Division of Labour: February 2009 Archives
February 27, 2009
Just Another Partisan Hack
Last summer, ND Sen. Kent Conrad said, "President Bush will be remembered as the most fiscally irresponsible president in our nation's history."
Well, here's Sen. Conrad yesterday holding a copy of the Obama budget calling for huge spending increases and large budget deficits. Compared to this budget, President Bush's spending looks downright miserly. So, Sen. Conrad, why the big grin?
ADDENDUM: Below is a statement from Sen. Conrad's website; it's rather hard to square this statement with his grin about the Obama budget.
Senator Conrad is particularly concerned about the soaring federal debt that is forecast for the nation's long-term budget outlook. He believes that reducing this debt burden is essential to the future strength of the nation's economy. Over time, large deficits and debt will raise interest rates, crowd out private sector investment, and slow long-term economic growth.
ADDENDUM2: A better title for this post would have been "A Deficit Chicken Hawk."
Bring back corncobs
The New York Times reported yesterday that the softness sought in toilet paper by Americans is wiping out forests. After all, paper doesn't grow on trees. Oh wait, it does. and that's the problem. [...] Swooping in to save the day are Wallypop toilet wipes, a reusable cloth product. The sales pitch: They're comfy and environmentally friendly. You can use them wet, and they won't fall apart.The column concludes:
The company admits there's "a certain ick factor involved." Indeed. If you try this at home, let us know how everything comes out.Maybe we should bring back corncobs. The increased demand for corn might provide political cover for a reduction in the ethanol subsidy.
Oops. I should have seen Frank's entry before posting this.
Entrepreneurs and the Great Conversation
Does modern capitalism sap us of all our creative and intellectual energies, leaving us alienated and demoralized? You be the judge. Here's a recent transaction that took place on Facebook:
1. A friend I haven't seen in a few years posts a graph of national debt as percentage of GDP since 1950 and *waits for Art to describe what's wrong with this graph*. He's not an economist, but if I recall correctly he has a Grammy.
2. I look at the graph and remember something I read in one of McCloskey's "Bourgeois Era" books about British debt. Not merely content to say "I think I've read that British debt in the early 19th century was twice British GDP," I'm able to download a .doc version of the book and with the use of the ctrl+f command, I'm able to produce a quote complete with a page reference for context.
3. I then use Moveable Type to write a short blog post about it before returning to my regularly-scheduled work. Google helps me find some of the things I want to link to. I'm able to strengthen a weak tie with a friend and contribute truth to the universe. I'm able to do all of this in the course of a few minutes without leaving my office.
All of this owes much to the entrepreneurial endeavors and ingenuity of Bill Gates, Steve Jobs, Michael Dell, Larry Page, Sergey Brin, and Mark Zuckerberg. The great irony is that all else equal, all four will probably be remembered by history as the great villains of the early 21st century.
Calling Sheryl Crow
Two items on TP via Drudge:
Posted by E. Frank Stephenson at 11:05 AM
Krugman, Stiglitz and me
Today I travel to New York for the Eastern Economic Association, where the luncheon address is by Paul Krugman and the evening plenary is by Joseph Stiglitz. I hope I make it to the Stiglitz lecture, but I might find myself at the Waldorf Astoria for Fox Business Happy Hour. Cody is hard core.
February 26, 2009
Here’s the top headline on this morning’s print edition of the St. Louis Post-Dispatch:
Nearly 1 million need food aid in Missouri
The word “need” is normative, not factual. It imparts a definite bias. It prompts the reader to think, “Oh, those poor unfortunate souls.” The facts reported in the story, about the statistics for January 2009, warrant a different headline:
Nearly 1 million received food aid in Missouri
It has a different normative connotation, doesn’t it?
P. S. The newspaper takes a factual approach in the headline it has put on the very same article’s online version:
More Missourians than ever sign up for food stamps
Congratulations to ...
... former student Andrew Chupp who is finishing his Ph.D. at Georgia State and has accepted a job at Illinois State University. I'm happy to see things work out well for Andrew given the difficult job market this year.
... current student Marcy Peterson who last weekend was crowned Miss Berry 2009.
Posted by E. Frank Stephenson at 02:49 PM
A cure for insomnia c. 1909
That would be either the Williams or the Tufts basketball teams in 1909, as reported in the Feb. 26, 1909 NYT:
Williams College tonight defeated Tufts College in basketball by the score of 15 to 9.
FIFTEEN TO NINE!!?!?!?!?
I know the game was played just a bit differently back then, but seriously, there should have been a mercy rule for those in attendance.
Classical and Marxian AV Club
We finish reading Marx in Classical & Marxian Political Economy today, and we move to our discussion of the Industrial Revolution and changes in standards of living on Tuesday. In addition to the links below, I have a few parting thoughts on Marx below the fold (I'm basically live-blogging my class prep this morning).
First, here's a talk in which Steven Pinker argues that this is the most peaceful time in our species' history. He argues against the thesis that modern industrial/commercial society is in some way less harmonious than previous societies.
Here are two legendary talks by Hans Rosling in which he does absolutely incredible things with data using his Gapminder software.
Finally, co-blogger Lawrence H. White will give a lecture on monetary theory at Rhodes on Monday, March 9 at 7:00 PM in Barret 051. Here's a lecture by Professor White on "Gold and Free Market Banking" from the Mises Institute's first conference in 1983. Here (again) is an interview with Professor White's longtime co-author George Selgin on his recent book about private coinage. Comments on Marx are below the fold.
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What are we to do with Karl Marx the economist and with Karl Marx the social thinker more broadly? I rely here on the Oxford University Press edition of Schumpeter's History of Economic Analysis, pages 383-392; parts of the Routledge edition are on Google Books. Schumpeter argues that the two cannot really be separated--Marx the economist relies on Marx the sociologist and vice versa. Further, he argues that someone can't really understand Marx without a clear understanding of the German intellectual tradition in which he was writing, without reading all three volumes of Capital, and without reading Theories of Surplus Value.
Marx made several contributions that lend support to McCloskey's thesis that he was the most important social scientist of the nineteenth century. In my reading of Marx I have found him to be a positively gripping writer, sure and strong in his convictions and fundamentally revolutionary in his rhetoric. In spite of the fact that his scientific work was virtually inseparable from his political agitation, he was fundamentally an analytical economist in the classical tradition. Discussions of Marx have been marred by unthinking religious devotion on the part Marx's followers and by a refusal on the part of some anti-Marxists to defile themselves with his ideas (Schumpeter 1954 :385). It is, in Schumpeter's words, "analytical by virtue of its logical nature, for it consists in statements of relations between social facts" (p. 385). At the same time, Schumpeter continues by noting that Marx's science "was distorted not only by the influence of practical purposes, not only by the influence of passionate value judgments, but also by ideological delusion" (p. 385). Hence, Marx never developed a theory of the socialist economy but merely pointed to its alleged historical inevitability. He responded to his critics not with analysis and argument, but with ad hominem attacks that questioned the allegedly venal motives of those who dared to question his system.
A rich and well-explored irony of the Marxian system is the fact that Marx was himself "the product of a thoroughly bourgeois environment that failed to provide economic independence, and of a thoroughly bourgeois education that made him (as it makes so many) an intellectual, a radical, and a scholar--the radicalism being of the bourgeois brand of his time and the scholarship being of the historico-philosophical, as distinguished from the mathematico-physical type" (p. 386n). Marx's revolution was a revolution that began with the intellectuals (beginning with Marx, himself ensconced in the library of the British Museum) rather than the working class. Marx was a member of the bourgeoisie writing for intellectuals, elites, and other members of the bourgeoisie. While I'm borrowing explicitly from Schumpeter and Murray Rothbard, I think this is a charitable interpretation.
So what of Marx's economics, and what of his social theory? As I'm not a trained anthropologist, political theorist, sociologist, etc. I remain skeptically agnostic about Marx's contributions to social theory because I'm still unconvinced that his social theory does not derive from his thoroughly exploded and refuted economic theory. Bohm-Bawerk and Schumpeter argue that Marx the analytical economic thinker was logically consistent in the construction of his system; however, his economics was totally unfounded. Here is Schumpeter: "...Marx's system is seriously at fault. I mean only that he could have presented a comprehensive economic theory without violating logic--he would always have to do violence to facts" (p. 389).
According to Schumpeter, Marx's "Economic Interpretation of History" was original and important (p. 389), as was his attempt to "work out an explicit model of the capitalist process" that "trie(d) to uncover the mechanism that, by its mere working and without the aid of external factors, turns any given state of society into another" (p. 391). According to a very brief hallway conversation with a political science colleague I ran into on my way to and from the coffee pot, Marx's theories of class interest survive his exploded economics.* According to Rothbard, however, Marx slips between his "economic power" theory of class and the libertarian "political power" theory of class throughout the Communist Manifesto.
According to Schumpeter, Marx did make some important original contributions, but as I understand it these consisted largely of his pre-analytic vision rather than his analysis and conclusions. Rothbard is correct in his assessment of Marxism rather than capitalism being a system that has been "burst asunder," and it is unfortunate that Marx's unsophisticated "method" of criticism--don't let ideas stand and fall on their own merits, but attack and denounce your enemies as blinded ideologues and apologists for the bourgeoisie--continues to permeate the Great Conversation.
