Tuesday, April 14, 2009

A Goodbye of Sorts

The fine folks at TPS have asked me to join the team. So if you have enjoyed reading my rants thus far, update your RSS reader to reflect my new location.

Thanks for reading and commenting over the last year and a half.

Saturday, April 11, 2009


A good date makes you dinner.
A great date makes you dinner and helps you finish off a sixer.

Sunday, March 29, 2009

Joke of the Day

I had a funny thought today. It followed a comment on my status (which read: Will is up and at 'em.); my friend Annette thought the phrase was "up and adam," but admits that my version actually makes sense. My remarks were as follows:
I always find it amusing when cliches morph.

For example, my grandma often says "a bird in the bush" as if this phrase has any meaning in and of itself. I know that she is referring to the proverbial bird in the hand which is worth TWO in the bush. I am just confused as to how this simplified to a single bird in a bush.

I have often thought about cutting her off by saying "I know, it's worth 0.5 in the hand." But this doesn't seem right. Surely half a bird is worth less than half the value of a whole bird... especially if you are interested in keeping birds as pets.
I also find it amusing when people say "I could care less." when they actually mean that they COULDN'T care any less. One of my favorite YouTubers, hotforwords, comments on this in more detail.


Today's XKCD is incredible (particularly because I am working on a paper regarding lock-in)!

Remembering Friedman

His clarity and persuasiveness always amazes me.

Friday, March 27, 2009

Wednesday, March 25, 2009

Helmet Laws

Some members of the motorcycle club I am in were discussing helmet laws. My comment follows:
"I guess some folks' "personal liberties" are more important than safety."

I think personal liberties are pretty important.

Nothing is "safe," it is a matter of degrees. Crossing the road is unsafe. So is eating meat. Or breathing, even, since many germs are airborne (of course, not breathing is pretty unsafe too!). The question is not between personal liberties and safety. Instead, it is a matter of WHO gets to decide WHAT LEVEL of safety is appropriate for YOU. Those of us who prefer personal liberties think that YOU are in the best position to decide what is best for YOU. And, if you think otherwise, you can always put someone else in charge of your life (Isn't that what marriage is?).

Surely you would not argue that riding a motorcycle is (a) 100% safe or even (b) safer than alternative forms of transportation. Yet YOU decide that the benefits from riding a motorcycle outweigh the potential costs of a motorcycle accident. And I respect your decision.

My mom doesn't respect your decision. And she'd try to convince you it is a bad idea to ride... which is well within her rights to do. It would not be okay for her to lock you up or make you pay a fine for deciding to go for a jaunt on a Saturday afternoon. Yet this is exactly what laws like "You must wear a helmet" do. They say what most people feel is an appropriate decision for them and then force that decision on everyone else.

So if you think everyone should wear a helmet, convince them. But using the force of law is inappropriate.

Tuesday, March 24, 2009

Fire Dennis!

As Milton Friedman once said, "There is nothing more permanent than a temporary government program." But Dennis Lennox is trying to abolish a PERMANENT government position in Cheboygan, Michigan. HIS position.

Maybe libertarians should take note of this strategy...

Monday, March 23, 2009

Blockquoting X

I found this gem in the comments section at TAE:
The best part of being a member of the AEA was that I received the directory of all assn. members -- with addresses, office phone numbers, even many with home phone numbers. As a junior I called Milton Friedman's office -- got his secretary and asked if I sent a copy of my Free to Choose book, would he and Rose sign it. Certainly he would, she responded, and off it went. I also called John Kenneth Galbraith's home (I don't recall if I got that number from the directory or from his department secretary). I wanted to drill him on his Keynesianism. Instead, his housekeeper answered and refused to allow me to talk to him.
Very nice, Dr. Prychitko.

Friday, March 20, 2009

Blockquoting X

X = Harold Demsetz:
Whether the free enterprise solution can be improved upon by the substitution of the government or other nonprofit institutions in the financing of research cannot be ascertained solely by examining the free enterprise solution. The political or nonprofit forces that are substituted for free enterprise must be analyzed and the outcome of the workings of these forces must be compared to the market solution before any such conclusion can be drawn. (Information and Efficiency: Another Viewpoint, p. 2)

Wednesday, March 18, 2009

Opening Line

I have always wanted to write a novel. But the first line seems to be the selling point. How about:
"We are free men. And free men must submit to authority." The words echoed throughout the room from a small radio in the corner.
What do you think?

Maybe I will just edit this and enter The Bulwer-Lytton Fiction Contest. That seems like a more manageable task.

Tuesday, March 17, 2009

Blockquoting X

It is game day every day for me. It is judgment day every moment of every day. It is only one way to play the game of life, and that is to play to win. Winning is a way of life. Winning is the only way. I no longer recognize or identify with the poor mentalities or mind states of the universe. I study hard, train hard, eat hard, sleep hard, vision big, think big, act big, and yet I still walk and talk with a sense of humility and peace. I’m so sincere people. I am so serious.
Try not to laugh. Today's X is Maurice Clarett, former Buckeye running back, present prisoner at Toledo Correctional Institution, and (if you can believe it) blogger.

