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To Lie or Not To Lie: Moral and Economic Reasons - Econlib
The student of economics and especially of public choice theory should expect politicians to lie—and he is certainly not disappointed in America these days. Politicians are ordinary individuals. An ordinary individual is tempted to lie when he considers it is in his interest to do so. I take lying to mean intentionally conveying a statement […]
What Would True Reciprocity Mean? - Econlib
President Trump has now unveiled his outline of the higher tariffs he proposes. They are much higher and, therefore, much more destructive of people’s wealth, than I or, apparently, many others had expected. Trump claims to be doing this in the interest of reciprocity. In his Rose Garden speech, he noted, correctly, that you […]
Relative, compared to whom? - Econlib
It’s often said that after people are wealthy enough to meet their basic needs, they are more concerned about their relative rather than absolute level of well-being. If Smith sees his real income increase by 10% this year, but everyone else around Smith has their real income increase by 20%, Smith doesn’t feel glad that […]
The slave to our passions - Econlib
I recently read some interesting comments by a basketball player for the Milwaukee Bucks: Regardless, Antetokounmpo felt weird about facing [former coach] Budenholzer at the other side of the court considering that they were strong and close allies in Milwaukee for five seasons. “It’s definitely weird,” Giannis said. “Seeing him complain about plays that I […]
Recent Mistakes I've Made - Econlib
I’m eagerly awaiting Donald Trump’s announcements of increased tariffs on Liberation Day, April 2. I used to think that Donald Trump was an ignoramus who didn’t understand the gains from trade. But now I realize that he understands it better than we economists. All we have are our models and our logical reasoning. Trump has […]
EconLog Price Theory: Inflation Targets - Econlib
We’re bringing back price theory with our series on Price Theory problems with Professor Bryan Cutsinger. You can see all of Cutsinger’s problems and solutions by subscribing to his EconLog RSS feed. Share your proposed solutions in the Comments. Professor Cutsinger will be present in the comments for the next couple of weeks, and we’ll post […]
The Joy of Freedom in the Digital Age - Econlib
The title of this post comes from co-blogger David Henderson’s beautiful 2001 book The Joy of Freedom: An Economist’s Odyssey. It is one of my favorite books; David captures the optimism of liberalism in a way few other authors can. Since David wrote the book, the world has entered the Digital Age. The proliferation of […]
Elasticity and Tax Burdens - Econlib
The Financial Times has an article discussing the proposed tax on Chinese ships that use US ports: In 2024, about 46 per cent of US bulk fertiliser imports — 6.7mn metric tons — were carried by Chinese-built dry bulk carriers, according to Kpler data. A $1.5mn fee could increase transportation costs by $62.50 per ton, […]
Household Net Worth Has Increased Relatively Steadily - Econlib
On March 7, 2025, I highlighted Herb Stein’s article “Balance of Payments,” which appeared in David R. Henderson, ed. The Concise Encyclopedia of Economics. That led to a lively discussion in the Comments section. Frequent commenter Warren Platts noted that the U.S. Net International Investment as a percentage of GDP has gone downhill since […]
It Is Basically Holistically Intuitive - Econlib
To analyze society and the economy, and especially if the goal is to coerce peaceful individuals, an understanding of basic economics should be a must. Economics is needed to think clearly about the social consequences of individual actions and government interventions. An example a contrario was just given by President Donald Trump; the Wall Street […]
What Ought Economists Do? - Econlib
Donald Trump’s decision to impose tariffs has sparked a lively debate among economists and others: are tariffs good? Maybe some of them? Should governments then impose those tariffs that are good? While these discussions are interesting in themselves, they also raise a more general question: what should economists be doing at all? The title of […]
Do All Creatures, Great and Small, and Made From Silicon, Have Rights? (with Jeff Sebo) - Econlib
Should monkeys have the same rights as humans? What about elephants, ants, or invertebrates? NYU philosopher Jeff Sebo makes the case for expanding your moral circle to many more beings than you might expect, including those based on silicon chips. Listen as Sebo and EconTalk’s Russ Roberts discuss to whom and what we owe moral consideration, how we determine a being’s intrinsic moral […]
Laws are for the little people - Econlib
I’ve always been skeptical of people that use “national security” as a justification for various repressive policies, including government secrecy, trade barriers, the military draft, censorship, and even taking over Greenland. That’s not to suggest that national security is never a valid concern—I would not advocate releasing nuclear weapons secrets—rather that the concept is overused, […]
