Monday, January 30, 2012
Before I get started, a special thank you to Joshua Zelinsky of Religion, Sets, and Politics who provided the questions used in this experiment. Thanks Joshua, you were a great help.
I used a random number generator to choose the order for the answers from my guests and I, and the order remains constant for each question. Instead of attributing each answer to writer A, B, C and D, I have labeled them as Al Pacino, Steve Buscemi, Christopher Walken and Robert De Niro because it's my blog and it's more fun that way.
The identities of each writer will be revealed in one week. Now on with it!
Question 1: Does government funding of scientific research do more good than harm?
I think that government funding for R&D is very important and, in most cases, relatively effective. It's important to take into consideration the role of the patent-granting activities of the government as the most potent tool for the advancement of scientific research and development, particularly in the pharmaceutical and medical science fields. Without the economic security granted by a patent, companies involved in the research and development of new technologies and advancements would have very little incentive to continue their work if they have no assurances of profit-maximization opportunities once they've developed or discovered something important. In my view, government funding of R&D and scientific and technological advancements in general should be a transcendent policy issue - everybody from every corner of the political and ideological arena should be able to recognize just how worthy of an investment this sort of spending is to the future of the country.
The government funding of science does more good than harm. Scientific research raises our collective good by investing in the intellectual capital of its people. In addition research by the government paves the way for private industry to profit from their discoveries. This is particularly true with Tempur-pedic fabric and nuclear technology.
It would depend upon the scientific research. Martial scientific research, like research in advanced weaponry, does little to improve our economy. War is ultimately a destructive force with net economic losses. Profit aligns with our values often enough to rely on it to drive economic growth a majority of the time, but the alignment isn’t seamless and it’s my opinion that a democratic society can decide to allocate resources for research in areas where start-up costs are too high for for-profit entrepreneurs to be attracted to it.
Scientific breakthroughs are public goods, and you subsidize public goods with positive externalities. That's econ 101, folks. Private companies need to justify research with short-term profits, and what happens if their funding shuts off in short order? How could you hope to have a massive project like the Collider - a machine the size of a racetrack - to satisfy curiosity and not make money? What about figuring out how nature works in general with no intended application? These are major market failures.
Question 2: What caused the current recession and what is the best thing the government can do to help us get out of it?
The current recession was causes by a toxic confluence of events precipitated by bad economic policy and a healthy dose of bad luck. The massive amounts of deregulation in the Reagan and Clinton years led to an environment on Wall Street in which poisonous mortgage-backed securities (subprime) and derivatives became the centerpiece of trading and investing behavior. Predatory and ill-advised mortgage lending made these securities toxic and the vile collusion between ratings agencies and financial institutions led to these investments being used for pensions and 401Ks and other such investment activities which subsequently tanked. Massive tax cuts, an unpaid for prescription drug benefit for Medicare and two incredibly expensive and unpaid for wars, in addition to the mess on Wall Street and the housing bubble, are the main causes of the current disastrous economy.
I propose that increased government spending in targeted, stimulative areas such as hiring tax credits, R&D, infrastructure programs, unemployment benefits, job training programs, education, and so on, will be the most effective ways to stimulate and jump start the economy. This need only last until full employment is reached. Full employment however is not 0% unemployment but there is a 4% to 6% level. Due to the leakages from MPS (marginal propensity to save) the government spending option provides a more direct, dollar-for-dollar boost to the economy at a time when neither consumers nor producers are in a position to do much in the way of growth-oriented economic activity.
The current recession was caused by lack of oversight and hubris: Oversight on the side of the major rating houses and hubris on the part of bankers. Bankers had to feed a demand for more and more mortgage backed securities, so they had to become creative with how they acquired them and bundled them together. This, combined with rating houses giving risky securities AAA ratings, was a recipe for disaster.
I honestly don’t know what happened - I have not studied the recession in great detail. But what I do know is that the state of our nation is nothing remotely close to what it was during the depression or other serious economic downturns. Whatever was or wasn’t done by the government (bailouts?) has likely either saved us, or their affects were negligible (nothing was harmed) and economic forces kept our machine oiled.
The recession was not caused by deregulation per say, existing protective laws were not relaxed. Instead it came from the stubborn refusal to adopt new regulations for new financial products. Derivatives and sub-prime loans entered the marketplace with no safety rail, and the economy went over the cliff.
