One of the more depressing implications of careful economic analysis is that it is very difficult to actually give away money in ways that actually benefit the people toward whom we are trying to be charitable. The law of supply is pretty robust here: if we effectively pay people to do something (stand in line for a handout), we will get more of that something (more people standing in line for a handout). You see it every Thanksgiving and Christmas: people lined up for blocks waiting for $0 food, clothing, shelter, toys, etc.

I tell my students that economics helps define the non-negotiable constraints on social reality. The principles that people respond to incentives and that people generally do more of things that they think will make them better off also help to clarify what is and isn’t (or what can and what can’t be) true. Today’s XKCD comic offers one of the best examples of this line of reasoning I’ve ever seen: if [X] really worked, then people would be able to get fantastically wealthy by doing [X].

The Brits are cutting down on their welfare state in an attempt to tackle deficits and save the state. The UK Chancellor of the Exchequer George Osborne claims the cuts of £83 billion ($130 billion) will bring the country back from “the edge of the economic abyss” and put an end to ten years of deficit spending. This may be an exaggeration, but is a welcome comment these days when destructive Keynesian economics seems to have been revived.

Since World War II, most economists have been apologists for government growth.1 Now the “experts” who never see a crisis coming tell us that we must once again abandon free-market principles to save

After Social Network, college kids are going wild for commercial start ups.

Fed’s press release