Tuesday, October 18, 2011

AEA Annual Meeting

Annual Meeting

The next meeting is scheduled for January 6-8, 2012 in Chicago, IL. The Submission portal is now closed to accept submissions for the 2012 Annual Meeting in Chicago.

Tuesday, October 11, 2011

George Will

The entire piece is well worth a read.

The collectivist agenda is antithetical to America’s premise, which is: Government — including such public goods as roads, schools and police — is instituted to facilitate individual striving, a.k.a. the pursuit of happiness. The fact that collective choices facilitate this striving does not compel the conclusion that the collectivity (Warren’s “the rest of us”) is entitled to take as much as it pleases of the results of the striving.

Warren’s statement is a footnote to modern liberalism’s more comprehensive disparagement of individualism and the reality of individual autonomy.

Sunday, October 9, 2011


Yesterday I referenced Michael Shermer and his new book. Shermer is part of the discussion over at CATO and this conversation is on point:

I also recommend the work of Dan Klein - this paper is both representative and informative. http://www.criticalreview.com/2004/pdfs/klein_stern.

A telling anecdote was reported in the New York Times earlier this year when University of Virginia researcher Jonathan Haidt asked participants in the annual meeting of the Society for Personality and Social Psychology how many in the audience considered themselves to be politically liberal. As the Times reported:

A sea of hands appeared, and Dr. Haidt estimated that liberals made up 80 percent of the 1,000 psychologists in the ballroom. When he asked for centrists and libertarians, he spotted fewer than three dozen hands. And then, when he asked for conservatives, he counted a grand total of three.

“This is a statistically impossible lack of diversity,” Dr. Haidt concluded, noting polls showing that 40 percent of Americans are conservative and 20 percent are liberal. In his speech and in an interview, Dr. Haidt argued that social psychologists are a “tribal-moral community” united by “sacred values” that hinder research and damage their credibility—and blind them to the hostile climate they’ve created for non-liberals.

The process of science is supposed to help humanity overcome our innate tendencies toward confirmation bias—a point strongly made in Shermer’s new book. Science is necessary because confirmation bias is everywhere. Research by Dan Kahan and colleagues at the Yale Cultural Cognition Project[2] has shown time and again that when confronted with policy issues involving tradeoffs involving technological benefits and risks, it turns out that those who identify as liberals (egalitarians and communitarians) in particular fear change and—to quote Jost—“reject out of hand scientific findings that might be experienced as disagreeable.”

For example, a 2009 poll[3] by the Pew Center for the People and the Press reported that 70 percent of scientists favored building additional nuclear power plants. Sixty-two percent of Republicans also favored this, but only 45 percent of Democrats did. A more recent Pew poll [4] (without reference to scientific opinion) done after the nuclear disaster in Japan found that 49 percent Republicans still favored increased use of nuclear power, whereas only 31 percent of Democrats did.

Saturday, October 8, 2011

2011 Students For Liberty Arizona Regional Conference

2011 Students For Liberty Arizona Regional Conference
Saturday, October 22
Arizona State University
Hosted by the ASU Students For Liberty

Join Students For Liberty in Phoenix, Arizona on October 22 for the 2011 Students For Liberty Arizona Regional Conference. Renowned speakers, activists, and passionate students are once again gathering on the Arizona State campus to support the ideals of individualism and a free-market society. The Arizona Students For Liberty Conference this fall will once again be a place for open and honest discussion where students of all backgrounds and political leanings can gather to advance their knowledge and respect for a free academy and a free society. Students will have an opportunity to network, discover internships and other future seminar opportunities as Students For Liberty continues its tradition of defending liberty in the beautiful state of Arizona. This is the premiere pro-liberty event happening in Arizona including three meals, drinks and an after conference social. You don’t want to miss this prestigious pro-liberty event so invite your friends and we’ll see you there. Register today!


