Bryan Caplan and David Henderson

Public Choice Theory

A Category Archive (240 entries)

Gary Johnson's Bold Attack on Freedom of Association

Economic Philosophy
David Henderson
The Our America initiative, which is headed up by 2012 Libertarian presidential candidate and former two-term New Mexico Gov. Gary Johnson, has produced a sharp commercial asking for donations to fund a legal challenge to presidential debates. The basic argument?... MORE

What we are up against

Regulation
Scott Sumner
The Great Recession led to a lot of "if only" comments. If only we could charge a negative interest rate on reserves, to discourage banks from hoarding excess reserves. If only we had had more regulation back during the housing... MORE

In response to something I wrote in January, I received a letter last week, postmarked January 30. Well played, U.S. Postal Service. It's like many I've received over the years when the writer doesn't like an article or blog post... MORE

Schuck on Why Government Fails So Often

Books: Reviews and Suggested Readings
David Henderson
I'm working my way through Peter H. Schuck, Why Government Fails So Often. It's due out next month from Princeton University Press and I'm writing a review of it. I'm over halfway through and I'm loving it. Schuck does a... MORE

11-99 Foundation: Buying Protection

Economics of Crime
David Henderson
I live in California, where I often see license plate frames carrying the words, "Lifetime Member, 11-99 Foundation." The frames are usually on newer-model luxury cars. I finally got curious enough to look up what the 11-99 Foundation is. Here's... MORE

Media Bias Yet Again

moral reasoning
David Henderson
Instapundit blogger Glenn Reynolds called attention to a case of media bias. One of his readers noted that Politico reporter Elizabeth Titus, in a piece on how there seem to be no scandals in Republican governor Scott Walker's background, identified... 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

Like other legislation of that era, the Fed was a government intervention supported both by ideologically-motivated and well-meaning reformers and by the industry being regulated. Rather than being this as some sort of unique conspiracy to take control of the... 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

Multiple Bandits are Roving Bandits

Public Choice Theory
David Henderson
What I learned from my local anti-tax activism UPDATE BELOW: One of the late Mancur Olson's most-valuable insights was his distinction between roving bandits and stationary bandits. His basic idea was as follows. Consider an anarchist society in which there... MORE

Welcome to the Police State

Economics of Crime
David Henderson
If all you've got is a hammer, then everything starts to look like a nail. And if police and prosecutors are your only tool, sooner or later everything and everyone will be treated as criminal. This is increasingly the American... MORE

Elizabeth Warren Channels Milton Friedman

Public Choice Theory
David Henderson
Elizabeth Warren Opposes Corporate Social Responsibility On Facebook and elsewhere, many of my libertarian friends have claimed, quite correctly in my view, that Senator Elizabeth Warren, in this letter, is bullying various heads of major banks. She realizes that she... MORE

Was Going to War with Japan a Good Idea?

Public Choice Theory
David Henderson
I wrote about the topic in this blog title back in 2006 at antiwar.com. My piece is titled, "I Don't Have to Fight You." Here is an excerpt that relates to Pearl Harbor: Last December, I attended a round-table academic... MORE

UPDATE BELOW In selling the health-care plan that bears his name, President Obama has, according to the fact-checking website Politifact, said at least 34 times that "if you like your health care plan, you can keep it." That statement was... MORE

Obama: Government Doesn't Work

Economics of Health Care
David Henderson
You know, one of the lessons--learned from this whole process on the website [healthcare.gov]--is that probably the biggest gap between the private sector and the federal government is when it comes to I.T. [Information Technology] ... Well, the reason [that... MORE

We Won!

Taxation
David Henderson
"David, what's wrong?" said my wife Rena last night as she heard me gasping for air shortly after opening my computer while on the couch last night. She thought I might be having a stroke. "I can't believe it," I... MORE

Did Obama Break His Promise?

Economics of Health Care
David Henderson
Jared Bernstein's Sense of Time On a number of occasions before ObamaCare passed in late March 2010, President Obama promised that if you like your current health insurance plan, you can keep it. Now Jared Bernstein, formerly Joe Biden's chief... MORE

Time for a Third Party? Let's Bet

Politics and Economics
Art Carden
Via Students for Liberty on Facebook, I saw this Politico article reporting polling data showing "Record demand for third party." As one of the comments points out, it's the sort of thing that gets attention periodically but that never really... MORE

Washington Monument Strategy on Steroids

Public Choice Theory
David Henderson
A perennial case in point is the "Washington Monument strategy" of the National Park Service. At budget time, the service frequently threatens to curtail visiting hours at its most popular attractions, such as the Washington Monument, if its budget request... MORE

Maxim Lott on the Carrier Cost Overrun

Political Economy
David Henderson
Maxim Lott has a short, excellent piece on the cost overrun for the almost-$13 billion (yikes!) aircraft carrier, USS Gerald R. Ford. Of course, I'm biased, because he quoted me and used the two best quotes I gave him. Here's... MORE

Four Readings from Frederic Bastiat

Economic Philosophy
Art Carden
File Frederic Bastiat under "under-appreciated thinkers." I'm talking about Public Choice in my principles of macroeconomics class tomorrow, and here are a few readings from Bastiat that continue to inspire me: 1. "What is Seen, and What is Not Seen."... MORE

Incentives in Foreign Policy

Behavioral Economics and Rationality
David Henderson
One of the issues I emphasized in my speech last night, "The Economic, Moral, and Constitutional Case for a Non-Interventionist Foreign Policy," was the role of incentives. Here's part of what I said: Now consider the incentive problem. Neither the... MORE

Mencken on Government

Public Choice Theory
David Henderson
Some of my Facebook friends are celebrating H.L. Mencken's birthday with their favorite quotes from Mencken. One that pops up again and again is this one: Democracy is the theory that the common man knows what he wants and deserves... MORE

Many people worry that a majority of the voting-age population will soon pay no federal income tax and will, therefore, be motivated to vote themselves even more federal transfers. Undoubtedly, most of those paying little in taxes want more government... MORE

On Bastiat and the Edifice Complex

Central Planning vs. Local Knowledge
Art Carden
Last week, I asked my principles of macro students to do the following: Evaluate this argument in light of Frederic Bastiat's essay "What is Seen, and What is Not Seen." You may use the assigned readings and videos, but you... MORE

The Myth of the Rational Voter: Experimental Edition

Behavioral Economics and Rationality
Bryan Caplan
I've long argued (here, here, and here for starters) that weak incentives are a major cause of political irrationality, but I've failed to convince Gerry Mackie, Jeff Friedman, Tyler Cowen, and many other critics.  So I was delighted to discover... MORE

I Don't Have To

Economic Philosophy
David Henderson
Condi Rice Plays "Hide the Options" My favorite piece ever from Objectivist philosopher David Kelley is his article "I Don't Have To." In it, he takes on the idea that there are these things that we must do or that... MORE

Feedback Loops in Government

Public Choice Theory
David Henderson
Public Choice in a Nutshell Government officials are happy making and executing plans that affect the lives of millions, but when things go wrong, well ... they're willing to accept the responsibility, but they're not willing to take the blame.... MORE

John Allison's Nice Summary

Public Choice Theory
David Henderson
As a financial contributor to the Cato Institute, I get a bimonthly memorandum from the president and CEO of Cato, John A. Allison. In the latest one, he leads off with two paragraphs that sum up, beautifully succinctly, so much... MORE

Adam Smith on the Public Choice of Foreign Intervention

Cost-benefit Analysis
David Henderson
Why the 13 colonies are a net loser for Great Britain: A great empire has been established for the sole purpose of raising up a nation of customers who should be obliged to buy from the shops of our different... MORE

The Hulk's Handshakes and Optimal Monetary Policy

Public Choice Theory
Garett Jones
The world's a complex place and we don't know a lot about how it works. To make matters worse, it's not just that we're ignorant about the world, we're ignorant about ourselves: We rarely know our own strength. Given our... MORE

