Thursday, September 29, 2011

The Moral Consequences of Economic Growth

I highly recommend Benjamin Friedman's excellent book.

Friedman says in this 2009 interview:

I look at four or five quite specific issues. One is opportunity. A key issue for any society is whether the young people who are given an opportunity to get ahead are simply the sons and daughters, and nieces and nephews of people who are already at the very top, or whether opportunities are made available more broadly.
I argue in the book on the basis – not just of theory, but also lots of social and political evidence for the U.S. and Western Europe and other countries – that when the broad bulk of the citizenry is moving forward in its living standard and has a sense of optimism that that forward progress will continue, then not only is the society better able to afford to make opportunity available more broadly, but people are more likely to support it.

A second issue is tolerance. Tolerance with respect to what? As an American, I would immediately think of race relations. As an American, I would immediately think of attitudes towards immigrants. But, I also have in mind things like religious tolerance, or discrimination, ethnic prejudice, and the like.
A third issue that I have in mind is generosity toward the poor. It's all very well to provide opportunities, but everybody knows that for one reason or another, lots of people are not going to be able to take advantage of the opportunities that are provided.

In economics, we talk often about people's individual endowments. We have this marvellous phrase called "labour market luck." Well, some people are not well endowed and others have bad luck, and then what? What are we going to do?
Once again, the idea that I advance in the book is that when the broad bulk of the society's population has this sense of forward progress in their material living standard, then people are also prepared to be tolerant in each of these ways.
And then finally, the fourth one that I'll mention is democracy, by which I mean creation of new democratic political institutions in societies around the world that are not yet functioning democracies, but even for a society like ours that already is one, the strengthening and nurturing of the democratic institutions that we already have.

Now, in each of these four cases, and in a few others besides, my argument is that sustained economic growth broadly distributed across the population leads to forward progress also in these moral dimensions, to call it that using the 18th century sense of the word.

Tuesday, September 27, 2011

Grappling with the Banality of Evil - Wendy McElroy - Mises Daily

Many consider service to "their country" to be an automatic virtue, but it is a dehumanizing vice whenever it involves the abandonment of conscience. The military demands this abandonment.

Grappling with the Banality of Evil - Wendy McElroy - Mises Daily

Monday, September 26, 2011

Tuesday, September 20, 2011

Dr. Horwitz dispels the myth that . . .

Dr. Horwitz dispels the myth that laissez faire Hoover caused a depression and FDR saved us.

Which intellectuals have influence?

Which intellectuals have influence?
by Tyler Cowen on August 9, 2011 at 6:59 am in Economics, History, Political Science, Uncategorized | Permalink

Ben Casnocha suggested to me that I have harsh standards. I don’t mean “influencing lots of other minds,” I mean changing the world. Here are a few intellectuals who have had real influence:

1. Jane Jacobs: City planners heed her strictures in many different locales, sometimes too much.

2. Rachel Carson, and numerous environmentalists: Obvious.

3. Milton Friedman: He inspired market-oriented reformers around the world, eased the way to floating exchange rates, helped legitimize early derivatives, and focused attention on monetary policy and away from fiscal policy, among other achievements.

What about today?

1. Peter Singer: Many fewer people eat meat and he has given the animal rights movement greater intellectual credibility.

2. Muhammad Yunnus: He popularized micro-credit and spread the notion to many countries, even though he is by no means its inventor.

3. Richard Posner: Many more judges use economic concepts when issuing judgments or writing up opinions.

Most of the people in this category have spent a big chunk of their lives pushing a single, fairly specific issue or method. You could add Bernanke (a special case, but still a yes), Charles Murray on poverty, and Germaine Greer. Art Laffer maybe. Friedman is a throwback to the time when generalists could be quite influential.

Who hasn’t had much influence over events? I would cite Jared Diamond, Richard Dawkins, Slavoj Žižek, Christopher Hitchens, Paul Krugman, Tony Judt, Noam Chomsky, Francis Fukuyama, Charles Taylor, Steven Pinker, Naomi Klein, and Niall Ferguson, among many others including virtually all economists.

Perhaps these individuals will have long-run influence on people’s broader views, and thus on longer-run events, but I wonder. Not everything feeds into a long and powerful stream, and every now and then there is a reset. We do not know, but we do know that some very focused individuals have had real influence.

I would put Esther Duflo, Jeffrey Sachs, Paul Romer, and Jacob Hacker (public option) in the “still have a good chance to have a big influence” category.

