EconLog Archive
Macroeconomics
Employment Forecasting
I argue that criticizing the Administration’s employment forecasts is hypocritical. suppose you were to do a blindfold test. Give an economist the actual output growth of 7.8 percent over three years (roughly 2.5 percent per year) and ask the economist to “predict” the breakdown between growth in employment and growth in output per person. Almost .. MORE
Behavioral Economics
eBay, Fun, and Social Waste
David Weinberger has some thoughts about eBay. I’ve lost bids to auction snipers. As a customer, I feel cheated, even though, of course, I could take a sniper’s eye-view of the transaction. Even if letting robots game the auction doesn’t affect the integrity of the marketplace, they sure take the fun out of it. And .. MORE
Economic Education
Red Sox Technologies
What do you call a technology that looks promising but always lets you down? In this essay, I point out that one example is micropayments. Another example, I argue, is virtual classrooms. Most web-based education software seems designed to enable a teacher to make course materials, such as lectures, accessible by computer. However, if access .. MORE
Labor Market
The Two Employment Surveys, Again
Robert Barro tosses in his $.02 about the divergence between payroll and household employment growth: since the peak of payroll employment in March 2001, household employment has risen by 700,000, while payroll has fallen by 2.4 million, so that household did better by 3.1 million. A less well-known fact, also shown in the graph, is .. MORE
Behavioral Economics
Why Are Saving Rates Declining?
Robert Shiller thinks that people ought to be saving more. According to a recent study by the Organization for Economic Cooperation and Development (OECD), household saving rates declined between 1984 and 2001 in Australia, Austria, Belgium, Canada, Finland, Italy, Japan, Korea, New Zealand, Portugal, Spain, the United Kingdom, and the United States. In some countries, .. MORE
Fiscal Policy
Jobs and Tax Cuts
Noam Scheiber argues that the Bush tax cuts in fact were stimulative. Liberals in Congress and at places like the Economic Policy Institute complain that the Bushies should have targeted the bulk of their tax cuts toward the working poor and middle class, who were more likely to spend their tax savings than more affluent .. MORE
Labor Market
Measuring Employment
Tim Kane has written a timely paper on the behavior of the payroll survey, which is the source of data showing disappointing employment numbers. The key point is this: The payroll survey double-counts any individual who changes jobs during the pay period in which the worker is on two payrolls. Such turnover overcounting would normally .. MORE
Macroeconomics
Recession Dating
There is a silly controversy concerning when the recession began. The White House has argued revisions last year to economic data meant the fourth quarter of 2000 would be more accurate, a change that would shift the start of the downturn from the presidency of Bush to that of his predecessor Bill Clinton. What we .. MORE
International Trade
Economists as Heretics
In this essay, I argue that Congress treats economists the way the Inquisition treated heretics. Why do the Inquisitors have it in for economists? Ultimately, politicians tell the people what we want to hear. They think that we want to hear that we are too feeble and victimized to cope with global competition. They think .. MORE
Macroeconomics
Keynesians and Monetarists
I turn out to be more Keynesian than Brad DeLong, at least in an old-fashioned sense. In a long and interesting post, Brad DeLong finds little difference between new Keynesians and monetarists. The former he describes as believing in five propositions. –The key to understanding real fluctuations in employment and output is to understand the .. MORE
Fiscal Policy
The Budget Outlook
Niall Ferguson and Laurence Kotlikoff paint a dire picture of the fiscal outlook in the U.S. Much of the material is a recital of the prospects for Social Security and Medicare, with which readers of this blog are familiar. One insight that was new to me was this: During the Clinton Administration, the CBO routinely .. MORE
Economic Education
Academic Lock-in
In a polemic I wrote against academic tastes, I raise the question of why top universities remain successful. I suggest, The nation’s top-tier colleges benefit from network and lock-in effects. No single Ivy League undergraduate has the incentive to attend a start-up college, unless a large number do so simultaneously. In many industries in our .. MORE
Economic Growth
The European Outlook
Olivier Blanchard sees hope. In the United States, over the period 1970 to 2000, GDP per hour increased by 38%. Hours per person also increased, by 26%, so GDP per person increased by 64%. In France, over the same period, GDP per hour increased by 83%. But hours per person decreased by 23%, so GDP .. MORE
Finance: stocks, options, etc.
Greenspan’s Concerns
Federal Reserve Chairman Alan Greenspan tries taking on some sacred cows. In a logical assessment of the Social Security’s future financial condition, he suggested ways to curtail the growth in future benefits. The response was predictable Sen. Arlen Specter, R-Pa., called the suggestion ”outrageous, insipid, preposterous” and ”the worst idea I ever heard of.” On .. MORE
International Trade
Extreme Free Trade
What happens when you take free trade to extremes among states with uneven incomes? Virginia Postrel suggests looking at the fifty United States as an example. The United States is one giant free trade zone. Businesses can move their plants, investors can move their money and workers can move themselves from region to region without .. MORE
International Trade
Block that Free Lunch
Russell Roberts speculates on what might happen if Indian outsourcing really gets out of hand. suppose Indians decided to work for free and give away the software, the ultimate competitive threat. If outsourcing work to low-wage Indians is bad, surely free software from zero-wage Indians is even worse. Free software would be hard for the .. MORE
International Trade
Benedict Arnold Legislators
Walter Williams explains how sugar protectionism has caused candy manufacturing to be outsourced. the protectionist miracle that Congress has created for the sugar industry has cost anywhere from 7,500 to 10,000 jobs in sugar-using industries due to higher sugar costs. Higher sugar costs make U.S. candy manufacturers less competitive in both domestic and world markets. .. MORE
International Trade
Saving Jobs from Outsourcing
Stuart Anderson looks at the arithmetic of Indiana’s effort to save jobs from outsourcing. Out of 65 contract employees, Tata would have employed a number of Hoosiers through an Indiana-based subcontractor, but would also have used Indians currently employed by the firm…let’s assume that the Governor’s action leads to hiring an extra 50 people from .. MORE
Labor Market
Where are the Jobs?
Virginia Postrel thinks that the Bureau of Labor Statistics may be under-estimating employment. the bureau has missed more than 300,000 manicurists. It puts the total at around 30,000, compared with the count of 372,000 — up from 189,000 a decade ago — by Nails magazine, using private survey and state licensing data. Even if not .. MORE
Economics of Health Care
The High-Cost Producer
Alex Tabarrok points out how government ends up paying too much for pharmaceuticals. in some areas, Medicaid accounts for a large fraction of the market…In this situation it makes sense for pharmaceutical companies to raise prices – they lose customers in the private market but this is more than made up for by the increase .. MORE
Regulation and Subsidies
Cost of Sarbanes-Oxley
Stephen M. Bainbridge argues that the cost of regulations under the Sarbanes-Oxley law (SOX) enacted in the wake of the Enron scandal are too high. The SEC initially estimated § 404 compliance would require only 383 staff hours. According to a Financial Executives International survey of 321 companies, however, firms with greater than $5 billion .. MORE