The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – F.A. Hayek
Posted in Uncategorized on Jan 31st, 2011
I have extremely mixed feelings about the recent Florida district court’s striking down of the Constitutionality of Obamacare. While the child in me, the one who believes that the world actually works the way we want it to work, quietly applauds an apparently thoughtful attempt to remain faithful to the enumerated powers clause, I cannot [...]
Posted in Paternalism on Jan 31st, 2011
… the bath salts. I read this as I was trying to take two wimpy Sudafeds. Here is the last entry in the series. If Chuck gets his way, we’ll ban the salts, and then the burnouts will turn to some other household item to snort … and then after that one gets banned, they’ll [...]
Posted in Inequality, Methodology on Jan 31st, 2011
The question of the “right amount” of inequality came up in a discussion with a student a few days ago. The student agreed that perfect income equality would be undesirable because theory and experience both show that most of us would end up following the Soviet mantra, “We pretend to work and they pretend to [...]
Posted in Education on Jan 30th, 2011
“When school children start paying union dues, that’s when I’ll start representing the interests of school children.” That’s from former AFT President Albert Shanker.
Posted in Fun Facts on Jan 29th, 2011
In 2008, Americans gave $300 billion to charity (over 90% of Americans, and this is over and above tax “contributions”). For comparison, the federal government in 2008 spent $66 billion on education, $49 billion on housing and urban development, $59.9 billion on labor programs, $65 billion on transportation, $8 billion (directly) at the EPA (environmental [...]
Posted in Environment, Macroeconomics on Jan 28th, 2011
Starting in the early part of the last century economists endeavored to come up with measures of the overall economic performance of the macro-economy. The creation of the modern concept of GDP is usually attributed to the work of Simon Kuznets during the Great Depression at the NBER. For the record, I find incredible problems [...]
Posted in Inflation on Jan 27th, 2011
In this piece, Senator Bernie Sanders tells us: “It’s an IOU that is backed by Treasury bonds and the faith and credit of the United States government,” said Sen. Bernie Sanders, I-Vt. “It is the same faith and credit that enables us to borrow from rich people and from China and from other countries. As [...]
Posted in Environment, Market Failures, You Can't Have it Both Ways on Jan 27th, 2011
Two common arguments made against market systems are: Left to their own devices, capitalist economies are prone to monopoly. Private, profit-seeking interests over-exploit environmental resources. Let’s grant that both of these are 100% true. What would the implication be? Well, consider the problems of “monopoly” as the standard market-failure critique goes. Monopolies are “bad” because [...]
Posted in Macroeconomics on Jan 26th, 2011
Today’s we’ll address a very simple approach to a very complicated idea. How much are people “worth?” If you think of people simply as GDP machines, then the easiest way to conceptualize the value of people is to ask, “What is the present value of the income generated by all of the people in the [...]
Posted in Market Failures on Jan 25th, 2011
Last week, we started to discuss how it was impossible to identify whether a low price was a “predatory” price. We continue in this post to work our way through Demsetz’s paper. Another way to potentially identify predatory behavior is not to look at prices, but rather to look at how firms’ output levels change [...]
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