Russell Roberts's Blog, page 1542

Some Links

My GMU and Mercatus Center colleague Tyler Cowen, writing at Economist.com, offers an important lesson in Labor Economics 101.

The Washington Post's Anne Applebaum identifies a real, and deep, problem in America.

Cato's Jim Dorn responds, in the Financial Times, to Michael Spence.

David Beito is reading Neoconservatism: An Obituary.

Bill Shughart identifies yet another victim of Potomac Fever: Christina Romer.

U.S. News & World Report's Mort Zuckerman has harsh words for Pres. Obama's economic...

What went wrong–a narrative is born

When I was younger, the standard view of the Great Depression was that FDR saved the country. Then some people wondered whether the economy had really recovered–there was a bad spike in unemployment in 1938. The new narrative was that while FDR had done his best, he hadn't really been much of a Keynesian–it was the war that was the real Keynesian stimulus. I think this narrative was wrong as well. As Bob Higgs as shown, the war was good for bomb-makers and airplane manufacturers. But the...

Workers' Paradise

Check out all the great jobs Haitians get to fill by being spared the capital investment made possible by saving, free markets, and free trade. And here.  And here.  (HT Kerry Dugas)

I sent the following letter a few days ago to USA Today:

Wyclef Jean deserves applause for his efforts to improve the education of Haitian children ("Don't forget long-term goals for Haiti," July 15).  But in his sensible call for Haitians to focus on the long-run, he misdiagnoses Haiti's core problem.

Contrary to...

Is Pessimism Rational?

Here's a letter to the Washington Post:

Reviewing Matt Ridley's book The Rational Optimist, Wray Herbert isn't convinced that Mr. Ridley's optimism about both the likelihood and the benefits of continued economic growth is justified ("Matt Ridley's 'The Rational Optimist,'" July 18).

I pose today to Mr. Herbert the same question that Thomas Babington Macaulay posed in 1830 to the irrational pessimist Robert Southey – a question that Mr. Ridley wisely quotes as the introduction to Chapter 1 of...

Some Links

Writing in Barron's, My GMU colleague Tom Hazlett praises the Obama administration's support for property rights in the radio spectrum.

My former research assistant – and now blogger extraordinaire – Mark Perry, over at Carpe Diem, offers compelling, data-grounded pictures on the happy state of manufacturing in America.

Chris McGraw composed this rock-music ode to "Helicopter" Ben Bernanke.

Thomas Sowell is reasonably certain that today's economic woes are being prolonged by unreasonable...

Industrial Policy – Not

On the final day of The Economist's published debate on industrial policy, moderator Tamzin Booth summarized industrial-policy enthusiast Dani Rodrick's case for such state direction of the economy: "for Mr Rodrick, the fact that every single prosperous country in history has used industrial-policy tools at some point proves that they must work."

How ironic that the same e-mail from The Economist that brought me the final words on this debate also featured this report on what The Economist

Remember Chapter 1 of A. Smith and Chapter 7 of D. Ricardo

Here's a letter to the Wall Street Journal:

Darrell West might be correct that a more-open immigration policy is easier to sell to the public if that policy focuses on admitting foreigners who are very smart and well-educated ("We Need an Einstein Immigration Policy," July 16).  But as a matter of economics it's untrue that only high-skilled workers have "the potential to enhance American innovation and competitiveness."

By relieving engineers, web designers, chemists, and other high-skilled...

Persistent unemployment

Greg Mankiw looks at unemployment and sees something scary. I agree:

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He observes:

"This recession looks very different, and much more troubling, than those in the recent past."

What is different? Lots of things certainly, but look at employment in the construction industry:

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From the mid-1990s through 2006, construction employment accelerated and grew much more quickly than the previous trend. You can see previous recessions in the construction employment data–it takes anywhere from 2-3 years for ...

A big part of the job market problem

Greg Mankiw looks at unemployment and sees something scary. I agree:

[image error]

He observes:

This recession looks very different, and much more troubling, than those in the recent past.

What is different? Look at employment in the construction industry:

[image error]

From the mid-1990s through 2006, construction employment accelerated and grew much more quickly than the previous trend. You can see previous recessions in the construction employment data–it takes anywhere from 2-3 years for construction employment to...

Macro Thought Experiment II

Here's another macro thought experiment.

A government economist notices that 25% of the job losses in the economy are from the construction sector. To help speed the recovery in the job market and reduce unemployment:

1. the government decides to build 1,000,000 government houses and sell them cheaply to qualified (low-income buyers)

2. the government decides to build 1,000,000 government houses and then tear them down.

3.  the government decides to pay the out of work construction workers their ...