Division of Labour: November 2010 Archives
November 30, 2010
Battles Among Licensed Occupations

Part of the abstract of a new NBER WP from Morris M. Kleiner and Kyoung Won Park:

In this study, we examine dentists and dental hygienists, who are both universally licensed and provide complementary services to patients, but may also be substitutes as service providers. We focus on the labor market implications of governmental requirements on permissible tasks and the supervision of hygienists’ activities by dentists. Since there are elements of monopsony in the market we examine, we use the model as a guide for our analysis. We find that states that allow hygienists to be self-employed have about 10 percent higher earnings, and that dentists in those states have lower earnings and slower employment growth. Several sensitivity and falsification tests using other regulated and partially regulated occupations show that our licensing measures are generally robust to alternative specifications. Our estimates are consistent with the view that winning the policy and legal battle in the legislature and courts on the independence of work rules matters in the labor market for these occupations.
Posted by E. Frank Stephenson at 09:16 AM in Economics

Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions

Another example of the importance of institutions comes in the new NBER WP (ungated version here) by Dongwoo Yoo and Richard H. Steckel; the abstract:

Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan’s colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.

Yoo has a couple of other interesting looking papers on property rights here.

Posted by E. Frank Stephenson at 08:49 AM in Economics

November 29, 2010
Hayek on Inflation

I'm prepping some macro notes right now, and I'm listening to this interview with Friedrich Hayek on "Meet the Press" in the 1970s. Some of the questions are just silly, honestly, and it is interesting to hear how Hayek answers them.

Posted by Art Carden at 03:42 PM in Economics

November 24, 2010
In Which an Anonymous Commenter Wishes Death for Me, My Friends, and My Family

This morning, I wrote a fourth TSA piece for Forbes (http://blogs.Forbes.com/artcarden for the whole set). Be sure to check out the comments; one of the commenters essentially expresses the hope that I, my family, and my friends die in a terrorist attack. And yet I spent most of the day on a Greyhound bus with no security screening. I wasn't worried, and I don't think my fellow passengers were, either.

Posted by Art Carden at 07:37 PM

Hot Stove Economics

I've been meaning to give JC Bradbury's book a plug. I bought it in early October and read it over fall break. It's terrific and timely as baseball's hot stove league is warming up with the trade of Dan Uggla and the signing of Victor Martinez. I particularly like JC's finding that there is a range of wins (roughly 60-80--diagram here) over which improvement yields little extra revenue and, consequently, gives teams little incentive to hire additional talent. My only major quibble is the copyediting--I found about a dozen typos etc. that should have been caught by a decent proofreader. A great holiday gift choice for the baseball-loving econ geek in your life!

Posted by E. Frank Stephenson at 01:57 PM in Economics

Lynne Rocks

Many thanks to Knowledge Problem's Lynne Kiesling for visiting Berry and giving two talks earlier this week. Who knew that one could have so much fun discussing the Black Death or electricity pricing?

Posted by E. Frank Stephenson at 01:08 PM

Manufacturing a Problem

This column (which ran in the deadtree version of the local fishwrap) prompted me to go Boudreaux:

If recent columnist John Steel (“We need ‘Made in America’ label,” Nov. 19) truly wants to “stop the nonsense” he should take a few moments for research before making baseless claims. To wit, he states that “we don’t make much in this country anymore” resulting in a “near total reliance on, and addiction to, foreign manufacturing.”

Those pesky things known as facts indicate otherwise. Federal Reserve data (available at http://tinyurl.com/37ulpgt) indicate that U.S. manufacturing’s value added was some $2.28 trillion, roughly 15% of GDP, in 2008. Beyond statistics, we Romans need only think of local plants such as Southeastern Mills and Pirelli to know that claims that the U.S. does not manufacture anything are balderdash.

There are enough genuine economic problems—spendthrift fiscal policy, feckless monetary policy, and regulatory regime uncertainty, to name just a few—that there is no need to manufacture others.

Frank Stephenson
Professor of Economics
Berry College

Posted by E. Frank Stephenson at 01:03 PM in Economics

The TSA Trilogy, With More at Mises.org

My third (and final?) Forbes piece on the TSA went live last night. It should be good reading for while you're passing time in the security line today.

Posted by Art Carden at 09:39 AM in Economics

November 23, 2010
Government job training programs for (wait for it) . . . ex-pirates

How is it possible that I'm the first DOL blogger to notice this story from today's Journal?
(Must be the holiday.)

