EconLog Archive
Productivity
Cost Disease
If the government is taking more in taxes than it did forty years ago, then why does the typical citizen not feel that he or she is getting more in services? Kevin Drum proposes an answer. In fact, most of the per capita increase in government expenditure over the past 40 years has come from .. MORE
Austrian Economics
Leftist Austrian Economics
I don’t know how else to describe this article by Richard Florida (recommended with reservations by Stephen Karlson). In the later 20th century, the pace of creativity quickened while the profit from routinized production plummeted. A new version of capitalism began evolving in which creativity was not just perennial but constant, in which rapid-fire innovation .. MORE
Energy, Environment, Resources
Fishy Economics
How can we deal with the problem that unrestricted access to fish leads to over-fishing? This is almost a textbook exercise in Coase economics. One solution is fish farming, in which a business owns the fish that it breeds in a particular area. In The Skeptical Environmentalist, Bjorn Lomborg argues that fish farming is increasing .. MORE
Growth: Consequences
Elastic Economy
In this essay, I suggest that the economy has grown more diverse over the past fifty years, making it more elastic. One way to describe the elastic economy is that it has become more complex. Human wants continue to be relatively simple and basic. The fundamental resources, such as land and labor, are the same. .. MORE
Tax Reform
More Tax Day Thoughts
Virginia Postrel writes, most Americans want the tax system to do three things: to be progressive, to treat households with the same incomes equally, and to treat all individuals with the same incomes equally, whether or not they’re married. The problem is, we can have any two of those things at the same time, but .. MORE
Tax Reform
Tax Day Thoughts
April 15th is an appropriate day to consider the complexity of the tax code. Here is a piece by Chris Edwards written in October of 2001 on the case for a consumption-based tax. The key factor that causes rising income tax complexity is that the tax base is inherently difficult to measure. The Haig-Simons measure .. MORE
Energy, Environment, Resources
Economics of Hydrogen, II
Lynne Kiesling quotes an engineering analysis of hydrogen as a fuel source for automobiles. I can assure you that there is no way that spending heat energy to make hydrogen to be burned to make heat energy can be anything but a losing proposition… thermodynamically, and hence – with certainty – economically, this is a .. MORE
Cost-benefit Analysis
Sports Stadiums
The Atlantic Monthly points to this survey of the economic impact of pro sports stadiums. The verdict from many economic studies is that the marginal contribution of a sports team to a local economy is small, and perhaps negative. When a stadium is financed with public money, the benefits do not accrue to the public. .. MORE
Income Distribution
Measuring Tax Progressivity
The May issue of The Atlantic Monthly pointed to this study of tax progressivity at the state level. The authors write, Our primary finding is that most state and local tax systems take a much greater share of income from middle- and low-income families than from the wealthy. That is, most state tax systems are .. MORE
Trade Barriers
Agricultural Trade Barriers
Paul J. Gessig makes the case for dismantling U.S. agricultural subsidies. According to Organization for Economic Coordination and Development (OECD) data and calculations from Dan Griswold of the Cato Institute, completely eliminating the current web of subsidies and tariffs would provide the economic equivalent of an immediate $18 billion per-year tax cut for American consumers. .. MORE
Macroeconomics
Reconstructing Iraq
The future of Iraq’s economy is suddenly a topical issue. I wrote, The new government in Iraq should encourage the growth of a private sector, by keeping taxes and regulation on businesses to a minimum. However, for the next several years, the government itself may have to be a large part of the economy. It .. MORE
Information Goods, Intellectual Property
Comment of the Week, 04-09-03
The signal-to-noise ratio in our comments continues to be very high. See the Economics of Hydrogen thread and the imperfect markets thread, for example. But I give the comment of the week award this week to Robert Musil. A brief excerpt: Disney’s continuing “creation” of Mickey Mouse would likely end if Mickey image became common .. MORE
Information Goods, Intellectual Property
Lessig on Copyright
In 1998, Congress extended copyright terms on both new and existing works. Lawrence Lessig tried unsuccessfully to have this extension overturned by the Supreme Court. In this interview, Lessig explains the weakness of the economic argument for the copyright extension. First, even for new works, a longer copyright term confers very little incentive at the .. MORE
Austrian Economics
Defending Imperfect Markets
Sean Gabb explains how Austrian economics differs from Anglo-American economics. the standard economics textbooks provide an utterly unrealistic defense of the market. They begin with the claim that markets are efficient, and then define efficiency as it does not and cannot exist. A perfectly efficient market, they agree, is one in which there are many .. MORE
Economic Growth
Internet Bubble and Growth
Brad DeLong argues that the failure of many Internet-based enterprises does not imply a social loss. profits are not the same thing as social value…Profit is primarily a signal about the size of a set of enterprises: If too small, then customers are desperate for your products, prices are high, and profits abundant; if too .. MORE
Behavioral Economics
Surveys Vs. Revealed Preference, II
In a previous post, I mentioned Richard Layard’s critique of economics, based on survey research. Now, I have written an extended response to Layard. An excerpt: [Layard] is saying that you cannot trust people’s behavior as an indicator of their preferences, because their tastes may be socially constructed. However, if tastes are socially constructed, then .. MORE
Efficient Markets Hypothesis
Comment of the Week, 2003-04-02
On the issue of index investing, Yasser Mawji wrote Surely there’s a problem of aggregation that’s inherent to index fund investing. If most investors are blindly purchasing index funds without any regard for valuation, then those stocks which constitute the index will become overvalued. Back in 1999-2000, a stock would rocket 20% or more on .. MORE
Supply-side Economics
The Budget Debate, VIII
Be careful what you wish for. Some supply-siders have asked for “dynamic scoring” of tax cuts, to take into account supply-side effects. The Congressional Budget Office has done this analysis. CBO’s analysis suggests the proposals, on net, would probably increase labor supply but decrease investment and the stock of capital. Largely because of those two .. MORE
Energy, Environment, Resources
Economics of Hydrogen
Lynne Kiesling has written a five-part article on hydrogen fuel cells. She looks at technical issues as well as economic issues, and each part in the series offers insightful analysis. The last installment questions the wisdom of the Bush Administration’s proposed subsidy for hydrogen fuel development. She writes, Governments (and corporate bureaucracies, for that matter) .. MORE
Economic Education
Economics and its Enemies
William Coleman, author of Economics and its Enemies, gave a lecture on the history of anti-economics. He sees two main sources of hostility to economics. First, The paradoxical truth is that nothing is more unpopular than the pursuit of the public interest. For every member of the public is a vested interest who wants preference .. MORE
Efficient Markets Hypothesis
Can you Beat the Market?
Financial columnist James Glassman touts a study by Joshua D. Coval, David A. Hirshleifer, and Tyler G. Shumway that shows that some investors were able to beat the market consistently. This conflicts with the efficient markets hypothesis. The authors write, A rolling-forward strategy of going long firms purchased by previously successful investors and shorting firms .. MORE