Bryan Caplan and David Henderson

Arnold Kling: May 2012

An Author Archive by Month (33 entries)

Really???

Macroeconomics
Arnold Kling
Simon Wren-Lewis writes, I do not think targeting nominal GDP means that the monetary authorities can achieve that target at all points in time. The main way I think it overcomes the zero lower bound (ZLB) for nominal interest rates... MORE

Andrew Lo, JP Morgan, and PBR Audits

Regulation and Subsidies
Arnold Kling
In an interview, Andrew Lo says, There is one very simple question that you can ask -- which has a definitive answer -- about the small number of individuals who were responsible for managing this group at JP Morgan and... MORE

Steven Chu vs. Bernie Madoff

Politics and Economics
Arnold Kling
A commenter on this post wrote, I don't find it very credible that Steven Chu spends his whole life studying physics (and extremely successful at it) so one day he could reward some political cronies of his boss. Comparing Chu... MORE

Random Thought

Politics and Economics
Arnold Kling
From a graduation speech by Neil Howe, reprinted by John Mauldin. The Millennial Generation is correcting for the excesses of Boomers and Gen Xers who today run America. I need not remind you what those excesses are: leadership gridlock, refusal... MORE

The Energy Loan Scandal as a Non-story

Politics and Economics
Arnold Kling
Mark A. Thiessen writes, as Hoover Institution scholar Peter Schweizer reported in his book, "Throw Them All Out," fully 71 percent of the Obama Energy Department's grants and loans went to "individuals who were bundlers, members of Obama's National Finance... MORE

Audits and Principles-Based Regulation

Regulation and Subsidies
Arnold Kling
One point that many people miss about principles-based regulation is that it gives regulators an additional enforcement tool, other than addressing actions that are improper. That tool is a process audit. Audits can be very useful. In 1990, Freddie Mac's... MORE

Edward Glaeser on GSE Reform

Public Choice Theory
Arnold Kling
He sees it (earlier, preliminary, no-cost version here) as a public choice problem. If there is a high probability that political leadership will be induced to pursue policies that maximize the profitability of private entities at the expense of taxpayers,... MORE

More Comments on Principles-Based Regulation

Regulation and Subsidies
Arnold Kling
1. I think that many people are missing an important feature of principles-based regulation, which is the role of audits in producing compliance. I will explain that in the next post on the topic. 2. One principle I want to... MORE

Sentences to Ponder on the Eurozone

Eurozone crisis
Arnold Kling
1. From Tyler Cowen. It probably is about time to judge the euro zone as a failed idea -- and rarely is it wise to double down on failed ideas. 2. From David Zervos via John Mauldin's newsletter (you may... MORE

Eugenics and Man at Yale

Political Economy
Arnold Kling
The Yale Alumni Magazine has this: In the early decades of the twentieth century, eugenics "fell squarely in the mainstream of scientific and popular culture," according to Yale history professor Daniel Kevles, author of the 1985 book In the Name... MORE

My Review of James Manzi

Books: Reviews and Suggested Readings
Arnold Kling
is out in National Review (dead tree edition a couple weeks ago, on line now). Reihan Salam calls Manzi's work "the most important book of 2012." As you know, I think that honor belongs to Jonathan Haidt's The Righteous Mind,... MORE

The Anti-Mandel

Books: Reviews and Suggested Readings
Arnold Kling
I am reading Edward Conard's Unintended Consequences, because Tyler Cowen wrote, I find parts of this book brilliant and other parts dead wrong. In any case it is full of substance, it is one of the must-read books of the... MORE

PBR, once again

Regulation and Subsidies
Arnold Kling
Kyle writes, Kling's line is very simple: 1. Ideal regulatory systems can be modeled as games. 2. Regulators *try* to solve problem by creating regulations. 3. The regulated participants *try* to circumvent regulations by following the letter of the law,... MORE

The Importance of Nirvana

moral reasoning
Arnold Kling
On Wikipedia, The nirvana fallacy is the logical error of comparing actual things with unrealistic, idealized alternatives. It can also refer to the tendency to assume that there is a perfect solution to a particular problem. I thought of this... MORE

Principles-Based Regulation

Regulation and Subsidies
Arnold Kling
In my latest essay, I argue for principles-based regulation. With PBR, legislation would lay out broad but well-defined principles that businesses are expected to follow. Administrative agencies would audit businesses to identify strengths and weaknesses in their systems for applying... MORE

Timothy Taylor on Health Care Spending in the U.S.

