Bryan Caplan and David Henderson

Business Economics

A Category Archive (251 entries)

Hachette and Amazon made a deal

Business Economics
Alberto Mingardi
I have previously commented on the quarrel between Amazon and Hachette, a cause celebre that brought Paul Krugman to argue against Amazon's "market power." Now the contract dispute has, as it happens with contract disputes, come to an end. The... MORE

Krugman on Amazon

Business Economics
Alberto Mingardi
What does it mean that Amazon has "too much power"? Paul Krugman has published a vehement column on the online retailer, arguing basically that Amazon enjoys a significant "market power" vis-à-vis publishers. He refers to the feud between Amazon and... MORE

Walmart to the Rescue

Economics of Health Care
David Henderson
While away on my vacation in Canada, I missed this story about Walmart and health care. Here's an excerpt: After years of "Will they or won't they?" discussion, Walmart is making its long-awaited move into delivering primary care: The retailer... MORE

Trust, Even in the Face of Government Hostility

Business Economics
David Henderson
In markets, even illegal ones, we sometimes trust. Seventy miles to the southeast in Quebec's Eastern Townships [DRH note: this is where my grandfather and grandmother grew up in the 1800s: my grandfather was born in 1855, my grandmother in... MORE

A Patron Saint for entrepreneurs

Business Economics
Alberto Mingardi
In a Financial Times article, Luke Johnson searched for "a patron saint for entrepreneurs". For Catholics, that's Saint Homobonus. The fact that the patron saint of business is emphatically named "Good Man" is in itself remarkable, and should be reminded... MORE

Boudreaux on Piketty

Business Economics
David Henderson
Piketty reasonably assumes that if government finances its expenditures with taxes, then the rich would pay a disproportionately large share of those taxes. But he unreasonably assumes that debt financing of government expenditures not only allows the rich to escape... MORE

Bruce Benson on the Holdout Problem

Business Economics
David Henderson
My bleg about eminent domain yesterday led to a useful discussion in the comments. Dan Klein recommended that I read Bruce Benson's article, "The Mythology of Holdout as a Justification for Eminent Domain and Public Provision of Roads." I've done... MORE

Eminent Domain Bleg

Business Economics
David Henderson
In a comment on my earlier post today, Tom West writes: I'm fairly certain that most infrastructure projects like pipelines or electrical transmission corridors would *never* get built without the government power of eminent domain. That's a reasonable view, and... MORE

Mind Your Own Beesness

Business Economics
David Henderson
Rucker and Thurman point out that outbreaks of bee disease are not new: reading their article is your chance to get up to speed on varroa mites, tracheal mites, the bacterial infection called American foulbrood, and the nosema and chalkbrood... MORE

You Nasty Creators of Consumer Surplus

Business Economics
David Henderson
Longtime partners Alaska Air Group Inc. and Delta Air Lines Inc. are slugging it out in a battle for Seattle that is turning into one of the U.S. airline industry's nastiest turf wars in years. So reads the opening paragraph... MORE

Jeff Deist of the Mises Institute interviews one of my favorite writers on cars, Eric Peters. Whenever I teach my Energy Economics course, I spend a little time on how CAFE messes up cars. Peters discusses that in more... MORE

Maximizing Short-Run Profits

Business Economics
David Henderson
I was one of three speakers on a panel at the San Francisco Federal Reserve Bank on Wednesday. The other two speakers were Kevin Lansing of the SF Fed and Atif Mian of Princeton University. The event went well and... MORE

Robert Bradley on Enron

Business Economics
David Henderson
My previous Econlib article, "Enron: The Perils of Interventionism," described how capitalism's most trenchant critics turned the rise and fall of this once iconic corporation into "Exhibit A" against laissez-faire. Other critics, though, understanding that America's regulated economy leaves no... MORE

Was Bork Right About Mergers?

Business Economics
David Henderson
In a just-published NBER study, "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," NBER Working Paper 19939, economists Orley C. Ashenfelter of Princeton, Daniel Hosken of the Federal Trade Commission, and Matthew C. Weinberg of... MORE

Reminiscences of Rogge

Business Economics
David Henderson
UPDATE BELOW: Earlier today over at Cafe Hayek, Don Boudreaux highlighted a quote from the late Benjamin A. Rogge. That brought back warm memories for me. Rogge, who lived from 1920 to 1980, was a libertarian economics professor at Wabash... MORE

Jason Furman: Excellent or Sad

Business Economics
David Henderson
Tyler Cowen recently linked to an article in the Washington Post about "the excellent Jason Furman." And if you read the puff piece article, you would certainly think Furman is an excellent economist. The writer, Zachary A. Goldfarb, tells tale... MORE

American Hustle: Unreal and Real

Business Economics
David Henderson
WARNING: MULTIPLE SPOILERS AHEAD I saw the movie, American Hustle, on Friday night and liked it a lot. I liked the pace and I especially liked the integration with 1970s music, one of my favorite decades for pop music. I... MORE

You read that headline right. This last Wednesday, I sat for over an hour in a waiting room while my wife was having a medical procedure. On the way to the outpatient facility early that morning, I picked up my... MORE

We often hear people, including businessmen, lament the fact that the government doesn't seem to be run like a business. Many of them want it to. In one of the two December Feature Articles, "Why Government Doesn't--and Can't--Manage Resources Like... MORE

If You're So Smart . . .

Labor Market
David Henderson
In a recent blog post, my friend Don Boudreaux writes: In short, monopsony power in labor markets keep workers underpaid. With all those underpaid workers out there--and because there are no government-enforced prohibitions on starting companies that employ low-skilled workers--a... MORE

The Economics of Receipts

Business Economics
David Henderson
Megan McArdle has an excellent short piece on why businesses provide receipts even when customers don't ask for them. She gives a brief interesting history of the introduction of cash registers also. Bottom line: the purpose of cash registers, with... MORE

Costco vs. Wal-Mart

Business Economics
David Henderson
In other words, Trader Joe's and Costco are the specialty grocer and warehouse club for an affluent, educated college demographic. They woo this crowd with a stripped-down array of high quality stock-keeping units, and high-quality customer service. The high wages... MORE

Where no publisher has gone before

Business Economics
Alberto Mingardi
As he already revolutionized logistics, floored old fashioned retailers, and made a bookstore a thriving business, expectations are very high for Jeff Bezos as the new publisher of Washington Post. Certainly newspapers might need a little bit of creative destruction,... MORE

Upstart Bleg: Help Paul Gu Help You

Business Economics
Bryan Caplan
Paul Gu, one of the winners of Peter Thiel's 20under20 fellowships, has co-founded a company called Upstart.  In this guest post, he explains his idea, pre-answers common questions, and solicits novel questions.  And now... Paul Gu! Human Capital Contracts for... MORE

The Economics of Self-Imposed Price Ceilings

Business Economics
David Henderson
About once every two weeks, I drive to Costco for my favorite fast food per dollar: the famous Costco hotdog. It's priced, along with a soda with free refills, at $1.50 plus tax. In Sand City, California, my local Costco,... MORE

Twitter vs. Flying Cars

Growth: Causal Factors
David Henderson
You've probably heard that line from Peter Thiel: We wanted flying cars, instead we got 140 characters. That line expressed his disappointment about how technology has turned out. Now, when rich libertarian entrepreneurs, especially ones I admire as I do... MORE

Bastiat on Baseball

Business Economics
David Henderson
Without question, advancing a runner to the next base makes it easier for the runner to score. You can literally see the runner move to the next base. That's easy. But as Bastiat declared, ""Stop there! your theory is confined... MORE

Tullock on Advertising

Business Economics
David Henderson
I'm at a Liberty Fund conference on bureaucracy in Brunswick, Maine and I found an interesting passage in one of the readings, Gordon Tullock's The Politics of Bureaucracy. It's an aside on advertising. Tullock writes: Due to the ubiquitousness of... MORE

Apple's E-Books are Pro-Competitive

Business Economics
David Henderson
The Wall Street Journal had an excellent editorial today (print) and yesterday (electronic) on the absurd antitrust suit against Apple. It's titled "Throwing the Book at Apple." Two paragraphs: At the time, prior to the existence of the tablet device... MORE

Jason Furman at CEA

Business Economics
David Henderson
There's a rumor, presumably well-founded, that Jason Furman will become the next Chairman of the Council of Economic Advisers. Given the universe of people from whom President Obama probably chose, I think it's probably a good choice. Four years ago,... MORE

"Most Economists?" Really?

