EconLog Archive
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
Fiscal Policy
Bush on Trial
Jeff Frankel speaks for the prosecution. they will do anything for a few votes, even if their behavior is against the national economic and security interests and blatantly inconsistent with things they claim to stand for: small government, free trade, macroeconomic discipline, good neoclassical economics, and so forth. And they will favor political expediency even .. MORE
Growth: Consequences
Who is Rich?
David R. Henderson and Charley Hooper argue that most of us are rich. Except for the few hundred thousand who are homeless, the Americans whom the U.S. government defines as poor live exceptionally rich lives. In most ways, their lives are better than those of kings and queens just 200 years ago. Consider the quality .. MORE
Efficient Markets Hypothesis
Backwardation
As of May 20th, the June 2004 futures contract for light crude oil was at $41.66, while the June 2005 futures contract was at $35.58. When futures prices are below spot prices, this is known as “backwardation.” I believe that it represents a puzzle. Think of it this way. If you have oil, by holding .. MORE
Energy, Environment, Resources
Gasoline Hysteria
It’s not just Democrats. National Review Online’s James S. Robbins writes, A strategic plan for secure and sustained energy would have many elements — shifting imports to more stable, friendlier countries, exploiting more domestic resources, pursuing alternative energy sources, and rapidly promoting the use of breakthrough technologies such as the thermal depolymerization process (that can .. MORE
Energy, Environment, Resources
A Glimmer of Hope on Oil
In forecasting oil prices, I tend to defer to the efficient markets hypothesis. In some sense, oil in the ground has to compete with bonds and other interest-bearing assets. So, a reasonable approximation is that oil prices should be expected to go up at the interest rate. So, if the interest rate is 5 percent, .. MORE
Economics of Education
Compulsory Cultural Exchange?
In this essay, I propose a compulsory cultural exchange to try to improve national cohesiveness. With a cultural exchange program of this sort, the children of the liberal elites could experience first-hand the urban public schools which their parents believe must be protected from competition at all costs. Children raised by nannies could see how .. MORE
Economic Growth
Hard America, Soft America
I just breezed through Michael Barone’s Hard America, Soft America. Reviewers tend to quote the following passage (p. 12). UPDATE: see also this article by Barone which leads with the sentence I quote. For many years I have thought it one of the peculiar features of our country that we seem to produce incompetent eighteen-year-olds .. MORE
Economics of Education
Education Reform
I have a skeptical essay on the No Child Left Behind Act. The No Child Left Behind Act reflects outmoded, paternalistic, industrial-age thinking on education. Its real name should be No Educrat Left Behind. What we need instead is bottom-up, consumer-driven reform that is aimed at reviving our capacity to educate ourselves. For Discussion. What .. MORE
Energy, Environment, Resources
The Future of Oil
Lynne Kiesling and Don Boudreaux have already pointed to an article by Morris Adelman, who was at MIT back when Krugman and I were in grad school there. There is not, and never has been, an oil crisis or gap. Oil reserves are not dwindling. The Middle East does not have and has never had .. MORE
Economics of Health Care
Why is Health Care Inefficient?
Tyler Cowen raises a good question. Have you ever heard the claim that U.S. medical care is in trouble because we subsidize third-party insurance through the tax system? …If the argument is that tax deductibility leads to too much health care, I can see the logic. But then the problem is in the pretzels and .. MORE
Economic Growth
Progress and Displacement
Tyler Cowen points to a paper by Foster, Haltiwanger, and Krizan (unlike Cowen’s link, my link goes to the full paper) that stresses the importance for productivity growth of resources leaving inefficient firms and going to efficient firms. I was surprised by the following: A pervasive empirical finding in the recent literature is that within .. MORE
Austrian Economics
Caldwell, Hayek, and Math
Francis Fukuyama reviews Bruce Caldwell’s Hayek’s Challenge, an intellectual biography of Friedrich Hayek. As Caldwell notes, Hayek initially thought the dividing line between possible and impossible positivism lay in the distinction between natural sciences and social sciences, but by the 1950s he had come to understand that the issue was really one of complexity. A .. MORE
Economic Growth
“It’s Their Fault”
Nick Schultz cites work by Amir Attaran showing that drug company patents are not an obstacle to health care in poor countries–in fact, drug companies do not even bother to obtain patents in the poorest countries. Attaran’s research concludes that “poverty, not patents, imposes the greater limitation on access.” The “economic data leave no doubt .. MORE
Information Goods, Intellectual Property
Copyright Law and Utilitarianism
Richard A. Epstein has written an interesting essay on copyright law. He concludes, But for years now, my own private campaign has been to insist that the strength of the natural law theories rested on their implicit utilitarian (broadly conceived) foundations, which require some empirical evaluation of why given institutions promote human flourishing and through .. MORE
Economics of Education
The Science Race
An alarmist New York Times article about America’s relative standing in science has Cafe Hayek on edge. First, Russ Roberts wrote, The real question is not whether America is “ahead” or “behind” but whether students interested in science have good opportunities to explore science. Next, Don Boudreaux added, In the 18th century France boasted an .. MORE
Income Distribution
Athletes and Entertainers
Allen R. Sanderson writes, no one complains when Ray Romano (“Raymond”) gets $50 million a year—$1.8 million per episode—which takes about the same time to film as a baseball game…But let Alex Rodriguez sign for $25 million a year or let the mean baseball salary hit $2.5 million and commentators and the sports-talk-radio crowd get .. MORE
Economic and Political Philosophy
Hostility Toward Economics
Zimran Ahmed, commenting on a piece by David Warsh, writes, I’ve been thinking of why people find economics so fundamentally repugnant, and I think the fact that it goes against millennium of natural selection that re-enforced building, monitoring, and maintaining social relationships, is a large part of that. We humans are hard-wired to prefer interacting .. MORE
Finance: stocks, options, etc.
Uncovered Interest Parity
Brad DeLong wonders, U.S. interest rates are low relative to those of other major countries (save Japan). Where is my uncovered interest parity? Here is what Brad is thinking. If I own dollars today and want to invest in bonds that will pay me in dollars tomorrow, there are two ways that I might do .. MORE
Social Security
Social Security a Diamond in the Rough?
In this essay, I examine at length Peter Diamond’s arguments for Social Security as it exists currently. An excerpt: I doubt that elderly people who maintain their assets in lump sum format rather than as annuities are as irrational as Diamond and others suggest. In the real world, the elderly face many more sources of .. MORE