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Arnold Kling: April 2008

An Author Archive by Month (34 entries)

A High-Wage Equilibrium

Labor Mobility, Immigration, Outsourcing
Arnold Kling
A commenter points me to Will Wilkinson's post where he links to The Economist Intelligence Unit's ranking of Denmark as the best country to do business. About the Danish labor market, they write The system combines low non-wage labour costs... MORE

A Meditation on Minarchy

Political Economy
Arnold Kling
Charles Kessler writes, continued growth of government is not inevitable. But a word of caution: Neither is big government’s demise inevitable. Sometimes conservatives and even libertarians predict that big government is doomed. Some point to modern technology as the savior:... MORE

Environmental Disasters

Energy, Environment, Resources
Arnold Kling
According to Iain Murray's new book, the worst disasters come from environmental policy. It is remarkable the magnitude of the harm caused by government relative to the harm caused by the private sector from which it protects us. My co-blogger... MORE

Important Data on Access to College

Economics of Education
Arnold Kling
From an column in the Chronicle of Higher Education. Among high-school students who graduated in the bottom 40 percent [UPDATE/correction]: in a comment, Adelman writes that this is the bottom 20 percent] of their classes, and whose first institutions were... MORE

Insiders, Outsiders, and Voting Behavior

Political Economy
Arnold Kling
Tyler Cowen writes, real world political debate is not fundamentally a macro-cosm of the thought processes of a smart person, or of one smart person debating another. The politics of confrontation usually turn ugly. Since my father's death, I have... MORE

Modern Recessions

Macroeconomics
Arnold Kling
Robert Hall writes, One of the most important facts about the modern recession is at all sectors of the labor market slacken at the same time. . .Each of the seven major sectors—even including government—were recruiting to fill far fewer... MORE

Political Economy Lessons for the World Bank

Institutional Economics
Arnold Kling
Some major league teachers. Nobel Laureate Douglass North writes, Our political history emphasizes modifications to natural state institutions in the 18th century that led to concern within the elite that political competition would inevitably lead to consolidated political control by... MORE

Income Distribution Reality

Income Distribution
Arnold Kling
In his new book Unequal Democracy, Larry Bartels writes (p.7), families at the 20th percentile experienced declining real incomes in 20 of the 58 years...by comparison, families at the 95th percentile have experienced only one decline of 3% or more... MORE

Fiscal Reality

Social Security
Arnold Kling
Some numbers from the proposed Budget for 2009 for the Federal government. I try to divide non-security spending crudely into necessary spending (courts, justice, Treasury, the mysterious "other" mandatory spending) and "worthy causes" (things that are really discretionary). Update: Figures... MORE

Loose Mortgage Credit

Finance: stocks, options, etc.
Arnold Kling
Atif R. Mian and Amir Sufi write, We demonstrate that high 1996 latent demand zip codes experience a dramatic relative reduction in mortgage denial rates during this time period. Simultaneous with the reduction in denial rates, high 1996 latent demand... MORE

Credit Spreads and the Fed

Finance: stocks, options, etc.
Arnold Kling
John B. Taylor and John C. Williams write, the spread on August 9 was 25 basis points above the pre-August 9, 2007 average. That is 7 times the standard deviation before August 9—more than a 6-sigma event. The mean through... MORE

A Basic Economic Lesson

Income Distribution
Arnold Kling
In the latest econtalk, Russ Roberts just speaks himself. The result may be my favorite of all of his podcasts. If you had just one hour to learn essential, basic economics, listening to this talk would be the way to... MORE

Peasants vs. Nomads

Books: Reviews and Suggested Readings
Arnold Kling
I review Philip Carl Salzman's Culture and Conflict in the Middle East. I write, Salzman sees differences between growing crops and raising livestock. Growing crops fosters a society rooted in the soil, with strict hierarchy and strong, predatory central government.... MORE

Wilkinson and Shirky

Information Goods, Intellectual Property
Arnold Kling
Want to see two bright, good-looking guys discuss economics and media? Then watch the latest episode of Free Will, with Will Wilkinson interviewing Clay Shirky. The topic is one of my favorites, and these are two of my favorite thinkers.... MORE

Assortative Living

Political Economy
Arnold Kling
Reviewing a book by Bill Bishop, Alan Ehrenhalt writes, there is one simple statistic, rightly seized on by Mr. Bishop, that is difficult to explain away. It is this: In 1976, less than a quarter of the American people lived... MORE

I Still Hate Monetary Theory

Macroeconomics
Arnold Kling
On an earlier thread, a commenter wrote: 1) What happens to the value of the dollar when new forms of money, like credit cards, are introduced? I expect you'd say that the value of the dollar would fall, but this... MORE

Diminishing Returns and Life

Behavioral Economics and Rationality
Arnold Kling
Tyler Cowen recently solicited topics, and I peeked. Here was one: More "meta" stuff -- how to read, how to think, how to write, etc. Tyler's tricks on being a prolific, successful academic. My tip is to pay attention to... MORE

Why I am an Austro-Keynesian

Austrian Economics
Arnold Kling
A commenter on an earlier post points me to Steven Horwitz: As excess supplies of money work their way through the market, they cause differential effects on prices. Some go up by a lot, some only by a little. These... MORE

Behavioral Economics Ready for (Sub) Prime Time?

