Noah Smith

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Economist, Bloomberg contributor and author of the Noahpinion blog and The Substack.


101ism in action: minimum wage edition [More...]
Even professors and other professional economists make mistakes about Economics 101 situations and often ignore empirical evidence that contradicts 101 dogmas.
A Job Is More Than a Paycheck [More...]
"In most of economic theory, a job isn't treated as something inherently valuable -- it's just a conduit through which money flows from employer to employee... To most people, the idea that jobs give people dignity and a sense of self-worth seems laughably obvious... But among economists, there remains a relentless unwillingness to consider the importance of dignity and social respect."
A Nation’s People Offer the Best Return on Investment [More...]
Countries that spend on education, protect the environment and tackle inequality tend to outperform others.
A Nobel for economics that really works [More...]
Noah Smith reports the basics of Matching Theory. "Matching Theory is basically an algorithm - a mathematical technology - for finding optimal matches between pairs or groups of people. It incorporates human preferences, optimization, and strategic behavior, so it is economics."
A parable of one-way free trade [More...]
The benefits of international trade can be subverted by strategic interventions by governments. An "always free trade" policy leaves us vulnerable to the strategies of other nations.
Are macroeconomic methods politically biased? [More...]
Noah Smith details a long list of simplifying assumptions of macroeconomic DSGE models and then points out how much is left out and how biased both the assumptions and the omissions are.
Austrian Economists, 9/11 Truthers and Brain Worms [More...]
"The Austrian worldview is like a brain worm that has infected large swathes of our financial industry, commentariat and general public [...] The years 2011 and 2012 were to Austrians like sunrise is to a vampire. It was simply amazing to sit there and watch Austrians writhe and contort under the pure, burning light of extant reality."
Blockchain Hype Missed the Mark, and Not by a Little [More...]
The technology might still change the world, but all the skepticism seems warranted.
Calm down, Will Wilkinson! Joe Stiglitz is not the problem. [More...]
"Are Will and I living in the same country? This idea that progressive success has led to public-private collusion is very clearly a false narrative."
China Isn’t the Only Reason to Question Free Trade [More...]
"If nudging companies to export can raise productivity, the U.S. has work to do. The country’s domestic market is so big that lots of companies don’t bother to compete globally..."
Climate change isn't THAT hard: Relax, it's just the end of the world [More...]
A clear explanation of how technological improvements in solar, wind, and batteries make solutions to global warming possible: provided government action helps and incentivizes the change.
College Isn't a Waste of Time [More...]
Noah Smith shreds Bryan Caplan's claims that college is mostly a waste of time and primarily used for signaling. "But his arguments against college are deeply flawed, and the country would be well-advised to take them with a shot of skepticism."
Craft Brewing as a Model for Helping the Middle Class [More...]
There are other industries where the same regulatory approach should work.
Crypto Cynics Stand to Profit the Most [More...]
"Bubbles, therefore, may be a uniquely predatory financial phenomenon -- a natural and perfectly legal equivalent of a Ponzi scheme that happens every time a new asset class or a new type of investing becomes legal or technologically feasible."
NEW 2/03/2021: Do property rights increase freedom? (Japan edition) [More...]
"A society in which the government appropriates someone's tax money to provide parks, and trashcans, and drinking fountains, and benches, and highways, and sidewalks, and parking spaces doesn't fit the libertarian ideal of freedom...but it feels more free."
Does mercantilism "work"? [More...]
Noah Smith points out that free trade versus mercantilism could be like a prisoner's dilemma. Unless you have a world government to enforce cooperation, defecting to mercantilism would be the dominant strategy.
Don't Count on Tech to Set You Free [More...]
"Techno-libertarianism is too deterministic in its belief that new tools are all we need. Tools need people to use them, and freedom won’t guard itself."
Econ 101 No Longer Explains the Job Market [More...]
"Together with the evidence on minimum wage, this new evidence suggests that the competitive supply-and-demand model of labor markets is fundamentally broken. If employers have the power to set wages, then not just minimum wage, but other labor market policies -- for example, union-friendly laws -- can be expected to help workers a lot more than popular introductory economics textbooks now predict."
Economists Are Warming to Government Intervention [More...]
Based on recent surveys, "... on many issues, economists are actually more likely than the general public to summon the guiding hand of the state."
