Worldometers - real time world statistics

Worldometers - real time world statistics

Economic Freedom Rankings

The US continues a slide in economic freedom:

Weaknesses remain in fiscal freedom and government size. Total government spending equals more than a third of GDP. Corporate and personal taxes are high and increasingly uncompetitive. In 2008, the sub-prime mortgage crisis had far-reaching effects, and the government's unprecedented interventionist measures could severely undermine economic freedom in the future.

http://www.heritage.org/index/Country/UnitedStates

FreeHarvardEducation.com - The Boston Globe

FreeHarvardEducation.com - The Boston Globe

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Four Problems with Spontaneous Order

This is the December 2009 discussion over on the CATO blog and is provocative. Well worth a read.

Realizing Freedom: Libertarian Theory, History, and Practice | Cato Institute: Book Forum

BOOK FORUM
Tuesday, December 1, 2009

This forum can be viewed live or in archive form.

Featuring the author, Tom G. Palmer, General Director, Atlas Global Initiative for Free Trade, Peace, and Prosperity, and Senior Fellow, Cato Institute; with comments by Tyler Cowen, Professor of Economics, George Mason University, and General Director, Mercatus Center.

Realizing Freedom: Libertarian Theory, History, and Practice | Cato Institute: Book Forum

Summary Austrian Economics

Mario Rizzo writes of Austrian economics.

The highly interrelated themes I listed are:

(1) the subjective, yet socially embedded, quality of human decision making;

(2) the individual’s perception of the passage of time (‘real time’);

(3) the radical uncertainty of expectations;

(4) the decentralization of explicit and tacit knowledge in society;

(5) the dynamic market processes generated by individual action, especially entrepreneurship;

(6) the function of the price system in transmitting knowledge;

(7) the supplementary role of cultural norms and other cultural products (‘institutions’) in conveying knowledge;

(8) the spontaneous – that is, not centrally directed – evolution of social institutions.

Where conservatives have it wrong - The Boston Globe

On the whole, illegal immigrants are just the sort of newcomers Americans should embrace: self-motivated risk-takers, strivers determined to improve themselves, hard-working men and women willing to take the meanest jobs if it will give them a shot at building their own American dream.

Where conservatives have it wrong - The Boston Globe

Obama to Taxpayers: America Needs More Picnic Tables

Obama to Taxpayers: America Needs More Picnic Tables

What Makes a Nation Rich? One Economist's Big Answer

November 18, 2009, 9:00 AM
What Makes a Nation Rich? One Economist's Big Answer

Say you're a world leader and you want your country's economy to prosper. According to this Clark Medal winner from MIT, there's a simple solution: start with free elections.

Read more: http://www.esquire.com/features/best-and-brightest-2009/world-poverty-map-1209#ixzz0XPLjfQ4G

What Makes a Nation Rich? One Economist's Big Answer

Liberty: Shaping attitudes toward liberty, choice and responsibility

Boyes speculates, over on Liberty, on the underlying causes for what appears to be a shift in the general attitude toward capitalism and freedom.

In part, he wonders what influence the institution of higher education plays in shaping the underlying belief system of the general population. Dan Klein has analysis that plays into this discussion - http://www.criticalreview.com/2004/pdfs/klein_stern.pdf. He concludes that instructors in the social sciences at the college level are overwhelmingly consist in their selection of government driven policies over market driven policies.

Klein in other work, describes the process by which ideologies govern hiring decisions in colleges, that is faculty who serve on hiring committees tend to select colleagues from institutions similar those attended by the incumbent faculty. This would imply that the newly hired faculty have shared beliefs.

This begs the question of the level of impact or influence that college faculty exert over undergraduates. That is, do the beliefs and attitudes of faculty (who in social sciences at least) appear to be heavily weighted toward pro government/interventionist policies and hostile to market policies driven by liberty and freedom have an impact upon undergraduates? This is an important question and the data that Boyes cites suggests that there is in fact a relationship at work that extends the incumbent ideology to students.

So, to the extent that this relationship exists, a part of the explanation may lie with higher education.

I wonder to what extent the institution of the media plays a role in the pro interventionist ideology that seems to be evolving in the US today? That is, can the various channels of the media be seen to have a predominant ideology in regard to freedom, liberty and choice and, if so, is that ideology pro or anti free market?

Another institution that would seem to play a part in the evolution of attitude is religion. Economic freedom and the resulting growth and expansion of choice and standard of living have been limited to a very few countries. The recent discussion over on CATO regarding modernity points out the central role played by institutions and the apparent change in America in attitude toward capitalism naturally raises the question has there been a change in the institution of religion that may have simulated or supported this change?

The intersection of the two above institutions can be seen here:



Boyes motivates us to consider what factors that have lead to an important change in the informal belief systems in the US that directly and indirectly impact liberty and freedom.

Investors.com - He Spoke Out For Capitalism

Peter Boettke, a professor of political economy at George Mason University in Virginia, likens capitalism's success to a horse race.

One horse, named Schumpeter, represents innovation. The second horse, called Smith, stands for free trade. The third is government "and its stupid decisions," Boettke said.

"As long as the first two horses stay ahead of the stupid horse, the economy's cycles are manageable," he told IBD. "The trouble happens when the stupid horse's nose gets in front by (creating) policies that restrict trade or are anti-technology."

No solutions

Thomas Sowell has said that economics helps you understand that there are no solutions, only tradeoffs. In that spirit, I want to recommend Arnold Kling’s study of the financial crisis, Not What They Had in Mind. My favorite quote from the essay is a variant on Sowell’s:

The lesson is that financial regulation is not like a math problem, where once you solve it the problem stays solved. Instead, a regulatory regime elicits responses from firms in the private sector. As financial institutions adapt to regulations, they seek to maximize returns within the regulatory constraints. This takes the institutions in the direction of constantly seeking to reduce the regulatory “tax” by pushing to amend rules and by coming up with practices that are within the letter of the rules but contrary to their spirit. This natural process of seeking to maximize profits places any regulatory regime under continual assault, so that over time the regime’s ability to prevent crises degrades.

Krugman to the Rescue

Krugman to the Rescue

More in U.S. Say Health Coverage Is Not Gov’t. Responsibility

More in U.S. Say Health Coverage Is Not Gov’t. Responsibility

Calvin Coolidge

"Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan, 'Press on,' has solved and always will solve the problems of the human race." —Calvin Coolidge

Sobel's biography

Greenburg's biography

Coolidge and persistence - Jack Barry's great book - Rising Tide: The Great Mississippi Flood of 1927 and how it changed America

Disincentives from Health Reform

Greg Mankiw writes:

Consider the following question, which is not about healthcare per se: Would you favor a substantial increase in marginal tax rates for millions of middle and upper income Americans to provide more resources for those toward the bottom of the economic ladder?

Your answer to this question cannot be determined by positive economics without adding in some normative judgments. But your answer should strongly influence your view of the health reform bill. The bill moves us closer to much of Western Europe by favoring equality and paying the price of reduced efficiency from much higher marginal tax rates.

The health-care debate is part of a larger moral struggle over the free-enterprise system.

Arthur Brooks writes about the current reaction to health care changes

Rather, public resistance stems from the sense that the proposed reforms do violence to three core values of America's free enterprise culture: individual choice, personal accountability, and rewards for ambition.

no people, no problem

The recent ASET book club discussion and Boyes posting on the challenge of engaging in civil discourse with statists continues to nag at me.

Jonathan J. Bean's post over on Liberty and Power and the recent posting at Mises confirm the importance of both civil discourse and the continuing frustration that advocates of liberty encounter - both in and out of the academy.

Higher education, as Daniel Klein and others have pointed out, is characterized by a lack of intellectual diversity - the overwhelming majority of those who teach hold statist ideology, what Sowell calls the unconstrained vision.

Bean's comments might lead one to conclude that once the current generation of liberty advocates pass on, that the conversation dies. I am not that pessimistic, I work with a few younger faculty and have encountered younger colleagues at Liberty Fund colloquia who are persuasive advocates of liberty.

