Economics: Microeconomics 
Essential
The Concise Encyclopedia of Economics (CEE)
This encyclopedia contains articles by leading economists on basic concepts, economic systems, schools of economic thought, macroeconomics, economic policy, taxes, money and banking, economic regulation, environmental regulation, discrimination, labor issues, international economics, corporations, financial markets, the marketplace, the economics of special markets, economies outside the U.S., and biographies of famous economists.
Selected Essays on Political Economy
By Frédéric Bastiat: "Bastiat directed his arguments against certain ever recurring fallacies as they were employed in his time. Few people would employ them today quite as naively as it was still possible to do then. But let the reader not deceive himself that these same fallacies no longer play an important role in contemporary economic discussion: they are today expressed merely in a more sophisticated form and are therefore more difficult to detect."- F.A. Hayek
Economic Sophisms
By Frédéric Bastiat: "Bastiat was not primarily an original economic theorist. What he was, beyond all other men, was an economic pamphleteer, the greatest exposer of economic fallacies, the most powerful champion of free trade on the European Continent."- Henry Hazlitt
Strangulation by Regulation
By Peter Van Doren: "Why are America's markets so heavily regulated? Regulation usually rides in the Trojan horse of "market failure"-the perception that a particular market does not (or will not) operate efficiently without government intervention. Yet regulation persists in spite of evidence that it does not enhance efficiency. Why?"
Opening the Door to the Economic Way of Thinking
By Russell Roberts: "Here are ten fundamental ideas to help you explore and understand the world around us using the economic way of thinking. "
Economics in One Lesson
By Henry Hazlitt: "This primer on economic principles brilliantly analyzes the seen and unseen consequences of political and economic actions. In the words of F.A. Hayek, there is "no other modern book from which the intelligent layman can learn so much about the basic truths of economics in so short a time."
Twenty Myths About Markets
Tom Palmer subjects popular fallacies about the market system to the critical scrutiny of economics and ethics.
Competition, Regulation, and the Market Process: An "Austrian" Perspective
By Israel M. Kirzner: "The point is that in questioning government regulation, the economist makes no claim for the ultimate moral benignity of market process, or of its results; the relevant issue is strictly the effectiveness with which the system serves the goals of its individual participants."
The Layman's Guide to Economics
Five easy lessons to master free market economics, without math or graphs.
Recommended
Degrees are No Substitute for Experience
Cato scholar Dan Mitchell analyses Obama’s track record on improving the economy. He notes that the Obama administration sets the record for having the least private sector experience. And, sad to say, their private sector inexperience has not been offset by their academic experience. In fact, the Obama administration has done a fairly good job doing exactly the opposite of what it claims to pursue. Mitchell states that for businesses to contribute to the economy, they need confidence that their efforts will be awarded and not punished or hindered – and taxes, restrictions, and bureaucracy are not the way to do that.
Are We Still 'Free to Choose'?
In a throw-back article on Milton Friedman's seminal work, 'Free to Choose,' John Stossel recounts the value of Friedman's 1980 argument and reasserts its relevance today. "If we are free to make our own choices, we prosper. That was a new idea to many back then," says Stossel, adding that 30 years later American and other nations "still have not learned Friedman's lesson." Stossel notes that of particular importance to the freedom to choose is being forced to suffer and live with consequences of one's choices. What, then, would Friedman have thought of America's recent propensity for bailouts?
The Great Prosperity Machine
Cato senior fellow Tom Palmer explains international trade in under three minutes. He explains that while many decry trade as unfair or harmful to a local economy, in fact, “Trade is like a machine that allows farmers to convert oranges into telephones, and allows factory workers to convert their products into oranges, clothes or whatever they want.” The benefits don’t stop there, as Palmer notes that “Peace is the natural effect of trade.”
Learn more about the French writer and economist, Frederic Bastiat, here.
Too Many Gov't Employees Getting Too Much money
Cato scholar Dan Mitchell discusses the explosion of public sector employment, pay, and benefits. Among other things, government jobs offer higher wages than the private sector, lower termination rates, greater pensions and earlier retirement, and extremely low attrition rates -- all at taxpayers' expense. Government is far too big, and it's costing far too much.
VAT Attack!
Politicians have begun to more frequently toss around the concept of a VAT, or value added tax. A VAT attempts to spread the cost of the tax across the production chain, resulting in a cumulative amount close to that of a national sales tax. Cato tax scholar Dan Mitchell comments that while a VAT has some virtue, the biggest problem with the proposed policies is that they do not attempt to replace current taxes with a VAT, they simply aim to add it. The deeper problem is that politicians will likely use the additional revenue not to reduce the burden on citizens, but will allocate it to special interests in order to buy votes and stay in office. Mitchell notes, “real-world evidence shows that VATs are strongly linked with both higher overall tax burdens and more government spending.” If the goal is to simplify government and eliminate waste, a VAT is definitely not the way to go.
