Thursday , August 22 2019
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A Carbon Tax Is Not a Slam Dunk

Advocates of a carbon tax argue, correctly, that a tax is a much better way to reduce carbon usage than any system of regulations could be. The reason is that every use of carbon that creates carbon dioxide imposes damage, and a carbon tax based on the amount of carbon dioxide created will cause everyone who creates carbon dioxide to, indirectly, take that damage into account. The carbon tax beautifully scales the payment to the damage: those who create more damage...

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Ask the Author: Questions for Karelis

Charles Karelis, author of The Persistence of Poverty, is happy to answer your questions.  Please write them in the comments, and he’ll respond in a regular post. To get things started, here are a few questions from me. 1. Your theory seems to imply that when people temporarily have many personal problems, they will start doing painful things with long-run benefits.  Example: If you’re already (temporarily) miserable, why not go on a diet and start exercising, so...

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Mallaby on Grant’s Bagehot

I cannot add the second post before this afternoon but it would be this I’m halfway through James Grant’s Bagehot. The Life and Times of the Greatest Victorian. The book has been widely reviewed and it is, indeed, excellent. Grant writes engagingly and makes the most of Bagehot’s life (by the way, I was saddened by his reference to Thomas Hodgskin as “a kind of anarcho-socialist”, but this is a very minor fault of the book). Of the reviews I read, I’ve particularly...

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Industrial Policy: Shouldn’t we actively encourage X, rather than just passively allow Y?

This post will combine two of my interests: 1. Framing effects2. General equilibrium and the fallacy of composition Although most Econlog readers can see past framing effects, they have a powerful effect on the general population. My claim is that most people would answer yes to the question in the title of this post. And I also claim they’d continue to answer yes if you reversed X and Y. It simply sounds good. Do I have any evidence for this claim? Sam Bowman...

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The Persistence of Poverty: The Spinoffs (Part 8)

If Karelis is wrong, why have I written so much about his work?  Because his arguments are so much better than his conclusion.  Charles Karelis hasn’t explained poverty, but he has still enriched our understanding.  He’s hardly the first person to emphasize the connection between behavior and persistent poverty, but he makes this point more forcefully and eloquently than almost anyone else.  And he’s the first person to highlight the ubiquity of increasing marginal...

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21st century problems

I recently came across an amusing story out of San Francisco, which nicely illustrates the fact that the 20th century is over.  The San Francisco school board is considering painting over a set of murals depicting the life of Washington: More than 100 people crammed shoulder to shoulder in a high school entryway, gazing up at the scenes of George Washington’s life. Here was the first president in Mount Vernon, flanked by the slaves he owned. There he was again,...

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Dominance: Material vs. Rhetorical

Do the rich dominate our society? In one sense, they obviously do.  Rich people run most of the business world, own most of the wealth, and are vastly more likely to be powerful politicians. In another sense, however, the rich aren’t dominant at all.  If you get in public and loudly say, “Rich people are great.  We owe them everything.  They deserve every penny they’ve got – and more.  People who criticize the rich are just jealous failures,” almost everyone will...

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Dan Klein on Sweden

Dan Klein has an interview on Sweden, a country he knows well. It will read counterintuitive to many. In short, Dan argues that Swedish civic virtue precedes the welfare state and does not depend on it. Thinking otherwise implies not understanding “why the Swedish bumblebee flies as well as it does a strong and liberal national identity, free markets, civic virtue”. A couple of highlights. Dan emphasizes the importance of an entrepreneurial class that is relatively...

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Bernie Sanders Didn’t Say It

When I wrote a review of the excellent Socialism Sucks by Bob Lawson and Ben Powell, I quoted a passage from it that they attributed to Bernie Sanders. It did sound extreme, even for Bernie, and I should have checked. Unfortunately, I didn’t. That’s a problem because Bernie didn’t say it. Here’s the relevant passage in my review: They [Lawson and Powell] quote Bernie Sanders’s 2011 comment that “the American dream was more apt to be realized” in Venezuela than in the...

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Keynes’ Understated Criticism of FDR’s New Deal

One main component of Franklin Roosevelt’s New Deal was the National Industrial Recovery Act (NIRA), which cartelized hundreds of American industries. If FDR’s goal was, as the name of the act implies, to  help industries recovered from the depth of the what would later be known as the Great Depression, the NIRA never made sense. When you cartelize an industry, you cut output and raise prices. With output being so low, you make the situation worse, not better. My...

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