Congratulations to Russ Roberts! I look forward to seeing what’s coming up next.

HT: A.J. Green

I would argue that the answer is not as simple as yes or no. One should look at whether college admissibility and graduation standards have changed to increase enrollment and graduation rates. One could actually go back to K-12. Politicians around the world are well aware of social benefits of a high school and college education and they have made tremendous efforts to subsidize education at every level. However, my non-informed opinion is that these subsidies were by and large tied to results: admission rates, enrollment rates, graduation rates, etc. Well, a lot of these rates are tied to standards. If to reach these rates that will guarantee subsidies or government support, institutions have lowered their standards, encouraged grade curving leading to grade inflation, making exceptions, etc., the REAL value of the education in terms of productivity signal sent from the graduates to prospective employers and in terms of screening to distinguish high from low productivity workers for employers is pretty much zero because standards have changed and not only at the college level, across the board.

A good analogy in my opinion is monetary inflation. In theory, you are rich, in reality, you are still poor because, while you have more money in pocket, the price inflation makes your purchasing power the same, if not lower, than before.

Either way, this is not a problem specific to the United States, in Europe, they have the same problem and, like in US, it started with K-12 and progressively moving to College.

I wrote my dissertation on insider trading and corporate governance. The literature, theoretical and empirical, on insider trading is just plain huge and with time I came to slightly change my opinion on insider trading. I am not necessarily as convinced as before that insider trading should not be prohibited. True, one can argue that insider trading has benefits (improve informational efficiency of the markets, move capital towards more valuable uses, etc.) but it does have costs such as increasing agency and capital costs and decreasing liquidity. Today, I am not as certain as I was before that the benefits exceed the costs. Actually, I am inclined to think that insider trading costs exceed its benefits. However, it does not mean that the prohibition of insider trading and its enforcement should be left to the government, the Department of Justice, or the SEC. I believe that corporations and stock exchanges should decide whether or not insider trading should be prohibited on their markets AND investors will decide whether or not they wish to invest in these companies or markets that allow insider trading. Ultimately, the competitive process will help firms and markets discover what are the most effective institutional rules that will lead to healthy, broad, and efficient markets.

Allan Meltzer is the author of A History of the Federal Reserve, Volume 1: 1913-1951 (2002), A History of the Federal Reserve, Volume 2, Book 1, 1951-1969 (2009), and A History of the Federal Reserve, Volume 2, Book 2, 1970-1986 (2010) published at the University of Chicago Press.

I highly recommend Meltzer’s books to any student of money & banking and anybody who has any interest in this aspect of U.S. Economic History.

“Everyone wants to live at the expense of the state. They forget the state wants to live at the expense of everyone.” —Frederic Bastiat (1801–1850) Assuming Bastiat is correct, what ideas or reforms could be developed that would make people better aware that government wants to live at their expense?

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The Sir John M. Templeton Fellowships Essay Contest encourages college students and young college professors around the world to study the meaning and significance of economic and personal liberty.

Co-sponsored by the John Templeton Foundation and the Independent Institute, the essay contest honors Sir John M. Templeton and is held annually with a different topic each year.

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Israel Kirzner is more than a scholar and a teacher, he’s a Master. My students have already received an email urging them to watch the video and so should you!

HT: Steven Horwtiz at The Austrian Economists

http://www.usdebtclock.org/

The important parts are obviously the US National Debt, the Medicare/Medicaid liabilities, the Social Security liabilities, and the Prescription Drugs liabilities. How do you think all of this will look like if the U.S. adopts some kind of Universal/Socialized Healthcare system?

HT: Art Carden

The op-ed basically repeats what I wrote in the paper. The adult film industry, given the market constraints, i.e., consumers rather watch movies without condoms than with condoms, is doing a pretty good job in preventing HIV outbreaks. If consumers do not want to see condoms in the picture, what’s the best next alternative: systematic testing. Since 1998, the adult film industry requires its performers and wannabe performers to be tested monthly with PCR-DNA HIV test instead of the standard ELISA test. Since 1998, there has been only one major outbreak where one performer infected three female performers. All the other cases of active performers testing positive for HIV have been detected prior to the performers being able to infect other performers.

Health officials and other commentators think that this new recent case is another evidence of self-regulation failure on the part of the industry. To my knowledge, this performer has not infected anybody else and, instead of viewing this as a failure, one should see this a success. Adult Industry Medical Healthcare Foundation discovers the performer testing positive prior to her infecting other performers.

Ultimately, the problem is not that the adult film industry does not want to use condoms. If using condoms were profitable, meaning, if consumers were indifferent between watching movies where condoms are being used as opposed to condoms not being used, this would not be a problem. Unfortunately, this is not the case.

Health officials want to mandate condoms. This is a very bad idea. Condoms should indeed be used and performers should be encouraged to use condoms, which, after all, do reduce risks of transmissions. But, if condom use were to be mandated through a regulation, the unintended consequences and associated costs would likely outweigh the benefits. I would go as far as to contain that imposing condoms would likely lead to more HIV outbreaks in the industry.Industry would go underground or just relocate outside California or outside the country, outside the reach of the government hand.

Government should learn from the prohibition era and the war on drugs. During the prohibition era, morality and health arguments were advanced to justify the prohibition of alcohol. What happened? Unintended consequences forced the government to repeal the prohibition. One thing the government should learn is that market forces can be hampered, slowed down but they can NEVER be stopped.

Good intentions just don’t guarantee good results. Bastiat wrote an essay called What is seen and What is Not seen. As an economist, you can’t simply focus on what is seen, you must also go further and examine the possible unintended consequences of a policy before you can pronounce any conclusions. This is a long tradition among economists to analyze the unintended consequences of economic well-intended policies. Coase, in a similar tradition, explained that as long as we do not understand that we are making choices between institutional arrangements that are more or less perfect, we are not going to make much progress.

The L.A. medias have overall rejected my op-ed. Maybe I was unable to convey clearly the message but I doubt this was the real reason.

HT: Art Carden