James Buchanan on Writing

Political Economy
David Henderson
An excerpt from my appreciation of Public Choice, Gordon Tullock, and James Buchanan: One other thing I've gotten from Buchanan--primarily by hearing it from his past students, and mainly from the most-published ones--is his famous line, "Don't get it right;... MORE

In fiction politicians can say what they really think of voters. Two examples: 1. The Onion reports Hillary Clinton's thoughts on whether she should run for President (questionable language): ...while I can't definitively say what my plans are one way... MORE

Bleg: Median Voter Theorem

Public Choice Theory
David Henderson
In my Cost/Benefit Analysis course, I teach one segment on Public Choice. One of the issues I get into is the median voter theorem. I point out that it applies more directly to direct democracy, i.e., voting on initiatives and... MORE

Two public choice theories of fiscal policy: Under Starve the Beast, the spenders tell the tax-cutters, "If you get what you want, that means I can't get what I want."  It's a story of limits to budgets, limits to borrowing, limits... MORE

Carden and Horwitz on Market Failure

Public Choice Theory
David Henderson
Externalities, public goods, asymmetric information, and market power provide necessary--but insufficient--conditions for intervention to be justified. They certainly are not talismans that provide interventionists with carte blanche to tinker with the members of a society as if they were pieces... MORE

Milton Friedman's theory of Starve the Beast said that there was a "politically acceptable deficit," so a one-time ex nihilo cut in taxes would have to cause a spending cut to keep the deficit stable.  My commenters have revised (or... MORE

The "Starve the Beast" theory predicted that if you gave politicians more revenue, they would just spend it.  However, the last few years in Europe have provided example after example that tax increases are quite compatible with relative spending restraint... MORE

In the last few months here in the U.S. we've had a tax increase followed by a sequester.  Tax hikes coupled with slower spending growth: Here on the internet, we call that "austerity." But for decades, much of the American Right... MORE

Friday Night Video: Henderson on War for Oil

Energy, Environment, Resources
David Henderson
A friend of mine recently found a link to a video that a man named Jim Turney did of a talk I gave in Monterey in February 1991. It's at the annual convention of the Libertarian Party of California. The... MORE

Assorted Tweets: Cyprus Speed Bankruptcy Edition

Public Choice Theory
Garett Jones
1: Is the Cyprus bank levy a crude approximation of bankruptcy?  Actually, the bank levy is probably better for depositors than bankruptcy....The reason it's probably better than bankruptcy is because in return for haircuts, Cypriot banks will get cheap money from... MORE

In early January, I wrote a post whose subtitle was "Pssst: Someone tell the Republicans they won." The gist of it was that the Republicans got the Bush tax cuts made permanent for all but the very highest-income Americans. An... MORE

Rand Paul's Filibuster

Central Planning vs. Local Knowledge
David Henderson
Every once in a while, I depart from strictly economic education and information, the purpose of Econlog, to comment on important things that are happening in the political world. My latest article on antiwar.com discusses the Rand Paul filibuster. This... MORE

Assorted Tweets: Minimum Grade Law Edition

Labor Market
Garett Jones
1.  My colleague Don Boudreaux wrote a faux news article where politicians pushed for a "minimum grade law" to help struggling students. It's just a matter of simple fairness, of course.  I tweeted:Extra bonus of Boudreaux's Minimum Grade Law: banning... MORE

Bowles-Simpson: Don't Fight the Focal Point

Fiscal Policy
Garett Jones
In today's US News Debate Club, I offer my views on the latest deficit reduction outline offered by Clinton Administration official Erskine Bowles and former GOP Senator and current curmudgeon Alan Simpson.  My closing sentence: We could do worse than the latest... MORE

Lord Acton on "Power Corrupts"

Public Choice Theory
David Henderson
I'm sure that most of you know the famous saying, "Power tends to corrupt, and absolute power corrupts absolutely." I'm also pretty sure that a large percent of you who know the saying also know that it was the famous... MORE

Assorted Tweets

Monetary Policy
Garett Jones
1.  "OK, who thinks sequestration would cause the Fed to boost QE?"If you're raising your hand, then you think the zero nominal bound on interest rates isn't a zero nominal bound on looser monetary policy.  And you think that the... MORE

The Feds' Suit of S&P

Finance: stocks, options, etc.
David Henderson
I found two pieces on the federal government's suit of S&P particularly interesting because both make important points I hadn't thought of. First, the Wall Street Journal's editorial page take, which is titled "Payback for a Downgrade?" It's dec line... MORE

Dwight Lee on Socially Responsible Corporations

Public Choice Theory
David Henderson
I Can See Subsidies and Import Restrictions If a corporation generously gives to charity, is it socially responsible? Most people would say yes. But economist Dwight Lee, in "Socially Responsible Corporations: The Seen and the Unseen," Econlib's Featured Article for... MORE

Alan Blinder left his position as a Princeton economist to serve as vice chairman of the Fed. After he went back to academia he wrote a great short book that I see as a crypto-memoir, Central Banking in Theory and... MORE

Travis Vanderbilt Kalanick

Regulation
David Henderson
The idea worked. How could Mr. Kalanick tell? Four months after the launch in San Francisco, Uber was served with a "cease and desist" order from the California Public Utility Commission and the San Francisco Municipal Transportation Agency. "Given my... MORE

Travels of a T-Shirt

Books: Reviews and Suggested Readings
David Henderson
In an e-mail, Jeff Hummel wrote a book review that's good enough to post. Here it is: Pietra Riovoli's THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY: AN ECONOMIST EXAMINES THE MARKETS, POWER, AND POLITICS OF WORLD TRADE was... MORE

Cronyism in D.C.

Economics of Crime
David Henderson
While in D.C. these last few days, I've been following more closely the David Gregory case. In case you haven't, here's a recap. David Gregory, the host of NBC's Meet the Press, displayed an illegal 30-bullet capacity gun magazine on... MORE

Buchanan: Seeing With New Eyes

Public Choice Theory
Garett Jones
One of the starting points for public choice theory was Kenneth Arrow's Impossibility Theorem. Arrow proved that as long as people are diverse in their opinions, and as long as everyone's opinion counts, it is impossible to create a voting... MORE

Further Notes on James Buchanan

Public Choice Theory
David Henderson
In my haste last night to post on Jim Buchanan, I neglected to point out that a large percent of his work is on-line for free at Liberty Fund's Online Library of Economics and Liberty. Go here and scroll down... MORE

Great Moments in Public Choice: LBJ on Paul Douglas

Public Choice Theory
David Henderson
Senator Paul Douglas of Illinois was one of Johnson's more vocal critics. One afternoon LBJ beckoned me to his Senate desk with a grin. "I think I've found a way to defuse Paul Douglas. He was an economist, you know.... MORE

Thoughts on the Latest Tax Bill

Taxation
David Henderson
Pssst: Someone tell the Republicans they won. Now that I've had time to reflect, I do have some thoughts on the tax bill that differ a lot from thoughts of others who are usually my political allies. Most of the... MORE

Update: Scott Sumner responds. Sometime in the next 24 or so hours, I'll give my thoughts on the latest tax and budget deal between Congress and President Obama. I find that one's first thoughts are not typically one's best. There's... MORE

Where Tiebout Goes Wrong

Labor Mobility, Immigration, Outsourcing
Bryan Caplan
The Tiebout model implies that local governments will be redistribution-free and waste-free.  If you find these predictions absurd - and you should - local governments must violate one or more assumptions of the Tiebout model.  What are the key violations?1.... MORE

Nominations for Top Economic Stories of 2012

Energy, Environment, Resources
Garett Jones
Here are three, all good news, more possible:1.  QE3, all hail Scott Sumner.  The ECB's unconventional easings to banks and sovereigns deserve mention as well.  Perhaps someone will make a lot of money betting on high average inflation in the... MORE

A Question of War and Peace: Some Answers

Economic History
Bryan Caplan
Before Christmas, I asked EconLog readers for responses to the following test question:"There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest in... MORE

...the welfare state as social insurance.  After all, if you know how your kids are going to turn out, what's there to insure against?  Sure, you'd like to grab resources from other people--the raiding party has a long history--but it's only... MORE

Expanding Megabanks: Is Impatience the Cause?