Economists used to be the priests of free markets -- now they’re just a bunch of engineers [More...]
Economics is being rescued from libertarianism. "[...] most economists favor government intervention in the economy in a wide range of areas, including income redistribution, minimum wage laws, environmental regulation, anti-discrimination laws, and others (and that was before the financial crisis!)"
EconoTrolls: An Illustrated Bestiary [More...]
An Illustrated Bestiary of the Econ Blogworld, helping you to identify libertarians, Austrians, Republicans, and a host of other creatures you will encounter in economics blogs.
Faster Growth Begins With a Land Tax in U.S. Cities [More...]
"A land-value tax, or LVT, is like a property tax, but with a deduction for the value of buildings and other improvements. The tax would reduce land prices and increase the incentive to build more, which in turn will help drive down rents, making a city more affordable. And because land is a fixed quantity, taxing it doesn’t shrink the economy like taxes on wages and capital sometimes do. "
FDR’s New Deal Worked. We Need Another One. [More...]
"Claims that the programs adopted in the 1930s lengthened the Great Depression don’t hold up."
Finding Better Ideas to Rebuild America [More...]
A review of Concrete Economics: The Hamilton Approach to Economic Growth and Policy. "DeLong and Cohen walk the reader through a series of historical examples of economic policies that seemed to work well. Thus, this short, almost casually sketched book is really the opening shot in a long campaign... That campaign is the quest to build a New Industrialism -- an approach to economic policy that respects the power of the private sector but isn’t afraid of an activist government."
Free Trade With China Wasn't Such a Great Idea for the U.S. [More...]
An important recent study shows "powerful evidence that industries and regions that have been more exposed to Chinese import competition since 2000 -- the year China joined the World Trade Organization -- have been hit hard and have not recovered. Workers in these industries and regions don't go on to better jobs, or even similar jobs in different industries. Instead, they shuffle from low-paid job to low-paid job, never recovering the prosperity they had before Chinese competition hit."
Growing a Nation Won't Always Grow Its Economy [More...]
Compares Charles Tiebout's idea of political fragmenation to achieve libertarian paradise with Truman Bewley's criticisms. Worth reading.
How 'Keynes' Became a Dirty Word [More...]
Noah Smith sez: If you use the word "Keynesian" as a synonym for "socialist," "progressive," or "liberal," well my friend, you’re doing it wrong. Hayek's propaganda, pushed over a period of a half century, has tarbrushed Keynes' ideas.
How Noah Smith Should Have Criticised Austrian Economics [More...]
Noah Smith and Robert Murphy had an argument. An expert critical of Austrian Economics identifies 6 major problems he thinks Noah should have attacked instead.
How the New Classicals drank the Austrians' milkshake [More...]
"It seems to me that the Austrian School's demise came not because its ideas were rejected and marginalized, but because most of them were co-opted by mainstream macroeconomics [...] I'm pretty confident in saying that the paradigm of von Mises and Hayek is dead."
How the poor can (and should!) save money [More...]
"Most poor people, if they didn't take out payday loans, would not die. They would not be out on the street or crippled or starving. Instead, they would simply be wealthier. For this reason, many states, and the federal government, are all actively looking into legal restrictions on payday lending; some have already done this."
How to Limit Hoarding and Keep America’s Hands Clean [More...]
Economist Noah Smith writes: "Rationing has to play a role, but apps that tell consumers where essential goods are in stock would help."
How to win arguments by pretending to be a simpleton [More...]
Noah Smith explains why Hans Hermann-Hoppe's method of criticizing Paul Krugman is really just trolling. And how HHH could really know better just by reading one or two papers.
I get what you get in ten years, in two days [More...]
"Mankiw's differences with the bulk of the economics world are more about values than facts... But I somehow doubt that his opinion of "just deserts" will be able to win over a majority of Americans, even among the intellectual classes."
In which Steven Landsburg utterly flips out [More...]
Noah Smith assings us to read a Steven Landsburg post and assigns us to "think of four reasons why Landburg's post is utter nonsense."
Is America's health care underperformance a myth? [More...]
No: we really do underperform. Noah Smith takes on AEI's Cliff Asness to show decisively that healthcare costs are very high in the United States compared to socialized countries.
LBJ's Great Society Won the War on Poverty [More...]
