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Arnold Kling: May 2011

An Author Archive by Month (39 entries)

On My Book Wish List

Books: Reviews and Suggested Readings
Arnold Kling
In addition to the Gwen Morgenson and Joshua Rosner book, I need to read the new Nick Gillespie/Matt Welch book (when it comes out) and also Adapt by Tim Harford. Short interview with Harford by Cory Doctorow. Longer interview with... MORE

PSST vs. Monetary Walrasianism

Macroeconomics
Arnold Kling
Nick Rowe writes, Why wouldn't a reduction in marginal tax rates on all forms of "nominal interest income" (i.e. all forms of "income" from deferred consumption) have exactly the same effect on Aggregate Demand as an increase in expected inflation?... MORE

PSST as Market Failure

Macroeconomics
Arnold Kling
Noah Smith seems to think of it that way. in a PSST world, there is no invisible hand. This opens the door for a hugely expanded role for government (or other large, centralized actors) in the macroeconomy. If global patterns... MORE

Bubble, Bailout, and Cover-Up

Finance: stocks, options, etc.
Arnold Kling
John Taylor writes, it is very hard to imagine that heavily regulated banks could have engaged in such extreme risk-taking without the support of regulators. Nobel prize-winning economist George Stigler warned long ago about "regulatory capture" -- the tendency for... MORE

How a Sovereign Default Plays Out

Fiscal Policy
Arnold Kling
Andrew Lilico writes, What happens when Greece defaults. Here are a few things: - Every bank in Greece will instantly go insolvent. - The Greek government will nationalise every bank in Greece. - The Greek government will forbid withdrawals from... MORE

Fukuyama and Kuran

Books: Reviews and Suggested Readings
Arnold Kling
Timur Kuran writes, A telling indication is that in their interactions with private or public organizations, citizens of Arab states are more likely than those in advanced democracies to rely on personal relationships with employees or representatives. This pattern is... MORE

Bryan's Challenge

Economic Methods
Arnold Kling
He wrote, Name the most credible measure of idea production that isn't at least moderately positively correlated with population. I think this is a somewhat imprecise formulation. First of all, "moderately positive" is vague. It could be a very low... MORE

Cancer Screening Costs and Benefits

Economics of Health Care
Arnold Kling
According to Robin Hanson, the latter are statistically small. While cancer screening does consistently lead to more cancer detection and more cancer treatment, it consistently doesn't lead to lower mortality. This is based on studies of breast cancer, colon cancer,... MORE

He writes, The policy being considered by the Obama administration, which would guarantee the mortgage-backed securities issued by mini Fannie and Freddies, is effectively handing taxpayer dollars to the intermediaries in the housing finance process. That's a good policy if... MORE

The One-Party State

Political Economy
Arnold Kling
Russ Roberts writes, I don't get it. Why is $4 million of taxpayer money going to a mall so that Costco will come to Wheaton? In a one-party state, businesses that are friendly to the party receive subsidies, and businesses... MORE

Innovations and Resistance

Information Goods, Intellectual Property
Arnold Kling
Matt Rognlie writes, an Apple or Google could come along and bargain with several national newspapers to assemble a cheap bundle of online subscriptions. Since the bundler would have a very strong incentive to provide a reasonable price for customers,... MORE

The Methodology is Flawed

Economic Methods
Arnold Kling
My father always said that there were three iron laws of social science. 1. Sometimes it's this way, and sometimes it's that way. 2. The data are insufficient. 3. The methodology is flawed. On politically sensitive topics, the tendency is... MORE

It is Health Care Consumption

Economics of Health Care
Arnold Kling
The Washington Post editorializes, There is no silver bullet to controlling health-care costs Until somebody listens, I will keep shouting that it is not health care "costs" that are out of control. It is the utilization of medical services. To... MORE

The Trickle-Down Stimulus

Macroeconomics
Arnold Kling
A commenter here writes, So the stimulus was the left's version of "trickle down economics"? Well, Timothy Conley and Bill Dupor write, We estimate the Act created/saved 450 thousand government-sector jobs and destroyed/forestalled one million private sector jobs. Thanks to... MORE

Argumentative Theory

Behavioral Economics and Rationality
Arnold Kling
says having a confirmation bias makes complete sense. When you're trying to convince someone, you don't want to find arguments for the other side, you want to find arguments for your side. And that's what the confirmation bias helps you... MORE

Vacation Bound

Econlog Administrative Issues
Arnold Kling
Starting Monday, I will be away for two weeks. During that time, my blog posting will be sporadic, at best. Bryan and David will have to carry the ball.... MORE

Specialized Labor

Labor Market
Arnold Kling
For over two centuries, economists have spoken of "labor" as if it were homogeneous. Back in the real world, people were learning trades, becoming trained as professionals, starting businesses, and otherwise undertaking to differentiate themselves. Macroeconomics, as we know it,... MORE

Gifts for the Gifted

Economics of Education
Arnold Kling
Frances Woolley looks at studies that question the effectiveness of "gifted and talented" programs. here is my take-away: There are great wads of resources thrown at gifted education, and little evidence of positive results for border-line gifted students The reason... MORE

These all come from Understanding Fischer Black, written ten years ago.... MORE

Welcome to Our Future

Fiscal Policy
Arnold Kling
Business Insider reports, The Irish government plans to institute a tax on private pensions to drive jobs growth I expect our government, too, to punish those of us who try to save for our own retirement. They need the money... MORE

I Suspect Options Writers

Finance: stocks, options, etc.
Arnold Kling
James Hamilton writes, Count me among those who maintain that buying high and selling low is unlikely to be a successful trading strategy. But if enough people believe otherwise, they can wreak a bit of havoc on the rest of... MORE

The Secession Solution

Political Economy
Arnold Kling
From a news report: A long-simmering movement by liberal stalwarts in southern Arizona to break away from the rest of the largely conservative state is at a boiling point as secession backers press to bring their longshot ambition to the... MORE

Has Someone Not Written This Paper?

