EconLog Archive
Finance
Rethinking Triffin: The Fiscal Dimension of the Dollar Dilemma
The debate over Robert Triffin’s famous “dilemma” continues to animate policymakers and commentators. Stephen Miran, a leading economic advisor to Mr. Trump, in a November article revived the theme by arguing that the inelastic global demand for dollar-denominated assets imposes structural costs on the U.S. economy. Joseph Sternberg, in a recent column, by contrast, dismisses Triffin as a .. MORE
Economic and Political Philosophy
The State Power to Discriminate
John Locke’s idea that tyranny is defined as arbitrary power as opposed to the rule of law seems to underlie the whole classical liberal tradition (see Locke’s Second Treatise of Government [1690, Chapter 18]). Arbitrary power allows the state or any other central political authority to discriminate among its subjects by bribing its supporters and .. MORE
Economics and Culture
The Costs and Choices of Kiki’s Delivery Service
Despite facing little explicit costs, Kiki’s delivery service is a costly endeavor. Fortunately, for viewers, it’s a charming lesson on the nature of costs and an introduction to James Buchanan’s work on cost and choice. Kiki’s Delivery Service, Studio Ghibli’s 1989 masterpiece, captures genuine moments of a young witch trying to make it on her .. MORE
Regulation
A Substantive Reply on Tariffs
Soon after the Wall Street Journal published Phil Gramm’s and my warning of the destructiveness of President Trump’s steel and aluminum tariffs, a thoughtful CEO of a steel-producing firm in Pennsylvania emailed me to cordially express his concern that, if Sen. Gramm’s and my warning is heeded, failure to protect American producers of steel and .. MORE
Free Markets
A Blessing and a Curse
The market as an institution is both a blessing and a curse. Its blessing lies in its coordinating abilities. As Adam Smith first noted back in his Wealth of Nations, nobody knows how to make a woolen coat. Rather, it is the coordinated (although not planned) actions of “a great multitude” of workers that results in .. MORE
Labor Mobility, Immigration, Outsourcing
Lower Trade Deficits and More Foreign Investment?
There is something worse than everybody wanting to come to your country: that’s if everybody tried to avoid it. America is not at this point, but there is a play about that in a theater of the absurd near you. Official figures show a significant drop in foreign tourists coming to America this year compared .. MORE
#ReadWithMe
We Have Never Been Woke, Part 10: Should We Be Woke?
Based on the discussion over numerous posts in this series (beginning here) unpacking the arguments of Musa al-Gharbi’s We Have Never Been Woke: The Cultural Contradictions of a New Elite, one might assume that al-Gharbi is hostile to woke ideas or woke values. But that would be a mistake, and would show that one has .. MORE
Liberty
The Prevalence of Preference Falsification
The title of this post is a nod to Timur Kuran’s book Private Truths, Public Lies: The Social Consequences of Preference Falsification. This book examines the disconnect between what people say they believe publicly and what they believe privately. As Kuran puts it, The preference that our individual ends up conveying to others is what I .. MORE
Economic History
Unfairly Traded Steel
Cleveland-Cliffs Chief Executive Lourenco Goncalves’s invocation of “unfairly traded steel” shows, a contrario, many reasons why free trade is an essential feature of a free society. Mr. Goncalves said that adding tariffs on steel products to tariffs on primary (semi-finished) steel provides (“Trump Leans on National Security to Justify Next Wave of Tariffs,” Wall Street .. MORE
Central Planning
The Central Planning Arms Race
Regular readers here know that myself and my co-bloggers (both present and former) spend a lot of time talking about the problems of central planning.[1] There are many, many problems with central planning: the Hayek-Lavoie knowledge problem, issues revealed by public choice analysis, and so on. In this post, I want to highlight a big one: .. MORE
Free Markets
End the Fed?