Location: Arizona State University
Address: Discovery Hall: 250 E. Lemon St. Tempe, AZ 85287
Date: Saturday, Oct. 22
Start Time: 9:30 AM
End Time: 8:00 PM
What You Can Expect:

FREE registration
FREE food
FREE books, pamphlets, stickers, and other freedom materials
Connect with liberty organizations and other students for liberty
Hear and meet some of the greatest liberty speakers in the movement
Information on internships, jobs, programs, seminars, and conferences
Awesome socials including FREE drinks!
Help us spread the word! Invite your friends to the Facebook event!
Confirmed Speakers

David Schmidtz, Keynote Speaker

A leading intellectual of the liberty movement in our generation, David is the Kendrick Professor of Philosophy and joint Professor of Economics at the University of Arizona. He is also the founding director of Arizona’s Freedom Center and works mainly in ethics, environmental ethics, rational choice, and political Philosophy. He has been published in several journals, including the Journal of Philosophy, Ethics, and Political Theory. He is the author of several books including The Limits of Government: An Essay on the Public Goods Argument which combined his interests in moral philosophy and economic analysis. One of his passions is discussing and analyzing the environment and ethics.

A strong advocate for open and honest discussion, we are pleased to welcome Professor Schmidtz as our Keynote Speaker.

David Boaz, Keynote Speaker

Mr. Boaz is one of the major key players advocating and defending liberty in America today. You can see him frequently discussing current events and topics on major national television and radio stations. He is currently the Executive Vice President of the Cato Institute and consistent supporter of Students For Liberty.

He is the editor and author of several books and studies including Libertarianism: A Primer and The Politics of Freedom: Taking on the Left, the Right, and Threats to Our Liberties. Mr. Boaz is well versed in the history and struggle for liberty, which is why we are so excited to have him coming to Arizona State to speak!

Friday, October 7, 2011

The You Have Two Cows Challenge

HT: Marginal Revolution

No doubt you are familiar with the two cows guide to political philosophy.

Socialism: You have two cows. The government takes one and gives it to your neighbor.

Communism: You have two cows. You give them to the Government, and the Government then sells you some milk.

Capitalism: You have two cows. You sell one and buy a bull.

So under what type of ism do you have two cows but the government says that you can’t drink their milk? Whatever we call such an ism it may help to know that it is the one we live under. In a recent case in Wisconsin, as summarized by the judge:

Plaintiffs argue that they have a fundamental right to possess, use and enjoy their property and therefore have a fundamental right to own a cow, or a heard [sic] of cows, and to use their(s) in a manner that does not cause harm to third parties. They argue that they have a fundamental right to privacy to consume the food of their choice for themselves and their families and therefore a fundamental right to consume unpasteurized milk from their cows.

In response, Judge Fiedler wrote:

No, Plaintiffs do not have a fundamental right to own and use a dairy cow or a dairy herd;

No, Plaintiffs do not have a fundamental right to consume the milk from their own cow;

No, Plaintiffs do not have a fundamental right to produce and consume the foods of their choice…”

So MR readers, here is the challenge: You have two cows. The government says that you cannot drink their milk. What ___ism?

My suggestions?

Thursday, October 6, 2011

Creative destruction

A former student writes:

"I was hoping to get an interview with an economics professor who would be able to give me an educated opinion for my article. The topic is streaming movies vs. DVDs. Huge companies like Blockbuster have declared bankruptcy following the creation of companies like Netflix and Hulu."

While I have very little familiarity with delivery of entertainment (beyond that of an occasional user) I do have familiarity with the work of Joseph Schumpeter. It seems to be that the above question asks for an opinion on the role that entrepreneurship, innovation and discovery play in the process of economic change.