He does not have an internet connection, so he must relay posts to friends and family via phone.

Saturday, March 07, 2009

Thursday, February 12, 2009

On Settling

I just read an interesting article on settling written by self-proclaimed feminist, Lori Gottlieb.
Whenever I make the case for settling, people look at me with creased brows of disapproval or frowns of disappointment, the way a child might look at an older sibling who just informed her that Jerry’s Kids aren’t going to walk, even if you send them money.


It sounds obvious now, but I didn’t fully appreciate back then that what makes for a good marriage isn’t necessarily what makes for a good romantic relationship. Once you’re married, it’s not about whom you want to go on vacation with; it’s about whom you want to run a household with. Marriage isn’t a passion-fest; it’s more like a partnership formed to run a very small, mundane, and often boring nonprofit business. And I mean this in a good way.
Personally, I support the idea of settling. Finding the perfect person is just too costly. When do we hold out for the perfect anything? In a world where search costs are positive, we always settle. The more important question:What characteristics are most important and by what magnitude?

It's entertaining. And something to think about. Certainly good conversation fodder for the upcoming Valentine's Day. ATSRTWT

[HT: Angela]

Considering Dating Pools

This XKCD comic got me thinking this morning. I agree that the quantity of prospects might increase as one gets older. However, what is there to be said about the quality of these prospects? I drafted the following chart to help with this discussion.

There are a few things to note about this graph. First, the shape of the curve f(x) is such that f'(x) < 0; for some initial age A to A + E, f''(x) > 0; from A + E to infinity, f''(x) < 0. This first derivative expresses that people are exiting the dating pool (by marriage, death, etc.). The second derivative states that they do so at an increasing and then decreasing rate (a lot of people exit around 23-30, while fewer exit from 40-50). The area under the curve is the total number of prospects in your non-creepy range.

Suppose you are x years old (where x > 26). What can you conclude about your prospects? I'd suggest that those to the right of the dashed line are probably lower quality prospects. Probably. There are certainly some who have not yet married because they were focusing on their careers or traveling the world. But most are simply the leftovers.

If we were to adjust the original XKCD findings to include a qualitative measure, we would essentially eliminate the area to the right of the dashed line. However, a portion of those to the left are low quality as well. This could be illustrated by shifting the entire f(x) curve down.

Now let's think of this in a dynamic sense. Every year, your x moves one notch to the right. But, a batch of new prospects (NP) enter your non-creepy range on the left [recall that we are ignoring those entering on the far right because we already know they are low quality]. Of these new prospects, a portion of them are low quality, NP(LQ), and as such are above the red curve (but below the black curve). The rest, however, are average quality, NP(AQ).

At the same time, a portion of the average quality prospects who had entered the dating pool in earlier years exit the pool (again, by marriage, death, etc.). Let's call them EP(AQ). The question, then, is whether NP(AQ) is greater than, less than, or equal to EP(AQ).

I think some back of the envelope calculations would support the original XKCD hypothesis. Even adjusting for quality, your non-creepy dating prospects increase until around middle age.

So don't feel bad if you are single on Valentine's Day. Unless you are middle aged or older...

[HT: Angela]

Tuesday, February 03, 2009

Nailed 'Em - Amtrak Photographer

Second Amendment

Who's rights are protected by the US constitution? I would say American citizens. Rahm Emmanuel has a slightly different view (at least with respect to #2):
If you're on that no fly list, your access to the right to bear arms is canceled. Because you're not part of the American family. You don't deserve that right. There is no right for you, if you're on that terror list.
I wonder if being a member of the American family (whatever that means) is a precondition for other rights protected by the constitution. That could be scary. And, if not, what argument allows one to make the exception for the second amendment?

Monday, February 02, 2009

Blockquoting X

X = Caplan. On rigorously solving GE equations:
There must be some journal that still takes these papers, but you don't want to be in it. Well, maybe you do. But you don't want to read it.


My friend Braam Hanekom will be speaking at Harvard Law this month.
Time and Place
Date: Monday, February 16, 2009
Time: 6:30pm - 8:30pm
Location: Ropes Grey, Harvard Law School
Street: 1563 Massachusetts Ave
City/Town: Cambridge, MA

The Zimbabwe Kupemha is a dinner to raise money for PASSOP (People Against Suffering, Suppression, Oppression, and Poverty), an organization based in Cape Town, South Africa that works both with Zimbabwean refugees in South Africa and with those remaining in Zimbabwe.

