EconLog Archive
Economics of Health Care
Health Care Spending
Business Week’s Howard Gleckman successfully distinguishes between health care cost and health care spending. Medical technology is no different than consumer electronics. When DVD players cost $500, few people bought them, so total spending on the devices was insignificant. Now that they cost $50, everyone is buying. As unit costs fall, total spending rises. Same .. MORE
International Trade
Our Loss, China’s Non-gain
Joseph Carson of Alliance Capital Management decided to investigate how many manufacturing jobs China has gained at the expense of other countries. The result was somewhat surprising. According to our analysis, between 1995 and 2002 roughly 22 million jobs were lost globally, a decline of 11%. Yet over the same period, global industrial production jumped .. MORE
Public Choice Theory
Online Trade Barriers
Michael Cox writes about trade barriers that affect Internet commerce. Georgia requires buyers to purchase contact lenses in person, ostensibly to protect their health but in effect as a boost to in-state eyewear retailers. Oklahoma won’t allow its citizens to be buried in a casket bought out-of-state. South Carolina inhibits Internet mortgage brokers by requiring .. MORE
Finance: stocks, options, etc.
Stock Options as Tax Deferral
Kevin Hassett thinks that stock options are used because they are a form of tax-deferred compensation. It is sensible that the tax code encourages equity compensation. Shareholders benefit when management has a significant stake in the appreciation of a firm’s stock. But the tax code wrongly encourages reliance on options and only options. While options .. MORE
International Macroeconomics
U.S. as Debtor
Ken Rogoff, former chief economist of the International Monetary Fund, finds it odd that the United States is a borrower rather than a lender in international capital markets. Isn’t it even stranger that this borrowing includes sizable chunks from countries such as India and China, many of whose 2.3 billion people live on less than .. MORE
International Trade
Economics vs. Populism
In this essay, I argue that economists face an uphill battle in dealing with populist beliefs about international trade, entitlements, and consumption versus saving. In my view, international trade is only one aspect of the overall phenomenon of Progress and Displacement. Technological change is rapid and inevitable. It means that the employment base is constantly .. MORE
Economics of Education
Comment of the Week, 10-15-03
A lot of interesting comments on school vouchers. For example, Peter Gallagher writes, What beneficiaries want may NOT be a better education: and even if they do, they may not be very discriminating in deciding what ‘better’ looks like when it comes to education. I agree that families may make choices regarding education that are .. MORE
Macroeconomics
Lessons of the Great Depression
In this essay, I summarize what I have been reading about the Great Depression and its implications for today. The Depression certainly was an era of displacement. In fact I have borrowed the very term “displacement” from the late economic historian Charles Kindleberger, author of Manias, Panics, and Crashes and one of the eminent economists .. MORE
Economics of Health Care
Kotlikoff on Social Security
Steve Verdon points to a speech by Laurence Kotlikoff with a plan for saving Social Security and Medicare. The Personal Security System 1. The accrual of additional Social Security retirement (OAI) benefits is eliminated. 2. Current retirees and current workers receive their accrued Social Security retirement benefits. 3. The OAI payroll tax is eliminated and .. MORE
Economics of Education
Adverse Results for School Vouchers
Chang-Tai Hsieh and Miguel Urguiola find evidence that in Chile school vouchers caused schools to compete for the best students rather than compete to deliver better education. Although statistically insignificant, the point estimates suggest that, if anything, test scores experienced a relative decline in communities where the private sector made greater inroads. The results of .. MORE
Austrian Economics
Doubts about Planning
Jonathan Rauch argues that the absence of a plan for post-war Iraq is a feature, not a bug. In truth, the planning mind-set is exactly wrong for Iraq. Anything might have happened after the war: a flood of refugees, a cholera pandemic, a civil war—or, for that matter, the discovery of an advanced nuclear program. .. MORE
Energy, Environment, Resources
Basic Oil Economics
Holman Jenkins makes some useful points. nowadays U.S. consumption of Persian Gulf oil totals about $18 billion a year, less than we spend on computer parts from Asia. The price mechanism works: Oil would flow in greater volume from higher-cost sources in the unlikely event of a catastrophic disruption of supplies from the Gulf. Canada, .. MORE
Macroeconomics
The Great Depression
The Great Depression continues to be a fascinating period to study. As Thomas Sowell points out, the myth is well entrenched that the New Deal pulled the economy out of the Depression. Only now has a book been written in language that non-economists can understand which argues persuasively that the policies of the Roosevelt administration .. MORE
Behavioral Economics
Training Economic Man
Kevin McCabe says that experimental economics offers three implications for policymakers trying to foster economic growth through the adoption of markets. First, safeguards must be put into place to protect impersonal exchange from our innate desire for personal exchange. Second, policy must take into account the heterogeneity of individual cognitive strategies that are observed in .. MORE
Economics of Education
Economic Arguments
A few days ago, controversial radio personality Rush Limbaugh created a controversy. As a commentator on a football pre-game show, he said (1) The Philadelphia Eagles’ quarterback was overrated by others in the media. (2) The reason that the quarterback was overrated was because the reporters were trying to promote a black quarterback. The second .. MORE
Economics of Health Care
Health Insurance Reform
Recent stories on an increase in the number of Americans without health insurance prompted a couple of essays on health insurance reform. Ronald Bailey writes, One way to increase the number of insured Americans is to break the link between a job and a health insurance policy. I also have an essay that argues against .. MORE
Behavioral Economics
Various Articles
Posting here will be infrequent until later in October. Meanwhile, here are some links that may be of interest. Is the insecurity of Microsoft software an externality that should be regulated or taxed? An example of professional licensing as rent-seeking (in more ways than one). Robert Hall draws out the implications of extrapolating ever-increasing health .. MORE
Economics of Education
Libertarian Redistribution
In an essay called Bleeding-Heart Libertarianism, I sketch a system for using a consumption tax with a negative-income-tax feature to replace government-provided health care, education, and income security. Does the bleeding-heart libertarian approach seem harsh? Actually, the Welfare State is worse. The Welfare State targets much more of its largesse to people who are less .. MORE
Macroeconomics
Meltzer on the Labor Market
In an earlier post, I asked, What is the likelihood that some of the weak job growth and strong productivity growth of the past two years is in part a statistical mirage? Allan Meltzer says that the likelihood is high. What many companies have done is outsource some services previously performed in house. For example, .. MORE
Finance: stocks, options, etc.
Stock Options
In response to my earlier post on executive compensation, Jonathan Wilde wrote, First, to answer Arnold’s question – since all economic values are subjective, there is no question of there being a ‘correct’ valuation. All voluntary economic exchanges depend on the two parties valuing the exchanged goods in reverse order. I have yet to hear .. MORE
Energy, Environment, Resources
California Reality
As a dean at Berkeley, Hal Varian has a personal interest in California. In his column today, he offers some plain-spoken economics lessons. Most California voters think the electricity crisis contributed to the state budget deficit. If only things were that simple. In reality, not a cent of the deficit was caused by electricity prices: .. MORE