That said, the current popular and scholarly debate certainly seems framed in such a manner as to generate loud and abrasive attack rather than civil discourse. I wonder to what extent the economic climate has influenced this climate. I am thinking of Benjamin Friedman's thesis in The Moral Consequences of Economic Growth that tolerance, openness and engagement are cyclical qualities.

Who Cares About the Constitution?

This from a recent piece in Fox Forum "Opinion".

When I recently asked Congressman James Clyburn, the third ranking Democrat in the House, to tell me “Where in the Constitution the federal government is authorized to regulate everyone’s healthcare”, he replied that most of what Congress does is not authorized by the Constitution, but they do it anyway. There you have it. Congress recognizes no limits on its power. It doesn’t care about the Constitution, it doesn’t care about your inalienable rights, it doesn’t care about the liberties protected by the Bill of Rights, it doesn’t even read the laws it writes.

by Andrew Napolitano
- FOXNews.com
- November 06, 2009
Kiss Your Freedoms Goodbye If Health Care Passes
http://www.foxnews.com/opinion/2009/11/06/judge-andrew-napolitano-health-care-freedom-congress/

The $10,000 suit

The $10,000 suit

Two factors shaping the economics profession today

How the World Got Modern

How the World Got Modern

This post is well worth reading - a sample

To put it another way, there are a series of explanations given for the distinctive features of modernity, each identifying one factor as being the critical one and then going on to claim that this factor either first appeared in Europe or was present there to a greater degree than elsewhere. A non-exhaustive list of such models and the scholars associated with them would include increased capital accumulation (Robert Solow); legal pluralism and a distinctive notion of law (Harold Berman); economic institutions, especially property rights (Douglass North, Nathan Rozenberg); geography (Eric Jones, Jared Diamond); accessible fossil fuels (Kenneth Pomeranz); a different way of thinking about knowledge and technical innovation (Lynn White, Joel Mokyr); greater intellectual openness (Jack Goldstone); a particular kind of consciousness, associated with certain religions (Max Weber, Werner Sombart); divided and constrained political power (Eric Jones, several others); a distinctive family system (Deepak Lal, many demographers); population growth past a critical level (Julian Simon); a higher social status and cultural valuation of trade and enterprise (Deirdre McCloskey); trade and the benefits of specialization (Adam Smith and many others); the role of entrepreneurs (Joseph Schumpeter, William Baumol); some combination of these (David Landes).

Overpaid Bureaucrats Expand in Number and Pay | CEI

Overpaid Bureaucrats Expand in Number and Pay | CEI

Government employees have radically better benefits and pensions than private sector workers. “When wages and benefits are combined, federal civilian workers averaged $119,982 in 2008, twice the amount of $59,909 which workers in the private sector averaged for wages/benefits. The value of benefits for federal civilian workers averaged $40,000/year, four times the value of benefits that the average private sector employee receives. Only 12% of retirees from the private sector have defined benefit pensions to supplement Social Security. Their average annual pension is $13,083, and they are not eligible for full Social Security benefits until their late 60s. But the majority of public sector workers have pension plans that allow them to retire 10-25 years earlier with benefits many times the retirement payout that Social Security would provide.

John Stossel : Self-Governance Works - Townhall.com

John Stossel : Self-Governance Works - Townhall.com

The Goal Is Freedom: The Welfare State Corrupts Absolutely What's wrong with healthcare deform.

Over at Freeman, Sheldon Richman makes an important link between the current policy debate over health and liberty. His blog post reflects on the discussion ASET book club recently engaged in over Stealing from Each Other and a posting by Boyes and Pratt on the challenges of civil discourse.

Richman captures the consequence of statist ideology that I have been attempting to articulate and his analysis provides some insight into Boyes' concern and frustration with an seeming inability of statists to engage with empirical or data driven arguments.

Richman writes:

This irresponsible mindset, which is similar to a not very inquisitive child’s, is what at least two generations of government intervention in health care — and the welfare state in general — have produced in the American people. Thus the welfare state retards moral and intellectual development. We expect the State — our surrogate parent — to make it all right. The demagogues we call politicians are happy to feed this attitude because it provides occasions for the expansion and exercise of raw power while seeming, like Santa Claus, to give away free goods. Of such things long political careers are made.

So the Welfare State, in addition motivating stealing acts to retard our moral development. I really think Richman does a fine job of outlining this argument.

Steven Landsburg on Health Care

The answer is less insurance, not more, and private insurance, not public. In the long run, those health savings accounts are probably the best solution. In the interim, the single most effective way to cut health care costs in a hurry would be to eliminate the tax deduction for employer supplied health insurance. That deduction leads to immense overuse of health care resources, especially by rich people. That’s one good reason to eliminate the deduction, and here’s another: People would start shopping for insurance on their own instead of taking whatever their employers offer, which would make the insurance companies more responsive to consumer demands.

It saddens me that support for universal coverage and a public option has become, in many circles, a sort of litmus test for compassion and caring about the poor. It particularly saddens me to hear the president say that “What we face is a moral issue; at stake are not just the details of policy, but fundamental principles.” It’s the details of policy that change people’s lives. The moral imperative is to get them right.

Adam Smith: Moral Philosopher

This 2000 piece by James R. Otteson is worth a read.

Otteson observes about The Theory of Moral Sentiments:

Smith’s analysis of the way in which people and communities come to have common moral standards is intriguing—and, indeed, may in large part be true. This alone would recommend it for serious consideration. But Smith’s examination of human morality reveals a model for explaining the development and maintenance of large-scale human institutions generally—which would mean that the book’s import is yet greater than initially thought. I call Smith’s model a “marketplace model.” Let me sketch it briefly, drawing on the discussion so far.

First, Smith argues that moral judgments, along with the rules by which we render them, develop in the way I have described, without an overall, pre-arranged plan. They arise and grow into a shared, common system of morality—a general consensus regarding the nature of virtue, or what Smith calls propriety and merit—on the basis of countless individual judgments made in countless particular situations.

Second, Smith argues that as we grow from infants to children to adults we develop increasingly sophisticated principles of action and judgment, which enable us to assess and judge an increasingly diverse range of actions and motivations.

Third, what seem when we are children to be isolated and haphazard interactions with others lead as we grow older to habits of behavior; as adults the habits solidify into principles that guide what we call our “conscience.”

Fourth, people’s interests, experiences, and environments change slowly enough to allow long-standing associations and institutions to arise, which give a firm foundation to the rules, standards, and protocols that both set the parameters for the initial creation of these associations and in turn are supported by them. (These “associations” would today include everything from Elks clubs, YMCAs, and Boy Scouts, to the American Medical Association, the National Academy of Sciences, and even the Catholic Church.)

Smith next argues that the development of personal moral standards, of a conscience and the impartial spectator procedure, and of the accepted moral standards of a community all depend on the regular associations people make with one another.

Student For Liberty Challenges Michael Moore

On Monday, Sept 28, Michael Moore spoke at George Washington University about his new film, Capitalism: A Love Story. One of the leaders of the GWU Liberty Society, Chad Swarthout (who is an active member of Students For Liberty, formerly a leader in the London School of Economics Hayek Society while studying abroad, leader in the DC Forum for Freedom, and all around great guy), managed to get up and question Michael Moore.

Some Big Facts

Some Big Facts

Elinor Ostrom’s Nobel Prize in Economics | Foundation for Economic Education

Elinor Ostrom’s Nobel Prize in Economics | Foundation for Economic Education

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What's an Apology Worth?

I'm sorry, I really am. Here's the economics of apologies:

Saying sorry really does cost nothing, EurekAlert: Economists have finally proved what most of us have suspected for a long time – when it comes to apologizing, talk is cheap.

According to new research, firms that simply say sorry to disgruntled customers fare better than those that offer financial compensation. The ploy works even though the recipient of the apology seldom gets it from the person who made it necessary in the first place.

