Tuesday, May 29, 2007

Craig Newmark reviews my new book Freedomnomics

Craig Newmark provides a much appreciated and very nice review of my new book Freedomnomics here.

Freedomnomics focuses on incentives. It presents a wonderfully rich set of examples of how people respond to incentives. No background in economics is necessary to understand and enjoy these examples. . . .

For those interested, for a short time they can still obtain a free copy of the book here.

Side note: Craig's wife has had her blog blognapped. It is an absolutely horrendous story. It looks like things are getting fixed, but it has not been a pleasant process.

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New Op-ed FoxNews.com: Moore's Myths Sicko

New Op-ed FoxNews.com: Moore's Myths Sicko

Monday, May 28, 2007

France Paying Immigrants to go home

Even if few people take advantage of this offer, I think that it will be very important for a reason that I haven't seen anyone note: how upset can the immigrants in France be if you can't pay them to go back home? There is obviously a lot of discontent and rioting in France, but how can people maintain the intensity of their anger when they are admitting with their feet that France is much better than the alternative and they are refusing to even accept a payment to return home.

New French President Nicolas Sarkozy made immigration a central issue of his campaign. Now, his new minister for immigration and national identity says its time to start paying immigrants to leave the country.

France is home to over 5 million immigrants -- and the new conservative-led government doesn't plan on making things any more comfortable for them. While the new regime in Paris is determined to curb illegal immigration, it is also looking to encourage legal migrants to reconsider their decision to stay in France -- by paying them to go back home.
New immigration minister, Brice Hortefeux, confirmed on Wednesday that the government is planning to offer incentives to more immigrants to return home voluntarily. "We must increase this measure to help voluntary return. I am very clearly committed to doing that," Hortefeux said in an interview with RFI radio.

Under the scheme, Paris will provide each family with a nest egg of €6,000 ($8,000) for when they go back to their country of origin. A similar scheme, which was introduced in 2005 and 2006, was taken up by around 3,000 families. . . . . .


Friday, May 25, 2007

Ugh, Minimum wage increase about ready to occur

President Bush was expected to sign the bill quickly, and workers who now make $5.15 an hour will see their paychecks go up by 70 cents per hour before the end of the summer. Another 70 cents will be added next year, and by summer 2009, all minimum-wage jobs will pay no less than $7.25 an hour.

How do you get a higher wage for people? Well, if you increase people's productivity, that is the obvious way. But the way that the minimum wage and unions do it is by throwing people out of work. If you reduce the number of people able to work, than the productivity of the marginal worker will increase. When you throw out enough workers from the job, the workers' productivity will rise by enough that it will cover the higher minimum wage.

Who gets thrown out of work? The least skilled of the workers' whose wages were previously below the new minimum wage.

Are the workers who get the new higher minimum wage really better off? Some are, but others are actually worse off. How could that be? Well, you have a lot of workers competing for a reduced number of jobs. The workers will compete against each other to get the job and they will try to do so until the benefits from getting the job are dissipated. This is the same type of competition that occurred when government imposed price controls on gasoline. People sometimes had to wait hours in line at gasoline stations to try to make sure that they were the ones who got this artificially cheap gasoline.


Tuesday, May 22, 2007

Book News: Free copies of Freedomnomics, Top 10 Books Pelosi should read, and Books to Read this Summer

Saturday, May 19, 2007

Extra early mentions of my new book

My book isn't really out yet, but some have gotten early looks at it and James D. Miller and Richard Miniter have been nice enough to say kind things about Freedomnomics.


Thursday, May 17, 2007

France: The best intentioned legislation can have unintended consequences

James Miller points to how easily even the best intentioned legislation can have unintended consequences. I am glad that the new President of France seems to be willing to do a lot to get that country going again, I just don't want him to get attacked for well meaning legislaiton that goes wrong.

France's new President has proposed that there "should be no income tax on earnings in excess of 35 hours a week." This proposal is obviously designed to get the French to work longer hours. But this proposal will cause huge compliance problems.

To understand why let's say someone was earning $10 an hour and working for 35 hours a week, making $350 a week. Further assume that they pay 50% of their income in taxes so they get to keep $175.

Now imagine that the employee and firm come to a new arrangement. The employee will start sleeping at the office and the firm will consider this office sleeping time to be work. The employee will now be paid for working 60 hours a week. The firm, however, will also cut the worker's salary to $5 an hour. The firm now pays $5(60)=$300 a week. This is less than before so the firm is better off. The worker, however, is also better off. . . . .


Wednesday, May 16, 2007

Walter Williams on everything from Global Warming to Gun Control to Taxes

I have only highlighted Walter William's discussion on gun control, but I advise people to read the entire piece.

Now let's turn to gun control laws. What do Virginia Tech's 32 murders, Columbine High School's 13 murders, Jonesboro Westside Middle School's five murders, Germany's Gutenberg High School's 16 murders, the murder of 14 legislators in Zug, Switzerland, and the murder of eight city council members in a Paris suburb all have in common? Answer: All the murders were committed in "gun-free zones." So a reasonable question is: Does legislation creating gun-free zones prevent murder and mayhem?

In 1970, Israel adopted a policy to arm teachers and parents serving as school aids with semi-automatic weapons. Attacks by gunmen at Israeli schools have ceased. At Appalachian Law School in Virginia, a gunman who had already murdered three people was stopped from further carnage by two armed students. Gun possession stopping crime is not atypical, though it goes unreported by the media. According to various research estimates, from 764,000 to as many as 2.5 million crimes are prevented by armed, law-abiding people either warning a criminal that they're armed, brandishing their weapon or shooting a criminal. In the interest of truth in packaging, I think we should rename "gun-free zones" to "defenseless zones." . . . .

