The Library of Economics and Liberty is dedicated to advancing the study of economics, markets, and liberty. Econlib offers a unique combination of resources for students, teachers, researchers, and aficionados of economic thought.

Econlib publishes three to four new economics articles and columns each month. The latest articles and columns are made available to the public on the first Monday of each month.

All Econlib articles and columns are written exclusively for us at the Library of Economics and Liberty, on various economics topics by renowned professors, researchers, and journalists worldwide. All articles and columns are retained online free of charge for public readership. Many articles and columns are discussed in concurrent comments and debate in our blog, EconLog.


The Library of Economics and Liberty features the popular daily blog, EconLog. Bloggers Bryan Caplan, David Henderson, Alberto Mingardi, Scott Sumner, and guest bloggers write on topical economics of interest to them, illuminating subjects from politics and finance, to recent films and cultural observations, to history and literature.


The Library of Economics and Liberty carries the podcast, EconTalk, hosted by Russ Roberts. The weekly talk show features one-on-one discussions with an eclectic mix of authors, professors, Nobel Laureates, entrepreneurs, leaders of charities and businesses, and people on the street. The emphases are on using topical books and the news to illustrate economic principles. Exploring how economics emerges in practice is a primary theme.


The Concise Encyclopedia of Economics features authoritative editions of classics in economics, and related works in history, political theory, and philosophy, complete with definitions and explanations of economics terms and ideas.

Visit the Library of Economics and Liberty

Recent Posts

Here are the 10 latest posts from EconLog.

EconLog April 28, 2017

How can there be a shortage of construction workers?, by Scott Sumner

The title of this post is actually two questions in one. One issue is technical, why don't wages rise to restore equilibrium? And the second is sociological, haven't we all been reading that there are no longer jobs available for non-college men? And yet, there really does seem to be a shortage of construction workers. Here's just one article of dozens that I have read:

As the Dallas Morning News notes, between 2012 and 2016, wages for Texas construction workers rose 21.2 percent, compared with 12 percent for all construction jobs in the U.S., and 2.2 percent for all jobs in the state. In Collin County, home to Plano and McKinney, construction workers make $98,000. And that was before the new administration began its immigration crackdown. The Dallas-Plano-Irving metropolitan area is short about 18,000 construction workers--about 20 percent of the total. Which means that many homebuilders literally can't find people to do the job, and the rest must attempt to pass on higher costs to their customers.You can find similar articles about shortages of skilled factory workers, truckers, and many other blue-collar professions. So what's going on here?

Screen Shot 2017-04-28 at 9.47.47 AM.png
Let's start with the technical issue, why doesn't supply and demand (S&D) restore equilibrium? The problem here is that most labor markets are at least modestly monopsonistic, whereas the S&D model only applies to perfect competition. For instance, suppose a construction company paid its existing workers $26.50/hour. Also suppose it decided that it wanted to double the size of its workforce, because of growing demand for new houses. Under perfect competition there would be a long line of workers, just as good as the existing employees, willing to work for $26.50/hour. In the real world, however, there is a very limited number of potential employees in any given labor market. To attract more workers, you need to raise the wage rate.

OK, but then why don't firms raise the wage rate to attract those new employees and eliminate the shortage? Here's where the monopsony model comes in to play. For reasons of employer morale, if you raise the pay of new hires, you need to raise the pay of existing workers. Otherwise the existing workers resent the higher wages of the new hires. Even worse, they'll jump ship to trying to get higher wages at a competitor firm. If paying a new worker $27.50/hour forces you to raise the pay of each of your 50 existing workers by $1/hour, then the true cost of that worker is not $27.50/hour, it's $27.50 plus $50, or $77.50/hour. At that price you may refrain from hiring the new worker, and keep looking for someone willing to work for $26.50/hour. When a reporter stops by, you tell her that you face a "shortage" of workers, even though there's someone willing to do the job for $27.50/hour. That's what monopsony is all about.

That's actually the easier question to answer---a shortage is indeed possible, despite the fact that is seems inconsistent with simple S&D. But what about the other question? During the Year of Trump we read 1000 articles about the plight of America's blue-collar workers, especially non-college men. Why aren't they willing to do construction jobs in Dallas paying $98,000? That's more than many college professors make. If both spouses did that sort of work, the family income would be in the top 5%. Why the shortage?