John Stossel : A Nobel Prize for Showing That Freedom Works - Townhall.com

John Stossel : A Nobel Prize for Showing That Freedom Works - Townhall.com

Greg Mankiw on Health Care

The push for universal coverage is based on the appealing premise that everyone should have access to the best health care possible whenever they need it. That soft-hearted aspiration, however, runs into the hardheaded reality that state-of-the-art health care is increasingly expensive. At some point, someone in the system has to say there are some things we will not pay for. The big question is, who? The government? Insurance companies? Or consumers themselves? And should the answer necessarily be the same for everyone?

Inequality in economic resources is a natural but not altogether attractive feature of a free society. As health care becomes an ever larger share of the economy, we will have no choice but to struggle with the questions of how far we should allow such inequality to extend and what restrictions on our liberty we should endure in the name of fairness.

A Note on Capitalism and Imperialism

A Note on Capitalism and Imperialism

New Deal and Great Depression

New Deal and Great Depression

SuperFreakonomics

SuperFreakonomics

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Progressive Claptrap

Vintage Robert Higgs, important to examine his point in the day of Michael Moore.

http://hnn.us/blogs/entries/117604.html

Thinking about Boyes' post of Oct. 13th I would recommend a read of Bob Higgs posting over on HNN. Higgs is really getting at the importance of rhetoric in the "discourse" about the role of liberty and freedom in society. Samuel Gregg argues that civil discourse is a natural outcome of a commercial society, while Higgs implies that as the state expands in scope and scale in society civility is a casualty.

Both of these complimentary views are key to an appreciation of the importance of the media in the economic change of society. This change, to paraphrase North, is gradual and incremental and both formal and informal institutions shape this change. The institution of information diffusion is a key one as it shapes informal norms and beliefs and is shaped by these informal norms and beliefs.

I am thinking of a conversation with my brother, who considers himself a believer in liberty. I had given him Higg's classic - Crisis and Leviathan, my brother read the book and said that Higgs was a nut job. I had a similar conversation with a brother in law during the last election - he said that Ron Paul was a nut job.

Why does this happen? I think part of the answer might be in rhetorical choices by advocates of liberty. Higgs and, to a lesser extent Paul, seem to be to be reasonable, civil and accurate in their articulation of the importance of liberty and the consequences of its loss. However, an audience that is not convinced of these two issues (in my limited sample) finds them to be extremists. Oddly enough, one of these relatives applauds Michael Moore's latest film while the other condemns it.

In a previous post, I mentioned my reading of Samuel Gregg's The Commercial Society in which he models civil discourse. Perhaps advocates of liberty would benefit from a consideration of Gregg's rhetoric.

Another masterful post by Bill Easterly

The Perils of not knowing that you don't know.

The moral of the story is that knowing how much uncertainty there is about a projection – that is, knowing how much the projector DOESN’T KNOW – is often more important than the projection.

The Libertarian Nobel Peace-Prize Winner | Foundation for Economic Education

The Libertarian Nobel Peace-Prize Winner | Foundation for Economic Education

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Education - off the rails

Two contrasting views of education prompt me to think about Douglass North's analysis of the role of learning in economic change. The two posts deal with education - the process, while North is thinking of both the process and the outcome. The role of learning in economic growth is one that deserves serious reflection - while it is unclear what that relationship may be, the impact of learning seems significant. Moreover, the formal and informal institutional context of learning (and by implication education) serves as the constrain that limits the impact of learning.

With all that said, the 2008 Nobel winner in economics sees command systems as the mode to optimize education. It is no clear the Krugman believes that education and learning are closely related, but he is clear that education cannot take place without the state.

Paul Krugman: The Uneducated American

The Uneducated American, by Paul Krugman, Commentary, NY Times: If you had to explain America’s economic success with one word, that word would be “education.” In the 19th century, America led the way in universal basic education. Then, as other nations followed suit, the “high school revolution” of the early 20th century took us to a whole new level. And in the years after World War II, America established a commanding position in higher education.

But that was then. The rise of American education was, overwhelmingly, the rise of public education — and for the past 30 years our political scene has been dominated by the view that any and all government spending is a waste of taxpayer dollars. Education, as one of the largest components of public spending, has inevitably suffered.

My reading is that Krugman has this partially correct - if education in the 17-19th centuries in the US was "successful" it is in large part due to the emergent path that education was allowed to follow. And, while the state dictated "universal" (a misnomer of course) education - the responsibility for learning rested with the institutions of the family and church.

I also agree with Krugman that the crisis in education is a pressing one - a result of the altogether predictable consequences of the perverse incentives of the institution of public education. The second post which is well worth a read is by a parent who writes of a public school teacher in a highly rated school who lacked knowledge of the emergent concepts in the field (computer science). The post is titled - Beware Book Learning and the parent writes:

"This example supports the claim that it is mostly the students not the teachers who makes good schools good, and that even in computer science signaling takes precedence over learning."

Krugman and this parent have unintentionally opened a dialogue - they both work from the premise that education in the US is in crisis. As a public school teacher I would agree, and the crisis is deepening. The two offer drastically differing perspectives on the course of action to take. Krugman is confident that the state can resolve the problem - it is merely a matter of resources. More money, spent correctly will rectify the problem. Our parent, on the other hand, with direct knowledge of education on his child offers a more penetrating critique by pointing out the result of the institutional constraints of a state owned and directed enterprise. He observes of this public school teacher:

"Yes it makes sense for this teacher to ignore modularity if the AP exam ignores it. And perhaps it even makes sense for the exam to ignore it since modularity tests might take lots longer than other tests. But for someone with five years experience teaching computing at the nation’s best public high school to not even know that modularity goes way beyond objects – that seems a sad example of off-the-rails book learning."

Off the rails . . . I can't help but think of Bastiat's railroad and the recent discussion in the press of Bentham v Hume. The David Brooks article generated a great deal of discussion, and this posting (planners v doers) does a nice job of contextualizing the planner v searcher dichotomy. Planners like Krugman are confident that they have the answer, searchers such as the parent in Virginia engage in a process that can evolve in emergent responses - but only in the context of liberty.

So, the debate in education is a great way to view the debate over liberty - on one hand those who wish take away choice and liberty and coerce a solution or plan to be part of the expansive state and on the other hand those of us who stand for liberty and fear that it is leaving the station.

100 Blogs for Economics Students

Walmart Med Is Better

Wanna cut some med costs 30+% without sacrificing quality? Just have patients rely more on CVS, Walmart, etc. for care. From the Post:

Capitalism v socialism

This is an excellent editorial by Russian émigré, Svetlana Kunin.

In the USSR, economic equality was achieved by redistributing wealth, ensuring that everyone remained poor, with the exception of those doing the redistributing. Only the ruling class of communist leaders had access to special stores, medicine and accommodations that could compare to those in the West.

Just When Africa’s Luck Was Changing

Published: August 2, 2009
Africa is being affected greatly by the global recession as foreign investment funds are drying up.

An Open Letter By Kenneth Rogoff,

This letter is well worth a read as it identifies clearly one of the costs to the fatal conceit of centralization.

The letter is address to Joseph Stiglitz and, while the topic is his book Globalization and Its Discontents, the message is broader and more relevant today than when Rogoff wrote:

"you betray an unrelenting belief in the pervasiveness of market failures, and a staunch conviction that governments can and will make things better. You call us "market fundamentalists."

Adam Smith's Lost Legacy

Gavin Kennedy writes:


Smith did not write in favour of “enterprise”; he wrote in favour of “commercial society”. The former is a projection of a modern word onto the past; in fact, he displayed throughout Wealth Of Nations strong suspicions about the conduct of “merchants and manufacturers”.

The entire post is well worth a read and it reminded me of Samuel Gregg's book of the same title - The Commercial Society.

From a review of the book on the Acton site

Gregg explains the centrality for a commercial society of the healthy human attribute of trust. The centrality of trust is found in Adam Smith’s Wealth of Nations. Gregg examines the contributions of Adam Smith’s fellows of the Scottish Enlightenment. In the section Peace and Tolerance, Gregg expands upon the contribution of French philosophers to those principles. He quotes the letter of Archbishop Francois Fenelon of Cambrai to Louis XIV on the destructive impact of his wars. Voltaire, Montesquieu, Constant, and Tocqueville developed the theme of the contribution of commercial society to peace and toleration. Gregg quotes the French classical liberal Benjamin Constant: “It is clear that the more the commercial tendency prevails, the weaker the tendency to war must become.”