We're already out of the recession now, but that doesn't mean the government can't still speed up the recovery with public works projects and putting more money in the hands of the impoverished through redistribution, who will spend more of it right away. Yes, you can let the wound heal on its own, but why not put some neosporin on it to speed up the process?
Question 3: How serious a problem is deadweight loss? What are the primary causes and what can be done to reduce it?
Dead weight loss is a serious problem. If you observe a graphic representation, you can see what is called the "welfare loss triangle" to get a nice visual sense of how and why this phenomenon exists. The primary causes of dead weight loss are taxes, price floors and price ceilings. In all three instances, government imposes policies that interfere and obstruct the natural machinations of markets where the markets would ordinarily adjust through the price mechanism of supply and demand, thus arriving at equilibrium levels through the invisible hand. When taxes are paid, not all of the taxes paid are collected by government due to leakages which result in dead weight loss. The same is true of price floors and ceilings; price floors cause an excess of supply and thus dead weight loss and price ceilings cause an excess of demand and result in dead weight loss as well.
I would say at this point in history dead weight loss is less of a problem than it has ever been. Major causes of deadweight loss are monopolies, cartels, and other supplies in collusion. The best way to combat it it is to maintain strong antitrust laws and keep a vigilant eye on mergers. Of particular interest at this point would be the cell phone providers in the US.
I can’t think of any consumer driven causes, but there are plenty of ways either suppliers or states can create deadweight loss. State tools include taxation, subsidies, price ceilings and floors, etc. Supplier tools include monopolistic/oligopolistic price gouging. I admit, I can’t remember a whole lot about the subject, but I might speculate the seriousness of deadweight loss is highly dependant on the volume of the loss and/or the subjective intrinsic/sentimental value of the consumer product. In the event where deadweight loss is undesirably high, the solution to correct it will depend on the cause. State driven deadweight loss requires legislation to correct. I’m unsure about the best way to correct supplier driven deadweight loss, but it might be to break up the monopoly.
Deadweight losses - where something is taxed and less of it is created - are not always a problem. That's the whole idea of Pigovian taxes - when you tax something, you get less of it - including tobacco use, soda consumption and other activities that have negative costs to society. It's true you see some marginal changes with taxes when you have elastic demands, but that just shows how serious the job of setting tax rates is.
Question 4: The leader of a small country in the developing world asks for your advice about monetary and fiscal policy. What do you say to them?
I would advise an aggressive mix of expansionary fiscal and monetary policies. Expansionary fiscal policies are either increasing government spending or cutting taxes. Since a developing nation is in similar conditions to what a nation like the U.S. would characterize as a "recession", I would advice going the route of increased government spending. Keynesian principles hold that deficit spending during a recession is the best and most effective way to stimulate economic growth. The reason is simply - government spending is most directly impactful on an economy because it does not have to be filtered through households and firms, where a decision has to be made in terms of what to spend, save or invest. Infrastructure spending and projects are great for stimulating an economy on two levels: the short-term increases in employment as people are needed to build, repair and plan these projects. And the long-term impacts are very important as a strong and modern infrastructure can very often be the vehicle of economic growth, such as the expansion of the interstate highway system in the mid 20th century and the advent of the Internet in the 1990s, each of which acted as tremendously important innovations and investments for the U.S. economy.
On the monetary side, I would also advocate an expansionary policy by increasing the money supply and thus lowering the interest rate. When the interest rates are low and credit is more readily available, firms and businesses can more easily invest and expand which will in turn increase employment and consumption. This will happen for the basic reason that as the money supply is increased, demand for money decreases and interest rates decrease accordingly. Interest rates are in essence the "price" of money and when money is cheap, firms and households can engage in larger amounts of economic activity.
Take a hard and brutal look at your country and decide what competitive advantage it might have over others in the region, and if transportation and infrastructure is in place, then the world. In addition, when allowing foreign companies to develop in country, require a percentage of their revenue to remain in country.
Monetary policy is not my area of expertise. I struggled in college to make the connections between interest rates and currency values, with trade and economic growth. Relative to developing nations and our past, our country has enjoyed a very long period of economic stability while employing state controls over the value of our currency and interest rates. But I may be confusing causality and correlation. I would argue that measures should be taken to stabilize currency, as opposed to letting it succumb to the whims of economic forces. Developing nations are much more vulnerable to instability and exploitation.