My thinking begins with the costs and benefits of economic change. The evolution or more rapid revolution of change that Schumpeter labeled the gale of creative destruction creates first and foremost anxiety and fear. Thinking about the impact that DVDs had on the marketplace at the time of their introduction I recall my worry about having to replace my small library of videos, replacing my VHS player with a DVD player (I selected a model that was a combo VHS/DVD player) and my concern about all my family videos that were recorded on VHS. I thought to myself, how much will this new technology cost me in terms of time, money and angst. Click here for a 1999 blog posting on this topic. And I am only a small part of the demand side of the market. Think about the supply side - manufacturers of VHS tapes, suppliers of materials to these manufacturers, marketing and distribution.

The example above is a classic one that illustrates creative destruction and the costs and benefits. Schumpeter recognized that often the benefits of an innovation were in the future (in 1999 most of the DVD use and benefit lay before us) while the costs were immediate.

Thinking about the current transformation in delivery of entertainment from a physical media to a delivered media (a process currently underway) it is worth reflecting on the current costs, future benefits and incentives for further evolution or revolution in the delivery of entertainment.

Douglass North explored the nature of change which he called non-ergodic (a fancy word for unpredictable) and I would suggest that considerations of the current and future emergence of delivery of entertainment keep this unpredictability in mind. The pace of change is accelerating - "the cloud", "googlization", and "artificial intelligence" are manifestations of emergent and continual change - the gale of creative destruction that Schumpeter associated with dynamic, liberal society. Larry Page, the quintessential big thinker, sees the day when we will all expand our horizons and knowledge through technology, if a chip can be implanted in our pets to maintain their security and location, Page reasons, why not a chip in humans that connects to the power of information and "wisdom" on the web.

My opinion - innovation and the accompanying change are processes that have costs and benefits, create temporary winners and losers and, most often but not uniformly lead to progress in the future. Entertainment in the 1910s in the US centered around black and white silent film, phonographs, live plays, novels and literature, conversation, and contemplation. Today, many of these modes of entertainment have been replaced by processes such as streaming media. Clearly there are costs and benefits to this gale of creative destruction and, most observers, would agree that the benefits have outweighed the costs and the gains to winners in this evolutionary process outweigh the losses to the losers. That said, we can be confident that our children and grandchildren will not by using current streaming technology for their entertainment, at least in current form.

Relevant works

Cox, W. Michael and Richard Alm. Concise Encyclopedia of Economics: Creative Destruction

Levy, Stephen. In The Plex: How Google Thinks, Works, and Shapes Our Lives

North, Douglass Understanding the Process of Economic Change

Roberts, Russell (EconTalk podcast) http://www.econtalk.org/archives/2007/10/mccraw_on_schum.html

Beliefs as the source of opinion

In thinking about Boyes recent post and a great deal of our discussion on this blog it is becoming increasingly clear that the informal institutions that make up culture are ultimately the force that shapes evolution.

Shermer's new book - The Believing Brain: From Ghosts and Gods to Politics and Conspiracies---How We Construct Beliefs and Reinforce Them as Truths argues:

In this work synthesizing thirty years of research, psychologist, historian of science, and the world's best-known skeptic Michael Shermer upends the traditional thinking about how humans form beliefs about the world. Simply put, beliefs come first and explanations for beliefs follow. The brain, Shermer argues, is a belief engine. From sensory data flowing in through the senses, the brain naturally begins to look for and find patterns, and then infuses those patterns with meaning. Our brains connect the dots of our world into meaningful patterns that explain why things happen, and these patterns become beliefs. Once beliefs are formed the brain begins to look for and find confirmatory evidence in support of those beliefs, which accelerates the process of reinforcing them, and round and round the process goes in a positive-feedback loop of belief confirmation. Shermer outlines the numerous cognitive tools our brains engage to reinforce our beliefs as truths.

Interlaced with his theory of belief, Shermer provides countless real-world examples of how this process operates, from politics, economics, and religion to conspiracy theories, the supernatural, and the paranormal. Ultimately, he demonstrates why science is the best tool ever devised to determine whether or not a belief matches reality.

