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Jonathan Newman

Jonathan Newman

Jonathan Newman was a 2013, 2014, and 2015 Summer Fellow at the Mises Institute, and he teaches economics at Auburn University.

Articles by Jonathan Newman

Banking

29 days ago

Download the slides from this lecture at Mises.org/MU20_PPT_06. Recorded at the Mises Institute in Auburn, Alabama, on 13 July 2020.

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COVID Lockdowns Crippled the Division of Labor, Setting the Stage for Civil Unrest

June 27, 2020

The division of labor promotes peaceful exchange and continues peace. But this can all break down when governments intervene to prevent peaceful interaction and when government incompetence promotes violence. This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros. Original Article: “COVID Lockdowns Crippled the Division of Labor, Setting the Stage …

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Environmentalists Are Anti-Human

July 23, 2019

Why Markets Are Pro-Human In an unhampered market economy, entrepreneurs anticipate what we want and need and then use labor to turn land and natural resources into things that are most urgently needed: like houses, schools, hospitals, food, cars, and energy. Consumers respond by either buying or not buying what entrepreneurs have produced. The resulting profits and …

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Why Do Socialists Hate Families?

April 30, 2019

Families provide an example of social bonds without private property, prices, and “capitalist exploitation.” So, it’s odd that Marx wanted to abolish the family.Original Article: “Why Do Socialists Hate Families?”.

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Why Do Socialists Hate Families?

April 27, 2019

One of Ludwig von Mises’s most important contributions was to point out that economic calculation is impossible under socialism. Meeting consumer demands requires that factors of production are allocated to the right lines of production in the right quantities at the right time — and that they are combined in the right ways to produce …

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No, We Haven’t Drained the Earth’s Resources

August 2, 2018

  According to the Global Footprint Network, humans have already used a year’s worth of Earth’s resources in 2018. “Earth Overshoot Day” has crept up the calendar from December 29th in 1970 to August 1st in 2018.   Source: https://www.overshootday.org/newsroom/past-earth-overshoot-days/ The more we consume beyond their estimate of Earth’s ability to regenerate resources, the earlier …

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Who Is Henry Hazlitt?

July 26, 2018

Jonathan Newman discusses the many contributions of the brilliant popularizer of sound economics, Henry Hazlitt (1894–1993). Best known for his book, Economics in One Lesson, Hazlitt stressed that a comprehensive view of of any event or policy is necessary to avoid missing longer term consequences. Hazlitt was a voice of reason in the mainstream press. …

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Jordan Peterson and Human Action

February 15, 2018

When a psychology professor at the University of Toronto publicly rejected the forced use of a set of pronouns, it catapulted him into the news feeds and conversations of millions of people. Jordan Peterson’s enduring renown, however, has been sustained by the immense interest in what he has to say about the deepest questions.
His lectures on YouTube cover archetypal interpretations of the Bible, the meaning of life, human personality, and even five hours’ worth of dissecting Disney’s Pinocchio. Many of his lectures have hundreds of thousands of views, despite them being two and half hours of covering dense material quickly.
In his “Maps of Meaning” course, based on his book with the same title, he presents a framework for human action

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Jordan Peterson and Human Action

February 14, 2018

When a psychology professor at the University of Toronto publicly rejected the forced use of a set of pronouns, it catapulted him into the news feeds and conversations of millions of people. Jordan Peterson’s enduring renown, however, has been sustained by the immense interest in what he has to say about the deepest questions.His lectures on YouTube cover archetypal interpretations of the Bible, the meaning of life, human personality, and even five hours’ worth of dissecting Disney’s Pinocchio. Many of his lectures have hundreds of thousands of views, despite them being two and half hours of covering dense material quickly.In his “Maps of Meaning” course, based on his book with the same title, he presents a framework for human action with many similarities to that of

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These Feminist Economists Are Right about GDP

October 13, 2017

Gross Domestic Product has numerous issues, especially as a measure of national-level standard of living. It is supposed to be a measure of total production and therefore the general health of an economy, but it falls short of this in many ways. In the US, the Bureau of Economic Analysis is responsible for estimating GDP, and their preferred estimation technique is to add up all consumption, investment, government, and net export spending (export spending minus import spending).GDP ignores black markets and household productionOfficial estimates of total production are lacking because there is much of total production that isn’t counted. Some goods are not traded or not traded legally. For example, black markets in drugs, untaxed goods, prostitution, and copyrighted media

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These Feminist Economists Are Right about GDP

