The next time somebody asks me why there have to be billionaires, I will point that person to this tweet from Elon Musk:

Musk went ahead and invested about $100 million in SpaceX and $6 million in Tesla — totaling about half of his proceeds from the sale of PayPal, in which he was an early investor.

Who invests $100 million in a project that has a 10% chance of success? Answer: Essentially nobody who doesn’t believe that success will bring a reward of at least $1 billion.

At the moment (and it’s been this way for quite a while), CNN has Amy Klobuchar 84 votes behind Pete Buttigieg, and 2.1% of the vote behind Pete Buttigieg. Which should mean that the total number of votes counted is about 4000. But Klobuchar and Buttigieg have about 11,000 each, and Bernie Sanders has more than that. None of the anchors seems even slightly perturbed by this.

I am quite unqualified to review Bryan Caplan’s blockbuster The Case Against Education, by virtue of the fact that I have not (yet) found time to read all of it. But I think I have a pretty good idea what’s in it, and an even better idea of what others are saying is in it. So this will be a review not of Bryan’s book, but of the various paraphrases that are floating around the internet. Those paraphrases might or might not be accurate representations of Bryan’s thinking, but they deserve to be treated as arguments in their own right. So this will be a review of those arguments.

Continue reading ‘The Case Against The Case Against Education’

I have some questions about how money works.

I’ll start by talking about Bitcoin, though my questions are more general than that.

As you are probably aware, Bitcoin is a cryptocurrency that is currently trading for US Dollars at the rate of (depending on the exact moment when you’re reading this) somewhere between $15,000 and $20,000 per Bitcoin.

As you are somewhat less likely to be aware, Bitcoin Cash is another cryptocurrency that is currently trading for US dollars at the rate of something less than $2000 per Bitcoin Cash token. Despite the similar name, Bitcoin Cash is (now) entirely separate from Bitcoin. It originated in a “hard fork”, where each holder of Bitcoin was given an equal amount of Bitcoin Cash for free (so if you were holding, say 50 Bitcoins, you got 50 Bitcoin Cash tokens). After the fork, the two currencies have evolved, and will continue to evolve, separately.

The technology of Bitcoin Cash is very similar to the technology of Bitcoin. It offers the same sorts of anonymity, security, and so forth. There are some reasons to believe that in the future, Bitcoin Cash will be a bit easier to trade than Bitcoin (though that is not true in the present), and there are some other technological differences between them, but I’d be surprised to learn that those differences are accounting for any substantial fraction of the price differential.

The total supplies of Bitcoins and of Bitcoin Cash are currently about equal (because of the way that Bitcoin Cash originated). In each case, the supply will gradually grow to 21 million and then stop.

Continue reading ‘Matters of Money’

It was a pleasure and an honor to reminisce about Dee McCloskey for the Festschrift volume just released by the University of Chicago Press. It was less of a pleasure to discover that the U of C Press had ignored all the editorial corrections I sent them.

If you run into this volume, please don’t read my chapter. Read the corrected version here instead.

I realize I’m overdue to announce the winners of the crossword contest from last week. I promise to get to this before the weekend!

These were the posted prices at my local gas station this morning:

(Note the 5 cent discount for cash on regular and premium, as opposed to the 65 cent (!!!) discount on plus.) Unless this was just a mistake, my complete inability to explain it makes me question whether I should be allowed to teach economics.

Continue reading ‘I GIve Up’

Thus the headline in today’s New York Times. Well, the Tea Party was nice while it lasted.

I tried listening to Mitt Romney on the radio Sunday morning, but after a few minutes it just got too depressing.

Here’s what I heard in that few minutes:

1) We need to maintain defense spending because (among other reasons) it “creates jobs”. If Mitt Romney does not understand that the creation of jobs — i.e. the consumption of resources that could be valuably employed elsewhere — is the downside of defense spending, then he has no better chance of “fixing the economy” than a blue-bottomed monkey.

2) It is “immoral” for us to “pass on debt” to future generations — future generations who will almost surely be richer than we are. Note that in this context, “pass on debt” means exactly the same thing as “leave a smaller inheritance”. So Romney’s view is that there’s a moral imperative for the relatively poor — namely us — to transfer income to the relatively rich — namely our grandchildren. What’s interesting about that is that Romney is already on record in favor of a more progressive tax code, the sole purpose of which is to transfer income in the opposite direction — from the relatively rich to the relatively poor. (More precisely: Romney would tax capital income at a lower rate for the “middle class” than for the “rich”. Since there is no conceivable efficiency-based justification for such a policy, his position can only indicate a pure preference for rich-to-poor redistribution.) Either Romney has just declared himself immoral, or he’s just spouting random words. (Or, just possibly, he has a good argument for why we have a moral obligation to redistribute from the rich to the poor in some situations but not others. I would like to hear him articulate that argument.)

Continue reading ‘The Other Dunce’

The all-new revised edition of The Armchair Economist is now available in a Kindle edition (as well as paperback) here.

As of this writing, the Amazon page still says you are buying the 2007 version, but that’s wrong. The version you’ll get is the new 2012 version.

Barnes and Noble still has the 1993 version for the Nook. This will be fixed in a day or two.

This morning’s probability puzzle, as originally posted, contained a remark at the end saying For extra clarity … “the medicine killed him” should be interpreted to mean that if he hadn’t taken the medicine, he wouldn’t have died.

I’ve realized that for some readers that wording might be subtracting more clarity than it’s adding. It is, however, correct as originally stated.