A Sales Pitch for Laissez-Faire Health Care

Dan Klein is now at George Mason.

An Unwelcome Message for Obama

An Unwelcome Message for Obama

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Larry Reed, FEE and freedom, by way of The Austrian Economists

Larry Reed took over FEE and has been putting his stamp on it. In this Reason.TV interview, Larry discusses the 3 lessons of the freedom philosophy that we are in 2009 in danger of forgetting. Roughly stated they are:

1. Government can provide you with absolutely nothing except that which it has first taken from somebody else.

2. A government big enough to give you want you want, is big enough to take everything you have.

3. A free people are not economically equal, and an economically equal people are not free.

Americans Are Becoming Richer

Americans Are Becoming Richer

F. A. Hayek,

new: F. A. Hayek, “Decline of The Rule of Law, 2″

misplaced medical egalitarianism.

Martin Feldstein makes the following point:

"But budget considerations aside, health-economics experts agree that private health spending is too high because our tax rules lead to the wrong kind of insurance."

Due to scarcity rationing will always occur - the question is what process will be used.

The extremes of the continuum are liberty (decentralized agents interacting on their own knowledge) v. totalitarianism (Leviathan dictating allocation). As Boyes and I discuss over on Liberty, the current health care debate provides an outstanding example of the continuum of allocation methods and an opportunity to reflect on incentives and unintended consequences.

Feldstein discusses how tax rules (taxes are another example of increasing scale and scope of Leviathan in civil society as well as coercive power) lead to unintended consequences. Moreover, like regulations, these tax rules institutionalize in a very pernicious manner the power of the government and lead to a loss of liberty that may be permanent. (I am thinking now of the observation that the closest thing on earth to immortality is a government program). As more and more agents "accept" or become accustomed to the loss of liberty, the state has further room to grow.

Rescues Unlimited: Government as Wall Street’s Enabler

By DEVIN LEONARD
Published: August 2, 2009
In “Bailout Nation,” Barry Ritholtz argues that the American financial system has been twisted beyond recognition by cynical bankers and Washington politicians.

Central banks . . .

"Leaving a financial crisis is like leaving an awkward social gathering: a good exit is essential. In 1936-37, the Federal Reserve made a colossal mistake in its “exit strategy”. This time round it is crucial that central banks get their timing right."

Central banks must time a ‘good exit’

By Randall Kroszner

Published: August 11 2009

This raises a great question and reveals a great deal about the opportunity cost of centralized, state action. To the extent that the Fed or any other central bank is a representation of the state, then Hayek's knowledge problem prevails. So it is entirely understandable that the FED in 1936-7 did not "exit" either at the right time or in the right way - whatever that is.

So, Kroszner (see here for a great analysis titled the only winning move is not to play) reminds us of the dangers of centralized decision making.

Project Syndicate

Project Syndicate is an international association of quality newspapers devoted to:

* bringing distinguished voices from across the world to local audiences everywhere;
* strengthening the independence of printed media in transition and developing countries;
* upgrading their journalistic, editorial, and business capacities.

Project Syndicate currently consists of 432 newspapers in 150 countries, with a total circulation of 66,605,600 copies. Its activities fall into two broad categories:

* disseminating the highest quality commentaries and analysis to its member papers;
* fostering institutional links among member papers;

Organizations that support Liberty

The Association of Private Enterprise Education (APEE) is an association of teachers and scholars from colleges and universities, public policy institutes, and industry with a common interest in studying and supporting the system of private enterprise. APEE hosts an annual conference for members to share their scholarly findings and offers a number of awards to recognize individuals who have contributed to the cause of private enterprise. Support for young scholars is often available to attend the annual conference. The association sponsors the Journal of Private Enterprise so scholars may share their research with the wider academic community.

The Clemson Institute for the Study of Capitalism is dedicated to exploring the moral, legal, constitutional, political and economic foundations of capitalism. The Clemson Institute is particularly devoted to fostering a serious examination of a free society.

The Foundation for Economic Education (FEE), one of the oldest free-market organizations in the United States, was founded in 1946 by Leonard E. Read to study and advance the freedom philosophy. FEE’s mission is to offer the most consistent case for the “first principles” of freedom: the sanctity of private property, individual liberty, the rule of law, the free market, and the moral superiority of individual choice and responsibility over coercion.

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals. The Foundation develops, supervises, and finances its own educational activities to foster thought and encourage discourse on enduring issues pertaining to liberty.

Click here to see Liberty Fund co sponsors.

For over 25 years, the Mercatus Center at George Mason University has sought to bridge this gap. Mercatus applies scholarly research to the problems facing policy makers. Bringing together a network of scholars and experts from around the globe, the Mercatus Center provides policy makers with the economic tools to make sense of today's most pressing issues. Mercatus turns ideas into action.

The Ludwig von Mises Institute was founded in 1982 as the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics. It serves as the world's leading provider of educational materials, conferences, media, and literature in support of the tradition of thought represented by Ludwig von Mises and the school of thought he enlivened and carried forward during the 20th century, which has now blossomed into a massive international movement of students, professors, professionals, and people in all walks of life.

Reason is the monthly print magazine of “free minds and free markets.” It covers politics, culture, and ideas through a provocative mix of news, analysis, commentary, and reviews. Reason provides a refreshing alternative to right-wing and left-wing opinion magazines by making a principled case for liberty and individual choice in all areas of human activity.

Thomas Sowell : Listening to a Liar - Townhall.com

Thomas Sowell : Listening to a Liar - Townhall.com

Understanding Liberty and Choice: Property Rights and Economic Development

Co-sponsored by Liberty Fund, Inc.

Expert panel, featuring: Lee Alston Ph.D. Director, Environment and Society Program, Institute of Behavioral Science, University of Colorado;Research Associate, National Bureau for Economic Research (NBER)

Gary Libecap Ph.D. Bren School of Environmental Science & Management, University of California at Santa Barbara;Fellow, Hoover Institution

When: October 22-24, 2009

Where: Scottsdale, AZ-Scottsdale Marriott Suites

Sessions and readings

Session 1: Large Group activity


Session 2: Why Are Some Nations Rich and Others Poor?
North, Douglass C. “Institutions, Ideology, and Economic Performance, “ Cato Journal, 11(3), 1992. pp. 477-88.

Easterly, William. “Planners Versus Searchers.” The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. New York: Penguin, 2006. pp. 3-37.

Session 3: The Philosophy of Property Rights
Hume, David. “Of the Origin of Justice and Property.” A Treatise of Human Nature. London: Oxford University Press, 1896. pp. 176-194.

Locke, John. “Of Property.” in The Founders Constitution, Vol. 1, ed. By Philip B. Kurland and Ralph Lerner. Indianapolis, IN: Liberty Fund, Inc., 1987. pp. 580-85.

Session 4: Property Rights and Markets
Alchian, Armen with Harold Demsetz. “The Property Rights Paradigm.” The Collected Works of Armen Alchian, Volume 2: Property Rights and Economic Behavior. Indianapolis, IN: Liberty Fund, Inc., 2006. pp. 84-96.

Alchian, Armen. “Market Prices, Property, and Behavior,” The Collected Works of Armen Alchian, Volume 2: Property Rights and Economic Behavior. Indianapolis, IN: Liberty Fund, Inc., 2006. pp. 460-80.

Lawson, Robert. “Economic Freedom and Property Rights: The Institutional Environment of Productive Entrepreneurship,” in Making Poor Countries Rich: Entrepreneurship and the Process of Economic Development, ed. by Benjamin Powell. Stanford, CA: Stanford University Press, 2008. pp. 112-133.

Session 6: Institutional Weakness, Characteristics and Consequences
DeSoto, Hernando. “The Mystery of Legal Failure,” The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books, 2000. pp. 153-206.

