David Henderson
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Economist
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Claims by David Henderson (20 of 64)
All economics is behavioral because all economics is about human behavior; the field labeled 'behavioral economics' specifically studies systematic ways people deviate from standard rational-actor models—for example employees sticking with default 401(k) options even when costless to change, due to anchoring and behavioral biases.
The evolution of Paul Samuelson's textbook tracks the profession's shift on monetary policy: in the early 1950s it described monetary policy as completely ineffective, but as Friedman's influence grew, by the 1980s it described fiscal policy as relatively ineffective and monetary policy as much more potent.
The minimum wage survey question conflates 'increases unemployment' with 'decreases employment'—an important distinction, because a teenager who loses his job to the minimum wage may stop looking for work (going back to school, the illegal sector, or living with parents) and thus not be counted as unemployed, potentially explaining why some economists answered 'no effect on unemployment.'
The perception that economists disagree arises from two mechanisms: economists don't bother discussing what they agree on (so public discourse focuses on disagreements), and journalists seeking 'balance' on settled issues like free trade end up pitting an economist against a lobbyist, then headline it as 'economists disagree.'
Economists frequently share the same views on analysis even when they differ on values; for example, the vast majority agree rent control causes apartment shortages, makes apartments hard to find, lets housing quality deteriorate, and discourages new construction (unless new construction is exempted) because builders anticipate future controls.
Being in an ideological minority creates incentives for greater intellectual care; Henderson argues he keeps analysis and ideology more separate than many other libertarians and than liberal-left economists precisely because so many people will jump on him if he says something he can't justify.
Trade barriers and outsourcing do not destroy or create net jobs; they change which jobs exist, shifting workers toward goods where there is no comparative advantage and away from goods where there is—so Blinder's projection of 40 million service jobs at risk over ~10-15 years amounts to ~3% of jobs per year in an economy where ~20% of jobs already churn and are replaced annually.
Paul Samuelson, politically a liberal, is nonetheless a free-market economist because he laid out the strongest intellectual case for free trade; mathematical economists who identified market failures also frequently built the framework explaining why markets work well, showing 'free-market economist' is an analytical not ideological label.
When economists of differing ideologies (e.g., Summers, Krugman, Henderson, Anderson) actually discussed concrete issues at the Council of Economic Advisers, what was striking was how much they did NOT disagree—on free trade, price controls, natural gas decontrol—suggesting economics is more of a science than commonly thought.
When economists actually hold policy power—'where the rubber meets the road'—they tend to push the deregulation button rather than the regulate-more button; agency economists across administrations have unanimously opposed regulatory proposals, with their answer often being 'there are no good economic arguments for your proposal.'
Behavioral economics' empirical findings on irrationality are strong, but jumping from them to libertarian-paternalist government policy is unwarranted, because the same irrational people run government—and there they handle other people's money with less care, compounding irrationality with indifference.
Media incentives systematically push experts toward inflammatory framing: when Henderson wrote a Wall Street Journal piece criticizing the Schwarzenegger health plan, Bill O'Reilly's booker called the same day wanting to focus solely on the throwaway line about illegal aliens qualifying for benefits, because riling up an anti-immigrant audience drives bookings.
There is no single trustworthy media source or 'truth-teller' economist; consumers of economic news must triangulate across Fox, MSNBC, the New York Times, and even academic literature, using their own judgment—while avoiding the opposite error of so much skepticism that nothing is believed.
Pioneers of information economics like Joseph Stiglitz tend to neglect the Hayekian role of prices in conveying information and directing behavior in socially beneficial ways—a 'silo problem' where information theorists either consider that role already established or are not persuaded by it.
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