affluent and low-income students had grown by about 40 percent since the 1960s, and is now double the testing... MORE

Match the Passage to the Book

Books: Reviews and Suggested Readings
Arnold Kling
Below are passages taken from the introductory material to two books. Your job is to match the passages with the books. The two books are: A. Ameritopia, a best-seller by talk-show host Mark Levin. B. Why Capitalism?, by distinguished monetary... MORE

Rent Control

Price Controls
Arnold Kling
Peter Dorman writes, In fact, advocates for rent control have taken Econ 101 (most of them), but they just disagree on how large the positive and negative impacts are. The purpose of economics should be to help us think clearly... MORE

Wealth and the Output Gap

Macroeconomics
Arnold Kling
Tyler Cowen writes, There is still not enough talk of wealth effects in current macro debates, as they are invoked only selectively. Scott Sumner writes, I'm missing something blindingly obvious, as Jim Bullard, David Andolfatto and Tyler Cowen (who also... MORE

Another Frustrating Education Study

Economics of Education
Arnold Kling
From Richard Arum and others. They find that employment outcomes of college graduates are positively related to student performance on the Collegiate Learning Assessment (CLA). Who cares?. As Bryan points out, this sort of study confounds ability with learning, which... MORE

Timothy Taylor's Instant Economist

Books: Reviews and Suggested Readings
Arnold Kling
Tyler Cowen wrote that it is too elementary for most MR readers but it is well executed and would make a good gift for anyone needing an introduction to economic reasoning. My thoughts: 1. The price is very attractive. I... MORE

Notes from the Welch-Goldberg Show

Politics and Economics
Arnold Kling
The event was billed as a debate Are Libertarians Part of the Conservative Movement? And, yes, both speakers talked about reversing the question. The format consisted of 4-minute opening statements followed by one-minute responses to questions. It makes for lively... MORE

Fiscal Federalism's Failure

Institutional Economics
Arnold Kling
Below is an excerpt from a video conference with Michael Greve, Reihan Salam, and me on the problems with fiscal federalism in practice. The full half-hour video is here. And, yes, I also created a podcast. It is a good... MORE

Kevin Carey on Innovation in Higher Education

Economics of Education
Arnold Kling
Interviewed by Reihan Salam and me. The thought he expresses below is that online innovators will offer credentials that are initially inferior to college degrees but which will ultimately become superior. The analogy would be with Japanese cars, which initially... MORE

Who Cares About the Poor?

Income Distribution
Arnold Kling
Scott Winship writes, Whether politicians ignore the poor and pander to the middle class or scare the middle class into thinking they are as bad off as the poor, the result is likely to be the same. Most of our... MORE

Michael Munger on Self-Interest

Political Economy
Arnold Kling
In this article (for which the publisher charges a mere $36), he writes, We can't seriously think that people are narrowly and permanently self-interested, because the costs of enforcing agreements and constantly guarding against fraud or theft would be overwhelming.... MORE

Signaling and Costs

Information Goods, Intellectual Property
Arnold Kling
Bryan writes, when you make signaling cheaper, agents' natural response is to signal more intensely or on another dimension. My understanding of the signaling model is that it depends crucially on the relative cost of signaling to people with and... MORE

Supply, Demand, and Outcomes

Politics and Economics
Arnold Kling
Reihan Salam has had a number of interesting posts recently. Here, he discusses Kevin Carey's analysis of how subsidies to college education ultimately benefit not the consumers but the suppliers. Suppose that you want people to have more high-quality education... MORE

The Austerity of 1946

Economic History
Arnold Kling
John Cochrane writes, I ran across a fascinating article, "A Post-Mortem on Transition Predictions of National Product," in the 1946 Journal of Political Economy, by Lawrence Klein. Klein, who would go on to create the main macroeconomic forecasting models and... MORE

Simpler Frank Knight

Austrian Economics
Arnold Kling
From FastCompany Magazine. "Uncertainty is when you've defined the variable but don't know its value. Like when you roll a die and you don't know if it will be a 1, 2, 3, 4, 5, or 6. But ambiguity is... MORE

Segregation

Economics of Education
Arnold Kling
One of the issues that I have been thinking about since reading Coming Apart is segregation. 1. Where Bryan sees college as a useful signaling device for those who are cognitively gifted, I see it as a useful segregation device... MORE

Corporatism

Political Economy
Arnold Kling
Edmund S. Phelps and Saifedean Ammous write, This shift of power from owners and innovators to state officials is the antithesis of capitalism. Yet this system's apologists and beneficiaries have the temerity to blame all these failures on "reckless capitalism"... MORE

No Scott, the future is Portugal

Fiscal Policy
Arnold Kling
Scott Sumner writes, In my view, Japan is the future of the global economy. Not the deflation (I think the Fed will be able to keep inflation close to 2%) but the low real interest rates. In retrospect the 2001... MORE

Good Sentences

Political Economy
Arnold Kling
From Ross Douthat, writing an introduction to a new edition of Robert Nisbet's The Quest for Community. Man is a social being, and his desire for community will not be denied. ... And if he can't find that community on... MORE

The Wisdom of Robin Hanson, #n

Business Economics
Arnold Kling
He writes, My guess is that most intellectuals underestimate just how dysfunctional most firms are. This is part of a discussion of why businesses pay consultants. I think a pretty standard view is that CEOs bring in consultants to help... MORE

My PSST Papers

Macroeconomics
Arnold Kling
The Adam Smith Institute has just released a paper of mine on patterns of sustainable specialization and trade. An excerpt: The PSST approach drops the assumption that production technology is known. Instead, the Smithian division of labour and Ricardian comparative... MORE

My PSST op-ed

Macroeconomics
Arnold Kling
in the WSJ European edition. Unfortunately, the patterns of specialization and trade that had emerged five years ago were not sustainable. Many jobs in home construction, durable-goods manufacturing and distribution, and mortgage finance were dependent on housing markets with ever-rising... MORE

The Case for More Skilled Immigrants

Labor Mobility, Immigration, Outsourcing
Arnold Kling
Nick Schulz makes it. According to recent estimates, the stock of human capital is over $750 trillion.6 According to a research report from JP Morgan called "U.S. Recession and Repression Are Only in Our Minds," this is much greater than... MORE

Concerns with the CBO

Politics and Economics
Arnold Kling
The Wall Street Journal reports The inquiries of the Congressional Budget Office, which haven't been made public, concern the CBO's analyses of some of Washington's most complex and controversial measures, including bills on financial regulation, health care, small-business lending and... MORE

Kling on Charles Murray

Books: Reviews and Suggested Readings
Arnold Kling
So, I downloaded Coming Apart. I am not disappointed. It is well argued. In 1963, there just wasn't that much difference between the lifestyle of a highly influential attorney or senior executive of a corporation and people who were several... MORE

Catch Them Doing Something Right

Public Choice Theory
Arnold Kling
It's not the Sunday Outlook, but the Washington Post has a long op-ed that explains some important concepts in public choice. Charles Lane writes, Not surprisingly, much political activity consists of trying to create, or keep, opportunities to collect economic... MORE

David Brooks on Charles Murray

Books: Reviews and Suggested Readings
Arnold Kling
He writes, The truth is, members of the upper tribe have made themselves phenomenally productive. They may mimic bohemian manners, but they have returned to 1950s traditionalist values and practices. They have low divorce rates, arduous work ethics and strict... MORE

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