Public Choice Theory
Garett Jones
From Tuesday's Wall Street Journal:Some, like Citigroup Inc. and Bank of America Corp. have embarked on diets of their own.  On the whole, though, the financial system is more concentrated than before the crisis. And Santander, the largest Euro-area bank with... MORE

Why didn't 19th and early 20th century empires massively raise productivity per worker in their colonies?  Why have the big improvements in productivity almost always happened after the imperialists either left or genuinely turned over power to the locals?  This... MORE

A Question of War and Peace

Economic History
Bryan Caplan
Normal 0 MicrosoftInternetExplorer4 My favorite question from my latest Public Choice final exam:"There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest... MORE

Lincoln: Public Choice 101

Public Choice Theory
David Henderson
Honestly, Abe! My long-time friend, Tom Nagle, wrote the following letter to American Way, the American Airlines in-flight magazine, after reading an article on the making of the film, Lincoln. I convinced him that the probability of his getting the... MORE

Why are Economic Miracles Rare in Colonies?

Growth: Causal Factors
Garett Jones
A decade ago, Robert Lucas noticed a pattern:The economic progress that has come to Asia and Africa came after the colonial empires were dismantled. To put it another way, Lucas claims that with the exception of Hong Kong, no massive economic... MORE

Absurdities of the Tiebout Model

Public Choice Theory
Bryan Caplan
Economists across the political spectrum embrace the realism of the Tiebout model.  The model's intuition: At the level of local government, there are many consumers (i.e. residents and businesses), many suppliers (i.e. localities), and low switching costs - all the... MORE

Does money influence research outcomes?  We're used to hearing this question when it comes to pharmaceutical research and the same question is surely relevant to research in monetary economics.  Central banks like the Fed, the ECB, and the BoE do... MORE

People hate the property tax more than other taxes. There are fairly regular "tax revolts" against the property tax, many of which are based on local or statewide referenda. Property tax limits, whether imposed by referenda or by state legislatures,... MORE

David Brooks's Conservative Future Out of a Job

Information Goods, Intellectual Property
Garett Jones
Derek Khanna, the author of the important policy brief on the excesses of copyright law, has been fired by the Republican Study Committee. The brief, which the RSC pulled from their website, is here. From the Examiner: The staffer who wrote... MORE

Popcorn Pork

Fiscal Policy
David Henderson
As the late Professor Olson might have observed, the popcorn subsidy will likely become fiscal law because almost no one, other than the popcorn growers, will notice. Being a small lot, they have all the incentive they need to lobby... MORE

Mr. Sumner Goes to Washington

Public Choice Theory
David Henderson
Scott Sumner has posted an interesting story about his trip to Washington last week. Some highlights along with my comments in square brackets: 6. During the day I attended a bunch of foreign policy panels. It was interesting to see... MORE

My Election Outcomes: Final Update

Taxation
David Henderson
Or, Did I Optimize or What? I've posted a couple of times now (here and here) about a local election in Pacific Grove in which I took part. The proposal on the ballot, Measure A, would have imposed an added... MORE

Mark Carney: Like William of Orange, a Political Import

Labor Mobility, Immigration, Outsourcing
Garett Jones
You've heard the news already that the Bank of England is importing a high-quality central banker from Canada.  This continues the tradition begun in 1688 (or was it 1066? or AD 43?) of importing the best talent rather than pushing for... MORE

In an excellent Singapore econ-travelogue, Scott Sumner writes:My theory is that leftists don't really mind a place where income is unequal, they don't like places where income looks unequal. This is close to what pioneering blogger Mickey Kaus has been pushing... MORE

My Election Outcomes: An Update

Public Choice Theory
David Henderson
The day after November's election, I posted on my bets and on the results on a local tax increase referendum. Here's what I wrote on the local tax increase: A friend and retired lawyer, Carl Mounteer, and I wrote the... MORE

The Mouse's Power: Popularity or Cash?

Public Choice Theory
Garett Jones
Alex notes that once again, the Mouse appears to have won a copyright battle (he won a big one back in 1998).  So, is this evidence that most political outcomes are driven by cash?  Is this evidence that, contrary to... MORE

Center Libertarian?

Public Choice Theory
David Henderson
For years, conservative commentators on the Fox News Channel and elsewhere have said that the United States is a "center right" country. They seem to say it more insistently when the voters elect a left-wing Democrat as President. But James... MORE

Money Has Little Influence on U.S. Politics

Public Choice Theory
Garett Jones
Yesterday I tweeted:Will the reality-based community vocally embrace the repeated finding that money has little influence in U.S. politics? http://ow.ly/fbOXd The link is to Tyler's discussion of a great lit review on money in politics.  Levitt has another good lit review with more... MORE

Brinksmanship and the Obama-Bush Tax Cuts

Fiscal Policy
Garett Jones
Matt Yglesias is claiming that POTUS and Congressional Democrats can safely ignore John Boehner: To take the bargaining process seriously at this point you have to believe that come 2013, House Republicans would actually refuse to cut taxes on the grounds... MORE

China's Empty Cities: A Family Affair?

Public Choice Theory
Garett Jones
This week I returned from a trip to Shanghai and Nanchang; the latter is in Jiangxi province, and as a GMU aside, the food in Jiangxi was stunning.  I was in Nanchang to give some lectures at Jiangxi University of... MORE

Romney's Get out the Vote Epic Fail

Public Choice Theory
David Henderson
It's easy to point fingers after a loss and I wouldn't normally do it, but consider what happened. Project Orca was supposed to enable poll watchers to record voter names on their smartphones, by listening for names as voters checked... MORE

Barack Beane Obama

Public Choice Theory
David Henderson
One of my favorite books of the last decade was Michael Lewis's Moneyball. It's about how Oakland A's general manager Billy Beane used statistical analysis to offset the advantage of more heavily funded teams and make his small-market team into... MORE

My Election Outcomes

Public Choice Theory
David Henderson
One winning bet, three losing bets, and one election won. First, my winning bet. In July, I bet a local prominent Republican, Peter Newman, $50 that Obama would be re-elected. Second, my three losing bets. 1. Last week, I bet... MORE

William of Orange, Political Import

Public Choice Theory
Garett Jones
In the corporate world, it's common for top executives to be recruited from outside the firm, even outside the industry.  But in American politics, convention and sometimes law require politicians to have longstanding ties to the geographic areas they ostensibly... MORE

Woodrow Wilson's Public Choice

Public Choice Theory
David Henderson
At a Liberty Fund conference I just finished up in Miami, in our book of readings was the following quote: The best rulers are always those to whom great power is interested . . . . It is, therefore, manifestly... MORE

Why We Won't Eliminate the Electoral College

Public Choice Theory
David Henderson
Co-blogger Garett Jones has an interesting post making his case for the electoral college. I don't have a strong view either way, but I can tell you why it's extremely unlikely that the electoral college will ever be eliminated. The... MORE

Why I Love the Electoral College

Public Choice Theory
Garett Jones
There's some evidence that democracy itself makes people happier, but largely I see democracy as a means to an end.  One among those ends is "reducing social conflict."  The electoral college, set forth in the U.S. Constitution, is a great... MORE

On Human Evil (Economic Experiment Edition)

Behavioral Economics and Rationality
Garett Jones
Bryan says: I'd be much more impressed by an experiment showing that subjects spontaneously try to hurt others.Actually, there are plenty of those in the experimental public goods literature.  The questions raised by these public goods experiments might be what started... MORE

"Some Men Just Want to Watch the World Burn"

Behavioral Economics and Rationality
Garett Jones
A claim confirmed repeatedly in experiments:In the destructor game, players are randomly paired and assigned the roles of destructor versus passive player. The destructor player chooses to destroy or not to destroy a share of his passive partner's earnings....15% of... MORE

Josh Barro, Progressive Taxation, and Public Choice

Public Choice Theory
Garett Jones
Josh Barro today claimed that the Romney tax plan can't work. The Romney plan is simple to summarize: Cut income tax rates across the board, then end enough deductions and exclusions (informally, "loopholes") to make it revenue neutral.  Plus, the Romney... MORE

