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EconLog Library

Shoot to kill: Power, precision, sufficiency and the appropriate target

Over at MoneyIllusion I have a new post advocating reforms that would boost the power of monetary policy. Here I’d like to put this in context, especially given that the Fed is planning to revisit its policy strategy this summer. A successful monetary policy has four elements: 1. An appropriate target: I favor NGDP level targeting, but the Fed’s current target (AD set at a level that leads to 2% PCE inflation and minimizes the employment/output gap) is not that bad,...

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The sad decline of American democracy

The Constitution says that only the Congress has the power to declare war, and the last time they did so was 1941. But that wasn’t the last war the US fought a war. Interestingly, at just about the time Congress stopped declaring war, the “Department of War” was relabeled as the “Department of Defense”. Congress is supposed to approve treaties with foreign nations. But Congress never approved the nuclear deal with Iran. Congress increasingly gives unelected regulators...

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Stephen Moore for the Fed?

The nomination [of Stephen Moore for the Federal Reserve Board] has stirred a lot of controversy. Writing in the New York Times last week, Harvard economics professor N. Gregory Mankiw, who was chairman of the Council of Economic Advisers under President George W. Bush, accused Moore of being “a propagandist, pushing for conservative causes, often with flimsy arguments.” Democratic Senators are expected to vote against Moore’s nomination and even a few Republican...

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Governing Least: What’s Really Wrong with Utilitarianism

One argument against utilitarianism is that no one actually follows it.  I call this the Argument from Hypocrisy.  A better objection, though, is that even highly scrupulous utilitarians don’t comply with their stated principles; I call this the Argument from Conscience.   In Governing Least, Moller powerfully develops a parallel objection: While utilitarians often urge self-sacrifice, they rarely preach other-sacrifice.  But given their principles, they totally...

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China’s growth—what do we actually know?

Tyler Cowen recently linked to a study of China’s economic growth, which suggests that official figures (roughly 8%) overstate the real GDP growth rate by about 1.8%/year between 2010 and 2016: Using publicly available data, we provide revised estimates of local and national GDP by re-estimating output of industrial, construction, wholesale and retail firms using data on value-added taxes. We also use several local economic indicators that are less likely to be...

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Dan Moller’s Governing Least

Michael Huemer’s The Problem of Political Authority is definitely my favorite work of libertarian political philosophy.  Dan Moller’s new Governing Least, however, is definitely now my second-favorite work of libertarian political philosophy.  The two books have much in common: Both use common-sense ethics to argue for libertarian politics.  Both are calm, logical, and ever-mindful of potential criticisms.  Both strive to persuade reasonable people who don’t already...

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Cowen on Optimal Marginal Tax Rates on CEOs

A week ago, I sent to my editor my review of Tyler Cowen’s latest book, Big Business: A Love Letter to an American Anti-Hero. The book is outstanding. There are valuable facts and/or bits of economic reasoning on virtually every page. To give you an idea of how much I liked the book, I titled my review “A Love Letter to Tyler Cowen.” I’m not sure the editor will use that title. 🙂 The consistently great content meant that I had to leave a lot out of my review. Here’s...

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The strange endgame of protectionism

When Steve Bannon was still advising President Trump, he advocated a traditional form of economic nationalism. The goal was to boost manufacturing in America and reduce the trade deficit. One traditional argument against US protectionism is that it would damage American farmers, an important export sector. In the past two years, the Trump administration has moved increasingly far from that vision, promoting policies tailor made to increase the trade deficit and...

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As Notre-Dame-de-Paris Was Burning…

From any pronouncement, one must discount emotions, purple prose, and metaphors. Language is complex. In non-mathematical languages, things often (if not always) don’t literally mean what they say. This is even truer for politician-speak. As Notre-Dame-de-Paris was burning, French president Emmanuel Macron tweeted: Like all of our compatriots, I am sad this evening to see this part of us burning. His original tweet was of course in French, but he repeated it in...

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More Bang for Your Buck; or, Better Ways to Buy Your Happiness

Money has little effect on happiness.  Ancient Greeks like Epicurus said it, and modern empirical psychology confirms it.  Why do we have so much trouble accepting this?  In part, because our immediate reaction to money is highly favorable – and that sticks in our minds.  Before long, however, hedonic adaptation kicks in.  We start to take our good fortune for granted… and then we largely forget that our fortune is good. But there’s probably another important reason...

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