As for fiscal policy - developing nations tend to have fewer social institutions and stability. Good business depends on good relationships and a strong (don’t read as “big”) government that can enforce rules and agreements (no matter how few, libertarians.) Strong public investment in education is highly recommended.
I’ll go a step further and talk about trade policy as well. I would suggest free trading blocs with regional states at comparable stages of development. States that have opened trade with large Western nations get stuck producing (or rather just gathering) primary goods for export. While its an improvement from subsistence farming, it could be a dead end and unsustainable. Trade with regional partners strengthens political ties (reduces the chance of war, which is much more likely in developing nations) and diversifies markets.
I'm assuming we have a democracy, not an autocrat state, if we expect the advice to be heard. For monetary policy, have a central bank with a lot of government oversight to make sure monetary policy is being used appropriately, and put in safeguards to keep someone from running wild with the printing press like we saw in Zimbabwe. If the nation is small enough, why not have no monetary policy and adopt a foreign currency like the US dollar?
Fiscal policy needs to be tailored to the area. Do they have an AIDS problem? If so, thats going to require a lot of medical spending. Is there a lot of inequality to smooth out? I could give the boilerplate Keynesian prescription, but I'd have to know what I'm working with.
Question 5: Assume we discover an easy method of transportation to a planet with a far off alien species that is friendly and about the same technological level. Assuming small costs of transportation of goods to and from their civilization, what are the most likely economic consequences of such trade
According to Ricardo (and any other economist with a brain) engaging in free and fair trade will only benefit both trading partners. It will be imperative to first determing what we have an absolute advantage in and more importantly what we have a comparative advantage in; when I say "in" I mean in producing - what can we produce more efficiently than the aliens can or what can we produce at a lower opportunity cost in terms of other goods. If we specialize in that which we have those goods in which we enjoy a comparative advantage and the aliens do the same on their end, free trade between the two parties will benefit both. Real wages will rise and each trading partner will end up with more of all of the goods being traded than they would have if they'd chosen to keep all production and trade domestic. The only times I will even consider supporting protectionism or limitations on trade is in the case of "infant industry" or with respect to national security concerns.
Trade is good. If Gordon Gekko were a space trader he would have said the same thing. Trade will help out both countries, (sorry, planets) even if they are at the same technological level. The most likely consequence of such trade would be more specialization and lower prices on all goods involved.
We would easily see economic growth.
Depends if the general public can get over their irrational fears that "aliens are taking our jobs." The best case scenario is free trade with these beings, which will benefit both human and alien civilizations. There will be specific losers on both sides of space, like laborers who see their industry moving off-planet, but in total everyone will benefit. More "people" to cooperate with means more specialization and more gains from trade.
Question 6: Most would agree that as an economic theory, mercantilism suffered many flaws. If you had to identify a single biggest flaw what would it be and why?
The flaws in mercantilism relate very closely to my response to to the previous question. If government is too tightly restricting trade, consumers will have to pay higher prices for commodities that are expensively and ineeficiently produced domestically. The mercantilistic insistence on a "positive" trade balance is naive because it implies that there is something wrong with importing more than you export - there is not. The U.S. is uniquely positioned to lead in the information tech and information services sectors while other nations, such as China, are better suited to the manuifacturing of consumer goods. Mercantilism in short is an obnoxious and short-sighted repudiation of the reality of globalization. As I stated in the previous response, when trading terms are worked out fairly and intelligently, both partenrs end up with more of all goods being traded and the consumers and producers in both trading nations end up better off.
Anyone who has played a game of Settlers of Catan can tell you that it is harder to win if you don’t trade. However you define winning it is easier with trade. Whether winning involves; increased productivity, political stability, standard of living, or simply highest yield. In any case the greatest flaw of mercantilism would be that of its restrictive nature towards trade.
I hate following rules, so I will give you TWO major flaws: First, we probably suffered from EXCESSIVE deadweight loss under mercantalism - I realize that may seem redundant to some, but in a previous answer I argued that some deadweight loss may be regarded as negligible or tolerable.