Bailouts are for Bondholders

Public Choice Theory
Garett Jones
During the worst days of 2008, something strange happened.  During the Eight Days of Terror, the S&P 500 fell by 23% but there were no loud calls for the government to guarantee the value of stocks (Aside: TARP was signed... MORE

How to Pronounce Tiebout and More

Public Choice Theory
Garett Jones
From William Fischel's brief biography of the Connecticut-born economist. Fischel spoke with Charles Tiebout's family and friends, so this statement deserves weight: If I could offer but one contribution to his memory, let it be to induce economists to pronounce his... MORE

Bloomberg: Prime Minister Antonis Samaras compared Greeks' struggle with economic hardship and political turmoil with the conditions that led to the collapse of the Weimar Republic in post-World War I Germany and ushered in the Nazi era.Remember what Keynes thought about... MORE

From the FT: France's Socialist government has been forced into retreat by an online revolt by entrepreneurs and investors against its plans to raise capital gains taxes.It said it would review the details of its budget proposal to bring taxes on... MORE

Supermajority Rule: Buchanan, Tullock, Bernanke

Public Choice Theory
Garett Jones
Most supporters of democracy embrace the ideal of majority rule.  The great Swedish economist Knut Wicksell started from a different ideal: Unanimity.  If your idea is so great, shouldn't we all agree to it? And even if it's only a... MORE

Why the GOP is the Bigger Default Risk

Public Choice Theory
Garett Jones
Because Democrats really, really believe in death panels.  Steve Rattner, a former Obama Administration official, used the term (presumably as a form of gallows humor) in the Times a few weeks ago.  Rattner's piece hits some of the same themes... MORE

Treasury Bondholders: Winning in the Senate?

Public Choice Theory
Garett Jones
Many are convinced that the U.S. government will likely either default or hyperinflate its way out of debt.  I disagree: I think Treasury bondholders will win. As I wrote in Econ Journal Watch:A U.S. default is unlikely: As a demographically... MORE

Group IQ: One Source of Trustworthiness

IQ in Economics
Garett Jones
In Arnold's new essay entitled "Libertarians and Group Norms," he writes:[W]e live in a world that demands enormous levels of trust among strangers...I doubt that anyone fully comprehends what holds this fabric of trust together. I agree.  But we're building comprehension,... MORE

The Wisdom of Commenter Greg G

Finance
Garett Jones
On Speed Bankruptcy: Of course this would raise capital costs. That is a feature, not a bug. We have seen the results of underpricing credit risk.... MORE

On the question of how progressive a tax system can be if people can exit, Alexei Sadeski writes:Interesting theory, Garett. A supporting piece of evidence is that the US has a more progressive national taxation system - far more progressive -... MORE

Will ACA's cost-cutters outcut private insurers?

Economics of Health Care
Garett Jones
Earlier this month, health experts from the Obama Administration wrote up some advice on the next steps for health reform in the New England Journal of Medicine.  I recommend reading it: Not too technical, about 2500 words, it gives you... MORE

Can Progressive Taxation Survive Exit?

Public Choice Theory
Garett Jones
The other day I tweeted:Under a Tiebout federal government, I posit the rich would pay more in dollars than the middle class, less as a percentage Tiebout is shorthand for "voting with your feet," and it's a way to think about... MORE

Rafat Channels Tullock, Kuran, and Sunstein

Behavioral Economics and Rationality
Bryan Caplan
My Facebook friend Matt Rafat posted an exceptionally insightful update.  Think of it as Tullock's paradox of revolutions meets Kuran and Sunstein's availability cascades: Normal 0 MicrosoftInternetExplorer4 I'll say it again in case you missed it the first time: It's... MORE

Questions I've asked

Fiscal Policy
Garett Jones
1.  Will Treasury bondholders run our government? Follow-up questions:a. Will they run it better than we did?b. Do they run it already, as if by an invisible hand? I often ask myself, WWBD? And then I ask whether that's close to... MORE

Commentator Floccina, writing about my post on Social Security yesterday, states: SS is a way for the recipients (old people) to tax workers, therefore the more people getting SS the stronger the program is. That seems obvious, but let me... MORE

Henderson on Cronyism

Regulation and Subsidies
David Henderson
So, why does cronyism occur? In my paper, entitled The Economics and History of Cronyism, released today by the Mercatus Center, I cite two factors: government power over the economy and the discretionary power available to particular government officials. If... MORE

Unintended Consequences of Intervention

Political Economy
David Henderson
Many libertarian and conservative economists I know are good at pointing out the unintended, and usually negative, consequences of domestic government policy. But a smaller subset of these people seem willing to look at foreign policy with the same skeptical... MORE

Moral Authority, Continued

Public Choice Theory
Arnold Kling
Note Chris Dillow's cynical take: Crony capitalism, then, is the only feasible form of capitalism. Matt Mitchell writes, My colleague Adam Thierer has assembled an interesting compendium of expert opinions on regulatory capture. The quotes show experts interested in grappling... MORE

The Moral Authority Test

Public Choice Theory
Arnold Kling
Tim Carney reports on the latest project from the Mercatus Center. George Mason University's Mercatus Center this week is kicking off a series of papers on cronyism and business-government collusion. (Seemingly-related Video from LearnLiberty) You can think of the project... MORE

Henderson on Shiller

Finance
David Henderson
My review [scroll down] of Robert Shiller's Finance and the Good Society is out in the latest issue of Regulation. A highlight about the finance portion: On the issue of crises, the main financial crisis in our future is likely... MORE

Would Conscription Reduce Support for War?

Public Choice Theory
David Henderson
A number of prominent people in recent years as well as many people I run into in academia have been arguing that one virtue of returning to conscription is that it would put the sons of wealthy and politically powerful... MORE

Taking Lousy Government for Granted

Public Choice Theory
David Henderson
Their Supreme Gall There are two ways to take lousy government for granted: (1) to understand clearly how lousy, petty, vicious, self-serving, and narcissistic most government is, and (2) to understand implicitly how lousy, petty, vicious, self-serving, and narcissistic most... MORE

Rick Berman: Mercenary/Hero for Freedom

Public Choice Theory
David Henderson
"If this country is worth saving, it's worth saving at a profit." --H.L. Hunt This is a quote from one of the best books of the 1970s, The Machinery of Freedom, by David Friedman. It comes at the end of... MORE

David Stockman's Time Horizon

Social Security
David Henderson
"I'm just not going to spend a lot of political capital solving some other guy's problem in 2010." --David Stockman, in William Greider, "The Education of David Stockman," Atlantic, December 1981. One of the biggest "inside politics" articles in 1981... MORE

This is from a talk I gave on my book, The Joy of Freedom: An Economist's Odyssey, less than 3 months after 9/11. HT to Jim Cardoza.... MORE

Edward Glaeser on GSE Reform

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

Market Failure: The Case of Organic Food

Behavioral Economics and Rationality
Bryan Caplan
Right-leaning people typically believe that (a) markets work, and (b) organic food is a scam.  I definitely fit the profile.  As a result, my every trip to the grocery store inspires cognitive dissonance.  Organic food isn't merely on the shelves;... MORE

TSA: Thieves Sacking Americans

Regulation
David Henderson
Read David Friedman's latest blog post and the comments on it for his story about TSA. it turns out that there really is a noticeable difference between government workers in protected jobs and private firms hired to do the government's... MORE

Thanks for many good answers on the Kim dynasty vs. the stationary bandit model.  But as far as I can tell, no one drew the distinction I was looking for: durability versus stability.The Kim dynasty is clearly durable: it's ruled... MORE

The Kim Dynasty vs. the Stationary Bandit Model

Cross-country Comparisons
Bryan Caplan
Question from the final exam for my graduate Public Choice class:The Kim family has ruled North Korea for three generations.  Doesn't the stationary bandit model imply that the country should be prospering?  If so, what's wrong with the stationary bandit... MORE

