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Keep Up With the Week’s Events on the Blog, Twitter, and Instagram

July 18, 2014 in Economics

By Ryan McMaken

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We’ll be regularly updating you on upcoming talks and events all week during Mises University beginning Sunday evening. See here for the free live video feeds, and the Twitter feed, and the Instagram feed.

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Source: MISES INSTITUTE

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Mark Thornton on the Scott Horton Show

July 18, 2014 in Economics

By Ryan McMaken

Mark Thornton discusses his article “How the Drug War Drives Child Migrants to the US Border.”

Audio file, 22 minutes.

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Source: MISES INSTITUTE

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The Trouble with Pop Economics

July 18, 2014 in Economics

By Matt McCaffrey

Freakonomics

John Lott writes in Barron’s that we should be sceptical of the populist economics trend that’s been prevalent in the past few years. Specifically, Lott criticizes Steven Levitt and Stephen Dubner, authors of Freakonomics, for peddling a kind of “naïve economics” that fascinates readers, but doesn’t hold up to serious scrutiny (rather than “naïve economics,” maybe “economics for the naïve” would be better).

I’ve been working through some similar ideas myself, especially in a new paper criticizing aspects of the pop econ literature. I should point out that these books—including Freakonomics and its many imitators—do have a reasonable goal, namely, to bring the economic point of view to the general public. Now, the fact that economics needs a special literature to explain its ideas to the public is telling, and to some extent an indictment of how the profession has developed (e.g. into an abstract and often excessively technical discipline). Still, as writers like Hazlitt show, it’s a great advantage to be able to communicate economic ideas simply and powerfully. But while in general we should welcome economic writing for non-economists, too often pop econ forgets to stop when descending the ivory tower, and ends up on the intellectual parking sublevel.

Of course, there is a lot that could be said for and against pop writings, which come in all shapes and sizes. But there are a few common threads in the literature that I think give a misleading view of what economics is fundamentally about. One of these is the tendency of pop writers to define economics as the study of incentives. This idea goes back at least to Steve Landsburg’s book The Armchair Economist (1993), which was basically the founding document of pop economics. As he puts it, “Most of economics can be summarized in four words: ‘People respond to incentives.’ The rest is commentary” (p. 3).

The same idea is repeated in other books in the pop genre. Freakonomics, for instance, states that “Incentives are the cornerstone of modern life. And understanding them—or, often, ferreting them out—is the key to solving just about any riddle” (p. 13; emphasis in original). The hyperbole about incentives is impressive: “An incentive is a bullet, a lever, a key: an often tiny object with astonishing power to change a situation” (p. 20).

The trouble with the incentive-based view of economics is that it is far too narrow. An incentive is …read more

Source: MISES INSTITUTE

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Jeff Deist and Will Grigg Discuss ‘Police State Keynesianism’

July 18, 2014 in Economics

By Ryan McMaken

Mises Weekends: Jeff Deist and Will Grigg discuss “police state Keynesianism,” how the once embryonic American police state became overt, how military equipment, personnel, and mindsets increasingly find their way into local law enforcement agencies, and why there are more than 100 SWAT deployments every day in the US.

Stitcher: http://www.stitcher.com/podcast/mises-institute/mises-weekends/episode/34836821

iTunesU: https://itunes.apple.com/us/itunes-u/mises-weekends/id884207568?mt=10

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Source: MISES INSTITUTE

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Was Ronald Coase an Austrian?

July 18, 2014 in Economics

By Per Bylund

Ronald H. Coase was one of the few very influential economists of the 20th century, and was awarded the “Nobel Prize” in economics in 1991. He was hardly an Austrian economist. On the contrary, he was a self-declared socialist – at least in his youth. But there is reason to believe he was well aware of Austrian theories while an undergraduate student at LSE in the 1930s (which was when he wrote one of his most influential articles, “The Nature of the Firm” published in 1937). This is when Hayek gave a series of lectures on capital theory and business cycles at LSE, and later the same year was made part of the faculty.

Coase notes in his reflective work that the whole department was affected by Hayek’s lectures and the content of the latter were part of the discussion among faculty and students for months. At the same time, it would be strange to assume that the leading figure in the department – Lionel Robbins, at the time somewhat of a Misesian – had no impact on Coase. We know that Arnold Plant, head-hunted and employed by Robbins (and mentioned as an Austrian in Hülsmann’s Mises biography), was the faculty member that influenced Coase’s thinking most. So there are several obvious “touch points” between Coasean thought and Austrian economics.

But there is more. Coase was obviously well aware of Mises’s argument against socialism, which he refers to in his 1937 article noting that “economists in the West were engaged in a grand debate on the subject of [economic] planning” (Coase, 1988, p. 8). This (and related) statements in Coase’s lauded 1937 article have been quite overlooked by scholars, but they may very well be important. In fact, as I elaborate on in an article in the September 2014 issue of the Journal of the History of Economic Thought, there is good reason to read Coase’s “The Nature of the Firm” as not primarily a treatise on economic organization in general – but a discussion on economic planning intended to support the market socialist argument in the Socialist Calculation Debate.

Coase not only positions his article in the great debate, but refers to Austrian arguments while seemingly relying on insights borrowed from Hayek’s lectures (but misunderstood). This apparent relationship between Coasean thought and the Austrian framework sheds new light on the modern theory of economic organization, which is often based on or even ”starts with” Coase. (The probably …read more

Source: MISES INSTITUTE

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Obama Says He Ended the "War on Drugs." Don’t Believe Him

July 18, 2014 in Economics

By Jonathan Blanks

Jonathan Blanks

If the Obama administration is to be believed, America’s infamous “War on Drugs” is over.

In its most recent National Drug Control Strategy, released last week, officials promised a more humane and sympathetic approach to drug users and addiction. Out, the report suggests, are “tough on crime” policies. Rather than more police and more prisons, officials talk about public health and education. They promise to use evidence-based practices to combat drug abuse. And they want to use compassionate messaging and successful reentry programs to reduce the stigma drug offenders and addicts face.

Unfortunately, the government’s actions don’t jibe with their rhetoric.

For decades, the White House’s Office of National Drug Control Policy (ONDCP) and its allies have used government resources to marginalize, stigmatize, and demonize drug users. There were the nonsensical ads like “this is your brain on drugs” and inexplicable demonstrations like torching cars and valued possessions. The ONDCP, Partnership for a Drug-Free America, the Ad Council, and Above the Influence portrayed small time dealers as snakes and users as rats.

They also showed drug use as a gateway to prostitution and, in the wake of 9/11, explicitly linked casual drug users to supporting terrorism and cop killing. The United States has spent millions stigmatizing drug use, sale and abuse — all before one even begins to calculate the costs to arrest, try, and incarcerate offenders for the past 40 years. This, of course, comes in addition to the stigma that comes with incarceration and criminal records.

The Obama administration says it wants to de-stigmatize drug addiction. But no matter how hard it tries, it’s virtually impossible to de-stigmatize behavior that is still a crime.

This is not yet a federal government willing to apply compassion, embrace evidence, and repudiate years of drug misinformation.”

And the administration is doing little to actually de-stigmatize drug use. Despite their supposed adherence to “evidence-based practices,” officials steadfastly refuse to consider legalization or decriminalization, even though the evidence unambiguously shows drug prohibition has been a disaster.

Prohibition-related violence has killed thousands in this country and multiples of that number more in supplier nations like Colombia, Mexico and Afghanistan. In the United States, incarceration rates have become so onerous (over 700 adults per 100,000) that research suggests they’re probably doing harm to society by pulling too many workers out of the economy, breaking up families and making offenders …read more

Source: OP-EDS