Tyler Cowen linked to an interesting study today:

A poll from the National Association of Home Builders (NAHB) of young Americans ages 18-to-25 shows that almost no millennials want a career in construction -- a high-paying industry. 64 percent of these millennials said they wouldn't even consider working in construction if you paid them $100,000 or more.

74 percent of young adults know what career field they want to pursue, and of these millennials, just 3 percent want a career in construction trades. What's more stunning is that of the 26 percent who don't know what career they want, 63 percent of these undecided millennials said there was "no or little chance regardless of pay" that they would work in construction trades.
I've done a bit of work in construction---it doesn't seem like a bad job. So what's going on here? I don't know the answer, but I'll throw out a few possibilities, and ask you for other suggestions:

  1. Millennials were more likely to grow up with indoor activities, such as computers games, and less likely to roam around outside. Perhaps that makes them softer. Before everyone jumps all over me, I strongly believe that my (boomer) generation was softer than my dad's ("Greatest") generation, which fought in WWII. And that my dad was softer than his grandparents, who were pioneers in the Midwest. That's progress!

  2. In the US, Europe and East Asia, physical work is increasingly done by immigrant workers. But we've cracked down on immigration from Mexico, so perhaps that's contributed to a worker shortage. From the Dallas worker shortage article:

Competition for labor in the housing market has been intense for some time, in part because the flow of immigrants from Latin America has decreased and in part because many people who worked in housing during the boom found other work during the bust. But with the government now openly hostile to the presence of these workers, and starting to deport some of them, it is becoming that much harder.3. Maybe the prestige of construction work has fallen, partly due to wage inequality and partly due to the fact that it's seen as "immigrant work". When I was young, autoworkers often made more than college professors. The problem with this theory is that Dallas construction workers are making good pay---so why is there the perception that construction work doesn't pay well? Maybe the Dallas figures are outliers, and the national average is far lower.

  1. That raises the issue of regional labor shortages. Maybe some unemployed workers in other parts of the country don't want to move to Dallas. But why not? Maybe their wife has a good job as a nurse, and doesn't want to move. In the 1960s, wives were less likely to work outside the home.

  2. Maybe millennials see construction work as unreliable, recalling the Great Recession, and want something more dependable. In The Age of Complacency, Tyler says people are less willing to move between states, and even between jobs.

To summarize, I believe that the supposed lack of work for blue-collar men is more complicated than people assume. I do think there is a problem here, how could there be such a widespread perception of a problem, if it did not exist? And we also have wage data that suggests blue-collar wages have tended to rise less than white-collar wages. But I also believe there are more factors at work here than we assume. Just to give one example, a successful Trump policy of bringing back blue-collar jobs might start drawing in more immigrants again, wall or no wall.

There's more going on here than meets the eye, and a good reporter should be trying to delve deeper into this issue, by interviewing more construction companies and more unemployed blue-collar workers in Texas, to get a sense of why they aren't matching up.

PS. The monopsony model does provide a theoretical rationale for the claim that a higher minimum wage might not costs jobs. The problem there is that if it doesn't cost jobs, then a higher minimum wage would also fail to lead to higher prices. But studies show that higher minimum wages do lead to higher prices. (Even studies that find no job loss). So if higher minimum wages really don't cost jobs, then they do so for reasons that are still poorly understood.

PPS. This post is about more than just construction. I predict that if all illegal aliens were expelled from Iowa, there would be a shortage of Americans willing to work in meat packing plants.


EconLog April 27, 2017

The World's Worst Argument Against Homeschooling, by Bryan Caplan

I've heard many arguments against homeschooling.  Here's the worst:

"Bryan, you've got to send your kids back to public high school."


"Well, you've got to understand that high school is miserable."

"I remember it well.  How is that an argument for high school?"

"Because it prepares you for the misery of life.  Having a job is just like being in high school.  Without that preparation, you'll never make it in the real world."

The obvious objection: Suppose your kid is incredibly happy in high school.  Everyone's nice and encouraging.  He's learning piles of material.  Day after day, he comes home and says, "High school is a dream come true."  What kind of a parent would react not with elation, but alarm?  As in: "Eek!  My kid's may be excelling academically, but he's totally not being prepared for the harshness of adult life.  I'd got to immediately move him to a school where he's unhappy... for his own good!"  None I've ever encountered. 