Occupational Licensing

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

Curley Effect in California

Public Choice Theory
David Henderson
James Michael Curley, a four-time mayor of Boston, used wasteful redistribution to his poor Irish constituents and incendiary rhetoric to encourage richer citizens to emigrate from Boston, thereby shaping the electorate in his favor. Boston as a consequence stagnated, but... MORE

What I'm Saying

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

A Better Analogy for David Friedman

Public Choice Theory
David Henderson
Motorcycles, not Cars Yesterday, in my Cost/Benefit Analysis course, I covered the highlights of public choice. One of the pieces I like to use is a short chapter from David Friedman's modern classic, The Machinery of Freedom. The chapter is... MORE

Robert Caro's Hands-On Discovery of Public Choice

Books: Reviews and Suggested Readings
David Henderson
Caro had a further epiphany about power in the early '60s. He had moved on to Newsday by then, where he discovered that he had a knack for investigative reporting, and was assigned to look into a plan by Robert... MORE

Concentrated vs. Dispersed Interests

Public Choice Theory
David Henderson
From my former student, Michael Williams: What I am wondering, or maybe proposing, is that as communications become easier and require less effort (i.e. writing an email as opposed to writing a letter) and information becomes easier to access will... MORE

Timothy Taylor's Instant Economist

Books: Reviews and Suggested Readings
Arnold Kling
Tyler Cowen wrote that it is too elementary for most MR readers but it is well executed and would make a good gift for anyone needing an introduction to economic reasoning. My thoughts: 1. The price is very attractive. I... MORE

Catch Them Doing Something Right

Public Choice Theory
Arnold Kling
It's not the Sunday Outlook, but the Washington Post has a long op-ed that explains some important concepts in public choice. Charles Lane writes, Not surprisingly, much political activity consists of trying to create, or keep, opportunities to collect economic... MORE

An Institutional Check on Financial Regulators?

Finance: stocks, options, etc.
Arnold Kling
Ross Levine writes, [We] propose a new institution, which I label the "Sentinel," to act as the public's sentry over financial policies and to help compel financial regulators to act in the public interest, regardless of their private interests. The... MORE

My "Occupy Monterey" Talk, Part I

Regulation
David Henderson
I finally have found time to tell the story of my "Occupy Monterey" talk last Saturday, titled "Crony Capitalism versus the Free Market." My expectations for the success of my talk, on a scale of 10, were 3 to 6... MORE

An Annoying Law

Public Choice Theory
Arnold Kling
In New York: This month, thousands of New Yorkers will hand over their apartment keys to strangers, making a few extra bucks by renting out their homes when they head out of town. But they might not know they're actually... MORE

More on the Anti-Commons

Property Rights
Arnold Kling
From Eli Dourado. If we could be certain that eminent domain would only used when it was efficiency-enhancing, and that adequate compensation would be made to the expropriated, I would have no problem with it. I would regard it as... MORE

Bill Niskanen, RIP

Public Choice Theory
David Henderson
William A. Niskanen, an economist who held an amazing number of different interesting jobs, died yesterday. Early in his career, he was a Robert McNamara whiz kid. His experience in the bureaucracy led him to write his early contribution to... MORE

The Anti-Terrorist Bureaucracy

Public Choice Theory
David Henderson
Now that the big kahuna -- Osama bin Laden -- has been killed, the "War on Terror" is much less exciting. Even before Osama's demise, experts sent chills through the massive post-9/11 U.S. government anti-terrorism bureaucracies by concluding that the... MORE

Is Russia a "Thug State?"

Institutional Economics
David Henderson
Although the KGB was abolished in 1991 after its chairman, Vladimir Kryuchhov, participated in the failed coup d'etat against USSR president Mikhail Gorbachev, the KGB mentality still thrives. Russian is run by former KGB officials and Kremlin-friendly oligarchs. They control... MORE

Housing Finance in Other Countries

Finance: stocks, options, etc.
Arnold Kling
In the Richmond Fed bulletin, Renee Haltom writes, The United States finds itself on the far end of the spectrum in many aspects of housing. At the funding level, the United States has the most government support of owner-occupied housing... MORE

Betty Yee's Outrageous Untruth

Taxation
David Henderson
Having just returned from my vacation in Canada, I got around to reading tax advocate Betty Yee's side of the "Amazon tax" issue. Yee is a member of the California Board of Equalization. I had argued against the tax but... MORE

Cannon's Law

Regulation
Arnold Kling
This story got picked up by several outlets. Soon, "mystery shoppers" may come to medicine. And doctors are outraged. The Department of Health and Human Services proposes using them to figure out why so many new patients are having problems... MORE

The Weiner Affair

Public Choice Theory
David Henderson
A Public Choice Moment Like many people in the last few weeks, I have given into the temptation to make jokes or listen to jokes about Anthony Weiner. He has the perfect name, and the perfect story, to give rise... MORE

Shaping the Story

Public Choice Theory
Arnold Kling
The Washington Post reports, A majority of Senate Republicans appeared to break Tuesday with two decades of GOP orthodoxy against higher taxes, voting to advance a plan to abruptly cancel billions of dollars in annual tax credits for ethanol blenders.... MORE

Mr. Smith Goes to Public Choice

Public Choice Theory
David Henderson
I woke up early Friday morning and, rather than turning on ESPN, which is my wont, I surfed movies and found that "Mr. Smith Goes to Washington" had started only a few minutes earlier. Once I start watching that movie,... MORE

Here's the most open-ended question I included on last week's Graduate Public Choice midterm: Normal 0 MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman";} Suppose... MORE

Should Caesar Have Been Killed?

Public Choice Theory
David Henderson
Is this a day to celebrate or to mourn the death of Julius Caesar? That's the question for the Ides of March. Here's what Wikipedia says about his policies: When the triumph was over, Caesar set forth to passing an... MORE

Summarizing an IMF conference, Olivier Blanchard lists nine points. I will make extended comments below the fold. Here is a crucial sentence: Monetary policy has to go beyond inflation stability, adding output and financial stability to the list of targets,... MORE

Power Corrupts

Public Choice Theory
David Henderson
"Power tends to corrupt: absolute power corrupts absolutely." This quote is, of course, from Lord Acton. Today, Megan McArdle has laid out beautifully how it corrupts. This is my favorite McArdle post in a long time. She starts with a... MORE

No Prayer, Sorry

Public Choice Theory
Arnold Kling
Bryan Caplan says that maybe liberals and libertarians can agree that farm subsidies are bad. However, I am not impressed by this. Liberals have no problem reducing government support for groups they dislike, such as "corporate farmers." But they still... MORE

John Goodman on Government Failure

Public Choice Theory
David Henderson
Why is our perspective so different from so many other health policy analysts? I think the answer is: the vast majority of people in health policy do not understand the concept of "government failure." For example, health economist Austin Frakt,... MORE

Housing Finance Reform

Finance: stocks, options, etc.
Arnold Kling
While I await the release later today of the Administration's white paper, I have received from Princeton University Press an advance copy of Guaranteed to Fail, a new book by Viral Acharya, Matthew Richardson, Stijn Van Nieuwerbergurgh, and Lawrence J.... MORE

Tunisia: Tullock's Model Fits

Public Choice Theory
David Henderson
The first time I met Gordon Tullock, as I tell here, was in the fall of 1971 when he gave a paper at a conference at the University of Western Ontario. The paper was titled "The Paradox of Revolution." Here's... MORE

An Assignment for Progressives

Finance: stocks, options, etc.
Arnold Kling
First, read Peter Wallison's op-ed. Congress should assure that housing does not again make itself a ward of the government. Then, write an essay that consists of something other than ad hominem attacks on Wallison. Instead, write an essay that... MORE

Cut Cali

Public Choice Theory
Bryan Caplan
Arnold should enjoy Jacob Lyles' proposed initiative to split California into two new states:Every single incumbent Democrat running for reelection to the state legislature won his race, including a dead guy. In this election cycle politically active Californians were most... MORE