October 13, 2017

Gross Domestic Product has numerous issues, especially as a measure of national-level standard of living. It is supposed to be a measure of total production and therefore the general health of an economy, but it falls short of this in many ways. In the US, the Bureau of Economic Analysis is responsible for estimating GDP, and their preferred estimation technique is to add up all consumption, investment, government, and net export spending (export spending minus import spending).GDP ignores black markets and household productionOfficial estimates of total production are lacking because there is much of total production that isn’t counted. Some goods are not traded or not traded legally. For example, black markets in drugs, untaxed goods, prostitution, and copyrighted media

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Why Robots Won’t Cause Mass Unemployment

August 3, 2017

I made a small note in a previous article about how we shouldn’t worry about technology that displaces human workers:The lamenters don’t seem to understand that increased productivity in one industry frees up resources and laborers for other industries, and, since increased productivity means increased real wages, demand for goods and services will increase as well. They seem to have a nonsensical apocalyptic view of a fully automated future with piles and piles of valuable goods everywhere, but nobody can enjoy them because nobody has a job. I invite the worriers to check out simple supply and demand analysis and Say’s Law.Say’s Law of markets is a particularly potent antidote to worries about automation, displaced workers, and the so-called “economic singularity.”

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Our Obsession with Survey Data is Ruining Economics

July 24, 2017

In a recent Bloomberg article, Noah Smith celebrates the increasing trend of empirical work in economics over the years. Purely theoretical papers are on the decline as a share of all published work. More and more economists are utilizing data to estimate the magnitude of various effects or to estimate specific parameters in theoretical models.Empirical work is on the riseThe following figure from Angrist et al (2017)1 backs up Smith’s claims — empirical work is on the rise.

Of course, the distinction between a purely theoretical paper and an empirical paper in the mainstream is quite different from the Misesian distinction between economic theory and empirical work (history). But the trend is undeniable — economists are using data in more of their research than

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Trump’s Maoist Steel Obsession

July 5, 2017

“If steel and iron works, copper mines, and sawmills cannot be operated to their full capacity, the reason can only be that there are not enough buyers on the market ready to purchase their whole output at prices which cover the costs” wrote Ludwig von Mises in Human Action.1Chairman Mao’s steel obsessionIn his first Five Year Plan (1953–57) and the Great Leap Forward (1958–60), Chairman Mao steered communist China toward heavy industrial production. He was obsessed with steel production as a measure of a nation’s superiority, and so directed the population of China to produce as much steel as possible.From 1952 to 1957, steel production tripled, butthis was regarded as inadequate, and during the GLF, the drive for steel turned into an all-consuming obsession, and the

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La obsesión maoísta de Trump por el acero

July 5, 2017

Lea esto en Español
“Si no se aprovecha toda la capacidad de las factorías productoras de hierro y acero, de las minas de cobre y de las explotaciones madereras, ello acontece porque no hay en el mercado compradores suficientes para adquirir la totalidad de su producción a precios rentables que cubran los costes”, escribía  Ludwig von Mises en La acción humana.1La obsesión por el acero del presidente MaoEn su primer Plan Quinquenal (1953-57) y el Gran Salto Adelante (1958-60), el presidente Mao dirigió a la China comunista hacía la producción de industria pesada. Estaba obsesionado con la producción de acero como medida de la superioridad de una nación y por tanto dirigió a la población de China a producir tanto acero como fuera posible.De 1952 a 1957 se triplicó la

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College Degrees Are Becoming Useless

June 16, 2017

Students are running out of reasons to pursue higher education. Here are four trends documented in recent articles:
Graduates have little to no improvement in critical thinking skills
The Wall Street Journal reported on the troubling results of the College Learning Assessment Plus test (CLA+), administered in over 200 colleges across the US.
According to the WSJ, “At more than half of schools, at least a third of seniors were unable to make a cohesive argument, assess the quality of evidence in a document or interpret data in a table”. The outcomes were the worst in large, flagship schools: “At some of the most prestigious flagship universities, test results indicate the average graduate shows little or no improvement in critical thinking over four years.”