Trade Deficit with China Not a Bad Thing
The Chinese currency – pegged artificially low against the U.S. dollar – has long been a topic of political debate, and with the current economic crisis some are claiming that the ensuing trade deficit hurts American jobs. Cato scholar Dan Ikenson dispels that myth by explaining how in the globalized economy the U.S. actually benefits from undervalued Chinese currency. He adds that “forcing China to appreciate its currency through sanctions will impose higher prices on American consumers, thereby reducing Americans' real incomes." The current situation allows Americans to benefit twice: once when purchasing inputs for production in the U.S., and again when purchasing final consumer goods from China. Our politicians should be aware that acting on impulse and not fact is setting us up for even harder economic times.
Price Controls Won't Help Healthcare
As President Obama resurrects healthcare reform, up from its grave in Massachusetts, his actions serve as a highlight real of his previous missteps on the subject. Cato scholar Michael Tanner offers several real world predictions of what might happen should Obama's policy actually pass the increasingly hesitant Congress. Tanner reminds that every action has a reaction, and that price controls set by government regulation will have unwanted effects. Furthermore, he notes that "limiting the prices that insurers can charge does nothing about the underlying costs of health care." Without substantative changes, Americans will end up with higher costs, less service and/or more debt. Thankfully, Tanner offers several recommendations for real reform.
Government Stimulus Caused Unemployment
"Why did the unemployment rate rise so rapidly... to 10.2 percent in October?" asks Cato fellow Alan Reynolds. "It was clearly the administration's 'stimulus' bill." Reynolds explains that the stimulus gave more money to states to fund unemployment benefits, which gave people the incentive to continue receiving government checks and not find work. In fact, top White House economist Larry Summers wrote a paper in 1995 that stated, "Unemployment insurance lengthens unemployment spells." So why would he enact the stimulus when he knew what would happen? Now that's a question worth exploring.
Feds Giveth Jobs & Cars, Then Taketh Away
Cato scholar Tad DeHaven discusses the announcement that both 'jobs created' and 'economic growth' figures have been overestimated, and explains how such policies are actually limiting economic growth. Analysis shows that government has redirected employment, making jobs by taking them from elsewhere. And Cash for Clunkers simply caused people to buy cars a little sooner than they would have otherwise, causing reduced sales in the months to come. DeHaven concludes that the government policies are stifling growth due to a high degree of uncertainty among entrepreneurs and business owners; "Right now businesses and entrepreneurs are hesitant to make investments or add new workers because they're worried about what Washington's interventions could mean for their bottom lines."
The Case Against College Entitlements
The cheaper something desirable becomes, the more people will buy it. What's true for a Snickers bar is true for education, according to Michael Moynihan, from Reason. He, sociologist Charles Murray, and Rep. Paul Ryan address this issue in a short video and article. They discuss the Obama Administration's covert moves to revamp and recharge government funding of college education. They also address the provocative question, "What if America is sending too many people to college?" If you think a kid with money in his pocket may be inclined to buy too many Snickers bars, you may agree with Moynihan's conclusion.
Seven Lessons of Cash-for-Clunkers' Failure
In the Washington Examiner, Irwin Stelzer discusses several reasons to reconsider the "success" of the cash-for-clunkers programs, which spent $3 billion of taxpayer dollars in just over a month. His final of seven points notes the negative impact on lower-income consumers; "By mandating the destruction of trade-ins, Congress removed 700,000 cars from the used-car market, inevitably driving up prices of the cars that lower-income consumers tend to buy." Stelzer's point transitions well into the up-coming debates on Cap-and-Trade that are sure to resurface come the end of the Senate's August recess. Yet another instance where environmental hype trumps human well-being.
Reason Foundation's 23rd Annual Report on Privatization and Outsourcing
The Reason Foundation has long been a proponent for liberty, and has just released its Annual Privatization Report. From public-to-private parking meters in Chicago to "contract cities" in Georgia, this report studies current U.S. trends. Leonard Gilroy, the editor of the report, comments that "Interest in privatization is sky-high and rightly so. Now more than ever, policymakers need to study their priorities, re-examine what are really core government functions, and then tap the private sector's expertise in all of the areas where they can save taxpayer money and improve the quality of services."
Is Your iPod Unpatriotic?
The guys at ReasonTV put together this article and visually appealing clip documenting 'Why America Shouldn't "Buy American."' They conclude with the analysis that "Even though plenty of foreigners have jobs thanks to it, so do 14,000 Americans whose duties include designing and marketing the little buggers. So the iPod is a product of America and the world, and these days that describes nearly all the items we buy."
