My GMU colleague at the Law School J.W. Verret pleads for no more Solyndras.

University of Chicago Law professor Todd Henderson discusses the many 1-percenters.

In this paper, law profs Douglas Kahn and Jeffrey Kahn argue that the alleged free-rider justification for Obamacare is a red herring.

In my most-recent column in the Pittsburgh Tribune-Review, I reflect further on income differences in modern America.

Here’s a short video on the distinction between free-market capitalism and crony ‘capitalism‘ cronyism and capitalism, starring Susan Dudley and Bradley Schiller.

With only a few well-chosen words, EconLog’s David Henderson exposes the foolishness that is Donald Trump’s ‘economics.’

Hoover, FDR, and the Great Depression  (HT Dan “Bulldog” Mitchell)

Some current trade facts from Dan Griswold.

Finally, I’ve not read this book, so I haven’t any idea if it goes there – but (bonus question!) how might the developments documented in this book result in higher and more predictable product quality (including product safety) – all without any regulation by government?

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{ 36 comments }

Greg G December 13, 2011 at 9:34 am

From the “myth puncturing” video on Hoover, FDR and the Great Depression: “All the Keynesians were terrified that economy would fall back into a depression when the supposed stimulus of wartime spending came to a halt.”

Which raises the obvious question: Was Keynes a Keynesian? ???

If so, then where are the quotes where he makes such a prediction???

According to Hayek, Keynes was more worried about post war inflation.

indianajim December 13, 2011 at 9:48 am

SWEET video distinguishing Cronyism from Capitalism; also I like the idea of making the distinction as “Cronyism vs. Capitalism” rather than “Crony Capitalism vs. Capitalism” as the term “Crony Capitalism” risks tarring capitalism with the same brush as cronyism.

I’ve posted it to my FB page and emailed it to people who don’t use FB.

Great Job Don et al. !!!!

Sam Grove December 13, 2011 at 2:29 pm

It occurred to me that Republicans spout free market rhetoric but give us crony capitalism, while Democrats spout anti-capitalist rhetoric, but give us crony capitalism.

steve December 13, 2011 at 4:13 pm

I would amend that to say Democrats spout incoherent market rhetoric, but I could go with your version.

Steve

indianajim December 14, 2011 at 4:46 pm

What about Tea Party Republicans? Don’t they deserve a little slack? What about Ron Paul (R)?

Sam Grove December 14, 2011 at 5:44 pm

I wasn’t speaking absolutely.
I’m hopeful for a Ron Paul win in Iowa.

Krishnan December 13, 2011 at 10:09 am

The opening of the Indian economy has done wonders for ordinary consumers – and yes, advertising has increased and people are being bombarded with all kinds of products … even as the quality gets better, prices are coming down … If the powers that be were to let WalMart (and others like that) get into the retail sector, there will be no limits to growth and prosperity … What we WILL find is a definite reduction in those seeking to leave the country for “better prospects” because there will be so many opportunities in India – so the opening of the country (India) will have implications for all other countries (particularly the US)

Invisible Backhand December 13, 2011 at 10:15 am

From your column:

Adjusting for inflation more realistically — to better account for improvements in the quality of goods and services…

Oh God, Boudreaux trotting out hedonic quality. In theory, since new TV’s have bigger screens than 1976 TV’s we’ll say they cost 35 percent of what they really do to make it equivalent to a 1976 TV. In practice, it’s used to make inflation look less bad than it is so COLA adjustments aren’t as high. It’s an accounting gimmick.

Don’t expect, though, Mr. Boudreaux to point out these nuances.

http://www.bls.gov/cpi/cpihqaitem.htm

Let’s see, since at some point there was a prototype mp3 player that cost $1,000,000 to make, and they’re now selling for about $20, lets use that to offset the cost of food and fuel. Sounds fair.

Greg Webb December 13, 2011 at 10:54 am

The price of homes has dropped by 50% in some markets. Isn’t that proof that the market economy works for the little guy.

Invisible Backhand December 13, 2011 at 11:20 am

Yeah, but residential homeowners weren’t storing their wealth in mp3 players or hamburger or gasoline, so it doesn’t reduce their wealth when
the price of an mp3 player goes done. When the price of their home goes down…

Invisible Backhand December 13, 2011 at 11:23 am

edit: “goes down” and invisible carriage returns. Maybe someday Russ and Don will upgrade to a modern commenting system.

While I’m here, great post over at DK’s blog today:

“Russ Roberts has come out and said it’s all about ideology for him, an admission that should probably have made even more of an impact on people than it did.”

http://factsandotherstubbornthings.blogspot.com/2011/12/david-glasner-on-keynes-hayek-cassel.html

GAAPrulesIFRSdrools December 13, 2011 at 12:29 pm

but residential homeowners weren’t storing their wealth in mp3 players or hamburger or gasoline..

Why would anyone store wealth in residential real estate? Oh yes, a whole bunch of stupid government policies made it appear that it was possible to buy something, use it and still expect the value to increase.

Invisible Backhand December 13, 2011 at 1:46 pm

Oh yes, a whole bunch of stupid government policies made it appear that it was possible to buy something, use it and still expect the value to increase.

Heh heh, this isn’t my first rodeo, troll.

