Bryan Caplan and David Henderson

Regulation and Subsidies

A Category Archive (203 entries)

Maskin's Failure

Finance
David Henderson
UPDATE BELOW In particular, if I'm a bank and I'm making risky loans, I have an incentive, if I can, to make those loans using other people's money, in other words to make highly leveraged loans. But when I do... MORE

Last night, I did a segment on the John Batchelor Show on the late George Hilton. Here it is. My part starts at 33:10 and goes to the end. One correction: John referred to me as the Features Editor of... MORE

Prohibition: Then versus Now

Books: Reviews and Suggested Readings
David Henderson
This will likely be my final post about Daniel Okrent's excellent book The Last Call: The Rise and Fall of Prohibition. This one, appropriately enough, is about the fall and some of the factors that led to it. There's a... MORE

Jonathan Turley Echoes Milton Friedman

Regulation
David Henderson
As federal agencies have grown in size and scope, they have increasingly viewed their regulatory functions as powers to reward or punish citizens and groups. The Internal Revenue Service offers another good example. Like the patent office, it was created... 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

The Missing Arguments

Behavioral Economics and Rationality
Bryan Caplan
Libertarians have a reputation for silly absolutism.  While there's truth in the stereotype, libertarians are at least as likely to make intellectually lazy exceptions to their general principles.  This is especially true when the people losing their liberty are foreigners... MORE

Taxi drivers of the world, unite!

Regulation and Subsidies
Alberto Mingardi
On Wednesday last week, taxi drivers all over Europe protested and went on strike against Uber. Uber is set to conquer the European market, in spite of allegations of illegality of the services it provides under current EU regulations. Uber... MORE

The Stockpile Solution

Energy, Environment, Resources
Bryan Caplan
If I were convinced that the fate of mankind hinged on massive reductions in carbon emissions, I would still be pessimistic about unilateral taxes or cap-and-trade.  As I told Yoram:National emissions regulations can have perverse global effects.  If relatively clean... MORE

Cartoon Introduction to Climate Change: Pollution Taxes Illustrated

Books: Reviews and Suggested Readings
Bryan Caplan
Here's another page from The Cartoon Introduction to Climate Change that's worth more than all the demagogic words spoken about pollution taxes.  Now in stores.  Click to enlarge.[Excerpted from The Cartoon Introduction to Climate Change by Grady Klein and Yoram... MORE

Unemployment Insurance Bleg

Labor Market
Bryan Caplan
As far as I can verify via Google, workers under the age of 18 remain fully eligible for U.S. unemployment insurance.  Am I missing anything?  Please show your work.... MORE

Myth of the Rational Voter: The Animated Series, Part 3

Behavioral Economics and Rationality
Bryan Caplan
I'm back from vacation, and my Learn Liberty video on anti-market bias is up.  Enjoy.... MORE

Krugman's Strange Post on Solar Power

Energy, Environment, Resources
David Henderson
Paul Krugman has a strange post on solar power that contradicts basic microeconomics. He writes: Like just about everyone who has looked at the numbers on renewable energy, solar power in particular, I was wowed by the progress. Something really... 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

Why we debate the unimportant issues

Regulation and Subsidies
Scott Sumner
Alex Tabarrok has a post discussing the laws protecting auto dealers from competition. One thing I notice is that when I discuss this sort of crazy law in the faculty dining room, many non-economists will tell me that they have... MORE

Australia's auto industry collapses as America's booms

Regulation and Subsidies
Scott Sumner
From the Economist: Toyota's announcement on February 10th that it would join Ford and Holden in pulling out of carmaking in Australia, closing its assembly line in 2017, was greeted with commensurate dismay. Yet beneath the obligatory political blame-mongering was... MORE

How Welfare Hurts Walmart

Microeconomics
Bryan Caplan
Walmart's critics often argue that food stamps, Medicaid, and other poverty programs subsidize its labor force.  Since government pays a big part of its workers' living expenses, Walmart doesn't have to.  Is this true?As long as non-workers remain eligible for... MORE

The Minimum Wage vs. Welfare: Band-Aid or Salt?

Cost-benefit Analysis
Bryan Caplan
Peter Thiel entertains what economists would call a "second-best" argument in favor of raising the minimum wage:"In theory, I'm against it, because people should have the freedom to contract at whatever wage they'd like to have. But in practice, I... MORE

All three factors can combine to make the value of the insurance policy well below its price. Let's say that the family values the insurance at $3,500. That family is worse off because it is paying $4,000 net of the... MORE

Paul Krugman was upset over a recent column by Casey Mulligan. Here's Krugman: Jonathan Gruber is mad as hell, and he's not going to take it anymore. The eminent health care economist and health reform architect is annoyed at Casey... MORE

Bias and Bigness Bleg

Political Economy
Bryan Caplan
Question for anyone who thinks that the existing regulation regime is well-designed to protect the interests of big business: Why do so many regulations exempt firms with small numbers of employees (typically 50 or less) - and so few regulations... MORE

John Cochrane Views the World

Taxation
David Henderson
One of the big advantages of having been an economist for a long time and having been at the Council of Economic Advisers 30 years ago is that I've gotten to know and follow a lot of people and their... MORE

Public intellectuals often talk about "conservative economics."  The truth, though, is that conservative economics is essentially non-existent.  Academic economists range from liberal to libertarian.  While Republicans are rarely libertarian, Republican economists are the exception that proves the rule.This is a... MORE

Phase-In: A Demagogic Theory of the Minimum Wage

Behavioral Economics and Rationality
Bryan Caplan
Increases in the minimum wage are usually "phased-in."  Instead of raising the minimum wage overnight, the law usually specifies a series of steps.  The Fair Minimum Wage Act of 2007 increased the prior $5.15 minimum wage in three steps:  ...to... MORE

Do-It-Yourself vs. the Minimum Wage

Labor Market
Bryan Caplan
After my Intelligence Squared debate, I had a long chat with my opponent Ron Unz about his latest cause: a huge increase in the minimum wage.  For Unz, the disemployment effect of a high minimum wage is a feature, not... MORE

Why Buildings Aren't Taller

Political Economy
Bryan Caplan
Whenever Robin Hanson turns to urban economics, I expect to be edified.  A prime example:Urban economics studies the spatial distribution of activity. In most urban econ models, the reason that cities aren't taller is that, per square meter of useable... MORE

