EconLog Archive
Austrian Economics
Ludwig von Mises and the Berlin Batman
A body of literature called the New History of Capitalism argues (incorrectly, I believe) that Western prosperity is built on legacies of exploitation like colonialism and slavery. Economists are very skeptical because the New Historians of Capitalism rest much of their case on fundamental misunderstandings of basic economic concepts like national income accounting. Economists have .. MORE
Social Security
Social Security: Flawed from the Start and Ponzi versus Stocks
When I posted on Social Security as a Ponzi scheme on March 11, I didn’t expect the degree of interest I got. It also led to a discussion of what to do now that we’re in a mess. So I’ve decided to post the rest of my chapter of The Joy of Freedom: An Economist’s .. MORE
Cross-country Comparisons
The Conservative Cruel Kids
A new trend is emerging in left-wing circles in the Americas- denouncing rivals as ‘cruel.’ In the US, the New York Magazine (NYMag) recently ran a cover titled ‘The Cruel Kids’ Table,’ which featured a picture of partying conservatives who apparently would have been, according to the implied message, bullies in high school. Never mind .. MORE
International Macroeconomics
China’s deflation: Made in the USA
I’m continually amazed by the media coverage of China’s deflation problem, which is treated as a big mystery. Actually, almost all modern examples of deflation have the same explanation—relatively tight money. (To be sure, deflation can be caused by a positive supply shock, but that rarely occurs under modern fiat money regimes.) Central banks can .. MORE
Business Economics
Averages, Margins, and Memes
It’s often said that economics is counterintuitive. On the other hand, it’s also said that economics is about human behavior. This should imply that at least the basic ideas of economics should be pretty easy to understand and explain. (Assuming, of course, that you are in fact a human.) One important point in economics is .. MORE
International Trade
Tariffs
What are the economic benefits and costs of import tariffs? The economic impact can be examined in one of two ways: on an individual product basis (partial equilibrium, looking at supply and demand for a particular good), or on an economy-wide basis (general equilibrium, looking at many markets simultaneously). Let’s consider each approach in .. MORE
Economic and Political Philosophy
The False Promise of Populism
Populism is one of the most important political phenomena of our time. Yet, it is still poorly understood. At its core, populism is built on the notion that the masses are engaged in a struggle against corrupt elites who have rigged the political and economic system to their advantage. Whether left-wing or right-wing, this is .. MORE
Free Markets
Where Are the “Free Market Advocates”?
Despite containing useful information, a Financial Times story makes some puzzling statements (“Trump Nominee Unites Right and Left with Tough Antitrust View,” Financial Times, March 7, 2025): Among the loyalists selected by Donald Trump to staff his second administration, Gail Slater stands out for a different reason: she unites right and left with a sceptical .. MORE
Foreign Policy
The NATO debate, one year later
In this post, I’d like to revisit a debate from early 2024, when Trump suggested that he would not favor defending NATO members that spent less than 2% of GDP on defense. Here’s what Tyler Cowen said at the time: As you probably know, Trump threatened to let NATO countries that failed to meet the two .. MORE
Economic History
Trade War Fears
One of my all-time favorite movies is the 1982 cyberpunk-noir classic Blade Runner. Not only did the film single-handedly create the cyberpunk genre, but it inspired significant change in the sci-fi genre as a whole, led to classics such as Akira, and inspired great directors such as Guillermo del Toro, Christopher Nolan, and Denis Villeneuve. .. MORE
Austrian Economics
Review of the Strong Gods III: Reno Swings and Misses on Economics
R. R. Reno’s book The Return of the Strong Gods is very broad in scope. He covers many disparate phenomenon, including some commentary on economics. Unfortunately, Reno’s arguments in this regard are disappointing. While describing possible causes of economic inequality, Reno says, “This is the sort of assertion I prefer to leave to the economic theorists .. MORE
Social Security
Social Security Is a Ponzi Scheme
Last week, Alex Tabarrok wrote a post at Marginal Revolution titled, “Is Social Security a Ponzi Scheme?” His answer is yes. That reminded me of what I wrote about Social Security in my 2001 book, The Joy of Freedom: An Economist’s Odyssey. Here’s the start of the chapter. I say we scrap the current .. MORE
Economic and Political Philosophy
Organized Hatred From Above
The trade war between the United States and Canada—more exactly between the American government and the Canadian government(s)—helps illustrate the opposition between two regimes: free trade between individuals or private organizations, which creates mutual gains and favors peaceful relations; trade between governments or directed by them, that is, mercantilism, which generates conflicts and hatred. After .. MORE
Economic History
Two Excuses
During the mid-1930s, FDR pursued an aggressive set of policies including various actions intended to raise wages, as well as an undistributed profits tax. These actions were widely seen as anti-business, a view reinforced by FDR’s frequent attacks on the “economic royalists”. In the second half of 1937, the US economy fell into a deep .. MORE
Labor Mobility, Immigration, Outsourcing
David Bier on Legal Immigration
I started noticing the change in Americans’ views on immigration in the early 2000s. Most people I talked to were not very upset about even illegal immigration. I saw the change in my students, who were primarily officers in the U.S. military. In any given class, the plurality of the students, usually the majority, were .. MORE
Central Planning
My Weekly Reading for March 9, 2025
Jail Time for Cheap Rides? by Jack Nicastro, Reason, March 4, 2025. Excerpt: Empower, a ride reservation service, has been hounded by Washington, D.C., regulatorssince it began its operations in 2020. CEO Joshua Sear will be arrested on Wednesday for violating the Department of For-Hire Vehicles’ (DFHV) cease and desist order if the app doesn’t shut down by .. MORE
Business Economics
Firms Moving to the US Pay a Tariff Equivalent
About his new tariffs, President Donald Trump said (and repeated in different forms): “So what they have to do is build their car plants frankly and other things in the United States, in which case they have no tariffs.” This is seriously misleading. Recall the standard economic result that a foreign exporter does not typically .. MORE
International Macroeconomics
Economic Warfare
In a recent interview, Tyler Cowen asked me why China doesn’t end its deflation by devaluing the yuan. I suggested that it might be due to pressure from the US. A recent Bloomberg article provides support for that claim: In fact, the PBOC has been fending off depreciation pressure on the yuan since Trump won .. MORE
International Macroeconomics
Herb Stein on Balance of Payments
One of the best decisions I made in the early 1990s was to get Herb Stein to do a piece on the balance of payments for The Concise Encyclopedia of Economics, which was then The Fortune Encyclopedia of Economics. His first two paragraphs are still beautiful: Few subjects in economics have caused so much confusion—and .. MORE
Adam Smith
Authoritarianism: A Deal with the Devil
The mouse smiled brightly It outfoxed the cat! Then down came the claw, And that, Love, was that -Lyrics to a lullaby recited by the devil Raphael Commenting on a recent post by Scott Sumner, Mactoul argued “Authoritarianism is useful when you are trying to downsize the federal bureaucracy.” This sort of love affair .. MORE
Competition
Henderson on Canada as a 51st State
On February 14, I received an email from Alexa DiFrancesco, a producer at the government-funded Canadian Broadcasting Corporation. She wrote, in part: I’m reaching out because my team is working on a Canada-US call-in show between 4 and 6pm ET (2pm and 4pm MT) on Sunday, Feb 23rd. It will be carried on NPR, CBC and .. MORE