In the Times today, the mathematician John Allan Paulos' new book Irreligion is reviewed. It is another critique of theism, a la Hitchens , Dawkins, Harris. While I'm on his side, here is an argument against ID I wish he hadn't used - although I've used it myself. He says, according to the reviewer, that the idea that we can infer a designer from a design is refuted by Darwinian natural selection and "free market economics" (e.a) It's the last clause I take issue with.
Of course the idea is that the spontaneous order exhibited by a laissez-faire economy is an instance of design without a designer. The trouble is that I can't think of any spontaneously ordered economies for which intelligent design (and I don't mean the Deity!) isn't implicated to some degree in the order achieved. A judicial system able to underpin a complex economy doesn't come into existence spontaneously. The Bretton-Woods system had intelligent designers - and so on and so on. The "market" is not a natural fact. It is embedded in institutions and to the extent that it functions with any kind of order, the intelligent designers of these institutions deserve some of the credit. We saw the fallacy of the belief in the spontaneous ordering of the market as a natural fact in the tremendous disorder following 1989 in Russia.
Just sayin'!
Tuesday, January 22, 2008
COMIC RELIEF
by the Sandwichman,
This doofus, Ben Stein, assures his readers that recessions aren't all bad. With the random clarity of an infinite number of monkeys typing at an infinite number of keyboards, he manages to come pretty close to accidentally explaining the collective behavioral cause of recessions in prescribing his individualistic "cure" for them.
"There is some good news in here."
"Even in a recession, more than 90 percent of workers who want to work will be employed. Even in a recession, most businesses will make a profit. Even in a recession in this era, more than 10 million men and women will need cars and trucks. Many millions will need new homes. Tens of millions will need retirement investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend.
"Those who tend to their work, who get to the office or showroom or shop early, stay late, work hard, stay on the phones dialing for deals (as my pal, Barron Thomas, puts it), will make money. Those who stay sharp and make a point of befriending their clients will make money. Yes, some extra effort will be needed, but it'll pay off. There's still money to be made, even when the economy itself has slowed down.
"It's the guy or gal who puts in extra effort who stays ahead and even prospers when the economy is in a slowdown. The easygoing, laid-back time-servers get tossed overboard.
"Stay Hungry (Not Literally)
"There's another key truth about recessions: They always end, and the economy always goes on to a new plateau. It may take a while, but the stock market always moves on to a new high.
"So stay hungry. Work harder. Dig deeper. Keep investing in broad indexes. You'll come out all right on the other side."
That's right, sucker, run faster on your hamster wheel and you'll get to where you're going sooner.
This doofus, Ben Stein, assures his readers that recessions aren't all bad. With the random clarity of an infinite number of monkeys typing at an infinite number of keyboards, he manages to come pretty close to accidentally explaining the collective behavioral cause of recessions in prescribing his individualistic "cure" for them.
"There is some good news in here."
"Even in a recession, more than 90 percent of workers who want to work will be employed. Even in a recession, most businesses will make a profit. Even in a recession in this era, more than 10 million men and women will need cars and trucks. Many millions will need new homes. Tens of millions will need retirement investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend.
"Those who tend to their work, who get to the office or showroom or shop early, stay late, work hard, stay on the phones dialing for deals (as my pal, Barron Thomas, puts it), will make money. Those who stay sharp and make a point of befriending their clients will make money. Yes, some extra effort will be needed, but it'll pay off. There's still money to be made, even when the economy itself has slowed down.
"It's the guy or gal who puts in extra effort who stays ahead and even prospers when the economy is in a slowdown. The easygoing, laid-back time-servers get tossed overboard.
"Stay Hungry (Not Literally)
"There's another key truth about recessions: They always end, and the economy always goes on to a new plateau. It may take a while, but the stock market always moves on to a new high.
"So stay hungry. Work harder. Dig deeper. Keep investing in broad indexes. You'll come out all right on the other side."
