June 30, 2003
"geezer" -- banned in the classroom -- but not here at PrestoPundit! Diane Ravitch has the story.
Mark Steyn -- quotable:
American liberals have had great success inventing evasive language to advance their agenda, ever since ''abortion'' became ''choice.'' Only the other week, with the cooperation of foolish, short-sighted Republicans, ''welfare'' morphed into ''tax credit.'' American liberals have had great success inventing evasive language to advance their agenda, ever since ''abortion'' became ''choice.'' Only the other week, with the cooperation of foolish, short-sighted Republicans, ''welfare'' morphed into ''tax credit.''
Bush's folly -- Hydrogen. A look at the science tells the story:
At least one small benefit of the current interest in FCs [hydrogen fuel cells] is that even many scientifically illiterate enthusiasts now realize that hydrogen is not an energy source, merely an energy carrier. Unless we get some environmentally benign means of producing it by the electrolysis of water (that would require either exceedingly cheap photovoltaics or an entirely new generation of nuclear reactors) we would get it by using today's most practical method: steam reforming of natural gas. If you wonder how that would not lead to higher natural gas prices (and hence to higher oil prices as the two fuels are substitutable to a large degree) and how that would reduce our dependence on fossil fuels, you have to ask true hydrogen believers for an explanation.Moreover, hydrogen is an inherently poor choice for a transportation fuel because its uniquely high energy density depends on its liquefaction, i.e. storage under high pressure, or at least on its incorporation into metal hydrides to avoid bulky fuel storage in vehicles. And here's a curiously underappreciated fact given the litigiousness of this society: what would be the liability repercussions of distributing a fuel that now can be handled only by select personnel to hundreds of thousand commercial outlets? For these, and other, reasons -- all of which have been detailed in some excellent technical reports that have called recently for rethinking hydrogen cars -- we are not on the threshold of a new era dominated by FCs and hydrogen.
But try getting a television newsie or a politician to learn some basic science and technology -- I mean real stuff, not drug store pseudo-science techno blather, which is like a contagious disease in contemporary public discourse. It ain't happening.
The average person in sub-Saharan Africa earns less than $1 a day. The average cow in Europe -- thanks to government subsidies -- earns about $2 a day ...
more.
The autonomy which gives Hong Kong its traditional freedoms is threatened by a new anti-subversion law which goes into effect the 9th of July. Protesters have taken to the streets and CNN reports in Hong Kong have been censored. A beacon of freedom in the world continues to be pulled into the system of the Communists in Beijing, despite the official "one country, two systems" rhetoric of the government. CNN's report on the situation is here, with backgrounders.
"I'm looking forward to doing many more films".
Including "Conan the Barbarian 2". Is Arnold simply doing a Donald Trump move with the voters of California? Colin Powell and others have proved that the electorial tease generates interest -- and sells.
"You're terminated" -- "a slogan intended for poor Gray Davis?" The NY Times reviews T3.
Phillip Howard reviews Walter Olson's The Rule of Lawyers: How the New Litigation Elite Threatens America's Rule of Law. Howard highlights how the press and the academic establishment in the law schools are co-conspirators in the ongoing corruption of the American legal system:
Where are the whistle-blowers? The media in this area are like putty, or worse, all too willing to turn any story of personal tragedy into one of corporate abuse, without stopping to ask who the real victims are when, say, companies are bankrupted by lawsuits. Self-interest has infected all sides in these cases. Large corporate firms (including the one where I work) make millions defending these cases.How about academics in the ivory tower? A full-length portrait of O'Quinn hangs in the John M. O'Quinn Law Library at the University of Houston. The then-law school dean at Texas Tech, W. Frank Newton, solicited a contribution of $12.5 million from one of the tobacco lawyers before agreeing to serve on an arbitration panel that awarded the lawyer and the other four firms on the case $3.3 billion in fees. When asked about the propriety of his conduct, the dean suggested that his conflict was well-known: "There's no question about who I am or what my role was."
