in a survey of crime and policing that Jon Klick and I wrote in 2010 we found that a cost-benefit analysis would justify doubling the number of police on the street. We based our calculation not only on our own research from Washington DC but also on the research of many other economists which together provide a remarkably consistent estimate that a 10% increase in policing would reduce crime by 3 to 5%. Using our estimates, as well as those of some more recent papers, the Council of Economic Advisers also estimates big benefits (somewhat larger than ours) from an increase in policing. Moreover, what the CEA makes clear is that a dollar spent on policing is more effective at reducing crime than a dollar spent on imprisoning.
Monthly Archives: May 2016
Book Review
A Comeback for Fish?
An NYT story credits a policy called catch shares.
Under this system each boat is given a long-term share (say, 5 percent) of the total annual quota, to give the fleet a strong vested interest in rebuilding fish stocks. As Lubchenco explains: “If you have 5 percent of the pie, you’d like to see the pie grow.”
And here is Alex Tabarrok on technology that could help.
I am on econtalk this week
Alan Blinder on Trade
Every month roughly five million new jobs are created in the U.S. and almost that many are destroyed, leaving a small net increment. International trade accounts for only a minor share of that staggering job churn.
Pointer from John Cochrane.
One wishes that such an op-ed were not necessary, but this is an election year.
George Selgin on Monetary Theory and Policy
He has begun work on a primer. In the first entry, he writes,
Central banks are, for better or worse, responsible for seeing to it that the economies in which they operate have enough money to operate efficiently, but no more. Shortages of money wastes resources by restricting the flow of payments, making it hard or impossible for people and firms to pay their bills, while both shortages and surpluses of money hamper the correct setting of individual prices, causing some goods and services to be overpriced, and others underpriced, relative to others. Scarce resources, labor included, are squandered either way.
I am going to raise an issue with this, but keep in mind that this is an issue I have with conventional monetary theory–it has nothing personal to do with Selgin.
I do not believe that the central bank can set the money supply. Instead, think in terms of Hyman Minsky’s aphorism: anyone can create money; the trick is getting it accepted.
Consider what is accepted as money these days: among consumers and retailers, credit cards and Paypal are accepted. In the “money market” where banks and Wall Street firms trade, government securities are sufficiently liquid to act as money.
With all of these alternatives available, it is difficult for the central bank to create a shortage of money. in response, people can just make a bit more use of the alternative methods.
Creating a surplus of money is possible, if the central bank wants to turn the printing presses loose. But small increases in what the central bank supplies will more probably be met by small decreases in the use of alternative payment systems, leaving no net effect on prices.
Again, mine is not a standard view.