Galbraith and the Southern Sharecroppers

Books: Reviews and Suggested Readings
David Henderson
"I am astonished how little we were concerned." In the mid-1930s, under the Franklin Roosevelt-inspired Agricultural Adjustment Act, the U.S. government paid farmers not to grow. Richard Parker, in John Kenneth Galbraith: His Life, His Politics, His Economics, writes: If... MORE

Adam Ozimek has an interesting objection to my claim (here and here) that empirical work on the disemployment effect of the minimum wage contradicts empirical work on the wage effect of low-skilled immigration:Bryan's immigration example is missing an important point.... MORE

Mises on Death Panels (Implicitly)

Cost-benefit Analysis
Bryan Caplan
Unlike most opponents of Medicare, I think that restricted reimbursements and so-called "death panels" are great ideas.  If the government is paying the bills, saying "We'll pay for whatever you want" or "We'll pay whatever it takes to save you"... 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

Alex and some of the internet are noting that airline security might cost lives and does cost liberty. Yglesias asks one counterfactual: How many airplanes would be "blown up by terrorists" if there were no airline security?  I might have... MORE

Towards the end of my debate with Steve Pearlstein, he posed an intriguing question.  My paraphrase: Suppose half of higher education really is pure waste.  What's the efficient government response?  Should government should cut its subsidy by 50%?  Or what?Steve's... MORE

Would the Private Sector Make You Wear an Airplane Seatbelt?

Behavioral Economics and Rationality
Garett Jones
This week I tweeted:What argument do defenders of government-mandated airline seatbelt paternalism use? It can't be that plane crashes aren't salient to buyers.Note that I'm asking why the government has to mandate seatbelt usage.  Since people overestimate the chance of... MORE

Higher Education: Time to Cut the Cord

Cost-benefit Analysis
Bryan Caplan
Should government withdraw from an active role in promoting and subsidizing higher education?  I recently debated Pulitzer Prize winner Steve Pearlstein on this very question.  Here's the debate resource page, including full audio.  I've also published a correction: total government... MORE

Ohio and the Auto Bailout

Regulation and Subsidies
Luigi Zingales
The presidential election seems to come down to Ohio and the vote in Ohio is likely to come down to one issue : the auto bailout. With one out of eight workers employed in the auto industry, it is hardly... MORE

You Should Repeatedly Read Cochrane's "After the ACA"

Economics of Health Care
Bryan Caplan
Soon after I finished my Ph.D. at Princeton, I started going to academic conferences.  When I met senior professors at these gathering, they were often surprised to discover my pedigree.  Regardless of the subject at hand, I habitually revealed exactly... MORE

True by Definition: Redistribution and Economic Freedom

Cross-country Comparisons
Bryan Caplan
My main complaint about Scott Sumner is that he still hasn't joined the faculty of George Mason's Economics Department.  But I'm also unhappy about the distinction he frequently makes between "size of government" (or "redistribution") and "market freedom."  The latest... MORE

A Relook at Enron

Energy, Environment, Resources
David Henderson
But the historian must look deeper. Was Enron really a free-market, capitalistic company even when its apparent self-interest lay elsewhere? Or were profit centers dependent on tax subsidies, advantageous regulation, or checks written on the U.S. Treasury? Was Enron passive... 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

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

Andrew Lo, JP Morgan, and PBR Audits

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

Audits and Principles-Based Regulation

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

More Comments on Principles-Based Regulation

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

PBR, once again

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

The Importance of Nirvana

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

Principles-Based Regulation

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

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

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

Confidently Uncertain

Finance: stocks, options, etc.
Arnold Kling
The latest IGM forum question asks renowned economists to guess whether, prior to the crisis, Freddie and Fannie passed many benefits through to mortgage borrowers. The economists are also asked to rate their confidence in their answers, on a scale... MORE

Krugman on Supreme Court Reasoning About Health Insurance

Economics of Health Care
David Henderson
In his column today, "Broccoli and Bad Faith," Paul Krugman goes after the conservative judges on the Supreme Court for their lack of understanding of health insurance and their "self-evidently absurd" claim about coercion. First, the analogy between health insurance... MORE

Matt Yglesias on Urban Development

Books: Reviews and Suggested Readings
Arnold Kling
The book is The Rent is Too Damn High. Counties, municipalities, states, and everyone else involved in promulgating land-use regulations need to ease off on parking requirements, artificial constraints on lot size, height restrictions, etc. Other interesting excerpts below. (Possibly... MORE

The Boudreaux Plan to Save the NYT

Regulation and Subsidies
Bryan Caplan
Don Boudreaux, Master of economic ridicule, gets one step closer to unseating Grand Master Frederic Bastiat.  When the NYT calls to raise the minimum wage, Don replies:In the same spirit of demanding that government improve people's economic well-being simply by... MORE

Bastiat's Insight on Government Inaction

Regulation and Subsidies
David Henderson
I've noticed in discussions--in person, on Facebook, and in blogs--how hard it is for most people to see that opposition to having the government subsidize or require activity X does not mean that one opposes activity X. Frederic Bastiat addressed... MORE

Robert Frank's Narrow View on Schools

Information Goods, Intellectual Property
David Henderson
When I posted on Facebook a link to my recent blog post and book review [scroll down to the third page] of Robert Frank's latest book, a George Mason University economist friend wrote, "David, your critique is spot on, but... 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

Reason TV has up two parts of an interview that Nick Gillespie did recently with interviewee Ken Burns. Burns has a new 3-part PBS series out on Prohibition, which my economist/historian friend, Jeff Hummel, tells me is excellent. These interviews... MORE

Goolsbee, Friedman, and 1980

Economic History
Bryan Caplan
Milton Friedman's Free to Choose t.v. series is now 30 years old.  To celebrate, PBS is re-running highlights, followed by new panel discussions.  I was just on one of these panels: me, Austan Goolsbee, Amity Shlaes, and Clarence Page.  (Pre-recorded;... 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

Over-Grazing

Regulation and Subsidies
Arnold Kling
In Forty Years on the Regulatory Commons, Bruce Yandle writes, Ours is a regulatory capitalism where regulators and the regulated are intertwined in symbiotic cartel-forming ways that often make working the halls of Congress and regulator offices far more profitable... 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

Beaulier-Caplan Links

Behavioral Economics and Rationality
Bryan Caplan
"Behavioral Economics and Perverse Effects of the Welfare State," my 2007 Kyklos paper with Scott Beaulier, has been getting belated attention lately thanks to Karl Smith.  Check out comments from Mike Konczal (Rortybomb), M.S. (the Economist), and James Kwak (Baseline... MORE