Sabine Herold, the 21 year old conscience of France, is boning up on her Hayek. Bruce Bartlett suggests she'll need that -- and all the luck she can get.
Quote of the Day. Mona Charen:
Democrats swim out past the buoys, but Republicans, too, are pulled by the cultural undertow.
The quote is part of a good story on press bias in the reporting on females in the armed services. Charen goes into politicallly incorrect waters where PC fear keeps mouths shut.
Putting a fork in Michael Lind. Stephen Schwartz does a fisking:
Unless Lind is incapable of reading as well as thinking, he knows Wald is a defender of the Trotskyists, not of the neocons. This line alone should exclude Lind from any consideration as a serious intellectual himself, and brands him, not Wald, as an exemplar of pseudo-intellectual dishonesty.
When Lind writes about things I know a great deal about -- like the ideas of Hayek -- it's always worth a good laugh. Or a good shake of the head. Who is Lind trying to fool? Oh, those guys ... too easy.
Weintraub has his list of cuts for California -- many of them endorsed by Gov. Davis in some alternative universe life.
The SacBee's Dan Walters is on fire:
A sad but undisputed syndrome of humankind's unquenchable thirst for oil is that the discovery of rich petroleum deposits in Third World nations usually brings few benefits to their impoverished residents while fueling corruption, despotism, internecine warfare and economic decay. Quite often, international financial bodies such as the World Bank intervene and compel these nations to adopt more realistic, if austere, fiscal policies because they have proven themselves incapable of managing their own affairs.The latest poor nation to experience an oil boom is Chad, where an international consortium led by Exxon Mobil Corp. is investing $3.5 billion to develop oil fields. But this time, the World Bank is trying to interrupt the familiar pattern by setting up a broadly based committee to ensure that the $100 million annual revenue flow to Chad is spent for public benefit, not siphoned into Swiss bank accounts.
The new approach could, the Wall Street Journal says, "reverse the violent curse of oil money in Africa. In recent years, the gross domestic product of some oil-rich nations has actually declined, amid bloodshed and corruption."
Here's a thought: When the World Bank is finished with Chad, it should come to California, whose public finances these days resemble those of a Third World corruption pit more than those of a modern, presumably enlightened, industrial society ..
Read the rest.
The Orange County Register editorial page has a web page devoted to The Davis Recall Effort, which includes a link to a collection of letters on the Davis recall. A meatier site is their web page devoted to the state budget crisis.
All publicity is good publicity, right? Still more publicity for the half-baked "intellectual" behind the half-baked essay "The Weird Men Behind George Bush" -- i.e. Trotsky, Bush and all that nonsense. And the discussion turns to Joshua Muravchik. Yes, somehow, Muravchik.
June 29, 2003
Stanley Fish defends Justice Thomas -- but sides with O'Connor, because he favors unprincipled illiberalism over the principled liberalism of Thomas. Gentle plea to readers -- think about it.
Straight from the horses mouth -- a Keynesian crank on how the Fed blew it.
A profile of Peter Galison and his forthcoming book on the problem of the synchronization of distant clocks. Oh, and something about Einstein and Poincaré ...
We all know that Maureen Dowd is none too bright and not nice in the least. But it took Eugene Volokh to prove it mathematically (so to speak). Volokh is sitting in for the vacationing Glenn Reynolds.
Dean's World has an interesting post on blogrolls and the "gift economy". Worth reading.
Deflation is like cholesterol ..
.. says Sung Won Sohn, chief economist for Wells Fargo Bank. There's the good kind and the bad kind, and a little of the good kind can be healthy.
Oh, and this -- America is not Japan. Common sense and good economics. Don't you love it.
The San Bernadino Sun has a good article on Schwarzenegger - with long quotes from the T man. And this:
a quick flip through the massive "T3' press kit reveals a 4 1/2-page Arnold bio -- only two of which are devoted to his sporting and cinematic accomplishments. The rest are taken up by praise of his business acumen as well as his lobbying and legislative efforts on behalf of voter-friendly programs for children.
