Tuesday, December 14, 2010

Saturday, December 11, 2010

Will fiscal policy return to hibernation?

Sometimes the only way to diminish an idea is the try it, to see what happens when it is implemented. Keynesianism was largely irrelevant from the 1970s until George W Bush revived it in his administration, and the Obama administration is crowded with Keynesians. But is this revival supported by the evidence? Michael Boskin said "No" in the Wall Street Journal more than a week ago:
These empirical studies leave many leading economists dubious about the ability of government spending to boost the economy in the short run. Worse, the large long-term costs of debt-financed spending are ignored in most studies of short-run fiscal stimulus and even more so in the political debate.
Only time will tell if we will see Keynesianism again recede. 

One attraction of Keynesian policy is that it lets the government do something and people want the government to do something when there is a problem. There is, however, an asymmetry in how the results are judged. The Obama economists projected a path for unemployment with and without the stimulus program that Congress enacted shortly after Obama became president. Unemployment did not follow the projected path; on the contrary, it has greatly exceeded the path predicted if there were no stimulus. The Keynesians have not acknowledged that this is evidence that their program did not work. Rather they argue it shows that the program was not big enough. They are taken seriously in this response. However, consider what things would look like if the stimulus had not been enacted and unemployment had taken the course that it has taken. Would anyone take seriously the response that the initial shock was bigger than we had realized? Everyone would have concluded that we made a mistake in not passing a stimulus.

There is an incentive for politicians to "do something" in the way the media and the public react to failure. They are more willing to forgive failure or explain it away when the government acts than when the government does not act.

Tuesday, December 7, 2010

A great start

An article in Forbes begins with this great sentence:
The sovereign debt crisis now threatening Europe, as well as major American states and cities, discloses the sheer incompetence of a political class that has over-promised, under-delivered and squandered vast amounts of their citizens' wealth. 
That really gets to the heart of the matter, doesn't it?

The unfunded pension liabilities of the city of Chicago are $40,000 per household. Things must have looked really bad at the White House for Rahm Emanuel to have quit and gone back to Chicago.

Sunday, December 5, 2010


From the Wall Street Journal:

A 23-year-old Russian man accused by U.S. authorities of generating nearly a third of the spam e-mails worldwide is expected to be arraigned Friday in a Milwaukee Court.

The quotation is from the article in the print edition, which goes on to say that he used 509,000 infected computers to send as much as 10 billion spam e-mails a day that sold items including fake Rolex watches and counterfeit Viagra.

I am so impressed that I cannot get too angry, even though his operation has cost me wasted time deleting unwanted e-mail messages. At 23 I was unable to earn a living, so I went to graduate school.

Wednesday, November 17, 2010

Another viral youtube video

It is not too often that an economics video goes viral, but another one has.

It is rather funny, which probably explains its success.

Tuesday, November 16, 2010

Dirty jobs

Found from a link on a teaching-economics mail list, an article in the Chronicle of Higher Education about life as a professional paper writer:

I've written toward a master's degree in cognitive psychology, a Ph.D. in sociology, and a handful of postgraduate credits in international diplomacy. I've worked on bachelor's degrees in hospitality, business administration, and accounting. I've written for courses in history, cinema, labor relations, pharmacology, theology, sports management, maritime security, airline services, sustainability, municipal budgeting, marketing, philosophy, ethics, Eastern religion, postmodern architecture, anthropology, literature, and public administration. I've attended three dozen online universities. I've completed 12 graduate theses of 50 pages or more. All for someone else.
From my experience, three demographic groups seek out my services: the English-as-second-language student; the hopelessly deficient student; and the lazy rich kid.
...it's hard to determine which course of study is most infested with cheating. But I'd say education is the worst.

The attitude of the students that he works for, who are not interested in learning but only in being credentialed, is a major reason that I was happy to retire from academia this year. That, and the denial of the problem that was pervasive among the faculty.

Addendum: One of the contributors to the e-mail list on which I found this believes that this article is fiction. He argues that it seems too much designed to cater to the prejudices of the readership of the Chronicle--such as emphasizing writing papers for seminarians about ethics. It certainly is possible that it is fiction. With anonymous sources is that you cannot check them.

Sunday, November 14, 2010

the Billion Prices Project

The billion prices project at MIT, an attempt to use online prices to form price indices: http://bpp.mit.edu/

Tuesday, November 9, 2010


James Taranto considers some predictions:
there are no signs of a dramatic rebound for the party, and the chance of Republicans winning control of either chamber in the 2010 midterm elections is zero. Not "close to zero." Not "slight" or "small." Zero.
Making predictions is risky, which is why I try to avoid them. However, when someone makes a prediction that turns out correctly, that person deserves to be taken more seriously in the future. The correct prediction shows that they have understanding. Obviously when a person's predictions are completely wrong, that person should lose credibility because the failed prediction shows that their understanding of the situation is flawed.

Tuesday, November 2, 2010

Accuracy of government data

This does not give one confidence in government data:

Two people were found to have filed multiple W-2 forms that made them into multibillionaires, an agency official said yesterday. Those reports threw statistical wage tables out of whack and, in figures released Oct. 15, made it appear that top U.S. earners had seen their pay quintuple in 2009 to an average of $519 million.

The agency yesterday released corrected tables that showed the average incomes of the top earners, in fact, declined 7.7 percent to $84 million each.

Monday, November 1, 2010

Is Barack Obama a Keynesian

Mildly funny, but not really surprising. How many college students have ever heard of Keynes?

Another youtube video of Hayek and Keynes

Found on Division of Labor:

Wednesday, October 27, 2010

Who is using the web?

Video will rule the web:

Netflix's streaming service has become so popular that it is now the largest source of U.S. Internet traffic during peak evening hours, according to Sandvine Inc., a Canadian company that supplies traffic-management equipment to Internet service providers.

Streaming by Netflix subscribers accounted for about one-fifth of that peak-time traffic, more than double the volume flowing from Google Inc.'s YouTube, Sandvine said.

Tuesday, October 26, 2010

Another fun Youtube video

Gilbert and Sullivan would probably approve:

Monday, October 11, 2010


From Mark Halperin at Time who, in the words of Jennifer Rubin, is "known for his talent in parroting Democratic conventional wisdom:"
With the exception of core Obama Administration loyalists, most politically engaged elites have reached the same conclusions: the White House is in over its head, isolated, insular, arrogant and clueless about how to get along with or persuade members of Congress, the media, the business community or working-class voters. This view is held by Fox News pundits, executives and anchors at the major old-media outlets, reporters who cover the White House, Democratic and Republican congressional leaders and governors, many Democratic business people and lawyers who raised big money for Obama in 2008, and even some members of the Administration just beyond the inner circle.
So the rubes are finally awakening to reality that electing a man totally unqualified to be president is not a good thing to do.

Glen Reynolds comments on the media, "Hey, they’ll go down for you, but they won’t go down with you. . . ."

Thursday, October 7, 2010

Some Coasian economics

From the National Review's Corner blog, a story of a failure of the free market:
"Me:  How much will you pay me?"

The transactions costs were apparently too great to get a mutually-acceptable agreement.