Braam Hanekom, the Chairperson of PASSOP, will be speaking at the event about the current situation in Zimbabwe, as well as about PASSOP's initiatives to aid Zimbabweans. Braam is regularly featured in South African media reports on the problems immigrants face in South Africa, in addition to the situation in Zimbabwe. Braam recently won the Inyathelo Award for Youth in Philanthropy, an award from the South African Institute for Advancement.
Tickets are $20. Contact Leigh Ann for additional information: lwebster@jd10.law.harvard.edu

Trust Us

After all, you elected Us because We know best.

That seems to be the message broadcasting from the leader at the top of the party in power. In all honesty, I am becoming increasingly afraid of a full embrace of collectivism under Obama. I am typically quick to brush off all the right-wing propaganda. But three things have me second guessing this initial impulse:

1. Lot's of people love him. And it's the do-anything-for-you sort of love. Exhibit A.

2. There is already talk of mandatory national service. Exibit B.

3. The so-called financial crisis. And we will let Higgs' work on the Ratchet Effect stand as Exhibit C.

If I am unnecessarily fearful, please correct me.

Wednesday, January 28, 2009

With all due respect, Mr. President...

that is not true.

So reads Cato's full page advertisement in the NYT in response to this quote from President Obama:
There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.
Cato lists many, many economists who disagree. See the whole advertisement here (including 8 signatures from GMU professors).

Tuesday, January 27, 2009

The Bailout Game

Move over Monopoly, there's a new game in town: The Bailout Game.

Gone are the days when only politicians in Washington could throw away vast sums of money on potentially failing banks. Now, you can try your hand at squandering tax dollars from the comforts of your own living room. But watch out. The evil recession is creeping up from behind.

Seriously, though. If you have not seen this yet, check it out.

Manual Jokes

From page 6 of Getting Started with Stata for Macintosh:
Starting Stata from the Dock
You may wish to keep Stata in your Dock so that you can start it quickly. While Stata is still running, drag the Stata icon shown in the Dock either to a new position on the Dock or simply up and down again. After you quit Stata, its icon will remain in the Dock and can be double clicked to start the application.

If you have many Stata projects in different folders, and you made differently named blank do-files for each folder, you can drag these to the Dock to start your work on each project. You could also add commonly used Stata data files to the Dock. There are many such shortcuts you could use. Pick your poisson.
Some of you are still looking for the joke, Some of you assumed I made a typo. Two of you are laughing. And I know which two...

For those of you without initials L. J. or K. S., here is a hint.

Monday, January 26, 2009

Quoting Caplan

From this evening's class:
Pareto efficiency: you still have to learn it. But if you are interested in doing policy analysis, it's basically useless.

Sunday, January 25, 2009

Lies, Damn Lies, and...


Unemployment in the US, as of January 9, is estimated to be 7.2 percent. This is certainly high by American standards, but the European Union averaged roughly 8.5 percent from 1996-2006 (Data).

I cannot help but ask: do we have an economic crisis or a media frenzy? Please, show me the numbers.

Wednesday, January 21, 2009

Stimulus Gift Card

A little over a month ago, ThinkOOB suggested offering stimulus checks in the form of gift cards that expire after some period of time. They claim it would prevent people from saving the stimulus money. And they are right. Well, sort of. Can you spot the economic fallacy? These folks couldn't...
nerdrevenge Says:
December 1st, 2008 at 1:13 pm
I was a fan of this website before this idea showed up and now I am an even bigger fan. who comes up with this stuff and why isn’t anyone doing anything about it? This seems like something that someone should know about

policywonk Says:
December 2nd, 2008 at 6:46 am
This is why I alwyas check this site every week, because of stuff like this — We need to do this right away! Why didn’t they do this the first time? [...]

philr Says:
December 2nd, 2008 at 9:04 am
this is a GREAT idea. how do we get it “out there” so that it gets noticed other than by people like me who pore through policy blogs? You should have a links so that people can automatically forward these things to their congressperson

jimcalhoun Says:
December 4th, 2008 at 6:40 pm
the problem is that there is no way of getting the right people to listen. Anybody who reads this is going to say, duh, we should do this. BUt who is reading it? I see a lot of what looks like students and policy wonks but no one who can make it happen
Personal favorite:
bceconomist Says:
January 5th, 2009 at 5:05 pm
anyone see the Globe today? Ed Glaeser was lamenting that no one had come up with an idea to get people to spend their stimulus checks. Those Harvard people have to read this website before they mouth off in the paper. You don’t see us making that mistake.
Fortunately, someone eventually spoke up.
Will Says:
January 21st, 2009 at 3:23 pm
You have overlooked an important fact: MONEY IS FUNGIBLE. (Go look that word up, kids.)

So while soccer moms buy groceries on their stimulus cards, they reduce spending from other sources of income. The net effect of the stimulus card is probably comparable to a stimulus check. At best, you’ve made it minutely more difficult to save the additional income provided by the stimulus.

