Tuesday , May 18 2021
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EconLog Library

The Great Texas Blackout of 2021: Classical Liberalism and Electricity

Part 1 of 2. Coordination is a central term in economics. And malcoordination is what happened in historic, tragic fashion in the Great Texas Electricity Blackout of 2021, with a death toll nearing 200, damages and uncollectible expenses in excess of one hundred billion dollars, dismissals and resignations of involved regulators and planners, and countless lawsuits.[1] At fault was the “planned chaos” of central planning, not the (forgone) free-market order. The...

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The Fed is not a passive observer

I recently read an interesting book about octopus consciousness, written by Peter Godfrey-Smith.  This caught my eye: Some philosophers have always disliked this obsession with sensory input, with receptivity, seen in theories of the mind. . . . In everyday experience there are two causal arcs.  There is a sensory-motor arc, linking our senses to our actions, and a motor-to-sensory arc as well.  Why turn the page?  Because doing so will influence what you see next. ....

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Anti-Communism and Anti-Racism

I hate Communism.  I consider Communists to be the moral approximates of Nazis.  I might talk to a youthful Communist, but after the excuse of youth passes, I deem Communists beyond redemption. Even so, if George Mason University adopted an official Anti-Communist policy, I would oppose it. Why?  All of the following reasons. 1. George Mason University is part of the government, and as such ought to scrupulously respect freedom of speech, thought, and association. ...

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Saying Just About Anything

Yesterday, I pointed out the flimsiness of President Joe Biden’s economics as expressed in his speech of last week before Congress. What he said in the same speech comparing the First and the Second Amendments does not make more sense. It confirms one conclusion of the economics of politics: for a politician, the cost of saying just about anything or of plain lying is low. In arguing for still more gun controls, he explicitly invited a comparison between the limits of...

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Tabula-Rasa Economics in Biden’s Speech to Congress

A good exercise for economics students is to find instances of economic nonsense in a politician’s speech. In his speech of last Wednesday before Congress, President Joe Biden provided good course material. The proverbial Martian landing on Earth would have thought that Biden’s goal was to emulate his immediate predecessor. Even some elements of style—the interrupted and hanging sentences, and the repeated words, for example—look like an imitation. By the way, render...

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Economic Lessons from COVID-19

One of the most important things economists can do in a pandemic is not forget what we know. We know that central planners don’t have enough information and insight about the lives and activities of 330 million people to plan those lives in a thoughtful way. We know the problems that emerge when you distribute something valuable by giving it away. We know that government officials face bad incentives. We know that externalities pose problems for the straightforward...

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Deirdre McCloskey and the Tremendous Power of Talk

When I read Deirdre McCloskey’s 2006 The Bourgeois Virtues soon after it was published, I was impressed. But when, four years later, I read her follow-up 2010 Bourgeois Dignity, I was gobsmacked. Few books have had as big an impact on my worldview as has Bourgeois Dignity. My deep admiration for this book is apparent in my 2014 essay for Liberty Matters. And nothing that I’ve learned in the intervening seven years has dimmed my assessment of this remarkable work....

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Capital gains nonsense, part 2

Here’s Investor’s Business Daily: Biden proposes raising the capital gains tax rate to 39.6%, nearly double the current top rate of 20%, for millionaires and billionaires. . . . If enacted, the new higher cap-gains rate would impact just taxpayers with incomes over $1 million. Well, that’s good to know! People with incomes below $1 million presumably are not “impacted” if stock prices decline. And I guess workers don’t care if the nation’s physical capital stock gets...

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Double taxation of coconuts

I am often surprised by how many commenters say something to the effect, “I don’t get how taxing capital income is double taxing wage income.” Thus here I’ll present a simple numerical example. Imagine an island where residents produce 100 coconuts. They have the option of consuming the coconuts today, or planting them and having 200 coconuts in 10 years. In that case, the price of future consumption is 1/2 the price of current consumption. Now assume this society...

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Thoughts on My Simplistic Theory of Left and Right

I have a Simplistic Theory of Left and Right.  A reader sent me their thoughts on the theory.  Reprinted anonymously with their permission. I’ve been thinking about your conception of the Right and Left in American Politics and thought I would run a thought by you. You say: 1. Leftists are anti-market.  On an emotional level, they’re critical of market outcomes.  No matter how good market outcomes are, they can’t bear to say, “Markets have done a great job, who could...

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