The Guardian does the Schwarzenegger - California recall story. The tabloidy stuff is down toward the bottom.
Ward Connerly's "racial privacy" initiative will help power anti-Davis voters to the polls in the event of a November recall election.
More socialism. Bartley endorses Mundell's madness -- and provides the bonehead remark of the week:
A world money would be an extraordinary boon to international stability.
Anybody ever heard of competition? It's the thing markets are for, and the market for money and time needs competition perhaps more than anywhere else.
Here is the mathematical economics on this: Central Banking + World Government = idiocy squared, then cubed.
P.J. O'Rourke read Hillary's book so you don't have to. Quotable O'Rourke:
But George Washington and William F. Buckley Jr. put together could not have foreseen, in their gloomiest moments, the rise of Clinton-style über-mediocrity--with its soaring commonplaces, its pumped trifling, its platinum-grade triviality. The Alpha-dork husband, the super-twerp wife, and the hyper-wonk vice president--together with all their mega-weenie water carriers, such as vicious pit gerbil George Stephanopoulos and Eastern diamondback rattleworm Sidney Blumenthal--spent eight years trying to make America nothing to brag about.
And this tidbit -- Sen. Clinton failed her D.C. bar examination.
LA Times on the Schwarzenegger for Governor story. Quotable Arnold:
"In a few days from now, I do have to make a very, very — probably one of the most difficult — decisions of my life: what to wear on my opening day of 'Terminator 3.' ""
The Geezer Continent by 2050 median age of Europeans will be 52. And currently, less then 2 out of 5 men age 55 to 65 still work. Austrian economist Erich Streissler offers some analysis in this NY Times news article.
The recall -- just another chance to hit up Davis for favors. File this one under "your tax dollars at work".
June 27, 2003
A BBC reporter blogs Brazil -- including audio of the mating call of the Brazilian frog fish.
Who should bring wireless to the world -- entrepreneurs or the UN? Kofi Annan knows. And a BBC analysis.
Your own genetically engineered fish. $17 dollars. On sale soon at a pet store near you.
Blair's communications director continues his attack against the BBC over Iraq intelligence charges.
What would Instapundit say? French troops invoke gun ban in Congo town.
CalPundit on a recent Supreme Court case:
this is a case where the result is so clearly worthy that I don't even care that much exactly what the legal reasoning was.
My guess is that Calpundit speaks for lots of folks -- including some who wear black robes.
Am I being a bit too clear eyed if say that many would just as well put it this way?:
"this is a case where the result is so clearly worthy that I don't even care that much exactly what the Constitution says".
Or perhaps I read that somewhere in one of O'Connor's opinions.
When people are in a rush, they make mistakes. And they also sometimes let slip little truths about themselves that under ordinary circumstances get edited out. So it goes with bias in the media. When the press is in a rush, bias often pops out to the surface. Latest example (from Best of the Web):
CNN reported that Scalia, in dissenting from Lawrence v. Texas, a ruling declaring homosexual sodomy a fundamental constitutional right, had said he has "nothing against homosexuals." It turns out that although Scalia's dissent does contain this sequence of words, the network egregiously misquoted him. Here's what he actually wrote:"Let me be clear that I have nothing against homosexuals, or any other group, promoting their agenda through normal democratic means."
The object of the preposition against was not homosexuals but promoting. By presenting the fragmentary quote, CNN made it appear as if Scalia were issuing a defensive denial of personal prejudice, when in fact he was making a point about political philosophy. CNN has since corrected its story, and the original source of the error appears to have been an Associated Press dispatch that moved some 20 minutes after the court handed down its decision. The wire service has not issued a correction...
When the AP screws up, it reverberates around the world, as a Google search of today's news stories demonstrates. No one got it as wrong, however, as the New York Times' Joel Brinkely ... who explicitly falsified the quote (emphasis ours):
"Justice Antonin Scalia wrote the dissent and took the unusual step of reading it aloud from the bench this morning, saying "the court has largely signed on to the so-called homosexual agenda," while adding that he personally has "nothing against homosexuals.""