By modern methods of measuring poverty, poverty in the USA has dropped from 19.5% in 1963 to 2.3% in 2016. "In other words, taking a bird’s eye view of the economy, the Great Society worked. Material deprivation of the kind that was still common in midcentury America -- a desperate lack of food, shelter and basic medical care -- is much rarer today."
Libertarianism's Time Has Come and Gone [More...]
"Government actions can lead to more individual freedom, not less."
Libertarians embracing public goods, Tim Lee edition [More...]
"The larger point is that there are things that are much much much easier for government to do than private actors, and that these things often improve the efficiency of markets, and that infrastructure is a prime example."
Libertarians: Only now, at the end, do you understand... [More...]
"Here are a bunch of smart people who truly, honestly believe in their worldview [...] discovering for the first time that they are in fact merely a proxy army for people who don't take them or their worldview seriously at all."
Markets Don't Work for Everything [More...]
"Like every ideology, marketism has its limits, and like every movement it eventually overreached. There are plenty of reasons that a vast array of human interaction should be carried out without money or any kind of quid pro quo. And unsurprisingly, these problems crop up in many of the areas of human life into which people are now trying to push markets."
Microfoundations would be nice if we had them [More...]
"Once again, let me reiterate that the big problem with 'microfounded' macro, as I see it, is that the 'microfoundations' are bad: not credible, and generally not consistent with anything microeconomists have actually found. Bad microfoundations are worse than none at all."
Military Spending on R and D Is a Boon for the Private Sector [More...]
Military research spending spurs private-sector innovation and growth.
Monopolies Are Worse Than We Thought [More...]
Market concentration increases prices, limits market size, and makes the economy less efficient. And new evidence indicates that it hurts workers and increases inequality.
Monopolies May Be Worse for Workers Than for Consumers [More...]
There isn't much evidence that they raise prices, but they do seem to hold down wages.
National Health Insurance Might Be Good for Capitalism [More...]
"Our current health insurance system is holding back capitalism... Instead, national health insurance -- of the kind that has been successful in many other developed countries -- would remove health risk from the decision to start a business or switch jobs. It would free Americans to pursue their capitalistic dreams."
Neither Real, nor Business, nor Cycles [More...]
Noah Smith eviscerates RBC (Real Business Cycle Theory) using tools bequeathed by Voltaire, Larry Summers and Simon Wren-Lewis. "Label-the-Residual Economics."
Noncompete Agreements Take a Toll on the Economy [More...]
Noncompetes aren’t just hurting workers; they're hurting economic dynamism.
Noncompete Clauses Make Your Economy Sick [More...]
Noncompetes introduce externalities , restrict the job movement of low-wage workers, favor established firms over startups and block the spread of technology.
People Actually Use Food Stamps to Buy More Food [More...]
This defies the standard rational economic model's "fungibility of targeted benefits", which treats all income as shiftable to other purposes. "Putting all your income into a single pile, and then spending out of that pile, is the rational thing to do. But it turns out that most human beings aren’t rational -- at least, not in this regard."
Private Prisons Are a Failed Experiment [More...]
"Implementing criminal justice is one of the most critical, central functions of a state. Prison privatization turns this function over to contractors with comparatively little accountability. That opens the door for both cost overruns and mistreating inmates."
Public Housing Isn't Wasted on the Poor [More...]
"So while many people look at housing projects and see disaster areas, what they’re really just seeing is the negative effects of poverty itself. Both housing projects and the newer voucher system really make it easier for poor people to invest in their kids’ futures. Over time, these programs help the U.S.’s most destitute citizens the boost they need to climb out of their bad situations."
Rational Markets Theory Keeps Running Into Irrational Humans [More...]
"In theory, the smart money weeds out foolish speculators. The reality is different."
Republic of Science or Empire of Ideology? [More...]
Koch is making a sustained, multi-hundred-million dollar effort to push the academic economics profession toward a libertarian ideology. This is a "Republic of Science" to the same degree that North Korea is a "Democratic People's Republic of Korea".
Revive the Middle Class by Bringing Back Unions [More...]
"If combined with Manley’s idea for competing labor organizations and proportional representation in negotiations, sectoral bargaining would undo the decades-long decline in private-sector collective bargaining almost overnight."
Robot Takeover Matters Less If We're All Shareholders [More...]
