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.

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.

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.

Regards,

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.

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.

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.

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.

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. 

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.