Although gift cards would prevent people from saving the stimulus money, they would not accomplish the actual goal of boosting aggregate demand. Remember: you cannot assume that people will not react to change. They usually do.

Back in the USSR

McCartney, in a 1984 interview with Playboy, states:
I wrote that as a kind of Beach Boys parody. And 'Back in the USA' was a Chuck Berry song, so it kinda took off from there. I just liked the idea of Georgia girls and talking about places like the Ukraine as if they were California, you know? It was also hands across the water, which I'm still conscious of. 'Cuz they like us out there, even though the bosses in the Kremlin may not. The kids do. And that to me is very important for the future of the race.
Even though the bosses in the Kremlin may not.

I think it is important to remember how invasive the state can become. The Swing Kids movement is another good example of this. It is equally important, IMHO, to do everything in our power to prevent this from happening.

Smart Stimulus

That's what Bryan Caplan and Arnold Kling are calling their policy recommendation. Check it out and tell me what you think.

Tuesday, January 20, 2009

More On Stimulation

In only 53 seconds, Nick Gillespie of ReasonTV offers "two ideas for stimulating the economy even more than John Holmes was stimulated in Saturday Night Beaver."

[HT: Boudreaux]

Monday, January 19, 2009

Describing Zim

Nelson Banya writes:
[...] prices double every day and more than 2,000 people have died in a cholera epidemic.
Longtime readers of this blog know how the mess that is Zimbabwe breaks my heart. For new readers, I spent 4.5 months in Cape Town, South Africa in 2007 where I met many Zimbabweans and participated in a couple protests/informational meetings with respect to the country.

What is truly disheartening is how Zim went from breadbasket to basket case under the leadership of Mugabe. It isn't that they are incapable (i.e. don't have the resources) of being more prosperous, but rather that the institutional framework perpetuates poverty. Imagine dealing with doubling prices every day. Most of us have not experienced doubling prices in our entire lives. And the last time I saw a cholera epidemic was while playing Oregon Trail.

Josh Hall at DOL has another interesting Zim quote.

Sunday, January 18, 2009

Temporary Tax Cuts

As the NYT reports, House Democrats released a tax plan on Friday with $275 billion in cuts in an effort to revive the economy.
But the tax provision likely to be of most interest is the two-year middle-class tax cut, which will provide up to $500 to individuals and up to $1,000 for couples earning less than $200,000 a year, the overwhelming majority of Americans.
Let's ignore normative questions surrounding the government's role in stimulating the economy and, instead, focus on the economic case: will temporary tax cuts boost aggregate demand?

The short answer is no. As the Life Cycle Hypothesis (developed by Modigliani and Fisher, among others) and Permanent Income Hypothesis (developed by Friedman) suggest, temporary changes in income have little effect on current consumption. The idea is that individuals smooth out consumption over the long run.

Let's make some rough calculations.
Δ Current Consumption = Δ Income/n

where Δ represents "change in" and n is the remaining number of years one expects to live.
Assuming the average recipient is 45 years old and expects to live until they are 78, n = 33. A temporary tax cut of $275 billion increases aggregate current consumption by $275b/33 = $8.33 billion. Of course, if you are anything like me, the word billion after any number reduces the entire value to "a lot". To clarify: a tax cut of $500 per person for two years would boost current consumption by $(500+500)/33 = $30.30 per person. I've had bigger bar tabs.

It might be unfair to leave the discussion at this point, though. The assumption implicit in the Life Cycle Hypothesis/Permanent Income Hypothesis is that individuals save in good times and dissave or borrow in bad times. It could be argued that the government is simply providing short-term credit to those who would dissave or borrow if they had savings to dip into or private lenders willing to make loans. If this is the case, we should expect a larger portion of the tax cut to affect current consumption.

At best, though, I think the government-as-lender idea opens up a can of worms. For example, how does the government know who would be willing to take out a loan? The decision to give tax cuts to everyone "earning less than $200,000 a year, the overwhelming majority of Americans" seems to suggest they don't know with any significant degree of precision. So even if one were to accept this line of thinking, a temporary tax cut is a particularly inefficient modus operandi.

[Please refrain from jokes about two-handed economists, as appropriate as they may be.]

Quote of the Day

From President-elect Obama:
Despite the enormity of the task that lies ahead, I stand here today as hopeful as ever that the United States of America will endure — that it will prevail, that the dream of our founders will live on in our time.
Dream of our founders? What dreams would that be?

It would be great if, in his inaugural address, Obama reveals his true stance as a strong supporter of minimal government intervention and a commitment to protecting the constitution (including the second amendment). I wouldn't rush over to Intrade, though.

Trivia: Warren G. Harding coined the term Founding Fathers in his keynote address to the 1916 Republican National Convention.

