The Scrapbook cited Gary Becker last week, in a list of outstanding recipients of the Bradley Prize. We’re sorry to have a sadder reason to mention his name this week: He died May 3, at the age of 83. “He was perhaps the greatest living economist,” George Mason University economist Tyler Cowen eulogized. Becker’s influence is felt far beyond his own field, however. If the basic lesson of economics is that incentives matter, Gary Becker taught the world that incentives matter everywhere.Read more
Governor Rick Perry of Texas criticized President Barack Obama's Washington-centric approach to solving problems in a Sunday appearance on NBC's Meet the Press. Perry was asked by host David Gregory about the recent botched execution of a convicted murderer in neighboring Oklahoma and the announcement from Obama that his administration would be "analyzing" the use of capital punishment in various states. Perry said he was confident about how Texas administered executions, and then offered a critique of Obama.Read more
Health care costs rose in the first quarter of 2014 by 9.9 percent, according to a quarterly report from the Bureau of Economic Analysis. The jump in costs with respect to real GDP comes after several periods of more modest health care cost growth. In 2013, for instance, costs only grew 2.4 percent from the previous year.Read more
President Obama talks, talks, talks about jobs. The first 20 minutes of his State of the Union address in January was all about jobs. Immigration reform would “create jobs for everybody,” he said. His energy policy “is creating jobs.” Obama said he’s assigned Vice President Biden to make sure training programs match workers with “good jobs that need to be filled right now.” Last week he described his new budget as “a road map for creating jobs.”Read more
Millions of Americans, glutted with benefits that until now have seemed likely to be renewed and renewed again, have suddenly become devoid of ambition, shed the work ethic, and taken to the couch and the TV remote. Or found a back pain or emotional problem that entitles them to the even higher benefits designed to ameliorate the plight of truly disabled workers.Read more
President Obama’s State of the Union speech brimmed with ideas to increase upward mobility and spur job creation—most of which have been tried previously, without good results. From calling on Congress to raise the minimum wage to announcing the creation of six new “high-tech manufacturing hubs” centered around research universities, too many of these ideas flow from misplaced confidence in the ability of top-down government policy to steer the economy and lift the circumstances of those in poverty.Read more
It's been more than a week now and I’m beginning to suspect she’s not going to call, so here I will offer Janet Yellen the advice I’ve been hoping to give her privately since the Senate confirmed her as the new chairman of the Federal Reserve. My advice is: Think about John Cowperthwaite. By this I mean: Really think about
John Cowperthwaite.Read more
Everybody has an opinion about the pope these days and, what’s worse, feels compelled to express it. Rush Limbaugh has an opinion about the pope. He says he finds the pope “upsetting.” And he’s not even Catholic!Read more
There is a vintage Corvette parked on the street nearby, a 1977 canary yellow model in perfect condition. The NADA Blue Book says it’s worth around $15,000.
The car is someone’s toy: I know that because it hasn’t been moved for an entire year. I’ve seen the owner visit it a couple of times to rev the engine and give it a sponge bath, but it’s been in the exact same spot since last Christmas.Read more
For much of the last century the United States was the world’s beacon for capitalism, but these days we’re far from such a lofty perch. Since the end of the Cold War, countries on both sides of the Iron Curtain have moved to reduce the role of government in the economy by changing the tax code as well as by privatizing government activities.Read more
It's amazing how little President Obama has learned about economics in his four and a half years in the White House. Growth, incentives, tax reform, tax increases, private investment, the middle class, a second great depression, the sequester—all these issues have one thing in common: Obama doesn’t understand their role in our economy.Read more
In O. E. Rølvaag’s Giants in the Earth, homesteader Per Hansa and his family depart from the safety of their Norwegian immigrant community in Minnesota for the open land of the Dakota Territory. This is something Americans have done for hundreds of years—leave home for the chance to start anew. Today, the frontier isn’t far from where the homesteaders of the 19th century settled. North Dakota (unemployment rate 3.2 percent and falling) is a place where plenty of Americans are finding their second chance.