Regulation and Subsidies
Arnold Kling
Richard H. Thaler and Cass R. Sunstein write, government would achieve simplified transparency by requiring all lenders to provide borrowers with an electronic file that contains, in standardized form, information on every feature of the contract. Instead of fine print,... MORE

Book Club Worthy

Books: Reviews and Suggested Readings
Arnold Kling
On page 139 of Second Nature, Haim Ofek writes, In close analogy with the female role in sex selection, customers (of both sexes) seem to be highly inquisitive about the merchandise they seek to acquire; thus collecting information, checking warranties,... MORE

The Muddle that is Macro

Macroeconomics
Arnold Kling
Without irony, Greg Mankiw points to both John Makin, arguing in the Wall Street Journal for loose money, and Martin Feldstein, arguing the next day for tight money. Meanwhile, today's Washington Post has a story with a typical headline: Economy's... MORE

What I'm Reading (Slowly)

Books: Reviews and Suggested Readings
Arnold Kling
Second Nature, by Haim Ofek. It was written in 2001. It tries to address some puzzles in evolution and in ancient economic history. For example, why is the human brain overdeveloped, in the sense that it is larger than necessary... MORE

Merle Kling

Political Economy
Arnold Kling
His obituary is in today's St. Louis Post-Dispatch. Merle Kling, retired provost, dean and professor of political science at Washington University, died Tuesday (April 8, 2008) at Barnes Extended Care in Clayton... Mr. Kling's tenure as dean covered the Vietnam... MORE

Daniel Klein on Libertarianism

Political Economy
Arnold Kling
For an encyclopedia, he writes, In the eyes of the libertarian, everything the government does that would be deemed coercive and criminal if done by any other party in society is still coercive. For example, imagine that a neighbor decided... MORE

American Excess

Income Distribution
Arnold Kling
From a longer essay on Inequality and Excess: I feel awkward and defensive when the subject of economic inequality comes up. The fact is that I cannot say that I feel comfortable with the levels of inequality and excess that... MORE

Be Careful What You Wish For

Political Economy
Arnold Kling
Dean Baker writes, Remarkably, the Post editorial writers seem to be the only ones who have noticed that the Senate "Foreclosure Prevention" bill will give banks an incentive to carry through foreclosures. The bill would give a $7,000 tax credit... MORE

Please Stop

Behavioral Economics and Rationality
Arnold Kling
Will Wilkinson writes, I just got Arthur Brooks’ new book Gross National Happiness in the mail. Brooks quite rightly points out that happiness research doesn’t really do much to support conventional liberal policies, and he gives it a right-wing spin,... MORE

Make them take Basis Risk

Finance: stocks, options, etc.
Arnold Kling
Eric Falkenstein writes, because financial contracts have virtually zero marginal costs, sometimes an inflated 'face value' arises because it is easier to keep adding offsetting ones, rather than extinguishing some and starting over, the way a futures open interest works.... MORE

The Willpower Muscle

Behavioral Economics and Rationality
Arnold Kling
Sandra Aamodt and Sam Wang write, In the short term, you should spend your limited willpower budget wisely. For example, if you do not want to drink too much at a party, then on the way to the festivities, you... MORE

The Virtues of Small Enterprise

Business Economics
Arnold Kling
Paul Graham writes, The average MIT graduate wants to work at Google or Microsoft, because it's a recognized brand, it's safe, and they'll get paid a good salary right away. It's the job equivalent of the pizza they had for... MORE

Finally, a Pure Bailout

Finance: stocks, options, etc.
Arnold Kling
The Washington Post headline reads Housing Accord Puts Builders First but waits until the last paragraph to explain. Both parties wanted to help home builders and other businesses. Under the agreement, corporations that lose money in 2008 and 2009 would... MORE

What is a Market Economy?

Economic History
Arnold Kling
Troy Camplin writes, In the "Acharnians," Dicaeopolis is in Athens and complaining about the war and how he is "longing hopelessly for peace, loathing town and homesick for my village . . . where you don't hear cried of "Buy... MORE

Regulatory Re-Org

Business Economics
Arnold Kling
Tyler Cowen ponders the theoretical merits of a proposed re-organization of financial regulation. The Fed is smarter than other regulators, the Fed can pay higher salaries, and the Fed has more independence. ...One important question is what kind of relationship... MORE

Economics Appears Late

Economic History
Arnold Kling
Tyler Cowen writes, the absence of a developed economics until the mid-18th century remains a startling anomaly in the history of ideas. Why was that? I would note that the theory of probability also was developed surprisingly late. I think... MORE

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