Easterly, William. “You Can’t Plan a Market,” The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. New York: Penguin, 2006. pp. 60-112.

Session 7: Property Rights and the Future of Economic Development
Leeson, Peter. “Escaping Poverty: Foreign Aid, Private Property, and Economic Development.” The Journal of Private Enterprise, Spring, 2008. pp. 39–60.

Sachs, Jeffrey. “Making the Investment Needed to End Poverty.” The End of Poverty. New York: Penguin, 2005. pp. 244–265.

Mold Society Anew?

Bob Higgs makes the point that the assault on liberty takes two forms - the extension or expansion of government powers. It is this ratchett effect the is the mechanism that diminishes our liberty.

This ratchett effect is celebrated by statists and, in an interesting book, I came across the following sentiment about WW I:

"For Dewey, the growing drumbeat for war seemed to present a glorious opportunity: mobilization he predicted, would shake up the status quo, expand state power, and give progressives the chance to mold society anew." (p 107 Gage).

All war is an opportunity to "expand the state" and the attitude expressed is disturbingly familiar, the expansion of the state is perceived in some way to be glorious. And what is glorious? The dictionary tells us that it is characterized by splendor; magnificent; delightful; wonderful. So, to the extent that the population finds expanded state power wonderful, the ratchett effect that leads to diminished liberty accelerates - for it is only a tenacious belief in liberty and individual freedom that keeps Leviathan at bay.

What is this glorious state power used for? It is used to "mold society anew". Terrifying words that evolve the Inquisition or the Holocaust and yet the wider population seems to find this wonderful and delightful prospect.

Thinking about the process of economic change, it seems to me that this fundamental change in thinking - state power is glorious rather than a ultimate evil - poses the greatest threat to future progress. This belief system will be far more pernicious than the looming deficits and debt, the health care "debate" or any other goofy scheme concocted by the republicans or democrats.

Amity Shlaes: The Forgotten Man

A great review

Mises Daily by C.J. Maloney | Posted on 9/3/2009 12:00:00 AM

So to me, while The Forgotten Man may occupy a place in the reviews as an economic history of the Great Depression — which it is up to a point — more than anything else it is a character study of the one man who above all defined and shaped the New Deal: Franklin Delano Roosevelt. And the book reads as a 383-page indictment of him.

Considering what we face today, this book is a must read, for example:

"With the possible exception of Al Capone's Chicago gang, 1930s America saw no greater pile of buccaneering stickup men and rogues than those with whom FDR surrounded himself. As one of the book's central themes, Amity Shlaes condemns them for introducing "regime uncertainty" into the economy, thereby exacerbating the Great Depression. Keep in mind that "regime uncertainty" is but a euphemism for "utter lawlessness."

This "regime uncertainty" was a direct result of the ideological underpinnings of FDR and his Brain Trust.

. . .

Throughout the book, Shlaes demonstrates that FDR considered the law not as something to be respected and adhered to, but as something to be cynically manipulated or ignored at leisure. In his hands, the law became a weapon to be used against his enemies and other, arbitrarily chosen targets. During his first year of rule alone, "10,000 pages of law had been created" (p. 202), and an army of bureaucrats and police had been raised to enforce them.

. . .

H.L. Mencken once observed that the great thing about democracy is that the people get what they deserve — good and hard. Mrs. Shlaes never lets the reader lose sight of the fact that while FDR ushered in the final destruction of the Republic, the American voters, for whatever reason, wanted FDR, loved the New Deal — and still do to this day.


. . .

And, like all socialist systems of government, everything quickly began to harden into an immovable inflexibility. Mrs. Shlaes tells us "the New Dealer's economic failures were working to their own political advantage" (p. 267). The massive increase in the size of the federal government allowed FDR to build himself a formidable political machine, so well-oiled by patronage jobs, bribes, and handouts that "millions of voters [were] under obligation to him" (p. 375), making an election defeat impossible.

As Mrs. Shlaes persuasively argues, the Great Depression did not end because of the New Deal. Quite the opposite, "the New Deal was causing the country to forgo prosperity, if not recovery" (p. 263). FDR and his New Deal became vampires, living high off a Great Depression that his policies were feeding and keeping alive.

Liberty: Liberty and Healthcare

Liberty: Liberty and Healthcare

Violence and Social Orders - Cambridge University Press

Violence and Social Orders - Cambridge University Press

A Neglected Masterpiece of Economic Analysis

Bob Higgs writes:

I recently read a book titled Banking and the Business Cycle: A Study of the Great Depression in the United States, by C. A. Phillips, T. F. McManus, and R. W. Nelson. It was originally published by Macmillan in March 1937, later became a hard-to-find, almost-forgotten book, and in 2007 was reissued by the Mises Institute in an inexpensive paperback edition.

I am willing to say that I know of no better book on the economic dynamics of the 1920s boom and early 1930s bust in the United States. I know about several other excellent books that every student of economics and economic history should read on the same topics, but if I could recommend only a single book to an aspiring economist, or even to an interested lay reader, this is the one I would recommend.

It is tempting to characterize its theoretical framework as Austrian, as indeed it is in many respects (Mises and Hayek are cited favorably, along with many other sound economists, many of them now forgotten), yet Phillips, McManus, and Nelson’s framework is broader and more eclectic than a strictly Austrian analysis would be. Moreover, besides being packed with excellent economic analysis in a great variety of applications, the book contains a wealth of quantitative evidence, which the authors handle with admirable caution and good sense. They present many tables and charts, but not a single equation. For modern mainstream economists, who can scarcely move a muscle without writing a raft of equations, this book stands as a brilliant reproach.

Read more here

Greg Ransom's Frosh reading list

10 Books For A Freshman Seminar In Economics

This post was written by Greg Ransom on August 31, 2009
Posted Under: Economics Profession

Here is Greg Mankiw’s list. Here is Arnold Kling’s list. And here is my list:

• The Rise of the Western World by Douglass North & Robert Paul Thomas

• Looking Backward by Edward Bellamy

• The Ascent of Money Niall Ferguson

• Discovery, Capitalism and Distributive Justice by Israel Kirzner

• A Farewell to Alms by Gregory Clark

• Dream Machines by Philip Mirowski

• Economics — Mathematical Politics or Science of Diminishing Returns? by Alexander Rosenberg

• Individualism and Economic Order by F. A. Hayek

• The Making of an Economist, Redux by David Colander

• The Elusive Quest for Growth by William Easterly

2009 Economic History Association Meetings

Of Golf, Capitalism and Socialism

Of Golf, Capitalism and Socialism

By Armen A. Alchian

A puzzle has been solved. Despite their intense interest in sports, no golf courses exist in the Socialist-Communist bloc. Why is golf solely in capitalist societies? Because it is not merely a sport. It is an activity, a lifestyle, a behavior, a manifestation of the essential human spirit. Golf's ethic, principles, rules and procedures of play are totally capitalistic. They are antithetical to socialism. Golf requires self-reliance, independence, responsibility, integrity and trust. No extenuation is granted misfortune, mistake or incompetence. No second change. Like life, it is often unfair and unjust, with uninsurable risks. More than any other sport, golf exploits the whole capitalist spirit.

And along these lines

59 Is the New 30

Mankiw's frosh reading list

For those blog readers who might be interested in what the seminar will be reading, here is the list of books:

• The Worldly Philosophers, by Robert Heilbroner
• Spin-Free Economics, by Nariman Behravesh
• Capitalism and Freedom, by Milton Friedman
• Equality and Efficiency: The Big Tradeoff, by Arthur Okun
• Nudge, by Richard Thaler and Cass Sunstein
• The Return of Depression Economics, by Paul Krugman
• Animal Spirits, by George Akerlof and Robert Shiller
• The Myth of the Rational Voter, by Bryan Caplan
• Economic Gangsters, by Raymond Fisman and Edward Miguel
• The Price of Everything, by Russell Roberts

Truly Productive People

Truly Productive People

Government's Track Record in the Insurance Business

Government's Track Record in the Insurance Business

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From Boyes over on Liberty

Boyes uses a recent Paul Krugman op ed to take a look at the current discourse about the proper role of the government. This is an instructive and very important debate as it illuminates the basic tradeoff between liberty and security.