Regulation of, by, and for Big Business

Economic History
Arnold Kling
Michael Strong points out this forty-year-old essay by Roy Childs. What Kolko and his fellow revisionist James Weinstein (The Corporate Ideal in the Liberal State, 1900-1918) maintain is that business and financial leaders did not merely react to these situations... MORE

Regulation and the Second Best

Regulation and Subsidies
Arnold Kling
Scott Sumner writes, I resent my tax money insuring banks that make sub-prime mortgage loans, or risky construction loans. I'd like to ban FDIC-insured banks from making housing loans with less than at least 20% down. I am not opposed... MORE

Estate Tax Bootleggers

Regulation and Subsidies
Arnold Kling
Tim Carney and Dick Patten write, It's no surprise then that the life insurance industry, which stands to gain an estimated 10 percent of its revenues from estate tax policies, is leading the charge to ensure that the estate tax... MORE

Macroeconomic Costs of Credentialism

Macroeconomics
Arnold Kling
My latest essay: Entrepreneurs in healthcare and education face unusually strong barriers to entry. Both industries are credentials cartels. Licensing and accreditation are key requirements to compete in those fields, and incumbents are in control of the process. In addition,... MORE

The Housing-Oil Analogy

Regulation and Subsidies
Bryan Caplan
Arnold's latest post is spot-on.  I can't resist turning it into an SAT analogy... Housing: Oil :: Today: the SeventiesIn both cases, the public flipped out over the market outcome, government rushed to "do something," and ended up creating a... MORE

Parking, Once Again

Regulation and Subsidies
Arnold Kling
Tyler Cowen offers a number of links. I clicked on this op-ed, by Donald Shoup. To prevent shortages, some cities have begun to adjust their meter rates (using trial and error) to produce about an 85 percent occupancy rate for... MORE

Parking: What is the Relevant Margin?

Regulation and Subsidies
Arnold Kling
In a comment, Robin Hanson asks (or re-asks) why parking should be free, when there are thousands of other goods with low marginal cost that are not free. My basic answer is that there are thousands of other goods with... MORE

Parking Spaces: What is the Free-Market Equilibrium?

Regulation and Subsidies
Arnold Kling
Robin Hanson writes, I didn't see Tyler favoring forcing prices above marginal cost, just opposing laws requiring excess supply. So, there are two issues. a. How much land should be devoted to parking spaces? b. Given the answer to (a),... MORE

Why is there Free Parking?

Regulation and Subsidies
Arnold Kling
Tyler Cowen's latest column is on the anomaly of free parking. If developers were allowed to face directly the high land costs of providing so much parking, the number of spaces would be a result of a careful economic calculation... MORE

My Question for Larry Summers

Regulation and Subsidies
Arnold Kling
I doubt that I will get to ask it. He is announcing that over the next ten years, the government is going to make more spectrum available for broadband. My question is: isn't this just a partial solution to a... MORE

Dick Rutan on Aeronautical Progress and Government

Regulation and Subsidies
David Henderson
I've just returned from a 2.5 hour presentation by Dick Rutan, the man who, with Jeana Yeager, flew the first non-stop non-refueled flight around the world. They did so in December 1986. It was an amazing show that I recommend... MORE

Courts Fail. Use Regulators

Regulation and Subsidies
Arnold Kling
Andrei Shleifer examines why regulation might emerge. The Pigouvian theory is undermined because market failures or information asymmetries do not seem to be necessary for regulation, yet those are seen by the theory as the prerequisites for government intervention. The... MORE

Market Failure and Government Failure

Regulation and Subsidies
Arnold Kling
That is the topic of a self-recommending podcast in which Russ Roberts interviews Clifford Winston. Actually, although I have not had time to listen (I am on travel), reading over the notes on the podcast highlights this looks like one... MORE

Antitrust Through the Lens of Marginal Revolution

Regulation and Subsidies
Bryan Caplan
Marginal Revolution premiered six years and tens days ago.  Alex and Tyler may not have been the very first academic economists to start blogging, but they still got in at the ground floor.  I don't know how many people read... MORE

Glaeser on Housing Policy

Finance: stocks, options, etc.
Arnold Kling
Ed Glaeser writes, Ellickson's analysis suggests that this is just about the worst of all possible policy responses. By drawing out the foreclosure process, these moratoria increase the time during which homes are no-man's-land. During such periods, homes and neighborhoods... MORE

Smothers Brothers: The Missing Story

Regulation and Subsidies
David Henderson
For decades, I believed, as I think almost everyone who followed the issue did, that the Smothers Brothers Comedy Hour was yanked by CBS because of CBS's objection to the Smothers Brothers' edgy commentary about social issues. Various "public" television... MORE

Barney Frank Admits "Mistake"

Regulation and Subsidies
David Henderson
On CNBC this morning, Congressman Barney Frank was shown making his opening statement in the hearings on the bailout of GM, Ford, and Chrysler. He actually admitted that Congress had made mistakes and mentioned one such mistake. Perhaps, you might... MORE

Son of Chrysler: The Stealth Bail-Out

Regulation and Subsidies
Bryan Caplan
When's the best time to beg for a bail-out? When everyone's talking about another, bigger bail-out, of course! Via James Hamilton:The US Senate Saturday approved 25 billion dollars in loan guarantees for the financially strapped US auto industry... The bill,... MORE

Is FDA Paternalism a Public Good?

Regulation and Subsidies
Arnold Kling
Daniel Klein writes, knowledge has certain public goods properties. But the public-goods point in no way justifies the restrictions we see; it could only justify government subsidization of knowledge production. He is writing about FDA regulation of pharmaceuticals. Think of... MORE

When Capitalism Ran Amok

Regulation and Subsidies
Arnold Kling
David Leonhardt writes, For three decades now, the American economy has been in what the historian Sean Wilentz calls the Age of Reagan. The government has deregulated industries, opened the economy more to market forces and, above all, cut income... MORE

More on the Roots of the Bailout

Regulation and Subsidies
Arnold Kling
Stan J. Liebowitz says that the road to mortgage crisis was paved with good intentions. Concerning a Boston Fed study that purported to find mortgage discrimination, he writes, Most politicians jumped to support the study. "This study is definitive," and... MORE

The Roots of the Freddie-Fannie Bailout

Regulation and Subsidies
Arnold Kling
The Village Voice reports, [Secretary of Housing Andrew] Cuomo's predecessor, Henry Cisneros [moved] the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families. Cuomo raised that number to 50 percent and dramatically hiked GSE... MORE

Subsidies

Regulation and Subsidies
Arnold Kling
Robert H. Frank writes, Adopting some variant of a tax on carbon, as both leading presidential candidates have proposed, would help eliminate this discrepancy. That would set the stage for our next president to explain to other leaders why eliminating... MORE

Antitrust for Hong Kong?