Posted by Mike DeBow at 04:44 PM in Misc.

Building Brand Equity: More on the TSA

Here's this week's Forbes column.

Posted by Art Carden at 02:49 PM

November 22, 2010
Libertarian Party Founder David Nolan Dead at 66

David Nolan, a founder (arguably the founder) of the Libertarian Party passed away yesterday at age 66. The Libertarian Party was founded in Nolan's Colorado home in December, 1971. Although the Party has never made a breakthrough in American politics - it's high point probably came in 1980, when presidential candidate Ed Clark received 1.1 percent of the national vote and two Libertarians were elected to the Alaska state legislature - most libertarians have, at some point, had contact with the Party, and many have voted for or more actively supported its candidates.

Nolan's other claim to fame may be his invention of the "Nolan Chart," now, in somewhat revised form, frequently referred to as the "World's Smallest Political Quiz." Nolan developed the chart to better capture electoral/political philosophies than the traditional "left/right" paradigm used by most commentators.

One can read more on Nolan here. R.I.P.

Posted by Brad Smith at 05:15 PM in Politics

November 19, 2010
Make Good On Tea Party Rhetoric By Selling Federal Lands

So say my former student Shawn Regan and his PERC colleague Holly Fretwell in this Forbes piece.

Posted by E. Frank Stephenson at 11:25 AM

November 18, 2010
How to avoid a TSA pat down

Gary Clement on TSA.
Thanks to D. S., a loyal DOL reader from north of the border.

Posted by Edward J. Lopez at 12:19 PM in Funny Stuff

What is seen and what is not seen

Louisiana film tax credits aren't paying their way, researchers find

Posted by Mike DeBow at 11:57 AM in Politics

Inflation 'R Us!

Don Boudreaux calls attention to this passage in the Selgin, Lastrapes, and White paper on the Fed:

"[F]ar from achieving long-run price stability, it [the Fed] has allowed the purchasing power of the U.S. dollar, which was hardly different on the eve of the Fed‘s creation from what it had been at the time of the dollar‘s establishment as the official U.S. monetary unit, to fall dramatically. A consumer basket selling for $100 in 1790 cost only slightly more, at $108, than its (admittedly very rough) equivalent in 1913. But thereafter the price soared, reaching $2422 in 2008."
Posted by E. Frank Stephenson at 09:38 AM in Economics

November 17, 2010
Penn Gillette's latest on TSA

Last year's co-recipient of APEE's Thomas Jefferson Award, Penn Gillette, recounts a recent experience with TSA that we should all take as seriously as he does.

(How to become a) Federal V.I.P.

I'm boarding a flight in a few hours (in Guatemala) and will be mindful of Penn's example when going through TSA security on my connection in Houston.

HT: Jen Thompson
NB: The date on this post is not correct; Penn just posted it a few days ago...

Posted by Edward J. Lopez at 10:44 AM in Law

November 16, 2010
Because, Not Despite

A letter I sent to the WSJ earlier today in response to this article:

Today’s front page story (“Bond Market Defies Fed” Nov. 16) is subtitled “Interest Rates Rise Despite Launch of Treasury Buying ….” Since an important part of nominal interest rates is inflationary expectations (the so-called Fisher effect), it’s much more likely that interest rates are rising because of the Fed’s bond purchases rather than despite the expansion of the money supply.
Posted by E. Frank Stephenson at 01:13 PM in Economics

November 15, 2010
Alan Blinder is outraged. Outraged!

Choice tidbits from Alan Blinder in the WSJ today:

For months, we have witnessed the spectacle of people arguing that Keynes was wrong.

Spectacle indeed! Don't they know how gauche that is?

Somehow, additional government spending actually reduces employment—even when the economy has huge amounts of spare capacity and unused labor desperate for work; even when the central bank will prevent interest rates from rising to "crowd out" private spending. Really?

Imagine! They must somehow think that piling up debt to finance current government spending, with future tax hikes or inflation implied but not spelled out, can discourage investment!

The anti-Keynesian revival has been disheartening enough. But now the economic equivalent of the Flat Earth Society is turning its fury on Ben Bernanke and the Federal Reserve. Critics ranging from German Finance Minister Wolfgang Schauble to tea party favorite Sarah Palin—which is quite a range—have spoken as if Bernanke & Co. have lost their marbles and are embarking on a wild policy misadventure. All in all, it looks like the nation and the world need an Economics 101 refresher.