There is also the “futile crusaders” category, for instance Thomas Friedman for pushing for a centrist movement for green energy and Larry Lessig for IP reform and campaign finance reform, although of course subsequent events could upgrade them. We may well end up with green energy and IP reform but more likely as the result of technologies and market prices, rather than from successful intellectual battles.

Overall it is very hard to have much influence.

Monday, September 19, 2011

Daily Kipper- und Wipperzeit Update, Arnold Kling | EconLog | Library of Economics and Liberty

My line is that as long as you have bad debt that is priced at par, you have an active crisis. To the extent that the ECB is trying to keep the price of weak-country debt close to par, it is not offering a credible solution. Uncertainty will prevail in the markets.

Daily Kipper- und Wipperzeit Update, Arnold Kling | EconLog | Library of Economics and Liberty

Sunday, September 18, 2011

Teaching benefits

One facet of teaching that the NEA and AFT, in their data and in their public pronouncements, routinely fail to account for is the shorter workday and work year. In public schools, the median number of school days is 180 per year. Add half-a-dozen or so workdays for parent conferences, professional development, and planning, and the annual work year for most teachers is still shorter than 190 days. By comparison, an accountant or lawyer with two weeks of paid vacation and ten holidays or personal days will work 240 days annually—nearly 30 percent more days per year than public school teachers.

The typical teacher also has a shorter on-site workday than most other professionals. On average, teachers report being in school for fewer than 38 hours per week. This number rises to 40 hours if largely voluntary after-school activities such as coaching or club sponsorship are included. In fact, language limiting the number of hours that teachers are required to be in school is common in their collective-bargaining agreements, particularly in urban school districts. In the just-expired New York City teachers’ contract, the contractual workday was just 6 hours and 20 minutes (including a 50-minute duty-free lunch). The new contract extends the workday by 20 minutes. In Chicago, the limit is 6 hours and 45 minutes, including a 45-minute duty-free lunch.

Of course, many teachers put in nights and weekends at home grading papers and planning for the next week. However, a job that permits relatively more work at home is typically more attractive (particularly to women with children) than one that requires a similar amount of work time on site. And many other professionals bring their work home as well.

The combination of a shorter workday and work year means that the annual hours on the job for teachers are much shorter than in comparable professions.

Saturday, September 17, 2011

Teaching salaries

This is a key point that I make to my colleagues and those I engage in discussion about education.

In spite of this data there is a deeply held belief that is actively encouraged by the special interests in public education that public school teachers are somehow "under" paid.

Is Matt Damon Right That Teachers Make a "Shitty" Salary?
Nick Gillespie | August 2, 2011

At last Saturday's "Save Our Schools" rally, a fairly livid actor Matt Damon told that teachers make a "shitty" salary. Is the Oscar winner right about that?

The short answer is no. The longer answer? Also no.

According to Department of Education statistics for 2007-2008 (the most recent year listed), the average public school teacher brought in a bit over $53,000 in "total school-year and summer earned income." That figure, which is about $13,000 more than what the average private-school teacher gets in straight salary, does not include health and retirement benefits, places where teachers almost always get better deals and bigger employer contributions than the typical private-sector worker. For more on teacher compensation, go here.

An average salary of $53,000 may not be much for a movie star such as Damon, but it's a pretty good wage when compared to U.S. averages. Indeed, the Census Bureau reports that median household income in 2008 was $52,000. Teaching in most public schools requires a bachelor's degree and here teachers fare less well on first glance, though still not awful. The median income for a man with a B.A. was $82,000; for a woman, it was $54,000. About three-quarters of teachers are women, so the average salaries when gender comes into play hew closely to one another.

More to the point, Bureau of Labor Statistics and other surveys that take into account the reported number of hours worked in a year consistently show that on a per-hour basis, teacher income (again, not including fringe benefits, which are typically far more robust than those offered other workers, including college-educated professionals) is extremely strong.

Friday, September 16, 2011

More Thoughts on Metaphors, Arnold Kling | EconLog | Library of Economics and Liberty

A must read . . .

Kling writes:

Another key issue regarding metaphors concerns what is the correct metaphor for government. For libertarians, government is like a Mafia Godfather, carrying out a protection racket. It is a criminal organization that controls certain economic activities through the use of force. It obtained its status by ruthlessly stamping out competitors.