Bohm-Bawerk, Eugen von. 1949. Karl Marx and the Close of His System, in Paul M. Sweezy, ed., Karl Marx and the Close of His System by Eugen von Bohm-Bawerk and Bohm-Bawerk’s Criticism of Marx by Rudolf Hilferding. New York: Augustus M. Kelley.
Rothbard, Murray N. 1995 . Classical Economics. Auburn, AL: Ludwig von Mises Institute.
Schumpeter, Joseph A. 1954 . History of Economic Analysis. New York: Oxford University Press.
*I'm indebted to Arielle Goldberg for being kind enough to answer a couple of off-the-wall questions from an economist ten minutes before she had to teach a class.
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February 25, 2009
The RAAT Board?
Is there any sense of irony in the Federal Government?
Programs, agencies, OMB, and the new, $84 million Recovery Act Accountability and Transparency Board (see p. 175 of the bill) are all required to report on the progress of spending, often on different timetables. In fact, according to new OMB guidance, there are eight levels of reporting that are now required, with the first report from agencies due March 3.For real? The RAAT Board? Of course, it would have to be pronounced "the rat board"?
No earmarks tomorrow?
In the spirit of the "Free Beer Tomorrow" sign at your local tavern, the administration promises "No Earmarks Tomorrow" when it comes to the budget.
Here is the Omnibus budget. The "Letters of Certification" identify the
The certification letters for Division A (Agriculture) is only 35 megabytes.
Economics via M.C. Escher
An interesting take on economic policy using M.C. Escher's fantastic drawings.
I like this one (Ricardian Equivalence?):
I'm not sure I agree with all of rest, but they provide for interesting thought experiments.
Paul Heyne Quote of the Day
From p. 190 of Are Economists Basically Immoral?, writing on the mid-1980s Pastoral Letter from US Bishops concerned about the direction of the American economy:
"Voluntary actions move the world slowly and, from the global perspective, imperceptibly. Those who want to be sure of changing the cousrse of history must gain command of governments and armies? What are the concrete achievements of even Mother Teresa when laid alongside the differences made to the world by Stalin, Hitler, Mao, or almost any ruler of the most minor state in the United Nations? The contemporary turn to government for the solution of all problems is not some kind of neurosis; it reflects an accurate judgment about where social power is concentrated today."
On college football c. 1909
The Feb. 25, 1909 NYT reports the 1909 schedule for the University of Pennsylvania:
Sept. 25 - Gettysburg
One date (Oct. 20) was unsettled at press time. Those being courted were Ursinus (this is my unknown school of the day, although I admit to a Southern bias), West Virginia, Villa Nova, Dickinson, and Georgetown.
At the time the lineup wasn't all that bad, although I would have to dig into my data to find out whether Ursinus had any presence on the gridiron. It is interesting how college football has changed in 100 years.
On vice c. 1909
The February 25, 1909 NYT has a number of interesting, and sometimes conflicting, stories from around the country concerning vice:
More Rhetoric and Narrative: Are There Limits to Growth?
When you have a hammer (or drafts of future volumes in McCloskey's "Bourgeois Era" series), everything looks like a nail. Here's James Lileks on disturbing statements about childbirth and the environment (HT: Russ Roberts at Cafe Hayek). Here's the obligatory "gotcha" line, which scores rhetorical points while also carrying the narrative to its logical conclusion:
"It is heartening to think that encouraging the government to tell parents to abort #3 for the sake the environment is still too controversial."
This calls to mind a classic thought experiment that I've borrowed when talking about whether there are limits to economic growth. If the world is "overpopulated," i.e., if there are too many people, then who should we get rid of? What qualifies you to make that decision?
More concretely: on Sunday evening, we had friends over for dinner. Their daughter is a couple of weeks older than our son. Would the world be a better place if one of the two hadn't been born? In what ways? How do you know? On what grounds do you assume the right to be consulted regarding who lives, who dies, and whether your neighbors are allowed to reproduce? If the answer is "unpriced externalities," then how large are they? What are the specific transaction costs that prevent efficient Coasean bargains?
Note that these are questions that come up over the course of the discussion rather than bullying and badgering on my part. The economic way of thinking about the environment tells us that these are the questions that we have to answer before we can make so bold a statement as "there are too many people."
I tell my students that my recent foray into fatherhood has made me a better person and a better economist. For more, here are some notes on Julian Simon. Here's Bryan Caplan on having more kids--and congratulations to Bryan, by the way, on the imminent arrival of another baby Caplan.
A Contribution to Bourgeois Rhetoric
February 24, 2009
People Respond to Incentives: Law Enforcement and No-Knock Raids
Radley Balko has gained some notoreity around the blogosphere for documenting rights violations by police departments conducting military-style drug raids under cover of night. Today, he offered one of the best blog post titles ever:
"Tearful Atlanta Cops Express Remorse for Shooting 92-Year-Old Kathryn Johnston, Leaving Her to Bleed to Death in Her Own Home While They Planted Drugs in Her Basement, Then Threatening an Informant So He Would Lie to Cover it All Up"
Radley's snarky title basically summarizes the case. Here's the Atlanta Journal-Constitution summary of the sentencing.
This is an atrocity that we should learn from. My view on provision of police services is fundamentally a constrained vision. We don't get things like this because of bad people per se, and we can't fix it by filling the police force with good people per se. The problem is with the incentives in place. No-knock raids, killings, and coverups are predictable responses to the incentives provided by the drug war. Governments are monopoly providers of police services, and they face political rather than economic incentives. It should not be surprising that they behave accordingly. No one is collecting systematic data on this as far as I know, but the quantity and character of the incidents Radley has chronicles suggests to me that there is something more than chance at play here.
Radley also makes an important point that complements some of Deirdre McCloskey's recent work on the bourgeois era. McCloskey argues that a change in rhetoric whereby bourgeois innovation became respectable explains the massive increases in western standards of living since the industrial revolution. It's a provocative (and so far unproven) thesis, but I think it has a lot of merit. Radley points his finger at the last thirty or so years of the war on drugs and argues that the drug war narrative--indeed, "war" metaphor used to describe the attempt to stamp out a capitalist act between consenting adults that some people don't like--is one of the root causes. Here's the economic case against drug prohibition. Here's a really frightening PSA from the 1980s.
HT: Marie Hyunh, Boing-Boing Blog. Cross-posted at The Beacon.
Nationalize the banks?
Jerry O'Driscoll in today's Wall St. Journal explains why nationalizing going-concern banks, even temporarily for the sake of recapitalizing or resolving them, is playing with fire. He notes the ways in which the US is not Sweden when it comes to the prospects for resolution through temporary nationalization.
Here's his closing peroration:
Rather than focusing on ways in which we can further involve the government in the financial system, we need to find ways to extricate banks from government's deadly embrace. Banks, at least the behemoths, were public-private partnerships before the crisis. Deposit insurance, access to the Fed's lending, and the implicit (now explicit) government guarantee for banks "too big to fail" all constituted a system of financial corporatism. It must be ended not extended.
Templeton Essay Contest Announcement
The Sir John M. Templeton Fellowships Essay Contest for junior faculty and students in higher education is held every year. The submission deadline is May 1, 2009 . Winners will be announced in October, 2009 . The 2009 Templeton Fellowships will be awarded for the best essay on the topic:
“Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters.”
Which virtues contribute the most toward achieving freedom, and how can the institutions of civil society encourage the exercise of those virtues?
Please visit the Guidelines page for more information about how to write your essay.
Deadline: May 1, 2009
The Sir John M. Templeton Fellowships Essay Contest encourages college students and young college professors around the world to study the meaning and significance of economic and personal liberty.
Co-sponsored by the John Templeton Foundation and the Independent Institute, the essay contest honors Sir John M. Templeton and is held annually with a different topic each year.
Created in 1974 by Olive W. Garvey, the Fellowship contest has drawn essay submissions from more than 75 countries on 5 continents. Garvey winners have since become some of the finest of scholars, business and civic leaders, and journalists, applying and advancing public knowledge and appreciation around the world for the ideas of individual liberty and personal responsibility.
* Essay Guidelines
The Independent Institute will publish the winning essays on this website and seek to have them published elsewhere in major magazines and journals. All winning entries become the property of and are copyrighted by The Independent Institute.
More info here.
A Possible Exam Question: Are Lives "sure to be saved"?
My econ 101 students have an exam on Thursday, and the Memphis Commercial Appeal editorialized this morning in favor of a regulation that will require "recreational boaters and swimmers who venture outside designated areas to wear life vests." They write that "(l)ives are sure to be saved." A rough draft of a possible exam question:
The Corps of Engineers is requiring recreational boaters and swimmers on certain parts of four lakes in North Mississippi to wear life jackets. The Memphis Commercial appeal claims that "(l)ives are sure to be saved over the next three years." Is this true, false, or uncertain? Explain your answer using the key elements of economics we have developed in class.
February 23, 2009
As a Bollywood (popular Hindi cinema) fan, I enjoyed seeing – for the first time ever on a prime-time American network television – Bollywood actors (Anil Kapoor and Irrfan Khan) on stage for Slumdog Millionaire’s Best Motion Picture victory last night. It was a bonus that I was rooting for Slumdog Millionaire.