A free market is, by nature, dynamic. This constant change leads to what has been referred to here and in the past as Creative Destruction. I often point to failure as one of the most positive elements of a free market. The freedom to fail, a fundamental element of liberty, has any number of positive consequences. As the trial and error process of progress unfolds, information is the essential grease that lubricates the process and key information is to know what does not work, what is inefficient, what causes wealth destruction - and the flow of information is so much faster under a spontaneous order that is characterized by individual actors operating on their own set of preferences and knowledge.

That said, the issue of the role of government is at the heart of a free society - liberty carries with it responsibility and institutions both formal and informal are very important to facilitating exchange, these rules of the road reduce transactions costs and potential violence. My thinking is leading me to believe that informal rules are much more significant than are formal rules and, if the formal rules are in conflict with prevailing informal institutions, there will be negative impacts upon decision making and economic welfare.

What does this all mean today? I have a sense that the "many" in our society today have made a trade off for security at the expense of liberty. That is, in return for government support, many individual decision makers are willing to accept lower future growth and greater future obligation.

I am reminded of the following:

Larry Reed at the FEE asserts:

1. Government can provide you with absolutely nothing except that which it has first taken from somebody else.

2. A government big enough to give you want you want, is big enough to take everything you have.

3. A free people are not economically equal, and an economically equal people are not free.

Bill makes this first point very clearly - the political decision to increase deficits through spending is taking current income and current and future wealth from one group of society and transferring it to another. This is the opposite of voluntary exchange. Exchange that is mutually voluntary is a positive sum process leading to wealth creation - the government mandated exchange we see in deficit spending, deficit financing and monetary actions to further debase the currency are negative sum.

But the impact extends far beyond the arena of current and future standard of living - what is happening is a conscious trade off to engage in negative sum arrangements in order to achieve a sense of security - which is ultimately doomed.

This leads to Reed's second point - this is no longer a slippery slope, it is a point that we all need to consider - a government that is big enough to take citizen property through taxation and transfer to factions that are supportive of the executive (various industries, NGOs, labor organizations and community organizations) has power.

Our founding fathers were aware of the, excuse this, power of power, and were concerned enough to consciously make every effort to limit the accumulation and expansion of power at the federal level. Both this consciousness and actual limit have eroded over time - if we think of the ultimate expression of power, it would be to reunite the economic sphere with the political sphere - allowing one group or one person (a dictator/totalitarian) to make decisions dictating outcomes in both areas. In fact the areas are no longer distinguishable and perhaps this leads to a deterioration of society from the open access state back to the natural state or the primitive state (North et al). Or to use Adam Smith's view - a movement from the commercial society back to agricultural or pastoral or hunting.

What also colors the trade off between security and liberty that seems to be at the heart of this discussion is the notion of equity - Reed's final point.

The expansion in scope and breadth of government is motivated, in part, by this very misguided and misplaced sense of equity.

For some reason, over time we have misplaced the sense of equality from:

1. Equality under the law - that is, we are all treated the same in our encounters with the institutions (*formal and informal) of the law (Hayek's view of law). So, if Boyes and I are both accused of theft (a manifest violation of property rights) we are brought before the court and treated the same way.

This has been replaced by

2. Equality of outcomes - Boyes and I have the right (we should post about the inflation of rights and that impact on liberty) to the same, exact salary.

Boyes asks us to consider the ultimate negative sum nature of expansive government.

MPS New York 2009

The End of Globalizing Capitalism?

Classical Liberal Responses to the Global Financial Crisis


The Mont Pelerin Society: A Mandate Renewed

Moral Rules Are To Check Power

Moral Rules Are To Check Power

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How to rebuild a shamed subject

The reconstruction of economics needs to start with the universities. First, degrees in the subject should be broadly based. They should take as their motto Keynes’s dictum that “economics is a moral and not a natural science”. They should contain not just the standard courses in elementary microeconomics and macroeconomics but economic and political history, the history of economic thought, moral and political philosophy, and sociology. Though some specialisation would be allowed in the final year, the mathematical component in the weighting of the degree should be sharply reduced. This is a return to the tradition of the Oxford Politics, Philosophy and Economics (PPE) degree and Cambridge Moral Sciences.

Teaching and Learning Economics with Technology

Teaching and Learning Economics with Technology

Jeffrey Rogers Hummel: Review of George Selgin's Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821 (University of Michigan Press, 2008)

Jeffrey Rogers Hummel: Review of George Selgin's Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821 (University of Michigan Press, 2008)

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The Cause of the Scottish Enlightenment

The Cause of the Scottish Enlightenment

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The Minimal State

I just returned from a Liberty Fund Seminar where we examined self ownership or property rights in our selves. I was quite surprised to find that even people there are reluctant to question the role of government in providing defense, so-called public goods and externalities, and others. The problem is that once you admit there is a role for a state, you have a difficult if not impossible task in limiting the state. Read The Cult of the Presidency by Gene Healey and you will realize how the state feverishly works to grow, particularly in times of war and crises. In reading Hume or Mill, Locke or James Buchanan, I think you must continually question whether they have in mind some aspect of life they desire others to follow and thus fall into the fatal conceipt of assuming what they want must be good for society.

Thanks to Austrian Economists

The aid agency nobody knew existed is even worse than nobody realized

Aid Watch
Just Asking that Aid Benefit the Poor

The aid agency nobody knew existed is even worse than nobody realized

by William Easterly

I recently saw a June 2009 World Bank (Independent Evaluation Group) evaluation of the Global Forum for Health Research, an 11-year-old international organization that had received $56 million (through 2007) in official aid funding, about half from the World Bank. The Global Forum’s mission is “demonstrating the essential role of research and innovation for health and health equity, benefiting poor and marginalized populations.”

Gates and the 1st amendment

There is a serious problem in this country: Police are overly sensitive to insults from those they confront. And one can hardly blame the confronted citizen, especially if the citizen is doing nothing wrong when confronted by official power. This is, after all, a free country, and if "free" means anything meaningful, it means being left alone--especially in one's own home--when one is not breaking the law.

Sgt. Crowley had every right to check on what was reported as a possible break and entry. But as soon as he realized that the occupant was entitled to be in the house, he should have left. He admits in his own police report that he was indeed able to ascertain Professor Gates' residency and hence right to be in the house.

As for Professor Gates' inquiries into the officer's identity and badge number (as Gates describes the confrontation) or his tirade against the officer (as Crowley reports), the citizen was merely--even if neither kindly nor wisely--exercising his constitutional right when faced with official power. Even if Professor Gates were wearing a "Fuck You, Cambridge Police" jacket, the officer would have been obligated to leave the house without its occupant in handcuffs.

The Not So Wild, Wild West: Property Rights on the Frontier

Subject: ASET Book Club Event - August 2009

Thursday, August 27

The Not So Wild, Wild West: Property Rights on the Frontier
5:45 p.m. - 7:15 p.m.

RSVP by Friday, August
The authors emphasize that ownership of resources evolves as those resources become more valuable or as establishing property rights becomes less costly. Rules evolving at the local level will be more effective because local people have a greater stake in the outcome. This theory is brought to life in the colorful history of Indians, fur trappers, buffalo hunters, cattle drovers, homesteaders, and miners. The book concludes with a chapter that takes lessons from the American frontier and applies them to our modern "frontiers"-the environment, developing countries, and space exploration.

"Government can not efficiently do these things."

My colleague Bill Boyes blogs over on Liberty in response to Megan McArdle's view of the safety standards:

"Government can not efficiently do these things."

I tend to read the evidence on standards in much the same way. That is standards are a cost the are imposed, rather than a response that emerges. As such, this type of tops down approach falls victim to The Fatal Conceit.

I cannot envision a standard writer would would have the knowledge in order to construct a standard to ensure safety. The regulatory burden then, is much greater than the overt cost, it includes the perverse consequences that result from the "crowding out" of decentralized agents and the process that allows solutions not designed to emerge.