Business Economics
David Henderson
Sari, Ed. My friend Edward Lopez, who blogs here, linked on Facebook to a great story from the New York Times about an entrepreneur's solution to the challenge of dry-cleaning saris. It's neat and the piece is short. Then Ed... MORE

Some Economics of Wal-Mart

Labor Market
David Henderson
Last month, I received an e-mail from a high school student named Kelsey Stolz and I took some time to reply. I think our correspondence would be of wider interest. Here it is. Kelsey: I am a junior in high... MORE

Rockefeller's Railroad Rebates

Business Economics
David Henderson
I had always wondered why John D. Rockefeller would get rebates on railroad shipments, not of his own oil--that I understand--but of his competitors' oil. Such rebates were called "drawbacks." Here's the answer that Michael Reksulak and William F. Shughart... MORE

Great Moments in Cost Cutting: Rockefeller Edition

Business Economics
David Henderson
Rockefeller was relentless in ferreting out ways to cut costs. During an inspection tour of a Standard Oil plant in New York City, for instance, he observed a machine that soldered the lids on five-gallon cans of kerosene destined for... MORE

Don't Let Your Boss Hold You Back

Business Economics
David Henderson
One of the most-powerful pieces of advice that Dwight R. Lee and Richard B. McKenzie give in their book, Getting Rich in America: 8 Simple Rules for Building a Fortune and a Satisfying Life, is: Don't Let Your Boss Hold... MORE

Competition is a Hardy Weed

Business Economics
David Henderson
Pillar #10 of my "Ten Pillars of Economic Wisdom" is: Competition is a hardy weed, not a delicate flower. I thought of that when I read Steven Denning's recent article on the recent bankruptcy of Monitor. It's titled, "What Killed... MORE

Driving the Cool Kids Out

Business Economics
Garett Jones
Abercrombie and Fitch doesn't carry jeans with a waist size larger than 36 inches.  But the Centers for Disease Control reports that the median American male has a 40 inch waist. Why does A&F give up on so many potential... MORE

Business Accountability: Good and In-Between

Business Economics
David Henderson
I've had two experiences in the last few weeks in which one business was incredibly accountable and one business was reasonably accountable although its employee was so-so. The good story first. I was traveling home from Miami to Monterey on... MORE

Housing Bubble and Fraud

Behavioral Economics and Rationality
Luigi Zingales
Preet Bharara, Manhattan's U.S. attorney, is a man on a mission. Not satisfied with the historical conviction of former McKinsey managing director Raja Gupta for insider trading, he quickly moved to investigate mortgage fraud. Earlier this month he sued Wells... MORE

My Visit to NASA

Business Economics
David Henderson
Every fall quarter I teach an economics class to Executive MBA students by distance learning. For the first time, we have civilians in the program--in this case 5 students from NASA's Johnson Space Center in Houston. When I teach 5... MORE

Tribute to an Audience

Business Economics
David Henderson
UPDATE below. One of the lessons I tell my friends who want tips on speaking is one that, in the intensity of the moment, I often forget to do myself. Last Tuesday, I remembered. It is to lead with a... MORE

As Goes Janesville

Business Economics
Luigi Zingales
Saturday I had the chance to see a screening of the much awaited documentary film As Goes Janesville (http://371productions.com/what-we-make/documentaries/as-goes-janesville/ ) by Brad Lichtenstein. The documentary follows the life of a small town (Janesville, Wisconsin, 63,479 inhabitants) as a GM plant,... MORE

Changing the Corporate Form of Organization

Political Economy
Arnold Kling
Concerning U.S. corporate law, Kent Greenfield writes, Compare this to the European model of corporate governance, which requires much more robust social obligation on the part of corporations, embodied not only in cultural norms but also in law. The duty... MORE

California: Land of the Free

Regulation
David Henderson
I went on line a few days ago to order some vitamins. One of the items I ordered was Green Tea Complex. When I tried to place the order, I got a message in red saying that I couldn't order... MORE

August 1: Freedom for Western Canadian Wheat Farmers

International Trade
David Henderson
On August 1 this year, the Canadian government's monopsony over western Canadian wheat will end. For 68 years, farmers in western Canada have been able to sell their wheat legally only to one entity: the Canadian Wheat Board. But starting... MORE

Mitt Romney's Passion

Business Economics
David Henderson
I don't think of Mitt Romney as a passionate man. But there is one area in which I think he shows some passion: defending businesses and corporations from hostile attacks. I saw this when he argued that "corporations are people."... MORE

David Brooks Repeats Himself

Behavioral Economics and Rationality
Arnold Kling
I thought that Why Our Elites Stink (I suspect Brooks winces at the headline the editors supplied) these people are brats; they have no sense that they are guardians for an institution the world depends on; they have no consciousness... MORE

A Thought to Ponder

Behavioral Economics and Rationality
Arnold Kling
from Timothy Taylor. Behind Hornbeck's estimates seems to me a deeper pattern of human behavior. When confronted with difficulties, leaving to try somewhere else is hard, but do-able. Staying and continuing with the same behavior is unpleasant, but do-able. But... MORE

McKenzie's Defense of Apple

Business Economics
David Henderson
Interestingly, since 2010, when Apple and the publishers were supposedly conspiring against consumers, e-book sales have escalated by several hundred percent and as a percentage of all book sales, perhaps, in part, because of the so-called "anticompetitive conspiracy." That fact... MORE

Basic Research Does Not Equal Technology

Business Economics
David Henderson
One of the best articles by the late William A. Niskanen, which I used to great effect in my recent "Energy Economics" course, is his take-apart of "Bacon's Chain." The article is titled "R&D and Economic Growth: Some Cautionary Tales,"... MORE

I Flunk Horwitz's Doonesbury Contest

Economic Education
David Henderson
Attention undergraduates: Here is an opportunity for you to get published. Take a look at today's Doonesbury as it's chock full of bad economics. I would like to have a contest to see which undergraduate can produce the best response... MORE

The Case for a Strong Government Auditor

Business Economics
Arnold Kling
In an essay, I write, An independent auditor has some obvious potential problems. On the one hand, it could be ineffectual if it turns out to be weak relative to the independent agencies, or captured by them. On the other... MORE

Sentence to Ponder

Business Economics
Arnold Kling
From Tyler Cowen: If your blogging or writing doesn't increase the degree of trust among people who do not agree with each other, probably you are lowering the chance for better policy, not increasing it, no matter what you perceive... MORE

Merit, Ethics, and Reward

Business Economics
David Henderson
I've enjoyed the back and forth between co-blogger Bryan Caplan and Trevor Burrus. I'm starting to think that a good line for Vizzini to have used in "The Princess Bride," besides "Never get involved in a land war in Asia,"... MORE

Wal-Mart's Positive Effects

Business Economics
David Henderson
Devin G. Pope and Jaren C. Pope have recently had a Working Paper published by NBER. It's #18111 (May 2012) and it's cleverly titled, "When Walmart Comes to Town: Always Low Housing Prices? Always?" Here's an ungated version. In it,... MORE

You Come to Resemble Your Customers

Business Economics
Arnold Kling
Tyler Cowen quotes from a wide-ranging essay by David Graeber. The growth of administrative work [in universities] has directly resulted from introducing corporate management techniques. Invariably, these are justified as ways of increasing efficiency and introducing competition at every level.... MORE

Friday Night Video: The Joy of Capitalism

Economics of Health Care
David Henderson
This is from a talk I gave in 2001. Update: In response to Jonathan Bechtel below. For how strangers who are paid to be nice to you look awfully like a friendly community, see my post on New York.... MORE

Are Unpaid Internships Immoral?