Even more prominent was Bollywood’s leading film composer, A. R. Rahman, who won an Oscar for best score, sang a nominated song (though singing is not his strong suit), then won a second Oscar for the song. To my ears, the Slumdog Millionaire’s songs are not Rahman’s catchiest work. He has scored something close to 5 films a year (with 4-6 songs per film) for the last 15 years, so he has an amazingly large body of work to try to top. Of the soundtracks I’ve heard, his catchiest songs are for the films Rangeela, Lagaan, and Taal. The first two are worth watching, especially the anti-tax pro-cricket Lagaan.
My favorite CD of Rahman’s music, by the way, is the instrumental covers (with remixes) album Rahmania by London’s brilliant Bollywood Brass Band.
An interesting account of how Rahman’s creative process works (and incidentally of how an Andrew Lloyd Weber - produced stage musical is put together) is available in Salaam: Bombay Dreams, a making-of documentary (with hours of extras) about Rahman’s London smash (but Broadway flop) Bombay Dreams.
An amusing invitation
This landed in my inbox today.
---------- Forwarded message ---------- From: ISPR/KGCM 2009
And so, the message says, these tensions will be the issue at a conference this summer in Orlando. So far so good. But then there is this:
All Submitted papers will be reviewed using a double-blind (at least three reviewers), non-blind, and participative peer review.
Rent Seeking: Check's in the Mail Version
An AP story on how Washington State provides 250,000 food stamp recipients improved access to the federal pipeline.
Recent Reading: Unfinished Thousand-Page Tomes
Gavin Kennedy offers a clear, succinct, and enlightening discussion of Smith's value theory in response to an earlier post here. In the post he mentions that he is working on a paper about Smith's value theory; it's a paper I look forward to reading. While I claim that Smith has a labor theory of value that lays the foundation for Marx, Kennedy offers a reading of Smith's theory of value that would suggest a correct, subjectivist theory of value whereby value is only realized in exchange.
Prepping for Classical & Marxian Political Economy has been difficult, time-consuming, and rewarding. In addition to the readings I've assigned for my students, I've been reading enormous, unfinished treatises on the history of economic thought. The first is Murray Rothbard's two-volume Austrian Perspective on the History of Economic Thought. This was originally supposed to be a three-volume set, but Rothbard was unable to finish it before he passed away. The second is Joseph Schumpeter's almost 1300 page History of Economic Analysis. Both are breathtakingly detailed (as one might expect from over two thousand pages of historical intellectual analysis), and they offer nuanced, provocative discussions of the history of the discipline. A few notes on Schumpeter's treatment of Marx and ideology are below fold.
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I'm now looking at pp. 35-38 of Schumpeter, a passage in the section "Is the History of Economics a History of Ideologies?" in which he discusses the Marxian theory of ideology. Marx argued that late eighteenth and early nineteenth century political economy was the intellectual embodiment of bourgeois class interests. While Marx was correct to note that, in Schumpeter's words, "people's ideas are likely to glorify the interests and actions of the classes that are in a position to assert themselves and therefore are likely to draw or imply pictures of them that may be seriously at variance with the truth" (p. 35), a predisposition toward bias and error does not by itself suggest that the potential for intellectual bias implies the certainty of error (or knavery, as the case may be). Schumpeter offers three criticisms of Marx's "class interest" theory of political economy (p. 36):
"First, while Marx was so much alive to the ideological character of systems of ideas with which he was not in sympathy, he was completely blind to the ideological elements present in his own."
Marx's theory of ideas does not explain how he and Engels, both bourgeois themselves, were somehow able to overcome their class interests and "see the light," so to speak. Further, the method of Marxian kritik consists largely of ad hominem attacks against those whose bourgeois interests must be exposed. Perhaps class interests should give us reason for greater skepticism, but the penchant for denunciation in Marx and his followers short-circuited the conversation.
"Second, the Marxist analysis of ideological systems of thought reduces them to emulsions of class interests which are in turn defined in exclusively economic terms."
Once more, with feeling: Marx's theory of ideas does not explain how he and Engels, both bourgeois themselves, were somehow able to overcome their class interests and "see the light," so to speak.
Once more, with feeling: Further, the method of Marxian kritik consists largely of ad hominem attacks against those whose bourgeois interests must be exposed. Perhaps class interests should give us reason for greater skepticism, but the penchant for denunciation in Marx and his followers short-circuited the conversation.
This is where Marx's scientific contribution leaves off and his political inclinations start to do real damage to the Great Conversation. For Marx and his followers, ideas did not stand to be confirmed or refuted on their own merits but on the basis of whether they are promulgated by apologists for the bourgeoisie.
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Eminent Domain Progress in California
Calling Stockton, California's 2003 seizure of Marina Tower a case of “condemn first, decide what to do with the property later,” that state's Third District Court of Appeals ruled that the city had no right to take the property and that municipal officials grossly abused their discretion with what amounted to a naked land grab. While a firm slap at Stockton's misconduct, the decision is less than a full victory for the property owners who have been awarded legal expenses but must go back to court for a final outcome in the case.
This is significant for a state that routinely defines public use quite broadly. The pendulum swings slowly. Here is my paper with Tom Means and Ed Stringham on inclusionary zoning laws in California, arguing that they are a form of taking. Here is my paper with Todd Jewell and Noel Campbell analyzing the state legislative responses to the Kelo backlash. More about this latter paper to come.
February 21, 2009
The emails have been coming in hourly about George Mason's male homecoming queen. Here is a good story. The student, Ryan Allen, sounds like a fun person. Or should I say fun people? His female persona is Reann Ballslee, the newly crowned homecoming queen. From the story just linked.
The contest was half talent judging and half voting by the student body. Allen received the most votes but doesn't know how he scored in the talent competition, in which he performed in zebra-print pants and lip-synched to Britney Spears.
You might catch some footage of Ryan -- and Reann -- tonight when George Mason travels to take on Creighton. Game is on ESPNU at 9:30 eastern time. GMU is 18-8 on the season and one game out of the conference lead.
February 20, 2009
Not quite, but the AIER Summer Fellowship Program is a pretty close substitute. I spent several very productive weeks at AIER last summer, and I highly recommend it for students and professors looking for a place to get some serious work done this summer. It's a great deal for students especially because in addition to the classes you will take, you'll spend time enjoying meals, movies, seminars, and more with your colleagues and with visiting faculty.
February 19, 2009
Mike Lester on the Mortgage Bailout
Another fine offering in today's Rome News-Tribune:
Posted by E. Frank Stephenson at 09:45 PM
Crisis of Credit
An interesting visual depiction of how CDOs work. I am not sure I buy the implied predatory lending, I think there were just as many predatory borrowers. After all, are we to imagine that mortgage brokers had a monopoly on "greed"?
Pork Watch Resource
If you're up to looking at the sausage's ingredients, this site might be useful.
My Labour Confronts Me as Something Alien
So does advanced capitalism rob us of our creative, human powers? Check out the fruits of this YouTube search for "Snuggie" and decide for yourself.
February 18, 2009
President Barack Obama's new foreclosure-prevention plan is already sparking outrage from some Americans who won't qualify for federal aid -- and from those who resent having to foot the bill for those who do.
Posted by E. Frank Stephenson at 10:18 PM
Lou Dobbs Favorite Economist Must Be ...
... Peter Morici who, in a recent letter to the WSJ, claimed that "the U.S. open trade policy with China has made many Americans victims." Here's my response in today's WSJ:
Peter Morici (Letters, Feb. 11) asserts that "U.S. open trade policy with China has made many Americans victims." Perhaps, but research by the University of Chicago's Christian Broda and John Romalis suggests otherwise. Profs. Broda and Romalis find that imports from China have been tremendously beneficial for American consumers, especially low-income consumers who spend more of their income on goods, such as food and clothing, that are affected by trade.
Here's more on the Broda and Romalis study.
Mises Quotes of the Day
Last year one of our students helped me compile the underlined and highlighted passages from Socialism: An Economic and Sociological Analysis. A propos yesterday's notes on Julian Simon, I've put a bunch of interesting and potentially useful quotes below the fold.
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“In the Liberal Social Philosophy the human mind becomes aware of the overcoming of the principle of violence by the principle of peace. In this philosophy for the fire time humanity gives itself an account of its actions. It tears away the romantic nimbus with which the exercise of power had been surrounded. War, it teaches, is harmful, not only to the conquered but to the conqueror.” p 59
“History is a struggle between two principles, the peaceful principle, which advances the development of trade, and the militarist-imperialist principle, which interprets human society not as a friendly division of labour but as the forcible repression of some of its members by others. The imperialistic principle continually regains the upper hand. The liberal principle cannot maintain itself against it until the inclination for peaceful labour inherent in the masses shall have struggled through to full recognition of its own importance as the principle of social evolution.” p. 268
“The ideas of modern Socialism have not sprung from proletarian brains. They were originated by intellectuals, sons of the bourgeoisie, not of wage-earners." p. 317
“States and government are the social apparatus of violent coercion and repression. Such an apparatus, the police power, is indispensable in order to prevent anti-social individuals and bands from destroying social co-operation. Violent prevention and suppression of anti-social activities benefit the whole of society and each of its members. But violence and oppression are none the less evils and corrupt those in charge of their application. It is necessary to restrict the power of those in office lest they become absolute despots. Society cannot exist without an apparatus of violent coercion. But neither can it exist if the officer holders are irresponsible tyrants free to inflict harm upon those they dislike.” p. 519
“The laws establish norms of legitimate action. They fix the procedures required for the repeal or alteration of existing laws and for the enactment of new laws. They likewise fix the procedures required for the application of the laws in definite cases, the due process of law. They establish courts and tribunals. Thus they are intent upon avoiding a situation in which the individuals are at the mercy of the rulers.” p. 520
Thanks to Mallory Raffensberger for helping me compile these.