Superb Economic Analysis

...from a women's studies professor. I was surprised, to say the least. Lynn Comella, a professor at the University of Nevada, Las Vegas, makes the following statement:
"The recession might force the cream of the crop to rise to the top. There's some people who believe that a cleaning out of the market might be a good thing for the industry," Comella said. "2009 might not be all that bad, but it's going to bring the issue of quality to the foreground."
I should point out that she is referring to the porn industry. (I stumbled across this little gem when checking up on the potential porn bailout. BTW: no news, as of yet.)

This is similar to my (rather dismal) opinion on the current economic situation in general. Cheap credit has caused malinvestment. And these investments have prompted individuals to pursue training in areas that are not economically sustainable. We must allow market corrections to discipline us. Attempting to boost aggregate demand with a fancy stimulus package ignores the underlying problem.

What do you think?


Unfortunately, the only thing worse than working in a sweatshop for some people is not working in a sweatshop. In the NYT, Nicholas Kristof details where the impoverished of Phnom Penh, Cambodia turn when sweatshops are not an option:
It’s a mountain of festering refuse, a half-hour hike across, emitting clouds of smoke from subterranean fires.

The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound.
IMHO, Kristof's observations are spot on.
Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children.
He even provides testimonials.
“I’d love to get a job in a factory,” said Pim Srey Rath, a 19-year-old woman scavenging for plastic. “At least that work is in the shade. Here is where it’s hot.”
But this is by far his best line.
I’m glad that many Americans are repulsed by the idea of importing products made by barely paid, barely legal workers in dangerous factories. Yet sweatshops are only a symptom of poverty, not a cause, and banning them closes off one route out of poverty.

[HT: Boudreaux]

Thursday, January 15, 2009

Tullock 1, Austrians 0

I spent a few hours today working in the Tullock archives. Fortunately for all of you, I came across the following correspondence between the new TAE blogger and the old curmudgeon.

(Scribbled on a post-it attached to a paper entitled "Formalism in Austrian-School Welfare Economics: Another Pretense of Knowledge?")

Am I crazy, or are these other Austrians crazy?
Dave Prychitko

(Typed on official University of Arizona letterhead and dated August 1, 1995.)

David Prychitko
Department of Economics
State University of New York
Oswego, New York 13126

Dear Dave:

All Austrians are crazy.

Cordially yours,

Gordon Tullock
Karl Eller Professor of
Economics and Political Science

GT : lc
This could be the best Tullock insult discovered as of yet.

Wednesday, January 14, 2009

Economists on Stimulus Package

Here's what the skeptics say:
“A stimulus package of this magnitude is likely to contain many projects that are poor investments.”
‐ Alan Viard,
Resident Scholar, American Enterprise Institute

“Government spending does not create incentives for labor, innovation and investment. Instead of
spending $1 trillion in Washington, let Washington forgive $1 trillion in tax revenues to create incentives for
millions of individuals and firms to get the economy going again, one dollar at a time.”
‐ Donald Luskin
Chief Investment Officer, Trend Macrolytics LLC

“I have concerns about a stimulus spending bill. I think there are two criteria that may justify additional
spending: 1. The spending passes a long-term cost-benefit test. That test may be less rigorous now that
we are in a period of extremely low interest rates, but it should still be passed. 2. Alternatively, the
spending can be implemented very quickly and will have a significant impact on employment. I highly
doubt there are $1 trillion of new projects that meet one or both of these tests. I would rather see a
temporary suspension of some or all of the payroll tax.”
‐ Philip Levy
Resident Scholar, American Enterprise Institute

“The only way Congress can spend money is to extract it from the private sector – either by taxing it,
borrowing it, or seignorage. The question then becomes: will Congress spend that money more wisely than
the private sector would have spent it? The answer appears to be no. Congress typically spends
according to its political priorities, not economic priorities.”
‐ Michael Cannon
Cato Institute

“It is time for voters to wake up to the fact that government cannot create jobs. It can only shift jobs from
one part of the economy to the other. It is entrepreneurs who create jobs, and it is consumers who judge
whether those jobs are the best jobs to be created. The government contributes best by establishing a rule
of law and protection of property rights that allows entrepreneurs and consumers to act in their best
‐ Antony Davies
Associate Professor of Economics, Duquesne University

“The stimulus plan will most probably turn quickly into pork spending. Marginal rate tax cuts would be a
much more effective way to stimulate demand along with cuts in the capital gains and corporate tax rates.
Evidence shows that marginal tax cut multipliers are much higher than spending multipliers. In addition the
Fed is still not out of ammunition.”
‐ Joseph Zoric
Associate Professor of Economics, Franciscan University of Steubenville

“Fiscal stimulus may have symbolic value and certainly does provide an expedient for distributive politics,
but there is NO evidence that it contributes to GDP or economic growth more broadly.”
‐ Edward Lopez
Associate Professor of Law and Economics, San Jose State University

