I went to work for the Federal Reserve in 1992 and the United States entered its greatest economic expansion in the 20th century. I left the Fed in 1999. Little more than a year later, the economy was spiraling into…
Category: Other
Can there be too much information?
Minnesota Gov. Tim Pawlenty’s call for a federal ban on advertising prescription drugs raises an intriguing question that sharply divides economists. Would society be better off if pharmaceutical companies were barred from placing commercials and ads that extol the benefits…
Mother Nature has final word on crop profits
This summer’s drought is gripping an increasingly large portion of the nation. That is good news for my former neighbors in extreme southwestern Minnesota where I grew up. They saw good rainfall in June so their crops still are in…
Fed is shielded from politicking
The important lesson from Federal Reserve news this week is a fundamental one: Our central bank system basically works well. Regardless of Fed Chairman Ben Bernanke’s testimony before Congress or what the Fed’s Open Market Committee decides in three weeks,…
Hard work alone won’t yield wealth
Which is more important in determining a person’s financial success, individual initiative or the economic environment? It’s an old debate, but the performance of our cherry trees this year provides a good illustration. We have two trees, both of the…
Drug-plan confusion wastes resources
Economists have been slow to recognize the importance of information to efficient resource use. Reliable information is valuable. It generally takes resources to assemble. Inaccurate information is costly because it fosters bad decisions that waste resources. A recent government Medicare…
Demand for product has domino effect
The effects of booming U.S. demand for ethanol and Asian imports work their way backward through the economy. Economists call this phenomenon “derived demand,” and a textbook example is the humble hamburger. Increased consumer willingness to buy burgers elevates demand…
Taxi limits hurt poor
Restrictions on the number of taxicabs in a city hurt society as a whole and are particularly harmful to the poor. They benefit a small number of already well-off people. That many cities still have such restrictions is testimony to…
Sometimes, good law is bad economics
I thought I had heard of just about every injunction under the sun, but a news story this week made my jaw drop. A federal judge temporarily forbade the Veterans Affairs Department from publicizing an offer of free credit monitoring…
Fed needs steady hand on helm
Give Federal Reserve Chairman Ben Bernanke a good shave and he’d look a lot like British Adm. John Jellicoe. The resemblance doesn’t end there: Jellicoe was bright, confident and self-effacing, and so is Bernanke. This reassures me when I think…