Category Archives: News

Economics Detective Radio Named One of the Top 25 Economics Podcasts of 2016

Economics PodcastsThe Intelligent Economist has named Economics Detective Radio one of the top 25 economics podcasts of 2016!

I look forward to making the show even better in 2017, so stay tuned!

If you haven’t subscribed to the show, be sure to do so. You can do it through the built-in Podcasts app on your iOS device, or through any podcasting app on Android (Player FM is free and good).

Predictions for 2016

This year I will be making a series of predictions about the future, and assigning each of them a probability. I was inspired to do so by Scott Alexander and Phillip Tetlock. Too many commentators make vague predictions about future events and then declare victory however things turn out. So, in the interest of holding myself to a higher standard than a fortune cookie or horoscope, here are my predictions for 2016:

World Events

  1. Canadian year-over-year CPI growth will be higher than it was in December 2015: 90%
  2. Canadian year-over-year CPI growth will be at least 2.0%: 60%
  3. American year-over-year CPI growth will stay below 1.0%: 60%
  4. American year-over-year CPI growth will stay below 2.0%: 80%
  5. Unemployment in the US will be lower than it was in December 2015: 60%
  6. Unemployment in Canada will be lower than it was in December 2015: 60%
  7. Canadian year-over-year real GDP growth will be lower in 2016 than in 2015: 70%
  8. American year-over-year real GDP growth will be lower in 2016 than in 2015: 60%
  9. Iranian year-over-year real GDP growth will be higher in 2016 than it was in 2015: 80%
  10. The S&P 500 will end 2016 lower than it started: 60% (note that I am making this prediction on January 26th, and it has already fallen since January 1st)
  11. The price of crude oil will be above $35 USD at the end of 2016: 70%
  12. The price of crude oil will be above $30 USD at the end of 2016: 90%
  13. The price of Bitcoin will be above $400 USD at the end of 2016: 70%
  14. The Canadian Federal Government will not decriminalize marijuana: 90%
  15. The US Federal Government will not decriminalize marijuana: 99%
  16. At least one more US State will decriminalize adult use and cultivation of marijuana: 60%
  17. Donald Trump will not win the Republican nomination: 60%
  18. Conditional on Trump winning the nomination, voter turnout as a percentage of the voting age population will be higher than it was in the 2012 presidential election: 90%
  19. Conditional on Trump losing the nomination, voter turnout as a percentage of the voting age population will be lower than it was in the 2012 presidential election: 60%
  20. Hillary Clinton will be the Democratic nominee: 80%
  21. Hillary Clinton will be elected President: 60%
  22. ISIS will hold less territory than it did at the beginning of 2016: 90%
  23. ISIS will lose Raqqa: 60%
  24. The Force Awakens’ worldwide gross will exceed that of Titanic: 80%
  25. The Force Awakens’ worldwide gross will not exceed that of Avatar: 80%
  26. No 2016 movie will gross more than The Force Awakens: 90%
  27. Leonardo DiCaprio will finally win an Oscar: 90%

Continue reading Predictions for 2016

Finland to Introduce a Basic Income

Finland has plans to scrap its welfare state in favour of a universal basic income of 800 Euros.

While it may sound counterintuitive, the basic income is intended to encourage more people back to work in Finland, where unemployment is at record levels. At present, many unemployed people would be worse off if they took on low-paid temporary jobs due to loss of welfare payments.

Detractors caution that a basic income would remove people’s incentive to work and lead to higher unemployment.

The article doesn’t say who those detractors are, but they are wrong. When economists claim that welfare removes people’s incentive to work, it’s not because receiving cheques from the government automatically makes one lazy. It’s because they take those benefits away when you earn more. Continue reading Finland to Introduce a Basic Income

New Study Finds Strong Evidence of Male-Female Brain Differences

Perhaps you’ve heard about a precocious study making the rounds about the differences between male and female brains. Perhaps you’ve noticed it reported under headlines like, “Stereotypically ‘male and female brains’ aren’t real, say scientists” or “Brains aren’t actually ‘male’ or ‘female,’ new study suggests” or “Scans prove there’s no such thing as a ‘male’ or ‘female’ brain” or “Male brain vs. female brain? Research says they’re unisex” or “There Is No Difference Between Male and Female Brains, Study Finds” or “There’s no such thing as a ‘male brain’ or ‘female brain,’ and scientists have the scans to prove it” or “Men are from Mars….and so are women! Scans reveal there is NO overall difference between the brains of the sexes” or “A welcome blow to the myth of distinct male and female brains.”