That's right, sucker, run faster on your hamster wheel and you'll get to where you're going sooner.
The Market Panic in Perspective
Does anyone else see the irony in the ongoing panic in global asset markets? Last week we feared global imbalances; this week we fear they may dissipate.
Don’t get me wrong — the last thing I want to see is global rebalancing by way of a massive US recession. But why are investors from Hong Kong to Frankfurt getting spooked? They are signaling that they don’t think their economies are decoupled from ours, and that a US downturn means the global buyer of last resort is putting away his credit cards. The US will cease to be the bottomless export market, and sellers everywhere will stumble.
Maybe so, but drastically curtailing the US import habit is a necessary part of rebalancing; it is not possible for US exports alone to do the job. So the contagion we’re seeing demonstrates that the current imbalances have become addictive on all sides. (OK, rebalancing via recession lacks a terms of trade sweetener, but is that what the markets are freaking about?)
Don’t get me wrong — the last thing I want to see is global rebalancing by way of a massive US recession. But why are investors from Hong Kong to Frankfurt getting spooked? They are signaling that they don’t think their economies are decoupled from ours, and that a US downturn means the global buyer of last resort is putting away his credit cards. The US will cease to be the bottomless export market, and sellers everywhere will stumble.
Maybe so, but drastically curtailing the US import habit is a necessary part of rebalancing; it is not possible for US exports alone to do the job. So the contagion we’re seeing demonstrates that the current imbalances have become addictive on all sides. (OK, rebalancing via recession lacks a terms of trade sweetener, but is that what the markets are freaking about?)
Monday, January 21, 2008
Why We Should Not Tax the Rich
Here is John Edwards' "employer" on taxes. The last line, as they say, is "priceless." Griffin is an exception, since he is not interested in money, but in creating wealth for the community and the sheer joy of working. Also, he would work less if faced with high taxes, but only as a matter of principle (or is it principal?).
"Kenneth C. Griffin, who received more than $1 billion last year as chairman of a hedge fund, the Citadel Investment Group, declared: "The money is a byproduct of a passionate endeavor." Mr. Griffin, 38, argued that those who focus on the money -- and there is always a get-rich crowd -- "soon discover that wealth is not a particularly satisfying outcome." His own team at Citadel, he said, "loves the problems they work on and the challenges inherent to their business." Mr. Griffin maintained that he has created wealth not just for himself but for many others. "We have helped to create real social value in the U.S. economy," he said. "We have invested money in countless companies over the years and they have helped countless people"."
"The income distribution has to stand," Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, "you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard."
Uchitelle, Louis. "The Richest of the Rich, Proud of a New Gilded Age." New York Times (15 July).
"Kenneth C. Griffin, who received more than $1 billion last year as chairman of a hedge fund, the Citadel Investment Group, declared: "The money is a byproduct of a passionate endeavor." Mr. Griffin, 38, argued that those who focus on the money -- and there is always a get-rich crowd -- "soon discover that wealth is not a particularly satisfying outcome." His own team at Citadel, he said, "loves the problems they work on and the challenges inherent to their business." Mr. Griffin maintained that he has created wealth not just for himself but for many others. "We have helped to create real social value in the U.S. economy," he said. "We have invested money in countless companies over the years and they have helped countless people"."
"The income distribution has to stand," Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, "you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard."
Uchitelle, Louis. "The Richest of the Rich, Proud of a New Gilded Age." New York Times (15 July).
Saturday, January 19, 2008
Frontiers of Cost-Benefit Calculations
A little more than a year ago, in response to a Wall Street Journal article on airline travelers' lost luggage, an insightful reader offered a more in depth analysis:
"Airlines lose luggage because there is no incentive to correct the problem. It would cost money to fix the broken systems, and there is no meaningful penalty on airlines that lose baggage because our government allows airlines to pay pennies on the dollar for what is lost. Even worse, the threat of lost luggage actually benefits the airlines by forcing passengers to avoid checking luggage."