Ted Costa is claiming 1,000,000 signatures. He's also throwing down the gauntlet with Kevin Shelley, putting him on notice that he has a Constitutional duty to obey the law as specified in the California Constitution.
(But hey, who gives a rat's behind anymore about what a Constitution might say? What the folks in academia, in the media, and in government want are favoured outcomes, and dedication to principles be damned. The law? Who needs it -- when there's an agenda to protect and a money train to keep rolling.)
Davis Recall.com is claiming 892,430 unverified signatures in the recall effort. 898,157 valid signatures are required to put the measure on the ballot. If these numbers are in the ballpark, the recall goes over the top this weekend with signatures -- leaving 300,000 or so more needed to assure certification. But it may not even take that many, if reports are true that the validity rate of the signatures is exceptionally high.
CaliforniaRepublic.com is tracking the Davis recall at a blog called The Recall Follies.
Kudlow -- that maniac Keynesian -- wants Mo' Money. And he's using words with no meaning, borrowing technical terms from the academic economists:
the lagging economy has created a growing “output gap” between potential and actual economic activity.
Recall overview from the Cox News Service. Quotable:
"We're just exercising the old lemon law," explained Ted Costa, an anti-tax activist helping lead the recall campaign. "It's just like when you return a car that's burning oil or that has a leaky transmission -- but we want to return the governor."
Ananova -- Schwarzenegger 'wants to be governor of California'. And this:
[Schwarzenegger political adviser George] Gorton confirmed Schwarzenegger has been having discussions with political insiders and potential supporters.
Who needs Instapundit when there's ScrappleFace:
Supreme Court: Texans Too Stupid To Rule State(2003-06-26) -- In a little noticed addendum to today's Lawrence and Garner v. Texas decision, the Supreme Court ruled that the citizens of Texas are not intelligent enough to rule their own state.
Writing for the majority, Justice Anthony M. Kennedy noted, "Representative government is a good notion as far as it goes. But the citizens of Texas clearly lack the mental ability to elect representatives and make laws properly. We'll be keeping eye on them to protect them from themselves."
Justice Kennedy also wrote that "citizens of many other states probably lack the intellectual capacity to rule themselves as well, which is why the Supreme Court exists, and why none of us can afford to retire. Imagine what would become of this nation without our sovereign rule."
Schwarzenegger -- "definitely interested" in running, say folks close to the "Terminator".
"There is no money over there. There's no leadership, pretty much like California."
-- Schwarzenegger on Iraq, where he's headed next. And this:
"My kids are normal kids. They go to the mall and pass out recall petitions."
The smart money says he's running.
Recall offices open in Central California -- and "Rescue California" turns in another 150,000 recall signatures. We're on a roll folks.
Davis recall causes Green Party turmoil. Quotable:
[Green Party official Peter] Camejo said Davis is a “corrupt” figure who deserves to lose his job.
Business Week rationalizes it all for you -- how the Fed fine tuning economic growth and the bond market via the black magic of Keynesian inflation. Quotable:
the Fed isn't particularly worried by the risks of a bond bubble. If anything, it wants to cultivate a sky-high market.
Peter Wood on what the Court has done:
Diversity is a compelling state interest. In these mild words the Supreme Court has effectively amended the U.S. Constitution. We now live in a nation where the highest court has endorsed the principle of group rights. The "diversity" in question is the idea that Americans are properly seen in relation to each other as members of racial and ethnic groups, and not as individuals who have equal rights before the law ...I can't help but think that the transformation of America into a regime of group rights has only just begun. The danger of hereditary groups pursuing their interests as organized factions — the danger that so worried Madison and that deeply informs our Constitution — has been waved away by the Court. Don't worry, the Court says, we can have the benefits of racial categorization to correct our inequities, and then we will retire those categorizations in 25 years or so when they are no longer needed. But factions are interest groups, which are not known for fading away when you supply them with government incentives. No, the social divisions of diversity are here to stay, along with their inherent nastiness.