Sunday, October 3, 2010

Self identifying

On October 2 a rally designed to support the Obama Administration and the progressive cause, and to push back against the Tea Party rallies, was held in Washington D. C. Several hundred organizations endorsed it. If one wants a list of the organizations that make up the activist Left in the United States, this list serves a a good starting point because it contains those that have self-identified as being Leftwing. Here they are, taken from the onenationworkingtogehter.org website:
A. Philip Randolph Institute
A. Philip Randolph Institute - The Metropolitan New York Chapter
Action LA Network
AFGE: American Federation of Government Employees
AFSCME 3800 - University of Minnesota Clerical Workers
AIDS Walk Washington
All Hands on Deck
Alliance for Democracy
Amalgamated Local 171 UAW
American Arab Anti-Discrimination Committee
American Association of University Professors
American Federation of Teachers
American Federation of Television and Radio Artists
American Friends Service Committee
American Muslim Association of North America (AMANA)
American Rights at Work
Americans for Democratic Action
Americans for Financial Reform
ANSWER (Act Now to Stop War and End Racism) Coalition
Apollo Alliance
Bail Out the People Movement
Bethel Tabernacle AME Church, Brooklyn
Beulah Church of the Nazarene
Black Leadership Forum, Inc.
Black Women’s Roundtable
Black Youth Vote
Bronx for Change
Brooklyn for Peace
Brooklyn United for Innovative Local Development
Bryn Mawr Peace Coalition
California Black League of Voters
California National Organization for Women
Campaign for America’s Future
Campaign for Community Change
Campaign for Peace and Democracy
Campus Camp Wellstone
Campus Progress
CEEF: Center for Community and Economic Justice
Center for Biological Diversity
Center for Community Change
Central Jersey Coalition Against Endless War
Charlie Fink Productions
Chesapeake Climate Action Network
Chicago Democratic Socialists of America
Chicago Teacher’s Union – AFT Local 1
Children’s Defense Fund
Church of the Evangelical United Church of Christ
Citizen Wave
Cleveland Peace Action
Climate Crisis Coalition
Coalition for Peace Action
Coalition of Black Trade Unionists
Coalition of Black Trade Unionists Region One
Coalition of Labor Union Woman
Coalition on Human Needs
CODA (Coalition for a District Alternative)
Code Pink
Coffee Party Progressives
Color of Change.org
Committee of Correspondence for Democracy and Socialism
Communication for Social Change Consortium
Communications Workers of America
Communications Workers of America Local 2336
Communist Party USA (CPUSA)
Community Empowerment Network
Council of Islamic Organizations of Greater Chicago
Courage Campaign
CUNY University Student Senate
DC Asian American and Pacific Islander Democratic Caucus
DC Latino Caucus
DC Vote
Delaware Pacem in Terris
Demand Equity Now
Democracy for America
Democratic Socialists of America
Detroit Democratic Socialists of America
Disciples Justice Action Network
Dr. Martin Luther King, Jr. DC Support Group
Drum Major Institute
Earth Day Network
Energy Action Coalition
Equality Federation
Equality Wisconsin, Inc.
Ex-Offenders Association of PA
Family Equality Council
Fellowship of Reconciliation
Free Speech TV
Friends of the Earth
Friends of the Poor
Fur Cultural Revival (Darfur Community Center)
Gathering for Justice
Gay Alliance of the Genesee Valley
Gay, Lesbian and Straight Education Network (GLSEN)
General Board of Church and Society- United Methodist Church
Generation Change
Generational Alliance
Georgia Peace and Justice Coalition
Gertrude Stein Democratic Club
Get Equal
Gray Panthers
Greater Allen A.M.E. Cathedral
Green for All
Green Party
Green Party USA
Haitian American Caucus
Harlem Congregations for Community Improvement
Harlem One Stop
HOFADS Corp., Inc.
Human Rights Campaign
Humanist Party, New York City Chapter
Illinois Single Payer Coalition
Imani Group
immigration Equality
Injured Workers United
Institute for Policy Studies
Institute of Caribbean Studies
Interfaith Worker Justice
International Association of Machinists and Aerospace Workers
International Federation of Black Prides
International Socialist Organization
International Union of Painters and Allied Trades, AFL-CIO
Iraq Veterans Against the War
Jewish Arab Dialogue Association
Jewish Funds for Justice
Jewish Labor Committee
Jobs with Justice
Jordan / Rustin Coalition
Latin America Solidarity Coalition
Latino Action Coalition of DC
Latino Equality Alliance
Latino Federation of Greater Washington
Lawyers Committee for Civil Rights Under Law
Leadership Conference on Civil and Human Rights
League of United Latin American Citizens (LULAC)
Left Labor Project
Lemeul Haynes Congregational Church
Lincoln Park Neighbors United for Peace, Chicago
Long Island C.B.T.U.
Maine Green Independent Party
Majority Agenda Project
Make the Road NY
Maryland and DC AFL-CIO
Maryland Black Family League
Mass Equality
Mass Transgender Political Coalition
Mexican American Coalition
Midwest Academy
Minnesota Coalition for a People’s Bailout
Mother A.M.E. Zion Church
National Action Network
National Alliance Against Racist and Political Oppression, Chicago Branch
National Association for Equal Opportunity in Higher Education
National Association of Black Social Workers
National Baptist Convention, USA, Inc.
National Black Justice Coalition
National Black L.U.V. Festival est. 1997
National Black Law Students Association
National Black Police Association
National Center for Transgender Equality
National Coalition on Black Civic Participation
National Community Reinvestment Coalition
National Congress of Black Women
National Council of La Raza
National Council of Negro Women
National Domestic Workers Alliance
National Education Association
National Exhoodus Council
National Gay and Lesbian Task Force
National Immigrant Solidarity Network
National Jobs For All Coalition
National Missionary Baptist Church
National Network Opposing the Militarization of Youth
National Nurses United
National Organization for Women California
National Stonewall Democrats
National Union of Home and Health Care Employees
National Urban League
National Wildlife Federation
New England Region – AFSC
New Haven Peoples Center
New Jersey Black Issues Coalition
New York City Democratic Socialists of America
New York State AFL-CIO
New York Urban League
Next Step
North Country Peace Group (Long Island)
North Manhattan Neighbors for Peace and Justice
North Suburban Peace Initiative
Northeast Connecticut Coalition for Peace and Justice
NY Coalition of 100 Black Women
NYC Environmental Justice Alliance
NYU Nursing Doctoral Students Organization
One of the 266 Wrongfully Terminated
P.A.P.A.II People Assisting Positive Actions
Parents, Families and Friends of Lesbians and Gays
Pax Christi Metro DC-Baltimore
Pax Christi USA
Peace Action
Peace Action Education Fund
Peace Action Maine
Peace Action Montgomery
Peace and Freedom Party
Pennsylvania Council of Churches
People for the American Way
People’s Organization for Progress
People’s Organization for Progress
Physicians for a National Health Program
Planned Parenthood
Pledge of Resistance - Baltimore
Policy Link
Prayer, Praise and Worship Centers of America
Pride at Work
Progress Ohio
Progressive Congress Action Fund
Progressive Democrats of America
Progressive Democrats of America - NYS and NYC
Queers for Economic Justice
Rainbow PUSH Coalition
Reform Immigration for America
Resurrection Temple of the Lord
Retail, Wholesale and Department Store Union
Riverside Edgecombe Neighborhood Association (RENA)
Roosevelt Institute
School of Americas Watch (SoA Watch)
SEIU 1199
SEIU Local 32BJ
SEIU Local 722
SEIU: Service Employees International Union
September 11th Families for Peaceful Tomorrows
Sierra Club
Sikh Coalition
Single Payer Action Network Ohio - SPAN Ohio
Single Payer New York
Society of American Law Teachers
Stonewall Democratic Club
Stonewall Democratic Club - Los Angeles
Stonewall Young Democrats
Student World Assembly
Suffolk Peace Network
Teamsters Local 808
The Community Church of NY Unitarian Universalist
The L.I.F.E. Institute
The New Testament Revival Cathedral
The New York Immigration Coalition
The Opportunity Agenda
The Other 98%
The Power: The People United for LGBT Equality
The Religious Institute
The Shalom Center
The Southern Anti-Racism Network (SARN)
Tikkun-Network of Spiritual Progressives
TransAfrica Forum
Transition United States
Transport Workers Union of America
True Colors, Inc.
TWU Local 100
UAW, International Union
Unid@s LGBT- The National Latin@ LGBT Human Rights Organization
Union Jobs Clearinghouse
Unitarian Universalist Association of Congregations
Unite Here
United Food and Commercial Workers International Union
United Food and Commercial Workers Minority Coalition
United for Peace and Justice
United Mine Workers of America
United Puerto Rican Organization of Sunset Park
United States Students Association
United Steel Workers
Urban Agenda
US Action
US Campaign to End the Israeli Occupation
US Human Rights Network
US Labor Against the War
US Peace Council
US Peace Council– Wisconsin
Utility Workers Union of America, AFL-CIO
Veterans for Peace
Veterans for Peace NY
Voice of Haitian Americans Inc.
Voices for Creative Nonviolence
WAND: Women’s Action for New Directions
War Resisters League
Ward 7 Business Professional Association
Washington Peace Center
Welfare Rights Committee
Whitman Walker Clinic
William Kelibrew Foundation
Win Without War
Witness Against Torture
Women’s Caucus for Political Science
Women’s Funding Network
Women’s International League for Peace and Freedom
Working Families Party
Ya Ya Network
Young People For Working America