Armstrong, Arthur O. 2007. "Perpetual Curse of Lost Luggage." Wall Street Journal (27 January): p. A 5.
I have not heard whether or not the paper ever hired this contributor.
"Airlines lose luggage because there is no incentive to correct the problem. It would cost money to fix the broken systems, and there is no meaningful penalty on airlines that lose baggage because our government allows airlines to pay pennies on the dollar for what is lost. Even worse, the threat of lost luggage actually benefits the airlines by forcing passengers to avoid checking luggage."
Armstrong, Arthur O. 2007. "Perpetual Curse of Lost Luggage." Wall Street Journal (27 January): p. A 5.
I have not heard whether or not the paper ever hired this contributor.
Friday, January 18, 2008
The Efficiency of Publicly Owned Power Companies
Earlier, I mentioned are prolonged power outage. An invaluable article in our local weekly paper reports that our IOU -- the appropriate acronym for Investor Owned Utility -- PG&E suffered much more damage than the publicly owned utilities in the region. Apparently, PG&E has been relatively negligent in maintenance, leaving its infrastructure more vulnerable.
Because of aggressive tree trimming and replacement of ancient power poles, the publicly owned companies experienced virtually no outages.
Here is the link to the article:
http://www.newsreview.com/chico/Content?oid=613885
Because of aggressive tree trimming and replacement of ancient power poles, the publicly owned companies experienced virtually no outages.
Here is the link to the article:
http://www.newsreview.com/chico/Content?oid=613885
When Is Labor Exploited?
Earlier discussions of Joan Robinson on how it is better to be exploited than not to be exploited at all (unemployed) reminded me of the deeper issues involved. Was Marx right that it was working for private capitalists that led to exploitation? Is it a matter of what one is paid, either relative to some marginal product or some broader level? Is it a matter of self-management or being bossed? Were workers exploited in Soviet socialism, as the post-modern, Wolff and Resnick group argues, that the USSR was "state capitalism?" Is a society in which workers are not exploited possible?
In his _Socialism After Hayek_, Ted Burczak argues that such a society would be a decentralized market "socialism" of worker-owned cooperatives, funded through a wealth tax, with a generous social safety net oriented to "personal capacities" a la Nussbaum and Sen, with freedom and democracy. This supposedly avoids exploitation, as well as the sorts of flaws of information and incentives that Hayek found in command planned state socialism of the Soviet type. (I have commented on all this further in a paper on my website at http://cob.jmu.edu/rosserjb, entitled, "Has Burczak Shown How Socialism Can Survive Hayek?")
In his _Socialism After Hayek_, Ted Burczak argues that such a society would be a decentralized market "socialism" of worker-owned cooperatives, funded through a wealth tax, with a generous social safety net oriented to "personal capacities" a la Nussbaum and Sen, with freedom and democracy. This supposedly avoids exploitation, as well as the sorts of flaws of information and incentives that Hayek found in command planned state socialism of the Soviet type. (I have commented on all this further in a paper on my website at http://cob.jmu.edu/rosserjb, entitled, "Has Burczak Shown How Socialism Can Survive Hayek?")
Thursday, January 17, 2008
Iraqi oil production may be down again
There was much hullabalooing over a month ago when it was reported that November oil production in Iraq, about 2.4 million barrels per day (mbpd), had surpassed that of the end of the Saddam era of about 2.3 mbpd. Some Iraqi sources were claiming nearly 2.5 mbpd for December. Now, Ben Lando at Iraq Oil Report reports that Platt's estimates production fell back to 2.3 mbpd in December, even though apparently OPEC production overall rose in December. Most of the increase in recent months in Iraq has been out of Kirkuk, whose long run status remains disputed between the Kurds and the rest of Iraq. There also remains no oil law in Iraq, although majors like Shell are now negotiating with the central government on developing the Akkas field, and a slew of minors from places like Canada and Norway are cutting deals with the Kurds, who have their own oil law.
