EconLog Archive
Economic Growth
Nanotechnology and the Great Race
I once wrote an essay that I called The Great Race, in which I argued that two factors that affect the future are technological change in the private sector and the growth of entitlement spending. Many posts in this blog have focused on entitlements. I focus less here on technology. But several recent articles on .. MORE
Economics of Health Care
Regulation and Industry Structure
Milton Friedman argues that the drug-approval process is the problem. On the drug side, what seems to me to be the most serious situation is the extent to which the Food and Drug Administration makes it extremely expensive to produce a drug, and you can understand why. The FDA is required by law to certify .. MORE
Cross-country Comparisons
Cost-of-Living Arbitrage
An engineer from India emails me, The purchasing power parity in India is 5 compared to USA – a 20000 $ programmer in India is actually making 100,000 $ in terms of his spending power. …an average programmer in India lives the same life-style as an average US programmer now – in many ways better .. MORE
Information Goods, Intellectual Property
Intellectual Property
Here are some interesting comments on intellectual property that have appeared recently. Lawrence Lessig defends drug patents. I don’t know if the alternatives would be better – I don’t believe patents are bad in every case. But I do know that if there is one place where the benefits from patents seem to outweigh the .. MORE
Economic Growth
Who Should Own Iraq’s Oil?
Alex Tabarrok writes (it’s short, so I’ll quote the whole thing, except for links), The U.S. is no longer pushing privatization of the Iraqi oil industry primarily because the Iraqi’s presently in control don’t want it privatized for “nationalistic” reasons. This is bad news for the Iraqi people. Even putting aside bold plans for returning .. MORE
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