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Social Security

The Deficit Argument, V

By Arnold Kling | Mar 16, 2003

David Warsh gives one of the more sober overviews of the debate over tax cuts, the deficit, and Social Security. There are two basic issues in US tax policy — the question of the size of government and the health insurance/pension problem. …During the 1990s, the federal share of GDP climbed steadily from its thirty-year .. MORE

Public Choice Theory

Public Transit and Public Choice

By Arnold Kling | Mar 13, 2003

Here is Public Choice theory boiled down to three sentences, by‘Jane Galt’. The liberal mantra is that the market fails. The free market mantra is that government fails worse. And I think the weight of empirical evidence is on our side. For example consider urban rail transit subsidies. Rachel DiCarlo concludes, when it comes to .. MORE

Trade Barriers

Comment of the Week, 2003-03-13

By Arnold Kling | Mar 13, 2003

The topic of the World Population Outlook leads to the issue of immigration. David Thomson made this point. We need to educate these people so that they can become productive citizens. Will this encourage more Mexicans and others to break our national laws and sneak across our borders? If so, that’s the price we must .. MORE

Information Goods, Intellectual Property

Anti-anti-economics

By Arnold Kling | Mar 13, 2003

In Suits and Geeks, I discuss some information-age economic issues. As Carl Shapiro and Hal Varian wrote, “Technology changes. Economic laws do not.” My essay concludes, My goal is to see ignorance reduced on both sides of the Suit-Geek divide. Suits who are ignorant of the Internet ultimately do a disservice to the businesses whose .. MORE

Behavioral Economics

Economic vs. Non-economic Savings Incentives

By Arnold Kling | Mar 13, 2003

Hal Varian compares the potency of two types of incentives to save. One incentive is a tax break for savings. The other is a non-economic incentive, in which it becomes easier for an employee to sign up (or harder not to sign up) for a savings plan. For the latter, he cites research from James .. MORE

Growth: Consequences

Growth and Anti-Americanism

By Arnold Kling | Mar 12, 2003

Marian L. Tupy writes, If I am correct, then at least some of the roots of contemporary anti-Americanism rest on a deep misunderstanding concerning the functioning of international economics. Contrary to common misconception, the reasons for global economic inequality rest on a local level. They include the lack of rule of law, lack of respect .. MORE

Macroeconomics

Israel’s Public Sector

By Arnold Kling | Mar 12, 2003

Israel is an example of a country where there is a need to confront government spending. The cooperation of the public sector is essential to the success of an economic plan to cut spending, said Treasury wage director Yuval Rachlevsky on Tuesday. …”The only way of getting the economy out of the quagmire is by .. MORE

Economic Growth

World Population Outlook

By Arnold Kling | Mar 11, 2003

Ben Wattenberg analyzes the world population outlook. In the United Nations’ most recent population report, the fertility rate is assumed to be 1.85, not 2.1. This will lead, later in this century, to global population decline. He points to a number of economic effects of this drop in fertility, including challenges with funding retirement benefits .. MORE

Supply-side Economics

Supply-side Dissatisfaction, II

By Arnold Kling | Mar 10, 2003

N. Gregory Mankiw, incoming chairman of the President’s Council of Economic Advisers, continues to take flak from supply-siders. In this essay, I discuss the latest attack, from The Wall Street Journal’s Susan Lee (subscription required). Her objection to Mankiw is current. She complains that “his best-selling textbook argues that deficits or government debt pushes up .. MORE

Trade Barriers

Trade War?

