Posts tagged with: bryan caplan

trade21Many conservatives exhibit a peculiar tendency to be pro-liberty when it comes to business, trade, and wages, but protectionist when it comes to the economic effects of immigration.

It’s an odd disconnect, and yet, as we’ve begun to see with figures like Donald Trump and Rick Santorum, one side is bound to eventually give way. They’ll gush about the glories of competition, but the second immigration gets brought up, they seem to defer to labor-union talking points from ages past.

When pressed on this in a recent podcast, immigration protectionist Mark Krikorian argued that the difference is that immigrants are people not products, and thus they make things a bit more problematic. It’s more complicated and disruptive, he argues, when you’re dealing with actual people who have diverse and ever-shifting dreams. (more…)

Blog author: jcarter
Thursday, September 4, 2014

Imagine if a scientist was able to create technology that turns corn into cars. As economist Bryan Caplan explains, we already have such an innovation: foreign trade.

Caplan argues that foreign trade is a form of technology that lowers our cost of living and increases our standard of living. In fact, claims Caplan, from a broader perspective trade is even better than most technology since it not only makes us better off, it makes foreigners better off too.

America could have saved more jobs if, prior to the Industrial Revolution, politicians had banned the use of tractors. But that would have made everyone (especially those of us living in 2014) much worse off. Many Americans understand this point and yet still believe that when workers lose their jobs, we automatically become worse off.

Economist Bryan Caplan explains the problem with this ‘make-work’ bias, and why we are better off because of 19th century workers who lost their farm jobs.

Blog author: jcarter
Tuesday, December 17, 2013

61-kids-expensiveAs any parent can attest, kids are expensive. They take up space (increasing the cost of housing), eat everything in your kitchen (increasing the grocery bill), never remember to turn off lights (increasing the cost of utilities), and find dozens of other ways to drain your banking account. From birth to high school graduation, the average cost to raise a kid is $241,080.

The high cost is often proffered as an explanation for why families today are much smaller than in the past. But as Bryan Caplan explains having kids was never a paying venture:

One popular story about the decline in family size over the last two centuries goes like this: Back in the old days, having kids paid. Children started working when they were quite young, and provided for their parents in their old age. Then industrialization and/or the welfare state came along and changed everything. Young children ceased to contribute much economically to their families, and once Social Security, Medicare, and so on were in place, people stopped supporting their aging parents.

It turns out that this story is only half true. Yes, in the modern era, people give little financial assistance to their elders; even in late adulthood, old-to-young transfers remain larger than young-to-old transfers. The flaw in the story is the assumption that things used to be different. In an eye-opening 1996 JEL piece, Ted Bergstrom summarizes evidence showing that even in pre-modern societies, kids did not pay.

Caplan also adds this intriguing question, “If parents in 1850 were willing to support five or six kids with a negative financial return, why aren’t we?”

Sadly, because unlike most people in 1850, we measure the worth of children in financial terms. Theologian Al Mohler noted this a few years ago:

Hurricanes almost always leave two things in their aftermath: broken windows and articles advocating the broken window fallacy.

As economist Don Boudreaux wrote earlier today, “Americans will soon be flooded by commentary that assures us that the silver lining around the destruction caused by hurricane Sandy is a stronger economy. Such nonsense always follows natural disasters.” The only detail Boudreaux gets wrong is that such nonsense has preceded the actual disaster. The Atlantic, wanting to get a jump on being wrong, published an article today at noon arguing that Hurricane Sandy will “stimulate the economy” in two ways:

First, the threat of a dangerous event pulls economic activity forward. Families stock up on extra food and supplies to prepare for a disaster. Second, and much more significantly, the aftermath of storms requires “replacement costs” that raise economic activity by forcing business and government to rebuild after a destructive event.

Frederic Bastiat provided the ultimate rebuttal to this spurious thinking 162 years ago in his essay ‘That Which is Seen, and That Which is Not Seen.’ So why do we people make the same claim that destruction is economically beneficial? Could it be that people are simply unaware of Bastiat’s “parable of the broken window”?

Back in August economist Bryan Caplan asked why the one group that should be familiar with Bastiat’s essay—economists—don’t universally love it:

“Scandinavian economies are some of the most market-oriented on the planet” says economist Scott Sumner, who adds “Denmark is the most market-oriented country on earth.”

This peculiar claim is even more curious considering that it is based on the Heritage Foundation’s 2012 Index of Economic Freedom. On the Heritage Index, which ranks countries based on ten components of economic freedom, the United States comes in at #10, lumped in with the “mostly free” countries. All of the Scandinavian countries are lower on the list: Denmark (#11), the Netherlands (#15), Finland (#17), Sweden (#21), Iceland (#27), and Norway (#40).

Each of these countries are considered “less free” on Heritage’s Index than such nations as the U.S., Canada, and Chile, mostly because they have high levels of wealth redistribution. But Sumners thinks that the “size of government and degree of market freedom” are “two completely separate issues.”

The inimitable Bryan Caplan explains why Sumners is wrong and why size of government and economic freedom are inextricably connected:

“‘What’s stopping Warren Buffett from paying more taxes?’ is a red herring,” says economist Bryan Caplan. ” The fundamental question is: ‘Why is government’s share of the voluntary donations market so damn small?'”