Assorted Links (1/28/2012)

Here’s a list of articles that I have been reading lately:

Christie to the 1%: Please Occupy New Jersey

“In The Wall Street Journal, James Freeman interviews New Jersey Gov. Chris Christie, who has controlled state spending and is now pushing tax reform in the hope of stealing businesses and residents from neighboring blue states like New York and Connecticut.”

The Most Important Non-Presidential Election of the Decade

“In The Wall Street Journal’s Cross Country column, Stephen Moore writes that Wisconsin’s Scott Walker is facing a recall after his labor and spending reforms—and if he loses, public unions will flex their muscles nationwide.”

State of the Union 2012

Here’s a 9 minute, 40 second point-by-point response by Cato Institute scholars of nearly every major section of President Obama’s State of the Union address, from foreign policy to the economy to education…

Obama’s Dumbest SOTU Demand: Imprison Kids in Schools Until They’re 18

Last night’s State of the Union address, like all these things, will thankfully soon be as forgotten as the next pledge to create a competitiveness council, a war against cellulite, or what-have-you. But before we forget, let me suggest the absolute dumbest idea (loosely speaking) Barack Obama float…

The president plays small ball

Quoting from this article by Charles Krauthammer, “What Obama offered the nation Tuesday night was a pudding without a theme: a jumble of disconnected initiatives, a gaggle of intrusive new agencies and a whole new generation of loopholes to further corrupt a tax code that screams out for reform. If the Republicans can’t beat that in November, they should try another line of work.”

President Obama’s decision to waste (at least) $60 B

“If Mr. Lizza’s reporting is correct, over the objection of his economic advisors President Obama replaced $60 B of “highly stimulative spending” with a slow-spending but “inspiring” $20 B for high-speed trains and $40 B in pork for his Senate Democratic allies.”

The President repeats the “blank check for autos” falsehood

The Bush-era loans were not a blank check, and not a “straightforward bailout.” President Obama was wrong when he said they were.

RomneyCare and ObamaCare

From an incentive compatibility viewpoint, it’s difficult to imagine a worse contract design, where you pay a nominal penalty for not buying insurance but then are allowed to purchase insurance upon learning that you are sick. This represents a radical departure from basic insurance principles; such an arrangement can’t possibly be financially sustainable due to the well-known and well-understood problem of adverse selection (see At least these ideas are well-known and well-understood outside the Beltway…

On Religious Freedom, Years of Battles Ahead

“In The Wall Street Journal’s Houses of Worship column, David Skeel writes that the Supreme Court recently called for accommodating religion—and the White House has already pushed back.”

Romney and the Burden of Double Taxation

Quoting from this article, “Our tax code layers taxation of dividends and capital gains (at a rate of 15%) on top of a top corporate tax rate of 35%… This double taxation brings the effective tax rate on investment income to as much as 44.75%…. after the combined top tax rates hit $100 of corporate income, $55.25 remains for the investor. And this figure doesn’t even include various state and local taxes, or the death tax.”

Blogging vs. peer review

Interesting assessment of blogging versus publishing in peer-reviewed journals by economist Austin Frakt, who holds faculty appointments at Boston University…

Sixteen Concerned Scientists: No Need to Panic About Global Warming

Quoting from this article, “A recent study of a wide variety of policy options by Yale economist William Nordhaus showed that nearly the highest benefit-to-cost ratio is achieved for a policy that allows 50 more years of economic growth unimpeded by greenhouse gas controls. This would be especially beneficial to the less-developed parts of the world that would like to share some of the same advantages of material well-being, health and life expectancy that the fully developed parts of the world enjoy now. Many other policy responses would have a negative return on investment. And it is likely that more CO2 and the modest warming that may come with it will be an overall benefit to the planet.”

ObamaCare and Religious Freedom

“In The Wall Street Journal, Archbishop Timothy Dolan writes that the federal mandate that religious organizations offer their employees insurance coverage for contraception and sterilization shows disrespect for Catholics and others who object to treating pregnancy as a disease.”

Economics for the Long Run

In The Wall Street Journal, John Taylor writes that individuals should be free to decide what to produce and consume, and their decisions should be made within a predictable policy framework based on the rule of law.

Romney’s Fair Share

“The Wall Street Journal argues the candidate’s tax return is an argument for tax reform.”

