- Konstantins Benkovskis and Julia Woerz, on Lower import prices = 100% welfare gains? Not necessarily: don′t forget the impact of consumer taste and product quality
Import price statistics may not be a reliable indicator of welfare gains. They must adequately reflect the fact that consumers value variety, and that consumer tastes and product quality change over time. This column evaluates existing findings, and introduces new results for the four largest EU economies – including evidence of higher consumer welfare gains than suggested by official import prices for the period from 1995 to 2012.
- Susan Ariel Aaronson on Why the US and EU are failing to set information free
The internet promotes educational, technological, and scientific progress, but governments sometimes choose to control the flow of information for national security reasons, or to protect privacy or intellectual property. This column highlights the use of trade rules to regulate the flow of information, and describes how the EU, the US, and their negotiating partners have been unable to find common ground on these issues. Trade agreements have yet to set information free, and may in fact be making it less free.
- Nico Voigtländer and Mara Squicciarini on Knowledge elites, enlightenment, and industrialisation
Although studies of contemporary economies find robust associations between human capital and growth, past research has found no link between worker skills and the onset of industrialisation. This column resolves the puzzle by focusing on the upper tail of the skill distribution, which is strongly associated with industrial development in 18th-century France.
- Don Boudreaux on Cool!
2014 is the centenary of an unusually large number of regrettable events. But some good things also happened that year – for example, 1914 saw the first installation in a private residence of air-conditioning.
- Art Carden on Should Your City Run More Buses or Build Light Rail? Cato's O'Toole Says More Buses
If your city doesn’t have a light rail system, someone in town probably wants to build one. If your city already has a light rail system, someone in town probably wants to expand it. According to a June 3 Policy Analysis by the Cato Institute’s Randal O’Toole, this would be an expensive mistake.
- Peter Boettke on The Good, the Bad, and the Ugly ... of crony capitalism?!
Paul Rubin is an economic thinker I respect tremendously, but I am not sure I agree with him here. I do agree with live in the 2nd best (at best) world and thus it is a mistake to use 1st best theoretical ideas to guide practical affairs of public policy. I prefer instead to think of institutional robustness, rather than ideal welfare economics.
- John Taylor on New Legislation Requires Fed to Adopt Policy Rule
A lot of research and experience shows that more predictable rules-based monetary policy leads to better economic performance—both in terms of price stability and steadier-stronger employment and output growth. But in practice there have been big swings in Fed policy between rules and discretion, with damaging results as in the 1970s and the past decade of a financial crisis, great recession and slow recovery. This experience—especially the swing from rules to discretion in the past decade—demonstrates the need for legislation requiring the Fed to adopt rules for setting its policy instruments.
- Bryan Caplan on Ownership for Cartoonishly Nice People
The noble and prolific Jason Brennan has just released Why Not Capitalism?, a short book replying to Gerald Cohen's Why Not Socialism? Outstanding work, as usual. For me, the highlight is Brennan's explanation for why even cartoonishly nice people would want to own private property. It's easy to see why cartoonishly nice people - classic Disney characters like Mickey and Minnie Mouse - would want other people to own private property. But why would the nicest people imaginable want to claim ownership on their own behalf?
- Art Carden on Intolerant Socialism
As Jason Brennan writes, capitalism is preferable to socialism because voluntary socialist experiments like utopian communes and socialist camping trips are possible in a world with private ownership of the means of production. Capitalism tolerates socialism. Socialism does not tolerate capitalism.