“The empirical evidence overwhelmingly rejects federal government deficit spending as the best method for
stimulating the economy, and is generally unsupportive of it having any stimulus effect at all.”
‐ Justin Ross
Assistant Professor of Economics, School of Public and Environmental Affairs, Indiana

“There is not only the problem that efficient projects are often slow to get to the point where they generate
actual expenditures, but also that once the government starts spending it is hard to turn off the tap when
the stimulus is no longer needed.”
‐ Thomas Mayer
Professor Emeritus, University of California –Davis

“The stimulus plans assume consumption is the source of economic growth. It is not. It is the
consequence of said growth. The ‘stimulus’ is a redistribution of spending, at best, and will do little to help.
The next Administration should avoid large scale programs and experimentation and allow the marketplace
to correct the errors made by the last 8 years of misguided intervention.”
‐ Steven Horwitz
Charles A. Dana Professor of Economics, St. Lawrence University

“Any so-called stimulus program is a ruse. The government can increase its spending only by reducing
private spending equivalently. Whether government finances its added spending by increasing taxes, by
borrowing, or by inflating the currency, the added spending will be offset by reduced private spending.
Furthermore, private spending is generally more efficient than the government spending that would replace
it because people act more carefully when they spend their own money than when they spend other
people's money.”
‐ Richard Wagner
Professor of Economics, George Mason University

“Want to grow the economy without inflation? Cut marginal tax rates, slash the corporate rate, expense
investment in the first year (instead of depreciation), keep tax rates low on dividends and capital gains, and
repeal the death tax. Have the Federal Reserve focus on price stability and a sound dollar, and on not
generating a monetary roller coaster. (That, in part, is what caused the housing and commodities bubbles.)
Rein in government spending to pay for the tax cuts, and trim senseless regulation.”
‐ Stephen Entin
President & Executive Director, Institute for Research on the Economics of Taxation

“Rather than old style Keynesianism we should reduce the corporate income tax substantially. The
problem is not lack of demand, but rather a lack of investment. By reducing the corporate income tax,
among the highest in the industrialized world, we will increase the incentive for companies to invest in new
equipment, technology, research and development, and buildings. This will increase productivity in the
long run, leading to higher GDP and higher wages.”
‐ Gary Wolfram
William Simon Professor of Economics, Hillsdale College

“Government ‘infrastructure spending stimulus’ programs in Japan during the 1990s produced no stimulus,
but rather a vast overhang of government debt. Bridges, tunnels, roads, and trains to nowhere stimulate
nothing. It is productivity growth that counts, and that comes mainly from the private sector – which is why
tax cuts have always been a surer way to economic recovery.”
‐ Lawrence Franko
Retired Professor, University of Massachusetts Boston, College of Management

“There is no convincing evidence that stimulative fiscal policy is either feasible or effective. The recognition
and action lags (ancient terms from the bygone Keynesian era) alone virtually always mean that the
stimulus arrives after the recession is over, thus causing an undesirable distortion that impedes recovery.”
‐ John Seater
Professor of Economics, North Carolina State University

“The evidence that fiscal stimulus works is weak. Why risk such large amounts on a program with
uncertain benefits, especially if the mechanisms to transmit those benefits to the economy are a bunch of
pork barrel, second rate projects.”
‐ Charles Reback
Assistant Professor, University of South Carolina Upstate

“Japan in the early and mid 1990s engaged in major fiscal stimulus focused on infrastructure projects with
deficits equal to 7-8% of GDP and a cumulative Debt/GDP of almost 150%. None of this led to economic
recovery until the late 1990s when the Bank of Japan engaged in quantitative easing of monetary policy
and the Government of Japan finally introduced a taxpayer bailout of the banks. The Fed and Treasury in
the US have already taken such actions. The Japanese experience suggests that additional fiscal stimulus
will only add to the Debt without helping the economy.”
‐ Michael Keran
Retired, Former Sr. VP & Director of Research, Federal Reserve Bank of San Francisco

“Government intervention and ‘stimulus’ in the housing market is largely responsible for the current
economic crisis. History has shown that the Obama team’s proposed ‘stimulus’ is not only going to have
little to no effect in the short run, but will create a larger bureaucratic structure, lead to tremendous
investments in unproductive political lobbying among ‘stimulus project’ wannabes, and dissuade/delay
private investment, recovery and growth.”
‐ Michael Sykuta
Associate Professor, University of Missouri – Columbia

“Common sense dictates that any investment, public or private, must take opportunity costs into
consideration. It’s never a good idea to waste scare resources, but this is often what occurs when
economics gets pushed aside in favor of politics.”
‐ James Garven
Frank S. Groner Memorial Chair of Finance, Baylor University