I could go on, but I won’t. Given all these headlines, it might surprise you that the study all these journalists are reporting on actually finds strong evidence of differences between male and female brains. The study is “Sex beyond the genitalia: The human brain mosaic” by Daphna Joel et al. (and that’s a big et al!). It’s sadly behind a paywall, but here’s its abstract in full:

Whereas a categorical difference in the genitals has always been acknowledged, the question of how far these categories extend into human biology is still not resolved. Documented sex/gender differences in the brain are often taken as support of a sexually dimorphic view of human brains (“female brain” or “male brain”). However, such a distinction would be possible only if sex/gender differences in brain features were highly dimorphic (i.e., little overlap between the forms of these features in males and females) and internally consistent (i.e., a brain has only “male” or only “female” features). Here, analysis of MRIs of more than 1,400 human brains from four datasets reveals extensive overlap between the distributions of females and males for all gray matter, white matter, and connections assessed. Moreover, analyses of internal consistency reveal that brains with features that are consistently at one end of the “maleness-femaleness” continuum are rare. Rather, most brains are comprised of unique “mosaics” of features, some more common in females compared with males, some more common in males compared with females, and some common in both females and males. Our findings are robust across sample, age, type of MRI, and method of analysis. These findings are corroborated by a similar analysis of personality traits, attitudes, interests, and behaviors of more than 5,500 individuals, which reveals that internal consistency is extremely rare. Our study demonstrates that, although there are sex/gender differences in the brain, human brains do not belong to one of two distinct categories: male brain/female brain.

Continue reading New Study Finds Strong Evidence of Male-Female Brain Differences

The Tyee Asks About Climate Change

I attended a Students for Liberty conference organized by my good friend Liz Jaluague and happened to speak to a reporter from The Tyee. We talked about many things, but she made climate change her focus when writing her article. Here’s my part:

Like Proenca, Garrett Petersen is conflicted about climate change. The PhD candidate in economics at SFU acknowledges climate change is a failure of the market or a “market externality” imposed on future generations.

“Obviously we can’t write a contract with them because they are not born,” he said, referring to instances where the polluter signs a contract with those impacted by pollution, like cap-and-trade systems where industries are allowed a certain amount of emissions.

“For climate change I would argue there is no perfect solution. It would be great if we could all come together in a perfectly utopian and altruistic way and decide how much carbon to emit,” he said.

But he believes neither governments nor private companies are better suited to making that decision: markets can’t bargain with future generations, and politicians only care about the time they’re in office — not how their actions will impact the next generation.

Continue reading The Tyee Asks About Climate Change

On the Political Economy of Native Tribes

My latest Mises Canada post is all about Native tribes:

Ludwig von Mises wrote that, “[d]emocratic control is budgetary control. The government has but one source of revenue—taxes. … But if the government has other sources of income it can free itself from this control.”[1] This principle is particularly important for understanding the internal politics of Canadian Native tribes, whose governments are the recipients of large transfers from the Canadian federal government.

A recent scandal involving the Squamish Nation, a Vancouver-area tribe with a population of about 4,000, is a case in point. Two political officials of the band spent $1.5 million from an emergency fund for their personal ends. According to the investigation that eventually exposed them, “it was clear they handed out funds to develop political support from members.” [2] The scandal derives from the fact that funds earmarked for one purpose, emergencies, were used for a different purpose. But the interesting economic story would nonetheless hold if the funds had been used only for their intended purposes.

According to its most recent financial statements,[3] the Squamish Nation earned $11.3 million from Aboriginal Affairs and Northern Development Canada, i.e. the Canadian Federal Government, and only $8.4 million from taxation in 2014. As Mises suggests in the quote above, a government with alternative sources of income besides taxation can use this income to free itself from democratic control. Robbing Peter to pay Paul is a favourite activity of all governments, but when the robbery occurs through taxation, it is at least limited by Paul’s awareness that he is being robbed.