Secondly, Mercantalism fostered jingoistic nationalism a driving factor for both wars and exploitative colonialism both of which were highly destructive.The best thing competing European countries did was open up trade between each other after WWII. I would argue that Western European Nations will never go to war with each other again *quickly sweeps sectarian-violence-in-Northern-Ireland under the carpet.*
I'd say confusing shiny rocks, be they gemstones, gold, silver or certificates that stand for them, with wealth. Wealth is in things like raw materials, manufactured goods, usable items and services. Mercantalists were willing to trade away those things to bring in more shiny rocks. They could indeed exchange these rocks for resources, but they chose to choke off incoming resources in lieu of more shiny rocks, thus making them poorer in the practical sense.
That's everything. Can you guess which one is actually a freshwater economics writer attempting to answer from a Keynesian perspective? That answer is available here, but please don't click until you have a candidate in mind. There are things in there that you can see but can't unsee.
In June 2011 I posted about conducting an intellectual Turing test to see if I understand left-wing and Keynesian economics well enough to blend in with the real ones. I contacted some friends and acquaintances for help. Joshua Zelinsky of Religion, Sets, and Politics was kind of enough to draft the questions in a timely manner, but after a lot of hounding only three people submitted answers to mix in with my own. Others agreed to and I was foolishly holding out for them.
I was hoping for another set of answers, but I am finally publishing the four sets I have instead of letting this go dormant another day. The questions and answers are available in a single post and I will reveal who was who in a week. I turned off the comments in that post for the benefit of future readers.
For the next post in this series, click here.
Saturday, January 28, 2012
Brandon Wegner writes for a student newspaper in the Shawano School District is Wisconsin. He and another student wrote competing editorial on gay adoption, as can be viewed here. Wegner wrote in opposition and his argument wasn't very good, as can be expected when any high school student writes about political opinions.
But despite writing like a normal high school student trying to defend a bogus position, what happened next was absurd.
Brandon was hauled before the superintendent on charges that he had violated the school’s bullying policy. Superintendent Todd Carlson told him that the column “went against the bullying policy,” and asked him if he “regretted” writing it. When Mr. Wegner stated that he did not regret writing it, and that he stood behind his beliefs, Superintendent Carlson told him that he “had got to be one of the most ignorant kids to try to argue with him about this topic,” that “we have the power to suspend you if we want to” and that the column had “personally offended me, so I know you offended other people!”People, I don't like having to defend anti-gay high school students, like I did in November 2010. I don't like his position at all, and his use of the Bible to justify a generic anti-gay position is lackluster. That still doesn't justify the school district's stupid position that expressing ones views in a calm, disconnected manner is only allowed when it comes down on one side of this rapidly-decaying issue.
I was one of those kids. I grew up a christian who knew that part of the Bible rejected homosexuality as a legitimate lifestyle, calling it an abomination. I remember choosing that side of the issue because of the Bible. I also remember when I got to high school I realized I was on the same side of the issue as the Ku Klux Klan and there must be something wrong here and switched sides.
My school never had frank and open discussions where students got to share their opinions and feelings about gays without fear of being punishment. Don't get me wrong, we had an accepting school staff. There were several openly gay teachers who had upside-down Apple computer logo stickers on their classroom doors because they couldn't find rainbow stickers anywhere else.
I don't think younger people today realize how much has changed for gay acceptance in their lifetime. It was socially acceptable to say "fag" right up until the end of the 1990's. I would have benefited from an open discussion because my views were weak and unchallenged. I would have come around a lot sooner, and unfortunately, students like Brandon Wegner are being robbed of that chance to learn.
Eventually, my generation came around. It was through the free exchange of ideas that my generation came to accept gays, not authoritarian commands.
Adamantium Clause: A friend wrote that the logical conclusion of Wegner's piece is that gays should be exterminated, because of the Bible verse he referenced over and over that said gays should be executed for displeasing God. I maintain that Wegner is a poor writer and that interpretation was never his intention, and it is not the primary interpretation of the piece. He was simply quoting that verse to prove that God loves everyone but the gays.
Superintendent Todd Carlson's written statement suggests his problem with the piece was he found it offensive, not that it was a call for violence:
The Shawano School District would like to apologize for a recent article printed in the Hawks Post newspaper. Proper judgment that reflects school district policies needs to be exercised with articles printed in our school newspaper. Offensive articles cultivating a negative environment of disrespect are not appropriate or condoned by the Shawano School District. We sincerely apologize to anyone we may have offended and are taking steps to prevent items of this nature from happening in the future.