Thursday, September 30, 2010

The brain on steroids

From Scientific American:
Yet there are millions of cases of steroid use that occur daily with barely a second thought:  Millions of women take birth control pills, blithely unaware that their effects may be subtly seeping into and modulating brain structure and activity.
The possibility that an accepted form of chemical contraception has the ability to alter the gross structure of the human brain is a cause for concern, even if the changes seem benign -- for the moment. 
It is ironic that so many people are so concerned with minute traces of man-made chemicals in the environment but think nothing of dousing themselves with huge dozes of man-made chemicals that are prescribed by their doctors.

Saturday, September 25, 2010


From the Christian Science Monitor:

The cyber worm, called Stuxnet, has been the object of intense study since its detection in June. As more has become known about it, alarm about its capabilities and purpose have grown. Some top cyber security experts now say Stuxnet's arrival heralds something blindingly new: a cyber weapon created to cross from the digital realm to the physical world – to destroy something.
The appearance of Stuxnet created a ripple of amazement among computer security experts. Too large, too encrypted, too complex to be immediately understood, it employed amazing new tricks, like taking control of a computer system without the user taking any action or clicking any button other than inserting an infected memory stick. Experts say it took a massive expenditure of time, money, and software engineering talent to identify and exploit such vulnerabilities in industrial control software systems.
Stuxnet's ability to autonomously and without human assistance discriminate among industrial computer systems is telling. It means, says Langner, that it is looking for one specific place and time to attack one specific factory or power plant in the entire world.

Friday, September 24, 2010

Experience is a cruel but effective teacher

James Taranto argues something good will come from the Obama presidency:
This is not to deny that the Obama presidency has been ruinous. But sometimes the costliest mistakes are those from which we learn the most.

(I wonder if the same will be true of the recent revival of fiscal policy. Fiscal policy seemed to have died in the 1970s but was revived by George W. Bush. Paul Samuelson was quite delighted to see it come back in his last days, but he departed before he would see it fail. If fiscal policy goes dormant again, it will only be for a generation and then it will be revived. Its appeal to politicians as a justification for things they want to do for other reasons is just too great to put it in the grave.)

Sunday, September 19, 2010

Whom to blame

From Jennifer Rubin: "When things go wrong for the left, it blames the people; when things go wrong for the right, it blames the governing elites."

Friday, September 17, 2010

How many people did Mao kill?

From the Indpendent:

Mr Dikötter, who has been studying Chinese rural history from 1958 to 1962, when the nation was facing a famine, compared the systematic torture, brutality, starvation and killing of Chinese peasants to the Second World War in its magnitude. At least 45 million people were worked, starved or beaten to death in China over these four years; the worldwide death toll of the Second World War was 55 million.

His book, Mao's Great Famine; The Story of China's Most Devastating Catastrophe, reveals that while this is a part of history that has been "quite forgotten" in the official memory of the People's Republic of China, there was a "staggering degree of violence" that was, remarkably, carefully catalogued in Public Security Bureau reports, which featured among the provincial archives he studied. In them, he found that the members of the rural farming communities were seen by the Party merely as "digits", or a faceless workforce. For those who committed any acts of disobedience, however minor, the punishments were huge.
People were forced to work naked in the middle of winter; 80 per cent of all the villagers in one region of a quarter of a million Chinese were banned from the official canteen because they were too old or ill to be effective workers, so were deliberately starved to death. 
45 million is only the Great Leap Forward. How many others were killed in his consolidation of power and in the Cultural Revolution?

(Found via Legal Insurrection.)

Saturday, September 4, 2010

SUVs, green jobs, and thugs

From www.detnews.com news about Jesse Jackson:
Following the embarrassing news that Mayor Dave Bing’s GMC Yukon was hijacked by criminals this week, Detroit’s Channel 7 reports that the Reverend’s Caddy Escalade SUV was stolen and stripped of its wheels while he was in town last weekend with the UAW’s militant President Bob King leading the “Jobs, Justice, and Peace” march promoting government-funded green jobs.
Read that again: Jackson’s Caddy SUV was stripped while he was in town promoting green jobs.
Real jobs produced big, profitable SUVs like the one Jesse prefers to ride in. His SUV has been stripped by thugs – a fitting metaphor for what Jesse and his pals have done to the auto industry for the last 35 years.

Wednesday, September 1, 2010

Catholic writers and economics

In an article at Inside Catholic, Jeffrey Tucker tries to explain why Catholics do not understand economics. He begins with this assertion:
Today, most of what is written about economics in Catholic circles is painful to read. The failing extends left and right, as likely to appear in "progressive" or "traditionalist" publications. In book publishing, the problem is so pervasive that it is difficult to review the newest batch.
His hypothesis is that in religious thought many things are not scarce goods but rather either free or public good and thus religious writers are not used to dealing with economics questions that arrive from scarcity:
These are goods like salvation, the intercession of saints, prayers of an infinitely replicable nature, texts, images, and songs that constitute non-scarce goods, the nature of which requires no rationing, allocation, and choices regarding their distribution.
I accept his premise that a lot of Catholic writing shows no understanding of economics, and many of the comments left on his post re-enforce his premise--they are painful to read if you understand economics. I think there is an element of truth in his theory, but I also think there are at least two other factors that help explain the awfulness of Catholic economic understanding.

First, a lot of people who deal with religious matters are used to thinking in normative terms. I knew a person who thought of himself as a Catholic thinker and I do not know if he was able to think in any other way. For him, everything was normative and he simply could not think in positive terms. It meant that most conversations with him went nowhere.

Second, intention is key in discussing whether a person is acting morally or not. This is not true in determining what is naturally right or wrong, the natural law view of things, but it is in terms of judging specific actions. If a person does something that is naturally wrong but does not intend to do something wrong, or thinks that the action is in fact a right action. that person is not guilty of sin. If I hate my neighbor and do something that I intend to harm him but it in fact helps him, it is my intention that matters not the result when looking at whether I have been sinful or not. Alternatively, if I intend to help my neighbor but my actions in fact harm him, my actions are not sinful. In contrast, economics pays no attention to intention. Economics assumes that people act in a self-interested way, but self interest can be anything from selfish greed to certain forms of altruism. When economists see a result they do not like, they do not try to change people's intentions, but rather they try to change incentives. People in the religious world are prone to convert people, in other words, to try to change intentions and motivations,

Finally, my guess is that few Catholic writers have ever taken an economics course. (Maybe that is a third factor.)

Fun quotations

Mattheew Sheffield in the Washington Examiner:
The reason for this rhetorical disparity is that conservatives and libertarians seem to have a much better grounding in the idea that they have a political ideology. Liberals lack this sense, believing their ideology to be literally incommensurable to other ideologies. To oppose liberalism is thus not only intellectually incorrect, it is also an affront to common decency.
In other words, he says that liberals suffer from what has been called epistemic closure.

David Greenfield in his blog Sutan Knish has an entertaining rant on the ideological bias of the mainstream media:
By putting politics over profitability, the media left alienated viewers and readers exactly during the critical transition period when it needed them most. And the worse its fortunes grow, the more radical its politics have become.
When it came to a showdown between the principles of journalism and the principles of liberalism-- journalism never stood a chance. And all that was left was shrill political advocacy, propaganda if you will. Numerous stories praising their politicians and their cultural figures. Numerous other stories damning opposition politicians and elements of culture that displeased them. And the costs to the nation were high. The same media that did everything possible to destroy McCain and Palin, also portrayed Obama as a visionary leader, even though he had barely nailed down 100 days in the Senate before running for President.