To someone on the left, government is more like the adult supervision at a day care center. It sets the rules, provides structure, and prevents what otherwise would be dangerous behavior and chaos.

I think of government as a monopoly offering lousy service and determined to maintain and extend its franchise come hell or high water. Imagine General Motors or Microsoft or Blue Cross or Comcast with no competition whatsoever for consumers to choose from, and not even the ability to opt out of driving or personal computing or health insurance or cable TV.

I also see government in terms of insiders and outsiders. My influence there is Murray Edelman (as well as my late father, Merle Kling). When today's WaPo calls the deficit deal The Triumph of Old Washington, I nod my head in agreement. The outsiders get symbolic victories, and the insiders get the real win.

More Thoughts on Metaphors, Arnold Kling | EconLog | Library of Economics and Liberty

Thursday, September 15, 2011

Dodd-Frank's winners: Revolving-door regulators | Timothy P. Carney | Politics | Washington Examiner

I would only add that this is not limited to democrats, a review of both Bushes and Reagan administrations documents the same behavior.

Comments Dodd-Frank's winners: Revolving-door regulators
By: Timothy P. Carney

House Financial Services Committee Chairman Spencer Bachus (R-AL) adds a grade of F- to a 'report card' for the Dodd-Frank Act one year after the legislation passed July 15, 2011 in Washington, DC. Republican members of the committee gave grades of F to all aspects of the bill.It may not prevent another bailout or protect consumers from dangerous financial products, but the Dodd-Frank financial regulation law -- now one year old -- has already benefited one group of people: the government officials who wrote and implemented the law before cashing out as lobbyists or consultants for Wall Street, hedge funds and big banks.
The top staff lawyers in charge of crafting the legislation in both chambers of Congress have both left Capitol Hill for K Street, as has a Securities and Exchange Commission staffer who helped implement the law. This is "private-sector job creation, Obama-style," as blogger Ira Stoll drolly notes.

The Great Wall Street Cashout is another example of how President Obama's agenda of bigger government -- and congressional Democrats' style of leaving the key details up to executive-branch regulators -- accelerates the revolving door and breeds crony capitalism.

Read more at the Washington Examiner:

Tuesday, September 13, 2011

Why is America’s Budget Deficit So Large?

Martin Feldstein writes:

Shrinking America’s budget deficit to prevent a further rise in the debt-to-GDP ratio from its current level will require reduced spending and increased revenue.

Monday, September 12, 2011

Is There Hope for the Unemployed?


Thus it is not surprising that, according to the authors of the report, close to 98 percent of the 27.3 million new jobs in the American economy in the last two decades were created in the nontradable sectors, led by government and health care in first and second place.

These two sectors alone accounted for 40 percent of the total job growth over the last two decades. They were followed by retailing and construction, both of which grew on the back of heavy debt financing and a real-estate bubble.

So how can these desiderata –- creating jobs and, at the same time, cutting back on government and health care spending –- add up to a rosy future jobs picture? Can any government actually deliver on these conflicting goals?


Thursday, September 8, 2011

Pete Boettke writes . . .

It is a Spending Problem Stupid

The raising of the debt ceiling debate continues in DC. Here is some background information from the Mercatus Center.

Politicians in DC insist they are working hard to work out a deal. But this is not really a question of brokering a deal, it is about coming to grips with the real cause of the debt problem --- excessive spending. Of course, the politicians will tell you that each of their special programs are essential to the welfare of the voting public. And so at best a "deal" coming out of DC will result in a slower growth in excessive spending, not a cut in spending.

But I have 3 broad stroke spending cuts on programs that have proved to be costly and ineffective at meeting their stated goals. I am not asking for a mere cut, but an actually abolition of these programs. Just think of the cost savings:

1. War on Drugs

2. War on Terror

3. War on Poverty

We have to face up to the fact in our public debate that the problem isn't a tax problem, it is not a revenue generating problem; it is a spending problem, it is all about questions of the scale and scope of government. Government has assumed a level of responsibility in our lives that is fiscally irresponsible.

Wednesday, September 7, 2011

The Administrative State

This summer I taught a course in US Economic History and used the Walton and Rockoff text.

One of the lessons asked students to ponder the debate in the late 19th and early 20th century in our country over the tariff and income tax. Notice, the students were to consider the debate - both pro and con sides.