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On the radio
This afternoon from 4:30 [note change] to 5 (Central) I’ll be talking about the financial mess and the economy live on Crane Durham’s talk show, “Nothing But Truth,” on American Family Radio. Check for your local AFR Talk station here. If you’re reading this after the fact, a podcast of the show should be available here.
ADDENDUM: The podcast is now available at the above link; my segment takes up the second half hour. Don't miss the listener who asks me about a statement Gustav Cassel made in 1928!
David Harvey on Karl Marx
Geographer/social theorist David Harvey offers a complete package of lectures on the first volume of Capital here. I mentioned earlier the blogospheric fisticuffs between Harvey and Brad DeLong, and I'm glad that Professor Harvey's lectures are available online. We start discussing Marx in Classical & Marxian Political Economy tomorrow, and while I want to read The Bearded One as sympathetically as possible, I can't escape the conclusion that the marginalist/subjectivist critique originating with Bohm-Bawerk destroys the entire Marxian system. In fairness to Marx, he derived his erroneous value theory from Adam Smith and David Ricardo, but in fairness to the classical economists, they did not try to build an entire theory of history and social change on so sandy a foundation as the proposition that labor alone is the source of value. As I read Adam Smith, his endorsement of the "obvious and simple system of natural liberty" does not derive from his value theory.
One of my undergraduate professors said that Marx's economics was "stillborn," and the more Marx I read the more I am persuaded that one has to say the same about all that his economics implies--which is to say, his entire system. Nonetheless, my intellectual life is richer as a result of having dealt with Marx in some detail as I've prepared for this semester and for the next few weeks of class. Here, though, is Murray Rothbard's assessment, with which I'm inclined to agree (from p. 433 of Classical Economics):
"Thus, Karl Marx created what seems to the superficial observer to be an impressive, integrated system of thought, explaining the economy, world history, and even the workings of the universe. In reality, he created a veritable tissue of fallacies. Every single nodal point of the theory is wrong and fallacious, and its 'integument'--to use a good Marxian term--is a web of fallacy as well. The Marxian system lies in absolute tatters and ruin; the 'integument' of Marxian theory has 'burst asunder' long before its predicted 'bursting' of the capitalsit system. Far from being a structure of 'scientific' laws, furthermore, the jerry-built structure was constructed and shored up in desperate service to the fanatical and crazed messianic goal of destruction of the division of labour, and indeed of man's very individuality, and to the apocalyptic creation of an allegedly inevitable collectivist world order, an atheized variant of a venerable Christian heresy."
Brad DeLong on Karl Marx the Economist, the Activist, and the Moralist-Prophet
Building on yesterday's post, the complete set of DeLong's commentaries on Marx is below. DeLong has gotten into a bit of an argument with CUNY anthropologist David Harvey about the stimulus. Here's Harvey's first offering, DeLong's critique, and Harvey's reply. For now, here's Brad DeLong.
On Marx the Economist:
On Marx the Political Activist:
On Marx the Moralist-Prophet:
February 17, 2009
Notes on Julian Simon
After prepping my notes for Econ 323 (the source of the Adam Smith quotes below), I started grinding down the accumulating pile of stuff in my office. Among said stuff was a set of notes on Julian Simon's The Ultimate Resource 2, which I hadn't read until my first semester at Rhodes but which I would like to integrate into the undergraduate curriculum in some way. I'll be using the notes to update my IHS lecture on the limits to growth for this summer. Notes are below the fold.
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Simon lays out his system on page 579: population growth and increases in income lead to higher demand, which raises prices. This leads people to search for new supplies and for ways to use what they have better, which creates new sources of income as well as substitutes.
The mind is the ultimate resource. On p. xxxi, Simon gives his testimony, paraphrasing a Jewish chaplain at Iwo Jima:
“How many who would have been a Mozart or a Michaelangelo or an Einstein have we buried here? And then I thought: ‘Have I gone crazy? What business do I have trying to help arrange it that fewer human beings will be born, each of whom might be a Mozart or a Michaelangelo or an Einstein—or simply a joy to his or her family and community, and a person who will enjoy life?”
He then states the fundamental issue and the “central matters in dispute” on p. xxxiv:
An insertion based on reading Paul Heyne and Thomas Jefferson: do those who wish to impose their values by force have a right to be consulted on others’ decisions that neither pick their pockets nor break their legs?
Simon quotes Franklin Pierce Adams on p. 17: “Nothing is more responsible for the good old days than a bad memory.”
p. 571: “…even talented and energetic people require an incentive to create better techniques and organizations…(t)herefore, the political-economic structure is the crucial determinant of the speed with which economic development occurs.”
On the Popularity of the Malthusian Model (p. 583):
Simon’s contribution is a triumph of good science. He asks: if something were growing ever more scarce, how would we know it? His answer is that we should look at economic rather than physical measures. In other words, instead of looking at proven reserves, we should look at the price (paraphrased, no page number for this). Simon proposes a method that would allow us to distinguish between competing hypotheses and rule out one of them as false.
On page 27, Simon distinguishes between the methods of the technologists/engineers and those of the economists. The technologist/engineering approach estimates proven reserves and extrapolates rates of current use, treating the first as the inventory and the second as depletions of that inventory. Simon asks whether the data suggest whether the future will be substantially different from the past. This is summarized in his statement on page 31: “Current and future price is our best measure of both current and future scarcity.”
Recycling is an example of innovation that creates new resources (p. 43). Further, when resources that biodegrade slowly are put in landfills, they don’t disappear forever. They are waiting for new ways to be processed and reused. Of course, there are possible externalities from chemicals polluting groundwater.
« Close It
David Boaz on Disaster Socialism
David Boaz takes the administration to task.
Adam Smith Quote of the Day, Part II
“To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the publick, but what is more unconquerable, the private interests of many individuals, irresistibly oppose it. Were the officers of the army to oppose with the same zeal and unanimity any reduction in the number of forces, with which master manufacturers set themselves against every law that is likely to increase the number of their rivals in the home market; were the former to animate their soldiers, in the same manner as the latter enflame their workmen, to attack with violence and outrage the proposers of any such regulation; to attempt to reduce the army would be as dangerous as it has now become to attempt to diminish in any respect the monopoly which our manufacturers have obtained against us. This monopoly has so much increased the number of some particular tribes of them, that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature. The member of parliament who supports every proposal for strengthening this monopoly, is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest publick services can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists.”
Wealth of Nations, 4.2.43, emphasis mine.
Dan Mitchell on Economic Growth, Brad DeLong on Karl Marx
Here's Dan Mitchell on Growth (HT: Peter J. Boettke):
Adam Smith Quote of the Day
"No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society than that into which it would have gone of its own accord."
Wealth of Nations, Book 4, chapter 2, paragraph 3
The Greedy Hand
Outrage brewing over proposed 1,900% beer tax hike
HOUSEHOLDERS would be charged for each flush under a radical new toilet tax designed to help beat the drought.
Just as the true incidence of a tax depends on the underlying elasticities rather than than the statutory intent, I'm guessing these taxes have a similar incidence. People can be taxed when they drink beer or when they pee it out, though I imagine the Aussie tax will be widely evaded by people relieving themselves outdoors etc.
February 16, 2009
Lawson Talk at Berry
Students, alumni, and nearby friends are might want to catch co-blogger Bob's talk tomorrow (Tuesday 2/17) at Berry. It will be at 7:00 in the Evans Auditorium.
Posted by E. Frank Stephenson at 11:15 PM
IHS Seminar at St. Vincent College
A quick shout out to the St. Vincent and Duquesne students who attended the Institute for Humane Studies Exploring Liberty seminar over the weekend. It was fun to spend the weekend with such an intelligent and interesting group of students. Kudos too to Christy, Brian, Tsvet, Antony, James, and Rob for their fine work in putting on the seminar.
Student readers might want to check out the lineup of IHS seminars for this summer. Highly recommended.
Posted by E. Frank Stephenson at 11:09 PM
Will Wilkinson: "Naomi Klein: A Prebuttal"
Will will be speaking at U. Iowa the night before Ms. Klein. I've been told that his lecture will be available online sometime afterward.
Innovation in Health Care
In an EconTalk podcast, Arnold Kling suggested that that having doctors or other medical professional specialize in care the many ailments that accompany old age would be useful. What do you know--there already is a small (and somewhat expensive) niche for this type of medical practice:
Dale Haralson was the kind of patient some doctors would rather avoid. In 2005, the Tucson, Ariz., lawyer had a triple-bypass operation, then contracted an infection that spread to his chest, lungs, blood and bone. He needed more surgery and was told he would need a permanent feeding tube. But few surgeons wanted to take his complex case.
To be sure, some of this description might be thought of as premium service, but some of it represents the patient care coordination function that Kling described.
Posted by E. Frank Stephenson at 11:56 AM
Tragedy of the Schwinn, Yet Again
Paris's Velib, one of the supposedly successful bike sharing programs, seems to be encountering some difficulty:
A popular bicycle rental scheme in Paris that has transformed travel in the city has run into problems just 18 months after its successful launch.