Labor Market
David Henderson
Derek Thompson at the Atlantic blog argues that unpaid internships are immoral. His case? The essence of it is that because the employer gets valuable services, the employer should pay for them. Of course, the employer does pay for them,... MORE

Mankiw's Missing Solution

Business Economics
David Henderson
I'm using some of the chapters of Greg Mankiw's economics textbook, Essentials of Economics, in an Energy Economics class I'm teaching. Most of the students have never taken an economics course or took one more than 7 years ago. I've... MORE

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

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

Peter Thiel on Business

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

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

Ed Glaeser on Job Creation

Labor Market
Arnold Kling
He writes, In every year since 1989, new companies have created more net jobs than the economy as a whole, which means that older companies are, on average, destroying more jobs than they create. In 2009, the latest year for... MORE

Some Observations About Firing

Business Economics
Arnold Kling
Bryan poses the issue of why bosses are reluctant to fire unproductive employees. My observations: 1. Firing involves a confrontation. You tend to want to avoid confrontations. In large organizations, the confrontation is indirect. The boss tells HR, and HR... MORE

Thinking about Think Tanks

Politics and Economics
Arnold Kling
Tevi Troy writes, If donors see and use think tanks as pawns in a political war, the value of their product will be diminished in the eyes of the public, journalists and senior government officials. He made this point in... MORE

Cato and the Kochs, Take 3

Business Economics
Arnold Kling
A Wapo Blogger has an email from the Kochs. I hesitate to add another take. If my basic view is that this less important than it seems, it is strange to blog three times on it. More below the fold.... MORE

Videoconferencing and Health Care

Business Economics
Arnold Kling
Scott Gottlieb writes, A patient recently asked me why doctors don't spend more time communicating over email or by videoconferencing. There's a simple answer: Medicare hasn't created a billing code for these services. I would love to stand up and... MORE

Another Take on the Soap Opera

Politics and Economics
Arnold Kling
Will Wilkinson writes, this isn't a battle between good and evil, and the stakes are probably lower than you think. Not unlike my take, although he has more inside knowledge than I do. Read the whole thing. I have a... MORE

The Koch Cato Affair

Business Economics
Arnold Kling
Don Boudreaux shares his thoughts. My take: 1. Usually, corporate soap opera is less important in the grand scheme of things than it is to the people involved. Institutions go on. History goes on. 2. We discussed think tanks with... MORE

Fisker Update

Business Economics
Arnold Kling
not doing well, apparently Wray alleges he received word from Fisker on January 18th in the form of a letter informing him that due to the need for equity capital financing there was now a pay to play action in... 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

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

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

The Business Reporters We Have

Business Economics
Arnold Kling
Once again this week, the Washington Post Outlook section is an exercise in feeding its readers' anti-market prejudices. One prominent feature is an article by Jia Lynn Yang, a business reporter. The nagging problem with the consulting worldview, however, is... MORE

Business Experience

Business Economics
Arnold Kling
Will Wilkinson summarizes some discussion of the relevance of business experience to being President. One of the tropes that he mentions (without endorsing it) is that "business people don't realize that when you come to Washington you just can't boss... MORE

The Case for a Re-org of the Executive Branch

Business Economics
Arnold Kling
My latest essay: As an example of careless organizational structure, consider that prior to the financial crisis the Federal Reserve Board was responsible for consumer protection with respect to mortgages, while the Department of Housing and Urban Development was responsible... MORE

The Chess Game of Health Care Regulation

Economics of Health Care
Arnold Kling
Daeho Kim writes, To identify the impact of PPS on cardiac procedures, I exploit the discontinuity in Medicare eligibility at the age of 65. Utilizing data from before-and-after the PPS [prospective payment system] reform, I find a discontinuous change in... MORE

SarbOx and MF Global

Business Economics
Arnold Kling
There has been a lot of mention of Sarbanes-Oxley in the context of the failure of MF Global. This might be a good test of whether SarbOx is worth anything. 1. How much of MF Global's behavior was criminal pre-SarbOx?... MORE

Thinking About CEO Pay

Business Economics
Arnold Kling
Tyler Cowen writes, Keep in mind that we are already juggling a few margins here, including "getting this CEO to work harder or better" and "this CEO vs. another." Read the whole thing, as well as his previous post. Some... MORE

Freddie, Fannie, and Risky Mortgage Lending

Finance: stocks, options, etc.
Arnold Kling
Charles Calomiris uses internal emails to tell the story of what happened between 2004 and 2008. The turning point was the spring and summer of 2004. Fannie and Freddie had kept their exposures low to loans made with little or... MORE

Are the Illegal Drug Suppliers Really Cartels?

Business Economics
David Henderson
I was watching a TV show last night about some of the ingenious ways that drug suppliers use to move drugs across the border: well-built tunnels, a crane lifting a vehicle over the wall, a catapult heaving drugs over the... MORE

Confirmation for Baumeister's Gender Analysis?

Behavioral Economics and Rationality
Arnold Kling
From the Harvard Business Review blog: Men were more confident across all age groups, with 70% of males having high or very high levels of self-confidence, compared to 50% of the women surveyed. Half of women managers admitted to feelings... MORE

More on Kevin Murphy and the NBA

Business Economics
David Henderson
On September 26, I wrote a blog post titled, "Note to David Stern and the NBA: Be Afraid; Be Very Afraid." In it, I noted that the NBA players' union had hired one of the smartest economists in the world,... MORE

Against Merit Pay for Teachers

Business Economics
Arnold Kling
That would be my position. A government-run system of teacher compensation, based on test scores, would in some ways be the worst of all worlds. It would create incentives for teachers to "game" the system. It would give too much... MORE

Business Reality vs. Wonk Theory

Business Economics
Arnold Kling
Felix Salmon writes, And while the state attorneys general -- at least in states like New York and California -- might have a more aggressive stance towards the big banks than Treasury does, the fact is that they, too, are... MORE

Venture Capital and Loan Guarantees

Business Economics
Arnold Kling
It is important to understand the difference. Megan McArdle writes, A lot of Solyndra's defenders have been arguing that if the government is going to play venture capitalist, this is simply what's going to happen: venture capitalists accept that a... MORE

Pay for Performance

Behavioral Economics and Rationality
Arnold Kling
Bruno S. Frey and Margit Osterloh give a number of reasons to question the effectiveness of performance-based compensation systems. One of the reasons should be familiar to readers of this blog. It would be naïve to assume that the persons... MORE

Billy Beane Arbitrage

Business Economics
David Henderson
Byran posted this morning on Moneyball. Here's what Charley Hooper and I wrote on it in our 2006 book (we probably wrote this segment in 2004), Making Great Decisions in Business and Life. Billy Beane Baseball One of the most... MORE

This Should Not be News

Business Economics
Arnold Kling
Tyler Cowen quotes from a paper by Erik Hurst and Benjamin Wild Pugsley: most small businesses have little desire to grow big or to innovate in any observable way. We show that such behavior is consistent with the industry characteristics... MORE

They [the Department of Transportation and the Environmental Protection Agency] will swoop in with turgid - and then threatening - demands that you sell no cars to the public (no matter how much the public may want those cars) until... MORE

Economics Everywhere

Business Economics
David Henderson
The resourcefulness of free markets. Most mornings I go to the Starbuck's at the local Safeway to buy coffee for my wife. When I went this morning, I pulled up beside an unoccupied Sara Lee truck delivering bread. Outside the... MORE

Adaptation

Business Economics
Arnold Kling
This official Google blog post says, Over the next few months we'll be shutting down a number of products and merging others into existing products as features. The list is below. This will make things much simpler for our users,... MORE

AT&T/T-Mobile Merger is Pro-Consumer

Business Economics
David Henderson
The share prices of AT&T and T-Mobile parent Deutsche Telekom AG fell sharply, while shares of No. 3 cellphone company Sprint Nextel Corp., seen as the biggest loser if the proposed merger goes through, were up nearly 6%. This is... MORE