Regulation and Subsidies
Bryan Caplan
When the Lion Rock Institute asked me to sign its petition against possible antitrust laws for Hong Kong, the decision was a no-brainer. After all, I oppose antitrust laws. At best, antitrust laws are unnecessary, legislating outcomes that free competition... MORE

A Worthwhile Read on Fannie and Freddie

Regulation and Subsidies
Arnold Kling
Bob Van Order writes, The 1992 law that set up FF regulation required taking the stress test from the worst regional downturn in the data. We shall surely have a region (the southwest? Florida?) from the current period that will... MORE

The Nation vs. "The Economists"

Regulation and Subsidies
Bryan Caplan
I just got this fund-raising letter from The Nation, alerting me to a dangerous economists' plot to undermine democracy:Dear Nation Friend: I spent 27 years as the Editor in Chief of The Nation, so -- as you might imagine --... MORE

Ruining my Day

Regulation and Subsidies
Arnold Kling
John Tierney writes, it is the duty of the press to scour the known universe looking for ways to ruin your day. Indeed. David Broder writes, Each year, as the money comes in, the trust fund will distribute it to... MORE

A Depression-Era Solution on Housing

Regulation and Subsidies
Arnold Kling
Holman Jenkins writes, So far, Washington has put its political capital into trying to refinance salvageable homes for unsalvageable homeowners, when a relevant policy would consist of judiciously buying unsalvageable houses and demolishing them. Fannie and Freddie's strength is housing... MORE

Despite vocal opposition from lobbyists for terrestrial radio, it looks like satellite radio providers XM and Sirius will finally get to merge. It only took 17 months, plus some absurd concessions:The deal reportedly will also include a three-year price freeze... MORE

The McCain-Stiglitz Axis

Regulation and Subsidies
Arnold Kling
Regarding the Freddie-Fannie bailout, the Republican Presidential nominee writes, if a dime of taxpayer money ends up being directly invested, the management and the board should immediately be replaced, multimillion dollar salaries should be cut, and bonuses and other compensation... MORE

The Nanny State

Regulation and Subsidies
Arnold Kling
Marc Fisher writes, Montgomery County, the government that brought you bans on trans fats, smoking and any sales of liquor except by the county's own stores, last week added a new kind of regulation, becoming probably the first place in... MORE

Fools and Their Money

Regulation and Subsidies
Bryan Caplan
Arnold's just written some of the best sentences I've read in years:In the mortgage market, people saw risk-takers outperforming prudent lenders. So they took more risks. There is no simple fix for that. For the foreseeable future, we can count... MORE

Regulation We Don't Need

Regulation and Subsidies
Arnold Kling
Vince Reinhart writes, The problem with securitization is that it dilutes individual responsibility. The mortgage broker can easily become disconnected from the outcome of the initial lending decision. Federal regulation is needed to ensure that mortgage originators perform the appropriate... MORE

Emergency Housing Pork

Regulation and Subsidies
Arnold Kling
The Washington Post editorializes, Earlier this year, as clouds were already gathering over the GSEs, Congress raised the limit -- to almost $730,000 in certain high-cost areas -- on the theory that Fannie and Freddie could help unfreeze the housing... 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

Regulatory Hindsight and the Housing Bubble

Regulation and Subsidies
Arnold Kling
Martin Wolf says, When house prices are going to rise, or people expect them to rise, by 10 or 12 per cent a year, an additional 1 per cent on the interest rate is not going to stop people from... MORE

Economics of Home Ownership Subsidies

Regulation and Subsidies
Arnold Kling
Paul Krugman writes, Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway? It's a good question. Some of the subsidies to homeowners, such as the mortgage interest deduction, tend to go to more affluent... MORE

The Market and the Government

Regulation and Subsidies
Arnold Kling
On the one hand, The Washington Post reports, high fuel prices are having disparate effects: the end of free pizza deliveries at major franchises, a plunge in the sales of sport-utility vehicles, a steep drop in the price of houses... MORE

Unchecked Government Marches On

Regulation and Subsidies
Arnold Kling
Without irony, the Washington Post headline blares, FTC Wants to Know What Big Brother Knows About You The crime under investigation is targeted advertising on the Internet, where firms use databases to try to serve ads that are relevant to... MORE

Consumer Protection

Regulation and Subsidies
Arnold Kling
Richard Posner and Gary Becker have a rare disagreement. Posner writes, There are three possible responses to the problem created by consumer information costs. The first is to require producers to provide more information; the second is to ban products... MORE

Financial Flows and Regulation

Regulation and Subsidies
Arnold Kling
James Hamilton writes, Now, there is nothing inherently wrong in making financial investments in the form of derivative contracts rather than outright loans. You're doing something similar whenever you buy or sell an option rather than the stock itself. But,... MORE

Behavioral Economics Ready for (Sub) Prime Time?

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

George McGovern, Libertarian

Regulation and Subsidies
Arnold Kling
While Martin Feldstein is proposing more government meddling in mortgage markets, George McGovern writes, There's no question, however, that delinquency and default rates are far too high. But some of this is due to bad investment decisions by real-estate speculators.... MORE

The Regulatory State

Regulation and Subsidies
Arnold Kling
Alfred Kahn, the saving grace of the Carter Presidency, writes, The assumption of Democratic control of Congress last year and the probability that its majority will be increased by this year's elections portends a growing, deeply troubling ideological split within... MORE

Those Silly French

Regulation and Subsidies
Arnold Kling
The New York Times reports, Retail prices, particularly of books, are tightly regulated in France. Using "loss-leaders," or selling products below cost to attract customers, is illegal. Other restrictions apply to books retailers must not offer discounts of more than... MORE

Shiller is bold?

