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2 months ago | 
itif.org | Giorgio Castiglia
What is the connection between industrial concentration and innovation? “Neo-Brandeisian” antitrust enforcers under the Biden administration argued that there is a negative relationship: Increasing concentration means less innovation.
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Dec 8, 2024 | 
econlib.org | Scott Sumner |David Henderson |Giorgio Castiglia
A recent article in The Economist discussed what they assume is the president-elect’s view of interest rates:
A more hawkish Fed may, in turn, invite the wrath of Mr Trump, who has insisted that, as president, he should have a say over interest rates. He will surely want to see steeper rate cuts now that he is in charge.
This reminds me of a story entitled The Monkey’s Paw, where the protagonist is granted three wishes, which don’t turn out as well as intended.
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Dec 7, 2024 | 
econlib.org | Giorgio Castiglia |Adam Smith |David Henderson |Kevin Corcoran
Two main reasons for studying economics are often given in textbooks and classes. First, it helps us understand the social world we live in and, secondly, it informs better public policy decisions. An example comes from Adam Smith in The Wealth of Nations. By understanding what makes a nation wealthy compared to others, we might be able to develop a roadmap for other nations to reach prosperity too. A less often discussed motivation for learning economics is for better personal decision-making.
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Oct 8, 2024 | 
econlib.org | Kevin Corcoran |David Henderson |Giorgio Castiglia
Sometimes, fiction can be used to effectively communicate ideas from economics. Other times, the economics you see in fiction make no sense. This post is another example of the latter, from a fictional series I generally like – Star Trek. (For the record, Deep Space Nine was objectively the best Star Trek series.)One of the distinctive traits of the Star Trek universe is how, among all of the most prominent and regularly featured species, it seems like only humans are multifaceted.
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Oct 5, 2024 | 
econlib.org | Giorgio Castiglia |Pierre Lemieux |Scott Sumner
RECENT POST Economic Education As we dig into the Fall semester, thousands of students will begin their first economics course and be exposed to the world of economic thinking. I used to be a drumming instructor with a music lessons company. One thing I enjoyed doing as a teacher was leaving the student with the capability of performing and practici... Incentives A story in the Wall Street Journal illustrates some of the dictator’s incentives and trade-offs.
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Aug 25, 2024 | 
econlib.org | Scott Sumner |David Henderson |Giorgio Castiglia
The argument that tariffs raise imported goods prices is exactly the same as the argument that gasoline taxes raise gasoline prices.
You might object that it’s theoretically possible that a given tariff doesn’t raise prices. That’s true. It is also theoretically possible that a gasoline tax increase doesn’t raise gas prices. In both cases, the seller might absorb 100% of the tax.
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Aug 25, 2024 | 
econlib.org | Giorgio Castiglia |Scott Sumner |David Henderson
A recent post of mine explored the market for restaurant table reservations. Restaurants in high demand with long waitlists for tables could increase prices so that the market more easily clears. For potential reasons discussed in the article, they do not do this, which leaves the door open to third parties to buy and sell reservations for a profit. The same economics applies to third-party concert ticket sales containing add-on fees.
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Aug 24, 2024 | 
econlib.org | Scott Sumner |David Henderson |Giorgio Castiglia
Over a long period of time, the US economy has been shifting away from goods and toward services. If the US switches to a high tariff policy, this would accelerate the shift to services. To see why, we need to review some basic concepts in trade theory. To illustrate some of the ideas, I’d like to consider a 20% tax on all imported goods. By assumption, services are exempt. Let’s begin by considering the example of imported oil.
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Aug 18, 2024 | 
econlib.org | Scott Sumner |David Henderson |Giorgio Castiglia
In a recent interview of Alex Tabarrok, I saw this exchange:
Auren Hoffman (52:52.27)Now, your colleague, Tyler Cowen, he recently made an argument that we reached peak economist, that you don’t even need to be an economist anymore to be a member of the Federal Reserve Board. What do you think about that? Alex (53:09.104)Arthur Burns, I think was the first one with a PhD. There’s been quite a few since then, but before there were plenty of people on the Federal Reserve without PhDs in economics.
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Aug 17, 2024 | 
econlib.org | David Henderson |Giorgio Castiglia |Scott Sumner
Capitalism is the best. It’s free enterprise. Barter. Gimbels, if I get really rank with the clerk, ‘Well I don’t like this’, how I can resolve it? If it really gets ridiculous, I go, ‘Frig it, man, I walk.’ What can this guy do at Gimbels, even if he was the president of Gimbels? He can always reject me from that store, but I can always go to Macy’s. He can’t really hurt me. Communism is like one big phone company. Government control, man. And if I get too rank with that phone company, where can I go?