Macroeconomics
Arnold Kling
Title: Technological Unemployment in a Stock-Adjustment Model Abstract: Innovation can cause overproduction of consumer durable goods relative to the desired stock. Unemployment can result, until new industries emerge to absorb labor. Think of the auto industry in the 1920s. Given... MORE

Notes from What I've Been Reading

Books: Reviews and Suggested Readings
Arnold Kling
As you know, it's Inventing Ourselves Out of Jobs? America's Debate over Technological Unemployment, 1929-1981., by Amy Sue Bix. It came out in 2000. I ordered it after seeing it referred to in A Great Leap Forward, the book I... MORE

Trade, Mechanization, and Displacement

Growth: Causal Factors
Arnold Kling
James C. Cooper writes, Between 1999 and 2009, these large global corporations pared 2.9 million workers from their U.S. payrolls while adding 2.4 million jobs at their foreign affiliates. That's a reversal from the previous decade, when they boosted payrolls... MORE

Cyclical vs. Technological Unemployment

Macroeconomics
Arnold Kling
Tyler Cowen writes about the hospitality sector of the economy, In terms of absolute levels, business is above where it was before the crisis. At first glance, that should seem enough to support the nominal wage levels of 2007. You... MORE

Anecdotes of an Informal Economy

Income Distribution
Arnold Kling
Victor Davis Hanson writes, There is a vast and completely unreported cash economy in Central California. Tile-setters, carpenters, landscapers, tree-cutters, general handymen, cooks, housekeepers, and personal attendants are all both finding work and being paid in cash. Peddlers (no income... MORE

Field Review

Books: Reviews and Suggested Readings
Arnold Kling
As promised, here is my review essay on Alexander Field's A Great Leap Forward. I think the highlight of the essay is the table that lays out the six eras discussed in the book. How much does the current period... MORE

Momentum in Employment

Labor Market
Arnold Kling
The employment situation report for May 6 shows a gain of 700,000 jobs over the three-month period February through April. One thing I learned from Ed Leamer's Macroeconomic Patterns and Stories is that there is momentum in employment. If history... MORE

Short, Readable Book on Economics

Books: Reviews and Suggested Readings
Arnold Kling
A Marginal Revolution Reader writes to Tyler: There must be a good, short book out there on economics that illuminates the power of markets and the economic way of thinking. I recommend The Best Book on the Market, by Eamonn... MORE

Debating Monetarism

Macroeconomics
Arnold Kling
Matt Rognlie takes on the monetarists. Note that the comments on the post, including Matt's comments, are where the debate gets elucidated.... MORE

The Alternate Universe Problem

Fiscal Policy
Arnold Kling
At the moment, I am very pessimistic about the prospects for the United States solving its fiscal problems without a crisis. Given that we have divided government, a reasonable long-term budget will require a compromise. But the two sides seem... MORE

Starve-the-Beast Health Care Policy

Economics of Health Care
Arnold Kling
Jed Graham writes, Much has been written about Ryan's plan to have the vouchers only keep pace with inflation, which is generally well below health care inflation. But almost nothing has been said about how the Democrats' own health care... MORE

The Anti-Hanson on Health Care

Economics of Health Care
Arnold Kling
John A. Nyman has a theory under which it is efficient to stimulate health care spending with health insurance. When the care that was deemed to be welfare-decreasing is reclassified as welfare-increasing, health insurance becomes much more valuable to consumers... MORE

Thoughts on Accounting

Finance: stocks, options, etc.
Arnold Kling
From Liberty Fund's Daniel Austin Green. This scientific idealization also disregards the deeply political and decidedly non-scientific nature of many aspects of accounting and stands at odds with the emphasis on experience, judgment, and artistry used to justify CPAs' role... MORE

A Bet I Will Make

Finance: stocks, options, etc.
Arnold Kling
Some comments on my post on Social Security challenged me to bet. Here is a bet I am willing to make. It concerns the following proof. 1. national output = national income (note that is true by definition in a... MORE

Seagren on Service

Economic Philosophy
Arnold Kling
To David's recommendation, I wish to add mine. One of my pet peeves is people who describe volunteer work and non-profit work as "giving back." Instead, working for a profit can be (and, I suspect, usually is) a higher form... MORE

Notes From the Field

Books: Reviews and Suggested Readings
Arnold Kling
That is, from Alexander J. Field's A Great Leap Forward. I rate the book as must-read. It is about the behavior of productivity in various eras of the twentieth century. He rates the 1930's the highest (!) and the 1973-1989... MORE

Martin Feldstein writes, With a 3% payroll deduction, someone with $50,000 of real annual earnings during his working years could accumulate enough to fund an annual payout of about $22,000 after age 67, essentially doubling the current Social Security benefit.... MORE

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