EconLog Archive
Adam Smith
The Other Kind of Romance in Politics
Public choice is often called by the shorthand “politics without romance.” In the Concise Encyclopedia of Economics entry, we summarize this romance to overcome as, The wishful thinking…that participants in the political sphere aspire to promote the common good. In the conventional “public interest” view, public officials are portrayed as benevolent “public servants” who faithfully .. MORE
Institutional Economics
What Is Kakistocracy?
Every year in December, The Economist finds a “word of the year” that summarizes a major event or trend and has gained popularity in its wake. It is useful to know that the magazine has been opposed to populism as it rose in the United States and elsewhere in the world but, I would say, .. MORE
Macroeconomics
Paul Krugman retires from the NYT
Over the years, I’ve done a number of posts reacting to Paul Krugman‘s columns and blog posts. Now that Krugman is retiring from his NYT column (but not from academia), I thought I’d share a few observations about his career as a pundit. What made Krugman such an influential economic pundit, perhaps the most influential? .. MORE
Cryptocurrency
Crypto, Investment, and Intrinsic Value
Crypto doesn’t have intrinsic value; neither does paper money and neither does gold. A friend who regularly reads both the Financial Times and my posts on EconLog and on my Substack sent me the following email: I was talking with a friend who is a wealth manager at JP Morgan, and he is advising .. MORE
Economic Education
Consumer Purchasing Price Theory: Cutsinger’s Solution
[Editor’s note: We’re bringing back price theory with our series on Price Theory problems with Professor Bryan Cutsinger. You can view the previous problem and Cutsinger’s solution here and here. Share your proposed solutions in the Comments. Professor Cutsinger will be present in the comments for the next two weeks, and we’ll again post his proposed solution shortly thereafter. .. MORE
Politics and Economics
How valuable is just asking people?
A story in three acts, dear reader, that you may have seen in various forms before: Act one: An activist or TV talking head declares that the economy is failing, particular for those who are struggling most, and economic conditions are terrible. Act two: An economist interjects that actually, the economy is doing quite well, .. MORE
Finance
How to Get Rich Slowly
To get rich slowly, hang on to that beat-up old sedan. In an EconLog post on December 7, Giorgio Castiglia surprised me with the following story: At a 10-year high-school reunion, a middle school math teacher arrives in a beat-up old sedan and an old buddy of his pulls up in a shiny new convertible .. MORE
Cross-country Comparisons
One Year of Milei: Stabilization, A Balanced Budget and Deregulation in Argentina
Today marks exactly one year since Javier Milei rose to the presidency in Argentina. Expectations were high among libertarians, as this was the first time a self-described ‘anarcho-capitalist’ was elected to the highest office anywhere in the world. During his first year, Argentina has certainly experienced change. The country is no anarcho-capitalist paradise, but is .. MORE
Media Watch
Synecdoche, Bullets, and Politics
The following is not the most important aspect of the tragic murder of Brian Thompson, the CEO of UnitedHealthcare. But it does illustrate how using the correct words and being conscious of figures of speech help avoid confusion. Technically, a firearm cartridge is made of (1) a casing, which holds gunpowder and a primer to .. MORE
Monetary Policy
Gell-Mann Amnesia and AI
Tyler Cowen recently challenged us to try to stump an AI named “o1”: 1. o1 is a very good economist. Try to stump it if you can. I could not find o1, so I used ChatGPT 4.o mini. I hope someone will try the following question with an o1 and report the results in the .. MORE
Macroeconomics
The Monkey’s Paw and Interest Rates
A recent article in The Economist discussed what they assume is the president-elect’s view of interest rates: A more hawkish Fed may, in turn, invite the wrath of Mr Trump, who has insisted that, as president, he should have a say over interest rates. He will surely want to see steeper rate cuts now that .. MORE
Economics of Crime
My Weekly Reading and Viewing for December 8, 2024
Indiana Cops Seized Their Cash From a FedEx Hub. Prosecutors Just Agreed To Return It. by C.J. Ciaramella, Reason, December 3, 2024. Excerpts: Indiana prosecutors will return $42,000 in cash they seized from a California small business, several months after the owners filed a class action lawsuit alleging that law enforcement is exploiting a major FedEx shipping .. MORE
Adam Smith
Economics In Personal Decision Making
Two main reasons for studying economics are often given in textbooks and classes. First, it helps us understand the social world we live in and, secondly, it informs better public policy decisions. An example comes from Adam Smith in The Wealth of Nations. By understanding what makes a nation wealthy compared to others, we might .. MORE
Adam Smith
Does National Security Justify Trade Restrictions?
In a recent Defining Ideas article, “Why Trade Should Be Free,” I made the case for free trade. Although my way of stating it is slightly original, the case for free trade is one that many economists, including Adam Smith, have made. Free trade causes people in the free trade country to produce the .. MORE
Economic Education
Thinking About Imports and Exports
A thought experiment, dear reader, on how to think about international trade and its impact on the wealth of a nation. Suppose one day, every country in the world suddenly said, in unison, “Hey America! We’ve decided we think you’re just the best and to show how much we love you, we’ve decided that from now .. MORE
Uncategorized
Jeff Hummel on Tether
My friend and monetary theory teacher (of me) Jeff Hummel writes beautiful responses to various friends who comment on monetary issues. In a discussion of Tether, one of his friends quoted a source saying, “Tether is the third largest buyer of three-month US Treasuries and is projected to be the first next year. Tether now .. MORE
Incentives
Wanna bet?
Some bloggers take bets on the ideas they express in their writing. A few have been quite successful. I have chosen not to do so (thus far.) In some cases, those who refrain from betting are criticized for not having the courage of their convictions. I don’t believe that criticism is reasonable, and I’ll explain .. MORE
Economic and Political Philosophy
The Self-Government of the People
Explaining his nomination of Russell Vought for the position of director of the Office of Management and Budget, President-elect Donald Trump wrote (“Donald Trump Picks Scott Bessent as Treasury Secretary,” Financial Times, November 23, 2024): Russ knows exactly how to dismantle the Deep State and end Weaponized Government, and he will help us return Self .. MORE
Business Economics
What Deindustrialization?
Many critics of free trade argue that globalization has led to the US becoming deindustrialized; That is, trade is eroding our manufacturing base. Economists refute this claim by pointing to the fact that US industrial production is near the record highs set in 2018 or that the manufacturing component, while off the highs set in .. MORE
Regulation
What Cass Sunstein Omits in Discussing DOGE
Harvard Law professor Cass Sunstein has a short list of six factors that people in a Department of Government Efficiency need to consider. It’s worth paying attention to and those who don’t, yet want to deregulate, ignore his list at their (and possibly our) peril. I won’t repeat the list here. It’s brief. I will .. MORE
Price Controls
Letting the Rich Subsidize the Poor
In a recent post, I imagined a hypothetical situation where cranberries turned out to be a surefire way to prevent cancer. I described how this would create a huge shift in demand, leading to an increase in prices, which in turn would lead to an increase in supply: Suppose tomorrow, scientists announce that eating 100 .. MORE