When the Finance Minister of Germany rejects Keynesian economics this is equivalent to his rejecting the spherical shape of the Earth! Criticisms of Ben Bernanke for mistaken policies, even from a Finance Minister, cannot rest on economically literate arguments but only on fury! What is the world coming to?

To create the fearsome inflation rates envisioned by the more extreme critics, the Fed would have to be incredibly incompetent, which it is not.

After all, we have never had double-digit inflation under the Fed's watch. 1979-1981 never happened.

But calling QE2 "currency manipulation" is a grotesque abuse of language. ... the Fed will not intervene to push the dollar down.

When the Fed announces its intention to expand its liabilities (the monetary base) by 25%, and in so doing predictably drives up the expected dollar price level, and that in turn predictably pushes down the dollar on foreign exchange markets, that is a far cry from intervening to push down the dollar!

An independent central bank doesn't even consult with its own government.

Have you ever seen Ben Bernanke in a joint press conference with the Treasury Secretary? I didn't think so.

Critics tell us that QE2 won't give the U.S. economy much of a boost but will lead to rampant inflation. Both? How does that work?

It is inconceivable that nominal income Py could rise without real income y rising, but only P rising. Inconceivable!

Posted by Lawrence H. White at 03:31 PM in Economics

November 13, 2010
PR Department: Vend It Like Beckham Edition

The paper on David Beckham's attendance effect that co-blogger Bob, his former student Kate Sheehan, and I published in the IJSF (available here) is blurbed in today's WSJ. Our paper is also cited in this book on celebrities.

Posted by E. Frank Stephenson at 05:40 PM in Economics ~ in Sports

November 12, 2010
The Emergence of Institutions

New paper by two scholars I don't know, but I probably should.

"The Emergence of Institutions," by Santiago Sanchez-Pages and Stéphane Straub. (gated)

Abstract: This paper analyses how institutions aimed at coordinating economic interactions may emerge. Starting from a hypothetical state of nature, agents can delegate the task of enforcing cooperation to one of them in exchange for a proper compensation. Both individual and collective commitment problems stand in the way of institution formation. These problems imply first that a potentially efficient institution may fail to emerge and also that if it emerges, it may do so inefficiently. We show that big and untrustworthy societies are more likely to support institutions whereas their emergence is more difficult in small and trusting societies, but if institutions do emerge, they tend to be more inefficient in the former type of societies. Finally, we show that the threat of secession by a subset of agents may alleviate the latter problem.

Posted by Edward J. Lopez at 03:14 PM in Economics

Building Brand Equity: Courtemanche and Carden, J. Urban Econ

Our paper on Walmart Supercenters and Obesity is in press and available online.

Posted by Art Carden at 02:15 PM

What passes for "debate" on the gold standard at The New York Times

On November 9-11, the question for discussion on the online New York Times' "Room for Debate" feature was "Back to a Gold Standard?". Prompted by World Bank chief Robert Zoellick's remarks (previously noted here) suggesting that the price of gold be used "as a reference point for inflation and currency values", The Times invited six economists to comment on the following questions:

"Would moving to a modified gold standard make sense in this global economic climate? Or would it make recovery more difficult? How might this work?"

All six invitees rejected any type of gold standard. (My colleague Russ Roberts did at least defend the idea of constraining monetary policy in some other way.) Several invoked the common but mistaken notion that "the gold standard" was responsible for the Great Depression. None distinguished between the robust classical gold standard and the fragile jerry-rigged central-bank-mismanaged gold-exchange system that failed in the interwar period.

Sigh. That's not exactly my idea of finding "room for debate". Academic defenders of the gold standard are not that difficult to find (cough, cough).

Posted by Lawrence H. White at 12:11 PM in Economics

More federal workers' pay tops $150,000

From USA Today (via the Atlantic Wire and Instapundit):

The number of federal workers earning $150,000 or more a year has soared tenfold in the past five years and doubled since President Obama took office, a USA TODAY analysis finds.

