19 Sep 2014


Potpourri 238 Comments

==> David R. Henderson gives a comprehensive response (with the help of Scott Horton) to Richard Epstein’s case for a libertarian intervention against ISIS.

==> Speaking of Syria, check out my old post on “More Middle East Map Fun!”

==> Robin Hanson has an interesting post that suggests economists don’t actually care about changing the world. (HT2 Art Carden)

==> Ed Feser complains that no deep theist has ever advanced the argument that “everything must have a cause,” and yet atheists keep knocking it down with triumph.

==> Speaking of deep thinkers, Neil deGrasse Tyson is remarkably flippant about his made-up quotes, and so are his fans.

==> Can this be possible? A teenager gets 23 years in prison for shooting a dog (when he was 16) after breaking into a house?

==> It looks like Krugman is going to debate someone after all.

18 Sep 2014

“Hang on Sloopy” in the Hometown

karaoke 1 Comment

I’m back in Rochester for my 20th high school reunion (this weekend). While here I decided to treat this group of strangers to a classic tune from the McCoys. The crowd really gets into it at the end.

18 Sep 2014

Climate Change Activists Move Goalposts Yet Again

Climate Change, Shameless Self-Promotion 57 Comments

My latest IER post. An excerpt:

In the present post, I’ll walk through yet another example of this phenomenon, in this case a recent ThinkProgress article that complains that GDP (Gross Domestic Product) isn’t a good metric when it comes to the debate over climate change. As we’ll see, when confronted with very compelling arguments that the IPCC reports and leading computer models do not justify the aggressive government intervention that the people at ThinkProgress seek,[1] they don’t dispute the point. Instead, they rattle off all sorts of reasons that the IPCC is essentially wrong, because the computer models used in the IPCC reports leave out important details, and because the standard cost/benefit approach to judging policy recommendations doesn’t work when it comes to climate change.

All of this should make innocent onlookers very suspicious. For years, advocates of heavy restrictions on energy use and individual liberty have cited the IPCC reports in their proclamations that “the science is settled” and that only “deniers” could possibly dispute the need for immediate and strong government actions. Now all of a sudden, the leading advocates are changing their case mid-stream, implicitly admitting that the weight they originally put forth on the IPCC reports will no longer give them the conclusion they want.

17 Sep 2014

You’ve Heard of Moneyball…

Efficient Markets Hypothesis, Shameless Self-Promotion 34 Comments

…now get a load of the Efficient Majors Hypothesis, or EMH. A sample:

EUGENE: All right, it’s worth asking what those fees for active management have actually delivered to the investors. I ran a statistical analysis on the National League all the way back to 1876. Do you know that in every single season, when you rank the teams by their records, fully one-half of them fall below the median team? What the heck are these owners paying for?

It’s a satirical piece, of course, but by the end I had half-convinced myself.

17 Sep 2014

“Stable Prices”: A Lesson in Fed-Speak

Federal Reserve, Inflation 26 Comments

There is a lot to say about Janet Yellen’s remarks today about the Fed’s latest meeting, but I wanted to highlight something that always bothers me in these affairs. From the Bloomberg article:

Yellen and her Fed colleagues are debating how much longer to keep interest rates near zero as they get closer to their goals for full employment and stable prices. Some officials have said dropping the “considerable time” pledge would give the Fed more flexibility to react to the latest economic data.

Even so, “Economic conditions may for some time may warrant” a federal funds rate that’s below normal levels, even when data are near the Fed’s objectives for maximum employment and low and stable inflation, Yellen said.

The personal consumption expenditures index (SPX), the central bank’s preferred price gauge, increased 1.6 percent in July from a year earlier and hasn’t exceeded the Fed’s 2 percent objective since March 2012. [Bold added.]

In the above excerpt, I’ve highlighted the annoying tendency for analysts to refer to a 2% annual rise in (some measure of) prices as “stable prices.” No, that’s a stable *rise* in prices.

This isn’t an isolated thing. I can’t find it now, but a couple of years ago I quoted some big gun economist (it may have been Christina Romer, but I’m not sure) complaining that price inflation below 2% threatened price stability.

Note: At a constant price inflation rate of 2% annually, the dollar would lose half of its purchasing power in 35 years. That’s not “stable prices.”

17 Sep 2014

The Market Loves Jackie Robinson

Economics, Shameless Self-Promotion 93 Comments

My latest article at LibertyChat. An excerpt:

There was another example of this pattern very soon afterwards in the movie. Jackie Robinson’s team (he was not yet with the Dodgers organization) was traveling on a bus and stopped for gas. He got off the bus and approached the bathroom at the station, but the white guy who had just started pumping the gas said, “Hey boy, you know you can’t go in there.” After a moment of deliberation, Robinson announced to his team, “C’mon fellas, we’re leaving. We’ll buy our 99 gallons of gas someplace else.” (These aren’t exact quotes, I’m just paraphrasing from memory.) Balancing his desire to make a big sale against his desire to uphold local customs of segregation, the white guy at the pump relents and tells Robinson he can use the bathroom, as he resumes filling up the bus with gas.

