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Labor Market

Do Wages Cause Inflation?

By Scott Sumner | Feb 13, 2024

The answer to this question depends entirely on how one defines “cause”. There’s a sense in which wages do not cause inflation, and an equally plausible sense in which wages do cause inflation. I’ll begin with the negative view, by responding to a recent FT story: The Fed expects the labour market to cool this .. MORE

Economic Methods

A Fundamental Difference between Debates in Sports versus Politics

By David Henderson | Feb 13, 2024

I’ve often been involved in debates in politics in which people deny actual facts. At first, it’s easy to attribute that to partisanship. But it takes more than partisanship. Consider sports. On Sunday night, I was disappointed when Patrick Mahomes threw the touchdown pass that ended the game in overtime and handed the win to .. MORE

Political Economy

A Strange Ignorance of the Effect of Price Caps

By Pierre Lemieux | Feb 12, 2024

When a price is capped under its market equilibrium level, what happens? Few people seem to know the answer except for economists. And even some economists do as if they didn’t know, perhaps distracted by their, or their bosses’, ideology. The answer: price caps create shortages, that is, the stuff disappears from the shelves, waiting .. MORE

Macroeconomics

China’s Weak Economy

By Scott Sumner | Feb 11, 2024

China’s economy has recently become a subject of widespread concern. The FT has an article with the following headline: China’s consumers tighten belts even as prices fall The term “even” caught my attention.  Surely the FT editors don’t believe that falling prices would be expected to boost consumption?  That would be an Econ101-level error.  And .. MORE

Books: Reviews and Suggested Readings

My Weekly Reading for February 11, 2024

By David Henderson | Feb 11, 2024

Here are some highlights from my weekly reading and viewing. Create Wealth Without Making Anything by Art Carden, AIER, February 5, 2024 A popular and pernicious fallacy that Thomas Sowell calls “the physical fallacy” holds that you’re not creating value if you’re not turning material stuff into another kind of material stuff. In this view, you .. MORE

Economic Growth

Friedrich Hayek’s Legacy for the 2024 Election

By Vance Ginn | Feb 11, 2024

Amid a heated election year, the teachings of economist Friedrich Hayek provide a guiding beacon, urging us to transcend partisan lines and champion free-market capitalism that benefits everyone.  I recently interviewed Dr. Bruce Caldwell of Duke University about his book, Hayek: A Life, 1899-1950, who helped shed light on Hayek’s views on pressing issues today. .. MORE

Cross-country Comparisons

Public versus Private Pensions in Colombia

By Omar Hernandez | Feb 10, 2024

In Colombia, the pension system is regulated by Law 100 from 1993. This law divides the pension system into two main regimes: the average premium regime, which is public and managed by Colpensiones. The Colombian pension administrator is a state-owned industrial and commercial company, organized as a special financial entity, associated with the Ministerio del .. MORE

Cross-country Comparisons

Is Arabia the New America?

By Scott Sumner | Feb 10, 2024

I recently took my first trip to the Middle East, and have a few observations. Please consider the following post to be highly speculative, based on a limited understanding of the region.   As soon as I boarded the Qatar Airways flight from LAX, I noticed the diversity of the cabin crew, which included blond Europeans, .. MORE

Economic Growth

Effect of Global Warming on Wealth

By David Henderson | Feb 10, 2024

  I’ve often cited the UN’s Intergovernmental Panel on Climate Change’s (IPCC) conclusion that if we do nothing about global warming this century, GDP in 2100 will be 3% lower than it would have been. This November 2022 report by Charles Kenny, a senior fellow with the Center for Global Development puts the number even .. MORE

Business Economics

Incentives Impact NFL Decisions

By Amy Crockett | Feb 9, 2024

It is my favorite time of year. The end of the NFL regular season! I’m not a hater of the NFL. I’m a lover of seeing economic principles in real life! Many players have incentives in their contracts if they achieve certain statistics over the course of the season. For instance, the Chicago Bears kicker, .. MORE

Business Economics

Snickers, Sweaters, and Price Discrimination

By Kevin Corcoran | Feb 9, 2024

Today I continue my on-again-off-again theme of “Kevin complaining that economists are terrible at naming ideas.” The inspiration for this post comes from the pricing system used by a clothing store my wife enjoyed perusing.  At this location, items of clothing carried price tags that were interestingly different from what you would find at most .. MORE

