Celebrating humanity's flourishing through the spread of capitalism and the rule of law
30 Apr 2025 Leave a comment
in applied price theory, applied welfare economics, economics of bureaucracy, politics - New Zealand, Public Choice Tags: discount rates
A couple of months ago now I wrote a post about the new set of discount rates government agencies are supposed to use in undertaking cost-benefit analysis, whether for new spending projects or for regulatory initiatives. The new, radically altered, framework had come into effect from 1 October last year, but with no publicity (except […]
Bad advice on public sector discount rates
30 Apr 2025 Leave a comment
in applied price theory, entrepreneurship, financial economics
When interest rates go up, the price of bonds goes down. As Tyler and I discuss in Modern Principles, the inverse relationship between interest rates and prices holds for any asset that pays out over time. In particular, as Patrick McKenzie points out, when interest rates go up, the value of a loan goes down. […]
In Praise of the Danish Mortgage System
29 Apr 2025 Leave a comment
in applied price theory, behavioural economics, economic history, economics of information, financial economics, global financial crisis (GFC), great recession, macroeconomics, monetary economics
In a recent paper, Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen report (pdf): This paper presents 12 facts about the mortgage market. The authors argue that the facts refute the popular story that the crisis resulted from financial industry insiders deceiving uninformed mortgage borrowers and investors. Instead, they argue that borrowers and […]
Why the housing market imploded
28 Apr 2025 Leave a comment
in applied price theory, entrepreneurship, industrial organisation, international economics, politics - USA Tags: 2024 presidential election, free trade, tariffs
By Lauren Weber of The WSJ. Excerpts:”Most economists and other experts are skeptical that job creation will happen on a large scale because planning and building new factories is an incredibly complex and lengthy process. Businesses will be reluctant to do that unless they’re sure the investment is worth it over the long term. A fairly…
Can Trump’s Tariff Offensive Deliver New American Jobs?
28 Apr 2025 Leave a comment
in applied price theory, economics of bureaucracy, economics of regulation, health economics, politics - New Zealand, Public Choice Tags: drug lags
Eric Crampton writes – Come the next pandemic, we are going to be in the same stupid mess that we were in during the last one. Trusted pharmaceutical regulators overseas, like those in Australia, Canada, Europe, and the UK, will have given provisional approvals for vaccines that are safe. And Kiwis will have to wait, […]
‘Rule of Two’ medicines approval needs improving
26 Apr 2025 Leave a comment
in applied price theory, economics of information, economics of media and culture
A global team of gambling whizzes hatched a scheme to snag the jackpot; millions of tickets in 72 hoursBy Joe Wallace and Katherine Sayre of The WSJ. Excerpts:”There were 25.8 million potential number combinations. The tickets were $1 apiece. The jackpot was heading to $95 million. If nobody else also picked the winning numbers, the…
How a Secretive Gambler Called ‘The Joker’ Took Down the Texas Lottery
26 Apr 2025 Leave a comment
in applied price theory, comparative institutional analysis, development economics, economic history, growth disasters, Marxist economics Tags: economics of central planning
Building on my four-part series (here, here, here, and here) explaining the case against socialism and my five-part series (here, here, here, here, and here) on socialism in the modern world, today’s column will look at the economic argument against that statist ideology. Practically speaking, this seems unnecessary. After all, we can simply look at […]
Socialism Is an Economic Cancer
25 Apr 2025 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, economics of bureaucracy, economics of regulation, health economics, politics - USA, Public Choice Tags: economics of pandemics
My latest paper, Pandemic Preparation Without Romance, has just appeared at Public Choice. Abstract: The COVID-19 pandemic, despite its unprecedented scale, mirrored previous disasters in its predictable missteps in preparedness and response. Rather than blaming individual actors or assuming better leadership would have prevented disaster, I examine how standard political incentives—myopic voters, bureaucratic gridlock, and […]
Pandemic Preparation Without Romance
24 Apr 2025 Leave a comment
in applied price theory, Austrian economics, comparative institutional analysis, economics of information, economics of regulation, entrepreneurship, experimental economics, history of economic thought, industrial organisation
Vernon Smith reviews Joe Stiglitz’s book The Road to Freedom: Stiglitz did work in the abstract intellectual theoretical tradition of neoclassical economics showing how the standard results were changed by asymmetric or imperfect information. He is oblivious, however, to the experimental lab and field empirical research showing that agent knowledge of all such information is […]
Smith Reviews Stiglitz
24 Apr 2025 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, development economics, econometerics, history of economic thought, industrial organisation, labour economics, labour supply, politics - USA, unemployment Tags: 2024 presidential election, free trade, tariffs, unintended consequences
This short note shows that accounting for capital adjustment is critical when analyzing the long-run effects of trade wars on real wages and consumption. The reason is that trade wars increase the relative price between investment goods and labor by taxing imported investment goods and their inputs. This price shift depresses capital demand, shrinks the […]
Long-Run Effects of Trade Wars
22 Apr 2025 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis, development economics, economic history, history of economic thought, industrial organisation, international economic law, international economics, labour economics, politics - USA, unemployment Tags: 2024 presidential election, free trade, tariffs
This occurred in Knoxville, you can watch it here. Lots of fun, and p.s. I am more of a free trader than he is. We did have some disagreements.
My debate with Dani Rodrik about tariffs and free trade
20 Apr 2025 Leave a comment
in applied price theory, economic history, history of economic thought, industrial organisation, international economic law, international economics, liberalism, libertarianism, politics - USA, Public Choice, rentseeking Tags: free trade, tariffs
TweetWhen President Ronald Reagan delivered this address in November 1982, I was a 24-year-old graduate student. Radically libertarian at that point for almost six years, I was sufficiently astute enough to know that Reagan wasn’t terrible on most of the issues that I cared about, but I was nevertheless insufficiently mature and astute enough to…
Ronald Reagan in 1982 on Free Trade
18 Apr 2025 Leave a comment
in applied price theory, comparative institutional analysis, economic history, history of economic thought, industrial organisation, international economics, politics - USA Tags: 2024 presidential election, free trade, tarrifs
TweetHere’s a letter to The Daily Signal. Editor: Suppose I submitted to you an essay in which Thucydides is described as a first-century Roman senator who wrote a biography of Charlemagne – would you publish it? Of course not. The ignorance of such an essay would be palpable. But I would never write such a…
Victor Davis Hanson Should Stick to the Classics
14 Apr 2025 1 Comment
in applied price theory, history of economic thought, industrial organisation, international economics, politics - USA Tags: 2024 presidential election, free trade, tarrifs
TweetBob Graboyes masterfully exposes many of the fallacies that fuel Trump’s destructive trade ‘policy.’ Three slices: In 2016, Donald Trump promised, “We’re gonna win so much that you may get tired of winning.” His advisors must have reached that point, as evidenced by the bizarre, incoherent “Liberation Day” tariff policy they helped craft. Trump supporters have…
Some Links
13 Apr 2025 Leave a comment
in applied price theory, industrial organisation, international economics Tags: 2024 presidential election, free trade, tarrifs
TweetTunku Varadarajan’s “Weekend Interview” in the Wall Street Journal is with the great Dartmouth trade economist and economic historian Doug Irwin. Three slices: In effect, Mr. Trump also slapped tariffs on 10005, Wall Street’s ZIP Code, for America’s markets cowered in horror. Dollar assets experienced such a rout that Mr. Trump himself took notice of…
Some Links
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
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Celebrating humanity's flourishing through the spread of capitalism and the rule of law
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