BTW, the recent reports of a new reconciliation law with the ex-Baathists, much trumpeted by Bill Kristol and other war hawks, is baloney according to Juan Cole. Baath allies voted against the law, and apparently it will make it easier to fire ex-Baathists from government jobs and keep them out for good. While there may be fewer US deaths in recent months, there remains no success at all on any of the items that the Surge was supposed to achieve by the end of this past year.
BTW, the recent reports of a new reconciliation law with the ex-Baathists, much trumpeted by Bill Kristol and other war hawks, is baloney according to Juan Cole. Baath allies voted against the law, and apparently it will make it easier to fire ex-Baathists from government jobs and keep them out for good. While there may be fewer US deaths in recent months, there remains no success at all on any of the items that the Surge was supposed to achieve by the end of this past year.
I shall scream, Bumble-Wumble! --
...If I see one more study that purports to tell us the causes of "x" on the basis of some prima facie silly instrument. So autism is caused by TV-watching, eg, since it is correlated with rainy weather.
I'm not an econometrician (nor do I play one on TV) but the naivete with which these guys trumpet their ability to sort causation from correlation on the basis of a statistical technique is mind-boggling. David Hume, call your office!
I'm not an econometrician (nor do I play one on TV) but the naivete with which these guys trumpet their ability to sort causation from correlation on the basis of a statistical technique is mind-boggling. David Hume, call your office!
Nonsense on Imported Stilts
Econ bloggers have really missed the point about Landsburg’s free trade screed. The estimable Dani notwithstanding, the issue isn’t ultimately ethics or even procedural fairness. The problem is that doctrinaire economists understand less about trade than the average person with no academic training in the subject.
Ordinary people in many parts of the world, and not just in the US, worry about trade because they are afraid that jobs lost to imports will not be counterbalanced by jobs gained through exports. They worry that there will be fewer economic opportunities for them and their children. They worry that their wages or working conditions will be pushed downward through competition with even more vulnerable, desperate workers in other countries. They are right to worry about these things. Such miseries are not destined to happen, but they cannot be ruled out either.
Except in standard economic models which begin with the assumption that increases in imports automatically call forth equally valued increases in exports. If trade balances on the margin we live in the happy world of comparative advantage, and it is indeed true, as Landsburg says, that “when American jobs are outsourced, Americans as a group are net winners.” But the assumption that trade balances at the margin is simply a modeling convenience, something that enables Landsburg to regale his students with blackboards full of elegant diagrams and equations. It is not grounded in real experience, and especially not the experience of the US economy since the 1970s.
You have to be very well trained in economics and have high-level skills to make such a brain-dead assumption and not even know you’ve made it. Then you don’t have to give serious consideration to counterarguments because, hey, why pay any attention to the fallacies of economic illiterates and mathphobes?
But let’s get specific. Here’s how Landsburg illustrates his claim that international trade makes us better off: “I doubt there’s a human being on earth who hasn’t benefited from the opportunity to trade freely with his neighbors. Imagine what your life would be like if you had to grow your own food, make your own clothes and rely on your grandmother’s home remedies for health care.”
Notice a problem here? Landsburg assumes that there is no difference between trade within an economy and international trade. (To be more precise, the only difference is that governments interfere more often with trade across national borders.) Worse, he accuses anyone who recognizes the difference of woolly thinking, based of course on his assumption that there is no difference.
This is why the French students complained about autistic economics.
For what it’s worth, my view is that we as a society ought to provide opportunities for as many of us as possible to have a satisfying livelihood. If a community is down and out we should step in and do what we can whether or not trade played a role in creating the problem. We should create rules for international trade that minimize downward pressure on wage, environmental and social standards and that limit dangerous imbalances. These ideas are fairly widespread among the general population, and if economists think really creatively they might just be able to rise to the same level.
