“The Cold-War Origins of the Value of Statistical Life,” by H. Spencer Banzhaf, Journal of Economic Perspectives 28, no. 4 (Fall 2014).
“Here Mises says that we have to defend ourselves to maintain our freedom, otherwise we will be enslaved. OK. And then he says that voluntary self-defense will not work. Why won’t it work? Because the market isn’t working. And what causes the market to fail? ‘Isolated attempts on the part of each individual to resist’ will fail. In other words, defense is a public good. People will free ride on the efforts of others. But Mises has the solution. Impose a draft, and compel the able-bodied to defend the homeland and force everyone to pay taxes to finance the provision of the public good, which the unhampered free market is unable to do on its own. Of course, this is just one example of market failure, but Mises doesn’t actually explain why the provision of national defense is the only public good. But, analytically of course, there is no distinction between national defense and other public goods, which confer benefits on people irrespective of whether they have paid for the good. So Mises acknowledges that there is such a thing as a public good, and supports the use of government coercion to supply the public good, but without providing any criterion for which public goods may be provided by the government and which may not. If conscription can be justified to solve a certain kind of public-good problem, why is it unthinkable to rely on taxation to solve other kinds of public-good problems, whose existence Mises, apparently unbeknown to himself, has implicitly conceded?”
-David Glasner, “Ludwig von Mises Explains (and Solves) Market Failure.”
“The NAIRU, explained: why economists don’t want unemployment to drop too low,” by Matt Yglesias. A very nice primer.
“When Boris Yeltsin went grocery shopping in Clear Lake,” by Craig Hlavaty.
A wonderful parody of SJW indie games. Via Lee.
“The public clamor for the NFL to ‘do more’ when confronted by evidence of serious wrongdoing in the cases of Ray Rice, Adrian Peterson, Greg Hardy, and an unfortunately large number of other cases strikes me as very troubling, and reflective of this view, apparently pretty widespread, that we can’t count on the legal system to mete out appropriate punishment in a reasonable way. We have a criminal law, one would think, to define behavior that we cannot accept as a society, and to identify and punish those who violate those norms. Many people, though, seem to want the NFL, and/or the individual NFL teams, to take over that function. It’s a kind of privatization of a public function, and, extended more broadly, its costs might be much higher than we think. Do we really think it would be a such a good idea if Microsoft, say, or General Electric, or Wal-Mart, or Amazon, or other large private employers started instituting ‘codes of conduct’ governing employee behavior outside of work time? And if they started firing people because they received a video showing them behaving unlawfully, even heinously? And let’s see, whose interests do we think the NFL’s process for determining punishment is going to serve – the public’s? Or the NFL’s?”
-David Post, “Justice, Ferguson MO, and the NFL.”
“This paper investigates whether U.S. government spending multipliers differ according to two potentially important features of the economy: (1) the amount of slack and (2) whether interest rates are near the zero lower bound. We shed light on these questions by analyzing new quarterly historical U.S. data covering multiple large wars and deep recessions. We estimate a state-dependent model in which impulse responses and multipliers depend on the average dynamics of the economy in each state. We find no evidence that multipliers differ by the amount of slack in the economy. These results are robust to many alternative specifications. The results are less clear for the zero lower bound. For the entire sample, there is no evidence of elevated multipliers near the zero lower bound. When World War II is excluded, some point estimates suggest higher multipliers during the zero lower bound state, but they are not statistically different from the normal state. Our results imply that, contrary to recent conjecture, government spending multipliers were not necessarily higher than average during the Great Recession.”
“Government Spending Multipliers in Good Times and in Bad: Evidence from U.S. Historical Data,” by Valerie A. Ramey and Sarah Zubairy.
“Both major parties (and most of the minor ones) are infested with protectionist fellow travelers who would discriminate on the basis of national origin no less virulently than David Duke or any other overt racist would discriminate on the basis of skin color. But if racism is morally repugnant-and it is-then so is xenophobia, and for exactly the same reasons.”
“Xenophobia and Politics: Why protectionism is a lot like racism,” Steven Landsburg.
“It is common economic doctrine that, strictly speaking, with less than an infinite number of firms in an industry, the demand curve facing any firm is negatively sloped. Moreover, the degree to which a firm faces a less than perfectly elastic demand curve is presumed to depend in part on the number of firms, with perfect competition arising in the limit as the number of firms approaches infinity. Since an infinite number of firms per industry is unrealistic, the assumption is made that as long as there are “many” firms, each acts ‘as if’ there were an infinite number and this produces perfect competition. Firms, therefore, act as if they are price takers when in fact they are not.’ In this paper, we initially describe a partial equilibrium model loosely called Cournovian, after Cournot in which there is a positive relationship between the degree of competition and the number of firms in an industry. We then proceed to show that this relationship disappears in a general equilibrium model. In fact, the major result of the general equilibrium analysis is the following: under certain conditions, a general equilibrium with two or more noncolluding firms per industry is perfectly competitive.”
“The Number of Firms and Competition,” by Eugene Fama and Art Laffer, American Economic Review 62, no. 4 (September 1972).