Me on KQED FM on Friday

Business Economics
David Henderson
I'll be on KQED-FM (San Francisco) on Friday, September 2 sometime between 9:00 and 10:00 a.m. (PDT). The topic? Solyndra, the welfare-receiving corporation that suspended operations yesterday and plans to declare bankruptcy. UPDATE: Well, when it came to policy, it... MORE

Guitar Felons

Business Economics
David Henderson
Federal agents swooped in on Gibson Guitar Wednesday, raiding factories and offices in Memphis and Nashville, seizing several pallets of wood, electronic files and guitars. The Feds are keeping mum, but in a statement yesterday Gibson's chairman and CEO, Henry... MORE

Experimenting with Teaching Videos

Economics of Education
Arnold Kling
These are for my high school classes, where I teach AP statistics and AP economics. I am trying to do my version of Khan Academy. My hope is that the students can watch these on their own, and then I... MORE

Response to Thomas Boyle

Regulation
David Henderson
Commenter Thomas Boyle points out the following counterexample to Steve Horwitz's claim that the price of almost everything, in labor hours, has fallen: In 1947, the airplane [the Piper Cub] sold for $2,400, or about $25,000 adjusted for inflation to... MORE

A Means A in the Chronicle of Higher Education

Economics of Education
Arnold Kling
The Chronicle reports, The best way to eliminate grade inflation is to take professors out of the grading process: Replace them with professional evaluators who never meet the students, and who don't worry that students will punish harsh grades with... MORE

A Self-Help Book

Books: Reviews and Suggested Readings
Arnold Kling
I was sent a review copy of Innovation You, by Jeff DeGraff. A couple of excerpts: p. 181, Ask a family systems therapist what happens when a family member gathers the clan and says, "We have to be honest. Dad... MORE

A Means A, a bit more fleshed out

Economics of Education
Arnold Kling
Pasted in below the fold. Comments welcome.... MORE

A Means A

Economics of Education
Arnold Kling
A few months ago, Ben Casnocha wrote, Maybe 5-10% of high school high achievers should pursue higher education without attending a four year traditional college. This is the "Real Life University" option for entrepreneurial spirits. This is for folks who... MORE

Schools without Classrooms

Economics of Education
Arnold Kling
In the legacy education model, teachers combine coaching, feedback, and content delivery. By coaching I mean advice, guidance, and encouragement. Feedback includes formal grading as well as informal praise and criticism. Content delivery includes lectures and reading assignments. Perhaps the... MORE

Robin Hanson on Market Failure

Business Economics
Arnold Kling
At Cato Unbound, He writes, Finally, consider next the many functions and roles of managers, both public and private. By being personally impressive, and by being identified with attractive philosophical positions, leaders can inspire people to work for and affiliate... MORE

Finished Reading Pallotta

Books: Reviews and Suggested Readings
Arnold Kling
Bracing diagnosis, disappointing prescription. Having finished Uncharitable, I have that capsule review. As I see the diagnosis, donors evaluate non-profits on criteria that are not related to results. The big one is "percentage of donations that go to the cause."... MORE

Tyler Cowen challenges me to engage "with the academic literature" on consumer surplus from the Internet. Fair challenge. First, before doing so, I'll point out that I found it a little strange that he referred critically to a post I... MORE

Consumer Surplus from the Internet

Business Economics
David Henderson
Would you give up the Internet for One Million Dollars? That's the title of a 5-minute YouTube video produced by the Fund for American Studies. There's a lot of good stuff packed into this video plus some apparently contradictory stuff.... MORE

What I'm Reading

Business Economics
Arnold Kling
Books on start-ups (start-up porn?). Robert Cringely's Accidental Empires, which covers the pre-Internet personal computer boom. I re-read my own Under the Radar, which covers Web 1.0, as it were. Sarah Lacy's Once You're Lucky, Twice You're Good, which covers... MORE

Obama's Criminalization of Business

Regulation
David Henderson
I'm visiting a friend who does due diligence for his private equity fund's investments in various U.S. companies. As a result, he talks to businessmen every week. For many months now, he has found businessmen complaining about the Obama administration's... MORE

Random Mortgage News

Finance: stocks, options, etc.
Arnold Kling
This story requires a correction. An unprecedented alliance of organizations from the real estate industry, new home builders, mortgage companies, banks, civil rights groups and other lobbyists have descended on Washington, D.C. lawmakers to push against legislation that would require... MORE

Yay is for Apple

Business Economics
David Henderson
After my devastating fire in 2007 in which I lost my computer, I switched from PCs to a Mac. I didn't fall in love with the Mac instantly, as my Mac friends predicted I would. It took about 6 months.... MORE

How Will I Rejoin the Developed World?

Growth: Consequences
Arnold Kling
MIT Technology Review reports, In 2010 consumers bought more than 300 million smart phones--devices that include complete operating systems, and for which advanced software can be written--plus nearly 18 million tablet computers. (Meanwhile, more than 1.1 billion simpler phone handsets... MORE

Mail Delivery: Drop Saturday or?

Business Economics
David Henderson
. . . Wednesday. I gave a talk at Hoover Institution's retreat yesterday and in the Q&A, someone suggested cutting government spending by cutting Saturday mail delivery. After my talk ended, a woman came up and said that she thought... MORE

The Value of Sports

Economics and Culture
David Henderson
Commenting on my post on sports, my friend John Goodman said that he was surprised that I am so into sports. People who knew me before I was about 32 are surprised too, one of the main ones being my... MORE

The Political Economy of Spending Caps

Economics of Health Care
Arnold Kling
John Goodman writes, On paper, ObamaCare cut Medicare's unfunded liability in half the minute Barack Obama signed the health reform bill. (A reduction of more than $53 trillion -- looking indefinitely into the future!) Going forward, Medicare will grow no... MORE

Compensation of Bank Executives

Business Economics
Arnold Kling
Simon Johnson writes, New evidence in favor of the second interpretation [that bank executives were evil] has just become available, thanks to the efforts of Sanjai Bhagat and Brian Bolton. These researchers went carefully through the compensation structure of executives... MORE

The Entrepreneurial Mind

Business Economics
Arnold Kling
Inc Magazine writes, Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest. Corporate leaders, by contrast, decide they... MORE

Three Amusing Links

Labor Market
Arnold Kling
1. AOL buys Huffington Post for over $300 million. I did not realize that April 1st came in February. 2. A License to Shampoo. The WSJ covers a topic that would be my focus is somebody made me "jobs czar."... MORE

My Consumer Surplus Story

Business Economics
David Henderson
I said here that I would tell my consumer surplus (CS) story that I often tell when I teach the concept. Here it is. In September 1972, my friend Harry Watson (aka J.W. Henry Watson) and I were traveling from... MORE

Clarification on Consumer Surplus

Business Economics
David Henderson
Commenters on my previous post on consumer surplus (CS) raised some questions that I want to respond to. 1. Philo points out that in figuring out our consumer surplus, our baseline matters crucially. So, for example, my CS from one... MORE

Reflections on Freedom in New York

Business Economics
David Henderson
I'm stuck in New York after my early a.m. flight out was cancelled. Because the hotel I was in had no rooms available for tonight, I had to find another hotel. Fortunately, the Holiday Inn Express three short blocks away... MORE

Speaking of Science Funding

Business Economics
Arnold Kling
I attended a set of two panels this morning at the American Association for the Advancement of Science, touting "convergence," meaning joint work involving engineering and the biological sciences (with other disciplines as well). The scientists were talking their book,... MORE

The Amazon Boycott: Blaming a Victim

Business Economics
David Henderson
Antiwar.com, where I write a monthly column, has decided to boycott Amazon. Their reason is that Amazon banished WikiLeaks from its servers shortly after a staffer at the U.S. Homeland Security and Governmental Affairs Committee, chaired by Senator Joe Lieberman,... MORE

Predicting Success in Entrepreneurs

Business Economics
Arnold Kling
Via various people, Paul Graham identifies characteristics of successful business founders. First is "determination." I have a cousin who got into a business in which he had to make 150 cold calls a day, and if he was lucky he... MORE

How Cool!