Sure, parents occasionally sentence their kids to military school, but they do so because the kid is behaving badly now, not because they fear their studious, well-mannered kids will grow up to be snowflakes.

So what's the best argument against homeschooling?  Conformity signaling, of course.


EconLog April 26, 2017

Keep Your Eye on the Prize, by David Henderson


In a comment on a recent blog post I wrote on United Airlines, The Original CC highlighted one of my sentences and wrote:

You seem to be the master of deescalation. Can you explain this interaction and what you said in a little more detail? We could probably all learn from it.
The sentence he highlighted was this one:
One guy got defensive but, because I didn't get angry back, cooperated.
I might disappoint CC a little because I was so moving so fast that my memory of what I said is somewhat of a blur. What I do remember clearly was that the attitude that I take in these situations is that the people I'm asking for a favor owe me nothing. They are doing a favor, and I am the supplicant. So I don't get on my high horse and come off as someone who feels entitled. There's a very good reason I don't sound like someone who's entitled: I don't think I'm entitled. It would be nice for them to do what I'm asking, and it would probably cost them very little whereas my gain would be great, but that's for them to decide.

EconLog April 26, 2017

Ezra Klein on the Singapore health care miracle, by Scott Sumner

Ezra Klein has a good essay on the Singapore health care system. He starts off with the conservative case for the Singapore system, quoting the AEI:

What's the reason for Singapore's success? It's not government spending. The state, using taxes, funds only about one-fourth of Singapore's total health costs. Individuals and their employers pay for the rest. In fact, the latest figures show that Singapore's government spends only $381 (all dollars in this article are U.S.) per capita on health--or one-seventh what the U.S. government spends.

Singapore's system requires individuals to take responsibility for their own health, and for much of their own spending on medical care.
Most of the essay is spent partially (but not completely) debunking the conservative view. For instance:> According to the World Bank, in 2014 Singapore spent $2,752 per person on health care. America spent $9,403. Given this, it's worth asking a few questions about what Singapore's model really has to teach the US.

Are Singaporeans really more exposed to health costs than Americans? The basic argument for the Singaporean system is that Singaporeans, through Medisave and the deductibles in Medishield, pay more of the cost of their care, and so hold costs down. Americans, by contrast, have their care paid for by insurers and employers and the government, and so they have little incentive to act like shoppers and push back on prices. But is that actually true?

Screen Shot 2017-04-26 at 9.59.38 AM.png

EconLog April 25, 2017

Reply to Adam Ozimek, by David Henderson


Adam Ozimek has written an article on titled "Libertarianism Needs To Become More Realistic." HT to Tyler Cowen. Although authors rarely get to choose their articles' titles, the title does seem consistent with his message. Ozimek is friendly to libertarianism, and so his suggestions should be seen as friendly amendments to the strategies pursued by some libertarians.

Here's his final paragraph:

Instead, people want quality of life, economic growth, and good government. All three of these can be helped on some margins by utilizing market forces, deregulating, and increasing freedom. Libertarianism should focus on these margins, and accept that the all-too-popular vision of radical freedom and minimal government at all costs is not wanted by enough people to actually matter. Realistic libertarianism would unabashedly accept limits of markets, and embrace in rhetoric, theory, and practice the first order importance of quality government, which on many margins trumps small government.
I agree with some of it, and disagree with much of it.

I agree that libertarians are in a minority. He gives strong evidence for this, focusing on a factor that many libertarians, and almost all libertarian economists, would accept: the evidence on voting with one's feet. If libertarianism were really popular, he argues, more people would be moving to New Hampshire and fewer people would be moving to Texas. So, yes, we are in a minority.

But what follows from that? Ozimek thinks we should give up trying to persuade people to be more libertarian.

Consider, though, two historical episodes where libertarians were in the forefront: the decriminalization of homosexuality in the 1970s and the anti-draft movement of the 1960s.