Posted by E. Frank Stephenson at 08:35 AM
February 13, 2009
Mises meets chemistry
His (and others') ideas in Bureaucracy have become manifest at the subatomic level:
Lawrence Livermore Laboratories has discovered the heaviest element yet known to science.
HT: my dean.
February 12, 2009
School reading c. 2009
I have three young children so I have yet to experience the public education system. Supposedly the schools in our county of residence are "good," whatever that means. I think most people are comparing to a border-county's schools, thus "good" might not be saying much. With that, my question is real and I wonder if any DoL readers are willing to offer their insight.
This morning during a visit at Books-a-Million at our local mall I noticed the "School Reading List" section and took a gander. Here are some of the books on the shelf:
There were a few other books, such as the Grapes of Wrath and A Farewell to Arms, but most of them were written by lesser-known or minority authors. While I was pleasantly pleased that these books were (still) on the list, I wonder what the students are being taught they should take from them.
I would lead the discussion of these books in the following way. Each of them shows one or more of the following (not an exhaustive list):
a) the folly of government intervention in the market;
Here is my fear of what students are actually taught (this is an outcome of a discussion with my financial adviser, er, wife):
a) government intervention in the market is too often foiled by "greedy" individuals and corporations;
My experience with most of these books has been rather personal (especially Ayn Rand's work, which I came across on my own by accident). However, I do remember reading Animal Farm in (admittedly private) high school and our teacher explicitly pointing out the allegory with Stalinist Russia and, perhaps even more shocking, how repressive and murderous Soviet Russia had been. I wonder if such a discussion can or does happen today?
Customer-made Theatre c. 1909
In February 1909 there is a running theme in the NYT concerning indecency in the theaters. There have been several letters to the editor complaining about the license being taken by directors and actors, with some calling for censorship or at best a return to the "good old days." In the February 12, 1909 NYT there is a story reporting on a speech given by on Mr. Burnham, President of the Association of Theatre Managers:
Every self-respecting manager would like to be an Irving or a Daly," he [Burnham] continued, "but New York is a town of sensations. It runs wild after a reputation. Let but the word be passed that a play is broad or indelicate, and the town runs wild about it, while some play of merit, bright and entertaining, is laid on the shelf.We see the same thing today in movies, music, television, and the Internet, where the "indecency" seems to increase every year (although Gordon Tullock has an interesting take on censorship and how it might have the unintended effect of leading to more of the censored behavior).
The idea that the public drives the theatre might also apply to professional sports where doping is decried on the radio and in the halls of Congress (neither of which directly affect player/manager/team owner wages) even while revealed preference at the events or for telecasts (both of which do directly affect player/manager/team owner wages) show that the public appreciates the outcome of the doping.
Newspaper Publishers Full Employment Act c. 1909
How about this for "economic stimulus" from the Feb. 12, 1909 NYT:
Every railroad company in the State will be required to publish in all newspapers of every city, town, and village within the State through which its lines operate a schedule of the movement of its passenger trains, if a bill introduced today by Assemblyman Cuvillier becomes a law.So, either the newspapers of the state of New York would become obnoxiously large and heavy, what with the large number of railroads in operation at the time, or the schedules would be printed in 3-pitch font rendering them impractical to read.
Yes, the government has often felt obligated to intervene in what seem to be otherwise healthy markets.
Nothing spurs one into entrepreneurship like the sudden, unexpected decline in his opportunity costs
I wanted to share a Principles of Economics class assignment designed to make the students think more carefully about the concepts of entrepreneurship, opportunity cost and the role of government in society. I cannot be credited with this idea, as I learned of it from another economist at an SEA conference many years ago (and, shamefully, whose name I cannot recall). This assignment is comprised of answering various questions regarding Somerset Maugham's short story, "The Verger." I can send anyone interested an abridged version of the story that I use as a homework assignment. You can contact me here.
The story revolves around a verger (sort of a church custodian) pressured to leave his employment due to his illiteracy, and for his unwillingness to correct it. His despondent demeanor causes him to wander the nearby streets to buy a pack of cigarettes to calm him down. Unfortunately, he can't seem to find a tobacconist anywhere nearby. So he then decides to gamble his meager savings on starting a small tobacco shop in the area that ultimately ends up becoming a chain of shops that generate a tidy stream of profits for him.
The closing paragraphs describe an increduluous banker's reaction upon learning of the (continued) illiteracy of this highly successful business man who is satisfying so many consumers in the neighborhood. "Good God, man, what would you be now had you been able to (read and write)?" With a smile the illiterate man states that he'd still be the modest verger toiling away at his church.
I use this story to illustrate the role of unpredictable serendipity, idiosynchratic market insight among individuals, and a willingness to accept signifiant risk as necessary characteristics of entrepreneurship. In this light I ask my students to consider whether any kind of centralized government entity would have a comparative advantage in exploiting these key characteristics relative to the decentralized collection of individuals voluntarily interacting in society. This question is even more applicable during today's pressure for accepting ever more government intervention into allocating our nation's productive resources.
I get the students to consider what aspects of this scenaraio were foreseeable and which were not. I ask them to consider how nothing spurs an individual's willingness to become an entrepreneur more than a sudden, unexpected and significant decline of one's opportunity costs (that is, when there is nowhere to go but "up"). I then ask them to consider whether government policy, as designed by literate and highly learned men, can adequately be designed and implemented to respond to such ever-changing, unpredictable opportunity costs as well as individuals--even illiterate ones.
It all makes for a good class discussion starter and a nice seque from the usual comparative advantage section of the intro chapter(s) into the section on comparing and contrasting economic systems. I think it makes the potentially dry, conceptual discussion of socialism versus capitalism much more tangible and increases the student's empathy for the individual's perspective in each system.
February 11, 2009
If you move fast and go here, you can see a clip of me and two of the other LSUS economists (new slogan: twice as many faculty as last year!). It's in the Top News Videos section on the right, currently on page 4, "How will the stimulus package help you and I?" (Check out the Baywaytch-style slow-mo at about 0:42.) Of course, creative editing left in Chris' comment about the multiplier, and left out all of us expressing significant doubts about it being that high (let alone above 1). For the record, I was one of the two out of three advising nothing.
One of my favorite reads of last year was Jim Powell's FDR's Folly. Even though it's currently ranked #832 in books, it doesn't appear to have been read by anyone in DC lately (okay, maybe at Cato, but not by anyone with a finger on a real button). With all of this stimulus fever, I'm tempted to buy this Snorg t-shirt: it combines pithy but economically saavy commentary with greater-than-mild nerdiness.
DeLong on the Academic Job Market
Brad DeLong argues (briefly and convincingly) that Berkeley should hire aggressively in this year's job market. Why don't they? I think there's a lot to be said for the psych econ/sports econ results suggesting a bias toward inaction, and I think there are institutional forces at work, as well. I read this morning that the same schools who were the subjects of government investigations into their accumulation of ginormous endowments are now bound by rules saying they can't draw down their endowments to cover budget shortfalls or proceed with hiring plans.
February 10, 2009
Bleggar Thy Neighbor
Recent blegs have led to some pretty interesting emails. First, a Rhodes alum and former Program Director for the Governor's Books From Birth Foundation emailed detailed information about the Tennessee books program I discussed recently. Apparently, Tennessee is keeping copious data on it and apparently there are a few things that are unique about the Tennessee program. Since Tennessee borders more states than any other, the opportunities for clear identification are numerous. I revise downward my estimated probability that "Shelby County and the State of Tennessee are wasting their money" to about 0.75.
Second, regarding the popularity of Marx in the Ivory Tower, Todd Kendall sent along the following, which he heard from Allen Sanderson at Chicago: if we eliminate the market, most people would choose merit as the critierion for allocating resources. Therefore, resources would be redistributed toward intellectuals. He notes, though, that this doesn't explain why economists reject Marx.
Finally, a student emailed me about Paul Krugman's post on the possible second-best benefits protectionism. My response:
I've seen this--this is actually a pretty good argument. Krugman is saying that in a world where countries cannot coordinate their fiscal/monetary stimuli, protectionism might be wealth-increasing because it keeps the stimulus money inside the country. At the end of the piece, though, he makes the same criticism that I would make, which is that while the proposal works in an ideal world, political reality makes it almost impossible to implement without it being distorted by special interests. Further, the long-run costs are likely to outweigh the short-run benefits because, as Krugman points out, returning to the status quo would be politically difficult.
Bonus: On my way back from class a few minutes ago, I saw a few posters for an on-campus discussion of whether aid can work. I don't know if I'll be able to make it, but if a couple of posters in the hallway are sufficient indicators, it looks like the organizations sponsoring the event are taking what William Easterly would call a "searcher" approach to aid and development. For more, here's Easterly's new Aid Watch blog. Here's my take on foreign aid and the economics of institutions.
The strength stocks have shown lately vanished on Tuesday as the government unveiled a new bank-rescue plan and congressional action neared on a fresh round of fiscal stimulus for the wheezing U.S. economy.
Source. Can we get a hippocratic oath for politicians?
Mike Lester on the Stimulus, Part II
Mike Lester of the Rome News-Tribune has another cartoon on the stimulus. I don't get the plantation costumes for the Obamas but the fireplace and portrait are spot on.
Posted by E. Frank Stephenson at 08:46 AM
Obama's Next Cabinet Nominees?
