The Economic Way of Thinking

Meet 'Da Yoopers'

Weekend Edition Sunday from NPR News will be running a lengthy story on Michigan's Upper Peninsula tomorrow (Sunday) morning.  At some point, it sounds like the story will even take listeners for a stroll down one of my favorite city streets. 

What Caused The Great Depression?

Here's Art Laffer's answer in a WSJ op-ed from earlier this week.  The piece is quite good overall, and it encourages policymakers to exercise caution in the wake of our current crisis. 

Books On My Desk This Friday Morning

*George Selgin, The Theory of Free Banking

*F.A. Hayek, Contra Keynes and Cambridge

*L. Randall Wray, Understanding Modern Money

*L. Randall Wray, Credit and State Theories of Money

*John Smithin (ed.), What is Money?

*Louis-Phillip Rochon and Sergio Rossi (eds.), Modern Theories of Money

*G.F. Knapp, The State Theory of Money

Books On My Wife's Nightstand

I've come to realize that there are a number of books on my nightstand that just stay there and collect dust.  Anything I want to read gets cycled through quickly; others remain on the nightstand indefinitely and remind me how challenging it is to ignore sunk costs. 

My wife, Anemone, on the other hand cycles through books far more quickly than I do and has a far more interesting assortment on her nightstand.  Along with a ton of magazines and poetry journals, here were the books I saw stacked up there this morning (from top to bottom):

Brave New World, Aldous Huxley

Lila, Robert Pirsig

Living in Truth, Vaclav Havel

Common Sense, Thomas Paine

The Anticapitalist Mentality, Ludwig von Mises

Dream Songs, John Berryman

Economics in One Lesson, Henry Hazlitt

Ambition and Survival, Christian Wiman

Independent People, Harold Laxness

Meet the Free Marketeers!

Tonight a new, Mercer sanctioned student group that I'm very proud of, The Free Marketeers, holds its first formal meeting.  We'll be discussing Frederic Bastiat's "The Seen and Unseen," Michael Tanner's "Obamacare to Come," and Paul Krugman's "Why Markets Can't Cure Healthcare" over pizza and beverages. 

I hope to avoid doing much of the talking, but I'm sure I'll somehow find a way to bring this set of slides into the conversation.  Here's a picture of my favorite one:

 

EWOT Question Of The Day

In 2008 both John McCain and Hillary Clinton proposed that the 18 cents per gallon federal tax on gasoline should be temporarily suspended, to help the American consumer.  Evaluate the following argument against their proposal:

"Repealing the tax will give oil companies an additional incentive to raise prices.  If skyrocketing gas prices are due to supply and demand factors, as oil companies argue, a reduction of 18 cents will increase demand on a product already in short supply.  The increased demand will contribute to increased pump prices."

Where is the mistake in this argument?

Sitting *On* The Dock Of The Bay

Along with Little Richard Penniman and The Allman Brothers, Otis Redding is one of Macon's sons.  A few years back, the following statue of Otis was built along the Ocmulgee River at Gateway Park:

You can see water in the background, but it's distant and far from Otis.  Over the last week, the water has come over the bank and is slowly creeping up towards Otis.  Let's hope Otis continues to sit on dry land instead of inthe bay.  (When the Ocmulgee crests later this week, I will try get y'all a picture of the "after" to compare to this one!). 

Otis's problems, of course, pale in comparison to the problems real people in the floodplain around Georgia are actually experiencing.  Here are a few folks who it looks like it'd be fun to meet:

The Survey Says...

Take a look at what economists in the AEA believe about public policy.

HT:  Greg Mankiw

Bryan Burrough's Public Enemies

The movie Public Enemies was good but not great; the same goes for Bryan Burrough's book, Public Enemies, which was a bedside page turner that I finished last night.  Of course, after reading the book, I'm left shaking my head about some of the gross exaggerations and leaps made by the movie producer.  One thing the movie producers did well, however, was re-create the July 22, 1934 killing of John Dillinger outside of the Biograph. 

Some thoughts about the content of the book can be found below the fold.

The Obama Rally

A colleague of mine recently asked me if economists are doing much research and/or have a good explanation for the rapid run-up in US stock indices like the S&P 500 and the Dow Jones Industrial Average since March.  I said I didn't know off the top of my head but that I'd look into it. 

Here were the three answers I would have provided on the spot:

(1) Market prices move up and down all of the time.  The movement back up since March is the market "searching" for an equilibrium that lies somewhere between 7,000ish and 14,000ish. 

(2) If you pour enough money into any market, you can get short-term movements up in prices. 

(3) The market could be experiencing a relief rally in that Obama's craziest ideas are being curbed by his falling approval ratings, internal party dissension, and gridlock.  While this article says there isn't much of a relationship between presidential approval ratings and stock market performance, there is evidence that divided government is good for stocks.  At the moment, even though the Dems have the numbers, the de facto scene in DC appears to be one of divided government.

Any thoughts, readers?

In Memoriam

Patrick Swayze's recent death left me recalling one of the best skits in SNL history; the skit is right up there with "Da Bears" skits and the "Weekend Updates" with Dan and Jane. 

It's hard to believe both men are dead, and it's also difficult to believe nearly 20 years have passed since this great night of television.