Thursday, January 26, 2012
I've written a guest post on video game economics for the site, combining some ideas on scarcity and resource management with choosing which video games to buy and play.
In retrospect, a better title would have been "Why I don't play Skyrim" to show that my rule of budgeting game time, instead of just buying games because I like them, applies to a game that is said to be so good it threatens to damage the US Economy with lost work time.
Tuesday, January 24, 2012
The city council in Halifax, Nova Scotia is looking at establishing a local purchasing preference for city bids.
The buy local motion was brought forward by District 12 Councillor Dawn Sloane.I'm sympathetic to the politicians this time around because they do understand that major savings are worth importing. They want to find an algorithm to learn at what point they should change directions and be willing to pay more under the assumption that buying from local businesses is good for the community.
Sloane took up the cause after a Dartmouth firm, Intelivote Systems Inc., lost the bid to provide telephone and e-voting for the next municipal election. A Spanish firm said it could to the job for $553,007, a full $330,000 less than Intelivote's bid. Although Intelivote had done the work previously, the Spanish firm won the contract.
Dawn Sloane says the city should have a scoring process that gives extra points to local companies, but given the huge difference in price, it's hard to think of any buy local policy that would have awarded this contract to the local bidder.
But what if the difference isn't as pronounced? Recently a local company lost a bid to provide work boots to the municipality. The Halifax-based firm put in a bid of $72,431. The contract was awarded to a New Brunswick company that bid $69,801 - a difference of just 3.76%.
The question is - where do you draw the line? Should the local company win the bid if its price is 5% higher than the lowest bid, or 10% or 15%, or in the case of Intelivote 60% higher? And what about the quality of the goods and services being offered? Should the local business win the contract even if its product is slightly inferior?
Unfortunately, that assumption still makes the same old bogus assumptions. You are still instructing local people to do things they are not skilled at performing. The government could still be paying more taxpayer money for inferior service.
The Halifaxians should consider learning from our mistakes, such as the Smoot-Hawley Tariff Act from 1930.
Update: A resident of Halifax wrote to inform me they are called Haligonians, not Halifaxians. I was wrong.
Sunday, January 22, 2012
I first noticed it around the time I started this blog when Russ Roberts debated Bill McKibben on the "Buy Local" issue. Roberts criticized communities that pass special ordinances restricting store sizes in an effort to keep out chains like Walmart and McKibben defended the policy by saying it was established through democratic means.
So were Jim Crow laws, prohibition and Don't Ask, Don't Tell. That doesn't make them reputable.
I'm reminded of something John Stuart Mill wrote in On Liberty about the wisdom of the public:
They are always a mass, that is to say, collective mediocrity. And what is still greater novelty, the mass do not now take their opinions from dignitaries in Church or State, from ostensible leaders, or from books. Their thinking is done for them by men much like themselves, addressing them or speaking in their name, on the spur of the moment, through the newspapers.The Founding Fathers understood that the whims of the public poses serious risks and that's why they opposed direct democracy. It is fallacious to believe that simply through the act of voting, all of the ignorance, misconceptions and the superstitions of the general public will be washed away and replaced with complete metaphysical wisdom.
Saturday, January 21, 2012
As such, I was very happy to stumble across this recent episode of Rationally Speaking, the New York City Skeptic's podcast where author Joseph Heath talked about his book "Economics without Illusions."
It starts off a bit worrying, as the subtitle is "Debunking the Myths of Modern Capitalism" and early in the interview Heath said he didn't take economics classes in college because he thought it was a right-wing ideology.
However, he went back as an adult and the evidence lead him to accept capitalism while still identifying as a progressive. The bulk of the book is six myths the right believes about economics and six myths held by the left.
If that wasn't enough, Heath was eager to share Friedrich von Hayek's lesson that the problem with socialism isn't just getting people to work. It's not motivation so much as information, as he puts it. It's a great summary of The Use of Knowledge in Society.
The interview reminded me of a recent Bryan Caplan piece about "substitution" as an explanation for economic illiteracy. Caplan explained that a lot of positions the economically illiterate hold can be understood as an answer to a different, simpler question.
For example, when asked if the minimum wage helps low-skilled workers, they may give an answer to the question "Would I be happy if employers gave low-skilled workers a raise?"