My Weekly Reading for March 30, 2025 - Econlib
Federal Spending Is a Leaky Bucket by Chris Edwards, Cato at Liberty, March 24, 2025. Excerpt: There are two sides to the inefficiency of federal spending. Spending is funded by taxes, which distort the working, investing, and entrepreneurial choices of individuals and businesses. Each additional dollar in income taxes causes about 40 to […]
No, VATs are not like export subsidies - Econlib
Tyler Cowen recently made an uncharacteristic mistake: But there is another way to pose the question and that is “should the resources in the EU be allocated toward export, or not?” And then exports are VAT-free, and within-EU sales generally are not VAT-free. So there is an encouragement to exports here. America has sales taxes, […]
Social Contract Ambiguity - Econlib
Michael Huemer’s book The Problem of Political Authority examines various arguments given in favor of establishing the existence of political authority, which he defines as a property containing two aspects: (i) Political legitimacy: the right, on the part of a government, to make certain sorts of laws and enforce them by coercion against the members of its […]
Largest tax increase in US history? - Econlib
The recently announced auto tariffs are expected to raise roughly $100 billion per year in revenue. How does that compare with other major tax increases? According to the Tax Foundation, the previous record was $76.8 billion for the 2011 tax increase to finance the ACA (Obamacare). In real terms, the auto tariffs are not as […]
The Strangers Who Live Among You - Econlib
I wonder how Christians who favor the current US government’s war on immigrants can reconcile their stance with Leviticus 19:34, which reads (King James version): But the stranger who dwelleth with you shall be unto you as one born among you, and thou shalt love him as thyself, for ye were strangers in the land […]
Don Boudreaux Responds to Me and I Respond to Don - Econlib
I posted on Monday about where I agreed and disagreed with a statement by Veronique de Rugy about imports and exports, particularly about exports. In doing so, I was also disagreeing with Don Boudreaux. Don responded the same day with 2 lengthy comments on my post and 1 new post on his CafeHayek. But Don […]
Breaking the Symmetry - Free Trade Edition - Econlib
A while back, I wrote a post criticizing Yoram Hazony’s concern that free trade, while generally good, can undermine the bonds of mutual loyalty among citizens. My claim was that “mutual loyalty” by itself does not give a positive reason to prefer intranational over international trade: Suppose I’m looking to build a house, and I […]
The new China Shock - Econlib
There’s a widespread perception that trade with China caused increased unemployment in America. This is false. Imports from China did reduce jobs in some industries, but this did not have any effect on the overall unemployment rate, as even more jobs were generated in other industries. Last year, the Chinese trade surplus rose to nearly […]
Trade Deficits Cannot be “Managed” - Econlib
Writing for the Peterson Institute for International Economics (PIIE), Dr Maurice Obstfeld has a great, non-technical piece addressing some of the claims made by Michael Pettis (among others) that a trade deficit must be “managed.” Obstfeld details the theoretical and empirical issues with Pettis’s claims very succinctly. Allow me to supplement Obstfeld’s comments with my […]
TikTok: Godot, Absurd Politics, and Knaves - Econlib
The TikTok saga, which will soon rebound, seems to belong to the theater of the absurd. I tell the story up to late January in the just published Spring issue of Regulation. My piece is available online in an html or pdf version. The first paragraph summarizes the absurd affair: Imagine you are watching a […]
Why Methodological Cosmopolitanism? - Econlib
Cosmopolitanism is the idea that all people on the planet are part of a global community. The philosophy of cosmopolitanism is very broad, sometimes advocating universal rules, or that we should all have the same partiality to people far away than we do closer to us. By appending the modifier “methodological” to “cosmopolitanism,” I mean […]
Pointless Wars - Econlib
In previous posts, I’ve criticized ambiguity in foreign policy. I cited the example of the Gulf War (1991), which occurred because a US official gave Saddam Hussein the impression that we would not object to an invasion of Kuwait. That was clearly an incorrect signal, and as a result we were drawn into a costly […]
Bird Brains, Bird Sex, and All Kinds of Beauty (with Matt Ridley) - Econlib
Bright colors, long tails, and dances of seduction: they may hurt a bird’s chances of survival in the wild, but they seem to increase the chances of reproduction. Is this all part of natural selection or is sexual selection its own force in the bird world? Is there such a thing as beauty for beauty’s sake? What can we […]
China's Trade Surpluses are Not a Source of Strength - Econlib
In his new book Dawn’s Early Light: Taking Back Washington to Save America, Kevin Roberts of the Heritage Foundation argues that, “China believes it has a mandate to rule the world,” and that it is using trade balances to accomplish this. This is an old tactic. “As far back as the Roman Empire,” Roberts argues, […]
