EconLog Archive
Economics of Education
From the Cutting Room Floor: The Case Against Education
When my books are nearly done, I strive to cut 10% of the remaining words. Sometimes I end up cutting beloved passages that distract from the flow. Here’s one of my favorites from The Case Against Education, building on my earliest K-12 memory. I still remember my first day of kindergarten like it was yesterday. .. MORE
Macroeconomics
Ryan Avent asks some very good questions
Ryan Avent, who writes for The Economist, sent me an email with some very good questions about monetary policy rules. (He was a moderator at the recent Mercatus/Cato conference on monetary policy rules.) Ryan allowed me to reprint them here, and I’ll take a stab at answering them: 1. Why haven’t central banks been successful .. MORE
International Trade
The Conard Line on the Trade Deficit
Tyler Cowen writes: This framework makes Conard a revisionist on the U.S. trade deficit. The traditional story is that Americans buy goods from, say, East Asia, and the sellers respond by investing those dollars back in the U.S., a win-win situation. Conard believes that analysis would hold only if people who accumulate cash from foreign .. MORE
Industrial Organization
Let Them In
Yesterday, over at our sister site, “Library of Law and Liberty,” Northwestern University law professor John O. McGinnis had an interesting post. It’s titled “The Obama Administration is Helping Raise Your Airfares.” In it, Professor McGinnis makes the case that the U.S. airline industry “has become an entrenched oligopoly.” He writes: It is the Obama .. MORE
Macroeconomics
Brexit is not about Britain, #2
It’s less that 3 months since the Brexit vote, and thus too early to form any firm conclusions. But one recent article points to the growing belief that Britain may have dodged a bullet, which hit the eurozone instead: Brexit ‘shock’ threatens to do far more damage to the European economy than to Britain . .. MORE
Economics and Culture
Is “neoliberalism” a menace to human rights?
Hillel Neuer has succeeded in getting the UN Human Rights office to delete a tweet that asked whether “market fundamentalism”–namely, “the belief in the infallibility of free market economic policies”–is “an urgent threat.” I suppose it means a threat to human rights. Read the story in full here. Neuer issued a magnificent press statement: Tellingly, .. MORE
Behavioral Economics
The Ultra-Selective Rationality of Politicians
Me back in 2003: Politicians, just like other people, may prefer some beliefs over others. But unlike average voters, politicians often do have a significant probability of affecting outcomes, and their efforts have direct repercussions. A politician who does not have rational expectations about the impact of his policy stances on his career pays a .. MORE
Economics of Health Care
The FDA’s Power Grab
But if the FDA gets its way, nitroglycerin will not be obtainable for pennies. The situation was stable until Pfizer went through the time and expense required to test its particular version of nitroglycerin, Nitrostat, which the FDA approved in 2000. Once the FDA did that, other versions became officially “unapproved.” In 2010, the FDA .. MORE
EconTalk
#TWET: Terry Moe on the Constitution
Could allocating more power to the American President result in a more efficient government? Could it result in a smaller government? I admit, I would have had a pretty strong (negative) reaction to those two questions if you’d posed them to me a week ago. But, as usual, this week’s EconTalk episode has me thinking… .. MORE
Economics of Health Care
Scott Alexander IS an Economist
So many other bloggers called attention to Scott Alexander’s outstanding post about why the price of EpiPen is so high that I didn’t feel the need to. But now he has written another post about drug prices and the harm done by drug price regulation and has hit it out of the park again. An .. MORE
Behavioral Economics
Solve for This Equilibrium
Tyler Cowen’s fond of admonishing us to “solve for the equilibrium.” His maxim came to mind while reading his Bloomberg column last month: How’s this for a simple rule: Open borders for the residents of any democratic country with more generous transfer payments than Uncle Sam’s. What would happen? Many economists and perhaps laymen would .. MORE
Taxation
Response to Professor Stephen Gordon
Last month, I posted about Professor Stephen Gordon’s confusion between a tax and a price. Professor Gordon responded, and I responded to him. Here’s an excerpt from my response: Both Foster and I noted that there is an important distinction between a tax and a price. Professor Gordon is right that a tax on carbon .. MORE
Macroeconomics
My paper at the monetary rules conference
Today I will be presenting a paper at a Mercatus/Cato conference on monetary policy rules. Here I’d like to summarize my key themes: 1. The past 10 years have destroyed the pre-2008 consensus on monetary policy. Everything is up in the air. Tools, targets, and even the extent to which monetary policy can hit its .. MORE
Behavioral Economics
Betting Justice
My favorite Oliver Wendell Holmes quote, by far: Chauncey Wright, a nearly forgotten philosopher of real merit, taught me when young that I must not say necessary about the universe, that we don’t know whether anything is necessary or not. I believe that we can bet on the behavior of the universe in its contact with us. .. MORE
Media Watch
Matt Welch on the Washington Post’s Deficient Apology
Using “not entirely” in this case is like saying Rocky was “not entirely” about loan collections. On a blog called EconLog, I generally stick to economics. But occasionally I make an exception to deal with other issues. One is media bias, because I think the issue is so important. Recently Matthew Sheffield wrote an op/ed .. MORE
Labor Market
How would we know if wages were sticky?
I’ve done a lot of posts on wage stickiness, but misconceptions keep popping up. The sticky wage theory of the business cycle is based on the notion that only a fraction of wages get adjusted each period. This leads to some odd results. The bigger the fall in the equilibrium wage rate, the bigger the .. MORE
Behavioral Economics
Helicopter Parenting and Moral Causation
Condemnation is fun, but numbers are boring. What are we supposed to do, then, when condemnation requires numbers? Suppose you want to condemn a parent for putting his child in grave danger, but your knowledge of actual risks is hazy at best. The simplest approach is to do what Kahneman calls “answering an easier question.” .. MORE
Labor Market
Honor Laborers
Most Americans think of Labor Day as part of a long weekend and the unofficial end of summer. It was originally meant, though, to recognize the contributions of labor unions. I recommend a third alternative: use Labor Day to honor laborers. To honor laborers, you would have to respect their right to make choices for .. MORE
Macroeconomics
The interest rate fallacy
There is a common fallacy that lower interest rates are expansionary. Where does this fallacy come from? I can think of two true facts, each of which contributes to this fallacy. 1. The true fact that if I am thinking about building a new house, a lower interest rate might make me more inclined to .. MORE
Macroeconomics
Reply to Kocherlakota
I recently did a post over at MoneyIllusion, arguing against the elimination of currency. I suggested that this would have a disproportionate impact on the poor, who often lack access to banking facilities. It would also reduce privacy; the government would have access to all your shopping habits. Suppose a Colorado Congressman buys some pot .. MORE
Monetary Policy
No, Ben Bernanke, He Wasn’t
Hamilton was without doubt the best and most foresighted economic policymaker in U.S. history. So writes former Fed chairman Ben Bernanke. Monetary economist and fellow UCLA grad Lawrence H. White disagrees. Larry writes: Now that the controversy has cooled we can take a more informed perspective. There is no denying Hamilton’s importance and influence, or .. MORE