But I think Bill's comment leads us to a much bigger concern - the increased scope and scale of government action in civil life. As I suggest, this increased scope and scale does tend to have the effect of eroding the underlying motivation for participants to seek solutions and to internalize the costs of their own behavior. I suppose I am trying to argue that the government efficiently does replace private and civil association as a fully functioning component of society, leaving behind a vacuum to be filled by the centralized power.

To the Higgs perspective, and I agree, that the imposition of standards is perhaps, short of war, the most effective way that the government can increase it power.

"How Wars, Plagues, and Urban Disease Propelled Europe’s Rise to Riches"

"This column explains why Europe’s rise to riches in the early modern period owed much to exceptionally bellicose international politics, urban overcrowding, and frequent epidemics."

Cruel windfall: How wars, plagues, and urban disease propelled Europe’s rise to riches, by Nico Voigtländer and Hans-Joachim Voth, Vox EU: In a pre-modern economy, incomes typically stagnate in the long run. Malthusian regimes are characterised by strongly declining marginal returns to labour. One-off improvements in technology can temporarily raise output per head. The additional income is spent on more (surviving) children, and population grows. As a result, output per head declines, and eventually labour productivity returns to its previous level. That is why, in HG Wells' phrase, earlier generations "spent the great gifts of science as rapidly as it got them in a mere insensate multiplication of the common life" (Wells, 1905).

How could an economy ever escape from this trap? To learn more about this question, we should look more closely at the continent that managed to overcome stagnation first. Long before growth accelerated for good in most countries, a first divergence occurred. European incomes by 1700 exceeded those in the rest of the world by a large margin. We explain the emergence of this income gap by a number of uniquely European features – an unusually high frequency of war, particularly unhealthy cities, and numerous deadly disease outbreaks.

Rhetoric and Persuasion

Rhetoric and Persuasion
From the Washington Post:

President Obama has framed the health-care debate in Washington as a campaign against insurance companies whose irresponsible actions, he repeatedly says, must be reined in to control costs and improve patient care. In North Carolina this week, he told an audience that the existing system "works well for the insurance industry, but it doesn't always work well for you."

The message is no accident, as the president's chief pollster made clear in a rare public speech last month. Joel Benenson told the Economic Club of Canada that extensive polling revealed to the White House what many there had guessed: People hate insurance companies.

"Take the public plan, for example," Benenson said. "Initial reaction to it wasn't as positive as it is now. . . . But we figured out that people like the idea of competition versus the insurance company, and that's why you get a number like 72 percent supporting it."

It’s Our Turn to Eat: The Story of a Kenyan Whistleblower

Michaela Wrong’s gripping latest book, It’s Our Turn to Eat: The Story of a Kenyan Whistleblower, is the antidote for anyone who knows the weariness of wading through the jargon of implementation plans and institutional treatises on governance and anticorruption. It’s the anti-boredom serum, the potion that brings you the real consequences of what happens when those plans are ignored.

Trilemma

This is a technical paper - but the issue of "trilemma," or "impossible trinity" -- a country simultaneously may choose any two, but not all, of the three goals, monetary independence, exchange rate stability and financial integration is important.

Click here.

How American Health Care Killed My Father - The Atlantic (September 2009)

How American Health Care Killed My Father - The Atlantic (September 2009)

The author confirms the central role that incentives and institutions play in this market (as in all markets).

All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.

and

We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.

Research Papers dealing with Growth by Charles I. Jones

Research Papers dealing with Growth by Charles I. Jones

“Prices Must Be Free To Tell The Truth”

“Prices Must Be Free To Tell The Truth”

MV=PQ: A Resource for Economic Educators: Slideshows for Use in the Classroom

MV=PQ: A Resource for Economic Educators: Slideshows for Use in the Classroom

Health-Care Lies

Health-Care Lies

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Incentives

Bill Boyes over on Liberty blogs the relationship between incentives and performance.

Incentives matter. I think Boyes highlights a key application in economic reasoning, one that I have been reflecting on in the context of my summer reading as well as the current expansion of the state in our country.

Incentives come from the institutional framework of society. These institutions, as Douglass North tells us, can be formal or informal, and they are important in shaping the incentives that shape behavior. Boyes does a great job of exemplifying the impact of incentives and incentive changes in this post.

However, I am interested in the process by which both the institutions and the incentives change. In rereading North's challenging book - Understanding the Process of Economic Change - I encountered his concept of adaptive efficiency. North argues that the emergent and evolutionary process that characterizes change is shaped to a large extent by the degree of adaptive efficiency embedded in a society.

In addition, he argues that while formal institutions can be changed very quickly (the example that Boyes provides us - or the current effort to change the "rules of the game" for health care) while informal institutions (norms, beliefs, values, and shared cultural constructs) change very slowly, in his words this change is incremental and gradual.

So, what we seem to be seeing in contemporary political debate in the US is an effort to quickly change a formal institution in the face of no change in informal institutions. Stated differently, current political leaders seem to be attempting to share formal institutions in a way that conflicts with informal institutions.

This also seems to illustrate the adaptive efficiency of our society - that is a flexibility that encourages trial and error and failure. To the extent that the current political movement fails, there has been a higher order outcome and, tragedically, vice versa.

The relationship between Economics, Values and Organizations is the topic of a collection of essays that I might recommend.

So, Boyes challenges us to consider the impact of an attempt to change formal institutional structure in a rapid, tops down manner. I can't help but think about the alternative implied by Boyes - the emergent and evolutionary development of institutional structures described by Hayek.

Douglass North - Economic Performance Through Time

http://nobelprize.org/nobel_prizes/economics/laureates/1993/north-lecture.html


Arnold Kling on Adaptive Efficiency

http://www.tcsdaily.com/article.aspx?id=061807A

Benjamin Friedman - The Moral Consequences of Growth

Nathan Rosenberg - How the West Grew Rich

Opposing view - Megan McAardle
http://meganmcardle.theatlantic.com/archives/2009/08/did_big_government_save_us_fro.php

A Microeconomist

A Microeconomist’s Protest

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Paulson’s Calls to Goldman Tested Ethics

Gary Becker writes

So legitimate reasons exist for concern about the speed and strength of the recovery of the American economy. However, I worry much more about various regulations, spending, and controls being introduced by the present Congress and by President Obama than by intrinsic difficulties in the American economy.

Steve Horwitz

Two Recent Publications Available Online

My two recent papers published in The Independent Review are now available online.

“Fascism: Italian, German, and American,” review of Jonah Goldberg, Liberal Fascism: The Secret History of the American Left from Mussolini to the Politics of Meaning, The Independent Review, 13 (3), Winter 2009, pp. 441-46.

and

“Wal-Mart to the Rescue: Private Enterprise’s Response to Hurricane Katrina,” The Independent Review, 13 (4), Spring 2009, pp. 511-28.

Enjoy.

Arrow on the Increasing Cost of Healthcare

Arrow on the Increasing Cost of Healthcare

The Nobel laureate Ken Arrow:

Oh, why health costs increase? The basic reason why health costs increased is that health care is a good thing! Because today there is a lot more you can do!

The Harmony of Interests in Practice

This is what markets are all about at the end of the day: the harmonization of the self-interest of actors via decentralized coordination. That harmonization allows us to live in peaceful cooperation and extend the benefits of Mises' Law of Association to more and more of humanity. A computer calling me to remind me to refill my prescription might seem like a little thing in the broader scope of human accomplishment, but it symbolizes the real processes that have made possible the levels of peace and prosperity that we have.

http://austrianeconomists.typepad.com/weblog/2009/07/the-harmony-of-interests-in-practice.html

Anarchy and Development: An Application of the Theory of Second Best

Anarchy and Development: An Application of the Theory of Second Best

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Hurrying Into the Next Panic?

Hurrying Into the Next Panic?
By PAUL WILMOTT
Published: July 29, 2009
On top of an already dangerously influential and morally suspect financial minefield is now being added the unthinking power of the machine.