Regulation and Subsidies
Arnold Kling
A reader asked me to comment on Robert Shiller's column, where he says, In 1932, the National Association of Real Estate Boards proposed and Congress created the Federal Home Loan Bank System, modeled after the Federal Reserve System. Twelve regional... MORE

Order, Disorder, and License Requirements

Regulation and Subsidies
Arnold Kling
A reader sent this question: Your post on Prof. Wagner's piece on market order, especially the institutional nature of the order (differences between taxed orders and illegal orders), made me think about the nature of organization within legally established licensed... MORE

Supreme Court Overturns Per Se Rule; "Crazies" Rejoice

Regulation and Subsidies
Bryan Caplan
Price-fixing is no longer per se illegal, at least according to the New York Times. Decades after the big academic debate on resale price maintainence (RPM), five justices are convinced:The court struck down the 96-year-old rule that resale price maintenance... MORE

Penn and Teller had an interesting episode debunking the Americans With Disabilities Act and related regulations. But even a Non-Bleeding Heart Libertarian like myself spent most of the episode furrowing his brow in puzzlement. Penn and Teller appeared to be... MORE

Winston on Advertising Regs

Regulation and Subsidies
Bryan Caplan
Here's a neat passage from Clifford Winston's Government Failure versus Market Failure (complete book available for free downloading): Calfee and Ringold (1994) focused on surveys of consumers’ attitudes toward advertising. Analyzing six decades of data that began in the 1930s,... MORE

Milton Friedman on Big Business vs. Freedom

Regulation and Subsidies
Arnold Kling
In the context of Wal-Mart's joining the crowd that wants government to fix health care, Don Boudreaux reminds us of this quote from Milton Friedman. The two chief enemies of the free society or free enterprise are intellectuals on the... MORE

Bastiat Lives At Cafe Hayek

Regulation and Subsidies
Bryan Caplan
Don and Russ continue their Herculean effort to make economics too clear not to understand. The latest gems: Don on protectionist anecdotes: But I wonder how many of these people would accept the following line of argument: Researcher Jones, like... MORE

The Cost of Accidents

Regulation and Subsidies
Arnold Kling
Aaron S. Edlin and Pinar Karaca Mandic write, This study is an attempt to provide better estimates of the size (and sign) of the aggregate accident externality from driving. To begin, we choose a dependent variable, insurer costs, that is... MORE

California Energy Tax Proposal

Energy, Environment, Resources
Arnold Kling
Paul Romer writes, Greg Mankiw correctly points out that the tax in Prop 87 is not a Pigovian tax--that is, a tax on oil for the purpose of reducing oil consumption to socially optimal levels. However, the revenues from Prop... MORE

Online Gambling Getting Riskier

Regulation and Subsidies
Bryan Caplan
I'm mildly surprised to learn that parts of the U.S. government are actually trying to crack down on online gambling. Robin Hanson pointed me here and here. If ever there were a time to sarcastically ask, "Don't you have anything... MORE

A Bad Day

Regulation and Subsidies
Arnold Kling
Even if the California's lawsuit against auto manufacturers for the damages caused by global warming is, as Steve Verdon says, "a cheap political stunt," it is still shocking. The idea that this could win votes tells you something. And then,... MORE

Proposals for Liberalization

Regulation and Subsidies
Arnold Kling
In the course of putting together a critique of a critique of the 2005 Economic Report of the President, Daniel B. Klein and Michael J. Clark surveyed 11 economists at George Mason University and came up with a top ten... MORE

The Other Reason Big Business Supports Federal Regulation

Regulation and Subsidies
Bryan Caplan
Contrary to popular belief, Big Business often supports federal regulation. Economists' standard explanation: Regulation either directly restricts competition, or indirectly imposes a greater burden on smaller businesses. But there is another important reason why Big Business supports federal regulation that... MORE

A Taste of Economic Ridicule

Regulation and Subsidies
Bryan Caplan
Don Boudreaux is continuing Bastiat's noble tradition of teaching economics with ridicule: As my friend George Leef points out in an e-mail to me, if government can lower firms' costs by paying workers' health-insurance premiums, why stop there? Why not... MORE

The Los Angeles Liquor Puzzle

Regulation and Subsidies
Bryan Caplan
There's a lot less economic freedom in my state of origin, California, than in my state of residence, Virginia. According to the Pacific Research Institute's rankings, the state of California comes in 49 out of 50th. Virginia comes in 3rd.... MORE

Offsetting behaviour

Regulation and Subsidies
Eric Crampton
Russ Sobel warns us that NASCAR safety regulations cause more accidents. It seems that the racing industry is starting to take notice: NASCAR has made significant safety strides since the death of Dale Earnhardt, and many drivers credit recent innovations... MORE

Net Neutrality, Again

Regulation and Subsidies
Arnold Kling
Tim Swanson has a set of links, including one to wise essay by Martin Geddes. Network neutrality makes competition and consumer welfare dependent on law and lobbying, not natural competition. So you’ve chosen the area in which the telcos are... MORE

Net Neutrality?

Regulation and Subsidies
Arnold Kling
Greg Mankiw writes, After reading these two pieces [on proposals to force Internet carriers to be "neutral"], I am inclined to give the edge to Litan, in part because his piece is more infused with economic reasoning and in part... MORE

I Can Drunk Just as Well Think!

Regulation and Subsidies
Bryan Caplan
When I was first teaching Industrial Organization (nearly 10 years ago!), there was a big internet campaign to boycott Borders and Barnes & Noble. "It might superficially seem like consumers are getting more and better choices, but just you wait!"... MORE

Spencer Lives - and He Teaches at Harvard

Regulation and Subsidies
Bryan Caplan
My Non-Bleeding Heart Libertarian market niche is being eroded by Jeff Miron's new blog. Here's what he has to say about New Orleans: The Katrina disaster occurred mainly because government spent billions constructing these levees in the first place; without... MORE

Economics of Free Parking

Regulation and Subsidies
Arnold Kling
Daniel B. Klein writes a review of The High Cost of Free Parking, by Donald Shoup. Shoup shows that the magnitudes are huge. About 87 percent of all trips in the U.S. are made by personal motor vehicles, and parking... MORE

A License to Sing?

