EconLog Archive
Adam Smith
Man Is an Animal Who Says “I”, and Trades
Aligning words one after the other in correct grammatical form is not the same as intelligence and rational thinking. We have had two recent examples of artificial intelligence with Open AI’s ChatGPT and with the new AI companion of Microsoft’s Bing. With its reported declarations of love, threats of sabotage, and longing for “power and .. MORE
Cross-country Comparisons
Poverty is crowded
Chiloé is a charming island, but the traveler must be prepared to face a few frustrations. Towns like Ancud and Castro are very crowded. The traffic is congested and it’s hard to find a place to park. Even the sidewalks are crowded with people. The roads are narrow and the houses are packed into a .. MORE
Entrepreneurship
Is It Wrong to Make Money by Helping Others?
Jack (@jbwells2 on TikTok) runs her store Jack’s Vintage on the secondhand fashion app Depop. She posted a video on Jan. 24 where she tries on a variety of thrifted clothes, modeling skirts and jackets that she would later post to her online store. “This right here is the best thrift haul you will .. MORE
Liberty
Together, My People!
Since nationalism is a form of collectivism, it is not surprising that its vulgate plays so much on “together” themes. Vladimir Putin just declared in a public speech in fromt of a “jubilant crowd, amid a sea of Russian flags” (“Putin’s Wartime Russia: Propaganda, Payouts and Jail,” Wall Street Journal, February 22, 2022): “When we .. MORE
Liberty
Some thoughts on progress, freedom, and happiness
I recently took a car ferry across to the island of Chiloé. In the distance, I could see work being done on a big new suspension bridge, which when completed will connect the large island province to the mainland. My first reaction was disappointment; I came too soon to experience the convenience of the new .. MORE
Income Distribution
Oxfam: “Billionaire-Busting” for Fun and Profit
Oxfam, a global confederation of charitable organizations, just released a report demanding that billionaires be abolished. The report, Survival of the Richest: How We Must Tax the Super-Rich Now to Fight Inequality, states that: [T]he world should aim to halve the wealth and number of billionaires between now and 2030, both by increasing taxes on .. MORE
Business Economics
Decentralization is good business.
Economists are more likely than most to emphasize the importance of decentralized decision-making and the way it allows dispersed knowledge to be fully utilized. But the argument doesn’t just apply to a high-level view of the economy as a whole. Decentralization isn’t just good economic policy – it’s also good business policy. This thought crossed .. MORE
#ReadWithMe
Leoni, legislation and representation
We’re coming to our third online reading group discussing Bruno Leoni’s Freedom and the Law. So far the discussion was lively and insightful, a good reminder to me that the only way to really *know* a book is re-reading it periodically, as it may speak differently to you and you may notice things that you .. MORE
Economic History
The 1619 Project on Hulu Vindicates Capitalism
Hulu’s series “The 1619 Project” blames economic inequality between blacks and whites on “racial capitalism.” But almost every example presented is the result of government policies that, in purpose or effect, discriminated against African-Americans. “The 1619 Project” makes an unintentional case for capitalism. The series gives many examples of government interventions that undercut free markets .. MORE
Fiscal Policy
The internal contradictions of progressivism
The Financial Times has a very good article that exposes some of the internal contradictions of progressive economic policy: A shortage of construction workers is putting at risk the Biden administration’s ambitious plan to fuel a historic building boom in the US, according to industry executives. The construction sector could be short as many as .. MORE
Books: Reviews and Suggested Readings
Larry Summers’s Insight and Misunderstanding
Value and cost are not the same. I remark often to students that, all things considered, I would probably rather have the life and the opportunities of a lower-income student in today’s United States in material terms than the life of John D. Rockefeller. This is from Lawrence Summers, “Liberty, Optimism, and Superabundance,” Cato’s Letter, .. MORE
Information Goods, Intellectual Property
Hayek’s Volunteers in Ukraine
Even more impressive than Ukraine’s will to fight is the vast network of volunteers that underpins the armed forces and the defense of the country. At the Kyiv School of Economics, Tymofiy Mylovanov, its president, told me how in the first weeks of the war the school had formed a group of some eighty .. MORE
Finance
Credit Card Late Fees
The U.S. Consumer Financial Protection Bureau, no bureaucrats they, rather public-spirited civil servants, are proposing a new regulation: credit card late fees, which can now reach a maximum of $41, will be capped at a mere $8. One would think, based on this new initiative, that the reason we have late fees for credit card .. MORE
Trade Barriers
Arms are fungible
Economists often speak of money being fungible. Thus if one country donates money to another with strings attached, the receiving country can often circumvent those constraints by diverting their own funds from one account to another. A recent article in The Economist suggests that weapons and munitions are also fungible. The article begins by noting .. MORE
Labor Mobility, Immigration, Outsourcing
Immigration and Trade Are Key to Thriving Economies
President Biden recently visited the humanitarian crisis along the U.S.-Mexico border but mostly used it as a political stunt to offer more failed policies and chastise Republicans. Republicans have also had years to solve immigration issues, but the situation continues. Meanwhile, Biden and former President Trump have similar protectionist trade policies, which have come at .. MORE
Central Planning
The Universal Paradigm of Limited Resources
The economic paradigm of economizing on limited resources is universal. For example, mental resources are limited and must be economized, that is, allocated to some tasks instead of others. Choices and trade-offs must be made. Writing in the Wall Street Journal, Anthony Vance, a professor of business information, and C. Brock Kirwan, a professor of .. MORE
Foreign Policy
How Much is U.S. Aid to Ukraine Costing You?
In 2022, the U.S. government approved expenditures of $113 billion on aid to Ukraine. The Committee for a Responsible Federal Budget writes: In total, CBO estimated that $6.6 billion of the $113 billion would be spent in FY 2022 and another $37.7 billion in FY 2023. Furthermore, CBO estimated more than half of the approved .. MORE
Economic History
Policy Failure During the Great Depression
with Charlie Mathews Generations of students learned that the Great Depression was a conspicuous failure of free-market capitalism that only ended with the New Deal. Instead, the New Deal and other policies enacted to fight the Depression prolonged it. The Smoot Hawley Tariff was a conspicuous political failure. The New Deal was a conspicuous fiscal .. MORE
Economic Education
John Jasinski’s Sunk Cost Fallacy
Minnesota State Senator John Jasinski recently argued in favor of continuing the drug war on the basis of sunk costs. He argued that because police have spent thousands and thousands of dollars on training drug-sniffing dogs, that investment is lost if the drug war ends. He sees this as a cost. In fact, ending the .. MORE
Labor Mobility, Immigration, Outsourcing
Some Occupational Licensing Progress at State Level
Last week, economist Tim Kane put on YouTube a civil and brief 3-way discussion among himself, Robert Litan, and Allison Schrager about what 3 economic policies each would advocate to “save” U.S. democracy. One of Schrager’s policy proposals (at the 9:04 point) was to federalize occupational licensing rules. She argued, correctly, that state rules reduce .. MORE
Politics and Economics
Do elections have consequences?
In his new book entitled The Federal Reserve: A New History, Robert Hetzel notes the following: The 1912 Democratic Platform opposed “the so-called Aldrich bill or the establishment of a central bank” and demanded “protection form the control of . . . the money trust” A year later Woodrow Wilson signed the Federal Reserve Act. .. MORE