EconLog Archive
Regulation
Forward to the Past: US Regulators Top European Ones
In a recent piece, Financial Times columnist Rana Foroohar eulogizes the American “regulators” who are becoming a model for European ones. I put regulators in scare quotes because what we are speaking of has little if anything to do with homeostatic or cybernetic autoregulation or with general rules of law. In reality, the bureaucrats and .. MORE
Central Planning
Get Your New Washing Machine Before Biden Makes Them Illegal
And your new gas stove. Ever since Gerald Ford’s administration, federal regulators have been trying to make, and have succeeded in making, various appliances less useful. President Trump’s people put a pause to some of that. Biden’s employees have started it going again. The latest is washing machines. They already use less water than their .. MORE
Price Theory
What Should Economists Do? Price Theory or Microeconomics?
In his 1963 Presidential Address to the Southern Economic Association, later published as “What Should Economists Do?”, James Buchanan called for “economists to modify their thought processes, to look at the same phenomena through ‘another window,’ to use Nietzsche’s appropriate metaphor. I want them to concentrate on ‘exchange’ rather than on ‘choice’” (1964, p. 217). .. MORE
Economics and Culture
Three cheers for Michelle Yeoh
I am no movie critic but I was, for once, greatly pleased to see Everything, Everywhere, All At Once showered by the Academy awards. My favorite last year was The Fabelmans and I thought Steven Spielberg deserved yet another Oscar. Still, I’m happy for Everything, Everywhere, All At Once. The movie didn’t have much of a .. MORE
Finance
Time inconsistency in bank regulation
Back in the late 1970s, economists began exploring the “time inconsistency problem” in monetary policy. In the long run, we are better off if central bankers maintain a low inflation rate (or NGDP growth rate.) But in the short run, the economy may do better with a more expansionary policy. The negative consequences of that .. MORE
Cryptocurrency
Intellectual Property Rights Get More Complex—Again
On February 9, the Wall Street Journal reported a “victory” for intellectual Property (IP) rights, with the subhead: “Case Seen as test of how a company can exercise its IP rights against virtual assets.” Okay, we kind of get that: This is about assets that exist in cyberspace. The French luxury brand, Hermès International SA, .. MORE
Finance
Promises, promises
In 2020, the Fed promised to maintain an average inflation rate of 2%. They abandoned that promise as soon as it was convenient to do so. After the 2008 banking crisis, the government promised to refrain from bailing out small and mid-sized banks and instead allow FDIC to handle the situation. According to Bloomberg, that .. MORE
Economics of Crime
Usefulness of a Non-Lying Strategy: Two Examples
There is a rational, self-interested reason to choose a strategy, and establish a reputation, of non-lying. This idea been recently illustrated by the condemnation of Alex Murdaugh for the murder of his wife and son, and by Sergei Lavrov, the foreign minister of the Russian government during a conference in India. The theory is that .. MORE
Business Economics
The Economics of Stock Buybacks
Fortunately, Erica York, a senior economist at the Tax Foundation, nicely shows why stock buybacks often make sense. They tend to happen when a firm doesn’t have better investment options. Stock sellers can then use the funds to invest in firms that do have better investment options. Oh, and by the way, who owns .. MORE
Finance
“Bank management must be investigated”
Throughout our history, the US has always had a dysfunctional banking system. There was never a golden age of American banking. That doesn’t mean the system was always in crisis, but the potential for crises was always there. (Even in the 1970s.) This isn’t Canada. There are many problems with the US banking system, but .. MORE
Economic Growth
India Must Keep Its Faith in Nuclear Power
French President, Emmanuel Macron, might witness a game-changing moment in India as we go bullish on nuclear energy and say goodbye to our energy crisis for good. As he plans to visit India in early 2023, there is a newfound sense of urgency to expedite the construction of 1,650 MW nuclear power reactors at Jaitapur .. MORE
Economic Education
Budget: The Financial Times‘s Sloppiness
We should expect politicians to lie, or at least to make misleading statements, whenever they can get away with it. But we would normally expect the Financial Times to be careful with information (which is why I have been an addict to this newspaper for most of my life). An exception is their story of .. MORE
Central Planning
State Legislatures Have Reined in Public Health Bureaucracies
Oh my God, checks and balances. In “Economic Lessons From COVID-19,” Reason, June 2021, I ended my article with the following: Just as even paranoids can have real enemies, even optimists can have real grounds for hope. I think almost all of us were surprised at how quickly most governors and many mayors moved to .. MORE
Macroeconomics
Silver linings from inflation?
How would you react if a close friend made the following statement: “Of course, I am firmly opposed to infidelity, but I’ve discovered that it’s not so bad as I had thought. I have a friend who is currently having a passionate affair that is adding spice to his life. He says that he will .. MORE
Economic Growth
Canada’s Budget Officer Admits the Truth About Global Warming’s Impact
The Parliamentary Budget Officer (PBO) recently released a report on the effects of greenhouse gas emissions on Canadian GDP growth over the next 80 years. I’ve written previously about the recent economics literature investigating the link (or lack thereof) between global warming and economic growth. It’s a fascinating topic and I’ve been actively working .. MORE
Education
The Most Troubling in Mr. Murdoch’s Deposition
Progress in knowledge and ultimately in economic growth and prosperity requires some freedom of speech and some economic freedom; and the more of them, the better. This is not to say that these freedoms only have benefits, but that they have more advantages than drawbacks. The deposition of Rupert Murdoch in the defamation lawsuit of .. MORE
Economic Philosophy
Strange rebels
I recently read an interesting book on reality, entitled The Fabric of Reality. In the book, David Deutsch constructs a unified theory of reality by combining four fundamental theories: 1. Quantum mechanics (multiverse interpretation). 2. Turing principle of computers and artificial intelligence. 3. Popperian epistemology. 4. Darwinian evolution. Deutsch says: In all cases the theory .. MORE
Austrian Economics
Fairy Tales and Perfect Markets
Most modern fairy tales have very misleading endings. There’s a phrase they almost all end with – you can probably already guess what I’m thinking: “And they all lived happily ever after!” What’s misleading about this? It implies that in life, there’s some kind of end state you can reach called “happily ever after” where .. MORE
Uncategorized
The 1619 Project’s Tooth Fairy Economics
Ms. Hannah-Jones interviews Duke University economist William A. Darity, one of the most prominent academic voices behind the $13 trillion number. Darity has advanced similar dollar amounts in his scholarly work, including a 2022 article in the Journal of Economic Perspectives. As with the Hulu episode, he offers this figure while eliding difficult questions about .. MORE
Cross-country Comparisons
Biography of Mancur Olson is Now Online
Olson’s major insight in the second half of the book was about how Stalin managed to be a stationary bandit in the Soviet Union while still confiscating a huge amount of the wealth. By nationalizing land and virtually all forms of capital, Stalin took for the state a large part of the wealth created. He .. MORE
Macroeconomics
QE and low inflation are not alternatives
Raghuram Rajan recently offered some advice on monetary policy regimes: [T]he balance of risks suggests that central banks should reemphasize their mandate to combat high inflation, using standard tools such as interest rate policy. What if inflation is too low? Perhaps, as with COVID-19, we should learn to live with it and avoid tools like .. MORE