The news story brings to mind this recent cartoon from the Rome News-Tribune's Mike Lester:


Posted by E. Frank Stephenson at 08:46 AM in Politics

November 11, 2010
New paper on effects of post-Kelo state laws

"How did Kelo Affect Business Formation?"
by Ramon P. DeGennaro and Tianning Li


On June 23, 2005, the U.S. Supreme Court ruled in Kelo v. City of New London, 505 U.S. 469 (2005) that the Public Use Clause allows overnments to take private property for transfer to new private owners for the purpose of promoting “economic development.” We show theoretically that this reduces the value of businesses. We argue that this in turn reduces the incentives to start new businesses, particularly in states that did not enact legislation to restore property rights at the state level. Our preliminary empirical work supports this. The point estimate implies that passing a state-level law restricting eminent domain taking is associated with an increase in the rate of business formation of about 10 percent. Our results show that policy makers may enact state-level eminent domain restrictions to protect property rights without fear of retarding business formation. Business formation may even benefit.

PDF copy of paper here.

Posted by Edward J. Lopez at 04:52 PM in Economics

November 10, 2010
Krugman on Social Security

Paul Krugman notes that the deficit commission is "talking about raising the retirement age, because people live longer — except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever."

That's an excellent point. Social Security has always been a bad deal for people with shorter-than-retirement-age life expectancies. It would be much better for janitors and others in that position to have personally owned retirement accounts instead. Right, Paul?

Posted by Lawrence H. White at 04:42 PM in Economics

Making Enemies with Monetary Policy

It seems that there is no number of boneheaded moves you can make that will win the affection of TROTW (the rest of the world). During W's tenure, TROTW hated us (rightfully, IMO) for military expansion. Now, apparently, during Obama's (and Bernanke's and Paulson's and Geithner's) tenure, TROTW hates us (again, rightfully, IMO) for monetary expansion:

The move, known as "QE2," will push down the value of the dollar as it pressures emerging economy currencies to rise, and has been criticized around the world..."This time the U.S. has achieved something great; that is, basically turning the whole world against it. QE2 has sort of become the U.S.'s de facto foreign policy, because it's essentially affecting every country, every economy, in the world."

German Finance Minister Wolfgang Schäuble said at a conference last week that, "With all due respect, U.S. policy is clueless."

Was ist das?! Clueless? Whyever would you think that?

Posted by Tim Shaughnessy at 11:34 AM in Economics

Bernanke Dollars


Posted by E. Frank Stephenson at 11:11 AM

November 09, 2010
Words of wisdom: Follow through

Useful in almost all settings - politics, economics, friendships, love, and, of course, sport:


Posted by Craig Depken at 02:13 PM in Sports

Some of what is wrong with economics

I accidently deleted my first post:

On page 1313 (actual page 14) of the current issue of the American Economic Review has this very intuitive and, of course, easy to implement statement:

The optimal donation aj by a citizen satisfies the first-order condition, which in a symmetric equilibrium is

Does the author really think that individuals behave according to this equation? If not, then why should we? If so, then what?

Posted by Craig Depken at 01:56 PM

November 08, 2010
India and Democracy

From the teleprompter reader in chief's address to India's parliament:

This year, as India marks 60 years with a strong and democratic constitution, the lesson is clear: India has succeeded, not in spite of democracy; India has succeeded because of democracy.

Well then what took it so long? One can quibble with what it means for a nation to be successful (one can even think the notion is meaningless) but economic success didn't really come to India until the last 20 years or so. If this economic improvement is what Obama means by success then his this democracy thing sure is slow acting. After all, it was only some 40 years after India became a democracy for the improved economic conditions to arrive. Of course the real answer lies in improved economic liberty not with democracy.

Posted by E. Frank Stephenson at 09:02 PM

In The Reading Pile

1. Benjamin Rogge, A Maverick's Defense of Freedom.
2. James LeSage and R. Kelly Pace, Introduction to Spatial Econometrics.
3. Bethany McLean and Joe Nocera, All the Devils Are Here: The Hidden History of the Financial Crisis. (Thanks to Penguin Group for the copy).

Posted by Joshua Hall at 02:48 PM in Economics

QOTD: Kenneth Elzinga on the Market Process

From his essay on the relevance of Human Action to Industrial Organization, p. 241:

"Mises cogently explains in Human Action that markets do not equilibrate and then stop."

Posted by Art Carden at 01:55 PM in Economics

The War on Drugs + Occupational Licensing = ...

... this:

As many as 14 armed Orange County deputies, including narcotics agents, stormed Strictly Skillz barbershop during business hours on a Saturday in August, handcuffing barbers in front of customers during a busy back-to-school weekend.

It was just one of a series of unprecedented raid-style inspections the Orange County Sheriff's Office recently conducted with a state regulating agency, targeting several predominantly black- and Hispanic-owned barbershops in the Pine Hills area.