Saturday, August 28, 2010

An economist does not free ride but everyone else does

I occasionally review books for Choice Magazine, a publication of the American Library Association. About six weeks ago I sent my contact person this e-mail after submitting a review via their website:
I just submitted a review via your website at www.choicemag.org. I guess no one has ever mentioned that when you get to the end of the process, there is a link at the bottom that says "Choice Home Page." Clicking that link gets you to a error page that says "Sorry, Page Not Found."

It is rather amazing that this bad link is still there, but maybe it is there because no one has ever bothered to report it.
I got back this response:
Thanks very much for notifying us about this broken link. You are the first to report it! The CHOICE home page was redesigned about a year ago and the URL changed, and apparently we missed updating this link.
I'll report it to our tech people.

Research says that it is economists who free-ride, but in this case for a year no one took the time to report this little glitch even though hundreds of people from almost every academic discipline must have encountered it. The cost of the error to any one individual was minimal, but the overall benefit of fixing the error was certainly greater than the individual cost of reporting it. It was finally fixed when an economist took the time to do what was good for the group and report the problem.

Friday, August 13, 2010

Obama's intelligence

I read some of this interview from April 2, 2009 and part of it intrigued me enough so that I still remember it, especially this exchange:
Robinson: You are quoted in the Boston Globe, "I like Obama but I reject the suggestion that he is an intellectual. He is an activist merely mimicking the mannerisms of an intellectual." How good is Obama's mind?
Epstein: His mind is pretty good, but it is a clever "means-ends" mind. He has never written a scholarly article in his entire life. 
 I still do not know exactly what that a clever "means-ends" mind is.

Epstein's assessment here is rather frightening, but may explain a lot of what we have seen in the past 18 months:

But, the difficulty you get, for someone who has only worked in that situation, is that he believes the creation of private wealth is something the government cannot influence or destroy. He has many fancy redistribution schemes, in addition to his health plan and new labor laws, which are all wealth killers.

Thursday, August 12, 2010

Two in one

Two of my favorite ideas, feedback and the importance of rent-seeking, made it into a book review at The Wall Street Journal. The book in question was asking why Great Britain was the first to industrialize.
Mr. Mokyr's answer—articulated in densely packed but gratifyingly lucid prose—is that in Britain ideas interacted vigorously with business interests in "a positive feedback loop that created the greatest sea change in economic history since the advent of culture."
The reason for Britain's exceptionalism, Mr. Mokyr says, lies in the increasing hostility to rent-seeking—the use of political power to redistribute rather than create wealth—among the country's most important intellectuals in the second half of the 18th century. Indeed, a host of liberal ideas, in the classic sense, took hold: the rejection of mercantilism's closed markets, the weakening of guilds and the expansion of internal free trade, and robust physical and intellectual property rights all put Britain far ahead of France, where violent revolution was needed to disrupt the privileges of the old regime.
Implicit in this argument is that countries that cannot develop are locked in a rent-seeking trap, and my limited knowledge of economic develop suggests that is a plausible argument. Unfortunately, rent seeking seems to be increasing in the U.S. If there a feedback loop in which rent-seeking in some way creates more rent seeking, then deep pessimism is in order.

(found via Newmarks Door.

Wednesday, August 11, 2010

Buyers' remorse

I liked this conclusion to an opinion piece in the Wall Street Journal, though I think he is being a bit too optimistic:
Slowly, the nation has recovered its poise. There is a widespread sense of unstated embarrassment that a political majority, if only for a moment, fell for the promise of an untested redeemer—a belief alien to the temperament of this so practical and sober a nation. 
I know people who still cling to the belief that we have a redeemer as POTUS.

The coming fiscal crisis

The Congressional Budget Office put out an amazing document on July 27, 2010 titled "Federal Debt and the Risk of a Fiscal Crisis " The purpose was not to say that there was no risk of a fiscal crisis. On the contrary, the document outlined how fiscal crises come about and said that the U.S. will eventually have a fiscal crisis unless the government greatly reduces the level of deficits:
But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply. The exact point at which such a crisis might occur for the United States is unknown, in part because the ratio of federal debt to GDP is climbing into unfamiliar territory and in part because the risk of a crisis is influenced by a number of other factors, including the government’s long-term budget outlook, its near-term borrowing needs, and the health of the economy. When fiscal crises do occur, they often happen during an economic downturn, which amplifies the difficulties of adjusting fiscal policy in response.
The most arresting passage in the piece, though, was this one:
According to the Congressional Budget Office’s (CBO’s) projections, federal debt held by the public will stand at 62 percent of GDP at the end of fiscal year 2010, having risen from 36 percent at the end of fiscal year 2007, just before the recession began. In only one other period in U.S. history—during and shortly after World War II—has that figure exceeded 50 percent.
The Democrats want to blame Bush for this, but there is an inconvenient truth that they have to ignore to do that: they captured control of congress in the 2006 elections and have had control the purse strings since then.

You can find a link to the document on Greg Mankiw's blog here, or get the document directly here.

Tuesday, August 3, 2010

Problems in academia

The Wall Street Journal has a review of a book critical of higher education. A sample paragraph:
A lot of criticism of academia hasn't stuck in the past, Mr. Hacker and Ms. Dreifus imply, because people have almost unthinkingly believed in the economic power of the degree. Yes, you didn't learn a lot, and the professors blew you off—the reasoning went—but if you got a diploma the job offers would follow. But that logic may no longer be so compelling. With the economy tightening and tales of graduates stuck in low-paying jobs with $50,000 in student loans, college doesn't look like an automatic bargain.
 There is also an interesting comment on salary differences in academia, which is the center of concern about fairness in pay:
Take the adjunct issue. Everyone knows that colleges increasingly staff courses with part-time instructors who earn meager pay and no benefits. But who wants to eliminate the practice? Administrators like it because it saves money, professors because it saves them from teaching labor-intensive courses. And adjuncts themselves would rather continue at minimum wage than leave the profession altogether. In a "coda," Mr. Hacker and Ms. Dreifus declare that "it is immoral and unseemly to have a person teaching exactly the same class as an ensconced faculty member, but for one-sixth the pay."
It is interesting that although the faculty at the elite colleges fret over the inequalities of American, they are an important part of the system that promotes inequality. 

Thursday, July 22, 2010

JournoList, Breitbart, and the Prisoner's Dilemma

JournoList was an e-mail list created by Ezra Klein for liberal opinion setters to have off-the-record conversations. It has been on the fringe of news for a couple of years, but about a month ago, in reaction to some incident, Andrew Breitbart offered $100,000 for the full JournoList archives.

The list had 400 members. None of them would want the list to be made public because in the 25,000 e-mails that make up the archive, there must be numerous things that would be very embarrassing. However, the logic of the prisoner's dilemma suggests that it would be quite likely that someone would move to grab the money. And if you know that others have that incentive, you might was well be the one to collect the $100K

I do not know if someone collected, but the offer has been withdrawn and the Daily Caller has begun to publish articles about what is in the archives. The former JournoListers complain that things are taken out of context, but are unwilling to release the archives so everyone can take a peak. It would seem that if Breitbart got the archives, the articles would be on his BigJournalism site, not on the Daily Caller, but Breitbart is a master of media messaging, and maybe he wants the details to come out elsewhere.

In addition to being a wonderful illustration of a real world prisoner's dilemma situation, there are two other things that I find interesting about this whole incident. The first is that some apparently bright people did not realize that whatever you put out into the Internet (and an e-mail list-serve is part of the Internet) should not be considered private. I am constantly appalled at what young people put on Facebook, but stupidity is part of being young. That supposedly sophisticated journalists would make the same mistake is comic.