Ordinary people in many parts of the world, and not just in the US, worry about trade because they are afraid that jobs lost to imports will not be counterbalanced by jobs gained through exports. They worry that there will be fewer economic opportunities for them and their children. They worry that their wages or working conditions will be pushed downward through competition with even more vulnerable, desperate workers in other countries. They are right to worry about these things. Such miseries are not destined to happen, but they cannot be ruled out either.
Except in standard economic models which begin with the assumption that increases in imports automatically call forth equally valued increases in exports. If trade balances on the margin we live in the happy world of comparative advantage, and it is indeed true, as Landsburg says, that “when American jobs are outsourced, Americans as a group are net winners.” But the assumption that trade balances at the margin is simply a modeling convenience, something that enables Landsburg to regale his students with blackboards full of elegant diagrams and equations. It is not grounded in real experience, and especially not the experience of the US economy since the 1970s.
You have to be very well trained in economics and have high-level skills to make such a brain-dead assumption and not even know you’ve made it. Then you don’t have to give serious consideration to counterarguments because, hey, why pay any attention to the fallacies of economic illiterates and mathphobes?
But let’s get specific. Here’s how Landsburg illustrates his claim that international trade makes us better off: “I doubt there’s a human being on earth who hasn’t benefited from the opportunity to trade freely with his neighbors. Imagine what your life would be like if you had to grow your own food, make your own clothes and rely on your grandmother’s home remedies for health care.”
Notice a problem here? Landsburg assumes that there is no difference between trade within an economy and international trade. (To be more precise, the only difference is that governments interfere more often with trade across national borders.) Worse, he accuses anyone who recognizes the difference of woolly thinking, based of course on his assumption that there is no difference.
This is why the French students complained about autistic economics.
For what it’s worth, my view is that we as a society ought to provide opportunities for as many of us as possible to have a satisfying livelihood. If a community is down and out we should step in and do what we can whether or not trade played a role in creating the problem. We should create rules for international trade that minimize downward pressure on wage, environmental and social standards and that limit dangerous imbalances. These ideas are fairly widespread among the general population, and if economists think really creatively they might just be able to rise to the same level.
Wednesday, January 16, 2008
Bloomberg Interviews Michael Perelman
Tom Keene of Bloomberg Radio interviewed me for an hour on Monday. You can download it here:
http://media.bloomberg.com/bb/avfile/BBRECON/vMYIzswjgxsg.mp3
Tom is an excellent interviewer, who regularly interviews economists and financial experts.
Their interviews are available at
http://www.bloomberg.com/tvradio/podcast/ontheeconomy.html
http://media.bloomberg.com/bb/avfile/BBRECON/vMYIzswjgxsg.mp3
Tom is an excellent interviewer, who regularly interviews economists and financial experts.
Their interviews are available at
http://www.bloomberg.com/tvradio/podcast/ontheeconomy.html
Economists Who Deny Stopler-Samuelson
Greg Mankiw directs us to Steven Landsburg. I’m not sure why Greg endorses this stuff, however:
Dani Rodrik likely wants to remind us again of the Stopler-Samuelson theorem. And Paul Krugman might add:
Update: Dani also weighs in.
All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney? Um, no. Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?
Dani Rodrik likely wants to remind us again of the Stopler-Samuelson theorem. And Paul Krugman might add:
What all this comes down to is that it’s no longer safe to assert, as we could a dozen years ago, that the effects of trade on income distribution in wealthy countries are fairly minor. There’s now a good case that they are quite big, and getting bigger.This doesn’t mean that I’m endorsing protectionism. It does mean that free-traders need better answers to the anxieties of those who are likely to end up on the losing side from globalisation.
Update: Dani also weighs in.
Tuesday, January 15, 2008
The Law Is an Ass
Two recent decisions confirm that Charles Dickens' Mr. Bumble was correct in declaring, "The law is a (sic) Ass." In the first case, California's Supreme Court dismissed a suit by workers who were damaged by solvents, only because the majority held stocks in the oil companies. In the second, case a federal appeals court dismissed a suit by four British citizens who claimed torture, abuse, and violations of their religious rights at Guantánamo because "Because the plaintiffs are aliens and were located outside sovereign United States territory at the time their alleged RFRA claim arose, they do not fall with the definition of 'person,'" the court ruled."