This Court has fertilized and watered the seeds of discord. We are going to see at least a generation more of people mis-defining themselves as members of groups rather than as individuals, and the groups themselves competing ever more viciously for the spoils. And that's where we are. The Court has not upheld affirmative action. Rather, it has legitimated the politics of racial and identity-group faction.
Peter Wood is the author of Diversity: The Invention of a Concept.
"I don't need Bush's tax cut. I have never worked a [bleeping] day in my life."
Patrick Kennedy. (via the indispensible Drudge).
The Chronicle on the effort to intimidate recall petition workers.
"Listen, Arnold is great," Kennedy said. "And I never argue with Arnold, particularly when he's holding me by my ankles upside-down. But I intend to support the Democrat [in the California recall election]".Posted by Greg Ransom | Permalink
Wouldn't you know it -- politicians exempt themselves from the new law restricting speech over the phone.
UPDATE: And pollsters are protected also.
Andrew Sullivan posts this email from a reader on Lawrence v. Texas:
The majority failed to ground its decision in any established rule of constitutional law, but its outcome implies one of two things: 1) morality is never a "legitimate state interest" and thus all morality-based laws fail a rational-basis test OR 2) any activity valued by an individual and done in private is a "fundamental liberty" protected by the constitution as much as enumerated rights such as freedom of speech or the right to a fair trial. Either way, the Lawrence v. Texas decision has fundamentally altered constitutional interpretation and could be the basis for striking down an extraordinary number of laws--not just about sex--throughout the United States.The stronger implication seems to be #2, because the case labors over the evidence which led the Bowers Court to declare homosexual sodomy is not a fundamental right. As a person with libertarian sympathies, I am strongly tempted to cheer a decision that could serve to invalidate all victimless crimes. But as a student of Constitutional law I must be distressed that the libertarian principle has been shoehorned into the tiny phrase "due process" and not based in representative democracy, or legitimate interpretation or amendment of the Constititution. Even worse, the Court partially based its "fundamental liberty" declaration on the decision of many states and *Europe* to get rid of such laws. So now, if the Blue States and Brussels decide that something is a fundamental right, it will suddenly be read into our Constitution?!?
My email address is there in the upper right-hand corner.
The Media Research Center's DisHonors Awards are in. The event will be rebroadcast on C-SPAN Saturday night.
NBC labels agreement with Justice Scalia "on the extremes". Thanks guys.
The Congressman from Boeing -- and other pork stories from the Land of Lincoln. I tell you, without constitutional reform, the taxpayer is doomed.
"The Notorious GOP" -- Schwarzenegger appears on Leno. Some campaign slogans for Arnold:
"Who better to represent a state where no one speaks English?""Not a good enough actor to fool you on taxes."
June 26, 2003
Noam Scheiber takes Greenspan to school:
And yet, just because the prices of many goods are falling--and may continue to do so for the foreseeable future--doesn't mean the country is anywhere close to the kind of economic catastrophe that keeps central bankers up at night. Such fears confuse the cause and effect of a deflationary crisis. As James Grant, editor of Grant's Interest Rate Observer, points out, economics giants such as Ludwig von Mises and John Maynard Keynes understood deflation as a condition brought about by a scarcity of money and credit in the financial system. If, for example, there was too little money relative to the amount people needed to transact their day-to-day business, then people might start rationing and even hoarding it, which would cripple economic activity. True, prices would fall under these circumstances, since fewer dollars makes each one worth more. But those falling prices would only be a symptom of the real problem, which was a collapse in the money supply.As it happens, we can be pretty confident that today's downward pressure on prices isn't the result of too little money. For one thing, while average prices are indeed increasing at a slower and slower rate, individual prices are all over the map. Prices for many services, such as cable television and child care, are increasing by 5 percent per year. Meanwhile, prices for many manufactured goods, such as stereos and televisions, are falling by 5 to 10 percent per year. On average, these price hikes and price declines are roughly canceling each other out, hence the drift toward zero inflation. Second, the Fed has been aggressively lowering interest rates for almost two and a half years now, which it does by expanding the money supply. According to one broad measure, the money supply has been increasing by about 7 percent annually throughout the last few years.