At the root of the debate was the need for increased government revenue (taxes) and Walton/Rockoff assert that part of the increased need for tax revenue was due to (1) entitlements expanding much faster than anticipated (war pensions from the Civil War) and (2) increased military spending (the "new" and expanded navy was an example of expanding military expenditures).

Neither of these motivations or stimuli would surprise Bob Higgs and other scholars of the period.

But Walton and Rockoff go on to assert that, accompanying this expansion in transfer of income in the form of increasing taxation was an expansive administrative state that had as important an impact on US Economic Change.

The Warfare and Welfare states have to be administered and the acceptance of coercive administration in these two areas of life begins to shape other areas of activity.

A recent article by Virginia Posrtel illustrates the contemporary result of an emergent administrative state that shows little sign of receding. As Bob Higgs points out, this ratchet effect is inherent in the intervention of the state in society.

Need a Light Bulb? Uncle Sam Gets to Choose

If you want to know why so many Americans feel alienated from their government, you need only go to Target and check out the light bulb aisle. Instead of the cheap commodities of yesteryear, you’ll find what looks like evidence of a flourishing, technology-driven economy.

There are “ultrasoft” bulbs promising “softer soft white longer life” light, domed halogens for “bright crisp light” and row upon row of Energy Smart bulbs -- some curled in the by-now- familiar compact fluorescent form, some with translucent shells that reveal only hints of the twisting tubes within.

It seems to be a dazzling profusion of choice. But, at least in California, where I live, this plenitude no longer includes what most shoppers want: an inexpensive, plain-vanilla 100-watt incandescent bulb. Selling them is now illegal here. The rest of the country has until the end of the year to stock up before a federal ban kicks in. (I have a stash in storage.) Over the next two years, most lower-wattage incandescents will also disappear.

Postrel goes on to point out another important component of the administrative state - "scientific" elites who are so much better at planning that to truly "progress" coercion is not only tolerable, but necessary and acceptable. These elites in planning receive support for elites in culture, media and entertainment, as Postrel points out:

It’s a Ban
Now, I realize that by complaining about the bulb ban -- indeed, by calling it a ban -- I am declaring myself an unsophisticated rube, the sort of person who supposedly takes marching orders from Rush Limbaugh. In a New York Times article last month, Penelope Green set people like me straight. The law, she patiently explained, “simply requires that companies make some of their incandescent bulbs work a bit better, meeting a series of rolling deadlines between 2012 and 2014.”

True, the law doesn’t affect all bulbs -- just the vast majority. (It exempts certain special types, like the one in your refrigerator.) The domed halogen bulbs meet the new standards yet are technically incandescents; judging from my personal experiments, they produce light similar to that of old- fashioned bulbs. They do, however, cost twice as much as traditional bulbs and, if the packages are to be believed, don’t last as long.

Washington Knows Best

Tuesday, September 6, 2011

$70 billion in aid to Afghanistan

I'm shocked, shocked to find that aid is being stolen . . .

The Afghan government on Tuesday disputed findings from a scathing U.S. report that said Kabul officials are thwarting U.S. efforts to protect American aid money from being stolen.

Sunday, September 4, 2011

Fred Smith Jr. writes . . .

Worth a read and reflection. Smith writes:

With the existence of private property, government is forced to step into the economic realm under which private property is created and traded. Therefore, herein lies the one of the greatest roles for government: Protecting people’s rights, particularly our property rights, and maintaining our collective faith in the system that has made this country stand out across history.

This is exactly why crimes like those of Bernie Madoff are amongst the worst: They destroy people’s faith in honest commerce. It is this loss of faith that produces the ever-increasing calls for regulation.

But unless the regulators collectively represent some radically upgraded collective of character as compared to the rest of us — the people being regulated — we should expect failures in regulation as frequently as we see failures in the marketplace.

Saturday, September 3, 2011

Liberty Academy

Welcome to Liberty Academy! We’ve created learning paths to help you navigate the ideas of liberty through specific disciplines. Each path contains several lessons. The lessons are ordered to improve the learning process but you can skip around if you prefer.

Each lesson contains the following elements:

•A LearnLiberty short video explaining the concept
•Suggested resources for delving deeper into the topic
•Questions to enhance your understanding
•A discussion area to share your insights and ask questions

Thursday, September 1, 2011

A Short History of Intransigence

David Warsh - always thorough and this column is a nice heads up of recent popular writing on a civil society.

A Short History of Intransigence