"A social welfare fund that benefits every American would cushion human obsolescence... It could be just what the country needs to reverse the negative trends that have afflicted the middle and working classes during the past several decades."
Seven principles for arguing with economists [More...]
Some of the more common fallacious economics arguments, and how to counter them.
Should We Trust Economists? [More...]
"No matter how much we might wish they were, economists are not go-to experts who know just how the world works or how to fine tune it...But they do have a lot of interesting things to say. They might help you clarify or re-evaluate your own beliefs about how the economy functions. They can also help you spot the flaws in each other's arguments."
The Best Reason to Protect Workers From Covid-19 [More...]
"History shows that countries that treat labor badly have slower growth... But the key idea is that institutions of both the formal and informal kind last for a long time and govern human behavior in ways that can’t easily be explained by rational individual action."
The Case for Low Capital-Gains Taxes Grows Weaker [More...]
Evidence shows that rate cuts in 2003 did nothing to spur business investment.
The Case for Protecting Infant Industries [More...]
"Shielding young companies helped the U.S. economy flourish once. It wouldn’t hurt to revisit the idea."
The Choice Isn’t Between Capitalism or Socialism [More...]
"All countries practice a mix of both, and the U.S. isn’t the free-market leader some might think. "
The Connection Between Work and Dignity [More...]
An efficient economy leaves unemployment high: some inefficient but useful jobs can alleviate unemployment and create dignity for the workers. "If we work hard and produce something of tangible value, we tend to feel a sense of self-worth when society rewards us for it with a decent, middle-class life."
The libertarian solution to inequality [More...]
"So, the libertarian solution to the problem of inequality is to socially persecute anyone who talks about inequality?" A strange notion of liberty.
The liberty of local bullies [More...]
Noah Smith points out how libertarians are oblivious to commonplace coercion that isn't from government. Which makes it a favorite of local bullies who wish blessings upon their bullying.
The Man Who Made Us See That Trade Isn't Always Free [More...]
"David Autor upended the assumption that everyone benefits when countries swap goods without restrictions."
The Market Power Story [More...]
Noah Smith spanks Tyler Cowen for Tyler's ineffectual criticisms of a major paper on Market Power as a cause for economic ills. Among other things, Tyler does not consider "the inefficiency of monopolistic competition in standard theory".
The Promise and Peril of South African Land Reform [More...]
"These promises and pitfalls can be seen by examining the experience of neighboring Zimbabwe. In the 1990s and 2000s, Zimbabwe expropriated its remaining white-owned farmland without compensation, handing it over to black farmers. This resulted in improved agricultural yields, rising incomes for farmers and reduced rural poverty."
The Shouting Class [More...]
"But a subset of people will never stop complaining. When a problem becomes less severe, they switch to a different problem. And they will always find some problem that they feel requires their vocal complaint. That subset -- the people who will never stop complaining and giving negative feedback - are the Shouting Class."
The siren song of homogeneity [More...]
There is a strong strain of racism in some libertarian factions. This article discusses the claims about homogeneity in depth, and finds that it does not necessarily create distrust and it is impractical to recreate.
The Virtues and Vices of Econ 101 [More...]
Michael Strain and Noah Smith argue how relevant supply and demand is to labor markets and minimum wage. "The fact that employers have significant power over their workers has plenty of consequences for how we regulate labor markets, not just in terms of minimum wage, but regarding unions, antitrust law and many other policies. Supply and demand just doesn’t cut the mustard here."
There's Too Much Red Tape (But Only a Little) [More...]
"Hardcore free-marketers often claim that the cumulative effect of regulation is very large, and that dramatic cuts in regulation could boost economic growth for many years. The problem is that it’s very hard to find solid evidence to back up this assertion."
Try to Answer the Hardest Question in Economics [More...]
"once agriculture is going well, countries should focus on manufacturing, and use export promotion as a way to force companies to learn to be more productive."
Tyler Cowen's anti-Piketty crusade [More...]
Noah Smith observes the Koch-funded propaganda drumbeat, though he is too polite to call it that.
U.S. Companies Were Hurt by Trade With China Too [More...]
Free Trade with China, often assumed to be beneficial, as been shown to leave deep and lasting scars on huge swathes of the American workforce, increase political polarization, and decrease U.S. corporate innovation.