Economics and Culture
David Henderson
Right now I'm on a flight from Dallas to LAX. This is the first time I've been on-line in mid-air. It's fantastic. If you want to see a great 4-minute riff by Louisck that puts everything in perspective, check the... MORE

Twenty-One Years Ago

Business Economics
Arnold Kling
Below is a random post.... MORE

Vamoose!

Business Economics
David Henderson
I was out for a pre-dinner walk near my hotel in Rosslyn this evening and I saw a beautiful new bus and next to it a line of people waiting. The suitcases indicated relatively long-distance travelers rather than commuters. I... MORE

Funding Dis-Education

Business Economics
Arnold Kling
Mike Gibson points me to this story. [Peter] Thiel is starting a new initiative that will offer grants of up to $100,000 for kids to drop out of school. His goal is to get college students to work in business... MORE

We Don't Know

Business Economics
Arnold Kling
Russ Roberts discusses some survey data in which small businesses report that their biggest problem is lack of sales. Some economists have leaped on this as a decisive data point demonstrating that the problem in the economy is aggregate demand,... MORE

Data Bleg on Post-WWII Transition

Business Economics
David Henderson
I'm completing a study on how quickly the U.S. economy transitioned after WWII from a wartime economy with strong elements of central control to a relatively free-market economy. I've got all that. What I'm missing is stories such as, "The... MORE

The Dynamics of Creative Destruction

Macroeconomics
Arnold Kling
Dane Stangler and Paul Kedrosky write, When they come into existence, for example, startup firms create, on average, three millions jobs per year. Many of these jobs are lost and new ones are created, but employment at the moment of... MORE

Russ Roberts and Dan Pink

Business Economics
Arnold Kling
They discuss motivation and incentives. Very enjoyable conversation. If anything, it is a little too fast-paced. One point is that people seek autonomy, mastery, and purpose. I think that is very true in people's avocations, or hobbies. I think, though,... MORE

Two Tyler Retweets

Finance: stocks, options, etc.
Arnold Kling
The sole purpose of this post is to retweet two of Tyler Cowen's assorted links. 1. How to tell when a CEO is lying. I was expecting to click through and read, "His lips are moving," but in fact it... MORE

Brink Lindsey, Will Wilkinson

Business Economics
Arnold Kling
They are leaving Cato, and bloggers are gossiping. Here is my $.02: 1. I get paid by the piece writing for Cato occasionally, and they give me the title "adjunct scholar." But I have no office or salary there. I... MORE

Markets for Everything, Minaki Edition

Business Economics
David Henderson
$5 for 4 eggs On Monday, August 2, I was at my cottage and wanted to make a special breakfast for my cousin and his wife that morning and the next morning. I needed an additional 4 eggs. The problem:... MORE

Phelps on Short-Sightedness

Business Economics
David Henderson
I'm less impressed with Phelps's piece than Arnold is, to put it mildly. Take the following line from Phelps: Executives avoid farsighted projects, no matter how promising, out of a concern that lower short-term profits will cause share prices to... MORE

Technocracy

Political Economy
Arnold Kling
David Brooks writes, When historians look back on this period, they will see it as another progressive era. It is not a liberal era -- when government intervenes to seize wealth and power and distribute it to the have-nots. It's... MORE

Business Dynamics and Macroeconomics

Macroeconomics
Arnold Kling
Tim Kane finds that the tendency for a firm to add or subtract jobs declines with the age of the firm. Much of the job creation on average comes from startup firms. In fact, Kane puts it this way: without... MORE

The Everyday Wonder of Markets

Business Economics
David Henderson
On Friday afternoon, I drove from Monterey to a hotel near the San Francisco airport to give a talk the next morning at an event held by the Free to Choose Network. The event was the Winning Ideas Weekend and... MORE

The Glories of Competition

Business Economics
David Henderson
From today's Wall Street Journal, a front-page article by Geoffrey A. Fowler titled, "Price Cuts Electrify E-Reader Market": Two of the leading makers of electronic-book readers, threatened by the success of Apple Inc.'s iPad, slashed prices Monday in a move... MORE

Idiocracy

Business Economics
Arnold Kling
Without mentioning the movie, Bruce Charlton thinks we are living it. So we should be honest about the fact that human do not anymore fly to the moon because humans cannot anymore fly to the moon. Humans have failed to... MORE

Focusing on Entrepreneurs

Books: Reviews and Suggested Readings
Arnold Kling
William Baumol's latest book is The Microtheory of Innovative Entrepreneurship. It is hard to think of an economist as important as Baumol who does not have a Nobel Prize. He is old enough to put himself out to pasture, but... MORE

Beautiful Cadillac Commercial

International Trade
David Henderson
I get so serious on this blog. So I thought I'd share a lighter moment: three moments actually. Check out this stunning Cadillac commercial from China. HT to Karen Selick.... MORE

Morning Commentary

Business Economics
Arnold Kling
1. Richard Epstein on the SEC suit against Goldman. the SEC complaint makes no mention that Goldman actually took the same side of the deal as ACA, which puts it in the unique position of defrauding itself. Read the whole... MORE

What I Said, Recorded Version

Business Economics
Arnold Kling
The April 14 hearing on the HAMP program (modifying loans for troubled mortgage borrowers). I start some time after 1:31 (that is, one hour and 31 minutes into the hearing). I also got some questions at about 1:53. I actually... MORE

Oops. My Mistake

Central Planning vs. Local Knowledge
David Henderson
Commenters on my post last night pointed out something I had not been aware of: the special treatment local governments give Bass Pro Shops to set up. It turns out that the store I went to in Manteca last night... MORE

I Love Capitalism, Again

Growth: Consequences
David Henderson
Driving home from skiing today--it was a gorgeous day in California, by the way--I saw a Bass Pro Shops in a city called Manteca. I had only seen it advertised on TV, but had never seen a real one. On... MORE

Another Network Lie about Vehicles

Business Economics
David Henderson
As I wrote here, in the early 1990s, NBC was caught lying about trucks produced by General Motors. I wrote: NBC tried to stage an accident in which a collision would cause an explosion. It didn't work. So NBC rigged... MORE

From Poverty to Prosperity Watch

Business Economics
Arnold Kling
Nicholas Bloom and John Van Reenen write management practices vary tremendously across firms and countries. Most of the difference in the average management score of a country is due to the size of the "long tail" of very badly managed... MORE

Fun With Ralph Nader

Business Economics
David Henderson
Yesterday, I was at an all-day meeting of "left and right" in Washington to see if we could put together a coalition against the various wars that the U.S. is in but not in. (War has not been declared since... MORE

Pricing the Apple iPad

Business Economics
Arnold Kling
Megan McArdle writes, One estimate is that the cheapest iPad costs $270 to manufacture. Throw in advertising, transportation, distribution, and so forth, and maybe they can cut the price $100 if they're willing to make a slim profit in order... MORE

Getting Along in Business

Behavioral Economics and Rationality
Arnold Kling
A reader emails: I am low on agreeableness with people at my place of work...I am interested in knowing what you have learned about how to get along with co-workers and overcome low Agreeableness. I think that people who are... MORE

Recommended

Business Economics
Arnold Kling
Ben Casnocha dug up a James Fallows piece from 1985 on entrepreneurialism vs. credentialism. Fallows writes, Nowhere is the tension between the two cultures, the entrepreneurial and the professional, more evident at the moment than in American business. At just... MORE

A Sentence to Ponder

Business Economics
Arnold Kling
from Felix Salmon: I see [Tyler] Cowen as being a kind of anti-Larry Summers in the internal government debate about what to do about Haiti. Rather than being the person who throws cold water on promising ideas, he's the person... MORE

Price Discrimination Explains Everything

Information Goods, Intellectual Property
Arnold Kling
Trying to explain cable TV bundling, James Surowiecki writes (his name makes me dyslexic), The appeal of bundling is partly that it reduces transaction costs: instead of having to figure out how much each part of a package is worth... MORE

The Economics of the Microsoft Case

Regulation
David Henderson
I don't know when it happened, but my review of Page's and Lopatka's excellent book on the Microsoft antitrust case is on-line. It appeared in the Fall issue of Regulation. It's both here and here. My two favorite paragraphs from... MORE

