Another email from a reader. This one is instructive because of the micro versus macro aspects. Remember, it is only individuals that make decisions. If these decisions are not made in a favorable climate, with respect to expectations, incentives, etc., it doesn’t matter what nonsensical monies are wasted in stimulus. [...]

Many years ago Dr. Walter Williams wrote a book entitled The State Against Blacks. It was a book that I believed would be excellent required reading in an elementary economics course. I especially thought this for the brief time when I taught at an historically black university. Of course that [...]

Robert Murphy takes apart the Keynesian argument for more stimulus. He concludes with the following: Brad DeLong’s recent arithmetical argument for bigger government deficits is flawed on several counts. He treats government spending as equivalent to household spending, and his focus on aggregates overlooks the coordinating function of interest rates. [...]

Walter Williams is amongst my favorite commentators (and economists). He has a knack for identifying the critical aspects of complex issues and simplifying them for layman. In a recent piece, published on Townhall, Dr. Williams argued against the presumed economic successes of FDR during the Great Depression. Political myths apparently [...]

Patrick Barron rewrites the famed Keynesian equation as C + I + G = BALONEY and states: “Wrongheaded governmental interventions are preventing the world’s largest economies from recovering from massive malinvestment.” Read his entire article here. It is a worthwhile, common sense approach that non-economists can appreciate. Who but statists [...]

Macroeconomics does not work for a multitude of reasons. First and foremost is that it does not pick up the “changes” at the microeconomic level. That is, it does not deal with changes in incentives and disincentives that individual decision-makers like business owners, consumers and investors use to fashion their [...]

Here is a summary of conventional economic wisdom: Many people claim today that the U.S. economy is in a “liquidity trap” and only government can spend us out of this mess. Commentators from Paul Krugman to Martin Wolf of the Financial Times assert we are in a “Keynesian situation”; unless government spending [...]

From Financial Armageddon comes a reasonable description of what has motivated economic policy during this financial crisis: Throughout the financial crisis, policymakers have focused on keeping things afloat until the storm passes. They’ve spent vast sums of taxpayer funds trying to jumpstart growth until the economy is back on track. They’ve encouraged people [...]

Currencies are fickle, moving up and down against one another seemingly at will. Economists have several theories of how relative currency values are determined. One of these is the purchasing power parity hypothesis. In a frictionless world (only economists invent such worlds and terms), identical goods would sell for identical [...]

Image via Wikipedia Washington is cleaning up the airline industry with more regulation. NOT! This latest example of Washington intervention is more patently absurd than others. All are absurd; this example is just so simple that it is understandable without a complex chain of reasoning. It is classic top-down management [...]

Image via Wikipedia Image via Wikipedia Milton Friedman on Socialized Medicine. From a talk given at the Mayo Clinic in 1978. Although over 30 years old and focused on the medical industry, there are lessons here beyond the obvious. The semi-alert and above will recognize the process as a general [...]

The irrepressible Milton Friedman speaking about tariffs. Common sense for more than 200 years that periodically needs repeating. As the political class discusses jobs and their creation, watch for free trade to come under attack. Send your representative this short video. [youtube]http://www.youtube.com/watch?v=j0pl_FXt0eM[/youtube]

All of us are going to die. Knowing how and when are answers we are not provided. The imposition of Obamacare does not provide answers, but for most of us the terminal event is likely to be sooner rather than later under Obamacare. From the Wall Street Journal: President Obama [...]

For those who want an explanation of how our health care system got so bad, the following article written in 2000 in The Freeman provides an answer. It was not the free market, but government intervention that brought us to this point. Sadly, we are now going to “fix” the [...]

Years ago, I taught for a few years in an historically-black university. On occasion I would startle the class by stating that, if the Grand Dragon of the Ku Klux Klan were an absolute dictator ruling this country, he could not  design a more effective set of policies to harm [...]

Any Econ 101 student would flunk the course if he showed the aptitude of this Administration regarding basic economics. It is likely most Americans have never taken an economics course, yet would be able to discern why recent economic policies, either proposed or already implemented, destroy jobs. Simple common sense [...]

This post is older, but classical in its approach to the housing crisis. It sheds light on how the crisis started and grew, and why government intervention will hurt rather than help. It is a good, elementary exercise in understanding economics. Government Intervention Is Needed to Solve the Housing Crisis? [...]

“… as long as the Schumpeterian horse of innovation and the Smithian horse of the gains from trade outrun the Government horse of stupidity, the winners will continue to be you, me and our children and grandchildren, even if the stupid horse is running a bit faster than it used [...]

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Friedrich Hayek The economic programs and policies currently in place are truly astounding. I don’t think I have ever seen a more harmful economic environment for the country. [...]

WHY THE FALLING DOLLAR IS HARMFUL There are several reasons for foreign investors to stop buying Federal Government debt. One is merely the diversification motive. They already hold too many denominated assets. Second is the risk of default which grows along with our deficit. Third is the lack of returns [...]

Image via Wikipedia “By one measure, the government already plays an outsize role in our so-called free-market economy—and it has little to do with the recession. Economist Gary Shilling has calculated that 58 percent of the population is dependent on the government for “major parts of their income” including teachers, [...]

Image by markbult via Flickr Jerry Eugene Pournelle (born August 7, 1933) is an American science fiction writer, essayist and journalist who contributed for many years to the computer magazine Byte and has since 1998 been maintaining his own website/blog. Based on this quote, Pournelle has a solid grasp of [...]

Whatever field we are closest to, it is natural to assume that outsiders know more about it than they do because we assume “it is so important.” This episode from Jeopardy should be enough to alter this assumption regarding the field of economics.

Frederic Bastiat was probably the most influential economic essayist ever. He died in 1850. His “broken window fallacy” is probably the single most important principle in economics. It anticipated Keynesian economics and vitiated most of it before Keynes was born. Still today, one need only pick up the newspaper to [...]