Economics of Health Care
Arnold Kling
He concludes, The question of why the U.S. spends more than 50% more per person on health care than the next highest countries (Switzerland and Netherlands), and more than double per person what many other countries spend, may never have... MORE

Thoughts on Spain

Eurozone crisis
Arnold Kling
1. The Washington Post pushes the "austerity" narrative. The economic debate consuming Europe comes down to the question of whether struggling countries should choose austerity by clamping down on government spending to rein in unsustainable deficits or pursue growth stimulated... MORE

Criticizing Your Own Side

Politics and Economics
Arnold Kling
Mark Thoma thinks that pundits on the left are more willing to criticize their own team than pundits on the right. My guess is that people on the right think it's the other way around. If so, then let me... MORE

I Do Not Like Big Banks and Government

Finance: stocks, options, etc.
Arnold Kling
In NRO, I write, When large banks have resources, politicians will be tempted to treat them as piƱatas, taking whacks at them in order to extract money to distribute to constituents (see the recent "foreclosure settlement," or the pressure being... MORE

David Andolfatto Questions the Narrative

Finance: stocks, options, etc.
Arnold Kling
He writes, This couple bought their Reno home in June 1988 for $127,000. Their home is currently valued at $100,000. They currently have a mortgage worth $168,000. At first blush, this seems strange. Assuming a normal down payment and paying... MORE

Occupational Licensing

Regulation and Subsidies
Arnold Kling
Timothy Taylor summarizes some recent and not-so-recent research showing the surprising extent of occupational licensing. My own guess is that the politics of passing state-level occupational licensing laws is driven by three factors: 1) lobbying by those who already work... MORE

Baiting Garett Jones

IQ in Economics
Arnold Kling
Charles Kenny writes, The good news is that decolonization began a process of leveling the playing field, with rapidly climbing and converging indicators of health and education worldwide. Thanks to the Flynn effect, IQs are doubtless on a path of... MORE

Teen Pregnancy

Income Distribution
Arnold Kling
Timothy Taylor's post is based on an article by Melissa S. Kearney and Phillip B. Levine in the journal Taylor helps to edit. The cause-and-effect evidence here suggests that for many women who give birth as teenagers, their life outcomes... MORE

Cartel Federalism

Books: Reviews and Suggested Readings
Arnold Kling
In his book The Upside-Down Constitution, Michael Greve suggests that in theory there are two types of federalism. With competitive federalism, state governments compete with one another for citizens. With cartel federalism, state governments collude to raise spending and taxes... MORE

Brad Plumer, meet Bill McBride

Labor Market
Arnold Kling
Plumer writes, while part of the story is clearly that the labor force is shrinking because the bad economy is driving workers out, another significant factor is that baby boomers are beginning to retire early -- a trend that has... MORE

Group Affiliation Bias

Behavioral Economics and Rationality
Arnold Kling
Or something like that. Justin Fox writes, We all like to think we can evaluate information and arguments rationally, regardless of where they come from. But we don't. As Yale Law School's Dan Kahan, who has studied this stuff a... MORE

Another Reason to Distrust Non-profits

Political Economy
Arnold Kling
Reihan Salam quotes John DiIulio, Jr., About three-quarters of non-profit organizations, including most faith-based ones, spend under a half a million dollars a year and receive little or no government grant or contract money. But the quarter of the sector's... MORE

Notes on the "campus tsunami"

Economics of Education
Arnold Kling
David Brooks writes, The early Web radically democratized culture, but now in the media and elsewhere you're seeing a flight to quality. The best American colleges should be able to establish a magnetic authoritative presence online. My thoughts: 1. Do... MORE

Gray on Haidt

Books: Reviews and Suggested Readings
Arnold Kling
John Gray writes, With the possible exception of Poland, there is no advanced industrial country as deeply polarized as America is today. Gridlock in Washington is a failure of American politics, and the solution--if there is one--can only come from... MORE

Diamond Age Watch

Income Distribution
Arnold Kling
Timothy Taylor writes, Orazio Attanasio, Erik Hurst, and Luigi Pistaferri provide evidence that inequality of consumption has risen as well. But here, I want to focus on another one of their arguments: the rise in inequality of leisure. But there's... MORE

Let the Spinning Begin

Economic Methods
Arnold Kling
James Heckman and many co-authors write, a sample of rhesus monkeys...subject to a randomized early rearing protocol to show evidence that the lack of a secure attachment relationship early in life has detrimental consequences on physical and mental health later... MORE

What I'm Saying

Finance: stocks, options, etc.
Arnold Kling
At a Mercatus event on the future of housing finance. 1. In recent decades, the U.S. housing finance system took the "ownership" out of home ownership. Instead of starting out with equity in the form of a 20 percent down... MORE

What I'm Reading

Books: Reviews and Suggested Readings
Arnold Kling
The Kindle sample for Robert Hetzel's The Great Recession. I will probably buy the book, but its exorbitant price strikes me as profoundly unfair. If you are interested in the book, then I recommend my Million Mutinies series (continues here... MORE

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