Symposium on Bank Size

Finance: stocks, options, etc.
Arnold Kling
at the New York Times. Several interesting contributions. Jeremy Stein offers a reasonable technocratic approach, consisting largely of higher capital requirements for large banks. My problem with this is that any time you have a regime in which government guarantees... MORE

The Politics of the Mortgage Interest Deduction

Politics and Economics
Arnold Kling
Ed Glaeser is naive. He writes, Wyden-Gregg option is to limit the mortgage deduction to exclude second homes, home equity lines, and mortgages over $500,000. Lowering the upper limit on the home mortgage interest deduction should appeal to progressives, who... MORE

Maryland's State Pension Blues

Public Choice Theory
Arnold Kling
The Examiner reports, State teacher pension payments will grow 10 percent annually and its benefits contributions will grow 8 percent annually, while General Fund revenues -- responsible for all teacher pensions and 60 percent of benefits -- will increase only... MORE

Public Choice for Children

Public Choice Theory
David Henderson
Out of the mouths of babes oft times come gems. In "Obama Visits a Nation that Knew Him as Barry," November 8, the New York Times, uncharacteristically given the subject, has a revealing story about an interaction between Barry Obama... MORE

All the Devils are Here

Books: Reviews and Suggested Readings
Arnold Kling
Alex Tabarrok likes the book. My review was also very favorable.... MORE

Three that Caught My Eye

Economics of Education
Arnold Kling
1. William Easterly on the $320,000 kindergarten teacher story. Under the project studied, there were random assignments of teachers and students to classes. The striking thing in the findings is the identification of "Good" and "Bad" kindergarten classes, as shown... MORE

Earl Long on Not Voting

Public Choice Theory
David Henderson
I have friends who refuse to vote because their vote doesn't matter. I understand that. I have friends who make voting a moral issue and say it's wrong to vote. I kind of understand that. But what I don't get... MORE

Technocratic Overconfidence

Behavioral Economics and Rationality
Arnold Kling
Matt Ridley discusses a paper that uses "behavioral economics" to assess regulators. The paper is by Slavisa Tasic, and I believe that it can be found here. Tasic writes, In the context of political economy, overconfidence takes the form of... MORE

Obama's Almost Contradiction

Public Choice Theory
David Henderson
Here's an excerpt from Peter Baker's piece in the New York Times last week on Obama: He realized too late that "there's no such thing as shovel-ready projects" when it comes to public works. Now here's the start of the... MORE

History of Fire Protection

Microeconomics
Arnold Kling
William Polley recommended a paper by Annelise Graebner Anderson. Russ Roberts recommended an essay by Fred S. McChesney. The point is that fire-fighting began as a private function. Largely volunteer in the U.S. In London, fire brigades were hired by... MORE

Answer to Trivia Question

Public Choice Theory
David Henderson
Last night, I asked: Who was the first economist to win the Nobel prize? It's not as obvious as you might think. A hint (it's a very subtle hint) is in the category in which I listed this post. Commenters... 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

In the Name of "Affordable Housing"

Public Choice Theory
Arnold Kling
Greg Mankiw prints some notes from Philip Swagel from last week's conference on the future of housing finance. Conference participants from industries involved with the financing and construction of homes assert that no American will ever buy a home again... MORE

Why We Have Freddie and Fannie

Public Choice Theory
Arnold Kling
The Wall Street Journal reports, The Securities Industry and Financial Markets Association, Wall Street's main lobbying group, said in a proposal submitted to the Obama administration on Wednesday that the government couldn't completely exit the mortgage market without sending costs... MORE

Paul Gregory on Communism

Politics and Economics
David Henderson
Although I haven't found time to listen to more than about 20 of Russ Roberts's Econtalk podcasts, one of his latest, his interview with our Hoover colleague Paul Gregory, is one of the best I've heard. Here are some of... MORE

Green Jobs!

Energy, Environment, Resources
Arnold Kling
The latest announcement about U.S. industrial policy says, Abengoa SA... was offered a $1.45 billion loan guarantee by the U.S. Department of Energy to build a 250-megawatt solar plant in Arizona, and Abound Solar Manufacturing was offered a $400 million... MORE

Time Inconsistency in Government Policy

Public Choice Theory
David Henderson
When I teach various concepts, I try to connect them with specific stories because I find that students remember stories. This is especially important when the concept is labeled with a very abstract label. Take "time inconsistency." When I teach... MORE

If I Could Write the Lede

Public Choice Theory
Arnold Kling
President Obama's economic coordinator Lawrence Summers today announced the President's intention to gradually reallocate radio spectrum. The long-outmoded command-and-control system will be updated over the next decade, using a new set of rules and auctions. An overflow audience consisting mostly... MORE

Bruce Bartlett on "Starving the Beast"

Taxation
David Henderson
I've posted twice now (here and here) about sections of Bruce Bartlett's book, The New American Economy. I found Chapter 6, titled, "Starving the Beast Didn't Work," quite persuasive. First, Chapter 6. Bartlett deals with the idea, popular with many... MORE

Rent Sucking

Public Choice Theory
David Henderson
Economists use the term "rent seeking" to refer to people investing resources in getting government favors. In the Concise Encyclopedia article I wrote on this, I explain why I think the term is inappropriate. But if rent seeking were the... MORE

Good News

Public Choice Theory
Arnold Kling
From an email: Dear Grantseeker, One of the best kept secrets in Washington is that the new Health Reform Act is channeling millions of dollars in funding to other areas of vital interest to other nonprofits, tribes and local government!.... MORE

Why Bryan Caplan's CEA Veto Wouldn't Work

Public Choice Theory
David Henderson
In which the author shows himself to be more Caplanesque than Caplan I was reading through Bryan Caplan's excellent lecture notes on "Constitutions" for his Public Choice course. (Parenthetically, I'm blown away by the clarity and wisdom of his notes,... MORE

Insiders vs. Outsiders

Finance: stocks, options, etc.
Arnold Kling
Republicans are filibustering for this? Anyone who underwrites a mortgage which doesn't meet minimum underwriting rules would have to retain at least 5% economic interest in the trust. All of their proposals are variations on the ideas in the Democratic... MORE

Fannie and Freddie and Friends

Finance: stocks, options, etc.
Arnold Kling
Mark Thoma points to a series of presentations from the Roosevelt Institute, a left-oriented think tank. What struck me was Raj Date arguing for the elimination of Freddie Mac and Fannie Mae. He is quite firm on the point. He... MORE

Are Conspiracies Always Implausible?

Public Choice Theory
David Henderson
Bryan, in posting on Arnold's view of what Ben Bernanke is doing, wrote: Arnold's story fits the facts, but it just seems too conspiratorial. Yet Arnold didn't even hint at the idea of conspiracy. Instead, he was talking about Bernanke's... MORE

Earmarks and Total Spending

Public Choice Theory
Arnold Kling
Tyler Cowen quotes Garett Jones: The key to controlling spending is permitting more earmarks (sic). Tyler asks us to guess Garett's model. One model would be this: 1. Each Congressperson wants to use government spending to buy enough votes to... MORE

Big Banks

Political Economy
Arnold Kling
Tyler Cowen writes, Obama proposes a new banking plan and everyone is commenting for instance here is Simon Johnson. The plan seems to involve limits on bank size and limits on proprietary trading. In principle, I am against attempts by... MORE

Joe Salerno on Central Bankers

Monetary Policy
David Henderson
Central bankers are politicians with tenure. This was economist Joe Salerno's response to Stuart Varney's claim that giving Congress more control over the Federal Reserve would put politicians in charge of monetary policy. (It's at about the 4:09 point.) I've... MORE

Ayn Rand Discovers Public Choice

Books: Reviews and Suggested Readings
David Henderson
He [Parnell Thomas, chairman of the House Un-American Activities Committee] tried to placate her [Ayn Rand] with promises of a "whole [new] special hearing devoted to nothing but ideology," where she could bring out "all the facts." She told him... MORE

My New Public Choice Class

Public Choice Theory
Bryan Caplan
The webpage for my spring, 2010 Graduate Public Choice II course is now up, including the syllabus, complete lecture notes, and homeworks.  About half of the material is from my Graduate Public Finance I course; the rest is new.  Highlights... MORE

Do They Care?