“Our economy as a whole will [no] benefit from taking money from current or future taxpayers to support a
government spending spree. No doubt, certain interest groups will gain from feeding at the public sector
trough. But losers surely will outnumber winners by a large margin. Our economy as a whole will benefit
from Congress lowering taxes and letting Americans decide for themselves what is worth spending their
hard-earned dollars on.”
‐ David Laband
Professor of Economics and Policy, Auburn University

“A government-spending ‘stimulus’ is a very bad idea. Because government can spend only what it has
taxed or borrowed away from the public, it creates no new demand but merely redirects it. Recovery
depends on profit and loss discipline and public confidence that the basic rules underlying free markets will
be followed. The latter is hurt by government interventions such as ‘stimulus.’”
‐ Howard Baetjer
Lecturer, Dept. of Economics, Towson University

“[T]ax cuts will not create the waste [than] government spending would, because individual households are
making their own decisions about which spending or investment projects are worthwhile for themselves.”
‐ Alan Stockman
Wilson Professor of Economics, University of Rochester

“During recessions, unemployment rationalizes a role for government in creating jobs. But there is no
reason these jobs should be directly working for the government: nothing about a recession justifies larger
government. If we are worried about too few jobs, it makes sense to subsidize private employment (for
example, by temporarily lowering payroll taxes or creating a new tax subsidy for new hires).”
‐ Glen Weyl
Junior Fellow at the Society of Fellows and Post-Doctoral Fellow in the Department of
Economics, Harvard University

“Tax cuts are preferable to spending, especially the many programs that will doubtless result from this
process. Even the designated chair of Obama's CEA finds that increased taxes reduce growth.”
‐ James Butkiewicz
Professor of Economics, University of Delaware

“The current recession was caused by government fiddling with the mortgage market and the moral hazard
created by the illusion of government monitoring of financial markets. Increased government involvement
in the economy is not the solution.”
‐ Henry Thompson
Professor, Auburn University

“An ‘economic stimulus’ program will do nothing to correct the serious price and resource misallocations
that currently exist and are stopping the economy from moving back toward ‘full-employment.’ In fact, they
will likely retard the recovery. They will divert resources from the private sector to the government sector
moving us further away from a free-enterprise economy.”
‐ Gene Smiley
Emeritus Professor of Economics, Marquette University

“There is ample evidence that large deficit spending packages will be counter-productive. We should focus
on tax cuts and on spending proposals where the benefits outweigh the costs. Transferring funds to state
governments avoids asking the cost-benefit question and should be avoided.”
‐ King Banaian
Professor, Dept. of Economics, St. Cloud State University

“Government spending is not the road to real economic prosperity. I am particularly concerned about
government spending misdirecting opportunities for entrepreneurship and private economic growth.”
‐ Henry Butler
Executive Director, Searle Center on Law, Regulation, and Economic Growth
Northwestern University School of Law

“Governments make lots of a bad policy during times of economic stress. A spending package that
approaches $1 trillion is a case in point. Do we really trust the Congress and the Executive Branch to
spend such vast sums wisely, especially after all the bumbling around and ill-advised bailouts this year?
Does the government really have a long list of well-thought-out, cost-effective projects that will help our
economy? I do not think so.”
‐ Scott Bradford
Associate Professor, Brigham Young University

“A spending stimulus will only delay the needed restructuring of the U.S. economy to remain internationally
competitive. Tax cuts will facilitate that restructuring far better than spending and job creation by the
‐ Stacie Beck
Professor, University of Delaware

“There is no credible evidence that government spending can create jobs in the long run. Government
policies can, however, destroy jobs.”
‐ John Howe
Professor of Finance, University of Missouri

“Japan’s federal expenditures, following their 1989 stock market crash, have had little to no effect on their
recovery. Japan has been left with a huge government debt per GDP ratio and nearly 20 years of little to
no growth. Why on earth would the U.S. want to follow in Japan’s footsteps?”
‐ Gary Quinlivan
Dean of the Alex G. McKenna School, St. Vincent College

“We must first recognize that government officials must be seen as doing something to fix the economy;
however, the plans I have been hearing about, namely developing infrastructure for heretofore impractical
‘green’ technologies, strikes me as an odd approach. Markets still work pretty well and most economists
will tell you that government interference with those markets typically causes more harm than good…
Entrepreneurs will create a much more efficient outcome if the costs imposed upon them by government
are reduced.”
‐ Brian O’Roark
Associate Professor of Economics, Robert Morris University

“Government spending programs like these are political grab-bags whose successes are predicated on
satisfying political interest groups, not on creating value and growth in a market economy; these
government spending programs then often become embedded ‘entitlements,’ crowding out the flow of
funds to private investments in a free marketplace.”
‐ Douglas Houston
Professor, School of Business, University of Kansas

Too high? Too low?