The GOP Deserves to Lose

“In The Wall Street Journal, Global View columnist Bret Stephens writes that if Republicans don’t want to lose, they shouldn’t run with losers.”

Getting up to Speed on the Financial Crisis: A One-Weekend-Reader’s Guide

Quoting from the article abstract, “All economists should be conversant with “what happened?” during the financial crisis of 2007-2009. We select and summarize 16 documents, including academic papers and reports from regulatory and international agencies. This reading list covers the key facts and mechanisms in the build-up of risk, the panics in short-term-debt markets, the policy reactions, and the real effects of the financial crisis.”

Predictions about the death of American hegemony may have been greatly exaggerated

The decline of decline???

Obama’s Sputtering “Sputnik Moment”: Last Year’s SOTU Promises Mostly Unfulfilled

On the eve of President Obama’s latest State of the Union address (SOTU), the Wash Post remembers all of yesterday’s promises in last year’s ridiculous ode to the need for our very own “Sputnik Moment”: Among the initiatives Obama promoted then that have yet to come to fruition a year later: elimina…

The War on Political Free Speech

Quoting from this article, “”Corporate personhood” is a legal fiction that allows natural people to sue and to be sued, to own and transfer property, and to carry on their affairs as a group. Corporations have rights because the people who own them have rights.”

Keystone cop-out

“U.S. President Barack Obama made a choice last week: He chose Venezuela over Canada.”

Obama’s Keystone Delay Flouts the Law

“In The Wall Street Journal, Americas columnist Mary Anastasia O’Grady writes that the president’s decision to stop the project for further environmental review contravenes legislation he signed in December.”

The New American Divide

According to Charles Murray, who is the W.H. Brady Scholar at the American Enterprise Institute, the biggest threat to the American way of life is not income or wealth inequality; rather, it is cultural inequality. This article, which appears iin today’s Wall Street Journal, apparently provides a synopsis of a forthcoming (31 January) book entitled “Coming Apart: The State of White America, 1960–2010” (cf. A recent related article by Mr. Murray is entitled “Belmont & Fishtown” (cf.—Fishtown-7250).

How to Think about Private Equity

“If the overall pattern is so positive—for investors, companies, and even employment—why is private equity so controversial?” Informative essay by Steve Kaplan, who is a finance professor at the University of Chicago’s Booth School of Business and one of the foremost scholars on the topic of private equity…

How Many Jobs Did Romney Create at Bain?

“The companies Bain Capital funded under Romney have created tens of thousands of jobs using any measure.” Article #2 of 2 by U of C finance professor Steve Kaplan – well worth reading…

Environmentalism and the Leisure Class

In playing Keystone cop, President Obama protects his environmental flank for no good reason.

Assorted Links (1/20/2012)

Here’s a list of articles that I have been reading lately:

What the Top 1% of Earners Majored In

“The majors providing the best entree into the top income rank are pre-med, economics, biochemistry, zoology and biology.”

The GOP’s suicide march

Quoting from this article by Charles Krauthammer, “Now, economic inequality is an important issue, but the idea that it is the cause of America’s current economic troubles is absurd. Yet, in a stroke, the Republicans have succeeded in turning a Democratic talking point — a last-ditch attempt to salvage reelection by distracting from their record — into a central focus of the nation’s political discourse.”

How Much the Rich Pay

Good article concerning the difference between the incidence of a tax and its actual economic burden. Since equity-related income (i.e., dividends and capital gains) gets taxed twice – at the corporate (35%) and personal (15%) levels, marginal tax rates faced by the Mitt Romneys and Warren Buffetts of the world (i.e., people whose income is derived primarily from investments rather than wages or salaries) is 44.75%, not 15%! Too bad Romney and Buffett don’t understand this – it is simple arithmetic…

The Greece Next Door

Sad story about my home state, Illinois, which in fiscal terms is the closest thing we have in the USA to our own “Greece”. Quoting from this article, “Run up spending and debt, raise taxes in the naming of balancing the budget, but then watch as deficits rise and your credit-rating falls anyway. That’s been the sad pattern in Europe, and now it’s hitting that mecca of tax-and-spend government known as Illinois.”

Private Equity: Hero or Villain?

