My colleague Dan Klein is interviewed here on his recent studies on the role of ideology and confirmation bias.  Great stuff!

Here’s Arnold Kling on price adjustments and alternative hypotheses.

Daniel Hannan tries his skillful hand at dispelling ten myths held dear by OWSers.  (HT Mark Perry)

Peter Wallison, correctly in my view, refuses to let Fannie and Freddie get away with accepting only modest blame for the financial crisis.

This rather long read by UCLA economist Lee Ohanian on public-sector unionism is well worth your time.

Bob Higgs discusses one of the welfare-state’s more unseemly consequences.

Silvia Morandotti, in this video, offers five lessons from Europe for America.  Pay close attention.

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{ 28 comments }

Daniel Kuehn November 28, 2011 at 11:05 am

Also worth reading is the September, 2010 collection of critiques of Klein’s initial article (http://econjwatch.org/issues/volume-7-issue-3-september-2010), one of which was written by me. What I think a lot of people don’t realize is that of all these critiques that were invited by Econ Journal Watch, this concern about “challenging the left” was not the only or even the primary concern that was raised. There were a lot more critiques of the questions themselves, the identification strategy, etc.

Daniel Kuehn November 28, 2011 at 11:07 am

I’m still a little curious about the editorial process at EJW, and haven’t gotten a clear answer about exactly how that works. The first article could have avoided a lot of the misleading assertions made in the WSJ op-ed if it had been subjected to the same critical review process that was provided after the fact in the September, 2010 issue.

Randy November 28, 2011 at 11:51 am

Re; The Higgs article.

The political calculation of increasing dependancy is to convince a significant part of the population that their being exploited is really a benefit.

Slappy McFee November 28, 2011 at 12:14 pm

I am surprised you didn’t include Bryan’s take on education:

http://econlog.econlib.org/archives/2011/11/the_magic_of_ed.html

jjoxman November 28, 2011 at 1:44 pm

Silvia Morandotti is wrong about only one thing. There is a developed country to which liberty seekers can escape: Canada. It’s been going in the right direction (read: more liberty) for the past couple of years. Canada and U.S. are roughly the same position right now, but Canada is improving, while U.S. is declining.

Look to the North.

brotio November 28, 2011 at 11:53 pm

There is a developed country to which liberty seekers can escape: Canada

Until you need medical attention. Then, you’re hosed unless you can afford to come to the US.

Nikolai Luzhin, Eastern Promises November 28, 2011 at 1:49 pm

Wallison is just such tripe—talk about a political hack. He is the walking talking case study of bias

According to libertarian logic quotas reduce economic activity. A quota requiring 30% of loans sold to the govt’ to be “affordable housing” should have reduced the overall number of loans, as to low number of qualified buyers for affordable housing should have checked the number of loans to more qualified buyers (or shifted qualified buyers to lower priced housing that qualified for loans).

Since neither happened we know that the quota did not impact the market. Instead, what we had was good old fashioned fraud. Buyers/borrowers and lenders both lied, at will, because the loans were being sold, period.

Jon Murphy November 28, 2011 at 2:03 pm

“A quota requiring 30% of loans sold to the govt’ to be “affordable housing” should have reduced the overall number of loans, as to low number of qualified buyers for affordable housing should have checked the number of loans to more qualified buyers (or shifted qualified buyers to lower priced housing that qualified for loans).”

Well that’s a huge swing and a miss

Jon Murphy November 28, 2011 at 2:06 pm

You are partially correct when you say quotas reduce economics activity. You’re just missing one key word: “useful.” Quotas reduce useful economic activity. By requiring 30% of loans be sold to the government, you induced banks to loan to people they would not have otherwise loaned to, since they didn’t keep the loans. That’s why you saw the number of loans go up. It was fraud, my friend. Fraud in the guise of government. And shame on those who perpetuated it.

GiT November 28, 2011 at 3:27 pm

Great, more of Wallison’s disinformation, lacking some numbers and fudging others, while ignoring the actual timeline of events.

Ignore the shadow bailouts, fudge what counts as a ‘bad loan’ and pay no attention to differences in private securitization mortgages, ignore delinquency rates, etc. so as to get the story you want to tell.

Wallison acts as if who held the ball in 2008 determines who was responsible in all the years.. Assuming that who holds bad mortgages in 2008 (not to mention assuming that the mortgages held by the GSEs and those held by private banks were of the same quality) represents who demanded bad mortgages in years prior is a fallacy.

These links are instructive.

http://www.peri.umass.edu/fileadmin/pdf/conference_papers/SAFER/Ferguson_Johnson_Too_Big_PartII.pdf

http://www.ritholtz.com/blog/2011/07/why-wallison-is-wrong-about-the-genesis-of-the-u-s-housing-crisis/

Jon Murphy November 28, 2011 at 4:51 pm

It’s not a matter of who holds the ball at the end of the game. It’s a matter of what incentives got it there in the first place.

GiT November 28, 2011 at 9:47 pm

Yes, but Wallison uses who holds the ball at the end of the game as grounds for causal inference about what the incentives were when the loans were originated. He suggests that GSEs holding 70% of so-called bad mortages in 2008 is proof of their having caused the crisis. But that’s just deceptive manipulation of evidence.