Too Big to Fail, Read, Count, or Stop
Economists Adam Smith and Bruce Yandle write in Cato's Regulation magazine about the expanision of government in practically every market arena, and outline the implications of such a change. They warn that, "the ongoing entanglement between politics and the market means there will be much to fail, much to read, much to count, and little hope of stopping any of it."
Fuel Standards Are Killing GM
Cato scholar Alan Reynolds in The Wall Street Journal writes, in a compelling and timely manner, that "General Motors is likely to become profitable only if it is allowed to specialize in what it does best — namely, midsize and large sedans, sports cars, pickup trucks and SUVs. The company can't possibly afford to scrap billions of dollars of equipment used to produce its best vehicles simply to please politicians who would rather see GM start from scratch, wasting more taxpayer money on "retooling" to produce unwanted and unprofitable subcompacts and electric cars. The average mileage of GM's future cars won't matter if nobody buys them."
Billy Mays, Free Market Hero
ABC's 20/20 Co-Anchor John Stossel adds an interesting perspective to the life work of Billy Mays, made famous by his ability to sell things people "hadn’t known they'd wanted," who died earlier this week. Stossel states that "Mays was more of a “public servant” than the regulators who claim to serve us."
Globalization = Good
Professor Donald J. Boudreaux discusses trade policy through the impirical demonstration of gains from globalization. "Those who doubt the strength of the theoretical case for free trade should also consider that the empirical evidence in its favour is overwhelming. There is simply no credible evidence to support the belief that restricting trade increases the prosperity of ordinary citizens. All of the evidence points towards the benefits of free trade."
Baffled By the Economy? Don't Listen to Economists
By Steve Chapman: "Macroeconomists are expected to be smart, learned and articulate in explaining and predicting the course of the economy. But these days, at least, no one really expects them to be right."
100 Useful Research Tools for Amateur Economists
"You don’t have to be a professional economist to do some really great research on the web. Whether you’re looking into historical trends, modern buying patterns or the latest stats on the global financial market you won’t find any shortage of information to keep you interested. Here are 100 great resources to utilize that can help you find, organize and understand your economic research."
Jeffrey Miron on the Stimulus
A friend of the Cato Institute, Professor Jeffrey Miron, writes that "Bailout 2.0, like its previous incarnation, is a dangerous gamble for the Treasury and the economy."
Keep the Banks Private
Donald Boudreaux, an advisor for Cato's Center for Trade Policy Studies, argues that "When government takes over, political meddling is sure to follow."
Bankruptcy Doesn't Equal Death
Don Boudreaux, chairman of the George Mason University department of economics, writes, "A government bailout of the Big Three keeps huge amounts of productive inputs in firms that can't use them efficiently. Forcing taxpayers to subsidize the continued employment of gargantuan quantities of raw materials, labor and capital goods in unproductive pursuits is a recipe for economic stagnation. The popular and politically convenient myth has matters backwards: The bigger the unprofitable firm, the more vital it is that it be allowed to fail."
Cato Out Loud: The Auto Bailout
In a new edition of Cato Out Loud, Daniel J. Ikenson explains why the federal government should not extend a financial bailout to the auto industry. Since November, Cato analysts have appeared on more than 50 radio and television programs discussing the bailout of "The Big Three."
Tax Havens: Myths vs. Facts
Politicians from high-tax nations routinely smear tax havens as part of their efforts to undermine tax competition. Using academic research and data from international organizations, this video shows that the most common attacks made against low-tax jurisdictions are empty demagoguery.
When Corporations Hate Markets
In this month's lead essay, philosopher and libertarian theorist Roderick Long draws a sharp contrast between corporatism and libertarianism properly understood. He argues that liberals, conservatives, and even libertarians have all been guilty to some degree of obscuring this difference, and that the quality of our political discourse has suffered accordingly.
Tax Havens Are Very Beneficial for Global Economy
"Statist politicians and international bureaucracies such as the OECD and UN routinely attack tax havens, claiming that they lead to “harmful tax competition.” "Yet at no point do critics bother to provide any evidence for this claim. This mini-documentary that I narrated for the Center for Freedom and Prosperity looks at the empirical data and scholarly research and reports that tax havens actually have a very positive impact on the global economy." - Dr. Dan Mitchell
Three Days After Klein's Response, Another Attack
By Johan Norberg: "In May I wrote a critical Cato paper on Naomi Klein's attack on economic liberalisation, The Shock Doctrine: The Rise of Disaster Capitalism, which I claimed was hopelessly flawed on virtually every level. Now Naomi Klein has responded to some of my claims. This response is in itself an example of the methods Klein regularly uses in her works, what I have called disaster polemics."