The second is a failure to recognize that intentions are not enough. Jonathan Chiat writes, "Let me disabuse everybody by revealing that Journolist was not created for people to work out some party line." What he fails to recognize is that as organizations and interactions continue, they often (usually?) drift into new purposes and new uses. It was almost inevitable that a list like this, with all conservatives kept off (epistemic closure is alive and well on the Left) would at some time be used to work out partisan party lines. Moreover, one of the differences between conservatives and liberals is that conservatives are more likely to be concerned with unintended consequences and actual effects and less interested in the motivations or intentions than are liberals. I think the defense of JournoList will show that tendency--the defense will focus on intentions, not results.

Tuesday, July 20, 2010

Merle Hazard on Greek Debt

Merle Hazard has another winning video:

The decline of books

From the Washington Post:
In the past three months, Amazon has sold 143 Kindle books for every 100 hardcover books, the company said. In July, sales of e-books accelerated to 180 sold for every 100 hardcover versions. Kindle book sales this year have also exceeded broader e-book sales growth, pegged by the Association of American Publishers at 207 percent through May, Amazon said.

Thursday, July 15, 2010

We are in the very best of hands

Congresswoman Sheila Jackson Lee

Tuesday, July 6, 2010

Expectations matter

From Fareed Zakaria's "Obama's CEO problem -- and ours" in the Washington Post:

So why are they reluctant, despite having mounds of cash? I put this question to a series of business leaders, all of whom were expansive on the topic yet did not want to be quoted by name, for fear of offending people in Washington.

Economic uncertainty was the primary cause of their caution. ... But in addition to economics, they kept talking about politics, about the uncertainty surrounding regulations and taxes. ,,,

One CEO told me, "Almost every agency we deal with has announced some expansion of its authority, which naturally makes me concerned about what's in store for us for the future." Another pointed out that between the health-care bill, financial reform and possibly cap-and-trade, his company had lawyers working day and night to figure out the implications of all these new regulations. ...

Most of the business leaders I spoke to had voted for Barack Obama. They still admire him. Those who had met him thought he was unusually smart. But all think he is, at his core, anti-business. 

How much did people worry about offending people in Washington when Bush was president?

Wednesday, June 30, 2010


The website for Cracked Magazine has some good economics--explaining how laws based on good intentions backfire and cause harm. Their six examples are: Smoking bans in bars cause more drunk driving,; sex offender laws make them harder to track; fishing restrictions mean smaller fish; the Endangered Species Act endangers species; boxing gloves mean more head injuries; and the Paperwork Reduction Act does nothing of the sort.

Monday, June 28, 2010

Bad ideas

I liked this line in a Wall Street Journal editorial:
Like many bad ideas, the current Keynesian revival began under George W. Bush.

Monday, June 21, 2010

Good intentions are not enough

From a commencement speech from Justice Scalia's, cited in Commentary's blog:
More important than your obligation to follow your conscience, or at least prior to it, is your obligation to form your conscience correctly. Nobody — remember this — neither Hitler, nor Lenin, nor any despot you could name, ever came forward with a proposal that read, “Now, let’s create a really oppressive and evil society.” Hitler said, “Let’s take the means necessary to restore our national pride and civic order.” And Lenin said, “Let’s take the means necessary to assure a fair distribution of the goods of the world.”

In short, it is your responsibility, men and women of the class of 2010, not just to be zealous in the pursuit of your ideals, but to be sure that your ideals are the right ones. That is perhaps the hardest part of being a good human being: Good intentions are not enough. Being a good person begins with being a wise person. Then, when you follow your conscience, will you be headed in the right direction.
A lot of evil can be done by good people pursuing bad causes. A lot of harm can be done by people with good intentions but who do not understand basic economics, which is why the notion of unintended consequences is central to the subject.

Saturday, June 12, 2010

Perceptions and reality

From an article about a Massachusetts controversy:

“In politics, image and perception overrules reality every time,”

That pretty well summarizes the 2008 presidential campaign.

Falling debt

From the Real Time Economics Blog of The Wall Street Journal:
As of the end of March, the average U.S. household’s total mortgage, credit-card and other debt stood at 122% of annual disposable income, meaning it would take a bit more than 14 months to pay it all off if everyone stopped spending money on anything else. That sounds like a lot, but it’s better than it was before: At its peak in the first quarter of 2008, the debt-to-income ratio stood at 131%. Economists tend to see 100% as a reasonable level, so we’re almost a third of the way there.

In fact, people are making much more progress in shedding their debts by defaulting on mortgages and reneging on credit cards.

Since household debt hit its peak in early 2008, banks have charged off a total of about $210 billion in mortgage and consumer loans, including credit cards. If one assumes that investors suffered at least that much in losses on similar loans that banks packaged and sold as securities (a very conservative assumption), then the total — that is, the amount of debt consumers shed through defaults — comes to much more than $400 billion.

Problem is, that’s more than the concurrent decrease in household debts, which amounts to only $372 billion, according to the Federal Reserve. That means consumers, on average, aren’t paying down their debts at all. Rather, the defaulters account for the whole decline, while the rest have actually been building up more debt straight through the worst financial crisis and recession in decades.

Friday, May 28, 2010

This explains a lot

From a recent Mark Steyn rant:
According to a Fox News poll earlier this year, 65 per cent of Americans understand that the government gets its money from taxpayers, but 24 per cent think the government has “plenty of its own money without using taxpayer dollars.”

Saturday, May 22, 2010

Green jobs

From Investor's Business Daily:

The professor, Gabriel Calzada Alvarez of Juan Carlos University in Madrid, produced a 41-page study last year on the European experiment of going full bore on the conservation front. He found that "the Spanish/EU-style 'green jobs' agenda now being promoted in the U.S. in fact destroys jobs."
For every green job created by the Spanish government, Alvarez found that 2.2 jobs were destroyed elsewhere in the economy because resources were directed politically and not rationally, as in a market economy.

Alvarez's findings, of course, were rejected by the environmental left, which tried to smear him as a stooge of the oil industry.
But inconveniently for the eco-conscious, his results have been backed up by Carlo Stagnaro and Luciano Lavecchia, a couple of researchers from the Italian think tank Istituto Bruno Leoni.

And from Pajamas Media, a translation of the article in a Spanish newspaper that is the source of the story:
The president of the United States, Barack Obama, doesn’t seem to have chosen the right model to copy for his “green economy,” Spain. After the government of José Luís Rodríguez Zapatero demonized a study of different experts about the fatal economic consequences of renewable energies, an internal document from the Spanish cabinet that it is even more negative has just been leaked.
The numbers in the long run are even scarier. The government itself says that the alternative energies sector will receive 126 billion euros in the next 25 years. Just an example: The owners of solar plants make 12 times more than what they pay for the energy coming from fossil fuel combustion. The majority are subsidies charged to the consumer.
The conclusion is that with the economy at the point of bankruptcy, it is not possible to keep injecting money in such a costly sector. And the government seems to realize this now.

Image that--government policy forcing a move to costly and inefficient methods of production does not make a nation more prosperous but less prosperous. Who would have ever suspected it? Certainly not the politicians. 

Even the New York Times recognizes that the welfare state is unsustainable

Europe is beginning to realize that it has built a Ponzi scheme, and the New York Times, of all places, is reporting it.
The reaction so far to government efforts to cut spending has been pessimism and anger, with an understanding that the current system is unsustainable.
Changes have now become urgent. Europe’s population is aging quickly as birthrates decline. Unemployment has risen as traditional industries have shifted to Asia. And the region lacks competitiveness in world markets.
According to the European Commission, by 2050 the percentage of Europeans older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in the European Union will drop to 1.3 to 1.
“The easy days are over for countries like Greece, Portugal and Spain, but for us, too,” said Laurent Cohen-Tanugi, a French lawyer who did a study of Europe in the global economy for the French government. “A lot of Europeans would not like the issue cast in these terms, but that is the storm we’re facing. We can no longer afford the old social model, and there is a real need for structural reform.”
Jean-Claude Meunier is 68, a retired French Navy official and headhunter, who plays bridge to “train my memory and avoid Alzheimer’s.” His main worry is pension. “For years, our political leaders acted with very little courage,” he said. “Pensions represent the failure of the leaders and the failure of the system.”
In Athens, Mr. Iordanidis, the graduate who makes 800 euros a month in a bookstore, said he saw one possible upside. “It could be a chance to overhaul the whole rancid system,” he said, “and create a state that actually works.” 