Public Choice Theory
David Henderson
While many people dismiss insights from public choice, what's striking is its casual acceptance in conversation and discussion. Keith Hennessey posted today about the odds on various things happening with the Senate's and House of Representatives' proposed tax increases, aka,... MORE

Politics for Kids

Politics and Economics
David Henderson
A few weeks ago, Carl Mounteer, a local lawyer, and I were invited to present our views on a local tax issue to the Monterey County Weekly, the local left-wing weekly. Carl and I had written the ballot argument against... MORE

Democratic Senator Jay Rockefeller has introduced a bill that would give presidents the power to shut down the Internet. It was introduced on April 1, but it appears to be serious. According to the eweek article above: According to the... MORE

Can you say "rent-seeking?"

Public Choice Theory
Arnold Kling
Ed Kane writes, TARP recipients paid out $76.7 million on lobbying and $37 million on federal campaign contributions in 2008 and (through Feb 2, 2009) received access to $295.2 billion in TARP funds. The ratio of lobbying expense to TARP... MORE

Me on the Economics of Imperialism

Behavioral Economics and Rationality
David Henderson
In this radio interview, Scott Horton interviews me about various current economic issues including: the Obama budget, the Bush-Paulson-Bernanke bailout, why most of the Republicans in Congress have zero credibility in pushing for small government, the economics of imperialism, Adam... MORE

Yeah, right . . . The Time Inconsistency Problem

Public Choice Theory
David Henderson
Yesterday, Shaun Donovan, the secretary of the Department of Housing and Urban Development, was on Face the Nation to defend President Obama's bailout program for mortgage holders. The questioner, CBS's Bob Schieffer, asked some good questions. One of his best... MORE

Akerlof and Shiller Heart Higgs?

Behavioral Economics and Rationality
Arnold Kling
George A. Akerlof and Robert J. Shiller do not come to praise mainstream macroeconomics. Keynes' followers rooted out almost all of the animal spirits...that lay at the heart of his explanation for the Great Depression...They...minimized the intellectual distance between The... MORE

Recommended Reading

Fiscal Policy
Arnold Kling
Justin Wolfers writes, there are about three papers written on monetary policy for each paper mentioning fiscal policy. And there are only a few dozen papers written on the multiplier each year. He has more data. Jerry Muller writes, a... MORE

Tyler Cowen Discovers Public Choice

Public Choice Theory
David Henderson
You might claim: "they didn't nationalize it the right way" and maybe they didn't. Still, once you proceed down the nationalization path, you have to live with the nationalizations you will get, not the nationalizations as a professor might recommend... MORE

Krugman's Tin Ear

Public Choice Theory
David Henderson
I could just as easily have titled this post "Krugman's Achilles Heal." Basically, it's that Paul Krugman seems never to take account of the findings of public choice. Even a basic understanding of public choice would make him question his... MORE

The Aristocracy of Pull

Public Choice Theory
David Henderson
One of Ayn Rand's best scenes in Atlas Shrugged has her hero Francisco d'Anconia complete the statement of one of her villains with a surprise ending. Villain James Taggart states: We will liberate our culture from the stranglehold of the... MORE

Dean Baker

Public Choice Theory
David Henderson
One of the more interesting economist bloggers on the left side of the spectrum is Dean Baker. He had an interesting post the other day. (Hat tip to Sheldon Richman.) Baker wrote: The [Washington] Post tells us how the people... MORE

Imagine a Referendum on the Housing Bill

Public Choice Theory
Arnold Kling
Megan McArdle writes, Instead of moving to put FM/FM into a more easily understood model--either nationalizing them, or privatising--they're making the GSEs even weirder, and of course, piling on more debt...keeping pet companies on a leash so that you can... MORE

Public Choice Outreach Seminar 2008

Public Choice Theory
Bryan Caplan
If you want to learn more about public choice, why not fill out an application for the 2008 Public Choice Outreach Seminar? It's normally in the summer, but this year it's October 9-11. It's a great chance to sample the... MORE

Fiscal Desperation in Mass. and Md.

Public Choice Theory
Arnold Kling
The Boston Globe editorializes amendment to the House budget calls for a study of a 2.5 percent assessment each year on university endowments over $1 billion. The tax would affect nine of them, and in theory could generate an enormous... MORE

Fun History Fact of the Day

Public Choice Theory
Bryan Caplan
From my former student Jeremy Horpedahl:Lists of elections decided by one vote are often circulated in the popular press and by government election officials (interestingly, often directed at children). Most of the commonly cited examples are either completely wrong or... MORE

Public Choice Outreach 2007

Public Choice Theory
Bryan Caplan
Get your applications in for the 2007 Public Choice Outreach Seminar, July 12-15. Both faculty and students are excellent, and you'll get to meet many of your favorite bloggers. Apply now!... MORE

Regulation-exempt

Public Choice Theory
Arnold Kling
John Fund writes, In their favor-seeking, all of the lobbyists visiting Capitol Hill are bound by House and Senate ethics rules that cap most individual gifts at $50 per elected official or staffer, with an annual limit of $100 per... MORE

Rent-Seeking and Global Warming

Energy, Environment, Resources
Arnold Kling
The Wall Street Journal writes, The emerging alliance of business and environmental special interests may well prove powerful enough to give us cap-and-trade in CO2. It would make Hollywood elites feel virtuous, and it would make money for some very... MORE

Public Choice Television

Public Choice Theory
Eric Crampton
Deadwood is the best television series I've seen. I'm a big fan of Joss Whedon's work, but this surpasses it. Read Mancur Olson on stationary and roving bandits, then read some Tullock, then watch the show. Al Swearengen, who owns... MORE

Public Choice Outreach

Public Choice Theory
Bryan Caplan
The deadline for George Mason University's famous Public Choice Outreach Seminar, July 6-9, has been extended to May 19. Attendees get $250 toward travel expenses, room and board, and the chance to listen to many of the leading scholars in... MORE

Public Choice Theory, Example n

Public Choice Theory
Arnold Kling
Andrew Samwick quotes a New York Times story on how Congress is "improving" the private pension system. Someone must pay for this. Currently, the pension agency finances itself in part through the insurance premiums that companies are required to pay... MORE

Licensed to Rent-Seek

Public Choice Theory
Arnold Kling
Alan B. Krueger reports on Morris M. Kleiner's research on occupational licensing. He provides much evidence that the balance of occupational licensing has shifted away from protecting consumers and toward limiting the supply of workers in various professions. A result... MORE

China's Stationary Bandits

Public Choice Theory
Arnold Kling
Minxin Pei writes, The Chinese state remains deeply entrenched in the economy. According to official data for 2003, the state directly accounted for 38 percent of the country’s GDP and employed 85 million people (about one third of the urban... MORE

Abramoff and Rent-Seeking

Public Choice Theory
Arnold Kling
In a long article filled with details, Fred S. McChesney writes Lobbyists are free to petition government on behalf of clients. Indeed, the process is protected by the First Amendment. Accepting money for the exercise of one's First Amendment rights... MORE

Liberals and Walmart

Public Choice Theory
Arnold Kling
I have started a new series of essays about the assumptions made by (modern) liberals. The first one says, Liberals see the market as an arena in which evil corporations inflict their greed on innocent victims. I wish you would... MORE

The Banality of Corruption

Public Choice Theory
Arnold Kling
The front page of today's Washington Post has two stories on corruption. The main story is a stereotypical "one evil man" story on Jack Abramoff. The other story, on Maryland funeral law, probably explains everyday corruption more clearly. Maryland's leading... MORE

Reviving Political Economy

Public Choice Theory
Arnold Kling
From my latest essay: The mainstream approach treated economic behavior and political behavior completely differently. We viewed economic phenomena, such as a price change, as determined by an entire system. We took political decisions as arising from personal whim. We... MORE

Iraq and the Corruption Trap

Public Choice Theory
Arnold Kling
Rushing in where angels fear to tread, I thought I would apply the theory of the Corruption Trap to Iraq. Bribing an official to get something done is like paying ransom to a kidnapper -- what looks like a good... MORE

Constitution of Surveillance?