I remember returning to the University of Rochester from the national Libertarian Party convention in 1977, where I had allowed the Gay Caucus of the Libertarian Party to use my room for a cocktail party. When I told some colleagues about it, I got an icy glare. Now, I would bet, the reaction would be much different. What happened to change the landscape? I don't quite know. I do know that we were right to pursue this issue. More important, if Adam Ozimek were writing on this in the 1970s, what advice would he have given? It seems that he would said that we should give up.

Or the take at the anti-draft movement in which Milton Friedman, Walter Oi, and others were leaders in the mid-1960s. My impression is that the majority position was pro-draft. Would Adam Ozimek have counseled us not to pursue this?

I said above that I agree with some of his bottom line. Here's the part I somewhat agree with:

Instead, people want quality of life, economic growth, and good government. All three of these can be helped on some margins by utilizing market forces, deregulating, and increasing freedom. Libertarianism should focus on these margins
It makes sense for some of us to focus on these issues. But it also makes sense for some of us to pursue apparently quixotic causes that turn out to be quite realistic. (12 COMMENTS)

EconLog April 25, 2017

What Is Self-Righteousness?, by Bryan Caplan

What exactly does it mean to be "self-righteous"? 

  1. "Self-righteous" is definitely not the same as "hypocritical."  A hypocrite talks the talk but doesn't walk the walk.  A self-righteous person can definitely do both; in fact, you're probably more likely to be called "self-righteous" if you're strictly observant of your own principles.

  2. "Self-righteous" also seems distinct from simply being morally mistaken, or even extremely morally mistaken.  Indeed, we occasionally accuse people on "our own side" of self-righteousness.

  3. You are likely to be accused of self-righteousness if you loudly brag about your moral virtue - even if (especially?) your claims are literally true.  But is that all that's going on?

  4. When I call people "self-righteous," the subtext is normally that they're loudly observant but morally unreflective.  (As Nietzsche said in Human, All Too Human, "The most dangerous party member.-- In every party there is one who through his all too credulous avowal of the party's principles incites the others to apostasy.")  But perhaps that's just my pet peeve.

Further thoughts?

EconLog April 24, 2017

Score One for United Airlines, by David Henderson


With all the negative publicity United Airlines has had lately, I want to share a positive. Yesterday morning, I was flying from Washington Dulles to LAX, with a short time for my connecting flight from LAX to Monterey. We boarded late because one of the runways at LAX was closed for construction and the LAX air traffic controllers were rationing landings. Our pilot explained that to us when we boarded and told us that even though we were not allowed to take off until about 9:50 a.m. (the flight was scheduled to leave the gate at 8:30 a.m.) he was going to go out and hope for a slightly earlier takeoff. We got near the runway and then he announced that we would wait 15 to 20 minutes, the seatbelt light would be turned off, and the flight deck was open for those who wanted to come up. There were about 30 New Zealand boys on the flight from some sports team and I thought there would be a rush to the cockpit. There wasn't. I'm convinced that almost no one listens to announcements any more because so much of it is boilerplate. Somehow I've trained my ear to not listen to boilerplate but to hear the new stuff. I quickly unbuckled my seat belt and headed to the front. I was the first one there. I talked to the pilot and second officer, who were both friendly, and took some pictures. The pilot invited me to sit in his seat and wear his hat. Thus the picture above.

I wanted to make room for other people in line--as it turned out, there was only one--and so after a minute or two, I headed back. I saw almost everyone in first class as I walked back to coach grinning at me and I assumed that they were just enjoying my enjoyment of the opportunity. Wrong. The pilot came on the PA system and announced that his hat was missing. Sheepishly, I walked back and returned it. I'm so used to wearing a Golden State Warriors hat, especially during the playoffs, that I had only minutes earlier taken it off and put it in my backpack. So the hat on my head didn't feel unusual.