Monday, May 17, 2010

Meritocracy and feedback

Ross Douthat suggests a pessimistic feedback loop, that complex systems tend to become increasingly complex because they cause ever increasing problems:
This is the perverse logic of meritocracy. Once a system grows sufficiently complex, it doesn’t matter how badly our best and brightest foul things up. Every crisis increases their authority, because they seem to be the only ones who understand the system well enough to fix it.
But their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the “too big to fail” era. It’s the beginning. 

Found on the Econlog.

Friday, May 14, 2010

What economists do not know

Reuters reports on "Obama Counters Republican critics on jobs agenda":
Republicans say Obama's policies have failed to dent unemployment, a political sore spot for the president that has helped drag down his approval rating to 50 percent or lower.

Obama's $787 billion stimulus package approved last year by the Democratic-controlled Congress was largely rejected by Republicans. However, many independent economists have said the measures helped avert an even deeper recession.

Recalling the stimulus fight, Obama said he refused at the time to give in to "partisan posturing."
Why did the reporter throw in the sentence that I have highlighted? Why not put in this sentence: "However, many independent economists have said that the measure did little or nothing to fight the recession"? Economists are divided on the effect of the so-called stimulus package, with some believing that it helped and others believing that it did nothing or even made the recession worse. The only information this sentence contains is that the reporter believes the president and the Democrats are the good guys in this dispute and the Republicans are the bad guys.

Economists do not and cannot know what would have happened if the stimulus package had not been passed. Economists are not using current events to test their theories, but are using their theories to interpret current events. Those economists who believe that the stimulus measure helped hold that belief because their theory tells them that fiscal policy works. Hence, they conclude that without the stimulus the economy would have done worse. However, there are other economists who believe that fiscal policy is either ineffective or unpredictable in its effects, and they see no reason to believe that the economy would have done worse without the stimulus package.

Because economists cannot re-run history several times to see what would have happened with various policies, macroeconomics has long been an area of considerable disagreement among economists. However, the field is not totally without progress. Occasionally the results of policies are so dramatic that a theory loses plausibility. For example, the unemployment and inflation results of the 1970s killed the idea that there is a stable Phillips Curve. Sometimes examination of data from many years shapes what is plausible. For example, no one still believes that fiscal policy multipliers are anywhere near what the economists of the "New Economics" thought they were in the 1950s and 1960s. Even the Obama administration's economists were using government spending multipliers that were under two.

On a non-economic note, when has this president ever refused to give in to partisan posturing? Campaigning is the one thing he does really well.

Wednesday, May 12, 2010

the welfare state as the modern gold standard?

Robert Samuelson looks at the 1930s and wonders if today's welfare state may not be equivalent to yesterday's gold standard, a policy that no one dares question but also one that can only lead to disaster:
But there is another more sobering reading of the Great Depression. It is that painful and once unthinkable changes are made only under the pressure of acute crisis. One reason that central banks were so passive is that they clung to the gold standard: Relaxing credit policies too dramatically to rescue banks might lead to a loss of gold; people would demand metal to replace paper money. Gold was abandoned in various countries only after it seemed untenable. Similarly, the post-World War I debt problem wasn't "solved" until repayment was impossible. As for Britain's place as global leader, the United States assumed that role only in World War II.
Against that backdrop, today's unresolved problems -- over the welfare state, leadership in the global economy -- become more ominous. They suggest that major adjustments won't be made until they're compelled by some sort of crisis. This possibility defines the present economic drama. Will the recovery encourage conscious changes? Or is recovery providing a false sense of security? The stakes are, of course, enormous, because -- as everyone knows -- the economic suffering of the Great Depression transformed many countries' politics for the worse and led to World War II.

Saturday, May 8, 2010

OPM or other people's money

Margaret Thatcher once said, "...Socialist governments traditionally do make a financial mess. They always run out of other people's money." Her statement has been paraphrased as, "The trouble with Socialism is that eventually you run out of other people's money."

In the past week we have watched what happened as Greece ran out of other people's money because not enough lenders will extend credit. Greece almost certainly will not be the last European country to be in this situation.

It is also worth noting that another name for systems that run out of other people's money is "Ponzi Scheme." Ponzi schemes are often very popular in their early stages and people who get caught in them are very resistant to any warnings that what seems to be too good to be true usually is. Too few people realize that the social welfare systems of the West are Ponzi schemes that depend on ever-increasing population growth. They are not sustainable with the low fertility rates of the industrialized world. Everyone who looks at the data recognizes this, but no politician dares to act on it.

Thursday, May 6, 2010

Clueless in Washington?

The Washington Post recently added a blogger to cover the Right. It was widely remarked on conservative blogs at the time that the blogger was not a conservative, but a liberal. However, it seems that the editors at the Washington post may not have realized that.
Smith notes that some of the Post's editors are still clueless:
Some at the paper took Weigel for a true conservative counter-balance to Klein’s wonky, but fairly reliable, liberalism, two people familiar with his hiring said. Merida, in a web chat last month, was asked, “Will you (or Chris Cillizza) be adding more conservative/Republican voices to better balance what is now your predominately liberal/Democratic leaning coverage?”
He responded that “we recently have added to our staff the well-regarded Dave Weigel, who writes the new ‘Right Now’ blog,” before mentioning conservative columnists Kathleen Parker and Charles Krauthammer.
And some in the media wonder why they are losing audience and credibilty.

Monday, May 3, 2010

Wisdom in and of crowds

A few days ago I stumbled on a current events quiz at http://pewresearch.org/politicalquiz/quiz/index.php. (I forget what blog or news site had the link.) I wondered how my students would do on it, and then I realized that I could use it for an experiment, to see if there really is wisdom of crowds.

I gave the quiz to three different classes. The first class got nine of the twelve correct, and only one student of 17 claimed to have a better score. My next class was a disappointment because as a group they only got five correct. They were reluctant to tell me how they did individually. The last class got eight correct, and three of 14 said they did better than that and seven said they did worse. The wisdom of crowds seems to depend on wisdom in crowds.

One question that all three classes missed was, "During the entire year of 2009, do you happen to know if there were more fatalities in Afghanistan or Iraq?" By an almost 2-to-1 margin they chose Iraq. The coverage of the wars by the press may explain this result. It publicized every casualty in Iraq while Bush was president but became silent after the surge led to military success. The press seems to have lost all interest in body counts now that Obama is president. The news no longer starts with the cumulative death totals, as it often did during the Bush years.

I cannot explain why almost none of them knew that Harry Reid was the majority leader of the Senate.

The one question that they all correctly answered was "Do you happen to know who Stephen Colbert is?" It may be true that Comedy Central is the major source of news for the young.

Sunday, May 2, 2010

The Greek tragedy

At The American Interest, Walter Russell Mead reflects on the situation in Greece and the difficulties limitations that culture imposes on a country's development:
The Greeks are a highly cultured people; the most popular slogan at the rallies was “The Croesuses should pay.”  Croesus was, of course, the extremely wealthy king of Lydia whose story appears in Herodotus.  The point of the protesters is that the rich should pay the costs of the economic crisis not the ‘blameless’ ordinary people whose only sin is to have voted for generations of demagogic politicians who promised to give them the moon and pay for it with other people’s money.
Greece is one of those countries like Argentina where conspiracy theories are widely seen as important intellectual breakthroughs.  As in Egypt and Russia, in Greece only a fool believes anything that authorities say; it must all be deconstructed to reveal the plots within.
In many parts of the world it is easy to spot a vicious cycle at work.  Because a country or a culture missed the visit of either or both of the two modernization good fairies (geography and culture) it starts out handicapped in the race to master capitalism and control their own destiny.  As a result, they fall behind, and lose power and control to other, faster rivals.  Capitalism becomes ever less popular, ever more associated in the public mind with a world system felt to be wrong and unfair.  Those feelings of alienation make it steadily harder for the country to adopt and follow the policies that could reverse the cycle and bring it success.  And so it goes.
Read the whole thing.  

