EconLog Archive
Regulation and Subsidies
The Minimum Wage
Why oh why can’t we have a Brad DeLong who will put the adults in charge of the clown show that is John Kerry’s campaign? (For those of you who do not read DeLong, I am borrowing his anti-Bush tropes) Don Boudreaux writes Proposals, such as Kerry’s, to raise the minimum wage modestly will cause .. MORE
International Macroeconomics
The Balance of Saving
Should we worry about what I call the Balance of Saving (our trade deficit)? Don Boudreaux says no. Why should I care if new enterprises are financed out of the savings of a stranger from South Dakota rather than out of the savings of a stranger from South Korea? For Discussion. Try the same sentence, .. MORE
Finance: stocks, options, etc.
Housing P/E’s
Ed Leamer’s analysis of home prices in the San Francisco Bay area is summarized. His findings: In the Bay Area, the average P/E for a house shot up to 13. 8 in the first quarter of 2004, compared with 7.2 in 1999 and 2000. Today’s ratio is more than a third higher than it was .. MORE
Economic Growth
Moore’s Law for Storage
Tyler Cowen points to a historical timeline of the cost of data storage on hard disk drives. According to the timeline, the cost fell below $100 per megabyte in May of 1984. It fell below $1 per megabyte ten years later, meaning that it fell by a factor of 100 over that period. That means .. MORE
Economic and Political Philosophy
Economists’ Assumptions
Donald J. Boudreaux writes, What about the assumption of self-interest? It, too, is equally inoffensive. All that economists need to be true on this front is that each person generally cares more about himself, his loved ones, and his friends than he cares about strangers. Economic theory does not require that each individual care exclusively .. MORE
Social Security
The Economics of Immortality
Aubrey de Grey reviews a Brookings volume on the economics of increased longevity. Aubrey has a more optimistic vision than the authors. rejuvenation research…will anticipate and remedy the life-threatening degenerative changes appearing at newly achieved ages with ever-increasing efficacy and lead time. This will bring about the greatest economic change of all in society: the .. MORE
Income Distribution
Tax Cuts for the Rich
Philosopher Keith Burgess-Jackson dissects the phrase. Nobody, to the liberal, has a valid claim on anything, even his or her talents. Those who produce or acquire wealth do so not because of effort, initiative, creativity, or sacrifice. They’re just lucky. They were born healthy and into loving families. Others are unlucky. They were born unhealthy .. MORE
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