EconLog Archive
#ReadWithMe
Wading into Controversy
It is time to explore the principles on which human nature has been constructed and the social structures that are derived from behaviors embedded in the human genome. —Nicholas Wade, The Origin of Politics (46) Nicholas Wade is concerned that we are attempting to establish cultural norms and political structures that stray too far from .. MORE
Economic Theory
Accounting vs. Economic Profit
In any principles of economics class, students learn the difference between accounting profit and economic profit. Accounting profit, which is what one typically understands when discussing “profit,” is total revenue minus your monetary costs. It is what appears on the bottom line of an accounting statement as “profit.” Economic profit is a broader term. Recall .. MORE
Political Economy
Cuba After Communism
On January 1, 1959, Fidel Castro and his bearded revolutionaries marched into Havana. Church bells rang across the island as Batista fled into exile. This January 1st marked the 67th anniversary of that revolution. Sixty-seven years of a system built on deception, imposed through violence, and sustained through repression. But now, for the first time .. MORE
Price Theory
Cutsinger’s Solution: Inflation and Healthcare
Question: Over the past several decades, the inflation-adjusted price of healthcare has increased. Based on this information alone, can you infer the source of the higher price–lower supply or higher demand? If not, what additional data would you need to determine whether higher prices are being driven by changes in supply or demand? Solution: I .. MORE
Economic Theory
Peace on Earth, Goodwill Towards Refs
All major American professional sports have a time of year when they capture the eyes of the nation. America’s pastime, baseball, has the ‘Fall Classic’, the NFL dominates Thanksgiving, and the country has an entire weekend dedicated to the Super Bowl. Christmas Day is the NBA’s time to shine with action from noon to midnight .. MORE
Microeconomics
Silver and Gold
With the holidays upon us, what could be better than Christmas movies? And Christmas songs? And Christmas movies with great Christmas songs, like “Silver and Gold” as sung by Burl Ives in Rudolph, the Red-Nosed Reindeer? And of course, there’s the profit-seeking entrepreneur-prospector, Yukon Cornelius, obsessed with finding silver and gold. If silver and gold .. MORE
Microeconomics
The Fast Fashion Dilemma
Shoppers are filling their carts, both literally and digitally, with last-minute gifts. One tempting purchase, whether for gifting or for showing up in style at a holiday sweater party, is ultra-cheap clothing from Shein. Like many around the world, the French hunt for deals in December. During a recent interview with journalist Thomas Mahler, I .. MORE
Tariffs
Diving into Tariffs at Liberty Fund Today
From the editors: We have an in-depth discussion about tariffs across two Liberty Fund sites today. EconLog contributor David Hebert has a piece on the consequences of America’s new, more protectionist trade policies on our sister site, Law and Liberty, this morning. This piece makes a good complement to today’s EconLog post by Jon Murphy, .. MORE
Tariffs
No Manufacturing Jolt from Tariffs
Writing on Facebook, AEI economist Mark Perry points to evidence that the tariffs imposed in April by the Trump Administration have not resulted in job creation for the manufacturing industry (Mark’s graph is recreated below for those of you who do not have access to Facebook. The solid red line indicates the day the tariffs .. MORE
Sam's Links
Sam’s Links: Holiday Edition
Sam works on innovation policy at Progress Ireland, an independent policy think tank in Dublin, and runs a publication called The Fitzwilliam. Most relevant to us, on his personal blog, he writes a popular link roundup; what follows is an abridged version of his Links for November. Blogs and short links 1. Is Google search .. MORE
Price Theory
EconLog Price Theory: Inflation and Healthcare
This is the latest in our series of posts in our series on price theory problems with Professor Bryan Cutsinger. You can see all of Cutsinger’s problems and solutions by subscribing to his EconLog RSS feed.Share your proposed solutions in the comments. Professor Cutsinger will be present in the comments for the next couple of .. MORE
Economic Theory
Housing: Supply vs. Quantity
If there’s one thing we can count on in America, it’s that our elected officials will see an affordability crisis and respond to it by stimulating the demand side of the market. Today, we’re seeing this in the case of the housing industry, with Administration officials floating both a new (and improved!) 50-year mortgage and .. MORE
Economic Theory
Increasing Housing Supply
Modular housing is gaining prominence as a proposed way to increase the housing supply. This is an approach where the majority of home building is done off-site. Factories will construct entire rooms of a house, including all the wiring and plumbing connections built in. At the final construction site, the actual building process consists of .. MORE
Regulation
Barriers to Affordable Housing
A recent post argued that housing affordability is not so bad as it might appear when home prices are adjusted for all relevant factors, such as size, quality, and household income growth. While houses have become more expensive in dollars, they are also significantly bigger and nicer, and the average household has significantly more income. .. MORE
Economic Growth
Happy Thanksgiving
Tomorrow in the United States is Thanksgiving, the American version of a harvest festival celebrating the bounty of the earth and preparing for the winter ahead. We trace the history of our holiday to a documented 1621 gathering of English Pilgrims and the native Wampanoag tribe in modern-day Plymouth, Massachusetts. The Pilgrims had immigrated from .. MORE
Trade Barriers
Tariffs vs. Quotas
In case you missed it, the Trump Administration has been using tariffs under the 1977 International Economic Emergency Powers Act since at least April of this year. The legality of doing so has been questioned and we are now at a point where the Supreme Court has heard oral arguments on the matter. One of .. MORE
Economic Institutions
Separating Some Terms
Political views are often misleadingly discussed as though they span a single left/right spectrum. I want to suggest that a similar mistake gets made when thinking about economic systems and policies. As a corrective, consider that economic systems can be understood along more than one axis or spectrum – and these different axes are often .. MORE
Game Theory
Tit-for-Tat in Politics
Cooperation is both the most fragile and the most necessary condition of political life. It is fragile because individuals and groups often pursue short-term gains at others’ expense, yet it is essential because no political community endures without mutual accommodation and understanding. Politics, as Aristotle taught, is the art of living together—not the sum of .. MORE
Economic Theory
Strong Claims Need Strong Evidence
Each semester that I teach Principles of Microeconomics, I have some variation of this question on my exams: “Joe works at the local supermarket. One day, he says to you: ‘On Monday, we were selling oranges for $0.75 each and we sold 200 that day. On Friday, oranges were $1.00 and we sold 400 that .. MORE
Price Theory
Pricing Plumbing: Cutsinger’s Solution
Question: The Texas Minimum Construction Standards require that all plumbing fixtures be WaterSense certified. Examples of requirements under these standards include low-flow faucets, shower heads, and toilets. Suppose, for the sake of argument, that before the requirement for low-flow toilets went into effect, installing a normal-flow toilet cost $250. Suppose also that installing a low-flow .. MORE
Moral Reasoning
Applaud All Market-Made Millions
In the NFL offseason, star running back Saquon Barkley signed a $40 million contract extension with the Philadelphia Eagles. Make no mistake, he earned it after rushing for 2,005 yards in the regular season and helping to bring another Lombardi Trophy to Philadelphia. I’m not alone in thinking this. As one sports writer put the .. MORE