EconLog Archive
International Trade
India and the U.S.
Business Week runs a long, balanced article on India’s economy and its relationship to the United States. For all its R&D labs, India remains visibly Third World. IT service exports employ less than 1% of the workforce. Per-capita income is just $460, and 300 million Indians subsist on $1 a day or less. Lethargic courts .. MORE
Macroeconomics
Labor Market Issues
Today’s New York Times has two opinion pieces on the labor market. Pessimist Steve Roach does not believe that the productivity growth that we are seeing is real or lasting. we are woefully underestimating the time actually spent on the job. It follows, therefore, that we are equally guilty of overestimating white-collar productivity. Productivity is .. MORE
Regulation and Subsidies
Regulation and Housing Cost
Is housing more expensive in Manhattan because land is more valuable there? Edward L. Glaeser, Joseph Gyourko, and Raven Saks argue that housing is more expensive because of regulation. In twelve out of the twenty-one markets that we examine, on average home costs no more than ten percent more than the costs of the physical .. MORE
Finance: stocks, options, etc.
Financial Crime
Michael Lewis writes, The millions of dollars that mutual funds have, in effect, stolen from their small customers are dwarfed by the billions they have wasted for them. In his just-published book, “A Random Walk Guide to Investing,” Burton Malkiel shows that over the past two decades index funds have outperformed 88 percent of managed .. MORE
Economics of Health Care
AARP rent-seeking
I have not been following the prescription drug benefit bill closely enough to be able to provide a sound economic analysis. According to the Washington Post, I am not alone. This is an extremely expensive, 1,100-page bill that will have a profound effect on the nation’s fiscal and physical health. And although it was not .. MORE
International Trade
Trade Policy
Who is setting trade policy in the Bush Administration? Certainly not Bruce Bartlett, who writes, one of the new trade restrictions applies to brassieres. Yet there is no domestic manufacturer of this product… The Bush administration has shown incredibly poor judgment in trade policy ever since taking office. Its steel tariffs backfired by costing more .. MORE
Price Controls
Drug Price Controls
Some economists published a petition against drug price controls. Drug-price controls are more difficult to remove than other price controls. Controls on oil and other products often tend to be limited or short-lived, as voters eventually object to the resulting shortages and distortions. The effects of drug price controls, however, are far more difficult to .. MORE
Energy, Environment, Resources
New Energy Legislation
Lynne Kiesling, who believes that rent-seekers should be prosecuted, is in an accusatory frame of mind concerning the latest energy legislation. She writes, choosing to expand ethanol mandates as a renewable energy initiative is a big mistake. Using more ethanol will increase our dependence on foreign oil and impose costs that far outweigh its benefits. .. MORE
Fiscal Policy
Trade Deficit, Saving, and Tax Policy
I argue that our trade deficit is really a savings deficit. Increasing exports relative to imports is not a matter of beating up on China to live up to its commitments in the World Trade Organization. It is not a matter of prohibiting U.S. firms from outsourcing to India. It is a matter of increasing .. MORE
Regulation and Subsidies
Prosecute Rent-Seekers?
Lynne Kiesling sketched an interesting idea for antitrust enforcement. prosecutions based on the use of lobbying, regulation, and political relationships (i.e., rent seeking) to deter entry. Economists traditionally have evaluated monopoly power using measures such as the Herfindahl index of concentration. Kiesling is suggesting that only industries with monopoly power will spend resources lobbying Washington .. MORE
Regulation and Subsidies
Prairie Population Problems
Both Michael Lind and Ronald Bailey note a population decline in the old prairie states. However, they come to opposite conclusions. Lind wrote, Imagine a federal program that would help poor and working-class Americans to move not from crowded cities to suburbs in the same general area but from crowded states to low-density states where .. MORE
Information Goods, Intellectual Property
Government and Research
In this essay, I argue that we should not fear losing our technology edge. In doing the cost-benefit analysis on government funding of scientific research, one factor that should not be given weight is national competitiveness. I can see worrying about our ability to compete in military technology, but not in civilian research. I really .. MORE
Microeconomics
Price Discrimination and Profitability
Alex Tabarrok asks, If we graphed use of price discrimination against profits would we find a positive slope across the economy as a whole? I doubt it, yet this is what the theory would seem to predict. Send me your thoughts. My first reaction is that it is difficult for me to come up with .. MORE
Austrian Economics
Austrian Economics
After taking a quiz on Austrian Economics, I wrote about my agreements and disagreements with that school. Much of what I believe about economics is based on the concept of imperfect knowledge. Imperfect knowledge implies that as we gain knowledge, our standard of living improves. However, we still have much to learn. We know how .. MORE
Macroeconomics
Knife-edge Macroeconomics
One of the more irritating tropes in economic journalism is the “knife-edge” metaphor. A reporter will write a news-analysis piece that breathlessly explains that the Federal Reserve is on a knife edge, with recession on one side and inflation on the other. It seems as though the New York Times editorial writers have read too .. MORE
Energy, Environment, Resources
Peak-load Pricing
Lynne Kiesling and Vernon Smith explain peak-load pricing to the new governor of California. current policy unfairly forces consumers to pay rates based on the average hourly cost of energy and industry capital investment. As a result, peak utility cost is much higher than what consumers pay, and off-peak and weekend cost is much lower .. MORE
Microeconomics
Economics of Water
Water is generally viewed as a resource that requires centralized government management. However, Jacob Sullum shows that government does not necessarily allocate water rationally. Since cotton is a water-intensive crop, the middle of a desert seemed a strange place to grow it. Similar oddities can be observed in other arid areas of the country where .. MORE
Macroeconomics
Jobs and Creative Destruction
W. Michael Cox and Richard Alm look at the data on gross flows in the labor market. New Bureau of Labor Statistics data covering the past decade show that job losses seem as common as sport utility vehicles on the highways. Annual job loss ranged from a low of 27 million in 1993 to a .. MORE
Uncategorized
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Institutional Economics
Economic Freedom and Divergence
A just-concluded conference in honor of Milton and Rose Friedman produced some interesting papers. For example, James D. Gwartney and Robert A. Lawson find that an index of economic freedom helps to account for the failure of the standard of living of underdeveloped countries to converge toward that of developed countries. when the consistency of .. MORE
Macroeconomics
Bernanke on the Jobless Recovery
Federal Reserve Board Governor Ben S. Bernanke offers his views on current issues in macroeconomics. He points to research which suggests that the household survey of employment, which shows a stronger labor market than the payroll survey, may be misleading. That is because the household survey has to be “multiplied up” by a factor that .. MORE