By Arnold Kling | Mar 7, 2003

The WindsofChange blog asks, will the foreign-policy rift over Iraq spark a trade war between the U.S. and other countries? Indeed, a long term French campaign to introduce retaliatory and anti-USA tarrifs in the EU strikes me as not only likely, but probable. As an economist, I would say that of all the ways to .. MORE

Macroeconomics

Central Bank Timidity

By Arnold Kling | Mar 7, 2003

Morgan Stanley’s Steve Roach writes about the timidity of the European Central Bank. Incrementalism doesn’t work in combating deflation. That was one of the key lessons that the research staff of the Federal Reserve drew in a widely noted paper published last year…Yet that’s precisely the approach now being followed by the ECB. The 25 .. MORE

Macroeconomics

Comment of the Week, 2003-03-06

By Arnold Kling | Mar 6, 2003

Jim Glass cited an essay by Eugene Steuerle called Do We Really Need More Stimulus? The total decline in fiscal posture for 2003 alone comes to around $500 billion. Compare this to the size of the economic decline…the total decline from the beginning of 2001 to the end of 2002 might be about 2 to .. MORE

Macroeconomics

Feldstein for Fiscal Stimulus

By Arnold Kling | Mar 5, 2003

Martin Feldstein, writing in the Wall Street Journal (subscription required), makes the case for fiscal stimulus. The shift of the cyclically adjusted federal budget from a $108 billion surplus in 2001 to a $117 billion deficit in 2002 added $225 billion to aggregate demand last year, helping to achieve the 2.7% GDP growth. The Congressional .. MORE

Economic Growth

The Language Barrier, II

By Arnold Kling | Mar 5, 2003

The Economist notices that the English language is gaining in importance. This trend was spotted earlier by yours truly, and before that by Paul Krugman. Brad DeLong echoes my view that the use of English by India’s educated elite is likely to reinforce the position of English as the dominant language for international commerce.

Microeconomics

Economics of Obesity

By Arnold Kling | Mar 4, 2003

Economists Shin-Yi Chou, Michael Grossman, and Henry Saffer attempt to weigh in on the issue of why obesity is spreading. These data show that more household time is going to market work. There is correspondingly less time and energy available for home and leisure activities such as food preparation and active leisure. The increases in .. MORE

Efficient Markets Hypothesis

Inefficient Market?

By Arnold Kling | Mar 2, 2003

If you believe in efficient markets, then you should be very skeptical of the rest of this post. Ohio State’s J. Huston McCulloch, a leading authority on bond pricing, said on 2003-01-31, Frankly, stocks are so reasonably priced relative to earnings at present, and real rates on TIPS [inflation-index Treasuries] are now so low, that .. MORE

Supply-side Economics

Supply-side Dissatisfaction

By Arnold Kling | Feb 28, 2003

Some folks are reportedly bitter about the appointment of Greg Mankiw to succeed Glenn Hubbard as Chairman of the Council of Economic Advisers. N. Gregory Mankiw, whom Mr. Bush nominated on Wednesday to lead his Council of Economic Advisers, wrote a popular economics textbook in which he ridiculed the supply-side tax cuts of President Ronald .. MORE

Game Theory

Comment of the Week 2003-02-27

By Arnold Kling | Feb 27, 2003

This week, I give the award to this comment by Zimran. Talking about the issue of airline profitability, he writes in part the airline industry also has perennial over capacity. Companies may enter and exit the market, but the planes never leave. It is this that puts downward competitive pressure on prices, not the high-fixed .. MORE

Energy, Environment, Resources

Economics for Environmentalists

By Arnold Kling | Feb 26, 2003

At the fascinating Longbets web site, Robert A. Freling of the Solar Electric Light Fund makes this bet: By the year 2020 solar electricity will be as cheap or cheaper than that produced by fossil fuels I wish that environmentalists knew basic economics. In a free market, the price of electricity is the same regardless .. MORE

Game Theory

The Airline Union Game

By Arnold Kling | Feb 25, 2003

‘Jane Galt’ gives an explanation for airline bankruptcies . In single-union negotiations, money left on the table now can be partially reclaimed by demanding higher wages in the next round of negotiations. Not so with multi-lateral arrangements. Any money left on the table by one union will be picked up by another one, since negotiations .. MORE

Social Security

Milton Friedman on Social Security

By Arnold Kling | Feb 25, 2003

My choice for last week’s comment of the week generated a lot of comments! It refers to this article by Milton Friedman, who describes a conceptual scheme for transitioning out of Social Security. Based on the comments, I can tell that people are challenged by Friedman’s idea. Let me try to explain it. Suppose that .. MORE