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Negative Balance of Trade? So What?

Although the topic may appear daunting, the essence of the matter is utterly simple. As a fair approximation, each international transaction, whether it be buying, selling, borrowing, or lending across a national border involves a willing party on each side—importers want to purchase goods from sellers abroad, lenders want to lend to borrowers abroad, and so forth. Each party to the transactions expects to benefit by entering into it. In a sane and just world, that would be the end of the matter. continue reading

Think of All the Jobs Central Heating Destroyed

Central heating – along with running water, electricity-powered household appliances such vacuum cleaners, ranges, refrigerators, and freezers (with the latter later becoming self-defrosting), commercial dairies, inexpensive prepared foods, and other modern conveniences – released women from the dullness of housewifery so that they could contribute their skills to strangers in commercial markets (and, of course, earn extra monetary income from these contributions). continue reading

It’s Either Bullies or Balance Sheets

A wise man once told me that in this life, you can obey balance sheets or bullies. In the end, those are the only two paths. He was drawing attention to an unavoidable reality in a world of scarcity. All scarce things must be allocated among competing ends. This can be done top-down by people in control, or it can be accomplished bottom-up with the signaling system that emerges from voluntary exchange. The two approaches don’t mix well. continue reading

How Econ Textbooks Sanitize the Horrors of Communism

When I was first learning economics, I was surprised by how pro-communist many economics textbooks were. I don't mean, of course, that any economics textbook ever said, "Communism is good." What I mean, rather, is that textbooks were very positive relative to communism's historical record. Indeed, many seemed deeply ignorant of actual communism, basing their assessment on second-hand information about communists' stated intentions, plus a few anecdotes about inefficiencies. Many textbook authors were, in a phrase, communist dupes: Non-communists who believe and spread a radically overoptimistic image of communism. continue reading

What Are the World’s Three Biggest Problems?

Are you a serious thinker? Then self-consciously change the subject to the Big Picture.What can be done to mitigate the media's policy misdirection? I suggest we start the New Year with what I call the Priority Resolution. Are you a serious thinker? Then step back from the media cycle and name the world's Three Biggest Problems. Instead of trying to score points over the latest exciting story with colorful characters, let us self-consciously change the subject to the Big Picture. continue reading