Greg Webb December 13, 2011 at 10:38 pm

Pretender, the market price for home has dropped by 50% in some markets. It has done so because supply greatly exceed actual demand for such housing in those markets. The incentives that caused this oversupply of housing relative to true demand include (1) easy monetary policies of the Federal Reserve that caused interest rates to fall well below market, (2) subsidies to the housing industry provided in the income tax code and in fiscal policies of the federal government, and (3) government incentives for banks to lower lending standards to those set by the GSEs as a result of government goals for low income housing financing.

Brad Hutchings December 13, 2011 at 2:00 pm

Let me offer you two more that I distinctly remember from 1980, when I was 10. An hour of direct dialed long distance between Los Angeles and San Francisco was about $20 in 1980 dollars. Due to ridiculous telecom regulation and state granted monopoly, this price had no semblance in the reality of cost, marginal or otherwise. The same call is essentially free today on a myriad of competitors, including technological competitors. Or you might pay about $5 full retail if you’re still using retail land line long distance.

Another example is that an Apple ][+ starter system was about $900 in 1980 dollars, including a few programs, cables, and other things that the retailers like ComputerLand would upsell. That was a 1MHz 8-bit CPU with 16Kb of memory. Your smart phone that retails for about 1/2 as much in 2011 dollars is 1000x as fast with 64,000x as much RAM and direct access to millions of times of “slow” storage .

These aren’t just superfluous example that mask other price increases. They have actually enabled whole new ways of doing business and activities for pleasure. They make both capital and labor more mobile. Example: I make a good living doing about 80% of my work right at home without a dedicated “business” number, and with pretty minimal business travel. I bet 100 other Cafe Hayek readers (or pick any other blog) could attest the same thing: lucrative careers that just were not workable in 1980.

kyle8 December 13, 2011 at 5:10 pm

Food costs have also fallen, I suppose that is just some gimmick of that new fangled high tech food.

Slappy McFee December 13, 2011 at 10:20 am

The Todd Henderson article was one of the better links this year.

Panly December 13, 2011 at 10:39 am

on 1%, there are many opinions, some more informative than others.
http://blogs.reuters.com/felix-salmon/2011/12/09/hedgies-vs-obama/

steve December 13, 2011 at 10:50 am

Don- Why emphasize household income over individual wages?

Steve

Jon Murphy December 13, 2011 at 10:52 am

If I may postulate an answer for Don, I believe the focus is being placed there because some of those talking about income inequality are talking about household income.

steve December 13, 2011 at 11:04 am

Fair enough, but in an attempt to find out how people are really faring, shouldn’t we discuss both?

Steve

Jon Murphy December 13, 2011 at 11:08 am

I agree. I also believe that’s the point Don was making in his column (correct me if I am wrong). When you look at household income, it seems smaller because people divorce, there is only one breadwinner, etc. If you look at individual income, the story is different.

Slappy McFee December 13, 2011 at 2:45 pm

Steve –

The real question remains. What exactly is income? Try not to fool yourself into believing that all you consume comes from your paycheck.

Greg Webb December 13, 2011 at 10:52 am
SaulOhio December 13, 2011 at 1:40 pm

What does Leona Helmsley have to do with Newt Gingrich?

The chart Krugman posts is what happens under our present progressive tax system filled with all sorts of tax incentives imposed in the name of social engineering. From what I understand, Gingrich’s plan will put an end to that, and create incentives for the richest to put their money to more productive use, instead of putting it in tax shelters.

Greg Webb December 13, 2011 at 10:30 pm

No, Pretender. That’s wrong.

Sam Grove December 14, 2011 at 5:45 pm

All the costs of government spending are necessarily paid by those who labor to create value….no matter how much you tax the wealthy.

MWG December 13, 2011 at 11:02 am

The fact that Donald Trump was so embraced by republicans is all one needs to know about republicans.

GAAPrulesIFRSdrools December 13, 2011 at 12:48 pm

Might say the same thing about Ayn Rand acolytes.

MWG December 13, 2011 at 2:05 pm

I wouldn’t know. I’ve never read anything by Ayn Rand.

kyle8 December 13, 2011 at 5:12 pm

Well, not all Republicans.

Trump is a narcissist who is good with business, but possesses no economic knowledge, or rather what he does know is wrong.

khodge December 13, 2011 at 6:27 pm

Sorry, I missed that election; perhaps you can fill us in on the details.

MWG December 13, 2011 at 7:22 pm

Back in April when he was pushing for evidence of Obama’s citizenship polls showed he was highly regarded amongst republinas… or do you think being elected is the only sign of someone’s popularity.

khodge December 14, 2011 at 1:00 pm

Polls in April? Nearly a year before the first actual election? Yes, that is pretty meaningless.

MWG December 14, 2011 at 4:48 pm

Polls showed that back in April that he and his ‘message’ were quite popular amongst republicans. It has nothing to do with the election, it has to do with his popularity in general. Polls showed he had around a 54% favoribility rating amongst republicans. As an appearant republican, you may not like that as it makes team red look dumb, but it’s a fact that Trump and his economically ignant ideas poll well amongst republicans.

Bill December 13, 2011 at 12:04 pm

Russ’ recent “Econ Talk” podcast with Mike Munger is an excellent expansion of some of the themes (e.g., “distribution”) in Don’s Pittsburgh Tribune-Review piece.

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