How Markets Use Knowledge
By Russ Roberts: "Economists will often say that prices steer knowledge and resources. Prices are traffic cops that signal to buyers and sellers what is scarce and what is valuable. But what does this mean exactly? How do prices achieve this?"
Norberg on Open Trade
"Here's the eloquent, wise, and learned Johan Norberg -- speaking recently at the Cato Institute -- explaining some of the benefits of open markets." - Donald Boudreaux, Chairman of the Department of Economics at George Mason University
Economics Does Not Lie
By Guy Sorman: "If economics is finally a science, what, exactly, does it teach? With the help of Columbia University economist Pierre-André Chiappori, I have synthesized its findings into ten propositions. Almost all top economists—those who are recognized as such by their peers and who publish in the leading scientific journals—would endorse them (the exceptions are those like Joseph Stiglitz and Jeffrey Sachs, whose public pronouncements are more political than scientific)."
Mexicans and Machines: Why It's Time To Lay Off NAFTA
"Like technology, trade gives us more good stuff than bad—yet Americans are likely to cheer technology and fear trade. No doubt TV talkers and White House wannabes will keep stoking our fears of foreigners until voters and viewers stop buying it—or until robots snag their jobs, too."
The Biofuel Brew Ha-Ha
By Peter Suderman: Reason contributor Peter Suderman writes that the biofuels craze is boosting the price of beer, because farmers are shifting away from barley to biofuel crops made more lucrative by mandates and subsidies.
The Micromagic of Microcredit
By Karol Boudreaux and Tyler Cowen: "If a poor family is able to keep a child in school, send someone to a clinic, or build up more secure savings, its well-being improves, if only marginally. This is a big part of the reason why poor people are demanding greater access to microcredit loans. And microcredit, unlike many charitable services, is capable of paying for itself—which explains why the private sector is increasingly involved. The future of microcredit lies in the commercial sector, not in unsustainable aid programs."
Munger on Fair Trade and Free Trade
"Mike Munger, frequent guest and longtime Econlib contributor, speaks with EconTalk host Russ Roberts about fair trade coffee and free trade agreements. Does the premium for fair trade coffee end up in the hands of the grower? What economic forces might stop that from happening?"
Robert Frank's Strange Case for Taxing "The Rich"
By David R. Henderson: "At one time, critics of economic freedom justified high taxes on high-income people on the grounds of ability to pay. They at least admitted that those taxes hurt those people. But the growing availability to even the poor of goods that were only recently thought of as luxury goods has weakened that argument. Now, Robert Frank argues for higher taxes on high-income people on the grounds that it is good for them."
Adam Smith - A Primer
"Despite his fame, there is still widespread ignorance about the breadth of Adam Smith’s contributions to economics, politics and philosophy. In Adam Smith – A Primer, Eamonn Butler provides an authoritative introduction to the life and work of this ‘founder of economics’. "
Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist
"The economist and blogger Tyler Cowen provides quirky and insightful advice for life based on his signature urbane style of economic reasoning."
Why We Trade
By Russell Roberts: "We’re used to shrugging off all sorts of rhetorical gobbledygook from our politicians. But when you hear U.S. presidential candidates start to mouth off about free trade, watch your wallet: A discredited 14th-century theory of economics is enjoying a dangerous renaissance in the 2008 campaign. "
Fat on the Farm Bill
By Dr. Sallie James: The Farm Bill is the ultimate example of concentrated benefits and diffused costs. Farm subsidies are hard to justify on their merits, and even harder to justify when they go to massive corporate farms.
In Defense of Scalpers
By David Harsanyi: "In the end, I’m not sure why it’s fair to allow monopolies to sell tickets and not individuals. Turning a profit on your investment doesn’t sound like a crime to me. It sounds like America."
So You Want to be a Masonomist
By Arnold Kling: "Years from now, perhaps people will be saying that something big got started recently at the George Mason University department of economics. Maybe if you become a Masonomist now, you will be getting in early on a trend that will soon catch on much more widely."
Robert Frank on Economics Education and the Economic Naturalist
"Frank argues that the traditional way of teaching economics via graphs and equations often fails to make any impression on students. In this conversation with host Russ Roberts, Frank outlines an alternative approach from his new book, where students find interesting questions and enigmas from everyday life. They then try to explain them using the economic way of thinking."
Community-Run Fisheries: Avoiding the "Tragedy of the Commons"
By Donald R. Leal: "Community-Run Fisheries: Avoiding the "Tragedy of the Commons" presents case after case of communities that have effectively protected their fishing territories and preserved fish for the future."
Unintended Consequences
By Rob Norton: "The law of unintended consequences, often cited but rarely defined, is that actions of people - especially of government - always have effects that are unanticipated or "unintended." Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it."