Russell Roberts's Blog, page 1528

TARP and the small banks

The Washington Post reports:

Big Wall Street firms have the most bruised public reputations, but it's a collection of smaller banks that continues to plague the Treasury Department's bank bailout program.

The latest report from the agency shows that more than 120 institutions – nearly all of them small banks – have missed their scheduled quarterly dividend payments, which is more than a sixth of the banks that received federal aid during the financial crisis.

In addition, five banks that...

Kling on the influence of money

Arnold reminds us of some magnitudes:

My view on the funding of left and right is that if you include government funding, the left enjoys a huge funding advantage. A single government contract for Jonathan Gruber to lend his technocratic hand in government regulation of health insurance or for Mark Zandi to bless the stimulus with precise estimates of multipliers exceeds what one can earn in a lifetime by writing essays on expert failure. Compared with the amount of money that the government...

The "s" word

James Surowiecki wonders why "stimulus" has become a dirty word:

When President Obama unveiled an array of new tax-cut and spending proposals last week, one word was noticeably missing from his speeches: "stimulus." Republicans, meanwhile, energetically set about decrying the plan as "more of the same failed 'stimulus' " and as simply a "second stimulus"—as if the word itself were a damning indictment. The idea of using countercyclical fiscal policy to help get a weak economy moving is hardly...

Unbalanced 'Reasoning'

Here's a letter to the New York Times:

How disappointing that a trade economist of Paul Krugman's stature has become a leader of the protectionist tribe ("China, Japan, America," Sept. 13).  Like all members of that anxious and ill-informed clan, he tosses around arguments without concern for facts or consistency.

Consider: Given Mr. Krugman's claim that we live today "in a world awash with excess savings," why does he suppose that a lower U.S. trade deficit with China will not be offset by...

Does spending create prosperity?

Does spending create prosperity? It's a weird idea when you think about it. Spending is consumption. Consumption uses stuff up. How could it create prosperity? If anything, the causation is reversed–it is prosperity that creates spending.

The Keynesian logic, though, is pretty appealing. In times when there is high unemployment, spending should create demand. Any kind of spending. So if consumers don't want to spend, then government can stimulate the economy. And demand should create jobs...

Why inequality is a red herring

Inequality is a red herring. Or maybe a poisonous herring. It is the symptom, not a disease, and misunderstanding it leads to pad medicine. Here is Alex Tabarrok on what he and others call Winner-Take-All economics:

J.K. Rowling is the first author in the history of the world to earn a billion dollars.  I do not disparage Rowling when I say that talent is not the explanation for her monetary success.  Homer, Shakespeare and Tolkien all earned much less.  Why?  Consider Homer, he told great...

Some Links

A celebration of the life of Manuel "Muso" Ayau will be webcast tomorrow (Sunday, Sept. 12).

Frank Stephenson, at Division of Labour, on budget "cuts."

On Stossel, I defend consumers' right to buy caskets from whomever they wish.

Is this any way to encourage economic expansion and 'job growth'?

Synoptic Naming and Promiscuous Ideas

Seeing Like a State author James Scott has the lead essay in the most recent issue of Cato Unbound. I have one of the invited responses.  Other responses – one from Brad DeLong, another from Timothy Lee – will appear shortly.

Tonelson & Kearns Peddle Ptolemaic Economics

Here's a letter to the New York Times:

Alan Tonelson's and Kevin Kearns's case for taxing or otherwise throwing obstacles in the way of American consumers who seek to buy foreign-made products is a string of errors and misconceptions ("Trading Away the Stimulus," Sept. 10).

For example, these authors assert that America's trade deficit is "a central reason why American growth has lagged and President Obama's stimulus hasn't led to a robust recovery."  Nonsense.  While its true that the 2010...

Prices Report Reality; Government Threatens to Shoot Messenger (Or At Least to Falsify the Message)

Here's a letter to the Wall Street Journal:

You report that the Obama administration seeks "legislation that would give the federal government the power to reject unreasonable rate increases" by health insurers ("White House Warns Insurers Against Rate Hikes," Sept. 9).

Sounds reasonable.  But it isn't.  "Unreasonable" is too vague and subjective a standard for guiding a government agency that possesses the power to block price increases.  While by definition any "unreasonable" action is...