Regulation and Subsidies
Bryan Caplan
I was confused last night while watching the Billie Holiday biopic Lady Sings the Blues. For a reason I couldn't grasp, Billie needed to win over public opinion in order to get a "cabaret card." But surely, I told my... MORE

Economists are lambasting Maryland's "Fair Share Health Care Fund Act", which effectively forces Wal-Mart to spend at least 8% of its payroll on health care. While I'm happy to join in the chorus, I nevertheless believe that many opponents of... MORE

Hamilton's 20/20 Vision

Regulation and Subsidies
Bryan Caplan
There's more to James Hamilton's blog than high-quality energy economics. His latest is an incisive analysis of an Americans with Disabilities related lawsuit: If Boone was indeed fired because she was blind, is it a relevant fact that her replacement,... MORE

I miss Michael Powell

Regulation and Subsidies
Arnold Kling
The FCC thinks that cable TV's bundling policies are bad, according to this report. Chairman Kevin Martin, reversing a course set by predecessor Michael Powell, told lawmakers on Tuesday that cable subscribers could benefit if given the option to pick... MORE

"Do the Opposite": Hanson on Externalities and Zoning

Regulation and Subsidies
Bryan Caplan
A while back, I wrote: In a classic episode of Seinfeld, George Costanza realized that his instincts were fundamentally wrong, and vowed to "do the opposite": George: Elaine, bald men, with no jobs, and no money, who live with their... MORE

"Free to Build": The Best Hope for Libertarian Populism

Regulation and Subsidies
Bryan Caplan
The last big populist movement that libertarians could and did embrace was the tax revolt of the late 70's and early 80's. Since then, there's been a long dry spell, at least in the U.S. And if you know much... 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

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

Socienics

Regulation and Subsidies
Arnold Kling
What do the Kelo decision and eugenics have in common? In this essay, I argue that both involve a faith in government to manage social good while overturning individual rights. we are entitled to hope that our legislators and appointed... MORE

Eminent Domain

Regulation and Subsidies
Arnold Kling
Both Gary Becker and Richard Posner weigh in. Becker writes, Is eminent domain a desirable principle in the 21st century? In the 18th, 19th, and early 20th centuries, governments did rather little, so there was not much to fear from... MORE

Is that a Fact?

Regulation and Subsidies
Bryan Caplan
Reading William Greider is one of my guilty pleasures. Credit where credit is due: The guy can write. And the content is interesting, blending fun facts about the economy with bizarre interpretations thereof. Sometimes, however, I wonder whether his "facts"... MORE

From Religion to Real Estate

Regulation and Subsidies
Bryan Caplan
My colleague Larry Iannaccone is not just the world's expert on the economics of religion. He's also got some intriguing views on real estate. Cars have been mass produced on assembly lines for a long time, and the cost savings... MORE

Consumer Reports and the FDA

Regulation and Subsidies
Arnold Kling
Alex Tabarrok writes, The FDA currently works on a paternalistic model: One choice to rule them all. But another approach, what I call the Consumer Reports model, would meet the needs of diverse health-care consumers much better. Consumer Reports doesn’t... MORE

Freedom to Cell

Regulation and Subsidies
Bryan Caplan
Only a small man would pick on the Oakton Sun Gazette, but I can't resist. Friday's editorial attacks proposals to legalize cell phone use on planes: This idea – nincompoopery at its finest – needs to be smothered in its... MORE

Blue Laws

Regulation and Subsidies
Arnold Kling
The Washington Post reports, Maryland lawmakers yesterday approved legislation that would effectively require Wal-Mart to boost spending on health care... Lawmakers said they did not set out to single out Wal-Mart when they drafted a bill requiring organizations with more... MORE

FDA: Public, Economists, and Specialists

Regulation and Subsidies
Bryan Caplan
I've come across two interesting surveys on the Food and Drug Administration. The first is the latest gem by the Kaiser Family Foundation. Among other topics, it has the dirt on public opinion about regulation of drugs. Does the public... MORE

Motives and Consequences

Regulation and Subsidies
Arnold Kling
Hedge Fund Guy writes, Costs of lending are always passed on to the consumer. No one is forced to lend (well, there is the Community Reinvestment Act, but that's a quid pro quo, and an exception), so lenders will either... MORE

Robin, Radon, and Regulation

Regulation and Subsidies
Bryan Caplan
When the typical economist tells me about his latest research, my standard reaction is "Eh, maybe." Then I forget about it. When Robin Hanson tells me about his latest research, my standard reaction is "No way! Impossible!" Then I think... MORE

Regulation and House Prices

Regulation and Subsidies
Arnold Kling
Edward L. Glaeser, Joseph Gyourko, and Raven E. Saks write, the evidence points toward a man-made scarcity of housing in the sense that the housing supply has been constrained by government regulation as opposed to fundamental geographic limitations. The growing... MORE

Michael Powell Resigns

Regulation and Subsidies
Arnold Kling
Michael Powell, the Chairman of the Federal Communications Commission, is stepping down. In my book, I included an essay on Powell's Hayekian approach at the FCC. The FCC oversees industries in which competition is messy. Broadcasting and telecommunications do not... MORE

Fannie Mae, Freddie Mac

Regulation and Subsidies
Arnold Kling
Robert J. Samuelson writes, Well, homeownership isn't a big problem, and Fannie and Freddie have been minor -- not major -- forces in past increases. The others include rising incomes, falling interest rates, low-down-payment mortgages (as little as 3 percent)... MORE

Survey of Regulation

Regulation and Subsidies
Arnold Kling
Robert W. Crandall writes, the deregulatory movement has led to a modest amount of progress in reining in some of these programs in the United States. Unfortunately, much remains to be done in freeing water, spectrum, and land from inefficient... MORE

Subsidies Raise Prices

Regulation and Subsidies
Arnold Kling
Steve Pearlstein uses his column to explain some freshman economics. What two things do a college education, health care and housing have in common? One is that the price of these things has been rising at least twice as fast... MORE

Affordable Housing Oxymorons

Regulation and Subsidies
Arnold Kling
Here is an elementary example of presumably well-intended regulation without thinking through the consequences. Edward P. Stringham and Benjamin Powell write Under most inclusionary ordinances, builders must sell 10 to 25 percent of the homes to very low, low, or... MORE

Explaining Pharmaceutical Regulation

Regulation and Subsidies
Arnold Kling
David Masten has a brilliant way of explaining the impact of regulation on the pharmaceutical industry. He imagines a world in which computers are regulated like pharmaceuticals. - the Electronics and Computers Administration would have just approved the Intel i486... MORE

Reputation Systems and Brands

Regulation and Subsidies
Arnold Kling
Alex Tabarrok links to a story about the decline in the importance of brands, by James Surowiecki, who writes The single biggest explanation for fragile brands is the swelling strength of the consumer. We've seen a pronounced jump in the... MORE

Vaccine Shortage

Regulation and Subsidies
Arnold Kling
Russ Roberts has been all over the vaccine shortage story. In one post among many, he asks, Normally when there's uncertainty about demand, price rises to compensate suppliers for the extra risk. And consumers are happy to pay that higher... MORE

Elephants in the Big Tent

Regulation and Subsidies
Arnold Kling
Who speaks for the Republicans? Is it David Brooks? Now almost every leading politician accepts that government should not interfere with the basic mechanisms of the market system. On the other hand, almost every leading official acknowledges that we should... MORE

Telephone Fees

Regulation and Subsidies
Arnold Kling
The Milken Institute Review has an article by Robert W. Crandall, Robert W. Hahn, Robert E. Litan and Scott Wallsten, who note that Jerry Hausman of MIT has estimated that taxes on interstate and international telephone revenues that are used... MORE

Drug Companies and Rent-Seeking

Regulation and Subsidies
Arnold Kling
I discuss a suggestion that pharmaceutical companies should be treated like public utilities. Angell is accusing pharmaceutical companies of what economists call "rent-seeking," which Gordon Tullock defines as "special interest coalitions lobbying the government to transfer wealth to them." Her... MORE

Pharma a Public Utility?