We landed at LAX at about 11:45 and I got on my phone and found out that my Monterey gate for my flight leaving at 12:20 was 88, and that the gate we were landing at was 70A. That meant a long walk, but I know the airport well and knew I could do it. The problem: another United flight was at our gate. So we didn't get to the gate until about 12:07 p.m. So when I saw this coming, I asked the flight attendant if she could announce that some people have tight connections so if you don't, please stay seated for a few minutes. She said she would and she did. But notice what I said above: few people listen. So, sure enough, as soon as the seat belt light went off, almost everyone in front of me stood, many in the aisle. I politely explained to those ahead of me that my flight was leaving in 10 minutes (it was now about 12:10) and asked if I could get ahead. One guy got defensive but, because I didn't get angry back, cooperated. I got off the flight at 12:12 p.m. and ran through the airport. The gate agent at 88 was waiting for me and I got on at 12:20 p.m. The big burly guy sitting next to me hogged the arm rest but I didn't care. I would be home by 2 p.m. and have the afternoon with my wife.

When we got off the plane, I thanked the flight attendant and pilot for waiting.

HT to my friend Eric Garris for using photoshop to lighten the picture.


EconLog April 24, 2017

Trump and Le Pen, by Scott Sumner

The stock market behaved rather strangely in the period before and after the November elections. Before the election, stocks reacted negatively to each Trump surge in the polls, and stock futures fell late in the evening of November 8th, immediately after it became clear that Trump would win. Stock investors normally "root" for the GOP candidate. Indeed a GOP win in the presidential elections usually boosts stock prices by about 2% (although stocks actually have not done very well during GOP administrations.) To make matters even more confusing, stocks rallied strongly in the days and weeks after the election.

One possibility is that prior to the election investors were worried about Trump's call for protectionism and expelling illegal aliens. After the election, they were reassured that Trump would behave more pragmatically, and heartened by expectations that Trump would sign GOP tax cuts and also engage in deregulation.

A similar pattern occurred in the UK after the recent Brexit vote, where stocks initially fell and then rallied strongly.

One can discern two types of Trumpism. One type is very populist and nationalistic. Trump adviser Steve Bannon has been pushing for nationalistic economic policies and FDR-style spending programs to boost the economy. In contrast, Jared Kushner and Gary Cohn have a more internationalist perspective, and are more aligned with both Wall Street and the free market wing of the GOP.

Last night, Emmanuel Macron came in first in the French presidential election, and is now widely expected to win in the second round against Marine Le Pen. Think of Le Pen as being like the Steve Bannon side of the Trump administration. Le Pen is like Trumpism without the attachment of the GOP (or the UK Tories.) Like Trump, Le Pen is a nationalist on economics and immigration. Unlike Trump, she's also very left wing on broader economic issues.

The French stock market is up over 4% as I write this post, reflecting relief that Le Pen is not likely to win. While the election outcome was in line with the polls, the recent surge of a far left socialist had led to some concern that Macron would not even make it to the second round. Indeed four candidates ended up bunched together in the 19% to 24% range, with Macron being viewed as the most electable alternative to Le Pen. If Macron had not made it to the second round, the French stock market might well have plunged sharply, especially if the only two choices had been on the extreme right and the extreme left. (Le Pen is viewed as being on the right, despite her vaguely socialist views on government spending.)

Screen Shot 2017-04-24 at 1.27.51 PM.png
To summarize, the recent market response to the French elections helps us to better understand the previous market reactions to Trump (and perhaps to Brexit.) Investors are less concerned by moderate nationalism if it is embedded within a "conservative" administration that it sees as relatively business friendly. But there is one additional factor in the French election that differs from the earlier US and UK votes. France is part of the eurozone, and a win for Le Pen might have cast doubt on the future of the single currency project. This may explain why markets rallied strongly all across the eurozone. Indeed, stocks in Italy rose even more sharply than in France, as Italy has been widely viewed as a potential domino if the euro should start to unravel.


EconLog April 24, 2017

Earth 2.0?, by Bryan Caplan

The latest Freakonomics Radio is on "Earth 2.0: Is Income Inequality Inevitable?"  I'm pleased to be prominently featured alongside Jeff Sachs and Alice Rivlin.  A few highlights:

And we'll remember to keep our eye on the economic ball:

CAPLAN: Any time you're trying to analyze a complex problem, just forget all the other stuff at first, and just say, "Well, what does this do to the productivity of mankind?"And:
But not everyone shares Kanter's views on inequality.> CAPLAN: It's definitely the kind of problem that we should worry a lot less about.

Bryan Caplan is an economist at George Mason University.