Public Choice Theory
Arnold Kling
James Buchanan discusses three ideas for Constitutional amendments. He proposes an amendment to require balancing the Budget, and amendment forcing laws to be nondiscriminatory, and an amendment against regulating voluntary market transactions. On the nondiscrimination issue, he writes, The American... MORE

Bank Regulation and Public Choice Theory

Public Choice Theory
Arnold Kling
There are several gems in the latest Milken Institute Review. On the topic of bank regulation, James Barth, Gerard Caprio and Ross Levine give an excellent generic description of how the public-choice view of government differs from the assumptions that... MORE

Pension Bagholders

Public Choice Theory
Arnold Kling
Roger Lowenstein writes The drawback to 401(k)'s, remember, is that people are imperfect savers. They don't save enough, they don't invest wisely what they do save and they don't know what to do with their money once they are free... MORE

Admitting We Were Wrong

Fiscal Policy
Arnold Kling
From my latest essay: The two viewpoints might be summarized as follows: --Conservatives: Cutting taxes will help reduce the size of government. --Liberals: Big government is not really so bad. In the face of overwhelming evidence over the past five... MORE

Housing and the Corruption Tax

Public Choice Theory
Arnold Kling
The New York Times reports In recent years, the difficulty of getting things built has made business harder for small, local builders and easier for big companies, with their greater resources, to gain control of the housing market. "The large... MORE

Licensing Rents

Economics of Health Care
Arnold Kling
Morris M. Kleiner writes, Even in the 1950s, licensing covered less than 5% of the American workforce. Now more than 20% of the U.S. workforce is covered by state licensing laws...prices in regulated occupations have increased more--and the earnings of... MORE

Oil Econ

Energy, Environment, Resources
Arnold Kling
Anthony de Jasay writes, Some miracle of an unexpected kind will very likely occur one day to make some renewable energy source economical, but until it does, responsible oil companies will make haste slowly toward biomass, solar or wind power... MORE

This Explains It

Public Choice Theory
Arnold Kling
This piece by Brad DeLong helps illuminate his world view. After giving a litany of Katrina-related institutional failures at the local, state, and Federal level, he concludes we should be surprised. Fema is a bureaucracy. A bureaucracy is designed to... MORE

Nasty, Brutish Looting

Public Choice Theory
Arnold Kling
Lee Harris writes, To me, the looting came as no surprise: it was a completely natural phenomenon. It was exactly what my own theory of the social order would have predicted. What else should you expect when a civilized order... MORE

Real Electoral Reform

Public Choice Theory
Arnold Kling
In this essay, I argue that mass democracy reduces the quality of government. In 1790, the largest state in the union, Virginia, had a population of under 700,000. Today, Montgomery County has a population of over 900,000. Our nine-member County... MORE

Anti-antitrust

Regulation and Subsidies
Arnold Kling
David R. Henderson writes, The best statement of the philosophical case against antitrust is in philosopher Harry Binswanger's essay, "Antitrust: 'Free Competition' at Gunpoint." Binswanger draws a fundamental distinction between economic power and political power. Economic power, he notes, is... MORE

Rent-Seeking in Sin City

Public Choice Theory
Bryan Caplan
Here's a great passage in Sin City: The Hard Goodbye that didn't make the movie: In this town just about anything you can name that's worth doing is against the law. It works out better for everybody this way. Cops... MORE

All's Fair in Politics

Public Choice Theory
Michael Munger
by Michael Munger Guest Blogger Economist Ray Fair's very simple model on presidential elections has some interesting things to say about the upcoming election. Given the macro-economic and macro-political factors that have mattered in the past, George W. Bush should... MORE

Rent and Rent-Seeking

Public Choice Theory
Arnold Kling
Edward Lotterman talks about Ricardian rent and rent-seeking. The U.S. government subsidizes cotton production to the tune of some $3 billion per year. Virtually all the subsidy flows to fewer than 30,000 cotton farmers. At some $100,000 per producer, cotton... MORE

My latest essay is on these topics. There are three layers to the argument against paternalism. The first layer is purely libertarian, which says that government compulsion of individuals is always wrong. The second layer is utilitarian, which says that,... MORE

Costs of Entrepreneurship

Growth: Causal Factors
Arnold Kling
Andrew David Chamberlain points to a World Bank study written by Andrei Shleifer, among others, of barriers to entrepreneurship. Countries with heavier regulation of entry have higher corruption and larger unofficial economies, but not better quality of public or private... MORE

A Bad Month for Libertarians?

International Trade
Arnold Kling
In this essay, I say that libertarians had a bad month in November. Howard Dean came out in favor of re-regulation of "utilities, large media companies and any business that offers stock options." As Megan McArdle put it, "those of... MORE

Online Trade Barriers

Regulation and Subsidies
Arnold Kling
Michael Cox writes about trade barriers that affect Internet commerce. Georgia requires buyers to purchase contact lenses in person, ostensibly to protect their health but in effect as a boost to in-state eyewear retailers. Oklahoma won't allow its citizens to... MORE

Ethanol Mandate

Energy, Environment, Resources
Arnold Kling
Lynne Kiesling points to this article by Joel Schwartz on the ethanol mandate. what if our elected officials ... forced you to pay $180 more each year for gasoline that contains an antiquated additive you don't need, and that could... MORE

The Challenge to Cut Spending

Fiscal Policy
Arnold Kling
Recently, Kevin Drum issued this challenge to those who claim to prefer lower government spending. Let's hear what you want to cut. And remember, for bonus points you have to include some programs that you yourself benefit from. I was... MORE

Anti-Consumer Regulation

Regulation and Subsidies
Arnold Kling
Two recent columns concerning the regulation of Internet commerce show how regulation sometimes restricts competition at the expense of the consumer. The Wall Street Journal argues that state regulations prevent consumers from obtaining health insurance that otherwise would be available... MORE

Government Overgrowth, II

Supply-side Economics
Arnold Kling
Was the stock market boom good for New York? Not according to Megan McArdle, otherwise known as 'Jane Galt'. in an era of prosperity, city spending grew an astonishing $5.6 billion, or 25% - right up to the capacity of... MORE

Temporary Dividend Tax Cut?

Fiscal Policy
Arnold Kling
Jacob Levy criticizes the Senate's proposed temporary tax cut on dividends. The arguments in favor of repealing the dividend tax have to do with removing distortions from the capital markets and from the incentives faced by corporations, and with improving... MORE

Government Overgrowth

Supply-side Economics
Arnold Kling
One fascinating phenomenon is that when government grows so large and its interest groups so powerful, it threatens to crowd out the private sector. This is a concern in Israel, where a new economic plan that tries to limit government... MORE

Lessig on Copyright

Information Goods, Intellectual Property
Arnold Kling
In 1998, Congress extended copyright terms on both new and existing works. Lawrence Lessig tried unsuccessfully to have this extension overturned by the Supreme Court. In this interview, Lessig explains the weakness of the economic argument for the copyright extension.... MORE

Comments of the Week, 2003-03-19

Public Choice Theory
Arnold Kling
There were several interesting comments under the thread of Public Transit and Public Choice. Bernard Yomtov wrote, Liberals do believe the market fails sometimes. This is hardly a radical position. It is almost universally accepted except among market-worshippers who seem... MORE

Public Transit and Public Choice

Public Choice Theory
Arnold Kling
Here is Public Choice theory boiled down to three sentences, by'Jane Galt'. The liberal mantra is that the market fails. The free market mantra is that government fails worse. And I think the weight of empirical evidence is on our... MORE

Tax Reform Timidity

Public Choice Theory
Arnold Kling
The New York Times' Daniel Altman describes the state of the income tax code. Washington managed to hack through much of the underbrush of the tax code in an overhaul that President Ronald Reagan signed into law in 1986. But... MORE

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