Wednesday, October 5, 2011

Slow Recovery

Boyes highlights the mistaken notion that the current slow recover is an aggregate demand issue. He first wonders how Thomas Friedman comes to this conclusion and I might add to Boyes excellent analysis a review of Friedman's profession and professing. Friedman is a journalist with a great deal of experience in the middle east based upon his work their in the 1990s. I would argue that Friedman is an excellent example of Sowell's argument that the intelligensia (media and otherwise) take a major role in the formation of public opinion. Friedman has a background in writing and has developed a skill set that employees powerful metaphor to advance his arguments. Note that he sees his role as shaping public opinion rather than reporting the news. An excellent example of his ability to use metaphor in a powerful way is this recent appearance on the News Hour.

Friedman is the first segment

Watch the full episode. See more Nightly Business Report.

Transcript is here:


Note in his analogy Washington DC is the booster rocket for the economy. Clearly Friedman has a goal or agenda here far greater than reporting and his commitment to government intervention and steering the economy is reflective of the ideology of the elite.

But back to the point, is Friedman correct in arguing that aggregate demand is weak. Well, he is 70 per cent wrong, as Bob Higgs points out:

People, please look at the data. They are conveniently available to one and all at the website maintained by the Commerce Department’s Bureau of Economic Analysis, the outfit that generates the national income and product accounts for the United States.

According to these data, real personal consumption expenditure recovered from its recession decline by the fourth quarter of 2010. Continuing to grow, it now stands (as of the most recent data, for the second quarter of 2011) even farther above its pre-recession peak.

Real government expenditure for consumption and investment (this concept does not include the government’s transfer spending, such as unemployment insurance benefits and social security benefits) is also running higher than its pre-recession level.


Monday, October 3, 2011

Aggregate Demand

The New York Times editorial pages were interesting today. Thomas Friedman told us that the problem with the economy is aggregate demand. He also told us that technology has led to a loss of jobs -- outsourcing is now just standard daily practice not one of shipping jobs elsewhere. Most jobs are really not jobs because "the world is flat". Not sure what all this means except the part about insufficient aggregate demand and a hint of Ludditism. Tyler Cowen attempts to make a case for a tax increase to go along with spending cuts. His argument is that unless taxes are increased spending will continue and future taxes will be higher. He uses James Buchanan's argument for a balanced budget to buttress his agrument for both tax increases and spending cuts. But, what Buchanan argues is that unless constrained, say by a balanced budget requirement, politicians will simply continue spending and increasing the size of government. This has nothing to do with the argument to increases taxes and cut spending now; it is not a balanced budget constraint that Cowen is talking about but merely an Obama program of increasing the size of government. Irving Kristol's commentary is as confusing as Friedman's but he also supports the Keynesian aggregate demand is the problem argument.

So why isn't the insufficient aggregate demand thesis correct? There is no doubt that the economy is in the doldrums due to a lack of investment by business and a lack of consumption on the part of households. But, that does not mean the government can solve this by increasing spending. A dollar of spending is not fungible -- government spending is completely different than investment or even consumption. Moreover, government spending takes money from investment and consumption and reduces these further. The problem with the economy today fits nicely into Higgs' uncertain regime thesis. Businesses don't know what is coming. Why hire someone now if in the future that someone means higher taxes, higher health costs, etc? Why expand your buainess now if you will fact more regulations -- say like Dodd/Frank or Sarbanes/Oxley. The economy will not recover until that uncertainty is resolved in a way that will reward entrepreneurs for risk taking.

The NYT editorial pages are great -- they make me examine how the writers can possibly believe what they write. Yesterday'sd ecitorial by Krugman was classic. He wandered around and finally stated his constant refrain -- we need a lot more government spending right now.

We used to argue in textbooks that economists did not disagree as much as the general public might think. But, this is totally wrong. I have never experienced a period where there was such a strong and divergent set of views about the economy. In a future blog, I will pursue this idea further.