IEA Christmas special 2018: a year in review

Welcome to our Christmas special - 2018: A Year in Review.

Joining our Associate Director Kate Andrews today is IEA Director General Mark Littlewood, Research Director Dr Jamie Whyte and Director of the IEA’s FREER initiative Rebecca Lowe.

The four talk through the biggest stories of the year, ranging from the ongoing Brexit negotiations, to the state of British political parties and ideologies, to other important happenings around the world.

You’ll also get to hear who Mark, Jamie, and Rebecca have chosen as their person of the year, event of the year, and best of all, their top prediction for 2019.

Thomas Sowell on the myths of economic inequality

Peter Robinson at Uncommon Knowledge of the Hoover Institution interviews Thomas Sowell about the myths of economic inequality.

Thomas Sowell discusses economic inequality, racial inequality, and the myths that have continued to falsely describe the system of poverty among different racial and economic classes. He explains the economic theories behind these pervasive myths and proposes fact-based solutions for seemingly intractable situations.

Sowell discusses his early life as a high school dropout and his first full-time job as a Western Union messenger delivering telegrams. He admits to flirting with Marxism in his early twenties as he first tried to grapple with the housing inequality he saw across the neighborhoods of New York City. Marxism, he says, was the only explanation he could find at the time. He went on to serve in the Marine Corps before continuing his education in economics at Harvard and earning a master’s at Columbia and a PhD at the University of Chicago.

Sowell’s first job after his receiving his PhD in economics was working for the Department of Labor, and he says it was there that he realized Marxism was not the answer. He argues that the government has its own institutional interests in inequality that cannot be explained through Marxism. He began to be discouraged by Marxism and the government in general and began searching for better economic ideas and solutions (the free market).

Robinson and Sowell discuss Sowell’s written works, his ideas of racial and economic inequality, the state of the United States today, and much more.

How legalizing marijuana is securing the border

From the Cato Insitute comes this Cato Daily Podcast in which Caleb O. Brown interviews David Bier on the question of How effective would a border wall be against drug smugglers? The answer can tell us a lot about how effective it would be against illegal migrants.

A millenium of history: Steve Davies from the Norman Conquest to the world wars

From History Twins Podcast comes this interview with Dr. Stephen Davies of the IEA involving topics from the Norman Conquest all the way through to the World Wars. Find out what's wrong with Rousseau, who started the First World War, and what we're missing about the Industrial Revolution.

Latest Blogwatch column

My Blogwatch column from the latest issue (Issue 62, August 2018) of the NZAE magazine Asymmetric Information.

Annotation in the JEL 2

The Journal of Economic Literature, a journal of the American Economic Association, sets out to fulfil the following policy:

Our policy is to annotate all English-language books on economics and related subjects that are sent to us. A very small number of foreign-language books are called to our attention and annotated by our consulting editors or others. Our staff does not monitor and order books published; therefore, if an annotation of a book does not appear six months after the publication date, please write to us or the publisher concerning the book.

In Vol. 56 No. 4 December 2018 it annotated one of the two greatest books ever written:

So now go and buy, many many copies!

25% off the two greatest books ever written

Up to December 31st Routledge is having a sale which gives a 20% discount if you buy one book and a 25% discount if you buy two.

So you can get the two greatest books ever written for 25% less!

The Theory of the Firm: An Overview of the Economic Mainstream

A Brief Prehistory of the Theory of the Firm

Why are firms with more managerial ownership worth less?

An interesting, if somewhat counterintuitive, question. One could expect that a firm with more managerial ownership would be worth more since the incentives of the managers will be better aligned with those of the owners.

Why are Firms with More Managerial Ownership Worth Less?
Kornelia Fabisik, Rüdiger Fahlenbrach, René M. Stulz, Jérôme P. Taillard

NBER Working Paper No. 25352
Issued in December 2018
NBER Program(s):Corporate Finance

Using more than 50,000 firm-years from 1988 to 2015, we show that the empirical relation between a firm’s Tobin’s q and managerial ownership is systematically negative. When we restrict our sample to larger firms as in the prior literature, our findings are consistent with the literature, showing that there is an increasing and concave relation between q and managerial ownership. We show that these seemingly contradictory results are explained by cumulative past performance and liquidity. Better performing firms have more liquid equity, which enables insiders to more easily sell shares after the IPO, and they also have a higher Tobin’s q.

The human freedom index 2018

The Cato Institute Human Freedom Index is out for 2018.

The Human Freedom Index presents the state of human freedom in the world based on a broad measure that encompasses personal, civil, and economic freedom. Human freedom is a social concept that recognizes the dignity of individuals and is defined here as negative liberty or the absence of coercive constraint. Because freedom is inherently valuable and plays a role in human progress, it is worth measuring carefully. The Human Freedom Index is a resource that can help to more objectively observe relationships between freedom and other social and economic phenomena, as well as the ways in which the various dimensions of freedom interact with one another.

The areas of freedom considered.

And again New Zealand is number one.

And the bottom three will not surprise too many people.