Bryan Caplan and David Henderson

Arnold Kling: April 2012

An Author Archive by Month (53 entries)

Peter Thiel on the Founding of Companies

Business Economics
Arnold Kling
He is quoted saying, one factor dominates all others. That factor is whether the founders are aligned with each other. This is key both in terms of structure and company culture. If the founders are in sync, you can move... MORE

Garett Jones Blogs

Central Planning vs. Local Knowledge
Arnold Kling
He is one of my favorite economists. He is only guest-blogging now, for Megan McArdle. I had stopped reading her blog while others were substituting, but Garett is a must-read. Still, his posts could use a bit of refinement, which... MORE

My Thoughts on Technology and Government

Economic History
Arnold Kling
Thanks to Bryan for highlighting and hosting Tyler Cowen's paper. My thoughts: 1. For a long time, I've thought that the technologies of the industrial revolution favored centralization, while the technologies of the information revolution shift the balance somewhat more... MORE

The Fissaparous Libertarians

Business Economics
Arnold Kling
Look up fissaparous in the dictionary and you will find Inclined to cause or undergo division into separate parts or groups. You will also find a picture of the libertarian movement. 1. At the first Mont Pelerin Society meeting, Mises... MORE

Conversation with Ben Casnocha

Business Economics
Arnold Kling
We talked last week, about the book he co-wrote with Reid Hoffman, The Start-up of You. I reviewed it a couple months ago. Since there were just the two of us, you may prefer a podcast. Last time I posted... MORE

The New Geography of Jobs

Books: Reviews and Suggested Readings
Arnold Kling
That is the new book (due out May 5) by Enrico Moretti. My review can be summed up as: Wow. In a very competitive 2012 book market, this vaults to number two on my list (The Righteous Mind is still... MORE

Feeling the Haidt

Books: Reviews and Suggested Readings
Arnold Kling
In this long essay, I write I examine the problem of moral reasoning and offer three proposals for mitigating its damaging effects. The first is to take opposing points of view at face value, rather than attempt to analyze them... MORE

Off Topic, But

Growth: Consequences
Arnold Kling
Last time I did any computer programming, it was using a text editor. So I was really blown away by App Inventor for Android, which is a visual programming environment. Is that pretty standard now? Is there something similar for... MORE

The Virtues of Price Discrimination

Microeconomics
Arnold Kling
Jeff Ely writes, the winners and losers from an auction system aren't who you think. Auctions don't favor the deep-pocketed compared to the small guys. Exactly the opposite. The marginal consumer is priced out of the market when a seller... MORE

Helping Mortgage Borrowers, Revisited

Finance: stocks, options, etc.
Arnold Kling
Timothy Taylor takes the wrong side of this issue. it seems to me that a modest share of the trillions in federal borrowing in the last few years, along with the trillions of assets that the Federal Reserve has accumulated... MORE

Alternative to Charles Murray

Income Distribution
Arnold Kling
Bo Winegard and Ben Winegard write, A thirtysomething Wal-Mart cashier cannot reasonably expect that his hard work will be rewarded with consistent raises and promotions, terminating, perhaps, in a solid management job. Thus the new lower class is deprived of... MORE

Voluntary Taxes and the Relevant Margin

Political Economy
Arnold Kling
Will Wilkinson writes, Suppose I'm a utilitarian convinced that human consumption of meat causes a huge amount of animal suffering. And suppose I love meat, and giving it up would leave me worse off. I would happily comply with a... MORE

Why Take Yoga Classes?

Economics of Education
Arnold Kling
Matt Yglesias poses the question. It would clearly be cheaper and more convenient to just unroll your yoga mat in your living room and work out while watching yoga videos. The answer that pops into my head is "pre-commitment." When... MORE

Self-Recommending could-have-been

Books: Reviews and Suggested Readings
Arnold Kling
Concerning Paul Seabright's War of the Sexes, Tyler Cowen writes, Paul is a splendid writer and thinker, and of course this is a topic of importance. That is almost word-for-word Tyler's definition of self-recommending. A subset of self-recommending books are... MORE

Peter Thiel on Business

Business Economics
Arnold Kling
Blake Masters took notes. Tyler Cowen linked to them. I recommend them.... MORE

Watch Your Ratios

Finance: stocks, options, etc.
Arnold Kling
Timothy Taylor writes, The horizontal axis shows total assets of banks as a share of the economy of their home country. The four largest U.S. banks by assets are JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo. The vertical... MORE

In Person

Upcoming Events
Arnold Kling
I will be speaking about GSE reform at this event at noon on May 2, close to Capitol Hill. I also am looking into travel to California (Bay Area) first or second week of June.... MORE

Illustrated Primer Watch

Economics of Education
Arnold Kling
Tyler Cowen points to this article on a study of automated essay-grading. "The results demonstrated that over all, automated essay scoring was capable of producing scores similar to human scores for extended-response writing items," the Akron researchers write, "with equal... MORE