GSEs didn’t hold nearly that many ‘bad mortgages’ in early 2007 or 2006 or 2005 or 2004… Why? Wallison’s not interested in telling you, because it doesn’t help his story.

Greg Webb November 28, 2011 at 5:50 pm

More nonsense by useful idiots to corrupt politicians and their political cronies.

GiT November 28, 2011 at 9:49 pm

What enlightened analysis. Your sentence is practically brimming with information.

Unfortunately, all that information conveys is that you are incapable of thinking in anything other than tired, lazy ad hominems.

Why don’t you engage with the evidence? (Oh, right, because you’re too addled to actually read and understand it.)

Randy November 28, 2011 at 2:35 pm

The Hannan article is very good. Very quotable.

GiT November 28, 2011 at 3:39 pm

You consider this sort of deception with numbers ‘very good?’

“Between 1980 and 2007, the US cut taxes at all income levels. Result? The top one per cent went from paying 19.5 per cent of all taxes to 40 per cent. In Britain, since the top rate of income tax was lowered to 40 per cent in 1988, the share of income tax collected from the wealthiest percentile has risen from 14 to 27 per cent.”

From 1980 to 2007, the share of income taken in by the top 1% doubled.

And their share of tax receipts doubled.

And yet we’re saying the increase in tax receipts for the 1% is ‘a result of’ changes in the tax code, rather than changes in their income?

The Hannan article is very good at at least one thing – lying.

Nikolai Luzhin, Eastern Promises November 28, 2011 at 6:41 pm

your truth always welcome here

GiT November 28, 2011 at 10:04 pm

Funny how quiet things get when the high priests unambiguously abuse a simple accounting error to peddle bullshit.

Jon Murphy November 28, 2011 at 3:50 pm

I agree Randy. The Hannan article is very good. I may just print it out for posterity.

Randy November 28, 2011 at 3:30 pm

The Ohanian article brings to mind a strategy – a sort of modified “starve the beast” approach;

1. Refuse to raise taxes. No compromise. Period.
2. The political organization could respond by cutting salaries or benefits, but they won’t, choosing instead to reduce political service levels as an act of revenge.
3. Learn to live with the reduced political service levels – which shouldn’t be anywhere near as difficult as the politicians would have us believe.
4. After learning to live with reduced political service levels, repeat the cycle, until the very idea of becoming a political service worker becomes… well, something that no parent would want their son or daughter to do.

Jon Murphy November 28, 2011 at 3:44 pm

The only issue there, Randy, is if the government refuses to cut spending. That was the issue with Greece. As more and more people left the country/no longer paid taxes, they refused to cut services or salaries. As much as I’d like to see the US government reduces, I’d like to avoid doing it staring down the barrel of a gun.

Randy November 28, 2011 at 3:51 pm

I don’t think that it is avoidable. Not without giving in to the blackmail. And how much longer can giving in to blackmail work?

Jon Murphy November 28, 2011 at 4:18 pm

True, Randy. Nothing like bouncing checks to tell one he needs to start being lean. But I’d rather do it now, when the economy is growing, than when the economy is in the tank. It’s easier to cut 1 million people off from the government’s checkbook than 13 million.

Economic Freedom November 29, 2011 at 1:03 am

http://www.nytimes.com/2011/11/27/business/estee-lauder-heirs-tax-strategies-typify-advantages-for-wealthy.html?_r=1&scp=1&sq=lauder%20family%20fortune&st=cse

The rich dynasties must be undone. They have been stealing everything and have destroyed this country because of greed of control of the government via the Rethuglican party. I think only a civil war will accomplish it. The teabaggers versus the occupy wall street people. I’m afraid that the teabaggers are far better armed thanks to the Supreme Ct. interpretation of the 2nd Amendment. Therefore, I suggest that the occupy wall st. people begin to arm themselves and prepare for Armageddon. The librarian status quo must be defeated. Many will die and it will be bloody. What is the alternative? An acceptance of perpetual serfdom for the 99 percent? Give me liberty or give me death. That about sums up the reality of the situation. Target practice and then civil war is fulminating and in the offing. I hope that the librarians and teabaggers are soundly defeated otherwise a 4th Reich will be in our future. This is the Spanish Civil War all over again. History repeats itself.

enoriverbend November 29, 2011 at 5:25 pm

“The librarian status quo must be defeated. ”

Interesting platform, there. But be careful, even the librarians are arming themselves…

http://www.thebredafallacy.com/

Economic Freedom November 29, 2011 at 1:09 am

It is estimated that between 500,000 and 1,000,000 people died in the Spanish Civil War. Then a facist dictatorship under Franco ensued for many decades.

vidyohs November 29, 2011 at 7:18 am

Re: the Silvia Morandotti link.

Great video making great points, all of which have been made here, by so many of us, so many times it can’t be counted.

However, I sent that on to my e-mail list, hoping that the pretty girl will keep the guys attention long enough for them to hear the message.

In my opinion her #3 point should be #1, because it is that moral degeneration that allows all the other socialist moves to happen and makes it so difficult to reverse.

Jon Murphy November 30, 2011 at 4:38 pm

I was just reminded of a quote my Mark Twain that applies to the OWS folks:

Don’t go around saying the world owes you a living. The world owes you nothing. It was here first.

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