EconLog Archive
Finance: stocks, options, etc.
Question for Sumner
Forbes provokes Sumner to don the robes of hanging judge for the hypocritical right: If Forbes is right, and the markets are made up by a bunch of fools, then why not go with socialism? Here’s what I think is really going on. The right has a political agenda. When the stock market agrees with .. MORE
Macroeconomics
Distinguishing Recalculation from Aggregate Demand
Tyler Cowen writes, We’re also seeing job losses in virtually every sector. It’s not for instance a “sectoral shift away from services and into matchstick production and tungsten.” It’s a shift out of jobs which are revealed as unprofitable and a lot of people not knowing where the new jobs will be created. If someone .. MORE
Central Planning
Easterly Contra Galbraith
Back in the sixties, Galbraith famously argued that East and West were converging. The East had government central planning. The West had corporate central planning. Same difference, right? In his interview with Arnold and Nick, Bill Easterly begs to differ: [T]he metaphor of the large corporate hierarchy has led to a lot of misunderstanding about .. MORE
Books: Reviews and Suggested Readings
MRV watch
Bryan’s Myth of the Rational Voter was #3 on a list of the top ten pro-liberty books of the decade, as selected by a panel of 22 advocates of classical liberalism. Two of Bill Easterly’s books made the list. Pointer from Tyler Cowen. I have read four out of the top five, and I have .. MORE
Energy, Environment, Resources
The Gist of Julian Simon
In a comment on Bryan Caplan’s post today, Steve asks: Could someone please provide a distillation of Simon’s work? The link is to his website, where all I can find is a list of published papers. I gave such a distillation in my tribute to Simon (http://www.davidrhenderson.com/articles/0698_inmemoriamjuliansimon.html) in June 1998, four months after his death. .. MORE
Books: Reviews and Suggested Readings
You Should Read FP2P
Or so says Yuval Levin. I just can’t recommend it enough. It’s a deeply insightful look at where economics is going and why that should matter to us. We also get a plug from economics instructor Brooks Wilson.
Economic Growth
Various Follow-ups
These relate to recent discussions on this blog. 1. Clifford Winston and Robert Crandall on market failure and government failure, from Forbes last October. 2. A review of an optimistic book by Gregg Easterbrook. Mark Perry ties this back to FP2P. 3. Bill Easterly connects the dots between government failure and the underwear bomber. 4. .. MORE
Economic and Political Philosophy
An Alibertarian Case for Reproductive Laissez-Faire
Libertarians often highlight “the right to do wrong.” We are often morally obliged to tolerate the wicked and foolish behavior of others. A quote wrongly attributed to Voltaire beautifully captures the intuition: “I disapprove of what you say, but I will defend to the death your right to say it.” Fruitful as this insight is, .. MORE
Economics and Culture
How Free Markets Make Bad Behavior Costly
Although she [Ayn Rand] was normally generous in her responses to general audiences, NBI [Nathaniel Branden Institute] students were held to higher standards. Rand was likely to denounce anyone who asked inappropriate or challenging questions “as a person of low self-esteem” or to have them removed from the lecture hall. In front of journalists she .. MORE
Economics of Education
Another Reason to Get an Econ Ph.D.
Bruce Charlton says that the hard sciences just aren’t fun anymore. The system now rewards workaholism and subservience a lot more than creativity: Modern science is just too dull an activity to attract, retain or promote many of the most intelligent and creative people. In particular the requirement for around 10, 15, even 20 years .. MORE
Cross-country Comparisons
Why Were American Econ Textbooks So Pro-Soviet?
When I was in Econ 1, we actually used the infamous 1989 Samuelson text – the one that said, “the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.” So I was delighted when my colleague David Levy and his co-author Sandra .. MORE
Political Economy
Market Failure and Government Failure, Again
In the Christian Science Monitor, Nick Schulz and I write, When innovation-driven excesses and imbalances are recognized in the marketplace, the system can correct itself quickly. This is less the case when government policy failure occurs. The theme is that when markets go wrong, government is not necessarily the solution. Too bad we did not .. MORE
Fiscal Policy
How Big a Spender Was Bush II?
Compared to all presidents, 1952-2008, here’s Bush II’s record: Measure #1: Annual Change in Total Real Spending: 4.9% – second only to LBJ Measure #2: Annual Change in Total Real Spending, not counting interest on the federal debt: 4.6% – second only to LBJ Measure #3: Annual Change in Total Real Non-Defense Spending, not counting .. MORE
Fiscal Policy
Stimulus Without Multipliers
Paul Krugman provides an analysis showing arithmetically that the fiscal stimulus will have a declining contribution to GDP growth, even as stimulus spending increases. What is interesting to me about this analysis is that the concept of a multiplier has completely disappeared. If you believe in a multiplier, then as far as stimulus goes, the .. MORE
Political Economy
Market Failure and Government Failure
That is the topic of a self-recommending podcast in which Russ Roberts interviews Clifford Winston. Actually, although I have not had time to listen (I am on travel), reading over the notes on the podcast highlights this looks like one of the top podcasts in Roberts’ series. One point I would make is that when .. MORE
Regulation
Democratic Fundamentalism and The Baby Business; or, Debate? We Don’t Need No Stinkin’ Debate!
Deborah Spar’s The Baby Business is, by far, the best overview of the cutting-edge technology and sociology of having babies. If you want to learn about in vitro fertilization, surrogacy, cloning, and international adoption, Spar’s book is a one-stop shop. Unfortunately, she is also a caricature of a democratic fundamentalist. Although she describes many horrifying .. MORE
Economic Growth
Northian Pessimism in FP2P
Doug North has never sounded wiser or clearer than he does in his interview with Arnold and Nick. North’s concluding statement is the highlight for me: I’m moderately pessimistic about the future of the world… What particularly bothers me is that the world is evolving more rapidly now than it ever did before. The degree .. MORE
Central Planning
Failure to “Get” Hayek
When I teach my Ten Pillars of Economic Wisdom, I tell a story to illustrate part of Pillar Five, “Information is valuable and costly, and is inherently decentralized.” The part this illustrates is the “inherently decentralized” part, which I owe to Hayek’s “The Use of Knowledge in Society.” I won’t tell the whole story here, .. MORE
Economic and Political Philosophy
The Intellectual Propertarian/Environmentalist Analogy
Stephen Kinsella offers an analogy to offend two disjoint movements in one swoop: I would love to see libertarian IP advocates have to live in a world that truly implemented their IP views fully, consistently–it would be like a communist USSR stripped of its power to ape Western price structures, to ameliorate the effects of .. MORE
Regulation
FP2P Quip of the Day
From Arnold and Nick: “In many poorly governed countries, ordinary businesses are as tenuous as drug-dealing in the United States.”
Behavioral Economics
Hmmm
In Rand’s study…There were more than two hundred grocer’s cartons, each divided into sections and filled to the brim with colored stones Rand had collected and sorted. This is from Anne C. Heller’s biography of Ayn Rand. Based on reading Tyler Cowen’s Create Your Own Economy, I would view this stone-sorting behavior as a symptom .. MORE