The podcast is worth giving a listen, which implies the book is good as well.
Thursday, January 19, 2012
Yes, SOPA would have been a problem if passed. I fully support measures to stop piracy, but not by giving government officials powers beyond due process and trusting them to only use it fairly. This always, always, leads to abuse.
Yet those same people are upset about a court case that allows groups of people to broadcast criticisms of politicians around election time.
Actually, they're not really upset by that because most of them don't understand that's what Citizen's United is. They assume it allows big businesses to spend unlimited amounts on political lobbying, which is not true.
I've never kept it a secret that I support corporate personhood, but that isn't what the case is about. The Citizens United case didn't just free the speech of for-profit businesses, it also applied to organizations like the ACLU, labor unions and media companies.
These people aren't actually against the case they say they're against. They are, in fact, against a different issue and have allowed themselves to follow a fad without doing any real research.
But let me take the activists on at their true point. I'll disregard their intellectual sloppiness and engage them on their central issue: should we trust the government to put a cap on how much speech a private corporation can make?
The inequities of speech that flow from the inequities of wealth are certainly a big and distorting problem for a democracy, and have always been so, and not just during elections. No one knows how to remedy that, short of fundamental re-distributions of wealth. But I'll tell you what isn't a remedy: granting the government the power to decide who should speak, and how much speech is enough. Nothing but disaster flows from that approach, and that was what was at stake in this case.You can not claim to be a champion of free speech one day and then call for restrictions the very next day hoping to silence organizations you don't like. Most of the anti-Citizens United activists are grossly ignorant about the most basic details of the case.
If instead of a movie about a politician, Citizens United had written a book, would you allow the government to seize all the copies and burn it?
BONUS: As I was searching for the Popehat link about the New Jersey Department of Public Affairs claimed national security when it locked up the details on a barn it was building to house road salt, I came across a post that makes a better argument than mine. Ken gives a roundhouse punch when he says that it was corporate speech from Google, Wikimedia and Reddit that made the SOPA protest so big. Do these same people think those websites should have been censored from weighing in on proposed anti-piracy legislation?
How much speech should they have been allowed to have?
Wednesday, January 18, 2012
In 2010 gay conservative Andrew Sullivan said:
Certainly gay people do not want to become a Democratic party constituency that is totally taken for granted, which is of course what has happened. When you have no leverage over a party, they don't do anything for you except take your money and invite you to cocktail parties, which is all that's happened in two years under Obama with two houses of Congress.
Monday, January 16, 2012
A small but successful campaign is forcing the U.S Department of the Interior to modify a quote on the side of the Martin Luther King, Jr. monument in Washington D.C.
The missing context and omissions of two small words in the quote makes King sound arrogant. Gone unnoticed is a glaring error on the front of the statue that makes King look foolish.
There's a rule in men's fashion called Sometimes-Always-Never. That identifies which buttons to button, from top to bottom, in a three-button suit jacket.
Yet, his statue depicts the bottom button fastened like a frat boy concealing a Daffy Duck tie at the spring formal with the sisters of Alpha Sigma Ho.
Maybe if they had found a sculptor who did real research on his subject, instead of building agitprop monuments for barbarians like Mao Zedong, we wouldn't have this problem.
All they have to do is chisel the button off and leave an empty buttonhole shape behind. Fixing the quote will require a lot more work than chipping a little class into the rock.
I don't support the King is Ours group that formed to demand that a black sculptor design the monument. I think the name of the groups demonstrates they failed to grasp Dr. Kings lesson about equality between all people, not just blacks and whites. That being said, a black man would never have let something like this slip. One of the King is Ours organizers is even named Clint Button.
Sunday, January 15, 2012
Some people are saying that comparison isn't a fair description of Bain Capital's actions. But for this post, let's assume it was true. Let's say there are firms that break up troubled companies and harvest the assets, laying people off in large numbers. Is there ever an ethical time to do that?
Yes there is, as that's a public service that the economy needs. I could go into details of why that is, but there's already a great monologue from Danny DeVito that explains it all.
Can you imagine a world without vultures? An Earth without carrion beetles, blowflies or decompositing bacteria? Dead bodies would pile up and waste space. Their useless carcasses would tie up matter out of circulation in the circle of life. It's unpleasant to watch, but rot and scavenging are a necessary part of the ecosystem.
