Okay, so it's been awhile . . .

but I've had some reasons, maybe even good reasons, for neglecting this blog. First among those reasons is that I spent the spring semester at Harlaxton College as a visiting professor, which was a fabulous experience. And rather than duplicate my wife's efforts at blogging (which you can see at alnemgrant.com), I chose not to blog at all. The second reason is that much of my spare writing lately has been devoted to a textbook project that appear to be heading forward. I'm planning to share some thoughts and updates about that process here in the days, weeks, and months to come.

Pilgrims' Progress

Next week marks my forty-fourth Thanksgiving holiday. I have much to be thankful for -- a terrific family, a job, some savings, a comfortable life. I was lucky to have been born in the greatest country on the planet, in a place where individual initiative often brings wonderful rewards.

But things were not always that way in America, and I thought it might be useful to look back at the Pilgrims' first few years, years when there was little enough to be thankful for. Those years were, in a word, bleak. By the end of  the first winter, half the colonists had died, victims of disease and starvation. And while historians often credit the weather for those disastrous first years, a look back through the economist's lens reveals the true source of the economic chaos that reigned: the lack of private property.

Upon landing in the new world, the Pilgrims quickly established communal ownership of all pastures, and communal ownership of all agricultural production. As any introductory student of economics could predict, the result was underproduction and overconsumption, a net shortage of food. 

How, then, did the Pilgrims achieve their first bountiful harvest? Governor William Bradford, noting that communal ownership "was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort," assigned each family a parcel of land to do with as they pleased. Bradford writes, "This had very good success, for it made all the hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use . . . "

Bradford's recipe worked, and it worked well. It was so successful that, as abhorrent as private property was to communist leaders, country after country in the communist bloc relied on similar schemes to feed their people. In the Soviet Union, private garden plots accounted for less than four percent of arable land, but were responsible for a third of total Soviet agricultural production.

Private property encourages harder work, smarter work, and more useful work. It encourages it through the promise of reward commensurate with effort, vision, and intelligence. Sometimes, of course, working harder or smarter fails to bring those rewards. Perhaps one's timing is wrong, or the market misunderstood. But private property gets it right more often than not, and it is only the system of private property that contains the promise of ever richer and more bountiful Thanksgivings to come. So this Thanksgiving, raise your glass to private property. It's earned your thanks .

I believe that universities should hire people with Ph.D.s not because they want people who have achieved distinction in the past, but because they want people who will achieve distinction in the future.

It's the thought that counts . . .

Why spend perfectly good money on a gift someone will hate when you can find something they'll hate just as much in your own basement?

I believe that when a university becomes unable to staff its course offerings to the point that students are regularly enouraged to fulfil their requirements at a different institution, that university is being overly ambitious in both its course offerings and its requirements.

I Know It Pisses You Off, But

Last week, former Chairman of the Council of Economic Advisors and current Harvard University professor Greg Mankiw asserted that if the Obama administration rolled back the Bush tax cuts, he might no longer write a column for the newspaper. After taxes, there simply isn't enough reward in it. This, of course, has infuriated those who support the tax increase; one colleague of mine (and a colleague that I respect, like, and appreciate) responded with a resounding, "Oh, what a freaking selfish prick is Mankiw . . . "

And my friend may be right (though I cannot claim to have knowledge whether Mankiw is either freaking or selfish or a prick), but my friend misses two very important points. First, whatever he thinks of Mankiw and his selfishness, Mankiw is demonstrating that actions have consequences--if you increase the tax on an activity, you'll get less of it. Study after study has demonstrated that even addictive behaviors like smoking respond predictably to taxation. And so, if you increase the tax on being wealthy, which often follows as a result of taking unusual risks or having extraordinary talents, then you'll get fewer people taking risks and fewer people exercising their talents. And it should not come as a surprise that the rich are more sensitive to tax changes--increase income taxes on someone whose budget is tight, and they'll still go to work every day. But the rich, with income beyond their needs, have the luxury of simply reducing their effort with little consequence for their lifestyle.

In other words, Mankiw is purposefully and pointedly, through his actions, making the larger point that there are thousands and thousands of people at the top of the income ladder whose behavior will mimic his own. And perhaps these people, too, are all freaking selfish pricks. But that's out of your hands, my friend, and irrelevant for policymakers who must, when designing policy such as a tax increase, account only for the rich's behaviors and not their attitudes. Raising taxes will reduce investment and innovation and activity, and you may not like that, but it is what it is. No matter how much lipstick you put on a pig, it's still a pig.

The second point that eludes my friend, when he calls Mankiw a selfish freaking prick for cutting back work when taxes rise, is this: It's. Not. Your. Money! My friend wants Mankiw to continue working, regardless of the cost or benefit to Mankiw. And he wants this not because it does Mankiw any good, but because when Mankiw works, my friend receives the benefits Mankiw's taxes provide. And so my friend asks Greg Mankiw, who is no stranger to hard work, to work some more and pay some more so that my friend can pay less.


And so, dear friend, I ask the same of you. If you really believe that it's okay to ask Mankiw to work out of the goodness of his heart so that your life can be a bit easier, then it seems only fair that you to sacrifice your evenings and your weekends and take a job at the Home Depot or Baldwin City Market so that others' lives would be easier. And make it a low-paying job, please, or donate your salary to the federal government, because I want you to know in your heart that you are not working for the money it brings you (lest someone have the temerity to call you a freaking selfish prick), but so that the taxes you earn can be put to good service helping those below you on the income ladder.


In the end, it's not really the money we're talking about, it's the work. Mankiw wishes to work less, and you condemn him for it. If you are to point an accusing finger at those richer than you who don't wish to fill their every waking moment with work on your behalf, then you must also be willing to stand in their shoes and fill your every waking moment with work on behalf of those poorer than you.

The President's Right-hand Man has resigned . . .

Not Joe Biden, but Lawrence Summers, his chief economic advisor. Summers will return to Harvard, where he has a professorship in economics, and where more famously he was pressured to resign as president after making some much-misinterpreted comments about the abilities of men and women in science.

Summers has had a distinguished academic career (it does take some qualifications to get tenure at Harvard, after all), and is known predominantly as a macroeconomist. Perhaps this is why he was tapped to serve as Treasury Secretary under Clinton. But one of the pieces of his work (with Andrei Schleifer and Lawrence Katz) I find most interesting cuts to the core of family relations: how often children visit their parents in nursing homes.  Here is their work in a nutshell:

1) Children of rich parents visit more often than children of poor parents.
2) Result 1) holds only if there is more than one child.
3) In the instance of one-child families, there is no difference in visitation rates among rich and poor.

In other words, children visit their nursing-home-ridden parents because there's money on the line. But money is only on the line when there's competition for that money in the form of siblings.

Ah, family!