From an AP report (emphasis added):
The Associated Press found that, since [Plaxico] Burress joined the NFL in 2000, he has been sued at least nine times by people who said he failed to pay a debt, damaged their car or didn't pay his taxes.
UPDATE: Here's another choice for the Obama cabinet:
Prosecutors asked a federal judge Monday to send former Washington mayor Marion Barry to jail for failing to file his tax returns for the eighth time in nine years.
Posted by E. Frank Stephenson at 08:40 AM
February 09, 2009
My marketing colleague Nancy Albers-Miller is quoted in this NPR story on the Michael Phelps pot incident.
BTW, boos and hisses for the spotlight grabbing sheriff in SC who wants to prosecute Phelps.
Sunk Costs Are Sunk
This post on mlbtraderumors.com caught my eye:
According to Joe Strauss of the St. Louis Post-Dispatch, the Cardinals have released Adam Kennedy. They'll still be responsible for his $4MM salary. The move was "apparently made at the strong urging of manager Tony La Russa," who didn't want Kennedy to be his starting second baseman.
I'm guessing Hudson shouldn't wait too anxiously by the phone--releasing Kennedy doesn't free up his $4m salary. Kennedy's salary being a sunk cost shouldn't alter the decision to sign Hudson, something the Cards were apparently not interested in doing. Maybe Hudson is an improvement over Schumaker and Ryan while he wouldn't have been an improvement over Kennedy, but that raises the question of why the Cards would then release Kennedy.
Books in the Home and Child Development
A couple of things have happened recently that have caused me to think about the high correlation between the number of books in a child's home and his or her educational attainment. First, I recently purged a lot of books from my offices at home and at school (beneficiaries include the Barret Library at Rhodes and the library at Bellevue Baptist Church).
Second, we got our most recent free* kids' book from Shelby County, in cooperation with the Dolly Parton Imagination Library and the Tennessee Books from Birth Foundation. If I remember Freakonomics correctly, programs like this are based in part on the "books in the home"=>high achievement correlation, but it isn't the books as such that are causing achievement. It's the fact that "books in the home" is a proxy for the kind of home environment in which education, reading, and achievement are valued.
This kind of environment probably cannot be created from the top down by well-intentioned social reformers mass-mailing copies of The Little Engine That Could to familes with young children. Hence, I believe that the proposition "Shelby County and the state of Tennessee are wasting their money" is true with p = 0.95. If you know of any research that has estimated the effects of these programs, please let me know. The same goes for any instances in which programs like this have been eliminated because it has been found that they are ineffective; my hunch is that any proposal to stop mailing books to infants is a political no-sell.
*-"free" as in "our tax dollars at work."
Congrats to Art for his nice time in his first (?) race and winning of the bet! I'll be happy to substitute a fine non-HFCS-laden Coke for the beer I owe him, but would offer up a nice glass of Zacapa Centenario as an option. (Btw, I just got back yesterday from a Liberty Fund symposium in Guatemala and scored a couple liters of Zacapa for the liquor closet.)
On the subject of running, I'll happily brag a little about my marathon time from last weekend. 3:10:53 in the Mardi Gras New Orleans Marathon. It was a near perfect run. I ran a negative split (1:36 for the first half and 1:34 for the second) and felt great all the way. This is a new PR and I'm really thrilled. Alas the Boston Marathon has already closed for 2009, but I'm planning to go back in 2010.
On the work front, I recommend this new article from Djankov, et al. on "Disclosure by Politicians". I think this paper represents the background for a possible forthcoming Doing Business category on corruption/transparency.
We collect data on the rules and practices of financial and conflict disclosure by politicians in 175 countries. Although two thirds of the countries have some disclosure laws, less than a third make disclosures available to the public. Disclosure is more extensive in richer and more democratic countries. Disclosure is correlated with lower perceived corruption when it is public, when it identifies sources of income and conflicts of interest, and when a country is a democracy.
February 07, 2009
Treatment Effect of Cohabitation Bleg
I listen to a local Christian talk radio station when I'm driving, and today I heard another discussion of the alleged perils of premarital cohabitation. I say "alleged" because while I'm sympathetic to the basic argument, I'm not convinced we're measuring the effect accurately. The guests interviewed made a number of comparisons between married couples who never cohabited and married couples who did, and according to a variety of indicators non-cohabiting couples do much better: they're happier, they're more likely to stay married, etc.
Nothing was said about the identification strategies used in the studies mentioned, however. What appear to be simple differences-in-means comparisons omit a lot of relevant information, and the decision not to cohabit before marriage is likely to be related to a lot of other characteristics that might make for a long, happy marriage. The difference in the probability of divorce for cohabiting and non-cohabiting couples reported on the radio is an upper-bound estimate of the real effect of cohabitation on the probability of divorce. A quick Google Scholar search for ["treatment effect" cohabitation] doesn't yield much that I can access. Any cites identifying the treatment effect of prior cohabitation on the probability of divorce would be greatly appreciated. If this hasn't been done, it would be a great paper topic for someone interested in issues related to labor and the family.
I find this interesting for reasons beyond just curiosity or concern for the welfare of society. There is also the matter of wise stewardship. Systematically biased information about social phenomena lead to inappropriate policies, programs, and assorted endeavors. In a world with scarce resources, this means that we might not be maximizing the bang we're getting out of our charitable and educational bucks. Time and money directed toward counsel against premarital cohabitation on the belief that it leads to a substantial deterioration in the quality of the future marriage and an increase in the probability of divorce will be poorly spent if the impact of premarital cohabitation on marriage quality and duration is small. If the effect is small, then the time and money groups are spending fighting premarital cohabitation might yield greater fruit if they are used elsewhere. Here are my priors: I wouldn't be surprised if the treatment effect of cohabitation on the probability of divorce is positive, but I would be very surprised if it's as large as the people I heard on the radio are saying. I don't know, but before we sound alarm bells about the effects of cohabitation on different indicators, we should make every effort to measure those effects accurately. I'll post on this again as soon as I find out.
Bob Lawson Owes Me a Drink
I finished the Mike Cody Four-Mile Classic in 46:45, roughly two minutes less than our agreed-upon goal of 48:44. I realize that's a laughably pathetic time for serious runners, but I'm pretty happy with it given that my goal was just to cross the finish line. I know Bob offered a beer, but since we'll be outside the US I'll settle for a taste of protectionism (Mac blogging, can't link, so here's the URL: http://findarticles.com/p/articles/mi_qa5477/is_200710/ai_n21301892/pg_1).
A reader asked me about the appeal of Marx across the humanities and social sciences in spite of the fact that his system is fundamentally flawed and 20th century attempts to implement his vision are soaked in blood. I can't do much more than speculate on this right now, but I wonder if Marx's appeal stems from its flattery of what Hayek called "The Fatal Conceit." Mises speaks to this a little bit in "The Anticapitalistic Mentality," but if memory serves me correctly he doesn't offer much in the way of systematic evidence.
For readers fortunate enough to have regular multi-disciplinary conversations with earnest and inquisitive thinkers from across the ideological and intellectual spectrum, here's a question to consider: why don't they read Mises and Hayek instead of Marx? Both were, like Marx, systematic and rigorous thinkers of towering intellect who applied their insights beyond economics. Unlike Marx, however, they developed and built on correct theories of value, prices, and business cycles. I realize there's a lot of contention within economics about Misesian/Hayekian business cycle theory, so this last claim is weaker than the first two.
I wonder if path dependence isn't at play here. I agree that the economics of QWERTY can be laid to rest in market settings--Tyler Cowen and Peter Klein have blogged about this recently--but I think it has much to tell us about the dynamics of systems in which feedback mechanisms like prices, profits, and losses are lacking. Is Marx the QWERTY of the ivory tower? I need to think about this in greater detail, but the robustness of the Marxian system in light of his failed theories of value, exploitation, alienation, and class conflict is not apparent to me.
I'll be writing about this periodically as I prep my Econ 323 notes over the next few weeks. I'm always grateful for insight, correction, and reproof; you can reach me at cardena-at-rhodes-dot-edu.
How is Mark Zandi Like a Psychic?
The crummy economy is good for psychics:
If this sounds like the advice of a financial planner or an economist, think again. It's a reading from psychic medium Roxanne Usleman.
It's an open question whether the stimulus bill can lift the nation's ailing economy. But this much is certain: It's a bonanza for the career of Mark Zandi.
Hmmm ... I wonder if they have more in common than negative income elasticities of demand for their services.
Running While Thinking About Bohm-Bawerk and Marx
The Mike Cody Four Mile Classic begins in about 40 minutes. It's my first race, and my goal is just to cross the finish line. I don't care if I'm walking (likely), running (unlikely), or crawling (possible) when the race is over as long as I finish it. I'll count it a double success if I win my bet with Bob.
So what will I be thinking about while I'm running, apart from "I can't beleive I signed up for this, I think my lungs are on fire, I want to die"? In getting ready for a couple of weeks of discussing Karl Marx, Adam Smith, and classical economics in Econ 323, I've been slogging through Eugen von Bohm-Bawerk's Karl Marx and the Close of His System, which is a systematic, point-by-point discussion of the fundamental incoherence of the Marxian system. Marx's "law of value" holds that the value of a commodity is determined by the amount of socially necessary labor needed to produce it. This also determines the ratio at which commodities are exchanged. Bohm-Bawerk systematically shows that this is inconsistent the fact that profit rates tend toward uniformity across industries. Either the law of value is true, or the tendency toward uniformity of profit is true, or both are false. They can't both be true. I recognize that Thomas Sowell disagrees with and criticizes Bohm-Bawerk's interpretation, but after reading Rothbard's chapters on Marxism in his Classical Economics, I'm inclined to believe that Bohm-Bawerk's critique is accurate.