The same is true for businesses. Without vulture firms, we would have unneeded, wasteful or incompetent firms occupying office space, holding onto workers and wasting customer money. When those firms are eaten or rot, all those resource go back into circulation.
Healthy, fit animals have nothing to fear from the noble vulture. They are the avian custodians of our world.
Friday, January 13, 2012
Some of us don't even prefer small businesses to large corporations.
But that doesn't mean we love large corporations. I support corporate personhood, but I'm also concerned with corporations gaming the system and using political influence to conquer the marketplace.
I don't consider these positions contradictory in any way. Imagine the worst politician possible, someone who takes bribes from racist drug dealers to force children to be videotaped in public school bathrooms.
Would you expect someone who strongly believes in democracy or republicanism to defend that politician?
Of course not, because we understand that the belief is in the game and not the players.
The same is true for capitalism. I fully understand that some corporations will do awful, stupid, unethical or dangerous things. I don't excuse those failures, but I find them easier to tolerate than the problems caused by alternative systems.
Wednesday, January 11, 2012
On the right is Carrie Brownstein from a non-local band I love, Sleater-Kinney. On the left is Fred Armisen from Saturday Night Live. In the middle is a local actress.
I know it's about Portland Oregon, but all the characters would be right at home in Portland Maine.
Monday, January 9, 2012
This weekend I started reading the newly-released volume two of Yoram Bauman's Cartoon Introduction to Economics that shared an Adam Smith quote from Book IV of the Wealth of Nations:
What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.This idea started the classical view of economics, that running a country is like running a household. However, seeing it in this cartoony context caused my mind to contrast it with a famous Friedrich Hayek quote from The Fatal Conceit:
Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within the different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e. of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once.Can I fit both of these ideas into my head without breaking something? I don't think I can. One of my favorite criticisms of communal societies and small-scale attempts at collectivism is that it doesn't scale. If that's true, how can I absorb Adam Smith's wisdom that a government should tighten its belt when times are tough, just like a household should?
Saturday, January 7, 2012
Small businesses are wholesome, mom and pop shops, right? They have closer ties to the community, treat workers better, pollute less and create more jobs than big companies.
Well, no, all of those claims are false.
It's popular for politicians to claim that small businesses create most new jobs in this country, so let's start there. You hear this from both donkey and elephant breeds. The crucial detail they are missing is that small businesses lose most of the jobs too, as they go under a lot. This is a classic case of counting the hits and not the misses, and that's why the policies intended to help small businesses fail at creating jobs.
From Doug Henwood of the Left Business Observer:
...It’s still often claimed that that’s where all the real job action is. The claim is ultimately traceable to 1980s work by the consultant David Birch, who once famously said that 88% of the new U.S. jobs created in the first half of the 1980s were in firms employing fewer than 20 workers. That factoid was repeated by pundits and politicians, and has since made its way around the world. But it’s not true.American small businesses are defined as having less than 500 employees, a far cry from the small stores everyone pictures. Large businesses pay their employees more and environmental regulators have an easier time keeping tabs on them. They also employ local people and contribute to charities in the immediate area.
Mr. Birch came up with this nugget by playing with some computer tapes from the credit rating and business information firm Dun & Bradstreet. But a closer examination conducted some years later showed the D&B tapes to be full of errors, at odds not only with official unemployment insurance registration info, but even with the phone book. Firms were classed as being born and dying when they merely changed hands. And Mr. Birch’s methodology was pretty idiosyncratic, to put it kindly.
For example, firms that started in the very small category — fewer than 20 workers — were categorized for all time as staying there, even if they’d grown beyond the small category. Or, more wackily, if a firm with 600 employees had a bad year and canned 200 of them, this would show up as a gain of 400 jobs for the small business sector. Not that Mr. Birch ever fully disclosed his techniques, like most serious researchers would; he did, however, tell the Wall Street Journal in 1988 that his figures were “silly,” and that “I can change that number at will by changing the starting point or the interval. Anybody can make it come out any way they want.” Despite that confession, Mr. Birch is still taken seriously by the U.S. press.
I don't mean to vilify small business, because they are still important for the economy. Large, successful businesses have to start somewhere. For what it's worth, every member of my family is a small business owner. Both my parents, my brother and even his wife all own their own small businesses. My father owns a small franchised store and the other three have farm and agricultural businesses.