Quoting from this article, “Two major academic studies published in 2011 allow us to examine the record of a broad swath of private equity (PE) firms on the two key questions: returns to investors and job creation.” The first study (cf. documents that the record for returns to investors is stellar – 1.27 times the return on the SP500 during 1984-2008. The second study (cf. concludes that “…private equity buyouts catalyze the creative destruction process in the labor market, with only a modest net impact on employment.”

Bain Capital Saved America

“In The Wall Street Journal, Wonder Land columnist Daniel Henninger writes that in the 1980s, the resilient U.S. economy saved itself from becoming Europe—and Bain was part of the rescue.”

A Short (Sometimes Profitable) History of Private Equity

“In The Wall Street Journal, historian John Steele Gordon writes that the industry may only date back a half-century, but purchases of distressed assets and leveraged buyouts are as old as capitalism.”

A Brief Note on SOPA and PIPA

This blog posting written by a PhD student from the Managerial Economics and Decision Sciences department at Northwestern University’s Kellogg School of Management does an excellent job of laying out the law, economics, and political economy underlying the Stop Online Piracy Act (SOPA, in the House of Representatives) and the Protect IP Act (PIPA, in the Senate).

Global Markets Play Key Role In Costa Concordia Loss

Quoting from this article, “A Reuters report cites one industry analyst estimating the insured loss from the Costa Concordia at between $500 million and $1 billion. Meanwhile, Bloomberg News cites another analyst saying the insured loss could total as much as $800 million.”

Greek Disability Groups Angered by New Categories

The government has expanded a list of recognized disabilities, angering groups who say many people face cuts because of austerity measures. Quoting from this article, “The new list gives pyromaniacs and pedophiles disability pay up to 35 percent, compared to 80 percent for heart transplant recipients.” Apparently the Greek government formally recognizes pyromania and pedolphilia, along with behaviors such as compulsive gambling and “isms” including fetishism and sadomasochism, to be disabilities which qualify people for disability insurance claim payments… I’ll have to see what The Onion has to say about this!

Santorum’s Tax Plan Doesn’t Add Up

Quoting from this article by economist Kevin Hassett: “Santorum has some good ideas — lowering the corporate tax rate, reducing the number of income-tax brackets, and expensing capital investment, to name a few. But the massive distortions introduced to favor manufacturing and the social engineering from radically higher exemptions are horrible tax policy.”

MLK’s Philosophical and Theological Legacy

Great article by my friend Kevin Stuart, who knows what he’s talking about whenever he writes about Aquinas! (since he spent the better part of a year in England studying Aquinas’ Summa Theologica…

The Grumpy Economist: News flash: Bernanke not clairvoyant

Great insights from the Grumpy Economist (AKA U of C’s John Cochrane) who notes, among other things, “The real lesson is this: The smartest people in the room didn’t — couldn’t — see it (the housing crash and banking crisis) coming. The smartest people in the room won’t see the next one coming either.” Professor Cochrane’s conclusion: “…safety comes from better rules of the game, not finding just the right soothsayer to run the show.” Amen!

Does Money Really Buy Elections?

Fascinating podcast – by the way, the answer to the question, “Does money really buy elections?” is “not really all that much”. Actually, the ineffectiveness of the “dollars spent” variable is quite stunning; quoting from this article, “When a candidate doubled their spending, holding everything else constant, they only got an extra one percent of the popular vote. It’s the same if you cut your spending in half, you only lose one percent of the popular vote. So we’re talking about really large swings in campaign spending with almost trivial changes in the vote.”

Assorted Links (1/15/2012)

Here’s a list of articles and videos that I have been reading and viewing lately:

The Truth About Bain and Jobs

Quoting from this article, “…the best antidote to foolish thinking about job creation is the work of economists Steven J. Davis and John Haltiwanger. Their painstaking research has revealed a side of America’s dynamism that isn’t always pretty. Between 1977 and 2005, years roughly overlapping Mr. Romney’s business career, some 15% of all jobs were destroyed every year, even as total jobs grew by an average of 2% a year. Job creation and destruction are both relentless, the authors showed in paper after paper. The small difference between the two is what we call prosperity.”

Fascinated by Tim Tebow on More Than Sundays

“What, exactly, is it about Broncos quarterback Tim Tebow that so fascinates and provokes us? Why do some people project onto him the best of this country — and the worst?”