Interest Rates: The Strange Interlude

Macroeconomics
Arnold Kling
Russ Roberts pointed me to an essay from last year, by Edmund Phelps. The bond market will see that, in the long run, the pile-up of government debt - and any pile-up of entitlements - will make things much worse... MORE

What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
Imagine: How Creativity Works, by Jonah Lehrer. The worst thing I can say about it is that it seems to promise too much. That is, it seems to suggest that neuroscience has made great strides in understanding creativity. More like... MORE

The Crisis Response Worked Wonderfully

Finance: stocks, options, etc.
Arnold Kling
So says the Treasury. Below is the chart that proclaims that lending markets were unclogged. Pointer from the indispensable Mark Thoma. A few curmudgeonly remarks: 1. The indicator is the percentage of banks reporting easing or tightening of lending standards.... MORE

Libertarian Schisms

Political Economy
Arnold Kling
At Cato Unbound, Roderick Long defends Rothbard, Rand, and Mises against charges of absolutism. Daniel Klein expresses his disagreement with Mises and Rothbard. I am keen on liberty as a central principle and analytic fulcrum, and I depend deeply on... MORE

Model Forecasting Performance

Macroeconomics
Arnold Kling
Mark Thoma has the story, from Volker Wieland and Maik Wolters. Basically, the forecasts made in the latter part of 2008 failed to anticipate the severity of the recession. Here are some implications that come to mind: 1. The mainstream... MORE

From the weekend's op-ed pages

Political Economy
Arnold Kling
1. Ross Douthat speculates that technological advances could change us from civil societarians to meek subjects of an all-powerful state. 2. Chris Mooney talks about personality traits as determinants of ideology. I think that many people will walk away from... MORE

New Thinking in Macroeconomics

Macroeconomics
Arnold Kling
The latest essay in my "million mutinies" series says, For mainstream economists, the financial crisis has produced a new intuitive model of the economy which has yet to be articulated in any formal theory. Of course, I do not believe... MORE

Ron Bailey on Confirmation Bias

Behavioral Economics and Rationality
Arnold Kling
He wrote, Egalitarian/Communitarians, who are always eager to rein in what they regard as the unjust excesses of technological progress and commerce, see carbon rationing as an effective tool to achieve that goal. Not surprisingly, Hierarchical/Individualists are highly suspicious when... MORE

Stating The Problem: First Attempt

Economics of Education
Arnold Kling
Sebastian Thrun has one scenario. In 50 years, he says, there will be only 10 institutions in the world delivering higher education I do not think that there will be institutions as we think of them. I think that in... MORE

James Surowiecki on Medical Tourism

Economics of Health Care
Arnold Kling
He writes, In addition to exporting patients, we could import doctors. Politically speaking, of course, this all seems improbable, because the medical industry is a powerful lobby and uninterested in competition. But the reality is that, unless we find some... MORE

Questions at a Conference on Financial Regulation

Finance: stocks, options, etc.
Arnold Kling
Mark Thoma links to a conference at the Princeton club, taking place as I write this. I have skimmed the papers, and they raise interesting questions. Foote, Girardi, and Willen ask whether, given expectations for ever-rising house prices, the institutional... MORE

My New Hero and New Villain

Finance: stocks, options, etc.
Arnold Kling
The hero is Edward J. DeMarco, the acting regulator of Freddie and Fannie, who has tried to resist pressure for principal reduction on mortgages. For example, Annie Lowrey reports, Mr. DeMarco warned that allowing principal reduction might encourage some homeowners... MORE

Not Necessarily Bad News

Labor Market
Arnold Kling
Mark Thoma reports, The US Has the Highest Share of Employees in Low Wage Work Check out his chart, which shows that other OECD countries have a smaller share of employees doing low-wage work. This seems like bad news for... MORE

Economic Activity, Outsourcing and Cities

Labor Mobility, Immigration, Outsourcing
Arnold Kling
Alex Tabarrok writes, I was surprised at how close the association is between state level GDP and the urbanization rate GDP measures economic activity. Economic activity is outsourcing. If my daughter does her own laundry, her work does not get... MORE

Confidently Uncertain

Finance: stocks, options, etc.
Arnold Kling
The latest IGM forum question asks renowned economists to guess whether, prior to the crisis, Freddie and Fannie passed many benefits through to mortgage borrowers. The economists are also asked to rate their confidence in their answers, on a scale... MORE

The Liquidity Crisis Story

Finance: stocks, options, etc.
Arnold Kling
It keeps coming up. Mark Thoma points to Perry Mehrling, who invokes Fischer Black but also cites his own paper. A market-based credit system, however, relies on market liquidity and hence ultimately on dealer of last resort to ensure the... MORE

Private-Sector Urban Renewal

Political Economy
Arnold Kling
from Ikea. The Globe and Mail reports Where once they placed a couch in a living room, the Swedes now want to place you and 6,000 neighbours into a neglected corner of your city, design an entire urban world around... MORE

