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History for the Books: Javier Milei & Argentina’s Budget - Econlib
For most of 2023, Javier Milei advocated a number of libertarian policies aimed at reversing Argentina’s long economically downward trend. Among them was a proposal that was noted for its difficulty in a country known for its ever-increasing level of public spending. ‘It can’t be done,’ they said. Yet he did it: Under the presidency […]
Cotton v Wool Price Theory: Cutsinger's Solution - Econlib
[Editor’s note: We’re bringing back price theory with our series on Price Theory problems with Professor Bryan Cutsinger. You can view the previous problem and Cutsinger’s solution here and here. Share your proposed solutions in the Comments. Professor Cutsinger will be present in the comments for the next two weeks, and we’ll again post his proposed solution shortly thereafter. […]
Weep, Shudder, Die: The Secret of Opera Revealed (with Dana Gioia) - Econlib
[ANNUAL LISTENER SURVEY: https://www.surveymonkey.com/r/KYV5XPG. Vote for your 2024 favorites!] How can opera, with words we rarely understand, make us cry? Why does opera, filled with melodrama, move us? Listen as poet and librettist Dana Gioia explains to EconTalk’s Russ Roberts why words matter more than we think, in both opera and on Broadway.
I Win My Recent Inaugural Bet - Econlib
On December 21, 2024, my friend Dan Klein, an economics professor at George Mason University, sent out an email to a list that I’m no longer on but cc:ed me, with the following offer: Anyone want to give me 8:1 odds that on Jan 21 Trump won’t have been inaugurated? He linked to this post […]
The Peaceful Transfer of Power: A Few Reflections - Econlib
The experience of the two last federal elections in America suggests that “the left” is more interested than “the right” in a peaceful transfer of power. (By “the left” and “the right,” I simply mean most individuals who identify with either the Democratic Party or the Republican Party.) Kamela Harris gave a magistral lesson to […]
Liberalism as a vaccine - Econlib
This post might be misinterpreted in a couple ways, so read the following two points carefully: 1. I’m not defining liberalism in the American sense of left-of-center Democrat. I am using the term in the international sense of supporter of free speech, human rights, a market economy, democracy, civil rights, opposition to nationalism, etc. 2. […]
My Weekly Reading for January 19, 2025 - Econlib
Regulations Keep Millions of Bedrooms Empty During a Housing Crisis by Howard Husock, Reason, January 17, 2025. Excerpts: The U.S. is facing a housing affordability crisis, and new data from Realtor.comhighlight an often missed contributing factor: millions of empty bedrooms. Census data reveal 31.8 million “excess” bedrooms in American homes—compared to just 4 million […]
Greedflation in Turkey? How about greedspending? - Econlib
It turns out that “greedflation” is not just an American misconception, the same fallacy exists in many other countries. Kürşad Görgen has a blog discussing Turkish monetary policy issues, from a market monetarist perspective. Last year, he did a post discussing some rather unconventional views: After the 2023 elections, Turkey abandoned its infamous NeoFisherian interest […]
Government Junk Fees - Econlib
The FTC is rumored to be preparing legal action against Greystar, the largest landlord in the US, for “hidden fees”, also called “junk fees” (“FTC Prepares to Sue Largest U.S. Apartment Landlord Over Hidden Fees,” Wall Street Journal, January 13, 2025): The FTC finalized its hidden-fees rule last month and said it would seek civil […]
Financial Education and Economic Development - Econlib
Financial education is an essential component for the economic and social development of nations. In an increasingly interconnected world, understanding how personal finances and markets operate is an indispensable skill for individuals and economies alike. However, in countries like Colombia, the lack of financial education negatively impacts financial inclusion, investment, and economic growth. From a […]
The Wielders of One-Bladed Scissors - Econlib
The title of this post is a nod to Alfred Marshall, who stressed that supply and demand analysis required we think about “both blades of the scissors.” Prices are not set by supply or demand alone – it is the interaction between the two that is crucial. It is for this reason Greg Mankiw once […]
A Coase Story about Gambling - Econlib
Fellow economist Susan Woodward sent me this anecdote about Ronald Coase and gambling that I thought worth sharing. It led me to remember my own interesting story about gambling and one famous economist. Bob Hall [her husband] and I were talking about the 1987 Coase conference at Yale, which I attended but Bob did not. I […]
Thank Goodness He Didn't Spend All of It - Econlib
In the middle of the night your drunk father goes to the sugar bowl where your mother and you have put your savings and pulls out $1,000. He plans to spend $400 on booze and then waste the rest on various items. He spends the $400 on booze. But on the way home from […]
Fiscal Discipline: Reduce Spending and Empower People - Econlib