Economic Principals

David Warsh continues to write about a story that seems to be ignored by the profession and the press.

A major reason is Harvard University’s Russia scandal. Summers’ temperament and his policies at Treasury, both under Robert Rubin and as secretary himself, and how they might have contributed to the financial meltdown, would weigh in the balance, too. From a distance of twelve years, the Russian episode may seem musty with age. Who cares what happened when Harvard undertook its mission to Moscow in the brief heyday of the Russian robber barons?

To recap: a young Harvard professor, Andrei Shleifer, a Russian émigré, is hired by the US Agency for International Development in 1992 to advise the government of Boris Yeltsin on behalf of the US government. In 1997, Shleifer is caught investing in the Russian economy (and trying to set up his wife in a government-licensed business there) and fired by USAID. For the next eight years, he is shielded, at least to some extent, by his friend and mentor, Larry Summers, first at the Treasury Department, then as president of Harvard.


In 2004, a Federal judge finds Shleifer and Harvard to have committed civil fraud and orders Harvard to repay. Two years later, when Summers is asked to resign the Harvard presidency, his conduct in the affair is described as one of the reasons. When he returns to Washington as senior advisor to President Obama, listed among his brain trust is none other than Nancy Zimmerman, Mrs. Andrei Shleifer.

MV=PQ: A Resource for Economic Educators: Economics and the Great Depression

MV=PQ: A Resource for Economic Educators: Economics and the Great Depression

Tim Schilling, the blog author writes:

I ran across (somewhat belatedly, I admit) an essay on the History Now website. Historian David Kennedy (author of Freedom from Fear: The American People in Depression and War, 1929 - 1945) discusses some of the fundamental problems leading up to the Great Depression, as well as some of the challenges faced by Presidents Herbert Hoover and Franklin Roosevelt.

Hurrying Into the Next Panic?

Hurrying Into the Next Panic?

War on Drugs . . . drugs won.

“We’ve spent a trillion dollars prosecuting the war on drugs,” Norm Stamper, a former police chief of Seattle, told me. “What do we have to show for it? Drugs are more readily available, at lower prices and higher levels of potency. It’s a dismal failure.”

For that reason, he favors legalization of drugs,

Peter Blair Henry

Peter Blair Henry of Stanford University talks with EconTalk host Russ Roberts about economic development. Henry compares and contrasts the policy and growth experience of Barbados and Jamaica. Both became independent of England in the 1960s, so both inherited similar institutions. But each pursued different policies with very different results. Henry discusses the implications of this near-natural experiment for growth generally and the importance of macroeconomic policy for achieving prosperity. The conversation closes with a discussion of Henry's research on stock market reactions as a measure of policy's effectiveness.

http://www.econtalk.org/archives/2009/07/peter_henry_on.html

Property and Environement Research Center

PERC

THE FORECAST:   More cool weather for Montana. More articles, op-eds, policy studies, and forums for PERC. PERC's executive director Terry Anderson and Richard Sousa of the Hoover Institution have an op-ed at Forbes.com offering some pragmatic solutions to national problems that do not require more government intervention. PERC research fellow Alison Berry has published a new Policy Series, Two Forests Under the Big Sky comparing the management of the US Forest Service with that of the Confederated Salish and Kootenai tribes on two similar Montana forests. The tribes came out ahead for timber production and ecological value. Berry summarizes some of her findings in a brief podcast.   Buy local is the rallying cry for food, however, Pierre Desrochers, a PERC Julian Simon fellow, says buy global. Buying food locally is a "well-meaning marketing fad" that is a distraction from real and serious issues, says Desrochers, an associate professor at the University of Toronto. Read his newspaper article and complete study [PDF]. Joe Sehee, a 2007 PERC enviropreneur, is working to expand green burials and reinvent burial grounds as landscape-scale conservation efforts. The Green Burial Council is co-sponsoring the first ever educational conference for those interested in working in the green burial field. The event is scheduled for September 10-11 at the Foxfield Preserve in Ohio. Registration is open. Former PERC media fellow Wycliffe Muga of Mombasa reports in African Business [PDF] magazine on FME efforts that could help slow the desertification of Sub-Saharan Africa. Milton Friedman Legacy of Freedom Day is Friday, July 31. PERC, along with 50 other organizations across the country, is holding a celebration to include a brief talk and refreshments. The public is welcome. Please join us at the PERC office, 2048 Analysis Dr., Ste A, Bozeman, at 11 a.m. For more information, call Michelle: 406-587-9591. Wishing you an awesome August, Linda Linda Platts Director of Media Relations PERC 2048 Analysis Drive, Suite A Bozeman, MT 59718 406.587.9591 406.586.7555 (fax) www.perc.org We value your privacy. If you would prefer not to receive our news in the future, send a blank message to unsubscribe@perc.org.

Summer 2009 Reading

Douglas Irwin - Against the Tide: An Intellectual History of Free Trade, Free Trade Under Fire

Both books are excellent, the first provides an historical overview of the pre and post Adam Smith debate about the foundations for mercantilism (protectionism) and free trade. Irwin traces much of the thought back to classical works of philosophy.

David Landes The The Unbound Prometheus: Technical Change and Industrial Development in Western Europe from 1750 to Present

Wealth and the Poverty of Nations was an outstanding read (must for economic historians). This book is tougher going but worth it as Landes goes into significant detail. If time is an issue, I would recommend Mokyr.

Joel Mokyr The Levers of Riches

I loved reading this book - Mokyr does a wonderful job, well let me quote from this Amazon review:

"Mokyr has demonstrated, yet again, that he is one the best economic historians around. His book is a treasure trove of facts and insights about technological progress often overlooked in other accounts. Further, his argument that economics might do well to adopt the methodology of evolutionary biology instead of the standard application of Newtonian physics is cogent and convincing."--Howard Bodenhorn, St. Lawrence Univ.

"Joel Mokyr is a first-rate scholar who has read a wide body of literature. The book is very well written, lively and engaging. It is closely reasoned and well executed"--Nathan Rosenberg, Stanford University

"Joel Mokyr likes telling his story and he tells it well; his book makes for good reading and rereading, and this in itself sets him apart from many of his fellow economic historians."--The New York Times Book Review

According to Joel Mokyr, economic growth is the result of four distinct processes: Investment (increases in the capital stock), Commercial Expansion, Scale or Size Effects, and Increase in the Stock of Human Knowledge (which includes technological progress proper as well as changes in institutions). Throughout his brilliant book, he correlates technological creativity with economic progress throughout classical antiquity, the Middle Ages, the Renaissance, the Industrial Revolution, and then into the later 19th century.

Eric Rauchway Blessed Among Nations

Thomas Sowell A Conflict of Visions

Sowell at his best. This analysis of the constrained and unconstrained visions is clear and direct. He relies heavily on Adam Smith and William Godwin for illustration.

Adam Smith: Theory of Moral Sentiments, Lectures on Rhetoric and Belles Lettres, Lectures on Jurisprudence, Wealth of Nations, Essays on Philosophical Subjects

This reading is a delight. I was invited to a Liberty Fund colloquia on Smith in July, 2009.

Laird Bergad - The Comparative Histories of Slavery in Brazil, Cuba, and the United States
Fiction

Michael Gruber Tropic of Night

Gruber's first novel. I really enjoyed The Book of Air and Shadows, this one not so much. I will try his newest book The Forgery of Venus.

David Liss A Conspiracy of Paper

I am pleasantly surprised - I could not finish The Coffee Trader and his latest The Whiskey Rebel received negative reviews, but this is wonderful. I have the sequel - A Spectacle of Corruption on order.

John Sanford - Rules of Prey

Sanford's first Lucas Davenport and I am so glad I got to read the beginning.

Daniel Simmons Drood

Wow, talk about an unreliable narrator. A very intense exploration of . . . addiction, obsession, jealousy and . . . Charles Dickens. Excellent historical fiction - made me realize how little I know about this period, Dickens and Dicken's fiction. Very long, but worth it. I have - The Terror, on my reading list.