In "sweeps" on Aug. 21 and Sept. 17 targeting at least nine shops, deputies arrested 37 people — the majority charged with "barbering without a license," a misdemeanor that state records show only three other people have been jailed in Florida in the past 10 years.

The operations were conducted without warrants, under the authority of the Department of Business and Professional Regulation inspectors, who can enter salons at will. Deputies said they found evidence of illegal activity, including guns, drugs and gambling. However, records show that during the two sweeps, and a smaller one in October, just three people were charged with anything other than a licensing violation.

HT: Drudge

Posted by E. Frank Stephenson at 11:45 AM

World Bank Chief suggests a monetary role for gold

Well, this is interesting.

World Bank chief Robert Zoellick called yesterday
for a more "co-operative" international monetary system that "should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values." He adds: "Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today."

Not exactly a call for restoring the classical gold standard. But more respect than gold usually receives from the World Bank or IMF.

Posted by Lawrence H. White at 11:21 AM in Economics

November 06, 2010
One vote making a difference, 2010 edition

From north Alabama. Wonder if this is the only such example in the entire country?

Posted by Mike DeBow at 02:54 PM in Economics

Gave me a laugh

Awesomness from a reader of Greg Mankiw's blog.

Posted by Noel Campbell at 10:33 AM

November 05, 2010
Myth of the Rational Voter: Georgia Supreme Court Edition
A divorce lawyer who raised no campaign cash and did little public campaigning to support her own bid for the Georgia Supreme Court has forced Justice David Nahmias into a Nov. 30 runoff.

Nahmias, who was appointed to the bench in 2009, captured 48 percent of the vote with 100 percent of precincts reporting in the three-way race, just shy of the majority vote needed to avoid a runoff. He is seeking his first full six-year term.

But Lawrenceville lawyer Tamela Adkins managed to land a spot in the runoff by getting 35 percent -- more than 725,000 votes -- without launching any visible campaign.

Nahmias, 46, campaigned for months to build support across party lines after Republican Gov. Sonny Perdue appointed him to the bench in August 2009 to replace retiring Chief Justice Leah Ward Sears.

Adkins, 47, finished third in a 2008 Court of Appeals race with the backing of several prominent attorneys. But this time around she skipped campaign events, rarely talked to the press and didn't set up a Web site.

Source. Various commenters attribute Adkins's success to her appearing first on the ballot (alphabetical ordering), her being female, or her not being an incumbent. None, however, attribute her success to voter knowledge about the candidates' qualifications or stances on the issues.

Posted by E. Frank Stephenson at 04:06 PM

Incentives Matter: Afghan Girls Disguised as Boys Edition

From today's NYT (HT: Jayme):

Six-year-old Mehran Rafaat is like many girls her age. She likes to be the center of attention. She is often frustrated when things do not go her way. Like her three older sisters, she is eager to discover the world outside the family’s apartment in their middle-class neighborhood of Kabul.

But when their mother, Azita Rafaat, a member of Parliament, dresses the children for school in the morning, there is one important difference. Mehran’s sisters put on black dresses and head scarves, tied tightly over their ponytails. For Mehran, it’s green pants, a white shirt and a necktie, then a pat from her mother over her spiky, short black hair. After that, her daughter is out the door — as an Afghan boy.

There are no statistics about how many Afghan girls masquerade as boys. But when asked, Afghans of several generations can often tell a story of a female relative, friend, neighbor or co-worker who grew up disguised as a boy. To those who know, these children are often referred to as neither “daughter” nor “son” in conversation, but as “bacha posh,” which literally means “dressed up as a boy” in Dari.

Posted by E. Frank Stephenson at 11:14 AM

November 04, 2010
A Coke for You, Prof. Peltzman?

From the abstract of a new paper in the Journal of Public Economics:

Our results, based on state soft drink sales and excise tax information between 1989 and 2006 and the National Health Examination and Nutrition Survey, suggest that soft drink taxation, as currently practiced in the United States, leads to a moderate reduction in soft drink consumption by children and adolescents. However, we show that this reduction in soda consumption is completely offset by increases in consumption of other high-calorie drinks.
Posted by E. Frank Stephenson at 09:13 AM in Economics

November 03, 2010
Election Wrap Up: What Happened in the States

[Note: federal results are reviewed here].

*[This post was updated on November 6.]