The federal government’s $36 trillion debt isn’t just a fiscal issue—it’s a direct threat to economic freedom and prosperity. Every dollar borrowed is taken from us and future generations, limiting opportunities for growth and innovation. But there are more poor policies at the federal, state, and local levels stifling opportunity, which should be addressed in […]
Dealing with Danes - Econlib
Tyler Cowen recently made the following comment: I still am glad we bought the Danish West Indies in 1917. Nor do I hear many Danes, or island natives, complain about this. This issue has been revived due to discussion regarding the purchase of Greenland. So who got the better of that earlier deal? Or was […]
Why A Canada/U.S. Union is a Bad Idea - Econlib
I came across this article that I wrote over 20 years ago for a Canadian audience. It’s a propos now. I’ve made only small edits. The main problem with the union of Canada and the United States is that it would reduce the number of competing political jurisdictions in the world. This is almost […]
Trade and Competition - Econlib
I recently mentioned Diana Mutz’s book Winners and Losers: The Psychology of Foreign Trade and was struck by how people think of international trade as a competitive activity. Of course, I really shouldn’t be surprised by this. Over 30 years ago, Paul Krugman’s excellent essay “Competitiveness: A Dangerous Obsession” was published in Foreign Affairs. In […]
To the Cost-Cutting Enthusiasts, Good Luck! - Econlib
Elon Musk and Vivek Ramaswamy, co-chairs of President-Elect Donald Trump’s Department of Government Efficiency (DOGE) initiative, intend to reduce federal spending by $2 trillion (over an undisclosed time period), along with a substantial reduction in the federal workforce. Musk, Ramaswamy, and their army of unpaid volunteer cost-cutters will likely fall miserably short of their admirable […]
Confusions About Collectives - Econlib
Humans work in groups all the time. Indeed, I argue we are stronger because of it. Specialization and trade allows for a team to achieve things no individual could accomplish on their own. Economists since Adam Smith have highlighted the group efforts needed to produce even simple things such as wool coats, pencils, and bread. […]
The case against price controls - Econlib
Ryan Bourne recently edited a book that examines various types of price controls, and more broadly looks at the recent increase in hostility toward allowing markets to set prices. Here’s Bourne from pages 88-89 of The War on Prices: [N]o planner can harness the knowledge necessary to effectively allocate goods and services to their highest-valued […]
Jimmy Carter: The Great Deregulator? - Econlib
Jimmy Carter’s term as U. S. President (1977–1981) included major deregulation with airlines, motor carriers, and railroads. Other advances were scored in communications, tax policy, and regulatory budgeting. But the “great deregulator” had a very different approach with energy, which (along with inflation) defined his economic infamy. Carter began wellhead deregulation of petroleum and natural […]
Will DOGE and Musk Make a Difference? (with Michael Munger) - Econlib
[ANNUAL LISTENER SURVEY: https://www.surveymonkey.com/r/KYV5XPG. Vote for your 2024 favorites!] Can Musk use DOGE to reduce the size and power of the bureaucracy and big government? Michael Munger of Duke University thinks not, but EconTalk’s Russ Roberts isn’t so sure. Listen as they discuss the risks of empowering bureaucrats to rein in other bureaucrats and whether change can really […]
Businessmen: From Free Traders to Vile Courtiers? - Econlib
One would think that businessmen should easily understand the importance of trade. Some certainly do who are trying to lobby President-elect Donald Trump not to follow through on his protectionist threats (“CEOs Want Trump to Change Course on Tariffs. He Isn’t Budging,” Wall Street Journal, December 15, 2024). They seem to be defending their freedom […]
Short-term thinking - Econlib
There is often a conflict between policies that make things feel good in the short run and those that are optimal in the long run. This is one reason why I am fairly pessimistic about global warming—the world’s political systems are not well suited to addressing this issue. Perhaps the most famous example in the […]
My Weekly Reading and Viewing for January 12, 2025 - Econlib
Age-Verification Laws are a Verified Mistake by Corbin K. Barthold, Law & Liberty, January 9, 2025. Excerpt: Now legislators, both state and federal, are going the other way. They’re introducing, supporting, and (only, so far, at the state level) enacting bills that impose age-verification requirements on social media platforms and adult websites. Current online age-verification […]
Endowment Oversight in the Ivys - Econlib
The eight Ivy League endowments averaged 8.3% return in fiscal year 2023-24 (July 1, 2023, to June 30, 2024). Comparable schools like Stanford and MIT returned 8.4% and 8.9% respectively. In sharp contrast, the S&P 500 gained 23.5% for the same period, almost triple the Ivies. To make matters worse, universities allocate tens of millions […]
It's all about the Fed? - Econlib
Earlier today, I heard a CNBC commentator discussing today’s decline in stock prices. He said something to the effect, “It’s all about the Fed.” In fact, it’s rare that there is a day when it was so little about the Fed. Yes, higher interest rates played a role in lower stock prices, but these interest […]