The media created a frenzy over high gas prices. What do they do when prices drop? You guessed it: more fear-mongering. From MSNBC:
If [the big three's] fears come true, gas prices will be so low when they start rolling out the cars next year that people won’t buy them and all the high-priced research will have gone to waste.
And the solution, as usual, is more government. Hold on to your wallet.
The fear of producing the wrong cars has created a whisper campaign, with industry officials saying they may approach the incoming Obama administration about raising the federal gasoline tax or setting up a system that keeps the price of oil above a certain level.
If nothing else, this serves as solid proof that pro-business and pro-market are not synonymous.
“It makes life very difficult if the market gyrates wildly over the course of several months, and that’s exactly what we’ve seen happen,” Ford Executive Chairman Bill Ford Jr. said in a recent interview with The Associated Press.

[HT: Kate]

Friday, January 09, 2009


Face it: you are going to miss him.

Thursday, January 08, 2009

Health Care Reform is Old News

Ok. Maybe not. But I found some old news of interest. First, Michael Moore blows up over Dr. Sanjay Gupta's report on Sicko.

Then, Gupta goes head to head with Moore on Larry King Live.

Ignoring the issue, two media interviewing strategies are clearly present. Moore attacks. His aim is not to be academic, but to persuade the general public. He does so by making a lot of noise. Gupta, on the other hand, remains calm. He talks about numbers--not just stats pulled out of the air, but where the numbers come from and how data should be collected (CNN, in sharp contrast with Sick, got all of their numbers from the World Health Organization.).

My question to you: which do you find more persuasive? Or, rather, which do you think persuades more people.

Moore certainly won the debate on Blitzer. He makes the average viewer believe that CNN is a scam. But Moore's opponent was not around to defend himself (though Wolfe stood up to defend his colleague to some extent).

Gupta was certainly the victor on LKL, though. He had a strong command over the facts and raised tough questions that Moore refused to answer (e.g., socialized medicine is only free at the point of use).

Is there an optimal strategy for interviewing? Should one be more radical when there is no one to defend the other perspective? Or do experts (Moore is not an expert, only an activist) have an ethical obligation to behave the way Gupta did?

Wednesday, January 07, 2009

Clothes Off, Hand Out

The line for bailouts increases, as the porn industry joins the ranks. From CNN:
Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry.

“The take here is that everyone and their mother want to be bailed out from the banks to the big three,” said Owen Moogan, spokesman for Larry Flynt. “The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine.”

Francis said in a statement that “the US government should actively support the adult industry's survival and growth, just as it feels the need to support any other industry cherished by the American people."
You cannot make this up. But they do have a point: Why should the government be picking and choosing economic winners and losers?

[HT: Shruti]

Blockquoting X

X is Chris Coyne:
If we consider only two choices, both of which exclude the possibility of market provisions—total chaos where life is nasty, brutish, and short, or total harmony in the absence of conflict—we easily reach the conclusion that a compulsive state is needed as an effective enforcement mechanism. The former choice is dismissed on the grounds of continued violence and conflict, and the latter is rejected because a conflict-free society is impossible to imagine. Once the possibility of the market provision of rules, laws, and enforcement mechanisms is admitted, however, the conclusion that the state is the necessary and only source of order is exposed as a misconception.

Do as I say...

...not as I do.

Tuesday, January 06, 2009

Mien Financial Kampf

It appears as if no one is out of reach of a good 'ole bubble bursting...

[HT: Angela]

BART Shooting

Pete Eyre @ Bureaucrash links to this video on the BART Police shooting.

The young man was clearly unarmed. And even if he struggled with the officers, it does not appear as if lethal force was necessary. Nonetheless, 22-yr old Oscar Grant is dead. The name of the officer who fired on Grant has not yet been released.

The Economist on Economists

The Economist picks 8 young economists and concludes with this meaty little body of text:
Economics is now defined neither by its subject matter nor by its method.

What, then, unites these eight young stars and the discipline they may come to dominate? Economists still share a taste for the Greek alphabet: they like to provide formal, algebraic accounts of the behaviour they explain. And they pride themselves on the sophistication of their investigative methods. They are usually better at teasing confessions out of data than their rivals in other social sciences. What defines economics? Economics is what economists do—the best of them, anyway.
Is this a pro or con?

Monday, January 05, 2009

Free Knowledge?

Wikipedia founder Jimmy Wales writes:
You have proven that Wikipedia matters to you, and that you support our mission: to bring free knowledge to the planet, free of charge and free of advertising. You've helped make and keep Wikipedia available for the whole world.
I find it interesting that he still calls it free knowledge just after acknowledging that
Since July 1, more than 125,000 of you have donated $4 million. In addition, we've received major gifts and foundation support totaling $2 million. This combined revenue will cover our operating expenses for the current fiscal year, ending June 30, 2009.
C'mon Jimmy. Wikipedia is not free! And that is ok.

It is free at the point of use, which is quite different than altogether free. In fact, it might be a good example of voluntary income redistribution.