Update: Riots with protesters killing innocent bystanders.

Saturday, May 1, 2010

Perceptions and incentives

Economists believe that incentives matter, but does the New York Times? When the paper recently ran a sensationalist article on child abuse and the Catholic Church, it did not think it worth mentioning that a major source for the article, an attorney, had been party to 1500 lawsuits against the Catholic Church. When the paper was challenged on their report, the editors doubled down and said the background of the source did not affect the story, that the issue was a red herring. My guess is that people would have reacted very differently to the story if it had given the background of its source, and that the people involved at the Times understand that. Because their source benefits when the Church gets bad publicity, he has an incentive to present only information and spin that puts the Church in a bad light.

Economists believe that people respond to incentives. The media seem to believe that perceptions are more important than reality. Both can be right.

Wednesday, April 28, 2010

Ceremonial lowering the the flags

A ceremonial closing of the Indian-Pakistan border attracts large crowds for good reason.

A view from the other side of the border is here.

Tuesday, April 27, 2010


Civility and intelligence from the side of tolerance and reason in the current political debate. Background and links here.

Monday, April 26, 2010

What is the Tea Party all about

You will never understand the Tea Party movement from reading the mainstream press--their ideological bias is too great to let them see it clearly. I thought this take from the New Ledger (which I have not previously read but may add to my reading list) got it about right:
Here’s what the TP itself really fears, in an inchoate way that for most of its members doesn’t rise to the level of clear understanding, but is still intuitively very powerful: the US is embracing central planning as a governing theory, as fast as our legislative processes will allow.
Central planning has a long record of failure, but Americans have always believed that we know how to succeed where others can’t. That leads to the hubris of people like Barack Obama, who says “YES WE CAN!”
Central planning has two primary flaws, when compared with economic freedom: it misallocates resources, and it magnifies the impact of corruption.
Socialism starts with the goal of equality, but once implemented it leads inevitably to rigid hierarchy, a structure not unlike the class system that free markets overthrow whenever they are allowed to function.

On a somewhat related note, I have been reading Sway: The Irresistible Pull of Irrational Behavior by the Brafmans. I thought this passage on p 123 showed a lack of perception:
Hosking first became fascinated with Russian culture during the time of Khrushchev; he is especially interested in why socialism was ultimately unsuccessful in Russia.
I suppose the answer that socialism is a very poor economic system measured even by its own goals never occurred to them.

Russ Douthat on Decadence

Russ Douthat in the NewYork Times reflects on the implications of bleeped scenes in South Park:
This is what decadence looks like: a frantic coarseness that “bravely” trashes its own values and traditions, and then knuckles under swiftly to totalitarianism and brute force.
Happily, today’s would-be totalitarians are probably too marginal to take full advantage. This isn’t Weimar Germany, and Islam’s radical fringe is still a fringe, rather than an existential enemy.
For that, we should be grateful. Because if a violent fringe is capable of inspiring so much cowardice and self-censorship, it suggests that there’s enough rot in our institutions that a stronger foe might be able to bring them crashing down. 
The chattering class loves the meme of right-wing violence but takes no precaustions against it. The same people never mention Islamic violence yet its threat causes them to self censure. Actions speak louder than words.

Saturday, April 24, 2010

Beyond parody


Stephen Schwartz visits Norway for the Weekly Standard:

Norwegians are also astonishingly quick to admit that oil income does not reach their country's ordinary citizens. A young man I met defended its system by arguing that Norway has collectivized want. "Since nobody was that rich, nobody complains that our system produces equality of poverty," he told me, as we traveled in a rundown railroad car from Oslo to the rural town of Hamar. "But sometimes we ask ourselves why our infrastructure, including the transportation system, is so badly neglected." I did not have the heart to lecture him on the classic free market critique of socialism, proof for which he had just provided.
A Bosnian Muslim I met in Oslo enthused about his new homeland, where he had lived for 18 years, by equating it with Communist Yugoslavia, for which many Bosnians are nostalgic. "We were happy when we first came here because people welcomed us and the mountains and snow reminded us of home. But then we realized it offered us a better version of Tito's socialism--and not a very different one. We have jobs for life, free health care, and guaranteed housing, without the secret police or other political restrictions. For a Bosnian, Norway seems like heaven, although a bit colder and darker in the winter. When we tell our relatives and friends back in Sarajevo, they don't believe it."
Most of the article is about the their tolerance for those who follow radical Islam.

Friday, April 23, 2010

Secular religions

Carpe Diem quotes from an article in the Wall Street Journal, which unfortunately requires subscription:
"Many observers have made the point that environmentalism is eerily close to a religious belief system. Consider some of the ways in which environmental behaviors echo religious behaviors and thus provide meaningful rituals for Greens...."
The author, Emory University economics professor Paul H. Rubin, goes on to mention a Holy Day (Earth Day), self-sacrificing rituals, belief systems not based on evidence, sacred structures, and evangelization.

Viewing environmentalism as religion seems to be pretty common among economists, perhaps because economics is a competing secular religion. 

Epistemic closure

Powerline finds an example of epistemic closure.

Wednesday, April 21, 2010

Culture of Dependence

Is the debate over government spending, regulation, and taxes just a fiscal matter, or is it really a cultural issue? Michael Barone suggests it is at its heart it is cultural:
But [tea partiers] recognize, correctly, that the Obama Democrats are trying to permanently enlarge government and increase citizens' dependence on it.
Seeing our political divisions as a battle between the culture of dependence and the culture of independence helps to make sense of the divisions seen in the 2008 election.

Argentine and the U. S.

Could the U.S. become like Argentina?
Argentina did not become relatively poor because of having been involved in destructive conflicts. It became poor because it has had a series of both democratically elected leaders and non-elected dictators who never missed an opportunity to make the wrong economic decisions.

Sunday, April 18, 2010


Arnold Kling is pushing a recalculation theory of why the economy has the high levels of unemployment that it has:
Next, suppose that there is a bubble in housing, and when the bubble pops, many people want to put less income into expanding the housing stock and more income into investing in venture capital. This shift disrupts the economy and requires a major recalculation.
The economy needs to reallocate labor away from housing and related industries and into other industries. This means that the composition of the work force has to change, which takes a lot of time. Meanwhile, unemployment rises, which causes further disruption (there are multiplier effects).
There would have been this effect in the recession immediately after WWII. It is an intriguing theory with an Austrian flavor.

Thursday, April 15, 2010

The MSM and the tea parties

How has the main stream media covered the grassroots movement known as the Tea Party?
While the broadcast networks seldom devolved into the juvenile name-calling and open hostility evident at the liberal cable news networks, their coverage of the Tea Party’s first year reflected a similar mindset of elitist condescension and dismissiveness. Given how the networks have provided fawning coverage and helpful publicity to far-less consequential liberal protest movements, their negative treatment of the Tea Party is a glaring example of a media double standard. Rather than objectively document the rise and impact of this important grassroots movement, the “news” networks instead chose to first ignore, and then deplore, the citizen army mobilizing against the unpopular policies of a liberal President and Congress.
No news reporting can be truly objective. Any reporter, journalist, or historian must have some understanding of how the world works, and that understanding will determine the topics that are considered newsworthy and the way in which they are reported. What is clear to anyone who is not a partisan hack is that most of the mainstream media views the world from a secular, leftist perspective. There is nothing inherently wrong with that, but those in the media who deny that they have a bias and claim that they are objective reveal either ignorance or deceit. Which is worse?