Mutz, Caplan, and Anti-Foreign Bias - Econlib
In Bryan Caplan’s book The Myth of the Rational Voter: Why Democracies Choose Bad Policies, he outlines four biases impacting how most voters think about economics. One of the biases he identifies is anti-foreign bias – the tendency of voters to become especially pessimistic about the economic impact of dealing with foreigners. A recent book by […]
Don't buy Greenland, sell Alaska - Econlib
Every so often, there is renewed interest in buying Greenland. I suspect that this is not likely to occur, as Greenland is currently not for sale. In any case, I have a better idea; sell Alaska to Canada, where it clearly belongs. In grammar school, we were taught that “Seward’s folly” actually turned out to […]
Hitting the Right Target with Monetary Policy - Econlib
Most central banks around the world have a price stability mandate, and since the international monetary system regained its footing on a fiat basis after the inflations of the 1970s, that is mostly understood to mean a low inflation target. Over the past couple decades though, a growing number of economists have suggested instead an […]
Critics of Free Markets Strike Out - Econlib
The signers also made a criticism that we often hear from critics of the free market: the idea of market failure. They wrote: The laissez-faire model assumes that markets work perfectly if the government does not intervene. But unregulated markets are not benign—they reinforce unequal power relations that worsen inequality and hinder the application […]
Rational Crime and Subjective Probability - Econlib
Here’s a personal tidbit about me – I’m a bit of a true crime buff. I often listen to true crime podcasts and audio essays while unwinding at the end of the day, or during my time in the gym. (My wife finds the idea of listening to podcasts talking about horrific crimes to be […]
Regulating Rents - Econlib
Many Americans are increasingly disillusioned with the ability of the free market to bring down skyrocketing housing prices. More Americans believe housing prices to be inflated by the greed of landlords and lobbyists, combined with the inability of policymakers to effectively regulate housing costs. Proof of this is that rent control has returned to the […]
A Longer-Term Simon/Ehrlich Bet - Econlib
Many of you have probably read about the famous bet in 1980 between Julian Simon and Paul Ehrlich. I wrote about it here. The bet was based on their underlying views of the world. Ehrlich, the pessimist, thought population growth would run up against resource constraints, driving the prices of various materials higher. Simon, […]
Politics, the Military, and the Sagittarius A* Black Hole - Econlib
Two American-born citizens with military experience, one a veteran, the other a current soldier, committed public mayhem at the beginning of the new year: veteran Shamsud-Din Jabbar in New Orleans and decorated Green Beret Matthew Livelsberger in Las Vegas—the former case being much more destructive and lethal. Both events raise troubling questions about what caused […]
Democracy for Liberal People: Part 2 - Econlib
Inclusion and openness In Part 1, I wrote about Don Lavoie’s argument that robust liberalism requires open (democratic) politics that can make useful the tacit, dispersed knowledge of voters’ “interests, concerns, and demands to provide governance structures that people will use to resolve political disagreements peacefully.” Liberalism requires open democracy just as it requires open […]
Not Your Grandfather's America - Econlib
As I get older, I increasingly feel like this isn’t the country I grew up in. The most dramatic recent changes have been in the area of politics, where the system is becoming almost unrecognizable to those of us who were born in the mid-20th century. Here’s Bloomberg: The coalition between Clegg and Zuckerberg, the […]
The Reluctant Activist, or Not Only Can You Fight City Hall, You Can Actually Win - Econlib
The person who says it cannot be done should not interrupt the person doing it. ~ Chinese Proverb “That will be thirteen ninety-nine plus a dollar and one cent for tax,” said the clerk at Orchard Supply Hardware. I handed him my Visa card. After leaving the store with my wife on a beautiful Saturday […]
An Economic Approach to Homer's Odyssey: Part I - Econlib
Modeling Homer’s World An economic approach to Homer’s Odyssey1 is most definitely not about “what Homer really meant.” Instead, the economic approach views Homer through a lens that Homer himself probably never entertained, namely a series of relatively simple models about preferences and constraints. The economic approach is thus a distortion, but perhaps a useful […]
Understanding the Settler Colonialism Movement (with Adam Kirsch) - Econlib
[ANNUAL LISTENER SURVEY: https://www.surveymonkey.com/r/KYV5XPG. Vote for your 2024 favorites!] Under settler colonialism, you’re either a settler or indigenous and the sin of the founding of America, Australia, and Israel, for example, is not just a past injustice but a perpetuating mistake that explains the present. Listen as poet, author, and literary critic Adam Kirsch explains […]