Monday , December 16 2019
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Providing for Customers

Q: You embody a form of capitalism and entrepreneurship without romance. Where does that come from? A: I believe that the DNA of a business is to provide to its constituents. Customers come No. 1; No. 2 are employees; and somewhere in there are the shareholders. You who started it, you’re last. When you try and shift a business’s true purpose and say that it’s going to save society, you will fail. Not some of the time—100 percent of the time. Saving baby whales is...

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Why trade wars don’t work

Yesterday, in a post on the “phase one” trade deal with China, I predicted: As new information comes out, I expect the deal to look even weaker, even more porous. And today we have confirmation: Donald Trump says China will spend $50 billion a year for U.S. farm products as part of a “phase one” trade deal between the countries. But doubts are surfacing whether that’s even possible, bolstered by China’s reluctance to confirm the figure. . . . Prices for soybeans and...

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Sunk Costs in Foreign Policy

And then there was the manner in which Trump conducted himself personally. In an astonishing display of insensitivity, during a 2017 meeting about how to best prosecute the Afghan war, Trump said in Kelly’s presence that the young American soldiers who had died in Afghanistan had died for a worthless cause. Trump said, “We got our boys who are over there being blown up every day for what? For nothing. Guys are dying for nothing. There’s nothing worth dying for in...

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Freedom of movement and the police state to be

In The Wealth of Nations, Adam Smith deplores how restraining competition hinders workmen in their efforts to employ “the strength and dexterity” of their hands, that is: the very resources they could use to improve their lot. Steve Davies has a splendid article on the AIER website in which he reminds us that restrictions to people’s freedom of movement were ubiquitous in history, they were by and large part of the welfare system of the day, and they aimed at...

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Good news for Trump

In 1979, Margaret Thatcher was elected Prime Minister of the UK. This proved to be a leading indicator of politics in the US, as Reagan was elected a year later. In June 2016, British voters opted to leave the European Union. Here’s what I said the very next day: Of course this is good news for Trump, as it suggests a groundswell of nationalism. It’s also good news (for Trump) in the sense that the Brexit vote was greater than predicted by either polls or betting...

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Was There a Housing Bubble?

In his recent book Shut Out, Kevin Erdmann, a finance expert and visiting fellow at the Mercatus Center at George Mason University, has two main messages. The first, which is not controversial among economists, is that restrictions on residential construction in coastal California and the urban Northeast have constrained supply so much that housing in those areas is virtually unaffordable for people in the lower- and middle-income classes. His other message is more...

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Compared to what?

This graph caught my eye: Notice that prior to 1980, the number of affluent people was growing rapidly, but the number of poor people was also increasing. After 1980, the number of affluent people rose even more rapidly, while poverty began declining.  I was in grad school in 1980, and I don’t recall very many people expecting such a dramatic turnaround in the number of poor people.  Many experts were predicting a global catastrophe, due to rapid population growth in...

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Is the Fall of Unemployment Good?

Is it good news or bad news that the rate of unemployment in the United States has gone back to a 50-year low of 3.5%? It depends on what caused it. Discussing this question will lead us to look at numbers that some may find surprising. Figure 1 and Figure 2 show the evolution of the unemployment rate and of total (non-farm) employment under the previous and current administration. There appears to be little difference. If we calculate the average (compounded)...

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My Boise State Interview

The above is my interview by one of the student journalists at Boise State University. It took place on November 4, a couple of hours before my talk. I normally highlight particular parts, but this is only about 23 minutes long. I do make a basic math error in the first few minutes when I estimate the number of readers of one of my Wall Street Journal op/eds. The interviewer told me that she hadn’t taken any economics, but I thought she did a...

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The Five Best Introductory Books in Austrian Economics

The genre of introductions to Austrian economics has always been a troublesome one. Leaping right into the core books of the school has frequently been a problem for non-specialists. Thankfully, the last decade or so has seen several attempts to fill this gap, and all five of the books I’ll discuss below are worth your time for different reasons. My list proceeds from the most “introductory” to the least and tries to provide a sense of their differences and their...

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