CAPLAN: The main predictor of living standards of not just most people but the poorest people in the country is productivity in that country. Countries that produce a lot of stuff aren't just good places to be rich or middle class; they're good places to be poor. So when people complain about people being left behind ... China's got 1.3 billion people. Sure, someone's going to be left behind in there. But is it better to be poor now in China than it was 20 or 30 or 50 years ago, when people were starving to death? There is no question. It is only by going and forgetting history, forgetting comparisons, and then searching through a vast number of people to find a sad story that we can forget the big picture. What is the big picture? Not that we can find something that happened that is bad in the world so vast we can't even imagine it, but seeing what is happening overall. What is the general trend, and how can we keep the general trend good?I even get to make the case for not just open borders, but desert itself:
CAPLAN: I am old-fashioned enough to likethe distinction between the deserving and the undeserving poor. Right now, we have a lot of very expensive government programs that give money to everybody eventually. Old-age programs. Social Security writes checks to Bill Gates like anybody else. Again, to me, this is insane! Why tax everybody to pay for them in a situation that everybody knows they'll eventually reach, as long as they don't die young? Thinking about kids and the elderly in the same breath is crazy. You're born an orphan and there's nothing you could have done about that. That's totally not your fault. But if you are starving when you're elderly, then there's a question: why didn't you plan for this, which was totally foreseeable in every way?Hear the whole show.


EconLog April 24, 2017

Bretton Woods as a "guardrails" approach to monetary policy, by Scott Sumner

I now favor a monetary policy rule that I have dubbed the "guardrails" approach, although a more accurate metaphor might refer to the beeper you hear if you are about to hit a car in the front or rear when parallel parking. Under this approach, the Fed would offer to sell unlimited NGDP futures contracts at a price featuring 5% growth, and also offer to buy unlimited NGDP futures contracts at a price featuring 3% NGDP growth. Someone expecting more than 5% NGDP growth would buy these contracts from the Fed, and profit if growth did indeed exceed 5%. A bearish investor would sell 3% NGDP futures contracts to the Fed, anticipating sub-3% growth.

Because this is an unfamiliar concept, I'd like to compare it to the Bretton Woods regime. Under that system, central banks promised to keep the foreign exchange value of their currencies within a band of plus or minus 1% around the official par value.

To make things simple, let's suppose the Canadian dollar had been pegged to the US dollar at one for one. Then the Bank of Canada (or their Treasury) would promise to sell unlimited US dollars at a price of $1.01 Canadian, or buy unlimited US dollars at a price of $0.99 Canadian. As long as the actual exchange rate was within the band, traders would have no incentive to buy and sell US dollars with the Canadian government. But the plus or minus 1% exchange rate band would provide "guardrails" or limits on the amount of exchange rate volatility that the Canadian government would tolerate.

Now let's compare the two approaches, Bretton Woods and NGDP futures guardrails:

  1. Under both systems, the central bank would be completely free to conduct discretionary monetary policy as they saw appropriate, as long as they adhered to their promise to buy and sell their currencies at the specified guardrails. Despite this flexibility, these are clearly rules-based approaches, which put important limits in discretionary policy. (Just as the US government promise to buy dollars at $20.67/oz. allowed some flexibility, but also put clear limits on discretionary monetary policy during the 1920s.)

  2. Under both regimes the system can be "calibrated" to become either more discretionary or more rules based by widening or narrowing the width of the guardrails.

  3. The Bretton Woods regime can be regarded as a wager that the Canadian economy would perform best if the exchange rate were kept roughly stable vis-a-vis the US dollar. My guardrails proposal is a wager than the US economy would perform best if NGDP futures prices remained close to a 4% growth target. That wager has two components; the assumption that 4% NGDP growth expectations are desirable, and the assumption that the market price of NGDP growth contracts is close to the market expectation of NGDP growth.

  4. Neither system requires the central bank to do anything, unless asked to by the public. Thus the Fed would not have to set up a NGDP futures market, and it would not matter at all if no such market existed. The Fed would not have to watch for fluctuations in NGDP futures prices. They could simply sit back and wait for traders to approach them with offers to buy and sell NGDP futures contracts at the specified price.

