EconLog Archive
Taxation
Where Are We on the Laffer Curve?
A cut in federal income tax rates in the US right now would raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut. This is one of the questions on the IGM Forum, a forum in which many of the country’s leading economists .. MORE
Labor Market
PSST: Work-Sharing May Not Work
Don Peck writes, Today, American companies facing weak demand typically lay off workers, even though that decision can be costly down the road (rehiring and training are expensive). A work-sharing program would allow companies to instead make temporary, across-the-board reductions in hours worked by (and wages paid to) the same number of employees Let us .. MORE
Economic and Political Philosophy
Evil Exceptions
Philosophers spend a great deal of time crafting plausible exceptions to widely-accepted moral rules. Sure, murder is wrong. But what if you could murder a man on his death-bed to prevent a plane crash? What if you could smother the baby who grows up to be Adolf Hitler? What if you could prevent a bloody .. MORE
International Trade
Changing World Trade Patterns
From the latest issue of the Journal of Economic Perspectives, I recommend The Rise of Middle Kingdoms by Gordon H. Hanson. Whereas high-income economies accounted for four-fifths of global trade in 1985, they will account for less than half by the middle of this decade. The entire article is interesting.
Economics of Education
What Arrow Said About Education in 1973
In the early 90s, I saw Ken Arrow informally debate Murray Rothbard. Arrow was not impressive; all he did was repeat tired textbook arguments about market failure. My subsequent encounters with Arrow’s thought were no better. Early this year, however, I read Arrow’s 1973 “Higher Education as a Filter,” and decided I was completely wrong .. MORE
Economic Growth
Mexico’s Economic Growth
In the United States, the image of Mexico is abysmal and largely wrong. The average American seems to believe that Mexico is a destitute, quasi-socialist nation with rampant drug violence that is sending waves of illegal immigrants to the United States. This is from Ivan Eland, “The U.S. Should Take Lessons from Mexico,” June 20, .. MORE
Business Economics
I Flunk Horwitz’s Doonesbury Contest
Attention undergraduates: Here is an opportunity for you to get published. Take a look at today’s Doonesbury as it’s chock full of bad economics. I would like to have a contest to see which undergraduate can produce the best response to that comic pointing out those fallacies without defending Romney. Make sure that under no .. MORE
Eurozone crisis
Eurozone Crisis: what is the solution?
Friends sometimes ask me this question. My answer is rather harsh. The problem is that some governments and some banks are insolvent. When a financial institution is insolvent, its liabilities must be taken over by a solvent institution. The solvent institution gets to set the price, which typically is a discount. So, if your solution .. MORE
Economic and Political Philosophy
Real Subjects Have No Arbiter
When you challenge the morality of the status quo, people usually leap to its defense. After a few rounds of argument, though, defenders of the status quo often retreat to meta-ethics. Maybe immigration restrictions do seem wrong. But how are we to decide? Who precisely is the arbiter of right and wrong? Faced with this .. MORE
Public Choice Theory
Taking Lousy Government for Granted
Their Supreme Gall There are two ways to take lousy government for granted: (1) to understand clearly how lousy, petty, vicious, self-serving, and narcissistic most government is, and (2) to understand implicitly how lousy, petty, vicious, self-serving, and narcissistic most government is but get so used to it that you hardly notice. I’m in category .. MORE
Labor Mobility, Immigration, Outsourcing
Priceless Economics
A McKinsey Report says, Based on current trends in population, education, and labor demand, the report projects that by 2020 the global economy could face the following hurdles: 38 million to 40 million fewer workers with tertiary education (college or postgraduate degrees) than employers will need, or 13 percent of the demand for such workers .. MORE
International Trade
Marco Rubio: Trade Agreements Are About Producers
One of the hardest ideas for non-economists to get is the idea that a government’s unilateral elimination of trade barriers create a net benefit for the people in the country whose government makes the unilateral move. I pointed this out in a “What Clinton and Gore Don’t Say,” Fortune, May 1, 2000. Here’s an excerpt: .. MORE
Business Economics
The Case for a Strong Government Auditor
In an essay, I write, An independent auditor has some obvious potential problems. On the one hand, it could be ineffectual if it turns out to be weak relative to the independent agencies, or captured by them. On the other hand, it might become too powerful, evolving into a sort of super-agency itself. Finally, it .. MORE
Economic and Political Philosophy
Friday Night Video: Greed Is
This is one of the best of Milton Friedman, all in 2.4 minutes. He’s not saying greed is good. He’s saying greed is. The big question is which institutions harness that greed for good outcomes.
Cross-country Comparisons
Final Reply to Ridley
Matt Ridley once again graciously responds in the comments. Our differences appear to have largely evaporated. Ridley’s in blockquotes, I’m not. But your challenge mistakes my argument. I have not argued that there is no positive correlation of innovation with population, only that, as population size increases, population size alone will become a diminishing influence .. MORE
Books: Reviews and Suggested Readings
I Come Cheap
1. via 99-cent e-book: Not What They Had in Mind. I am still proud of this analysis of the financial crisis. Of course, if you want to get it even cheaper, you can download it from SSRN. 2. as part of a $1.99 bundle of five papers on reforming America’s housing finance system. Again, an .. MORE
Money and Inflation
Anna J. Schwartz, RIP
Anna J. Schwartz, who co-authored A Monetary History of the United States, 1876-1960 with Milton Friedman, died today. She was 96. Their book was a tour de force. They spent years on it in the late 1950s and early 1960s. I remember one of my professors, the late Robert Clower, telling a class that when .. MORE
Monetary Policy
Steve Chapman Publicizes My Bet
In his column in the Chicago Tribune today, Steve Chapman publicizes my inflation bet with Bob Murphy: Inflation hawks have been predicting a severe outbreak for years. But David Henderson, an economist at Stanford University’s Hoover Institution and the Naval Postgraduate School, has been skeptical enough to put his money where his mouth is. In .. MORE
Economic Growth
Rejoinder to Ridley on Innovation and Population
Matt Ridley graciously replies to my critique of his Julian Simon Award Lecture in the comments. Ridley’s in blockquotes, I’m not: First, I know of a lot of people who are not conventionally clever but who contribute to innovation by making tiny tweaks to machines or routines. That’s very much my point, that innovation is .. MORE
Fiscal Policy
A Fiscal History Lesson
The Hoover Institution’s on-line publication, Defining Ideas, has published my article, “A Fiscal History Lesson.” In it, I retell the story that I told at longer length in my 2010 Mercatus study, “The U.S. Postwar Miracle.” Two highlight paragraphs: In a 2010 study for the Mercatus Center at George Mason University, I examined the four .. MORE
Books: Reviews and Suggested Readings
James Manzi on Stargazing
In a podcast with Russ Roberts, Manzi says, Is the number of stars in our galaxy odd or even? Well, there’s a real answer to that question. If you have a bunch of people yelling odd and a bunch of people yelling even, one of those two groups is right. But unless one of them .. MORE