EconLog Archive
Economic Growth
From Galbraith to Spitzer
In an essay on the past and present positions of those who advocate big government, I write, The view that only large industrial enterprises matter seems preposterous now. If Galbraith had been right, then the industrial structure of the 1960’s would still exist today. Instead of what Alvin Toffler in 1980 called the “third wave,” .. MORE
Behavioral Economics
Rational Decisions and Pharmaceutical Regulation
Today’s Washington Post contains another op-ed piece by a physician, and of course he is in favor of price controls on prescription drugs. The pharmaceutical industry will intone its familiar mantra: The cost of drugs is a relatively small percentage of total health care costs; innovation requires investment; research-based companies need to realize an adequate .. MORE
Economic Education
Future of Education
I speculate on the future of education. The first ongoing trend, one that affects the demand for education, is rapid technological change. As the pace of change continues, or even accelerates, it causes all human capital to depreciate more rapidly. …The second ongoing trend, one that affects the supply of education, is progress in cognitive .. MORE
Cross-country Comparisons
U.S. vs. Europe
Steve Antler points to a study by Fredrik Bergström & Robert Gidehag of various indicators of prosperity in the U.S. relative to countries of the European Union. Most Americans have a standard of living which the majority of Europeans will never come any where near. The really prosperous American regions have nearly twice the affluence .. MORE
Economics of Health Care
Medicare Proposal
Laurence Kotlikoff suggests this. All Medicare participants would receive individual-specific vouchers on October 1st of each year to purchase insurance coverage for the following calendar year. The size of the voucher would be based on the participant’s current medical condition (an idea first suggested by Peter Ferrara of the Institute for Policy Innovation and John .. MORE
Energy, Environment, Resources
Run Out of Oil?
George Will quotes Cafe Hayek’s Russ Roberts’ pistachio example. Of course, oil supplies are, as some people say with a sense of profound discovery, “finite.” But that distinguishes oil not at all from land, water or pistachio nuts. Russell Roberts, an economist, says: Imagine that you love pistachio nuts and are given a room filled .. MORE
Social Security
Inappropriate Annuities
Are annuities appropriate for the elderly? The Securities and Exchange Commission and the National Association of Securities Dealers say not necessarily. The SEC also today issued an alert to remind investors that variable annuities are not suitable for all consumers, especially investors who need the money in the short term or who borrow against their .. MORE
Economic Growth
Lucas on Growth
Robert E. Lucas, Jr. (Nobel, 1995), sounding much like Brad DeLong, gives a historical overview of economic growth which is Malthusian up until around 1800 (meaning that population growth ate up, so to speak, increases in production), followed by a steadily increasing standard of living. The theory Lucas uses to tie together these two disparate .. MORE
Fiscal Policy
Reagan’s Economics in Context
I decided to put my thoughts into a longer essay. When Ronald Reagan defeated Carter’s re-election bid, “incomes policies” were a proven failure. Notwithstanding Milton Friedman’s comments quoted above, by 1980 it took a lot less courage to stand by a monetary approach to disinflation than it did a decade earlier. I believe that Carter .. MORE
Energy, Environment, Resources
Ronald Reagan’s Economics
Jane Galt writes, High inflation was the result of a dozen years of bad fiscal and monetary policy under two Republicans — Nixon and Ford — and two Democrats — Johnson and Carter — that was brought under control only when Paul Volcker, the Carter-appointed head of the Federal Reserve, jammed interest rates up to .. MORE
International Macroeconomics
What Determines Exchange Rates?
Tyler Cowen meditates on the topic of exchange rates. I am headed back from Poland to France, for one more day in Europe. I cannot help but wince at the especially high prices in France, compared to the United States. You may recall my mention of the five dollar chocolate bar; at home I could .. MORE
Economic Education
Milton Friedman on health, education
In an interview, Milton Friedman explains why shifting education and health care from the market to the government is inefficient. There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to .. MORE
Economics of Health Care
Health Insurance Idea
Brad DeLong writes, now the Kerry campaign has dusted off and brought forward a very clever idea from Brandeis’s Stuart Altman…Have the government take its task of social insurance seriously, and reinsure private insurers and HMOs: construct a ‘premium rebate’ pool to pay annual health-care bills over $50,000. In effect, the government would offer catastrophic .. MORE
Energy, Environment, Resources
Gas Tax Debate
David Ignatius is pro: The best plan I’ve seen for doing the politically impossible comes from an energy economist named Philip Verleger. …Verleger favors what he calls a “prospective gasoline tax,” which would allow the country four years to get ready to do the right thing. Congress would enact a stiff tax of $2 per .. MORE
Economic Growth
IQ and Living Standards
Randall Parker sent a link to a cross-country comparison of GDP per capita and the percent of the population with verbal IQ’s above 106. The equation fit very well, which led me to wonder how such a model could explain the low income of Communist countries. The article includes this note. We can reduce some .. MORE
Economic Growth
Innovation, Business Behavior, and Education
William Baumol compares the innovation strategies and results of large firms with those of small entrepreneurial firms. most private sector expenditure on research and development is attributable to very large corporations. These corporations are prime employers of scientists and engineers, personnel characteristically highly educated and technically erudite. But, despite this concentration of knowledge, talent, and .. MORE
Monetary Policy
Bond Market Vigilantes
If interest rates are the measure of monetary policy, then we have already seen a strong tightening. For example, since late March, the yield on the 10-year Treasury note — a critical interest rate since it’s the basis for mortgage rates — has jumped a full percentage point. That sentence appears right next to a .. MORE
Economic Growth
Jobs, Progress, and Displacement
Bruce Bartlett pointed to a Dallas Fed analysis of the causes and consequences of higher productivity. One of the sections, on the evolution of work, says The United States will continue to move up the hierarchy of human talents as it becomes more productive. Fewer jobs at relatively lower pay will be available for those .. MORE
Energy, Environment, Resources
Oil Reserves and Backwardation
I summarize my thinking about the Strategic Petroleum Reserve in an essay. I am not persuaded that the “convenience yield” of the SPR justifies its costs. However, even if it does, I believe it makes sense to have a rule that ties the amount of oil we hold in the SPR to the pattern of .. MORE
Cost-benefit Analysis
Wiretapping Costs and Benefits
In my latest essay, I argue that the costs of wiretapping are going up, while the costs of alternative surveillance technologies are going down. With ordinary phone service, wiretapping is nearly impossible to prevent. Regardless of what equipment the phone user employs, once an agency has access to the phone line, it can tap the .. MORE
Labor Mobility, Immigration, Outsourcing
Demographics
The International Economy Magazine collects twenty opinions on the issue of demographic change in one issue. For example, Michael Boskin writes, The United States is in far better shape to deal with these issues than the bulk of the developed world. Our fertility rate is near replacement and we are less hostile to immigration than .. MORE