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Four Reasons Why College Degrees Are Becoming Useless

June 15, 2017

Students are running out of reasons to pursue higher education. Here are four trends documented in recent articles:Graduates have little to no improvement in critical thinking skillsThe Wall Street Journal reported on the troubling results of the College Learning Assessment Plus test (CLA+), administered in over 200 colleges across the US.According to the WSJ, “At more than half of schools, at least a third of seniors were unable to make a cohesive argument, assess the quality of evidence in a document or interpret data in a table”. The outcomes were the worst in large, flagship schools: “At some of the most prestigious flagship universities, test results indicate the average graduate shows little or no improvement in critical thinking over four years.”There is extensive

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Cuatro razones por las que los grados universitarios se están convirtiendo en inútiles

June 15, 2017

Lea esto en Español
A los estudiantes se les están acabando las razones para cursar educación superior. He aquí cuatro tendencias documentadas en artículos recientes:Los graduados tienen poca o ninguna mejora en habilidades de pensamiento críticoEl Wall Street Journal informaba acerca de los preocupante resultados del examen College Learning Assessment Plus (CLA+), realizado en más de 200 universidades de todo EEUU.De acuerdo con el WSJ, “En más de la mitad de las universidades, al menos un tercio de los alumnos de ultimo año fueron incapaces de presentar un argumento coherente, evaluar la calidad de las evidencias en un documento o interpretar los datos en una tabla”. Los resultados fueron peores en las grandes universidades de referencia: “En algunas de las

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Fed Officials Can’t See What’s Right In Front Of Them

June 12, 2017

7 hours agoJonathan Newman  

While the Federal Reserve has an explicit dual mandate to keep prices stable and maintain full employment, they have unofficially taken on new goals like maintaining financial stability. Bernanke, Yellen, and other officials have noted how traditional monetary policy is a limited and blunt tool to accomplish this goal, which is why the Fed has, in recent years, exercised and flexed its regulatory muscle.The Minnesota District Bank president, Neel Kashkari, recently wrote an article about the dilemma the Fed faces regarding asset bubbles and whether or not they should be met with raising interest rates. He summarizes in five points:It is really hard to spot bubbles with any confidence before they burst. The Fed has limited policy tools to stop

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3 Ways the Critics Get Praxeology Wrong

May 22, 2017

Jeff Deist has excellent advice for us: listen to dead economists. He explains how economics has lost its way by trying to emulate the physical sciences and their empirical method. He cites Menger, Mises, Hayek, and Rothbard as primary resources for those interested in understanding economics as a “theoretical science.” According to Austrian economists, economic theory is constructed through deduction and not experimentation or mathematical modeling.It is unfortunate that this position elicits more backlash than almost any other claim made by Austrian economists, because this one is so fundamental. If there cannot be agreement about how to do economics, then how fruitful can a discussion about policy be?Much of the criticism I see is based on a misunderstanding and

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Neil Ty, The Scientism Guy

April 24, 2017

Neil Ty, The Scientism Guy

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Big GovernmentEducationHealth3 hours agoJonathan NewmanNeil deGrasse Tyson has released a new video aimed at a what he sees as a growing anti-intellectualism problem in the United States. It was released at the same time as the March for Science and many Earth Day demonstrations. He reflects on what he thinks made America great and what’s stalling progress today. Science used to be respected, but today, there is a growing crowd of science-deniers who threaten our “informed democracy.”The real anti-intellectual move, however, is conflating science, the scientific method, and truth to be one and the same. Fundamentally, science is any human attempt at discovering truth. What is true exists independently from what humans believe to be true or how humans arrive at truth claims. The scientific method, the process of using repeated experiments in an attempt to validate or falsify the conclusions of previous experiments, is but one way humans attempt to discover truth.The purpose of the video was to call out the obstinate, ignorant voters who deny what many regard as certain truths handed to them by a body of elite, trustworthy scientists. Yet Tyson and the marchers border on an equally dangerous view: scientism.Scientism isn’t scientificScientism is the over-reliance on or over-application of the scientific method.

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Busting the “Free College” Myth

April 18, 2017

Busting the "Free College" Myth

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Taxes and SpendingPolitical TheoryPrices6 hours agoJonathan NewmanA new program just passed by New York’s state government promises “free tuition” for middle-class students to attend a public college or university in the state. While there are similar programs elsewhere in the US, this is the first to include four-year schools.All of the headlines include some variation of the term free college, which makes this a great opportunity to discuss what actually happens when a government provides something for “free.” Let us consider this program from three different perspectives.From the student’s perspective, this is another scholarship program. Indeed, it is called the “Excelsior Scholarship,” and students may apply for it to cover any tuition not already covered by other forms of financial aid. It does not cover other fees, room and board, or books, so any headline advertising “free college” is misleading. One estimate based on the cost of attending a State University of New York campus says that the new program would pay about $26,000, leaving $60,000 for the students and their families to pay.Nevertheless, before any further increases in non-tuition prices, this may encourage more students to apply and attend. SUNY has seen enrollment increases every year at least since 2002, which is the earliest data at data.ny.gov.