Go read the rest at Mises Canada.

Hermione Granger, Capitalist?

J. K. Rowling has revealed in interviews what some of her characters went on to do after the close of the Harry Potter series. Unfortunately, they all became bureaucrats! Here is what she revealed about Hermione Granger’s future:

Hermione Granger

Hermione began her post-Hogwarts career at the Department for the Regulation and Control of Magical Creatures where she was instrumental in greatly improving life for house-elves and their ilk. She then moved (despite her jibe to Scrimgeour) to the Department of Magical Law Enforcement where she was a progressive voice who ensured the eradication of oppressive, pro-pureblood laws.

I think a lot of people see politics as the noblest and most altruistic career path. The world would be a better place if the misplaced respect for politicians was instead directed at entrepreneurs. A better epilogue for Hermione would go something like this:

Hermione began her post-Hogwarts career working in potion development. Her greatest creation was an elixir for the enhancement of non-pureblood wizards’ magical abilities. She used the wealth from this popular elixir to start a financial firm that specialized in extending loans to house elves and their ilk, allowing them to buy their freedom from servitude. Despite an extended legal battle with the Department for the Regulation and Control of Magical Creatures, Hermione’s firm became large and successful. She retired wealthy and comfortable, and when the history of house-elf servitude was written, the wizarding world remembered that over 60 per cent of freed house elves had bought their freedom with a Granger Capital loan.

There, now isn’t that better?

Archie Dies for Leftism

Well, that was unexpected:

Archie Andrews, a staple of American comics since 1941, will die in Wednesday’s issue of Life with Archie. And he’ll say goodbye to the series with one last act of heroism: Archie will take a bullet meant for best friend Kevin Keller, the first openly gay character in his comic universe. In doing so, he’ll foil an assassination attempt against Keller and, according to the story’s creators, give rise to greater understanding and tolerance in his fictional town of Riverdale. The final issue arrives as many Americans continue to work tirelessly on behalf of gay rights and to extend marriage equality across the US.

“He dies selflessly,” said Jon Goldwater, Archie Comics publisher and co-CEO, speaking to the Associated Press. “He dies in the manner that epitomizes not only the best of Riverdale but the best of all of us.”

That’s a little dark for a comic book about teen romance and hamburgers, but OK. I hope the creators would agree that dying selflessly for a friend would still qualify as a noble act regardless of the friend’s sexual orientation, race, religion, or gender. Continue reading Archie Dies for Leftism

American Apparel Demonstrates a Fundamental Principle of Capitalism

The American Apparel board of directors has ousted the company’s founder. The company stock jumped up nearly 20% on the announcement. Contrary to what we see in the movies, being a successful founder of a big company does not entitle one to kick back, smoke cigars, and let the profits roll in. Dov Charney had some innovative ideas about clothing and about turning a small enterprise into a global chain, but his personal failings became damaging, so he had to go.

An interesting question to ask is “who works for whom?” A week ago we might have thought that American Apparel worked for Charney, and not the other way around, but we would have been wrong. The board that fired him is itself beholden to the shareholders; the old share price (before the 20% jump) was the result of investors restricting their investments in the company because its bad CEO made it less appealing than some alternative investments. And who are the shareholders beholden to? Continue reading American Apparel Demonstrates a Fundamental Principle of Capitalism

How Do We Know (That The Minimum Wage Hurts Workers)?

Airplane Takeoff
One thousand internet points to the commenter who can correctly identify this image!

Here’s a conversation between a reporter and one of the alleged beneficiaries of Seattle airport’s $15/hour minimum wage:

“Are you happy with the $15 wage?” I asked the full-time cleaning lady.

“It sounds good, but it’s not good,” the woman said.

“Why?” I asked.

“I lost my 401k, health insurance, paid holiday, and vacation,” she responded. “No more free food,” she added.

The hotel used to feed her. Now, she has to bring her own food. Also, no overtime, she said. She used to work extra hours and received overtime pay.

What else? I asked.

“I have to pay for parking,” she said.

This may have come as a surprise to some, but not to those of us who are familiar with economic theory. The minimum wage hike here was large and sudden, so the impact was dramatic and visible. Continue reading How Do We Know (That The Minimum Wage Hurts Workers)?