Understanding the Meaning of 'Power' [More...]
"Economics writing is filled with loose language that muddles as much as it clarifies."
Unions Did Great Things for the Working Class [More...]
"Other than massive government redistribution of income and wealth, there’s really no other obvious way to address the country’s rising inequality. Also, there’s the chance that unions might be an effective remedy for the problem of increasing corporate market power -- evidence suggests that when unionization rates are high, industry concentration is less effective at suppressing wages."
Vast literatures as mud moats [More...]
"Vast literatures" can be a waste of time when they are propaganda, content-free, or generally erroneous. Demands that you familiarize yourself with vast literatures before you argue can be mere rhetorical strategies, rather than genuine requirements for understanding.
Welcome to the Age of Surveillance Capitalism [More...]
All that information we’ve handed over can be used in insidious ways in the absence of government oversight.
What ResistCapitalism Gets Wrong [More...]
"The libertarian, free-market right has, in my opinion, greatly overreached in the last 35 years, especially in the U.S.... In their zeal to kill the welfare state, libertarians and conservatives have ignored the crucial public goods that the government provides...."
Why America Stopped Being a Startup Nation [More...]
"When Goldschlag and Tabarrok run the numbers, however, they find no measurable relationship between rising regulation and declining dynamism at the industry level. Sectors where rules have become increasingly stringent have seen declines in startup rates that are no greater than sectors in which the level of regulation has been little changed."
Why bother with microfoundations? [More...]
Our modern "microfounded" macro models are no more useful than aggregate-only models because the available microfoundations are crap. If you put garbage in, you may or may not get garbage out, but why bother putting the garbage in in the first place?
Why the 101 model doesn't work for labor markets [More...]
The Econ 101 supply-and-demand model is just not a good description for the labor market. Supply-and-demand graphs are for one single commodity; labor is highly heterogeneous.
Yuppie Fishtanks: YIMBYism explained without "supply and demand" [More...]
Simple supply and demand models which assume one type of good do not work on complex housing problems where there are several types of goods as well as social goals.
Zoning Reform Alone Won’t Make Housing More Affordable [More...]
Zoning reform results in speculative increases in land value, but not necessarily lower costs of housing.


In most of economic theory, a job isn't treated as something inherently valuable -- it's just a conduit through which money flows from employer to employee... To most people, the idea that jobs give people dignity and a sense of self-worth seems laughably obvious... But among economists, there remains a relentless unwillingness to consider the importance of dignity and social respect.
Noah Smith, "A Job Is More Than a Paycheck"
... the entire modern American libertarian movement -- in principle, advocating a broad range of freedoms, but in practice focusing almost entirely on freedom from taxation and regulation. This is a shame. There are many more kinds of freedom than the narrow set embraced by the modern libertarian movement.
Noah Smith, "Are libertarians ready to embrace a broader notion of freedom?"
To those of us outside the movement, the fact that libertarians are a proxy army has always been painfully obvious. The key piece of evidence was always the set of issues that libertarians chose to emphasize. Most Americans share the idea that civil liberties are good, war is to be avoided, and high taxes are bad. But the fact that our country's libertarian movement spent so much time fighting high taxes and so little time fighting the encroaching authoritarianism of conservative presidential administrations was a clear sign that some priorities were seriously out of place. Should we really be more afraid of turning into Sweden than turning into Singapore? The contrast between libertarians' continual jeremiads against taxes and their muted, intermittent criticism of things like warrantless wiretaps, executive detention, and torture was a huge tip-off that the movement was really just some kind of intellectual front for America's right wing.
Noah Smith, "Libertarians: Only now, at the end, do you understand..."
The fact that employers have significant power over their workers has plenty of consequences for how we regulate labor markets, not just in terms of minimum wage, but regarding unions, antitrust law and many other policies. Supply and demand just doesn’t cut the mustard here.
Noah Smith, "The Virtues and Vices of Econ 101"
The libertarian movement annoys me because I feel like it's sucked up a lot of mental energy, creativity, and idealism that could have been put to better use - like the communist movement did generations earlier. I think it did some good, but it's a maximalist, package-deal ideology, and like all such ideologies it's gone into la-la land. I don't think it's killing the country but I think it's done some damage. So there you go.
Noah Smith, "The libertarian solution to inequality"