Suits vs. Geeks

Business Economics
Arnold Kling
Tyler Cowen asks why pay differentials in software development do not reflect the large differences in productivity across developers. James Kwak gives what would have been my answer. the way salaries are set at companies. At a high level, they... MORE

Super-FP2P

Information Goods, Intellectual Property
Arnold Kling
If Nick and I ever do a sequel to From Poverty to Prosperity, we should interview Hal Varian. Watch this talk, which has several interesting observations, particularly about how businesses are restructuring on the basis of new communication technology and... MORE

Creative Destruction

Business Economics
Arnold Kling
William Easterly writes, The Wall Street Journal featured this awesome chart yesterday. Only 8 of top global 25 companies in 1999 are still in top 25 in 2009, and some of them have shed a lot of market cap. One... MORE

Thoughts on Spontaneous Order

Business Economics
Arnold Kling
In a comment from a troll Bryan Caplan entry, I find, I've long since lost all patience with Hayek. His original, true ideas could have been five good blog posts Personally, I think that the concept of spontaneous order takes... MORE

A reader writes, If the price-insensitive people are at home avoiding the crowds then it would seem the online stores would be getting shopped by a higher than average percentage of price-insensitive people. It appears to me the 'price discrimination'... MORE

Accountability and the Web

Business Economics
David Henderson
Musician Dave Carroll recently posted a video on YouTube after United Airlines refused to take responsibility for one of its employees' having wrecked his Taylor guitar. In his last conversation with the United Airlines Customer Relations Manager, Carroll said he... MORE

Price Discrimination: Illegal or Not?

Business Economics
David Henderson
In his excellent post on price discrimination and how pervasive it seems to be, Arnold states: The manufacturer would like to charge $400 to JS and $200 to BZ. However, to do so blatantly would be illegal. One commenter challenged... MORE

Price Discrimination, Again

Business Economics
Arnold Kling
Some pushback from Karl SmithAdam Ozimek. Stores must sell their goods at a prices that cover the wholesale cost of the individual goods as well as the overhead costs of the store, like labor and the building lease. The amount... MORE

Price Discrimination Explains Everything

Business Economics
Arnold Kling
In my high school economics class, my students asked me to explain why there are sales on "Black Friday." The class period was over, so I only had time to blurt out "price discrimination" without getting into an explanation of... MORE

Macro and the Organizational Capital Model

Macroeconomics
Arnold Kling
Robert Shiller writes, Consider this possibility: after all these months, people start to think it's time for the recession to end. The very thought begins to renew confidence, and some people start spending again -- in turn, generating visible signs... MORE

From Poverty to Prosperity Watch

Books: Reviews and Suggested Readings
Arnold Kling
The Kauffman Foundation conducted a survey of entrepreneurs. The findings can be inferred from the table of contents. Experience, Management, and Luck: The Keys to Success Professional Networks, Education, Funding, Personal Networks: Important Location, Investor Advice, Alumni Networks, and Regional... MORE

The State of the Economy, II

Business Economics
Arnold Kling
I don't think yesterday's GDP report matters. Historically, cyclical movements in GDP are just blips. It is the long-run trend of productivity that matters. This news from Scott Shane might be disturbing. The self-employment rate is now below pre-recession levels.... MORE

Data and Dogma

Economic Methods
Arnold Kling
(i). Bob Sutton quotes a meta-analysis by Frank Schmidt and John Hunter published in 1998 on the factors found to affect job performance. 1. GMA tests ("General mental ability") 2. Work sample tests 3. Integrity tests: surveys design to assess... MORE

Suits vs. Geeks Watch

Business Economics
Arnold Kling
Calvin Trillin interviews a Wall Street old-timer. When the smart guys started this business of securitizing things that didn't even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the... MORE

Explaining Oliver Williamson

Business Economics
Arnold Kling
I think Alex Tabarrok is the most helpful of the bloggers thus far. Lynne Kiesling is helpful on Williamson as well as on Elinor Ostrom, the other new Nobel Laureate. I think of Oliver Williamson in terms of the 1980's... MORE

How to Kill Entrepreneurship

Business Economics
Arnold Kling
Make it an exercise in obtaining government money. Fisker Automotive, a private company based in Irvine, Calif., has received a $529 million loan from a Department of Energy program designed to fund the development of alternative vehicles. This was announced... MORE

Suits, Geeks, and Lehman

Finance: stocks, options, etc.
Arnold Kling
From a New York Times story: He recalls vividly the days in early 2007 at Lehman when his financial models began to throw up more warnings showing delinquencies and defaults, and he remembers colleagues on his desk raising questions about... MORE

Bloggers on Video

Business Economics
Arnold Kling
We were filmed in Kansas City in February. My first appearance is at 9:23. One theme of the video is the similarity between blogging and entrepreneurship. Catch Tyler about 18 minutes in (he also speaks earlier in the video).... MORE

Status, Greed, and Power

Behavioral Economics and Rationality
Arnold Kling
Matt Yglesias wonders why politicians are not more strongly motivated by higher ideals. Selling the public good down the river to bolster your re-election chances isn't like stealing a loaf of bread to feed your starving children. The welfare rolls... MORE

Should the Fed be Audited?

Finance: stocks, options, etc.
Arnold Kling
I want to make a few comments on this issue, which David has touched on On balance, I think I would support auditing the Fed. 1. The conservative case against auditing the Fed is that it will reduce the Fed's... MORE

From Poverty to Prosperity Watch

Books: Reviews and Suggested Readings
Arnold Kling
Alex Tabarrok looks at a study showing the increasing churn in the U.S. economy. The topple rate is a measure of how the rank of large firms on return of assets changes over time. The topple rate has increased by... MORE

Fixing the Health Care System

Economics of Health Care
Arnold Kling
Melinda Beeuwkes Buntin and David Cutler write, There are health care institutions that have spent large sums on health IT with zero or even negative returns; some health IT reforms made matters worse and had to be uninstalled. The reason... MORE

McCraw's Marginal Mistake

Business Economics
David Henderson
In his book, Prophet of Innovation: Joseph Schumpeter and Creative Destruction, business historian Thomas K. McCraw lays out a numerical example of economies of scale. Unfortunately, in doing so he confuses marginal and average cost. McCraw writes (pp. 52-53): Let... MORE

Test-Marketing

Books: Reviews and Suggested Readings
Arnold Kling
I asked, "If we had a product that allowed us to put questions and answers on your Web site, and this product wouold make all the e-mails go away, would you buy it?" Now here's a good lesson in... MORE

Is Obama a type P?

Business Economics
Arnold Kling
President Obama comes across to me as the Master of the Mixed Signal. It seems unclear how he will set priorities or where he stands on several key issues. I think this goes beyond a calculated effort to try to... MORE

It seems obvious that the answer to the above question is "yes." But it wasn't obvious to a small businessman who bet hundreds of thousands of his own money and hundreds of thousands of other people's money on his answer.... MORE

The Case for McMedicine

Economics of Health Care
Arnold Kling
Michael Cannon and I make it. Patients with multiple diagnoses require someone who can organize the efforts of multiple medical professionals. It is not unreasonable to imagine that delivering health care effectively, particularly for complex patients, could require a corporate... MORE

Today's Theme: Regime Uncertainty

Business Economics
Arnold Kling
Russ Roberts and Bob Higgs discuss the concept on this week's econtalk. Nassim Taleb tells Charlie Rose that we are headed for Capitalism 2.0, in which stock prices are much lower, and banks are treated like public utilities--their job is... MORE

The Zorn Effect

Business Economics
Arnold Kling
Management systems degrade. As a manager or a regulator, if you stand still you fall behind. This year, the Washington Redskins hired a new coach, Jim Zorn. They started out 6-2, but they have since lost 5 out of 6... MORE

Management without Responsibility

Business Economics
Arnold Kling
In his latest podcast, Russ Roberts interviews Steven Lipstein the CEO of the large hospital that shunted my father around to 8 different units over a two-week period. What strikes me about Lipstein is how little responsibility he wants to... MORE