Given that mine is the dismal science, it is my role to cool the exuberance of investors at the news that the Fed will continue to print money rather than taper, with a bit of news that should worry them--the possible revival of the trade unions, long a fading force in the private sector.Read more
It is no secret that Washington generally prospers even as the rest of the country struggles. In a rough fashion, prosperity in the capital and economic hardship in the rest of the country are inversely related. An economic crisis means lots of new government pump priming--remember the stimulus?--which means new departments and programs in Washington. More opportunities for the tribe of lawyers and lobbyists.Read more
Yesterday, the Fed decided that the economy was not yet sufficiently robust for it to "taper." Wall Street celebrated.
Today, the consumer put in his two cents, which is about what he thinks this "recovery" is worth. As Ben Schenkel at Bloomberg writes:
Consumers views of the U.S. economic outlook deteriorated in September to the weakest level in a year as higher borrowing rates started to chip away at progress in the housing market.Read more
Whether by design or inadvertence, Prime Minister Shinzo Abe’s plans for reviving Japan’s economy after two decades of stagnation differ sharply from the stimulus and austerity policies pursued by the United States and the European Union to recover from the deep recession of 2008-2009. These differences augur well for Japan’s prospects.
Why in the world do we need yet another “new” economics? Jamming the libraries and the bookstores of the world are avatars of what must be every variation on the great themes of market and managerial economics. Scores of Nobel Prizes have been awarded for various nugatory refinements of the prevailing ideas.Read more
"Something terrible has happened to the soul of the Republican Party. We’ve gone beyond bad economic doctrine. We’ve even gone beyond selfishness and special interests. At this point we’re talking about a state of mind that takes positive glee in inflicting further suffering on the already miserable.Read more
Recently a Japanese economist visited Washington to explain his government’s “five year economic outlook.” A five month outlook might have been more credible. Yet with surprising hubris, the economist forecast inflation and GDP five years out.Read more
Take a visit to the cyber-belly of the beast, to a website run by the European Commission, the EU’s bureaucratic core, and you will be told that “the financial sector was a major cause of the [economic] crisis and received substantial government support.” Soon it will be payback time, in the form of Europe’s new Financial Transaction Tax (FTT), set to be levied at a rate of 0.1 percent on equity and debt transactions, and 0.01 percent on trades in derivatives. It will ensure that the financial sector “makes a fair and substantial contribution to public finances.”Read more
New York City
"Look up the definition of poaching,” Rick Perry told his press secretary Josh Havens. Perry was annoyed at being accused, in headlines and news stories and by Democratic governors, of trying to “poach” companies from blue states and carry them off to Texas, where he is governor.
The Walt Disney World Resort, located outside of Orlando, has more than twice Manhattan’s land area and about the same number of hotel rooms as Philadelphia. It’s America’s largest single-site employer—over 60,000 people work there—and for many of the 17 million or so who visit each year, it is a place of near-religious significance. (At least one book and more than a dozen peer-reviewed academic articles have considered various aspects of Disney’s status as a secular pilgrimage site.)Read more
Two recent news items highlight the issue of income inequality in America. First, a study by the Pew Research Center found that the net worth of the upper 7 percent has risen by 28 percent since 2009 while the net worth of everybody else has dropped by 4 percent. Second, a recent poll conducted by Gallup found that 52 percent of Americans—an all-time high—think the government should “redistribute wealth by heavy taxes on the rich.”Read more
The Obama administration recently signaled to the business community that it could countenance some version of a territorial tax system for income earned abroad by U.S. businesses. Tax reform enthusiasts have seized on this perhaps a little too desperately, as evidence that reform will occur this year. It’s a thin reed, however: If any tax reform does pass Congress it will happen in spite of, and not because of, this administration.Read more
The economist Leonard E. Read once explained the effectiveness of free markets with the parable of the pencil: Pencils seem simple enough, just some wood with graphite inside and a bit of rubber at the end—but, he said, “no one in the world knows how to make a pencil.”Read more
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