In the twenty-first century, I'm not sure how much mileage we get as economists by beating up on Marx's economics. It's a dead horse, and we've known it for quite some time. After reading selections from Marx's Economic and Philosophic Manuscripts of 1844, however, I'm more and more convinced that social-scientific analysis derived from Marxian principles is fundamentally flawed. Among the essays I've read ("Estranged Labour," "Private Property and Labour," "Private Property and Communism," "Human Needs and Division of Labour Under the Rule of Private Property," and "The Power of Money"), it appears that Marx's social theory rests on his value theory. Without his value theory, his claims about alienated labor, capital and money as the embodiments of alienated labor, and the power relations among classes are invalid (NB: Here's David Prychitko's article on Marxism in which he notes that Marx's theory of alienation is also weakened by the Austrian theory of knowledge and its role in society).
I'll be thinking about this while I'm running this morning. If anyone can direct me to cites arguing convincingly that Marx's social theory is fundamentally independent of his value theory and his economic analysis, I would be grateful.
February 06, 2009
What NY Should Tax
Several blogs (I think I saw this first on Carpe Diem) have pointed out that the NYT has discovered that taxes have incentive effects:
Anybody who has paid for theater tickets recently in New York City knows what a big hole they can leave in the family budget. Gov. David Paterson of New York wants to make that hole even deeper with a new theater ticket tax.
The quote that the tax might exacerbate NY's budget problems or kill its golden goose (calling Art Laffer) reminded me of the snarky thought I had after NY imposed dozens of tax increases (furs, theater tickets, soft drinks, ...): they somehow missed taxing the one thing that might generate revenue for the state--UHaul trucks as folks flee Gov. Paterson's greedy hand.
Posted by E. Frank Stephenson at 09:31 PM
About as Firm as Jello
Jacob Sullum points to this quote of Obama's from last September:
I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.
Just one problem ... in signing the SCHIP bill which hikes cigarette taxes Obama has already broken this promise. Not only has he broken his promise--in a mere two weeks after taking office!--he's done so by hiking a tax that falls most heavily on low income folks.
Dogs bark (or, in the case of Pee Wee's puppy they ...), roosters crow, and Democrats raise taxes.
ADDENDUM: The tax promise isn't the only one Obama has broken. Tonight's "Special Report" on FNC reported that Obama's prompt signing of the SCHIP bill and the Lily Ledbetter bill violated a campaign pledge to post bills on a website for comment for 5 days before signing them.
Posted by E. Frank Stephenson at 09:06 PM
... and throw away the key
Doug Bandow's take on the Phelps incident:
Michael Phelps ... has violated the law. ... [H]e admitted the crime. The same crime for which the better part of a million people were arrested last year.
Mike Lester on the Stimulus
Today's offering from Mike Lester of the Rome News-Tribune:
President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
Reality TV and Economics
1. In "Kitchen Nightmares," Chef Ramsay visits and rehabilitates restaurants that are unmitigated disasters. In addition to helping me better understand the fine points of fine dining, the importance of fresh ingredients, etc., it's an interesting study in and appilcation of economic concepts like specialization, division of labor, entrepreneurship, competition, and information economics. At no point does Chef Ramsay advise any of these restaurants that they have to take prices as given and compete by adjusting their quantity until marginal revenue is equal to marginal cost. Competition is about innovation.
2. "Hell's Kitchen" has chefs competing for a spot as executive chef at one of Ramsay's restaurants. It illustrates important points about strategy and competition, but I wonder if the participants are behaving wisely when they are talking bad about one another and devising devious strategies behind one another's back but in front of the camera. There's winning and losing on the show to think about, but there's also the broader perspective: these people have careers to consider. Lying to Gordon Ramsay might help you in the very short run, but competition means that these things have a way of catching up to you. Lying to Gordon Ramsay on national TV will only make it catch up faster.
February 05, 2009
Dog Bites Man
A government watchdog group says the federal government overpaid for stocks and other assets from financial institutions under its $700 billion rescue program.
Source. Although it is comparing stocks and flows, the last paragraph reminds me of the old saw about the best of becoming a millionaire--start out as a billionaire.
Speaking of dogs, Pee Wee is getting his first puppy later today. Our 22 year old cat (we're thinking of changing her name to Methuselah) is not amused.
Posted by E. Frank Stephenson at 12:34 PM
"Because I Want It So" c. 1909
The Feb. 5, 1909 NYT provides a draw from the "Because I want it so" drawer:
A reduction of 2 cents a kilowatt hour for electricity in Brooklyn is provided for in a bill introduced to-day by Senator Cullen. The bill reduces the price from 12 to 10 cents, making it uniform in the Boroughs of Manhattan and Brooklyn. The measure was referred to the Cities Committee, notwithstanding the protest of the introducer, who desired that it be referred to the Committee on Miscellaneous Corporations.The "Committee of Miscellaneous Corporations"? Such a committee actually existed and was given that name?!? I understand that mandating lower prices for Brooklyn might have been seen as a "populist" stance, but how could Mr. Cullen have known what the optimal price for electricity was at the time? What would Mr. Cullen have done if such a law killed the infant electricity industry in its crib? I am sure he would have been outraged that the good "hard working" citizens of Brooklyn were being unfairly denied access to the life-improving, indeed in cases life-saving, service of electricity.
Today's s national average cost per kilowatt hour? 11.96 cents (not adjusted for inflation).
On trade unions c. 1909
There was a time when K Street was just another street in Washington, DC. There was a time when it was less need to send "representatives" to Washington to lobby for and against legislation, there was less need to have "a man in Washington" to watch your six. There was a time when the Legislature wasn't used to tell others what to do with their private property.
Then along came "Populism" and the perception those with "too much" private property would use this property to harm others, to steal from others, to deny others their basic necessities. The cure was to use the Legislature to tell others what to do with their private property. This, in turn, created an incentive for those being attacked to "defend themselves" from the Legislature. It is reasonable for private property owners to respond in this manner, although I might be confusing cause and effect in certain instances.
Unfortunately, once the fixed costs of protecting property rights from the Legislature were borne, the marginal cost of shifting form the "defensive" to the "offensive" in Washintong. That is, using lobbyists, political contributions, graft, and other (perhaps even more objectionable) means to use the Legislature to protect or create profit potential, to erect entry barriers and increase the costs of potential and actual competitors, to finalize the creation of the "mixed economy."
The Feb. 5, 1909 NYT reports on the birth of such an "organization" in the wall paper industry:
Thirty manufacturers of wall paper, representing the largest wall paper mills in the country, met yesterday in the Hotel Victoria and organized the Wall Paper Manufacturers' Association of the United States. A call for the meeting had been sent to practically all the heads of wall paper manufacturing companies in the country, and nearly all responded...And so it began in the wall paper industry and a similar story was told in any number of other industries. One hundred years later not much seems to have changed.
Quick Thoughts on Bonds
Evidence in the crimiinal case against Barry Bonds was released yesterday. It reminded me of reading Game of Shadows last summer. I brought a dislike of Bonds to the book--my impression was that he was a jerk and juicer and the book reinforced those impressions.
Yet the book and its description of the case against Bonds offended my libertarian sense of legal fair play. As recounted by the book (or my 7 month old recollection of reading it), the case against Bonds and Balco started when a federal agent went snooping through the trash outside Balco. The agent didn't appear to have any sort of probable cause but apparently started sniffing around based on a gut instinct. Even worse, the book (and the authors' newspaper articles preceding it) report what is supposed to be secret grand jury testimony. It is certainly their right to report testimony, but the leaking, presumably by prosecutors, is not kosher. So, yeah, I think Bonds is a bum, but bums have rights too and I find his treatment offensive.
Render Unto Caesar?
Here is an excellent article on the historical and political context of Matthew 22:21, the verse in which Jesus says "Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's." It navigates the stormy waters between interpretation of the passage as an uncritical endorsement of taxation and the state and word-mincing interpretations that try to ferret out a pre-established conclusion. I found the article especially interesting in light of the review I'm working on of Paul Heyne's book on economics and ethics, which should be available soon.
At Least They're Studying
They're commonly called "smart drugs" or "study drugs." Scientists call them "cognitive enhancers." Drugs like Adderall and Ritalin, generally prescribed for attention-deficit disorder, are increasingly being used by college students to help them study despite serious side effects, researchers say.
Snarky title aside, it probably isn't a good thing for kids to use drugs as study aids. Econ students--Adderal taking or otherwise--might want to use a supply and demand diagram to explain the last paragraph the snip.
Posted by E. Frank Stephenson at 09:24 AM
The Best of the Beatles
A guy with lots of time on his hands has ranked every original Beatles song, from 185 to #1. His commentary on each song is fun, too. The guy knows a lot about the Beatles.
I'll just list my top 15, knowing they could change tomorrow:
15. Ob-la-di Ob-la-da
I'll allow comments for a little while if anyone wants to list or discuss favorites. I should note - to tie it to the theme of this blog - it pained me to leave off the Beatles great anti-tax anthem, the Taxman.