Regulation and Subsidies
Arnold Kling
David Warsh has an interesting column on the pharmaceutical industry. "If only we could find a patient willing to pay $800 million for that first dose," said Judy Lewent at one point (she is executive vice president and chief financial... MORE

Not a Dime's Worth of Difference

Regulation and Subsidies
Michael Munger
by Michael Munger Guest Blogger For those who, like Ralph Nader, think that there is no difference between the major party candidates, consider the regulatory process, which largely operates under the media radar, but affects all of us. Interesting in-depth... MORE

Incumbents and Government

Austrian Economics
Arnold Kling
What does government do? Austrian economists fear that government simply serves to protect incumbents. In a long, informative review of a book by Hans Herman-Hoppe, Andy Duncan writes, ask yourself if there are many large corporations in the US or... MORE

Against Paternalism

Regulation and Subsidies
Arnold Kling
Glenn Reynolds makes an articulate point about paternalism. Another -- and it's a lesson that policy wonks seem slow to learn -- is that people other than policy wonks are capable of learning, and of changing their behavior on their... MORE

Technology Innovation vs. Government

Regulation and Subsidies
Arnold Kling
Two op-eds today on the issue of technological innovation and government's response. In the Wall Street Journal, former Intel Vice President Les Vadasz writes, The problem with the "Induce bill" is not its intent, but its overly broad language: Any... MORE

Regulate Mutual Funds?

Regulation and Subsidies
Arnold Kling
A while back, I cited some arguments against regulation of mutual funds. Today, Vanguard's John Bogle makes the case in favor of regulation. In the mutual-fund industry, relying solely on market forces has proved to be a weak remedy for... MORE

Asbestos Litigation Costs

Regulation and Subsidies
Arnold Kling
Michell J. White writes, That asbestos was so widely used from the 1950’s to the 1980’s suggests that multiple regulatory systems failed, including workers’ compensation, workplace safety regulation, product safety regulation, and liability law. ...Will the asbestos mess at least... MORE

SEC Taxes Mutual Funds?

Regulation and Subsidies
Arnold Kling
The latest SEC regulation of mutual funds draws fire from Stephen Bainbridge. He quote Cindy Glassman, an SEC Commissioner who dissented, as pointing out that no cost-benefit analysis was done of the proposal to require mutual funds to have an... MORE

The Minimum Wage

Regulation and Subsidies
Arnold Kling
Why oh why can't we have a Brad DeLong who will put the adults in charge of the clown show that is John Kerry's campaign? (For those of you who do not read DeLong, I am borrowing his anti-Bush tropes)... MORE

Rational Decisions and Pharmaceutical Regulation

Economics of Health Care
Arnold Kling
Today's Washington Post contains another op-ed piece by a physician, and of course he is in favor of price controls on prescription drugs. The pharmaceutical industry will intone its familiar mantra: The cost of drugs is a relatively small percentage... MORE

Drug Tax

Regulation and Subsidies
Arnold Kling
Glenn Reynolds pointed to an interesting talk by Charles Whitebread on the history of the drug war. In the face of possible Constitutional opposition to what they wanted to do, the people in Congress who supported the Harrison Act came... MORE

Market for Body Organs?

Regulation and Subsidies
Arnold Kling
Alex Tabarrok looks at the issue of how to increase the availability of organs for transplant. In the minds of many, financial incentives for organ donation means rich people buying up kidneys being hawked on eBay by the desperately poor...Two... MORE

Bundling II

Microeconomics
Arnold Kling
I extended my thoughts on bundling with this essay. What George Stigler showed is that ordinary intuition about bundling is wrong. Your intuition is that the reason that the seller engages in bundling is to force you to buy something... 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

Bundling

Regulation and Subsidies
Arnold Kling
The issue of bundling has been in the news recently. For example, the Europeans want to punish Microsoft for bundling a media player with its operating system. Professor Bainbridge supports the regulators in this case. Prohibiting Microsoft from bundling, say,... MORE

Greenspan's Concerns

Social Security
Arnold Kling
Federal Reserve Chairman Alan Greenspan tries taking on some sacred cows. In a logical assessment of the Social Security's future financial condition, he suggested ways to curtail the growth in future benefits. The response was predictable Sen. Arlen Specter, R-Pa.,... MORE

Cost of Sarbanes-Oxley

Regulation and Subsidies
Arnold Kling
Stephen M. Bainbridge argues that the cost of regulations under the Sarbanes-Oxley law (SOX) enacted in the wake of the Enron scandal are too high. The SEC initially estimated § 404 compliance would require only 383 staff hours. According to... MORE

Regulation and Industry Structure

Regulation and Subsidies
Arnold Kling
Milton Friedman argues that the drug-approval process is the problem. On the drug side, what seems to me to be the most serious situation is the extent to which the Food and Drug Administration makes it extremely expensive to produce... MORE

Policy in a Fog

Regulation and Subsidies
Arnold Kling
In a wide-ranging essay on the problem of incomplete information, I write, Perhaps the most important point of all is that government officials operate in a fog. If one looks at all of the imperfections and shortcomings of the market,... MORE

Water Privatization, Continued

Regulation and Subsidies
Arnold Kling
Lynne Kiesling has two interesting posts on water privatization. In her first comment, she writes, Suppose you are not persuaded by my argument that water utilities should be private companies and not municipal utilities. OK, but you could still contract... MORE

Water as a Private Good

Regulation and Subsidies
Arnold Kling
If you ask people to list goods that should never be privatized, water is often one of the first that comes to mind. But Richard Tren writes, Those that campaign against private water ownership and supply on the grounds that... 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

Regulation and Housing Cost

Regulation and Subsidies
Arnold Kling
Is housing more expensive in Manhattan because land is more valuable there? Edward L. Glaeser, Joseph Gyourko, and Raven Saks argue that housing is more expensive because of regulation. In twelve out of the twenty-one markets that we examine, on... MORE

Prosecute Rent-Seekers?