I Doubt the Business Model

Business Economics
Arnold Kling
Tech Crunch reports, Benchmark Capital made its largest seed investment to date -- $25 million -- in a startup/university called The Minerva Project. Pointer from Tyler Cowen. Jordan Weissmann also has coverage. The goal seems to be to compete with... MORE

This is Your Mind on Politics

Behavioral Economics and Rationality
Arnold Kling
Will Wilkinson writes, It turns out politics not only makes us stupid. It also makes us callous. He cites a study showing that we are less likely to project our own feelings on those with whom we have political disagreements.... MORE

Britain in the 1840s

Economic History
Arnold Kling
Andrew Odlyzko sees parallels with the U.S. today. Britain managed its huge national debt by relying on debt instruments ("consols" and similar bonds) that were perpetual yet callable. That meant that sudden spikes in interest rates, associated with wars or... MORE

Mainstream Views of School Vouchers

Economics of Education
Arnold Kling
The economists were asked about the statement The main drawback to allowing all public school students to take the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could... MORE

What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
1. Unbroken, the story of Louis Zamperini, an American airman who was shot down, captured, and tortured by the Japanese during the second World War. It was written by Laura Hillenbrand, the impairment-fighting author of Seabiscuit, and it is at... MORE

Passover Thoughts

Political Economy
Arnold Kling
Robert Higgs writes, I have been struck repeatedly by a certain fact about episodes of sudden or extraordinary expansion of the state: when push came to shove, those who resisted--often to the death--tended to be people of faith. In U.S.... MORE

Face-Saving and the Business Cycle

Macroeconomics
Arnold Kling
From a new paper by Steven R. Grenadier, Andrey Malenko, and Ilya A. Strabulaev. When decision makers face the unappealing task of revealing unsuccessful outcomes that impact their reputations, delay may be their first instinct.1 Delay becomes even more enticing... MORE

Econ Bloggers in Kansas City

Fiscal Policy
Arnold Kling
Videos here. Panel 2, on the budget, includes Ezra Klein. He argues that the budget is, in the grand scheme of things, not such an important problem. I would agree that in the universe of problems, others are worse: unemployment,... MORE

Political Economy of the Zero Bound?

Politics and Economics
Arnold Kling
Tyler Cowen offers a theory. The greater the number of protected service sector jobs in an economy, the more likely those citizens will oppose inflation. Inflation brings the potential to lower real wages, possibly for good. The wages that are... MORE

1. As Mark Thoma points out, for individual workers in given jobs, nominal wages are sticky downward. 2. As Pedro Silos and Lei Fang point out, workers who change jobs after being unemployed during a recession tend to take lower... MORE

What I'm Reading

Books: Reviews and Suggested Readings
Arnold Kling
The Coming Prosperity, by Philip E. Auerswald. Never before have more people had a greater opportunity to create value for society, and for themselves, than we do today. New technologies of communication and collaboration are enabling not just lone innovators,... MORE

A Guide to Budget Rhetoric

Politics and Economics
Arnold Kling
Because the budget is so far from being sustainable, budget rhetoric needs to be re-interpreted. When their side refuses to cut spending because it would be "cruel," they are ensuring that future spending cuts will be even crueler. When our... MORE

The Idea Factory

Books: Reviews and Suggested Readings
Arnold Kling
It is a book about the great discoveries made at Bell Labs. The author is Jon Gertner, and I read it on Tyler Cowen's recommendation. It is definitely worth reading, although not in the elite class of new books. It... MORE

Cities and Governance

Political Economy
Arnold Kling
Esther Dyson writes, Most cities evolved blindly, and have ended up semi-workable, whereas a city that is started from scratch can, in theory, benefit from intelligent design. But, even with long-term investors, to build a viable city at scale nowadays... MORE

Tyler Cowen on America's Future

Growth: Consequences
Arnold Kling
He writes, the static sector consists of the protected services (a big chunk of health care, education and government jobs), and the dynamic sector is heavily represented in U.S. exports, often consisting of goods and services rooted in tech, connected... MORE

Of NWW and Fukuyama

Books: Reviews and Suggested Readings
Arnold Kling
Here is my comparison of North-Weingast-Wallis with Fukuyama. Neither book makes one optimistic about the near-term prospects for seeing liberal democracies emerge out of the "Arab Spring." Instead, they suggest that sudden revolution from below is not the route to... MORE

Evolution and Economics

Behavioral Economics and Rationality
Arnold Kling
Jason Collins offers a reading list. I have read most of the books but few of the articles. I will want to pursue the articles.... MORE

Happy April Fools Day

Economic Methods
Arnold Kling
Unfortunately, this story came out on March 28th, and it is not a joke. During a decade as head of global cancer research at Amgen, C. Glenn Begley identified 53 "landmark" publications -- papers in top journals, from reputable labs... MORE

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