The Artist (2011)

“Directed by Michel Hazanavicius. With Jean Dujardin, Bérénice Bejo, John Goodman, James Cromwell. Hollywood, 1927: As silent movie star George Valentin wonders if the arrival of talking pictures will cause him to fade into oblivion, he sparks with Peppy Miller, a young dancer set for a big break.”

Dear Student: I Don’t Lie Awake At Night Thinking of Ways to Ruin Your Life

“Your professors don’t hate you, and they aren’t out to get you. Now that this is out of the way, let’s have a great semester.”

Why the Left Is Losing the Argument over the Financial Crisis

“Fair-minded people are persuaded by facts, not invective.”

The Mathematics of Magic

“I don’t particularly like math. I’ve never been a fan of magic either. For some reason, however, when I heard about a new book entitled Magical Mathematics written by two first-rate mathematicians, Persi Diaconis and Ron Graham, I felt compelled to buy it and read it.”

How Private Equity Works

The author of this thoughtful and well researched article is Jonathan Macey, who is a professor of corporate law, corporate finance and securities law at Yale Law School. Professor Macey provides a very clear and succinct explanation of what the role of “private equity” is in a free market economy (hint: it ISN’T what Rick Perry and others say it is).  Quoting from this article, “…Jonathan Macey notes that the alternative to the leaner, smaller firms created by private equity are bankrupt firms that don’t employ anybody.”

Ron Paul’s achievement

“Bringing his cause in from the fringe.”

How Fannie, Freddie and Politicians Caused the Crisis

Quoting from this article, “Government housing policies and the toxic mortgages they spawned were the sine qua non of the financial crisis.”

George Orwell’s Animal Farm

“Animated (72 minute) Feature of George Orwell’s anti-totalitarian novella Animal Farm.”

Elizabeth Warren’s Sloppy Progressivism

Interesting quotes from this article by NYU law professor Richard Epstein: 1) “Warren wants to reduce the role of the entrepreneur in society.” 2) “Laissez-faire capitalism requires an effective and focused government.” and 3) “Time after time, Warren embraces coercion over cooperation.”

Class Warfare and the Buffett Rule

“In The Wall Street Journal, Arthur B. Laffer writes that implementing a surtax on ‘millionaires’ would hurt just about everyone but the super rich like Warren Buffett.”

Assorted Links (1/7/2012)

Here’s a list of articles that I have been reading lately:

Government: The redistributionist behemoth

Quoting from George Will’s most recent Washington Post column, “Try a thought experiment suggested decades ago by University of Chicago law professors Walter Blum and Harry Kalven in their 1952 essay “The Uneasy Case for Progressive Taxation,” published in their university’s law review. Suppose society’s wealth trebled overnight without any change in the relative distribution among individuals. Would the unchanged inequality at higher levels of affluence decrease concern about inequality? Surely not: The issue of inequality has become more salient as affluence has increased. Which suggests two conclusions: People are less dissatisfied by what they lack than by what others have. And when government engages in redistribution in order to maximize the happiness of citizens who become more envious as they become more comfortable, government becomes increasingly frenzied and futile.”

A Youngster’s Bright Idea Is Something New Under the Sun; Scientist Is 13-Year-Old Aidan Dwyer

“A new way of collecting solar energy has polarized scientists around the world and ignited fierce debate on the Internet, where the innovator in question has been called everything from an alien to the agent of a global conspiracy. The scientist is 13 years old.”

The Cancer Revolution

“The Wall Street Journal reports that survival rates are rising, but new drugs are delayed by 1950s’ trial design.”

The President’s Risky Defense Strategy

“In The Wall Street Journal, Mackubin Thomas Owens writes that reducing ground forces and focusing on the Asia-Pacific region leaves the United States exposed to unanticipated threats.”

The 27 Rules of Conquering the Gym

“Sweating is a good way to begin 2012. But if you’re going to join a gym—or returning to the gym after a long hibernation—consider the following.”

Belmont & Fishtown by Charles Murray – The New Criterion

Quoting from this article, ““…a growing proportion of the people who run the institutions of our country have… always lived in upper-middle-class neighborhoods and gone to upper-middle-class schools. Many have never worked at a job that caused a body part to hurt at the end of the day, never had a conversation with an evangelical Christian, never seen a factory floor, never had a friend who didn’t have a college degree, never hunted or fished. They are likely to know that Garrison Keillor’s monologue on Prairie Home Companion is the source of the phrase “all of the children are above average,” but they have never walked on a prairie and never known someone well whose IQ actually was below average.”