This decision is surprising, given the importance of religion in determining personhood. After all, a fertilized egg with only a few cells is considered a person in the United States. Surely these unfortunate creatures are more fully developed persons in a newly formed embryo.
The first case suggests that corporations could immunize themselves from legal actions merely by ensuring that judges had some stock in the companies. On second thought, perhaps many of these corporations are not really persons after all, despite the claim that corporations have all the rights of human persons. However, some of these fictitious persons have relocated their fictitious homes to other lands. If people tortured by the government are not really persons because they are located outside the United States, surely the fictitious persons, who currently rule this country, should not be counted as persons.
This decision is surprising, given the importance of religion in determining personhood. After all, a fertilized egg with only a few cells is considered a person in the United States. Surely these unfortunate creatures are more fully developed persons in a newly formed embryo.
The first case suggests that corporations could immunize themselves from legal actions merely by ensuring that judges had some stock in the companies. On second thought, perhaps many of these corporations are not really persons after all, despite the claim that corporations have all the rights of human persons. However, some of these fictitious persons have relocated their fictitious homes to other lands. If people tortured by the government are not really persons because they are located outside the United States, surely the fictitious persons, who currently rule this country, should not be counted as persons.
Sunday, January 13, 2008
Douglas Elmendorf and Jason Furman on Targeted Fiscal Stimulus (Something Stephen Moore Failed to Read)
With a hat tip to Greg Mankiw, let’s turn to If, When, How: A Primer on Fiscal Stimulus - specifically principles 2 and 3 that any fiscal stimulus be well targeted and temporary.
This paper was published on January 10, 2008. On the very next day, the WSJ oped page featured The Right Stimulus. Just about everything claimed by the WSJ was refuted by Elmendorf and Furman. I wish I had cited their paper when I wrote this.
This paper was published on January 10, 2008. On the very next day, the WSJ oped page featured The Right Stimulus. Just about everything claimed by the WSJ was refuted by Elmendorf and Furman. I wish I had cited their paper when I wrote this.
Friday, January 11, 2008
Beware What You Wish For: Kossaks Want Obama Versus Huckabee
This has already scrolled off of daily kos, but yesterday they had a poll of people guessing which were the easiest and the toughest matchups from a Dem perspective in the prez race. While McCain was generally viewed as the toughest opponent, the most popular combo, viewed as easiest, was Obama versus Huckabee. I want to warn that this might be one of those desires one curses having fulfilled.
Key here is my post here earlier on "Who is a 'Populist'?" Among current candidates, they were Edwards, now looking near dead, and Huckabee. Obama is the New Centrist Dem, who does not appeal to poorer people so much, a sucker for a "Reagan Democrat" approach from the guitar playing, Colbert-appearing, Huck. He is ahead of both Romney and McCain in Michigan in the latest polls, and could get the nomination. Nice guy that he is, at least on the surface, he could go all the way. And, lest anybody forgets, his fundamentalism is right in there with the old-timey populists: think William Jennings Bryan. (And, don't forget that lots of Dems in 1980 were hoping for Reagan to get the GOP nomination.)
Key here is my post here earlier on "Who is a 'Populist'?" Among current candidates, they were Edwards, now looking near dead, and Huckabee. Obama is the New Centrist Dem, who does not appeal to poorer people so much, a sucker for a "Reagan Democrat" approach from the guitar playing, Colbert-appearing, Huck. He is ahead of both Romney and McCain in Michigan in the latest polls, and could get the nomination. Nice guy that he is, at least on the surface, he could go all the way. And, lest anybody forgets, his fundamentalism is right in there with the old-timey populists: think William Jennings Bryan. (And, don't forget that lots of Dems in 1980 were hoping for Reagan to get the GOP nomination.)
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