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Tuesday, May 15, 2007

Do reporters understand that demand curves slope downward?

This statement in the NY Times caught my eye:

"While New York City has always had a vacancy rate lower than most other cities, rental prices jumped last year by a record 8.3 percent."

So more people wanting apartments then are available is associated with a jump in rental prices? What is the word "while" doing in the sentence?


Wednesday, May 9, 2007

The irony of liberal regulations

Here is a perfect case of unintended consequences. A lesbian couple promises a sperm donor that he won't have to pay child support. The lesbian couple breaks up and the mother sues the biological father for child support. She wins, and he loses. Here is the irony. Liberals apparently think that ordering the father to pay support is great. But what is going to happen to the people who were previously willing to provide sperm to lesbian couples? You bail out existing women who got pregnant this way, but there won't be as many future births to lesbian couples. May be it is really a conservative plot to let liberals have what they want with the notion that it will simply mean fewer children born to lesbian couples in the future. For conservatives concerned about outcomes, the issue must be a little difficult. Support the right to contract or let the right be trashed but have somewhat fewer kids born this way. I don't know the rules are for artificial insemination, but if there are some difficulties for lesbian couples to get insemination through a regular fertility clinic, this ruling could have a significant impact on lesbian couples getting pregnant.


Tuesday, May 8, 2007

The Economics of Drug Price Controls

Ben Zycher has a nice piece in today's Investor's Business Daily.

Lower prices on drugs sound great, and if the Beltway can take credit for such goodies, so much the better. So Congress has passed an amendment to the Food and Drug Revitalization Act allowing the importation of medicines from a number of countries in which governments "negotiate" — that is, impose — prices.

If implemented, this law will yield fewer new medicines, less safety and a weakened system of intellectual property protection.

Those foreign prices are far lower than those paid by Americans, even in economies approximately as wealthy as ours. Thus do the Europeans and others use their pricing policies to obtain free rides on the massive investments — about $1 billion per drug — needed to bring new medicines to market. . . . .

So many people think that they can get something for free. These rules would effectively impose price controls.


Monday, May 7, 2007

John Fund on France's Election

Conservative Nikolas Sarkozy's comfortable victory over Socialist Ségolène Royal in France's presidential race may indicate that Europe's slowest-growing major economy is finally ready for some change.

Long derided as a "center of social rest" for its cradle-to-grave welfare state, mandatory 35-hour work week, public-sector strikes and ossified employment rules, France has voted for a new president who claims he wants to shake things up. "France does not fear change," Mr. Sarkozy told his supporters as the vote progressed yesterday, "France hopes for it."

That's unclear. It's certainly true that Mr. Sarkozy styled himself as a reformer who wants to arrest the pessimism gripping a country where polls show 70% of voters think their country is in decline. He advocated tax cuts, allowing overtime, and shrinking the central government's bloated bureaucracy by filling only half of the slots opened up by retirement. "The best social model is one that gives work to everyone," he would tell audiences in calling for more dynamism in the economy. "That is no longer ours."

But at the same time the former interior and finance minister has shown a willingness to bail out failing French companies and to embrace greater protectionism. Mr. Sarkozy is certainly no heir to Margaret Thatcher or even Tony Blair, but he is someone that free-market advocates can at least do business with. . . .


Friday, May 4, 2007

A history of the Parking Meter

Larry White as an interesting brief discussion of the history of the parking meter here .


Wednesday, May 2, 2007

"Why Economists Tend to Oppose Gun Control Laws"

Useful article:

After the shooting rampage at Virginia Tech, many well-intentioned people all over the country have been calling for increased gun control laws. However, economists tend to oppose gun control laws, since such laws generally pay no attention to basic economic issues.

Let's start with the relationship between means and ends. The shooter had his ends: he wanted to kill many people, and he wanted it to be visible and spectacular. He also had his means: guns and bullets. He engaged in forward-looking behavior: he purchased the guns, bullets, chains, locks, and video equipment well in advance. He taped himself in advance explaining what he was going to do and why he was going to do it.

Now let's consider gun control. Many people argue that if the shooter did not have guns and bullets, he would not have been able to shoot all of those people. This is surely correct. However, from that, they infer that if he did not have guns and bullets, he would not have been able to kill all of those people. This is a whole different question.

As Mises.org readers know, in economics, we discuss the idea of substitutes. These are goods that can be used to replace each other such as Coke vs. Pepsi, contact lenses vs. eyeglasses, Macs vs. PCs. When a person has ends, a person can select among different means to achieve those ends. These different means are substitutes.

Cho wanted to kill many people, and he wanted it to be visible and spectacular. To that end, he purchases guns, bullets, chains, and locks (to prevent survivors from escaping). Would gun control have prevented this? Or would Cho ÷ who apparently planned this attack for weeks, based on the fact that he acquired guns, bullets, chains, and locks for weeks - have used substitute goods?

What would Cho's substitutes have been? What others means are there by which he could engage in mass murder? Well, he could have purchased a knife, although that is probably a weak substitute for guns and bullets in achieving his ends. He has to be right next to his victim, and he might be defeated in personal combat by another person. Likewise, he could not kill a lot of people in the same time frame, and it would not be as spectacular. . . .

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Copies of new book hot off the presses

My new book Freedomnomics is hot off the presses and is now starting to find its ways to book stores. It will still be a month before it goes on sale, but I have high hopes for this book. It is quite a relief to see it coming out after all the work that went into it.