Moral Reasoning

Thoughts on Michael Oren’s Claims about Israel and Gaza

By David Henderson | Feb 9, 2024

Yesterday, I posted on the part of Michael Oren’s views that I strongly agreed with: that the U.S. government should not fund Israel’s government, either for war or for anything else. I promised to look at some other issues he raised. Here they are. Number of Gazans killed Russ asks: Let’s move to the current .. MORE

Economic Methods

Policy Effects in the Ultra-Long Run

By Scott Sumner | Feb 8, 2024

Social scientists use both controlled and natural experiments to estimate the impact of various sorts of public policies. One problem with this approach is that it is very difficult to ascertain the long run effects of policy, which might differ dramatically from the short run effects. Consider how rates of alcoholism vary in different parts .. MORE

Political Economy

Working For Some Citizens Against Others

By Pierre Lemieux | Feb 8, 2024

Nayib Bukele, the dictatorial president of El Salvador, provides a good illustration of a few themes I have discussed on this blog. Let me emphasize two. A six-minute YouTube video from The Economist and an article in the magazine (“Gangsters in El Salvador Are Terrified of Strongmen Nayib Bukele,” February 2, 2024) provide some background. .. MORE

Cross-country Comparisons

Michael Oren and Marc Joffe Agree on No Aid to Israel

By David Henderson | Feb 8, 2024

    U.S. Military Aid to Israel is Like Food Stamps. Russ Roberts’s recent EconTalk interview of Michael Oren, former Israeli ambassador to the United States, is fascinating. It’s titled, “Should Israel Depend on the US?“, February 5, 2024. I learned a lot. I’ll post about some of it later, but I want to focus .. MORE

International Trade

Questions for Interventionists

By Jon Murphy | Feb 7, 2024

In an earlier post, I pointed out that we do not exist in a state of nature.  As many economists have been pointing out since at least Ronald Coase’s famous 1960 paper The Problem of Social Costs, we exist in a complex world of pre-existing social, economic, legal, and legislative arrangements.  These arrangements influence our .. MORE

Cost-benefit Analysis

Pondering a Civil Grand Jury

By David Henderson | Feb 7, 2024

A couple of years ago, a pickleball acquaintance who was on the Monterey County Civil Grand Jury asked me if I would be interested in applying. He told me what the jury does and I was interested. Whereas I agree with James Buchanan’s famous statement that not all things worth doing are worth doing well, .. MORE

Economics and Culture

Defending the Small Stuff

By Kevin Corcoran | Feb 6, 2024

We’ve all heard the adage “don’t sweat the small stuff.” (And if by some chance you’ve never heard it before, well…now you have.) The general idea is that little things, being little, don’t really matter that much and we shouldn’t get too worried about them. This seems fairly reasonable at first glance. But another view .. MORE

Labor Mobility, Immigration, Outsourcing

The Washington State Experiment

By Scott Sumner | Feb 6, 2024

Over the years, I’ve done numerous posts pointing to the fact that states without an income tax tend to grow faster than more highly taxed states.  A part of that growth is related to the post-WWII sunbelt phenomenon.  But not all.  States lacking an income tax tend to grow faster than even nearby states with .. MORE

Business Economics

The Case for High Drug Prices

By David Henderson | Feb 6, 2024

  Almost all new drugs are developed for the U.S. market, no matter where the company’s headquarters are. Why? America is a large, rich country with an advanced medical system. America’s gross domestic product per capita is 65% higher than Britain’s, 57% higher than Germany’s and 87% higher than France’s. There are four Americans for .. MORE

Books: Reviews and Suggested Readings

My Weekly Reading and Viewing for February 4, 2024

By David Henderson | Feb 4, 2024

  Two reading highlights and one viewing highlight. The 2 Reasons California’s YIMBY Reforms Are Failing by Christian Britschgi, Reason, January 30, 2024. Excerpt: So, what’s going on? Why haven’t other YIMBY housing laws kicked off a boom in new duplexes and transit-adjacent apartments as they have with ADUs? I’d boil it down to two .. MORE