I used to think as small businesses as having the blessing of being too small to hire lobbyists to game the system in their favor. That was until I learned they pool their resources together and form lobbying groups like the National Federation of Independent Business.
In the end, all businesses are important for the economy, large or small. It's popular to single out small businesses as being special, but that's just empty rhetoric.
As a footnote, the "buy local" activists usually throw in that local businesses tend to be small businesses, but that's not always the case. Coming from Maine, I've never heard localists say they're against buying from LL Bean, despite it being a huge corporation. Their flawed model makes no allowances for the size of a business. That's why I don't bother including this point in my normal treatments of their economic views.
Thursday, January 5, 2012
Special thanks to Rebecca Watson for inspiring the first-ever YH&C political cartoon. Friedrich Hayek spoke of scientism, the use of scientific language and the trappings of science to make unscientific points. I think the feminist faction of skeptics are guilty of "skepticism" where they attempt to dismiss their opponents by falsely accusing them of being pseudoscientific and using logical fallacies.
Tuesday, January 3, 2012
Case in point a set of links Michael Hawkins shared with me on Facebook today. I couldn't make it through the first comment section without groaning to myself about how much I can't stand liberals - despite the irony that liberal Mr. Hawkins sent me the link with the same disagreement.
As I've written before, there's a faction in scientific skepticism that is trying to force political correctness onto the movement. They play the same old card, dividing the world neatly into feminists and misogynists. They make the unfalsifiable claim that the reason we men can't recognize the problems they claim are there is our male privilege, so we need to be silent and do whatever they tell us.
Yesterday a woman named Mallorie Nasrallah wrote a short essay saying these people don't speak for her. She's a woman who's been in the skeptical community for a long time and disagrees with everything the feminist faction is claiming.
The feminists didn't take it lying down and argued back, a bit viciously. Mallorie replied. What bothers me here isn't that Mallorie was criticized. No, that's part of the deal when you speak up. Criticism is a form of free speech, not tyranny. They had every right to fight back.
What bothers me here is that Mallorie had to frame it this way in the first place because other people were claiming to speak for her. That is the abuse of power.
It's no secret that I'm critical of the Occupy Wall Street movement. Most of their anger is directed at other people, but one thing that has always bothered me is their claim to speak for 99 percent of Americans. Polls have always shown that a smaller percent of the population support them. They claim they speak for people like me when they really don't.
I went through the same thing when I was on unemployment, where well-off progressives claimed they spoke for me when they wished to extend unemployment benefits. I opposed them, and I take it personally when people misrepresent themselves as speaking on my behalf.
Other people can argue is Mallorie is right or wrong, but one thing that is not up for debate is where she stand on the issue. She's a grown woman, let her speak for herself.
Sunday, January 1, 2012
Instead of telling people to imagine "Nothing to kill or die for, and no religion too" he requested people picture "Nothing to kill or die for, And all religion's true."
Honestly, I think the secular community's anger over this incident is short-sighted. I understand that that song is sacred to them, as it created a myth that Lennon was an atheist, something he denied shortly before his death:
People always got the image I was an anti-Christ or antireligion. I'm not. I'm a most religious fellow. I was brought up a Christian and I only now understand some of the things that Christ was saying in those parables. Because people got hooked on the teacher and missed the message.But what's important here is that Cee-Lo did the secular community a favor.
Take a moment and imagine that every religion is true. All of them. It's a mess.
You've got Muhammad and Quetzalcoatl fighting the Titans in Valhalla while Vishnu commands the Taurus bull. The Galatic Overlord Xenu is dodging djinns and Anubis to tempt Jesus in the desert before he breeds with giant Aryan women to bring them down to size. Who's in charge here, Ra, Jehovah, Zeus or Taiyang Shen? Can the light side of the force prevent Cthulhu from bringing Ragnarök to the world, which is made from the dead dragon Tiamat, or will the ancestral spirits and great mother turtle have to create a new one. Do faeries have chakras?
All religions being true would be like a Marvel-DC crossover, only with more unnecessary violence and less plausibility. What could be a better recruiting drive for atheism than for people to start 2012 by imagining a series of mutually-exclusive mythologies and folk tales competing for space in the same realm?