Monday , April 26 2021
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Does Spending Your Own Money on Yourself Create a Negative Externality?

Tyler Cowen thinks so. In a post this morning, economist Tyler Cowen writes: Now consider some older people who have a lot of wealth but very little human capital.  These (selfish) individuals still will pay a lot to avoid death or risk of death, but in essence there is an externality.  They treat their wealth as “disappearing with their death” when in reality that wealth simply is transferred to others.  Therefore they overspend to keep themselves around on planet...

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That Time Was Different?

Economic theories of politics sound warnings against oppression and tyranny. The prospect may seem abstract and theoretical, but history provides many examples of idealized political leaders who turned out to be self-interested tyrants and betrayed the power that naive citizens had granted them. Here is a telling one. At the end of the 19th century, many considered Germany to be the most advanced country in the world. It was at the first ranks of public health and the...

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The Missing Right-Wing Firms: Hanania’s Plausible Resolution

Last year, I tried to figure out why there aren’t a lot more right-wing (or apolitical) firms.  A recent piece by Richard Hanania comes down firmly in favor of my Explanation #4.  To review: Explanation #4. Few moderates or right-wingers care enough to create a major profit opportunity.  While they don’t relish looking over their shoulders, they prefer their current job to an alternative where they can shoot their mouths off but earn a $1000 less per year.  In this...

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Andy Pasztor on Our Amazing Airplane Safety Record

Over the past 12 years, U.S. airlines have accomplished an astonishing feat: carrying more than eight billion passengers without a fatal crash. Such numbers were once unimaginable, even among the most optimistic safety experts. But now, pilots for domestic carriers can expect to go through an entire career without experiencing a single engine malfunction or failure. Official statistics show that in recent years, the riskiest part of any airline trip in the U.S. is...

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Teenage employment has bounced back

Matt Yglesias directed me to a graph showing that teenage employment has bounced back to near pre-Covid levels: This surprised me, as prime-age employment remains depressed at levels well below early 2020: What explains the difference?  There are many potential explanations, but one possibility is that teenagers are less likely to be receiving generous unemployment benefits, as many of them were not working when the Covid recession hit last March, or had not worked...

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Walter Oi and Armen Alchian on Value of Life

I’ve enjoyed Bryan Caplan’s recent two posts (here and here) about how the value of life varies with age and I’m inclined to agree with him. I think about my own situation. My mother died of cancer in December 1969 at age 53. My brother committed suicide in July 1970 at age 22, just shy of 23. My father died in June 1997 at age 87. And my sister died in November 2018 at age 72. When I think about my degree of sadness and loss, it corresponds with what Bryan says....

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Goldberg on Expressive Politics

Brennan and Lomasky’s expressive voting model tries to explain why politics is largely about style and stories, not substance and numbers.  Long story short: Political entertainment is a private good; political results are a public good.  As a result, political systems primarily yield entertainment, not results.  Jonah Goldberg nicely illustrates these insights in a recent column.  Highlights: Application to immigration: [I]mmigration is a perfect example of what I’m getting at. It’s an...

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The Resource Cost of a Gold Standard

When I was in the UCLA Ph.D. program, one of the readings in my Monetary Theory course with Ben Klein, if I recall correctly, was Milton Friedman’s 1953 classic, “Commodity-Reserve Currency.” It was a chapter in his Essays in Positive Economics but originally appeared in the Journal of Political Economy in 1951. It was that article, more than any other, that convinced me that a gold standard was too expensive. Friedman had shown that the annual cost of maintaining a...

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You get what you pay for

In my previous post, I pointed out that the unusually generous unemployment benefits being paid out until early September were likely to depress employment of lower skilled workers during the summer months. You might wonder if there is any research that supports this claim. It turns out that there is.  A 2016 NBER study by Marcus Hagedorn, Iourii Manovskii & Kurt Mitman found that the expiration of the extended unemployment benefits at the end of 2013 led to an...

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The Problem in Bertrand de Jouvenel

At Law and Liberty, Daniel Mahoney has an interesting and often challenging article on Bertrand de Jouvenel. Mahoney, like Jouvenel, tries to reconcile the danger of the state (“the Minotaur” in Jouvenel’s terms) with the ancient philosophical ideal of a “common good” that political authorities are supposed to protect. My own reading of Jouvenel, specifically of his book On Power, has been mainly classical-liberal or libertarian, although I have emphasized the...

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