EconLog Archive
International Trade
Tariffs on Canada and Mexico Are Way Worse Than Tariffs on China
Some bad news and then some good news and then some bad news. Bad News On January 21, on his first full day in office, President Trump threatened to impose a 10% tariff rate on imports from China. His beef is that “China,” whatever that means (cue co-blogger Pierre Lemieux), is sending to Mexico chemical .. MORE
Uncategorized
My Weekly Reading for January 26, 2025
What Obamacare Hath Wrought by Tevi Troy, Commentary, 2025. Excerpts: The Obama team held a series of internal meetings to discuss what to do after the loss of the Senate supermajority. Most aides, including Chief of Staff Rahm Emanuel, suggested that they work with Republicans at this point on a compromise “skinny” plan that Pelosi .. MORE
Property Rights
Trickle-Down in Austin
Trickle-down economics is often caricatured as the claim that by giving money to the rich, the benefits will eventually trickle down to the poor. That theory is probably false, but that’s not what advocates of trickle-down are actually recommending. Housing is one area where trickle-down actually does work. A recent Kevin Erdmann post showed that .. MORE
Economic and Political Philosophy
Public Choice Doesn’t Require Us to Assume People Are Evil
Public Choice, the economist James M. Buchanan explained, is built on the “homely” proposition that politicians are just like the rest of us. We call this “behavioral symmetry.” They have their own interests, and they try to satisfy those interests. Furthermore, we can understand people’s behavior in the voting booth and the bureau using the .. MORE
Economic and Political Philosophy
Politics Feeds Mounting Discontent and Hatred
An interesting reflection by The Economist‘s US editor, John Prideaux, in a subscriber-only newsletter is worth quoting at some length (“How to Cover Trump 2.0,” Checks and Balances, January 10, 2025): Perhaps the least important thing about the awful fires in and around Los Angeles is Donald Trump’s response to them. And yet he’s about .. MORE
Economic Growth
Cat Cardiologists, Howard Hughes, Symphony Music, and Economic Growth
Our cat Theo has a heart disease. We found that out from a cat cardiologist. A cat cardiologist? Really? Yes, really. Why do I mention this on a site called EconLog? Because the fact that there are cardiologists for cats is a sign of economic growth. I’m pretty sure that fifty years ago we didn’t .. MORE
Politics and Economics
What does “pro-business” mean?
Long-time readers know that I believe that people underrate the importance of procedural issues. Too many people focus on “outcomes”, not the structure of decision-making. To take a recent example, consider the case of TikTok. At first glance, it may appear that I have the same view as President Trump. In fact, our views are .. MORE
Political Economy
Not Enough “Political Will,” but What Is That?
The idea that the only thing missing in a project is “political will” is a cliché representative of our times. We find it again in a Financial Times article about regulating social media ( “The Coming Battle Between Social Media and the State,” January 21, 2025): But there are two problems with regulating social media .. MORE
Labor Market
Productivity and Wages
In a recent post, I described a thought experiment where someone is stranded on deserted island, where resources are abundant but their ability to make productive use of those resources is very limited. In this situation, what happens if a new castaway washes ashore? With two people working together, things can improve. They can specialize .. MORE
Competition
Why Not Privatize the Post Office?
Given the news that the U.S. Postal Service could be privatized, it’s a good time to explore why privatizing mail delivery and opening it up to market competition is a wise idea. To start, it’s helpful to consider cases where privatization might be unwise and why mail delivery is different. In particular, many economists and .. MORE
Economics of Crime
Who likes pardons?
January 20th, 2025 was an unusual day. It’s not often that two different presidents engage in highly controversial acts on the very same day. I am referring to the flurry of pardons at the end of the Biden administration and the beginning of the Trump administration. America has become so polarized that it is hard .. MORE
Labor Market
Labor Supply and Wages – Stranded Workers Edition
In my recent post, The Wielders of One-Bladed Scissors, I talked about why supply-and-demand doesn’t automatically lead to the conclusion that the more workers there are, the lower wages become, and that it’s a fallacy to infer “more labor means cheaper labor.” After writing it up, a thought experiment occurred to me that helps make .. MORE
International Macroeconomics
History for the Books: Javier Milei & Argentina’s Budget
For most of 2023, Javier Milei advocated a number of libertarian policies aimed at reversing Argentina’s long economically downward trend. Among them was a proposal that was noted for its difficulty in a country known for its ever-increasing level of public spending. ‘It can’t be done,’ they said. Yet he did it: Under the presidency .. MORE
Economic Education
Cotton v Wool 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
I Win My Recent Inaugural Bet
On December 21, 2024, my friend Dan Klein, an economics professor at George Mason University, sent out an email to a list that I’m no longer on but cc:ed me, with the following offer: Anyone want to give me 8:1 odds that on Jan 21 Trump won’t have been inaugurated? He linked to this .. MORE
Economic and Political Philosophy
Liberalism as a Vaccine
This post might be misinterpreted in a couple ways, so read the following two points carefully: 1. I’m not defining liberalism in the American sense of left-of-center Democrat. I am using the term in the international sense of supporter of free speech, human rights, a market economy, democracy, civil rights, opposition to nationalism, etc. 2. .. MORE
Economic and Political Philosophy
The Peaceful Transfer of Power: A Few Reflections
The experience of the two last federal elections in America suggests that “the left” is more interested than “the right” in a peaceful transfer of power. (By “the left” and “the right,” I simply mean most individuals who identify with either the Democratic Party or the Republican Party.) Kamala Harris gave a magistral lesson to .. MORE
International Trade
My Weekly Reading for January 19, 2025
Regulations Keep Millions of Bedrooms Empty During a Housing Crisis by Howard Husock, Reason, January 17, 2025. Excerpts: The U.S. is facing a housing affordability crisis, and new data from Realtor.comhighlight an often missed contributing factor: millions of empty bedrooms. Census data reveal 31.8 million “excess” bedrooms in American homes—compared to just 4 million in .. MORE
Macroeconomics
Greedflation in Turkey? How about Greedspending?
It turns out that “greedflation” is not just an American misconception, the same fallacy exists in many other countries. Kürşad Görgen has a blog discussing Turkish monetary policy issues, from a market monetarist perspective. Last year, he did a post discussing some rather unconventional views: After the 2023 elections, Turkey abandoned its infamous NeoFisherian interest .. MORE
Economic Education
Financial Education and Economic Development
Financial education is an essential component for the economic and social development of nations. In an increasingly interconnected world, understanding how personal finances and markets operate is an indispensable skill for individuals and economies alike. However, in countries like Colombia, the lack of financial education negatively impacts financial inclusion, investment, and economic growth. From a .. MORE
Political Economy
Government Junk Fees
The FTC is rumored to be preparing legal action against Greystar, the largest landlord in the US, for “hidden fees”, also called “junk fees” (“FTC Prepares to Sue Largest U.S. Apartment Landlord Over Hidden Fees,” Wall Street Journal, January 13, 2025): The FTC finalized its hidden-fees rule last month and said it would seek civil .. MORE