In addition to a very good night in federal races, including the best Republican showing in the U.S. House since the election of 1946, Republicans did very well in the states on Tuesday, picking up hundreds of state legislative seats and gaining control in numerous state legislative chambers. This will not only influence policy, but also will strengthen Republicans in redistricting, and provide a larger "farm team" of candidates down the road. The run down - including such important but under reported races such as Attorney General and Secretary of State, is below the fold. We'll have one more long post, on state ballot initiatives, later in the week.

Read More »

Posted by Brad Smith at 02:07 PM in Politics

Election Wrap-up, Federal Races.

Well, it was a big night for political junkies. Soon enough we should worry about what it means for policy, but first, let's find out who, and what, won. In this post we'll review the federal races. A later post will cover what's happened in the states, which may be more interesting because it's harder to find! Go below the fold for more.

Read More »

Posted by Brad Smith at 11:00 AM in Politics

November 02, 2010
Divided We Vote

New paper by Pete Calcagno and yours truly, available for download at SSRN.

"Divided We Vote"

Abstract: Previous research has shown that divided government correlates with more constrained government, but less is understood about the empirical conditions that lead to divided government. This paper treats divided government as the dependent variable in an empirical macro political economy model estimated on 30 years (1976-2005) of panel data for the American states. Using both continuous and categorical measures of divided government, results indicate that voters support more divided government after periods of increased government spending per dollar of tax revenues, which suggests that voters attempt to utilize divided government for its constraining effects. On the other hand, voters generate more unified government after incomes have decreased and (to a lesser extent) after unemployment rates have increased, which suggests that voters seek to empower government in response to periods of economic distress. Only conditional support is found for the strategic-moderating theory (Alesina and Rosenthal 1996) that focuses purely on midterm cycles and split-ticket voting absent economic conditions.

Keywords: divided government, limited government, midterm cycles, split ticket voting, American states

JEL Classifications: D72; E62; H71

Posted by Edward J. Lopez at 05:13 PM in Economics

Election Day 2010: Read, Watch, Listen

On this election day, here's something to...

1. Read. My paper with Mike Hammock in which we apply some of the insights of Bryan Caplan's The Myth of the Rational Voter to environmental issues.

2. Watch. The Public Choice Society Symposium in Caplan's book from 2008.

3. Listen to. An EconTalk podcast with Caplan in which he discusses the book.

Posted by Art Carden at 10:04 AM in Politics

November 01, 2010
Rapping Keynes v. Hayek v2.0

Live rhyming on stage, followed by panel with Russ Roberts and John Papola. As discussed, they manage to preserve great accuracy with the innovative delivery.

Posted by Edward J. Lopez at 06:03 PM in Economics

Building Brand Equity: Speaking at CSU-East Bay, Taxes and Tea Parties

I'm speaking at the Smith Center for Private Enterprise Studies at CSU-East Bay on Wednesday, November 10. The lecture is $0 and open to the public, and I'm speaking at 2:00 PM. More information can be found here.

Also, Steve Horwitz and I are working on a trilogy about the Tea Parties. Here's installment #2.

Posted by Art Carden at 03:20 PM in Misc.

What the Government Purchases Multiplier Actually Multiplied in the 2009 Stimulus Package

Not much according to John Cogan and John Taylor:

Much of the recent economic debate about the impact of stimulus packages has focused on the size of the crucial government purchases multiplier. But equally crucial is the size of the government purchases multiplicand—the change in government purchases of goods and services that the multiplier actually multiplies. Using new data from the Bureau of Economic Analysis and considering developments at both the federal and the state and local level, we find that the government purchases multiplicand through the 2nd quarter of 2010 has been only 2 percent of the $862 billion American Recovery and Reinvestment Act (ARRA) of 2009. This increase in government purchases has occurred mainly at the federal level. While states and localities received substantial grants under ARRA, state and local governments have not increased their purchases of goods and services. Instead they reduced borrowing and increased transfer payments. These findings explain why, regardless of the size of a government purchases multiplier, changes in government purchases have had no material effect on the growth of GDP since the time ARRA was enacted. The implication is not that ARRA has been too small, but rather that it failed to increase government consumption expenditures and infrastructure spending as many had predicted from such a large package.

Now we know the answer to the burning question--how does one spend over $800B and have little to show for it?

Posted by E. Frank Stephenson at 08:10 AM in Economics

Incentives Matter: Death Tax Edition

Wyoming Rep. Lummis: Estate tax rise has some planning death

Posted by E. Frank Stephenson at 08:06 AM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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