EconLog Archive
Cross-country Comparisons
Now do Japan
I have frequently argued that China has the world’s largest economy, at least if measured in PPP terms. (Of course in per capita terms they are still only a middle-income country.) Others insist on using market exchange rates, which suggest the US economy is still significantly larger. Fair enough. But you need to be careful .. MORE
Books: Reviews and Suggested Readings
On Fairness – Aesop vs Sesame Street
The YouTube algorithm is a mysterious thing. It’s supposed to recommend videos you might like, based on videos you’ve watched and rated before, but as far as I can tell the recommendations are generated randomly by a half-asleep chimpanzee. Still, just as broken clocks are still right twice a day, random suggestions can manage to .. MORE
Game Theory
Prisoner’s Dilemma: A Simple Model of War
Economic models of cooperation and conflict are often based on the Prisoner’s Dilemma (PD) of game theory. As simple as this model is, it helps us understand whether or not a war will be fought, where “fought” includes escalation steps through retaliation—the current situation between the government of Israël and the government of Iran. Assume .. MORE
International Trade
Why the Status Quo Matters
In an earlier post, I listed some questions for interventionists to consider before advocating their interventions. This is part of my ongoing crusade to get interventionists to think about things as they actually are as opposed to a blank slate. These two modes of thinking I call “status quo reasoning” (seeing the world as it .. MORE
Macroeconomics
Hey teacher, call on me!
Do you recall that student back in middle school, frantically waving his hand trying to get the teacher to call on him? That’s how I feel when I read the following sort of news story: As the US economy hums along month after month, minting hundreds of thousands of new jobs and confounding experts who .. MORE
Books: Reviews and Suggested Readings
Means, or Ends?
Years ago, I read Banker to the Poor: Micro-Lending and the Battle Against World Poverty by Muhammad Yunus. In the book, Yunus describes the origins and purpose of the Grameen Bank. This bank specializes in offering small loans to people in poverty to help them begin to attain self-sufficiency. This isn’t a charitable organization – .. MORE
Labor Mobility, Immigration, Outsourcing
Military Age Males
Lately I’ve been watching Fox News Channel more than usual. I’ve noticed Jesse Waters (who replaced Tucker Carlson, who replaced Bill O’Reilly) using a phrase a lot: military-age males. He invariably uses it to refer to immigrants, typically illegal immigrants. Glenn Reynolds at Instapundit also did it recently. When you observe the males they’re talking .. MORE
Macroeconomics
Some Counterintuitive Thoughts on Monetary Policy
Here are five observations about recent trends in monetary policy: 1. The Fed would really like to avoid any further increase in interest rates. This psychological aversion to interest rate increases in not rational, and it actually makes it more likely that the Fed will find it necessary to raise interest rates even further. That’s .. MORE
Income Distribution
The Inheritances that Matter Most
Inheritances can be controversial because some people inherit enormous wealth while others inherit nothing or even debts. Due to this apparent inequity, even the archconservative economist James Buchanan supported massive inheritance taxes. By contrast, another free-market economist, Milton Friedman, argued such taxes are inefficient because they encourage people to consume during their lifetimes rather than .. MORE
Books: Reviews and Suggested Readings
My Weekly Reading for April 14, 2024
Here are some highlights of my weekly reading for the week just passed. Providing Labor Market Context for Debt-Related Driver’s License Suspensions in Ohio by Kyle D. Fee and Brian A. Mikelbank, Federal Reserve Bank of Cleveland, Community Development Reports, February 23, 2o24. Excerpt: Based on our analysis, over 830,000 Ohioans could be at risk .. MORE
Violence and War
Religious Incentives and Life in Society
Economics can help understand two conflicting aspects of religion: its potential usefulness in a free society and the incentives of some believers for extreme intolerance. The social usefulness of religion has been noticed by many thinkers, including Friedrich Hayek (see Chapter 9 of The Fatal Conceit). Religion or at least some religions can provide the .. MORE
Books: Reviews and Suggested Readings
Public Goods and Public Bads
Public Goods differ from private goods in that they are non-rivalrous in consumption and nonexcludable. If I watch a fireworks show, it doesn’t reduce the amount of “fireworks show” my neighbor can enjoy. If I’m going to put on a fireworks show, I can’t prevent non-payers from watching my bombs bursting in air. Since public .. MORE
Economics of Crime
The Anti-Chinese Roots of American Public Policy
Today, residential zoning, drug prohibition, and restrictions on legal immigration are three of America’s most consequential public policies. As we will see, all three began in California, and all three were explicitly motivated by extreme anti-Chinese bigotry. All three policies were intended to exclude “undesirables”. To be clear, I am not suggesting that modern proponents .. MORE
Family Economics
Pregnancy Discrimination Act Reduces Women’s Economic Freedom
I attended the Association for Private Enterprise Education annual conference in Las Vegas earlier this week. One of the sessions I attended was titled “Improving Women’s Welfare: Economic Freedom, Gender Ideologies, and Entrepreneurship.” One of the presenters showed a slide about the federal government’s 1978 Pregnancy Discrimination Act (PDA) and said that this had expanded .. MORE
Books: Reviews and Suggested Readings
Social Control at the School for Good Mothers
Jessamine Chan’s 2022 novel The School for Good Mothers (New York: Simon & Schuster) constructs a bureaucratic dystopia in which unfit parents—mostly mothers, but not all—are ordered by family courts into a re-education camp run by Child Protective Services. Perhaps the most chilling part of the narrative is how easy it is to imagine a .. MORE
Business Economics
Further Decline in the Value of the Costco Hot Dog
In July 2013, I wrote a post on EconLog titled “The Economics of Self-Imposed Price Ceilings.” The case in point was the Costco hot dog. I pointed out that by keeping the price of a hot dog and a soda with free refills at $1.50, Costco over time, to reduce losses, reduced the quality .. MORE
Adam Smith
Wisdom on Worth and Work
What do we desire from our lives and our work? In October of 2023, I participated in a debate at my college, Western Carolina University, regarding whether gender affirming care for minors should be banned. When it was my turn, I mostly stuck to the facts. I cited medical organizations, doctors, and meta-analyses. Though we were .. MORE
Macroeconomics
Should We Make Fun of JP Morgan?
JP Morgan is one of America’s most important investment banks. So what should we make of the following claim? The Federal Reserve raised rates the most in decades to bring down inflation. High borrowing costs are supposed to put the brakes on the economy to keep consumer prices from rising too quickly. But Jack Manley .. MORE
Energy, Environment, Resources
Conservation Through Capitalism
I recently stumbled across a news story that highlights something about capitalism and the profit motive that is underappreciated by the very people who most loudly clamor for it – the conservation of resources. Capitalism doesn’t merely incentivize maximizing output – it also incentivizes minimizing the use of inputs as well. If you want to .. MORE
Political Economy
Some Lessons from a Just War Fought Unjustly
The horrible “unintentional” murder of seven aid workers in Gaza carries many lessons. One is the importance of signaling the moral principles that are expected to be followed. One week after the barbaric attack against Israeli civilians, I wrote: The basic individualist ethic nurtured by Western civilization rejects group identities and tribal intuitions that justify .. MORE
Cross-country Comparisons
Milei’s Message to the World
The first few months of Javier Milei’s administration have already had major consequences in Argentina as the country has started to move away from years of leftist, failed economic policies. This is of course relevant to Argentines, who were the ones who actually suffered because of their country’s dismal economic situation. But the interest that .. MORE