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Auditing the Fed Is Now More Important than Ever

April 3, 2017

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The FedLast week, the House Committee on Oversight and Government Reform approved a bill submitted by Thomas Massie (R-KY) to allow Congress to audit the Federal Reserve. The bill was originally introduced by Ron Paul in 2009 and was passed in the House twice (2012 and 2014), but failed to pass in the Senate.The Obama administration, Fed chair Bernanke, and Treasury Secretary Geithner “vigorously opposed” the bill in 2009. Conditions are different today. President Trump tweeted in favor of the move during his campaign and now Republicans have a slight majority in the Senate.Even in a highly polarized political environment today, the current bill has bipartisan support, as did the previous versions, though support is mainly from Republicans.Massie explains his support for auditing the Fed in his press release:“The American public deserves more insight into the practices of the Federal Reserve,” Massie said. “Behind closed doors, the Fed crafts monetary policy that will continue to devalue our currency, slow economic growth, and make life harder for the poor and middle class…”“It is time to force the Federal Reserve to operate by the same standards of transparency and accountability to the taxpayers that we should demand of all government agencies.”The bill still faces some obstacles going forward, however.

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Six Graphs that Reveal Big Problems for Student and Auto Loans

March 27, 2017

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Money and BanksU.S. EconomyMoney and BankingThe New York Fed’s most recent household debt report showed ballooning debt and delinquency in student and auto loans. Total household debt has just about reached its previous late-2008 high of over $12.5 trillion.

You’ll notice that housing debt (blue) has not increased much since its 2013 low, meaning that the increases in total debt have mostly come from non-housing debt (red). A closer look at the composition of non-housing debt reveals that the biggest increases in debt have come from student and auto loans (red and green, below).

In fact, the numbers make it look like the housing bubble was almost exactly replaced by new bubbles in education and cars. From 2008 to 2016, housing debt has decreased by $1.01 trillion, while student and auto loan debt together have increased by $1.04 trillion. The Board of Governors of the Federal Reserve has an even higher estimate than the NY Fed for current student loan debt, at $1.41 trillion.

Shahein Nasiripour at Bloomberg showed the relative changes based on the same data this way:

While both student and auto loan debt have increased substantially, delinquency rates are higher for student loans.

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Bill Gates’s Robot Tax Is a Terrible Idea

March 8, 2017

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Capital and Interest TheoryProduction TheoryBill Gates has called for a “robot tax” to help maintain government tax revenue when human laborers are let go because a “robot comes in to do the same thing.” He seems to be following the same line of argument that many make for a universal basic income: when a worker in a $50,000/year job is replaced by some automated process and then finds a $25,000/year job, the government will need the extra resources to sustain this worker’s quality of life, but will have lost that much in income taxes by the worker moving to a new lower-paying job.Even setting aside the questionable benefit of government taxing and spending, there are some gaping holes in Gates’s argument.We Must First Define What a Robot IsThe first and most obvious issue involves defining a “robot.” Must it be some human-shaped machine that beeps and boops and speaks in monotone? What about the giant mechanical arms that put doors on new cars in the factory? Does a “smart” tool that saves labor but doesn’t have any moving parts count? In that case all computers would be subject to a new tax.

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Healthcare Is Not Immune to the Laws of Economics

February 10, 2017

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HealthInterventionismOne of the great things about economics is that it is devoid of all mysticism. Every person, good, service, and dollar is treated equally — nothing is special or above the rules. There’s nothing about the supply of or demand for apples that is categorically different from that of oranges. Since every good or service demanded by anybody is scarce, economics treats apples, oranges, computers, haircuts, education, and health care in the same way.There is not a special branch of economic theory that only applies to health care. Economists may focus on health issues, but they use the same basic set of tools as economists who focus on energy, or any other area for that matter.Does Health Care get a Pass on the Laws of Economics?This was the root of the disagreement between Ted Cruz and Bernie Sanders in this week’s CNN debate on Obamacare. Cruz (for all his faults) defended the view that health care is not special when it comes to economics. Sanders seemed to think that if he could just proclaim that health care is a right proudly enough, new doctors, hospitals, drugs, and medical equipment would fall from the sky, equally portioned out across the population of the United States.

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