  5. Both regimes expose the central bank to investment risk, but only if they allow the future value of their target to move outside the guardrails. Thus if the Canadian dollar were to fall to below 99 cents, the Canadian government would suffer losses on the Canadian dollars they had purchased to prop up the exchange rate. If the future level of NGDP fell below 3% growth, then the Fed would lose money on its purchases of 3% NGDP contracts.

  6. Neither regime is susceptible to the zero bound problem. The Swiss recently pegged their currency to the euro for a period of over three years, despite being hard up against the zero bound (actually negative rates.) They could have chosen to do so for much longer. At the time, speculators were also buying the Danish krone, and Tyler Cowen suggested that Denmark would provide a good test of the claim that the Swiss were somehow "forced" to revalue. Of course the Danes did not revalue, despite also being at the zero bound, and the Swiss could have also avoided revaluation if they had chosen to. Indeed the Swiss probably erred in revaluing their currency upward, which will make the zero bound problem in Switzerland even more deeply entrenched.

PS. About the guardrails vs. beeper metaphors. My proposal can be seen as like a car beeper in the sense that the "driver" (i.e. the Fed) is free to ignore the warning if he thinks the computer (i.e. market) is not accurate.

Screen Shot 2017-04-24 at 11.37.09 AM.png
On the other hand it can be seen as a guardrail in the sense that it commits the Fed to keep the market price of NGDP futures contracts within the 3% to 5% growth range.

Screen Shot 2017-04-24 at 11.37.56 AM.png


Here are the 10 latest posts from EconTalk.

EconTalk April 28, 2017

Georgia on my Mind

georgia T.jpg Like many of you, I love when EconTalk host Russ Roberts welcomes real-world entrepreneurs to the show, as he did this week with Elizabeth Suzann founder Elizabeth Pape. Their discussion included the start-up story of the company, a fascinating exegesis of the price of an Elizabeth Suzann garment, and the practice of shopping ethically.

I hope you were as taken with this episode as I was. (And yes, I ordered a Georgia Tee, and I'll report back! And I want to know how many other new customers were created by the "EconTalk spike!"). Share your thoughts with us using the prompts below, or create your own...No matter how you choose to continue the conversation, we love to hear from you!

EconTalk April 24, 2017

Elizabeth Pape on Manufacturing and Selling Women's Clothing and Elizabeth Suzann

LizElizabeth Pape, founder of the women's clothing company Elizabeth Suzann, talks with EconTalk host Russ Roberts about starting and running her company--a manufacturer and seller of high-end women's clothing in Nashville, Tennessee. The conversation chronicles the ups and downs of her entrepreneurial story, the recent evolution of the women's clothing market, and the challenge of competition from lower quality, lower-priced products.


Time: 1:15:53

EconTalk April 20, 2017

Something's Rotten

big bank.jpg
"You don't have to know anything about tier 1 capital to know something's rotten..."

The ratio of the financial industry's profits to its percentage of the overall economy has increased dramatically in recent decades, and has been pointed to by many as a cause for concern. That theme holds in this weeks EconTalk episode, in which host Russ Roberts welcomes Rana Foroohar of the Financial Times to discuss her new book, Makers and Takers: The Rise of Finance and the Fall of American Business. While Foroohar and Roberts don't necessarily agree on the solution, both are adamant about the problems this trend poses.

As usual, we'd like to hear what you think. Share your thoughts with us on what should be done to better discipline financial markets, the relationship between Wall Street and Washington, or your own experiences in the industry or regulatory sphere. As always, we love to hear from you.

  1. What does Foroohar mean when she says the financial sector has gone from "greasing the wheels of Main Street capitalism" to becoming "the game in and of itself?"

EconTalk April 17, 2017

Rana Foroohar on the Financial Sector and Makers and Takers

makers%20and%20takers.jpg Journalist and author Rana Foroohar of the Financial Times talks with EconTalk host Russ Roberts about her book, Makers and Takers. Foroohar argues that finance has become an increasingly powerful part of the U.S. economy and has handicapped the growth and effectiveness of manufacturing and the rest of the economy.


Time: 1:03:45

EconTalk April 12, 2017

Everyday Tragedies

A special thank you to Alice Temnick for creating this week's Extra.

giving homeless.jpg Do you drop coins in a cup or hand a dollars to homeless people? Does this help that person or perpetuate the "problem"? Does it make you feel better because you are doing something? Have you wondered, as Erica Sandberg and Russ Roberts do, if there is a better way to address this uncomfortable political and social issue?