Nonprofit Exit Rate

Business Economics
Arnold Kling
Teresa D. Harrison and Christopher A. Laincz write We find that [nonprofit] entry behavior resembles that of for-profits but greatly differs on the exit side. New public charities begin smaller than incumbents. The survivors grow much faster than incumbents while... MORE

Freddie Mac: My Chapter

Business Economics
Arnold Kling
I've said that I think that someone should write a book about Freddie Mac. Here is my chapter.... MORE

Freddie Mac's Whistleblower

Business Economics
Arnold Kling
A Freddie Mac Press release says, The story is apparently based on the word of David Andrukonis, a former employee who was involuntarily terminated in 2005. It describes a memorandum – one we can't confirm the existence of, one we... MORE

What Every Worker Believes

Business Economics
Arnold Kling
1. I should have more autonomy. 2. I should be rewarded more for my own ideas that work. 3. I should be penalized less for my own ideas that fail. 4. Competition that is innovative or inexpensive is unfair. That... MORE

A "Why Not?" Moment

Business Economics
Bryan Caplan
David Friedman's recent post on airplane boarding gave me a "Why Not?" idea: Wouldn't it be simpler if last row on the airplane was called #1? Then even the innumerate could understand that the first row boards first. It's not... MORE

Too Virtual to be True

Business Economics
Arnold Kling
Glenn Reynolds pointed to this blog post, which says that an inflatable electric car could be only $2500 in price and available starting in 2010-2011. The link takes you to a site for something called XP Vehicles. It lists no... MORE

New NBER working papers

Business Economics
Arnold Kling
Mihir A. Desai, Dhammika Dharmapala, and Monica Singhal write, The Low Income Housing Tax Credit (LIHTC) program provides for the majority of new affordable housing units built in the U.S. and has resulted in the production of 1.5 million low-income... MORE

Class Discussion Starter

Economic Education
Arnold Kling
The question of whether businesses should be public-spirited is a great one for class discussion. Teachers and professors will want to bookmark Creative Capitalism. Thanks to Tyler Cowen for the pointer. Here is Michael Kinsley's introduction: why not just pay... MORE

Billers, Players, and Income Inequality

Business Economics
Arnold Kling
Another Nassim Nicholas Taleb quote: A scalable profession is good only if you are successful; they are more competitive, produce monstrous inequalities, and are far more random, with huge disparities between efforts and rewards--a few can take a large share... MORE

Are Charities Like Startups?

Business Economics
Arnold Kling
From Another Paul Graham essay: If you start from successful startups, you find they often behaved like nonprofits. And if you start from ideas for nonprofits, you find they'd often make good startups. In Under the Radar, where I argued... MORE

An Entrepreneurial Generation?

Business Economics
Arnold Kling
Michael Malone writes, Half of all new college graduates now believe that self-employment is more secure than a full-time job. Today, 80% of the colleges and universities in the U.S. now offer courses on entrepreneurship; 60% of Gen Y business... MORE

The News Business

Business Economics
Arnold Kling
Steve Boriss is not such a fan of the Associated Press. First, while its members’ businesses are shrinking, the AP has used their fees to mushroom into a huge, full-service news outlet with more than 4,000 employees working in more... 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

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

Hal Varian's Words of Wisdom

Business Economics
Arnold Kling
This interview has many. A good quote to give my statistics students: If you are looking for a career where your services will be in high demand, you should find something where you provide a scarce, complementary service to something... MORE

Health Care and Organization

Business Economics
Arnold Kling
Russ Roberts writes, Within a firm and within a family, resources and decisions get made without prices and often without profits. The answer (as Coase understood and as Lauren notes in her comment) is that in these organizations, the savings... MORE

Questions for Goolsbee and Samuelson

Business Economics
Arnold Kling
On Radio Free Megan, Austan Goolsbee (now an adviser to Barack Obama) discusses, among other things, the role of regulation in financial markets. Using his 20/20 hindsight, Goolsbee tells us that the mortgage market should have been better regulated. I... MORE

Opportunism

Business Economics
Arnold Kling
William Easterly writes, Set big goals. Do whatever it takes to reach them. These muscular sentences form the core of commencement addresses, business-advice books, political movements and even the United Nations approach to global poverty. In "Strategic Intuition," a concise... MORE

Tim Harford's Next Book

Books: Reviews and Suggested Readings
Arnold Kling
Is called The Logic of Life. I hated the introduction. At one point, Harford writes, Might there not be such a thing as a rational blowjob? I don't think of myself as a prude, but I wound up muttering to... MORE

Valley Guys

Business Economics
Arnold Kling
This is an hour-long video of an announcement at Google of a set of protocols called "Open Social." I cannot vouch for its economic significance. But any business sociologist ought to watch this to see the way these guys talk,... MORE

Facebook Generation

Business Economics
Arnold Kling
I write, Despite Young Dave's assessment, I think it is possible that Facebook will make the leap from its predominantly young demographic to mainstream, grown-up usage. If it does so, the transition will happen soon and will not take long.... MORE

The Best Place to Learn Economics

Economic Education
Arnold Kling
According to Tyler Cowen, it's right here. He says (it's an interview with Bloomberg's Tom Keene) that right now blogs are the best place to learn economics. Probably not if your goal is to pass the exam. But it's an... MORE

Do Sports Franchises Make Money?

Business Economics
Arnold Kling
Austan Goolsbee writes, Take the Sonics. The team may have lost $60 million while Mr. Schultz owned it. But he bought it for $200 million in 2001 and sold it for $350 million five years later. So he ended up... MORE

The Reading Class

Business Economics
Arnold Kling
In The New York Times, Harriett Rubin writes, It took Dee Hock, father of the credit card and founder of Visa, a thousand books to find The One. Mr. Hock walked away from business life in 1984 and looked back... MORE

Hal Varian on Googlenomics

Business Economics
Arnold Kling
the Wall Street Journal does an interview. WSJ: Is Google an example of a “winner take all” market, where “network effects” make it more valuable as it gets more users? Varian: I don’t think [search] is a winner take all... MORE

Exit and Voice

Business Economics
Arnold Kling
James Surowiecki contrasts the governance of pirate ships with that of corporations. Leeson’s analysis of pirate governance focusses mainly on the way in which this system deterred self-dealing. But the pirate system was also based on an important insight: leaders... MORE

Out of Your Opening Book

Business Economics
Arnold Kling
Here is a very worthwhile interview with businessman and libertarian benefactor Charles Koch. Q: What do you envision Koch Industries to be in 10 years? Mr. Koch: The future is unknown and unknowable. This is the perspective of a book... MORE

Tyler on Ben

Business Economics
Arnold Kling
Tyler Cowen praises Ben Casnocha in Tyler's New York Times column. But why has America produced so many successful young entrepreneurs? Ben Casnocha, 19, author of the new book “My Start-Up Life: What a (Very) Young C.E.O. Learned on His... MORE

An Old Prediction May Come True

Business Economics
Arnold Kling
Jane Galt (who showed up at a lunch at Cato today) found this story. Several electronics outfits now sell head-mounted displays that they claim are the next frontier in gaming and movie watching. Rudimentary virtual-reality tech has been around since... MORE

Paul Graham on Many Subjects

Business Economics
Arnold Kling
I'll just pull quotes from several of his essays.... MORE

Indian Economy Bleg

Business Economics
Arnold Kling
The Indian Economy is a blog about, well, you can guess. If you are an economist/writer/blogger who’s written about India and/or economics, they would like a few more contributors. You don't need to be a resident of India, but you... MORE

Internet Bubble 2.0

Business Economics
Arnold Kling
My essay on the YouBubble says, If you are a founder or an investor in a new business, then I would advise you to read the Business 2.0 article on 25 hot start-ups. Figure out what these enterprises have in... MORE

Planning vs. Experimentation

Business Economics
Arnold Kling
Hal Varian writes, it is simple to run a controlled experiment with a Web page. Amazon can show a different page layout to every hundredth visitor and determine in a few days whether the new design increases sales. Similarly, a... MORE

Failure in an Open-Access Order

Institutional Economics
Arnold Kling
Clay Shirky writes, Open systems are a profound threat not only because they outsucceed commercial firms but also because they outfail them. They grow not in spite of failure but because of it. In traditional business, trying anything is expensive,... MORE

CEO Pay and Market Signals

Income Distribution
Arnold Kling
Bruce Bartlett writes (from behind the NYTimeSelect firewall, unfortunately), [Alan] Reynolds has been criticized for making too much of inherent limitations in the data that have been known for many years and for ignoring evidence that conflicts with his thesis.... MORE

Two Blogs on Business Economics

Business Economics
Arnold Kling
Organizations and Markets looks interesting, although the most stimulating posts are coming from a guest blogger, Steven Postrel. For example, It turns out that the main reason why upstream specialist A needs to know something about downstream specialty B is... MORE

Why Company Health Clinics?

