EconLog Archive
Social Security
Social SecurityAnalysis
The 2004 Economic Report of the President also discusses Social Security. One issue is measuring the Social Security shortfall. Most economists reject the so-called “actuarial shortfall” as a measure. One alternative is the Gokhale-Smetters present value estimate. The 2004 Economic Report comes up with its own measure. The income rate is the total amount of .. MORE
Fiscal Policy
Who Bears the Tax Burden?
The 2004 Economic Report of the President contains a chapter on tax incidence. the person who is legally responsible for paying the tax may not be the one who actually bears the burden of the tax…the incidence of a tax depends upon the law of supply and demand, not the laws of Congress. …Many observers .. MORE
Labor Market
Immigrant Labor Market Issues
Caitlin Flanagan’s cover story (as of this writing, not yet on line) for the March issue of The Atlantic Monthly is on the crucial role played by female immigrant workers in the “have-it-all” lifestyle of professional women with children. one of the noblest tenets of second-wave feminism collapsed like a house of cards. The new .. MORE
Income Distribution
Income Redistribution Proposals
The Chronicle of Higher Education discusses a number of income redistribution proposals. For example, Edmund Phelps has suggested a government wage subsidy for low-wage workers. Mr. Phelps argues that his plan — which, in his view, should entirely replace the welfare and food-stamp programs — would draw hundreds of thousands of discouraged workers into the .. MORE
Energy, Environment, Resources
Environmentalist Forecasting Model
My view of environmentalists is that they use the fixed-coefficients production function for long-term forecasting. Thus, they ignore substitution and technological change. Ronald Bailey reviews the many mistaken predictions based on this methodology. For example, For the first Earth Day in 1970, Ehrlich, in an article entitled “Eco-Catastrophe” in The Progressive magazine, offered a scenario .. MORE
Behavioral Economics
Collective vs. Individual Benefits
I have a new essay that argues that we over-estimate the value of collective benefits. Contrary to my training as an economist, I believe that at least some of the preference that workers have for in-kind benefits reflects flat-out irrationality. Even without tax arbitrage (and, after all, something like half the population pays no income .. MORE
International Trade
Cost-of-Living Arbitrage, II
I received a lot of pushback on my earlier post. Comments and email have pointed out that (a) the cost of living really is five times lower in India and (b) Indian expatriates are indeed moving back home to take advantage. Some links: Columnist Rajeev Srinivasan writes, a salary of about $20,000 in India — .. MORE
Economic Growth
Nanotechnology and the Great Race
I once wrote an essay that I called The Great Race, in which I argued that two factors that affect the future are technological change in the private sector and the growth of entitlement spending. Many posts in this blog have focused on entitlements. I focus less here on technology. But several recent articles on .. MORE
Economics of Health Care
Regulation and Industry Structure
Milton Friedman argues that the drug-approval process is the problem. On the drug side, what seems to me to be the most serious situation is the extent to which the Food and Drug Administration makes it extremely expensive to produce a drug, and you can understand why. The FDA is required by law to certify .. MORE
Cross-country Comparisons
Cost-of-Living Arbitrage
An engineer from India emails me, The purchasing power parity in India is 5 compared to USA – a 20000 $ programmer in India is actually making 100,000 $ in terms of his spending power. …an average programmer in India lives the same life-style as an average US programmer now – in many ways better .. MORE
Information Goods, Intellectual Property
Intellectual Property
Here are some interesting comments on intellectual property that have appeared recently. Lawrence Lessig defends drug patents. I don’t know if the alternatives would be better – I don’t believe patents are bad in every case. But I do know that if there is one place where the benefits from patents seem to outweigh the .. MORE
Economic Growth
Who Should Own Iraq’s Oil?
Alex Tabarrok writes (it’s short, so I’ll quote the whole thing, except for links), The U.S. is no longer pushing privatization of the Iraqi oil industry primarily because the Iraqi’s presently in control don’t want it privatized for “nationalistic” reasons. This is bad news for the Iraqi people. Even putting aside bold plans for returning .. MORE
International Trade
Outsourcing
It’s the topic du jour. Here is Dan Pink’s story for Wired. A century ago, 40 percent of Americans worked on farms. Today, the farm sector employs about 3 percent of our workforce. But our agriculture economy still outproduces all but two countries. Fifty years ago, most of the US labor force worked in factories. .. MORE
Finance: stocks, options, etc.
Finance and Macroeconomics
Tyler Cowen recommends two articles by Perry Mehrling on the relationship between the theory of finance and monetary theory/macroeconomics. One of the articles is a nice summary of the work of Fischer Black. What Black did was to conceive of the assets not as financial assets but as real assets, which moreover arise endogenously because .. MORE
Revealed Preference
European Scientists and America
Do European elites hate America? Not if you judge on the basis of revealed preference. According to Time, No amount of funding can buy a culture of competitiveness. And if researchers don’t see opportunities for reward, they’ll take their talent to the States, where innovation and hard work are rewarded with generous grants, full credit .. MORE
Economic Growth
Ethics as Infrastructure
Will Wilkinson argues that ethics are an important part of economic infrastructure. At bottom of both well-functioning markets and states are norms of behavior that dispose people to cooperate, to keep agreements, and to recognize and respect claims to property and a certain degree of personal autonomy. These norms are the ultimate public goods, and .. MORE
Income Distribution
Poverty and Income Distribution
Robert E. Rector and Kirk A. Johnson offers some interesting facts concerning poverty in the United States, including Forty-six percent of all poor households actually own their own homes…The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe… Overall, the typical American .. MORE
International Trade
Fine-tuning Immigration
Two articles today discuss economic ideas for fine-tuning immigration policy. James Miller writes, The guest worker program should allocate visas to communities and then permit each community to decide how many of their visas to issue. For example, if Northampton, MA received fifty visas but wanted only twenty guest workers, the town would not be .. MORE
Social Security
Social Security Privatization
In this piece, I argue that the “transition cost” argument against privatizing Social Security is bogus. I also make my usual case against what I call the Stock Market Scenario. Finally, I conclude by saying that privatization is the ultimate lockbox. The real benefit of Social Security privatization is never discussed by either side in .. MORE
Austrian Economics
Government vs. Private Debt
A reader points to a fresh post on the Mises.org web site of a decade-old piece by Murray Rothbard arguing that the Federal government should not be allowed to create obligations for future taxpayers. One solution he proposes: I would advocate going on to repudiate the entire debt outright, and let the chips fall where .. MORE
International Trade
Roll Over, Ricardo
That was the title I wanted for this essay on comparative advantage, which pulls together several ideas that I first trotted out on this blog. The essay is lengthy. Here is a short excerpt: To see why trade balance is an equilibrium condition, imagine a barter economy. In a barter situation, in order to pay .. MORE