Podcaster and writer Erica Sandberg talks with EconTalk host Russ Roberts about homelessness in San Francisco. Sandberg talks about what the city can do about homelessness and her experience with Downtown Streets Team, which gives homeless people in the Bay Area the chance to work in exchange for gift cards that let them buy food and other basics.

Share your thoughts with us about this model or any other private organizations you are aware of that are addressing issues of homelessness. We love to hear from you!

  1. A common misconception or description of homelessness is the number of women and children "on the streets". But Sandberg argues that this is not what we are seeing, that the face of homelessness predominantly one of a single male often representing behaviors of substance abuse and/or mental illness. Is this consistent with your first hand observations or second hand information of the problem?

EconTalk April 10, 2017

Erica Sandberg on Homelessness and Downtown Streets Team

homeless.jpg Podcaster and writer Erica Sandberg talks with EconTalk host Russ Roberts about homelessness in San Francisco. Sandberg talks about what the city can do about homelessness and her experience with Downtown Streets Team, which gives homeless people in the Bay Area the chance to work in exchange for gift cards that let them buy food and other basics.


Time: 57:40

How do I listen to a podcast?


Size:26.5 MB

Right-click or Option-click, and select "Save Link/Target As MP3.

EconTalk April 6, 2017

I, Taxpayer

read lips.jpg What are you glad your tax dollars pay for? What are you upset your tax dollars pay for? These are just some of the questions this week's EconTalk guest, Vanessa Willamson of the Brookings Institution, asked a group of American adults. What she found about the way Americans think about their taxes may surprise you...

So let's hear about it. Have you read Willamson's new book, Read My Lips: Why Americans Are Proud to Pay Taxes? If not, will this week's episode encourage you to do so? How did this week's conversation influence the way you feel about paying your own taxes? Share your thoughts with us today...As always, we love to hear from you.

  1. The conversation begins with a discussion of some of the most common misconceptions Americans have about the taxes they pay. Which of these most surprised you, and why?

EconTalk April 3, 2017

Vanessa Williamson on Taxes and Read My Lips

Read%20My%20Lips.gif Are Americans overtaxed? How does the average American feel about the tax system and tax reform? Vanessa Williamson of the Brookings Institution talks with EconTalk host Russ Roberts about her book, Read My Lips. Williamson shares the results of her survey of American attitudes toward taxation and government spending. People misperceive much about who pays what and the structure of the tax system, particularly the payroll tax. But some of what appears to be errors--about foreign aid and government waste for example, come from the average person's definition of these terms being different from the narrow meaning.


Time: 1:08:39

How do I listen to a podcast?


Size:31.5 MB

Right-click or Option-click, and select "Save Link/Target As MP3.

EconTalk March 29, 2017

Midtown Mysteries

Why do we think of Manhattan as the land of skyscrapers? Have you ever really noticed the shape of the Midtown skyline? EconTalk host Russ Roberts has, and he's been perplexed. So this week he welcomed Jason Barr to the program to discuss his new book, Building the Skyline: The Birth and Growth of Manhattan's Skyscrapers. There are very few skyscrapers between City Hall and 34th Street, but it's probably not because of some of the reasons often cited.

Let us know your reaction tothis week's episode. Share it with your students, your friends, your family, and let's keep the conversation going. As always, we love to hear from you.

  1. What did "sprawl" look like in the early days of Manhattan? What was the (perhaps ironic?) role that public transportation played in this phenomenon?

EconTalk March 27, 2017

Jason Barr on Building the Skyline and the Economics of Skyscrapers

fBuilding%20the%20Skyline.jpg Why does the Manhattan skyline look like it does with incredible skyscrapers south of City Hall then almost no tall buildings until midtown? Jason Barr of Rutgers University-Newark and author of Building the Skyline talks with EconTalk host Russ Roberts about the evolution of Manhattan as a place to live and work, and the mix of individual choices and government policy that created the skyline of Manhattan.


Time: 1:17:37

How do I listen to a podcast?


Size:35.6 MB

Right-click or Option-click, and select "Save Link/Target As MP3.