There are two key reasons the prices of certain goods are falling, neither of which has to do with the money supply. First, all the equipment and information technology that companies invested in during the last 20 years--particularly during the late '90s--has dramatically increased productivity, enabling companies to produce the same amount of goods more cheaply than ever before. Second, that investment has led to excess capacity, meaning companies are able to produce more goods than the market can absorb. According to The Wall Street Journal, for example, the global-production capacity for automobiles stands at about 80 million per year, while global demand is about 60 million. Companies that overproduce tend to cut prices to move all their extra goods.
he Fed's confusion of cause (a contraction of money and credit) and effect (falling prices) arises from a misreading of the two historical episodes upon which today's conventional wisdom about deflation is based ...
Well, you'll have to read the rest here.
Reform comes to the European farm subsidy system. I'm both surprised and pleased.
Good news for so many of my high school classmates, all those years ago. It turns out there hasn't been permanent brain damage.
The British government goes after the BBC over claims of doctored intelligence.
Institutional Economics notes that Gerald O'Driscoll -- a leading authority on the macroeconomics of Hayek -- "is beating the inflation drum in the wake of this week's Fed easing". And he posts this from O'Driscoll:
In the end, financial markets may negate the beneficial effects for economic activity of the Fed's expansionary monetary policy. If markets are in fact turning their attention to the possibility of inflation, long-term interest rates will rise. Higher interest rates offset the effects of monetary stimulus. Perhaps that will yet give Fed policy makers pause. For now, however, higher inflation is in store for the US economy. Global investors take note.
Hot recall news. California Insider reports that the California's Democrat Sec. of State has issued an edict bending -- no, breaking -- the law of recall signiture verification, so that the recall election will be effectively pushed back to March, rather than allowing for a November recall election.
George will on Lap Dancing, Sodomy, and the Constitution. On target analysis of the evolution of the "right to privacy".
Krauthammer on racial descrimination and the Supreme Court. Quotable:
Issues of this magnitude should never be decided by nine robes. Affirmative action needs to be dealt with by the people in the legislatures and in referendums. I believe that the current dispensation is a travesty. But a very substantial portion of the population reads the Constitution -- and the nation's needs -- quite differently. Under these circumstances, the issue should not be settled by judicial fiat.We learned from the abortion issue the doleful consequences of such judicial imperialism. In 1973 changes in public opinion and action in state legislatures were altering the landscape on abortion. At which point the court stepped in and took the issue out of the political arena. As Ruth Bader Ginsburg argued before she ascended to the Supreme Court, "Roe v. Wade . . . halted a political process that was moving in a reform direction and thereby, I believe, prolonged divisiveness and deferred stable settlement of the issue." The result has been 30 years of strife and agitation, as a disenfranchised minority continues to carry the fight against policy for which it has no political recourse.
It would be a pity to reenact the experience with affirmative action. Popular referendums have already abolished racial preferences in California and Washington state. Such acts of abolition enjoy the kind of political legitimacy that -- as conservatives, of all people, should acknowledge -- is lacking when handed down by unelected judges.
The Economist on Richard Posner's Law, Pragmatism, and Democracy -- from the review:
Mr Posner describes himself as an “everyday” pragmatist. Despite the thousands of words he devotes to the subject, it is not really clear what he means by this. He seems to mean that he is in favour of ignoring general moral and ethical principles because they are meaningless. All that counts—and what judges should consider above all else in interpreting the law—is what is sensible and produces the best result from society's point of view.But these are highly controversial questions, and the answers to them invariably involve assumptions about moral principles. Mr Posner's approach is essentially hollow, amounting to little more than a demand that people not think too deeply about issues.
The second problem with many of Mr Posner's ideas is that they seem inappropriate for a senior judge to be expounding. For example, he argues strongly in this book for the notion that democracy has little to do with rational deliberation or citizen involvement, but is instead merely a matter of competition between self-interested elites for the temporary favour of an apathetic and ignorant electorate.
