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Tag Archives: Economic Methods

The Domino Theory Reconsidered

Historians often casually refer to the “discredited” Domino Theory.  For example, the History Channel website tells us: The domino theory was a Cold War policy that suggested a communist government in one nation would quickly lead to communist takeovers in neighboring states, each falling like a perfectly aligned row of dominos. In Southeast Asia, the U.S. government used the now-discredited domino theory to justify its involvement in the Vietnam War and its support...

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What is the lesson from the East Asian miracle?

Tyler Cowen recently linked to an interesting essay by Byrne Hobart on East Asian development. Here’s the opening paragraph: I’ve always had highly libertarian instincts, for both pragmatic and ideological reasons. You say civilians should be able to own rocket launchers, I demand that these rocket launchers not face a sales tax. But for me and people like me, the East Asian economic miracle poses a serious challenge: the greatest anti-poverty program in history...

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The Bayesian Prisoners’ Dilemma

Suppose someone sends you a new article claiming X.  Intuitively, we think, “This will either make you more likely to believe X, or have no effect.”  Once you understand Bayesian reasoning, however, this makes no sense.  When someone sends you an article claiming X, you should ask yourself, “Is this evidence stronger or weaker than I would have expected?” If the answer is “stronger, ” then you should become more likely to believe X.  However, if the answer is...

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Antitrust and Ideology

Most people, including many among those who think of themselves as defenders of free markets, believe that antitrust laws are justified. It nearly goes without saying. So the recent paper of Ryan Young and Clyde Wayne Crews (“The Case Against Antitrust Law,” Competitive Enterprise Institute, April 2019), which reviews the case against these laws, is most welcome. They conclude: Antitrust regulation harms competition, consumers, and innovation, and therefore should be...

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Why the Prices Are So Damn High: Reply to Alex

Alex has already posted a reply to my critique of Why Are the Prices So Damn High?   Here’s my point-by-point reply, with Alex in blockquotes. In contrast, my friend Bryan Caplan is not happy. Bryan’s basic point is to argue, ‘look around at all the stupid ways in which the government prevents health care and education prices from falling. Of course, government is the explanation for higher prices.’ In point of fact, I agree with many of Bryan’s points. Bryan says,...

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Why the Prices Are So Damn High: A Deeper Look

Out of my colleagues in Carow Hall, I’ve learned the most from Tyler Cowen, and I reason the most like Robin Hanson.  But I agree the most with Alex Tabarrok.  I was surprised, then, to find so much to disagree with in Alex’s new monograph (co-authored with Eric Helland), entitled Why Are the Prices So Damn High?  Helland and Tabarrok try to explain why prices in labor-intensive industries – most notably education and health care – have increased so much more rapidly...

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Gross Domestic Error in The Economist

The Economist is a serious magazine engaged in rational discourse, whatever you think of its political philosophy. Exceptions happen. One can be found in the opening section (“The World this Week”) of the current issue (May 25, 2019). It is all the more surprising as it relates to a simple and narrow topic. We read: There was some head-scratching this week, as data showed Japan’s economy growing by 2.1% in the first quarter at an annualised rate, defying expectations...

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Eric Voegelin: Economics with a Moral Grounding

Methodology is not a value-free tool in economic analysis, leading some to conclude economics itself cannot be a value free science. The presumption of every economic methodology is philosophical and ethical, for it holds a view of a reality that transcends economics: what lies therein an account of the human person. Positivist schools of thought underplay the role of human action, but in doing so are still making a moral judgement on it, assigning a lesser...

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Recognizing a Tyrant or Tyrant-To-Be

Societies are made of more than one individual. If a ruler governed only one individual, it would be easy to find whether or not he is a tyrant: just ask his single subject. Does “society” love its ruler? But in any actual country, the fact that a minority or even a majority of the ruled supports a ruler does not mean that he is not a tyrant. That a society must not be conceived as a single individual is a central feature of the methodological individualism used by...

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Backlash Immortal

Here’s a two-step exercise. Step 1: Read this passage. Based on research to date, there would seem to be little reason to worry about a protectionist backlash against globalization in response to rising inequality. If the “average” economist thinks that technology’s role has been four times as important as that of trade, surely policy discussion is focusing on how to even out the gains from technology, not on how to erect new trade barriers? Unfortunately, this is not...

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