A Rare Disagreement with Veronique de Rugy and Don Boudreaux about International Trade - Econlib
Does purchase of imports necessarily imply that we must export? On March 21, 2025, economist Don Boudreaux quoted, on Café Hayek, the following passage from a chapter written by Veronique de Rugy. Here it is: One of the biggest fallacies about trade is that the ultimate value of trade for a country is […]
Is fiscal policy effective? - Econlib
Valerie A. Ramey of the Hoover Institution has a new NBER paper that examines the impact of lump sum transfer payments on aggregate demand. Here is the abstract: This paper re-evaluates the effectiveness of temporary transfers in stimulating the macroeconomy, using evidence from four case studies. The rebirth of Keynesian stabilization policy has lingering costs […]
The Justice of (Classical) Liberal Anarchy - Econlib
The new issue of Regulation (Vol. 48, No. 1 [Spring 2025]) features, under the rubric “From the Past,” my review of Anthony de Jasay’s book Justice and Its Surroundings (Liberty Fund, 2002). This book may appeal more to political philosophers than to economists, compared with Against Politics (Routledge, 1997) which I recently reviewed for Econlib. […]
My Weekly Reading for March 23, 2025 - Econlib
A Revolution Against Regulation by John Berlau, Law & Liberty, March 20, 2025. Excerpts: The phrase “regulation without representation” also connotes the battle that George Washington and other American patriots fought against taxation without representation. But in researching my book George Washington, Entrepreneur, I found that “regulation without representation” is more than just linguistically connected to […]
Tariffs and Inflation - Econlib
As I write this, much digital ink is being spilled on inflationary pressures from Trump’s latest round of tariffs on Mexico, Canada, and China. These are our three biggest trading partners, representing vast amounts of goods over many industries and sectors, affecting both American consumers and American firms alike. Price concerns are legitimate. But we […]
Homo Economicus and Home Buying Economics - Econlib
Economists are often criticized for assuming people behave like homo economicus – some kind of perfectly rational machine making emotionless decisions based entirely on money. Of course, no competent economist actually thinks this way, just as no competent physicist believes that billiard balls are perfectly round spheres operating in a vacuum on a perfectly flat, frictionless surface. […]
One Requirement of the Rule of Law - Econlib
There is something that, I think, libertarians have learned, or should be learning, from the current American administration about the rule of law. One illustration among many was provided on March 13 when Ursula von der Leyen announced the European Union’s response to Trump’s 25% tariffs on steel and aluminum imports. (See “EU and Canada […]
Lessons from Lincoln, Then and Now - Econlib
As The United States approaches its 250th anniversary in 2026, there is no better time to study the great men and women who built, protected, and improved the nation. Many historians regard Abraham Lincoln as America’s greatest President, for good reason. Lincoln mended the fractured United States, wrote the Emancipation Proclamation, and gave some of […]
Why Torsten Sløk was correct - Econlib
Bloomberg has an article with the following title and subhead: How Torsten Slok Solved the ‘Sherlock Holmes Mystery’ of the Economy When others thought a recession was inevitable, Apollo’s chief economist correctly predicted more growth. He did it by looking at the data. Sløk seems to be one of the few economic pundits that is […]
Defending Apple's DEI Program - Econlib
DEI is often criticized as a modern religion. Without getting into the weeds of that discussion, I would say that my attitude toward DEI, broadly understood, actually does fit neatly into the First Amendment’s view of religion – that the state should pass no law establishing it, nor prohibit the free exercise thereof. Many companies […]
My New Thought about DOGE - Econlib
I gave an OLLI (Osher Lifelong Learning Institute) talk on Tuesday on President Trump’s economic policies and actions. As you might imagine, it was pretty negative–on failure to cut major spending programs, on cracking down on both illegal and legal immigration, and on tariffs. The one potentially bright spot was on DOGE. I led by […]
My Talk at UW - Superior - Econlib
On March 4, I had the great pleasure of giving a talk at UW – Superior on my research on cascading expert failure (ungated version here). You can find a video of the talk on my YouTube channel . Thanks to Dr Joshua K. Bedi for hosting and for the Wisconsin Institute for Citizenship and […]
A Win-Win Proposal to Fix Social Security - Econlib
Everyone knows Social Security is broke and broken. According to the latest OASDI Trustees Report, Social Security has been paying out more than its total revenue (payroll taxes and trust fund) since 2021, and the latest projections have the Social Security trust fund depleted by 2033. After that date, it will only pay 79% of […]