The Constitution is Clear on Recess Appointments

This is a brilliant constitutional exegesis by NYU law professor Richard Epstein on recess appointments; well worth reading!

Obama’s Reckless Recess Ploy

“David Rivkin and Lee Casey write in The Wall Street Journal that no president has resorted to recess appointments when Congress is in session—so we can expect serious legal challenges to new financial regulations.”

Gingrich and the History of Negative Campaigns

“In The Wall Street Journal, John Steele Gordon writes that negative ads can intensify an existing perception of a candidate. They can seldom create one.”

Where to Put Your Money in 2012

“In The Wall Street Journal, Burton Malkiel writes that U.S. stocks should produce returns of about 7% going forward, five points higher than the yield on safe bonds.”

For young graduates, the case for economics

Quoting from this article, “…”economics is organized common sense,” as Tom Sargent, this year’s winner of the Nobel Prize, remembers …the teaching assistant who inspired him to take up economics saying.”

2012: Marking the New Year

“Around the world people celebrated with fireworks, kisses, blessings, gatherings, cheers, watching the sunrise and plunges into icy bodies of water to welcome in a new year. Here’s a look back at how some of them marked the transition.”

Here’s why I love ‘greed,’ and so should you

“What human motivation gets the most wonderful things done? It’s really a silly question, because the answer is so simple. It turns out that it’s human greed that gets the most wonderful things done.”

Assorted Links (1/4/2012)

Here’s a list of articles that I have been reading lately:

Dave Barry’s 2011 Year in Review

Dave Barry’s “Year in Review” columns are quite good – the “2011 Year in Review” is no exception…

The Hidden Dangers of the “Living Wage”

Besides being a Constitutional scholar, NYU law professor Richard Epstein is also a very capable labor economist…

Rent Control Hits the Supreme Court

NYU law professor Richard Epstein, who is renowned for his scholarship on the takings clause of the Fifth Amendment of the Constitution, discusses an upcoming Supreme Court case which presents “…a serious constitutional challenge to rent-control and stabilization laws” in New York City…

Why Public Pensions Are So Rich

“Andrew Biggs and Jason Richwine write in The Wall Street Journal that shifting government workers to 401(k)-style plans would offer greater transparency and keep benefits in line with the private economy.”

Why Placebos Work Wonders

“From Weight Loss to Fertility, New Legitimacy for ‘Fake’ Treatments”

Teen Tells Story on Youtube Before Death

“Watch a video that 18-year-old Ben Breedlove from Austin, Texas posted on YouTube explaining his near-death experiences due to a serious heart condition, only a few days before he passed away on Christmas night.”

Does Airport Security Really Make Us Safer?

“Heaps of federal money, endless bureaucracy, and constant travel delays are the most visible by-products of the Transportation Security Administration. Too bad “increased safety” doesn’t fit on that list.”

M.I.T. Game-Changer: Free Online Education For All

“For Wall Street Occupiers or other decriers of the “social injustice” of college tuition, here’s a curveball bound to scramble your worldview: a totally free college education regardless of your academic performance or background.”

How To Get Smart in 2012

I resolve to follow (at least some of) Walter Russell Mead’s advice given here…

Argentina in December 2001 versus Europe in December 2011

“This month marks the ten-year anniversary of Argentina’s massive sovereign debt default, an event with many lessons for the European sovereign debt crisis of today, though analogies are far from perfect.”

Farnam Street The Challenge Of Causation

“An insightful piece by Jonah Lehrer on the challenge of causation. Despite all of our fancy tools and computers, we’re still trying to figure out how X relates to Y.”

Philadelphia: The Cheesiest Are Robbing the Neediest

“Marian Tasco is a Philadelphia city councilor who voted for DROP, an outrageous pension giveaway that allows the shameless and depraved to retire for one day, collect a six figure retirement payout, and return to work the next morning.”

Deepening Crisis Over Euro Pits Leader Against Leader

Fascinating telling of the sequence of events which led to the European sovereign debt crisis. Quoting from this article, “Europe’s leaders were reluctantly realizing that living with a common currency meant surrendering more of their national independence than they had bargained for.”