Some 500 economists work for the Federal Reserve System. This is probably more than the entire dismal science faculty at all eight Ivy League Universities, perhaps with Chicago and Berkeley thrown in for good measure. If the Fed were disbanded, they would all have to seek other work, perhaps leading to prosperity. Under the present .. MORE
Family Economics
Economics Problems of Grocery Delivery
Occasionally, I use a grocery delivery service—not always, and not for every item. In a vacuum, one might think that having someone else take the time to gather grocery items for me and bring those items to my house seems clearly advantageous. So why don’t I always use this service? A few ideas from economics .. MORE
Economic Institutions
The Political Economy of Cruelty: Some Elements
Why are some people cruel? Why are some governments cruel? Do cruel governments require cruel citizens? I take cruelty to refer to Merriam-Webster’s definition of cruel as “disposed to inflict pain or suffering: devoid of humane feeling.” An individual is cruel who has a taste for cruelty, i.e. cruelty is an argument of his utility .. MORE
#ReadWithMe
We Have Never Been Woke, Part 9: Why Have Elites Never Been Woke?
(This post is part of a series that began with this post.) The overarching theme of Musa al-Gharbi’s book is examining the gap between the ideas most supported by those who are woke and the actions of those same people. While al-Gharbi isn’t overtly hostile to woke ideas as such, he is troubled by how .. MORE
Economic Methods
What Would Success Look Like?
President Trump fired the Bureau of Labor Statistics commissioner, Erika McEntarfer, after July’s jobs report showed very little job growth over the past quarter. Initially, the President accused her of “rigging” the numbers to make him look bad. More recently, members of his administration have tried to reduce the criticism to just that of substantial .. MORE
Fiscal Policy
Fiscal Dominance Brings Financial Repression
“Fiscal dominance” refers to the state’s expenditures (fiscal policy) dominating monetary policy. Instead of the legislature (Congress in the US) controlling government expenditures while the central bank (the Fed) tries to control inflation, the latter helps finance expenditures and Congress obtains more leeway to run deficits. Fiscal dominance is the opposite of central bank independence. .. MORE
Money and Inflation
Milei’s Message for Economists
Soon before the election that made Javier Milei president, 108 economists around the world (including prominent names like Thomas Piketty, Gabriel Zucman, and Jose Ocampo) signed an open letter warning about the dangers of “non-traditional” economic thinking. Even at the time, the letter was cluttered with flawed thinking. The letter then bemoans that “the laissez-faire .. MORE
#ReadWithMe
We Have Never Been Woke Part 8: Totemic Capital and Consecrated Elites
My last post in this series on We Have Never Been Woke by Musa al-Gharbi ended by mentioning another form of symbolic capital very valuable to symbolic capitalists, particularly with the advent of victimhood culture – what al-Gharbi calls totemic capital. As he describes the concept, In sociological terms, a totem is a sacred symbol that represents .. MORE
Economic and Political Philosophy
A Collectivist Judge Is a Contradiction in Terms
It is a bit of a mystery why people who claim to be American-style conservatives do not embrace Friedrich Hayek, the economist and legal theorist who was awarded a Nobel Prize in economics in 1974. The mystery dissipates when one realizes that most self-identified conservatives are in fact as collectivist as the self-defined progressives (“liberals” .. MORE
Government Growth
Will the Fed Lowering Rates Reduce Government Borrowing Costs?
Short version: no. In my recent post on central banks and independence, I cited Harvard economist Jason Furman in discussing how lower central bank rates won’t necessarily translate into lower private borrowing costs: The Federal Reserve only sets a handful of interest rates, and those are limited to rates between banks—the discount rate (the rate .. MORE
Moral Reasoning
My Final EconLog Post
I began my blogging career at TheMoneyIllusion in early 2009 and ended that blog last year. In January 2014, I started blogging here at EconLog and have greatly enjoyed the opportunity. This will be my final post. I wish to thank everyone who works at EconLog, and I wish the best to all of my .. MORE