EconLog Archive
International Trade
The Case for Free Trade
Three recent pro-trade articles of interest. First, Peter Gordon refers to some academic surveys in support of the benefits of globalization. Second, the Washington Post argues that the Democrats’ platform is too anti-trade. Finally, Joseph Stiglitz argues that international trade negotiations are too focused on issues that are important to rich countries, which leaves issues .. MORE
Behavioral Economics
Money and Happiness
Robert H. Frank writes, Considerable evidence suggests that if we use an increase in our incomes, as many of us do, simply to buy bigger houses and more expensive cars, then we do not end up any happier than before. But if we use an increase in our incomes to buy more of certain inconspicuous .. MORE
Economics of Health Care
Medicare History
John Lanius points out that in April of 1961, then-private-citizen Ronald Reagan warned, The legislative chips are down. In the next few months Americans will decide whether or not this nation wants socialized medicine . . . first for its older citizens, soon for all its citizens. The pivotal point in the campaign is a .. MORE
Growth: Consequences
Home Building Trends
One way to track the increased affluence in America is to look at the trends in new home construction. This research report from the National Association of Homebuilders is filled with interesting facts. For example, Some of the features that average home buyers want today used to be considered optional and were standard only in .. MORE
Austrian Economics
Incumbents and Government
What does government do? Austrian economists fear that government simply serves to protect incumbents. In a long, informative review of a book by Hans Herman-Hoppe, Andy Duncan writes, ask yourself if there are many large corporations in the US or large farming concerns, which would still be in business if not supported through subsidy, taxation, .. MORE
Growth: Consequences
Barbell Labor Market?
Frank Levy and Richard J. Murnane predict that computer automation is leading to a split in the labor market. Good jobs will increasingly require expert thinking and complex communication. Jobs that do not require these tasks will not pay a living wage. Thanks to David Warsh for the pointer. Every year, when I teach AP .. MORE
Economics of Education
Economics of Higher Education Subsidies
I discuss the economics of government subsidies to higher education. The end result is that even though government subsidizes higher education, and even though most economists believe that higher education enhances productivity, the government subsidies do not result in higher productivity. Simply throwing money at higher education has the effect of enriching the over-educated (faculty .. MORE
Regulation and Subsidies
Against Paternalism
Glenn Reynolds makes an articulate point about paternalism. Another — and it’s a lesson that policy wonks seem slow to learn — is that people other than policy wonks are capable of learning, and of changing their behavior on their own. Given the chance, and the information, they observe things that work and things that .. MORE
Regulation and Subsidies
Technology Innovation vs. Government
Two op-eds today on the issue of technological innovation and government’s response. In the Wall Street Journal, former Intel Vice President Les Vadasz writes, The problem with the “Induce bill” is not its intent, but its overly broad language: Any person or device that “aids, abets or induces” the sharing of copyrighted material would be .. MORE
Economics of Health Care
Health Care
My latest essay is on health care policy. America’s health care system has many flaws. However, the solution is not to enlarge government’s role. What I would like to see is a role for government in health care that is streamlined, rationalized, and bounded. I call this approach “limited paternalism.” I call for shrinking the .. MORE
Public Choice Theory
Rent and Rent-Seeking
Edward Lotterman talks about Ricardian rent and rent-seeking. The U.S. government subsidizes cotton production to the tune of some $3 billion per year. Virtually all the subsidy flows to fewer than 30,000 cotton farmers. At some $100,000 per producer, cotton is the most heavily subsidized of the major U.S. agricultural commodities. …As Ricardo would have .. MORE
Macroeconomics
Interest Rate Debate
Brad DeLong argues, There is a 5m-worker gap between household-survey employment today and what it would be if the employment-to-population ratio were at its average level for 2000. This suggests that we are extraordinarily far from anything that could be called “full employment” – and that an appropriate monetary policy would be one that permitted .. MORE
Energy, Environment, Resources
An Energy Internet?
Richard Smalley writes, Consider, for example, a vast interconnected electrical energy grid for the North American continent. By 2050 this grid will interconnect several hundred million local sites. There are two key aspects of this future grid that will make a huge difference: massive long-distance electrical power transmission, and local storage of electrical power with .. MORE
Growth: Consequences
Improved Standard of Living
In my latest essay, I argue against the view that life is getting harder for all but the rich. In the 1970’s, ordinary working people drove Vegas and Pintos. They did not eat out much. They rarely traveled by airplane. Many of their jobs were dangerous. Do you really think that there are many working .. MORE
Economic Growth
The Success of Failure
Virginia Postrel cites the research of McKinsey’s William L. Lewis on international differences in productivity growth. Food processing in Japan, Mr. Lewis writes, “has more employees than the combined total of cars, steel, machine tools and computers,” or about 11 percent of all manufacturing workers. While Japan’s fiercely competitive auto industry is the most productive .. MORE
Efficient Markets Hypothesis
The Wisdom of Crowds?
Are “predictions markets” more effective than other mechanisms at making forecasts and decisions? This issue has been given a lot of publicity, starting with a now-scotched proposal to set up a terrorism futures market. Professor Bainbridge weighs in. As for whether such markets will “revolutionize corporate forecasting and decision making,” as GMU economist Robin Hanson .. MORE
Cross-country Comparisons
Hours Worked In the U.S. vs. Europe
The OECD looks at total hours worked in its member countries. The performance of US labour markets also looks quite strong when assessed in terms of hours worked per capita, a more comprehensive measure of “labour utilisation” than the employment rate. Per capita hours fell during 1970-2002 for most OECD countries and by over 20% .. MORE
Economic Growth
More on the Productivity Story
The Fed’s Roger W. Ferguson speculates on the sustainability of recent high productivity growth. Ferguson and William Wascher’s article on the subject just appeared in the Journal of Economic Perspectives. The article says, Productivity booms seem to involve four key ingredients: technological innovation; the willingness and ability of owners and corporate managers to reengineer the .. MORE
Regulation and Subsidies
Regulate Mutual Funds?
A while back, I cited some arguments against regulation of mutual funds. Today, Vanguard’s John Bogle makes the case in favor of regulation. In the mutual-fund industry, relying solely on market forces has proved to be a weak remedy for bad behavior. As asset-gathering replaced prudent management as the industry’s prime focus, fund expenses rose .. MORE
Growth: Consequences
The Productivity Story, Continued
I put together a simple table of productivity performance over the last forty years. The table helps to demonstrate what Brad DeLong is talking about. The 17 percent productivity growth from the first quarter of 2000 to the first quarter of 2004 stands head and shoulders above the growth rate for any comparable period. In .. MORE
Books: Reviews and Suggested Readings
Fogel Vs. Wonks
Reading Robert Fogel’s latest book, I noticed that he provided some simple but paternalistic proposals for health care. Robert Fogel says that we should stop thinking of the problem of poverty and health care as one of insurance and instead think of it as one of convenience. Rather than initiating the poor into the wonderful .. MORE