Chicago Daily Observer

Housing prices dropped by over 11 percent at the beginning of this year, the largest drop in the 20 years that such data have been collected. Thank goodness.

Restoring Financial Sanity

Why are plummeting real estate prices good news? Because it’s the first sign that sanity is returning to the market. And a sane real estate market—one in which sellers recognize that they won’t get as much for their house as Al down the street got two years ago—is a precondition for a broader economic recovery.

Recessions, or any economic downturn, are always caused by the same thing: Something goes wrong. That may sound overly vague, but it’s rarely the same thing that causes a shock to the system. In an agrarian society, it might be a bad harvest or a failed monsoon season. In a developing country, it might be a slump in the global price of a major ... Read More...

I have a naïve request for the balance of the presidential campaign: I don’t want to hear any candidate say one more thing about “creating jobs” or “bringing back jobs” or doing anything with the word “jobs” in it.

That might seem strange at a time when the economy is teetering on the brink of recession, and has eclipsed Iraq as the No. 1 issue on many voters’ minds.

Here’s my reason: Other than during the depths of the Great Depression, the government doesn’t “create jobs.” (World War II created most of the jobs then anyway, and I’m not sure that’s the direction we should go.) Instead, a sensible government should help to create a skilled workforce and a decent business climate. If it does that, the jobs will take care of themselves.

I settled into my seat for a flight a few days ago from Chicago to Washington, D.C., and opened my book: “What Makes a Terrorist.” I now recognize that this probably wasn’t the best choice of reading material for a crowded plane.

But it is a good read. The author, Princeton economist Alan Krueger, has written an accessible and interesting book on the causes of terrorism. (Disclosure: Krueger was my statistics professor in graduate school; I did badly in the class, which is why I now happily write articles like this that involve no math.)

This will be a different kind of column. Usually, I write about things that economics can explain. This time I’ll admit that I’m completely befuddled.

I just don’t get the airline industry, at least not the traditional carriers that have been around since before deregulation. The new upstarts like Southwest appear to have a model that works—but that just makes the older carriers look all the more old-fashioned and obtuse.

Fly the Stupid Skies…

More Spending, Better Results?

Anyone who’s spent time in a struggling school knows that there are lots of things that could be done with more money: adding teachers, fixing decrepit buildings, offering more sports and activities, upgrading books, and so on.

Presumably, doing those things would improve student performance. This is the reasonable view made by those who lean left. Less reasonably, it’s also the emphatic view of the teachers unions and the politicians (mostly Democrats) who depend on their support.

Yet the relationship between spending and student achievement is surprisingly tenuous. True, in one famous randomized experiment (yes, children were treated like laboratory rats), students assigned to smaller classes did better than students assigned to larger classes. Obviously, money is what makes smaller classes possible.