17 Sep 2014


David R. Henderson, Krugman, Potpourri 60 Comments

==> Tyler Cowen elicits outrage from his readers (in the comments) when he writes, “[T]his story will not end with a “no” vote from Scotland, unless it is strongly decisive. Regardless of the result, allowing this referendum to go forward likely will go down as one of the greatest unforced errors in recent times.”

==> I’ll almost certainly be writing something on this topic, but in the meantime, here is Bryan Caplan’s interview about “open borders” (make sure you see his point about Spanish-speaking immigrants), and here is Gene Callahan giving a good jab on Caplan’s opening rhetorical move, as well as a longer post using Hayekian dispersed knowledge to justify a “non-open border.” (I am putting these terms in quotation marks because the writers in question don’t really mean what the words might imply.)

==> Silas Barta was thinking about women killing their husbands before you even knew the village had a queen.

==> Scott Sumner has a good post on why ending slavery made the U.S. richer. I think Scott also missed a huge point: The (so-called) Civil War itself was very destructive, and so his empirical arguments are even stronger (I think?).

==> David R. Henderson was writing memos to Martin Feldstein when I was watching Voltron. I think I made the wiser choice.

==> There’s something oh so special when Paul Krugman writes, “Nor are zombies and cockroaches the only kinds of bad faith; the worst, as far as I’m concerned, involves refusing to take responsibility for your actual statements.” I’ll just leave this here.

16 Sep 2014

Couples Therapy

Game Theory 16 Comments

OK, I opened Pandora’s Box with this post, so I might as well close it. (You’ll have to read the post and skim the comments to get up to speed.)

In the below, I’ll walk through the analysis for the village having a total of one, two, and three couples. (Note that the couples have very convenient names.) You’ll see the pattern I hope, and then realize why the solution works for all 100 wives killing their husbands on Day 100 in the original version.

Alice doesn’t know that Alan has been unfaithful to her. (Don’t ask me how he did it if she’s the only woman.) So clearly, Alice won’t kill Alan. But then the Queen says, “At least one husband has cheated in this village.” Alice realizes the Queen must be referring to Alan, so she kills him on Day 1.

Alice knows that Bill cheated on Betty, and Betty knows that Alan cheated on Alice. However, nobody kills anybody, because neither wife is sure that her own husband has cheated. Then the Queen says, “At least one husband has cheated in this village.” Now at first, the wives are still uncertain. For example, Alice can’t kill Alan, because for all she knows, Bill is the cheater to whom the Queen refers. However, if Day 1 comes and goes, now Alice *can* be sure. She reasons, “If Betty never saw Alan cheating on me, then the Queen’s announcement would make Betty sure that Bill had been the cheater. So Betty would have killed Bill on Day 1. However, since Betty did *not* kill Bill on Day 1, I can conclude that Betty saw Alan cheat on me.” Therefore, on Day 2, Alice kills Alan. By similar logic, Betty kills Bill.

Alice knows that Bill and Charlie cheated, Betty knows that Alan and Charlie cheated, and Cindy knows that Alan and Bill cheated. Further, Alice knows that Betty knows that Charlie cheated. However, Alice does NOT know that Betty knows that Cindy knows that Bill OR Alan cheated. In other words, Alice cannot be sure that Betty knows that Cindy knows “at least one husband in this village has cheated.” In still other words, Alice realizes it is possible that Betty believes that Cindy has observed 0 instances of adultery.

Clearly, without the Queen, nobody has any reason to kill anyone.

However, things change once the Queen says, “At least one man in this village has cheated.” If there a woman who started out having observed 0 instances of adultery, then that woman would kill her husband during Day 1. Thus, when Day 1 comes and goes with no murder–AFTER the Queen’s announcement–it changes Alice’s knowledge. In addition to everything she had directly observed, and then deduced, at the outset, Alice can now conclude, “Betty knows that Cindy has observed at least one instance of adultery.” To reiterate, this is new knowledge, and shows that the Queen’s announcement, plus the subsequent actions, adds new knowledge.

However, after Day 1 has passed, there is still not enough for any woman to kill her husband. For example, Alice still can’t be sure that her own husband, Alan, has cheated on her. Alice knows that Betty and Cindy have each observed at least one act of adultery (otherwise they would have killed their husbands on Day 1), but perhaps Betty merely saw Charlie, and Cindy merely saw Bill. Notice, though, that if Betty ONLY saw Charlie, then Betty would kill Bill during Day 2 (not Day 1). That’s because Betty would know by Day 2 that Cindy had observed at least one act of cheating, and so–if Betty had never witnessed Alan cheating–then she would deduce that Cindy must have seen Bill cheating.

But if Day 2 comes and goes as well, then Alice realizes that Betty must have observed Alan cheating; this is why Betty couldn’t be confident in killing Bill on Day 2. Thus by Day 3, Alice realizes Alan cheated and kills him. The other wives go through similar reasoning, and kill Bill and Charlie on Day 3 as well.

* * *

By similar reasoning, if there are 100 couples, nobody makes a move until Day 100, at which time all 100 husbands see the end.