Regulation and Subsidies
Arnold Kling
Lynne Kiesling sketched an interesting idea for antitrust enforcement. prosecutions based on the use of lobbying, regulation, and political relationships (i.e., rent seeking) to deter entry. Economists traditionally have evaluated monopoly power using measures such as the Herfindahl index of... MORE

Prairie Population Problems

Regulation and Subsidies
Arnold Kling
Both Michael Lind and Ronald Bailey note a population decline in the old prairie states. However, they come to opposite conclusions. Lind wrote, Imagine a federal program that would help poor and working-class Americans to move not from crowded cities... MORE

Wal-Mart controversy

Regulation and Subsidies
Arnold Kling
Wal-Mart is controversial. On the issue of labor costs, Steve Pearlstein writes, I'm talking about a minimum wage that would put a family with two full-time workers above the poverty line in high-cost metropolitan areas -- and no doubt put... MORE

Hayekians vs. Stiglitzians

Information Goods, Intellectual Property
Arnold Kling
I contrast Hayek and Stiglitz on the importance of imperfect information. Hayek would have the government tolerate messy competition. His point is that with the optimal outcome unknown, government resolution of issues shuts off the learning process that market competition... MORE

Japanese Banks

Regulation and Subsidies
Arnold Kling
Joe Peek and Eric S. Rosengren explain how regulatory incentives contribute to the persistent mis-allocation of capital by Japanese banks. Bank regulation and supervision policies in Japan provide banks that have significant nonperforming loans and impaired capital little incentive to... 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

Economic Arguments

Regulation and Subsidies
Arnold Kling
A few days ago, controversial radio personality Rush Limbaugh created a controversy. As a commentator on a football pre-game show, he said (1) The Philadelphia Eagles' quarterback was overrated by others in the media. (2) The reason that the quarterback... MORE

Various Articles

Regulation and Subsidies
Arnold Kling
Posting here will be infrequent until later in October. Meanwhile, here are some links that may be of interest. Is the insecurity of Microsoft software an externality that should be regulated or taxed? An example of professional licensing as rent-seeking... MORE

Minimum Wage and CEO Pay

Income Distribution
Arnold Kling
Marc Brazeau asks (see Steve Antler's site), Two common arguments against raising the minimum wage are possible inflationary effects and job loss. Why aren't these issues raised in relation to executive compensation? I think that the conventional wisdom is that... MORE

Comment of the Week, 2003-09-03

Regulation and Subsidies
Arnold Kling
Regarding the New Deal, Boonton wrote, how much of the New Deal has survived? While national economic planning seems to have finally been discredited...the bulk of the New Deal remains firmly established not only in the US but in most... MORE

Demand Too Elastic?

Microeconomics
Arnold Kling
London's congestion charge, which seemed like such a good idea from an economic perspective, may have run afoul of elastic demand, according to an article by Iain Murray. economists...estimated that a reduction in traffic of 15 percent would require that... MORE

Did the New Deal Fail?

Macroeconomics
Arnold Kling
Cato's Jim Powell makes the case against the New Deal. Among the material Powell cites: Richard K. Vedder and Lowell E. Gallaway, in their 1997 study Out of Work, estimated that by 1940 unemployment was eight points higher than it... MORE

Auction Toxic Waste?

Energy, Environment, Resources
Arnold Kling
How should the location of undesirable land uses, such as toxic waste dumps or prisons, be determined. Citing Julian Simon, Herbert Inhaber suggests using a reverse auction, in which the Federal government offers to compensate local residents for living near... MORE

Electricity Economics

Energy, Environment, Resources
Arnold Kling
In the wake of the electricity blackout, I have been disappointed that economists have contributed more noise than signal in their comments. For example, Paul Krugman wrote, Under the old regulatory system, power companies had strong incentives to ensure the... MORE

Labor Supply and Demand

Microeconomics
Arnold Kling
About a year ago, the big story in our local suburban newspaper was the adoption of a "living wage" bill in our county. This summer, the big story was the shortage of teenage jobs here. I was tempted to write... 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

Drug Price Discrimination?

Information Goods, Intellectual Property
Arnold Kling
Derek Lowe compares the fact that prescription drugs cost less outside the U.S. to the phenomenon of price discrimination by airlines. Most consumers [of pharmaceuticals] in the US don't realize that they're subsidizing the lower prices for everyone else, whereas... MORE

California Energy Crisis Redux?

Energy, Environment, Resources
Arnold Kling
Could California suffer another "energy crisis?" Lynne Kiesling writes, California has a lower construction rate for proposed generation projects than other states that have implemented electricity restructuring...even in states that started with higher capacity relative to demand, such as Texas... 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

Regulatory Tariffs Vs. Quotas

Regulation and Subsidies
Arnold Kling
Reason Foundation's Ted Balaker sees a libertarian silver lining in the cloud of state government budget deficits. After all, some states are now eyeing legalized gambling as a new cash cow. Maybe the next step will be to legalize –... MORE

Economic Policy Diversity

Regulation and Subsidies
Arnold Kling
In an essay on diversity in economic policy, I propose dividing the United States. By splitting into the virtual regions of Miltonia and Hillaria, we could run a "natural experiment" to see how things work. Perhaps after ten or twenty... MORE

California Energy Regulation

Energy, Environment, Resources
Arnold Kling
Lynne Kiesling bemoans electricity regulation policy in California. [The original deregulation effort] was much more about freeing up restrictions on trade in wholesale electricity markets, although it did a pathetic job of that, requiring buyers and sellers to use the... MORE

Nanotech Research Funding

Regulation and Subsidies
Arnold Kling
Is Federal funding for research in nanotechnology justified? Declan McCullagh raises some doubts. First, private sources will pay for basic research. It may not be at the level that all researchers would prefer, but if it can lead to applied... MORE

FCC Policy Issues

Regulation and Subsidies
Arnold Kling
In the age of the Internet, the FCC has become a pivotal regulatory body, as I pointed out in The Economics of the Wireless Last Mile. In a new essay, I argue that In the United States today, companies that... MORE

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