Economics of Health Care
Arnold Kling
James Miller notes a New York Times story on corporations setting up in-house health clinics. Miller comments, Much of economic growth comes from specializing. Whatever is requiring firms such as Pepsi to "unspecialize" by providing health care is greatly harming... MORE

Malcolm Gladwell on Enron

Business Economics
Arnold Kling
This story rings true with me. “There have been scandals in corporate history where people are really making stuff up, but this wasn’t a criminal enterprise of that kind,” [Yale law professor Jonathan] Macey says. “Enron was vanishingly close, in... MORE

The Entrepreneurial Society

Books: Reviews and Suggested Readings
Arnold Kling
In my latest essay, I write, Continental Europe is set up to preserve large public sectors, large banks, and large corporations. For individuals, the promise is stable jobs, a stable business environment, and collective sharing of the costs of unemployment,... MORE

I Don't Heart Cass Sunstein

Business Economics
Arnold Kling
But I agree with what he writes here. The general point is much broader. Baseball involves a lot of money; people have strong incentives to make the right decisions. But even experienced people make systematic errors--and it took a Billy... MORE

How Electronics Retailers Make Money

Business Economics
Arnold Kling
The Washington Post says, Neither Circuit City nor Best Buy discloses how much of its bottom line comes from extended warranty sales. But analysts have estimated that at least 50 percent and in some lean years 100 percent of profits... MORE

Enron

Business Economics
Arnold Kling
'Jane Galt" writes If Mr Delong emails me, I will be quite happy to put him in touch with reputable and knowlegeable people, not paid to do so, who believe that Skilling and Lay, at the very least, may be... MORE

Businesses as Storehouses of Knowledge

Business Economics
Arnold Kling
It turns out that my post on Test Scores and Economic Performance was preceded by Stuart Buck's meditation on the knowledge contained in businesses. For any type of business that you can imagine, the overwhelming majority of the information necessary... MORE

Fundraising vs. Selling

Business Economics
Arnold Kling
Bryan makes a good point that denying someone a risky investment opportunity probably will not protect that individual, given all of the alternatives out there. When I wrote, I think we need fewer fund-raising start-ups and more start-ups where the... MORE

Funding Start-ups

Business Economics
Arnold Kling
Bruce Boston asks, what are the economic arguments in favor of the two class system of accredited investors and non-accredited investors? And are these economic arguments stronger than the counter-arguments that can be made on this same topic? I'd also... MORE

Your Next Job?

Business Economics
Arnold Kling
The San Francisco Chronicle reports, Ray Ruiz of Sacramento will perform one of the dirtier jobs of parenthood: For $50 an hour plus travel costs, Ruiz will bring a chair, lights, chemicals and combs to your house to pick the... MORE

Used Furniture

Business Economics
Arnold Kling
Tyler Cowen finds advice on what to buy used. We just helped my daughter move to an apartment in Boston. She asked, "How did people sell their used furniture before Craigslist?" My wife and I decided that part of the... MORE

Long Tail Podcast

Business Economics
Arnold Kling
Chris Anderson's Long Tail thesis is that small, niche markets are, in the aggregate, very large on the Internet. Russ Roberts has a "podcast" (audio file) where Anderson explains his thesis. I recommend becoming familiar with Anderson's thinking. He draws... MORE

Management by Re-organization

Business Economics
Arnold Kling
James Pinkerton pushes an idea to make the Federal government more effective. [Former Congressman Bob] Walker's idea, which makes it print debut here in TCSDaily, is this: Take the functions of the federal executive branch and turn them all into... MORE

Can Entrepreneurship Be Taught?

Business Economics
Arnold Kling
My answer has always been "no." Read this post, from a venture capitalist. there are two ways to build a company. You can design it from scratch, figuring out exactly what you want to build, getting it all down on... MORE

Small vs. Large Businesses

Business Economics
Arnold Kling
In this essay, I write Small organizations are the size of hunter-gatherer bands. The behavior of each individual can be monitored and constrained by the group, using instincts that are deeply embedded by evolution into our social psychology. Members want... MORE

But I Still Disagree with Brad DeLong

Business Economics
Arnold Kling
when he writes, Shouldn't the fact that WalMart finds it more efficient to be a bureaucracy of 1.5 million people--rather than to split itself up into 15,000 companies of a hundred employees each--make Arnold Kling a little hesitant in his... MORE

Evolution vs. Intelligent Design

Business Economics
Arnold Kling
In my latest essay, I write, While I have little faith in individual corporations, I have more faith in decentralized market processes. For example, although I have no admiration for any oil company in particular, I believe that we will... MORE

Good Reading Recommendation from Tyler Cowen

Books: Reviews and Suggested Readings
Arnold Kling
A while back, Tyler Cowen recommended Perry Mehrling's book on finance theorist Fischer Black. I read it while on vacation this past week. I strongly endorse Tyler's recommendation. Black co-developed a formula for option pricing which garnered a Nobel Prize,... MORE

Arthur Andersen Posthumously Exonerated

Business Economics
Arnold Kling
I found this story interesting. The Supreme Court on Tuesday overturned the conviction of the Arthur Andersen accounting firm for destroying Enron Corp.-related documents before the energy giant's collapse. In a unanimous opinion, justices said the former Big Five accounting... MORE

Start a Business, Young Person

Business Economics
Arnold Kling
Paul Graham says, Most organizations who hire people right out of college are only aware of the average value of 22 year olds, which is not that high... The most productive young people will always be undervalued by large organizations,... MORE

Knowledge Problem

Business Economics
Arnold Kling
Lots of good stuff recently at Knowledge Problem. Lynne tells us what to think of the new energy legislation. If you support a forward-looking, dynamic, creative, innovative approach to energy, this is not the legislation for you. If you are... MORE

Movie Economics

Business Economics
Arnold Kling
Tyler Cowen posts on one of my favorite topics, movie economics. a multiplex will charge the same ($9.50 in my case) for the number one movie and for a flop. Nor is the price more expensive for Saturday night, or... MORE

Mail Un-Rebates Revisited

Business Economics
Arnold Kling
I hope this got it out of my system. If mail-in rebates went away, then retailers would still have to earn their profits somehow. Either other shady sales practices would expand, or the retailers would have to raise prices. In... MORE

A Swindle, not a Joke

Business Economics
Arnold Kling
In this post, I joked about the complexity of mail-in rebate forms. It turns out that this is not a joke. It is in fact a deliberate swindle, which I am now quite sorry that I fell for. Ed Foster... MORE

Pseudo-currency

Business Economics
Arnold Kling
The Glittering Eye points to this story on frequent flyer miles. By the end of 2004, almost 14 trillion frequent flyer miles had been accumulated worldwide, worth between 1p and 6p apiece. According to a new analysis by The Economist... MORE

Outsourcing = Economic Activity

Business Economics
Arnold Kling
The Economist writes, SO YOU want to withdraw cash from your bank account? Do it yourself. Want to install a broadband internet connection? Do it yourself. Need a boarding card issued for your flight? Do it yourself... Many people complain... MORE

Key Operating Ratio

Business Economics
Arnold Kling
Why are movie theaters gravitating toward large multiplexes? The Washington Post writes, With 16, 18 or 24 screens, the traffic in and out is constant and the popcorn sales never stop -- yet the staffing costs are only incrementally greater... MORE

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