February 04, 2009
Powell and Stringham on Anarchy
Here's an important and very timely survey article from Ben Powell and Ed Stringham entitled "Public Choice and the Economic Analysis of Anarchy: A Survey," forthcoming in Public Choice. Here's the abstract:
Public choice economists began studying the economics of anarchy in the 1970s. Since then, the amount of research on anarchy has burgeoned. This article surveys the important public choice contributions to the economics of anarchy. Following the lead of the early public choice economists, many current economists are researching and analyzing how individuals interact without government. From their non-public-interested explanations of the creation of government law enforcement to their historical studies of attempts to internalize externalities under anarchy, public choice scholars are arriving at a more realistic perspective on government and how people interact when government law enforcement is lacking. Although the economics of politics often receives more attention, the economics of anarchy is an important area of research in public choice.
Here's some evidence against the "provide public goods and correct market failures" theory of government: the ordinance I mentioned in yesterday's post passed unanimously. I guess that loud noise I heard yesterday was the housing supply curve shifting.
Update: I would be remiss if I mentioned Ed, Ben, Public Choice, and housing in the same post and didn't take a chance to plug the forthcoming book Housing America: Building Out of a Crisis, edited by Randall Holcombe and Ben Powell.
I'm sure this has some significance
The Democrats always rail against tax cheats, and complain that the rich don't pay their share of taxes, etc. etc. Now it appears from the President's cabinet nominees that every third Democrat doesn't pay his or her taxes. And why is it that they all seem to have nannies, drivers, and seven figure family incomes?
Meanwhile, Republicans are the party of public morals and opposition to free love and gay sex. Just ask Senator Craig and Representative Foley. Yet they get all the juicy sex scandals.
I'm sure there is some hidden message here. Your homework is to write a 500 word essay on the topic.
February 03, 2009
Bailouts for bunglers, indeed
Paul Krugman writes that “the administration’s plans for a banking system rescue … are shaping up as a classic exercise in ‘lemon socialism’”. Really? I would have thought that “lemon socialism” is a form of socialism, i.e. government ownership of business, in which the government nationalizes failing firms rather than allow them to enter bankruptcy. Outright nationalization is not what the Obama administration is talking about -- to Krugman’s clear disappointment, when he sneers at its “prejudice in favor of private control” of financial institutions.
What the administration is talking about is further installments of what the Bush-Paulson administration practiced, namely lemon fascism. At least a veneer of private ownership remains while government takes control of the commanding heights.
I share Krugman’s distaste for taxpayer purchases of troubled bank assets, taxpayer guarantees against losses on bank assets, and taxpayer infusions of bank capital. They are each, as he says, “a big gift to bank stockholders”. They are handouts.
But we disagree about the alternatives. I think that there are very good reasons for favoring private ownership of banks, as of other enterprises. It isn’t a “prejudice”: it’s based on the evidence about how badly nationalized banks chronically perform. See: India. See: France.
The option that remains is to let failed banks go into resolution (sale or liquidation). Let their managers and stockholders, not taxpayers, bear responsibility for their bungling. Make room for better-managed banks to expand their market shares. Why not? Krugman writes: “The chaos after Lehman Brothers failed showed that letting major financial institutions collapse can be very bad for the economy’s health.” By that logic, the chaos after the rescues of other firms (Bear Stearns, AIG, Freddie Mac, Fannie Mae) show that rescues are equally bad for the economy’s health. Post hoc ergo propter hoc.
When an airline goes bankrupt, the planes and pilots don’t disappear. They are reallocated to other airlines with better strategies for using those resources. Likewise when a bank is resolved – and FDIC officials are old hands at doing this – the brick and mortar, the deposits, and the financial talent won’t disappear. They will go to other banks with sounder strategies.
Bottom line: You have to choose one of the following for an insolvent bank: handouts, nationalization, or resolution. I prefer resolution. It has served us well to date, for the good reason that it is consistent with the logic of market economy. The others are failed policies, for the good reasons that they are inconsistent with the logic of a market economy.
Tax Cheats Withdraw
Econ 101 Homework Assignment
Yesterday's Memphis Flyer caught my eye with a cover story about homelessness, and it reminded me of a discussion I had in December with a group of real estate investors and landlords. I then wrote the following econ 101 homework assignment:
This problem will also resemble a problem that might appear on the exam (sans the reading assignment).
Read the article “No Place Like Home,” which is the cover story in the 1/29/09-2/4/09 issue of the Memphis Flyer. If you are still looking for an idea for paper #1, this would be a viable candidate.
1. Use the principles we discussed in class on Thursday, 1/29 and Tuesday, 2/3 to formulate a hypothesis that might explain why the quantity of housing demanded exceeds the quantity of housing supplied (3 points).
2. Is the elasticity of the housing supply curve likely to be greater in the short run or in the long run? Explain your answer using an appropriate diagram (3 points).
3. In a meeting on December 16, 2008, the Memphis City Council considered an “Ordinance to Provide for Minimum Energy Efficiency in Rental Property.”* The ordinance would require landlords to make improvements that would increase the energy efficiency of their properties in Memphis. Using a supply and demand diagram, predict how this ordinance would affect the equilibrium price and quantity of housing in Memphis. Explain your answer using the “Ten Key Elements of Economics” and the principles you learned in our discussion of the laws of supply and demand (3 points).
4. Suppose a classmate argues that the housing supply will not change because landlords can still earn profits. In light of the principle that people make decisions at the margin, is this correct or incorrect (1 point)?
*Audio of the City Council discussion can be found at http://memphis.granicus.com/MediaPlayer.php?view_id=2&clip_id=1097; you can select the option to “Jump To…” the discussion of the ordinance, which is the last item discussed. I had trouble with the “Jump To…” option with Firefox, but it works with Internet Explorer. Disclosure: I first learned of this ordinance when I gave a talk to the Memphis Investors Group, which is comprised of local real estate investors and landlords.
Independent Institute's 2009 Templeton Essay Contest
Open to students and untenured faculty no older than 36 years.
This year's topic:
“Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters.”
Deadline: May 1, 2009. Details on TII's website.
Line of the Day ...
... comes from a Cincinnati police officer arresting Ole Miss basketball coach for an altercation with a cabbie (empahsis added):
Cincinnati — A newly released police video shows Mississippi basketball coach Andy Kennedy pleading with an officer before his arrest on an assault charge.
Sorry Bob. The incident has spawned suits between the cabbie and coach; the coach's suit includes a claim that the incident has cost him a "loss of consortium" with his wife. Source.
February 02, 2009
Paragraph and Sentences of the Day: Ed Glaeser on the Housing Crisis
Via Arnold Kling, here's Ed Glaeser writing in The New Republic:
In the midst of today's housing crash, certainly, subsidizing borrowing looks particularly foolish. The government essentially encouraged Americans to leverage themselves to the hilt and bet on housing markets. Now a lot of those erstwhile owners have lost everything. Why exactly does it make sense to subsidize gambling on home prices?
Here's Glaeser on land-use restrictions and their environmental impact:
The problem is that local environmentalism is rarely good environmentalism. When local land-use controls stop development in coastal California, this does not slow the pace of new development. It merely moves new development elsewhere, to places where landowners can still freely build. Unfortunately, places with less restrictive controls, such as Houston, have browner sources of energy and less temperate climates. A new home in Texas uses a lot more energy than a new home in California. But when California environmentalists shut down new construction around the San Francisco Bay, they push development to the suburbs of Houston. The net result is that California's land-use restrictions make housing unnecessarily expensive and increase carbon emissions.
Here's an interesting movie on California land-use fights.
Sorry, Bob. It's not a Cinemax title. Launched officially today, it's the cool new wiki that lets you search, evaluate, and "vote" for individual line items proposed for the the stimulus package. Brought to you by our friends Jerry Brito and Eileen Norcross. With details here.
Does Gordon Tullock Write for NPR?
Of course not, but this NPR story on asphalt and concrete firms vying for bites of porkulus is right out of rent-seeking 101:
With the $800 billion-plus stimulus bill coming up for debate in the Senate on Monday, all over Washington, lobbyists are making their own pitches for why bigger investments and tax breaks are best spent on their industry. As groups compete to defend their parochial interests, they sometimes find themselves pitted against others in their own industry.
Posted by E. Frank Stephenson at 12:23 PM
RE: "... not magically transformed to selfless agents of the good ..."
That part of John Hasnas's essay reminded me of this story in today's AJC:
A day after Atlanta fire Chief Kelvin J. Cochran declared his department in “an extremely vulnerable situation” because of firefighter absenteeism, fire officials Monday reopened five stations. The stations had been ordered temporarily closed on Sunday.
Posted by E. Frank Stephenson at 12:15 PM
What it feels like to be libertarian
By John Hasnas, posted on his website. What does it feel like to be a libertarian these days?
I’ll tell you. It feels bad. Being a libertarian means living with a level of frustration that is nearly beyond human endurance. It means being subject to unending scorn and derision despite being inevitably proven correct by events.
ATSRTWT. Don't be fooled by John's brevity. There is much packed into few words here. Well worth the read. And well worth saving these ideas!
I Guess We Now Know Why Michael Phelps Has a 12,000 Calorie Daily Diet
Olympic great Michael Phelps acknowledged "regrettable" behavior and "bad judgment" after a photo in a British newspaper showed him inhaling from a marijuana pipe.
The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith
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