EconLog Archive
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
Finance: stocks, options, etc.
Bond Market
Brad DeLong wonders why the bond market isn’t punishing the Bush Administration harder for its fiscal sins. He lists a number of possible explanations, including 1. The people who matter in financial markets are expecting either (a) that there will be a Clinton-Democrat (i.e., Eisenhower-Republican) victory in November 2004, or (b) that Stephen Friedman, John .. MORE
Behavioral Economics
Economics and Evolution
David Friedman uses evolutionary psychology to solve some puzzles in economics. Human beings have a functional module in their minds that deals with exchanges with other human beings. One feature of that module, hard-wired in by evolution, is that human beings regard the usual terms of exchange as right and any deviation from those terms .. MORE
Public Goods
Lighthouses
In an essay on telecommunications pricing, Andrew Odlyzko spends some time reviewing the controversy about whether a lighthouse is necessarily a public good. As an example, a recent commentary [68] claimed that Coase had shown that “[i]nstead of the government-sanctioned ‘light dues’ charged by Trinity House, developers persuaded ship-owners to sign up in advance for .. MORE
Books: Reviews and Suggested Readings
The Morality of the Market
Jerry Muller, author of The Mind and the Market, gives a brief synopsis of his book. In previous societies, one’s status as a peasant, artisan or merchant often defined one totally. Being a member of a guild, for example, encompassed a complete set of social roles — economic, legal, political, and even religious. Modern market .. MORE
Behavioral Economics
Surveys and Happiness
I have already given so-called “happiness research” a pretty hard bashing. But Tyler Cowen thinks that there is something to it. He links to a paper that says that people who work for nonprofits are happier than people who work in other occupations. To me, this shows the foolishness of the survey exercise. I hate .. MORE
International Trade
Ricardo’s Difficult Idea Eludes Wonks
Alex Tabarrok has a timely post that links to another Paul Krugman classic on the gulf between economists and noneconomists on the theory of international trade. Krugman writes, it is not obvious to non-economists that wages are endogenous. Someone like Goldsmith looks at Vietnam and asks, “what would happen if people who work for such .. MORE
Labor Market
Immigration Reform
In my essay, I made an off-hand comment. If the households and businesses that hire illegal immigrants do so in order to save the cost of paying taxes, and they will not pay the taxes even when an employment agency handles all of the paperwork for them, then what we have is more than an .. MORE
Regulation and Subsidies
Policy in a Fog
In a wide-ranging essay on the problem of incomplete information, I write, Perhaps the most important point of all is that government officials operate in a fog. If one looks at all of the imperfections and shortcomings of the market, then there appears to be a nearly infinite set of opportunities for the government to .. MORE
Fiscal Policy
Budget Woes
Robert E. Rubin, Peter R. Orszag, and Allen Sinai make a case that our Budget deficits are not sustainable. If one includes the cost of the recently enacted prescription drug benefit, assumes that discretionary spending keeps pace with inflation and population growth, that the growth in the fraction of taxpayers subject to the AMT is .. MORE
Uncategorized
Reminder about Comments
Use of the comment feature on this site is a privilege, not a right. In particular, even though we do not post email addresses, we need a real email address from everyone who comments. If you do not trust us with your email address, then we do not trust you to leave comments.
Income Distribution
Income Mobility
Is the United States becoming a more rigid class society? Paul Krugman sounded such an alarm, but Tyler Cowen issues a rebuttal. Yes, there is some correlation in wealth across the generations. But most of that correlation (almost seventy percent) comes from continued hard work and savings. The authors do not examine Krugman’s claim that .. MORE
Behavioral Economics
More Choice, Less Satisfaction?
Psychologist Barry Schwartz says that we may be worse off with more choice. “As a culture, we are enamored of freedom, self-determination, and variety, and we are reluctant to give up any of our options,” he writes with characteristic directness. “But clinging tenaciously to all the choices available to us contributes to bad decisions, to .. MORE