Wednesday, April 14, 2010

Merry Old England

A pessimistic view of the Britain's future:
Four huge shadows hang over this claustrophobic election, about which the three main parties will be trying to say as little as possible. The first, obviously, as part of the catastrophic legacy of 13 years of Labour misrule, is the barely imaginable scale of the deficit in public spending.
The second shadow over this election is the unprecedented damage done to our politics by the expenses scandal, which has degraded the standing of Parliament to its lowest point in history.
A third, closely related shadow which the political class has been only too keen to hide away has been the still barely understood extent to which it has handed over the running of our country and the making of our laws to that vast and mysterious new system of government centred on Brussels and Strasbourg.
A final huge shadow which will barely be discussed at this election, because the main parties are all but unanimous on it, is the way our politics has become permeated by everything which can be related to global warming, from soaring taxes to the propaganda dished out in our schools, from the wishful thinking that we can spend £100 billion on building thousands more useless wind turbines, to the disastrous distortion of our national energy policy by the "green" obsessions of both the EU and our own political class, which threaten within a few years to turn Britain's lights out.
Yet there are many American's who aspire to make the U.S. more like Britain.

Tuesday, April 6, 2010

Barro on the Great Depression


Confessions of a Census Enumerator



A former colleague sent me the link to the video, IOUSA, that looks at the threat of the growing national debt. I could quibble with some of the points it makes (I think the debt held by the public is a more meaningful number than the gross debt, and the clip does not explain how a trade deficit is the inevitable outcome when a country that borrows does not save), but it explains why the debt should be the most important issue of domestic politics. It got good reviews, though I wonder if the people who liked it would like a 2010 remake. When the 2008 version says that one of the nation's problems is poor leadership, it is clearly pointing to the Bush administration.

On that topic of political leadership, Peter Wehner had an April 5th blog post at Commentary arguing that history will not look kindly on the Obama presidency. He notes that Obama inherited a terrible debt and deficit problem, to which both Republicans and Democrats had contributed. However:
What I do hold President Obama responsible for is that he took office when it was clear that our debt and deficit had reached crisis proportions. While that situation wasn’t the case when he decided to run for the presidency, it was the situation when he assumed the presidency. And rather than rethink the core purpose of his presidency, he decided to pursue his agenda in a state of denial, as if the financial collapse that began in September 2008 never happened, as if our ominous new fiscal reality had never occurred.

At the moment when history demanded one thing of Mr. Obama, he did another.
I have little doubt that Obama, having helped to engineer this fiscal calamity, will, later in his term, try to portray himself as a model of fiscal rectitude and Republicans as the party unconcerned with the mind-bending levels of deficit and debt he’s saddled us with. I am skeptical this trick will work. Family members are surely happy if a gambling addict gives up habit, but they aren’t about to be lectured on financial responsibility by a person whose gambling ruined the family finances.

The majority of the Obama presidency is still before us. Nevertheless, it’s not too early to say that on this vital front, Barack Obama has been, and will eventually be judged to be, a significant failure. He not only missed history’s calling, he mocked it. He placed his own statist ambitions above the needs of the nation he was elected to serve. Soon enough, and perhaps on a scale he cannot now imagine, Obama and his party will be held accountable for having done so.
 A 2010 remake of IOUSA would, if honest, have to reach conclusions similar to Wehner's. George Bush was as fiscally irresponsible as any president the U.S. has ever had, but compared to Barack Obama, he looks rather frugal.

Thursday, April 1, 2010


Here is a funny political video from the UK especially designed for April Fools Day:


Is pornography addictive? This piece suggests that it is and that it has serious consequences for third parties.
Imagine a drug so powerful it can destroy a family simply by distorting a man’s perception of his wife. Picture an addiction so lethal it has the potential to render an entire generation incapable of forming lasting marriages and so widespread that it produces more annual revenue — $97 billion worldwide in 2006 — than all of the leading technology companies combined. Consider a narcotic so insidious that it evades serious scientific study and legislative action for decades, thriving instead under the ever-expanding banner of the First Amendment.
Pornography deserves a second look from economics. The libertarians have tended to treat it as a private matter, and argue that there is no disputing tastes. However, as a compulsion or addition it would be interesting from the point of view of behavioral economics. And if we recognize that it has externalities, mainstream public finance has a lot to say about it. I have been wondering if the enthusiasm many economists have for the global warming scare is not in large part due to the fact that they see it as an externality problem, and economists know how to fix externality problems.

Friday, March 26, 2010

Outsoucing and Obamacare

An effect of Obamacare:
Mumbai – With 22 pen strokes, President Obama signed into existence not just a historic healthcare reform law but also monumental piles of paperwork: New member registration forms. More claims. Ever-expanding databases. And on top of that, pressure to cut costs.
The bulge in administrative work may look like a nightmare to American insurance firms and government employees. But to outsourcing executives here in India, it’s heaven-sent. A number of Indian companies are already anticipating an increase in workload thanks to Obama's healthcare law.

Sunday, March 14, 2010

As seen in Ely

There were a number of these signs in Ely, Nevada last week.
Polls say that Reid is in trouble this election year. The story behind the signs here.

Tuesday, March 9, 2010

Peter Robinson


The elite journalists, I repeat, got Obama wrong. The troglodytes got him right.

Sunday, March 7, 2010

Moral Hazard

Paul Krugman, Nobel Prize winner, seems to have forgotten what moral hazard is.

Sunday, February 28, 2010

Steyn on Greece

Mark Steyn has written one of those columns that only Mark Steyn can write, pointing out why Greece is in trouble and asking why Obama and the Democrats want us to follow their example:
What’s happening in the developed world today isn’t so very hard to understand: The 20th-century Bismarckian welfare state has run out of people to stick it to. In America, the feckless, insatiable boobs in Washington, Sacramento, Albany, and elsewhere are screwing over our kids and grandkids. In Europe, they’ve reached the next stage in social-democratic evolution: There are no kids or grandkids to screw over.
So you can’t borrow against the future because, in the most basic sense, you don’t have one. Greeks in the public sector retire at 58, which sounds great. But, when ten grandparents have four grandchildren, who pays for you to spend the last third of your adult life loafing around?
We hard-hearted small-government guys are often damned as selfish types who care nothing for the general welfare. But, as the Greek protests make plain, nothing makes an individual more selfish than the socially equitable communitarianism of big government: Once a chap’s enjoying the fruits of government health care, government-paid vacation, government-funded early retirement, and all the rest, he couldn’t give a hoot about the general societal interest; he’s got his, and to hell with everyone else. People’s sense of entitlement endures long after the entitlement has ceased to make sense.
The problem is there are never enough of “the rich” to fund the entitlement state, because in the end it disincentivizes everything from wealth creation to self-reliance to the basic survival instinct, as represented by the fertility rate. 

The Welfare State is a giant Ponzi scheme and it only stays afloat as long as people have plenty of children. The authors of the welfare state probably never considered the possibility of demographic decline, just as those who gave us the housing bubble never considered the possibility that housing prices could decline. And as in the housing bust in the U.S., where bailouts of irresponsible financial institutions did not solve the underlying problems, bailing out entitlement states merely postpones the inevitable.

Tuesday, February 23, 2010

Greece on the skids?

In the Washington Post Robert Samuelson ponders the fate of Greece, and wonders if it is the canary in the mineshaft:
What's happening in Greece speaks to two larger issues affecting hundreds of millions of people everywhere: the future of the welfare state and the fate of Europe's single currency -- the euro.
The threat to the euro bloc ultimately stems from an overcommitted welfare state. Greece's situation is so difficult because a low birth rate and rapidly graying population automatically increase old-age assistance even as the government tries to cut its spending. At issue is the viability of its present welfare state.
Almost every advanced country -- the United States, Britain, Germany, Italy, France, Japan, Belgium and others -- faces some combination of huge budget deficits, high debts, aging populations and political paralysis. It's an unstable mix. Present deficits may aid economic recovery, but the persistence of those deficits threatens long-term prosperity. The same unpleasant choices confronting Greece await most wealthy nations, even if they pretend otherwise.