Russell Roberts's Blog, page 1579

A Thought Experiment

One difference between economists and others is that economists tend to be less impressed by motivation and more impressed by what people actually do. Economists are also less impressed by what people say than by what they do. So they are particularly unimpressed by people who profess to be motivated by the public good, for example. This is one reason some economists have little inherent sympathy for politicians–economists are not impressed by people who say they are working to serve the...

Pre-existing Nonsense

Here's a letter that I sent to the New York Times:

Paul Krugman thinks it wrong that health insurers don't cover pre-existing conditions ("Health Reform Myths," March 12).  Apparently, he believes that each market participant should ignore the value of what she gets in exchange for what she gives.

I wonder if Prof. Krugman has thought through the implications of his belief.  I propose a bet to test the soundness of his thinking.  Let's flip a coin.  If it lands on its edge, I pay Prof. Krugman...

Corporate Welfare Kings

A headline in today's Wall Street Journal reads "Obama Details Effort to Double Exports Over Five Years."

Translation: "Obama Details Effort to Increase Corporate Welfare Over Five Years."

Walter Williams on the Census

If you scroll down at this link, you'll find a video of my colleague Walter Williams discussing the U.S. Census.

Unreasonable Reason

Here's a letter that I sent to the Washington Post:

George Will wisely warns against reason unreasonably applied ("As a progressive, Obama hews to the Wilsonian tradition," March 11).  Pres. Obama and his ilk are guided by an irrational faith that human reason is so potent and encompassing that it permits the Best and the Brightest to consciously design society, or at least to successfully rearrange significant parts of society (such as the health-care industry).

This hubris is dangerous.

F.A...

Measuring stimulus

In this post, I disagreed with Menzie Chinn and argued that CBO estimates of the impactof the stimulus are not estimates. Charles Steele writes in a comment:

CBO's approach *is* an analysis of what stimulus actually did; such analysis necessarily requires a counterfactual, based on an underlying model of what would have happened otherwise.

So while we might disagree with the neoKeynesian underpinnings, this is an argument about the best macro model. So… what's your alternative model? And could...

They Just Don't Work in Practice

Here's the abstract of George Selgin's excellent new article, "Central Banks as Sources of Financial Instability," published  in The Independent Review:

The present financial crisis shows how central banks can fuel the financial booms that make severe busts possible. Unfortunately, theoretical discussions of central banking badly neglect its role in fostering financial instability, in part because they ignore its history and political origins.

Stimulus Working? More Evidence That It's Not

Writing in Investor's Business Daily, Robert Higgs documents the fact that private investment is drying up in the U.S. – and he explains why.  Here's a key selection:

Unfortunately, while private investment is the engine of economic growth, government spending (despite what generations of Keynesian economists have asserted) is the brake. To understand this negative relationship, we need only scrutinize how the federal government's spending is determined: namely, by political processes devoid...

The Neo Con

Here's a letter that I sent to the Wall Street Journal:

Bret Stephens interprets Iraq's recent democratic election as proof that western modernity, with all of its marvels and freedoms, is dawning in that country ("Iraqis Embrace Democracy. Do We?" March 9).  And, of course, the Great Liberator who rescued Iraqis from barbarism's clutch is none other than George W. Bush.

Mr. Stephens is mistaken.  Democracy neither brings modernity nor is an essential element of it.  The fountainhead of the...

CBO estimates

Menzie Chinn invokes the CBO "estimates" to argue against those who say the stimulus didn't work. Did the stimulus help turn the economy around and create jobs?  I'm skeptical on logical grounds but I confess that I do not have strong empirical evidence on my side.

But those who defend the stimulus have no empirical support either. The CBO "estimates" are not an analysis of what the stimulus actually did but rather what some predicted it would do. They have done NO independent non-partisan...