As a description of how America's democracy actually works, this is certainly plausible, but Mr Posner goes beyond this description to argue that this is the best that can be expected from the system and those who use it. That is a disconcertingly scornful view for a judge to take of the American public.
More troubling still is Mr Posner's view that judges should impose their own policy choices on a case whenever ambiguity in the law gives them the discretion to do so. Many judges do this, though nearly all deny it, justifying their decisions instead by reference to laws and court precedents. Mr Posner thinks this is usually legal flim-flammery, and that frank judicial activism would be better. Few people, on the right or the left, would swallow this.
It's happy 160th birthday for The Economist. The magazine celebrates itself with a special section on the hope of Liberalism in the 21st century titled "Capitalism and Democracy". And the original Preliminary Number and Prospectus of The Economist, dated Aug. 5th 1843, has been made available. Stories in the special section include Liberty's great advance, Pro-market, not pro-business, and Give freedom a chance.
Hit & Run -- another one which sees Lawrence vs. Texas as a victory for liberty:
Liberation DayThe ruling in Lawrence v. Texas presents a rare case of stand-up-and-cheer language in a Supreme Court majority opinion. From Justice Kennedy's ratio:
Liberty protects the person from unwarranted government intrusions into a a dwelling or other private places. In our tradition the State is not omnipresent in the home. And there are other spheres of our lives and existence, outside the home, where the State should not be a dominant presence. [...] It suffices for us to acknowledge that adults may choose to enter upon this relationship in the confines of their homes and their own private lives and still retain their dignity as free persons. When sexuality finds overt expression in intimate conduct with another peson, the conduct can be but one element in a personal bond that is more enduring. The liberty protected by the Constitution allows homosexual persons the right to make this choice.
Dean's World is rather elequent on today's Court ruling:
Unfortunate Decision With Good ResultsThe Supreme Court struck down a Texas sodomy law today. I'm glad to see the law gone, but I'm sorry about the decision anyway. Democratic freedoms are still being regularly eroded by the Supreme Court, and this is just another example of it.
In the 1980s, the Supreme Court declared that states have a right to have such laws. That decision was correct, in my view. The Supreme Court is not supposed to be in the business of deciding whether it "likes" or "agrees with" a law. The Justices are not supposed to decide that their commute is too long and rule speed limits unConstitutional. There are all kinds of laws I don't like, but I'd be horrified if the Supreme Court simply started throwing them out on my behalf.
As James Taranto's "Best of the Web" notes, in 1986, when the Supreme Court ruled that such laws were not unConstitutional, 24 states had them. Today, only 13 do. In other words, we were already on track on dealing with this issue via democratic means. When it comes to contentious social issues, it strikes me as particularly sad that we increasingly expect the courts to "do what's right for us," rather than go about the messy work of the legislative process.
Ah well. A bad law's gone, as are several like it. I just want to add my voice to those who note that it's sad when we celebrate democracy being trampled once again by the courts.
I come from the West. Most of the problems the Supreme Court has been trying to fix come out of the East and the South, e.g. the contraception laws, the abortion laws, the sodomy laws, etc. The people out here solve our problems the democratic way -- we vote on them. You don't find most of these laws in Oregon, Washington and California. To get the results they want for folks in the East and the South, the Supreme Court has been trashing the constitution for all of us. And its a damn shame.
California Insider sees the Supreme Court's Texas decision as a victory for liberty, rather than an attack on liberal constitutionalism and the rule of law. Worth quoting at length:
The Supreme Court has just overturned the Texas law banning sodomy, and certain folks already are contending that this is somehow an example of legislating from the bench. “Regulating homosexual conduct…is the right of the people, to be exercised through the legislative, rather than the judicial, branches of government,” says Mathew Staver, President and General Counsel of Liberty Counsel. Perhaps this strangely named group needs to look up the definition of liberty. Regulating homosexual conduct is the right of the people, alright, to be exercised by the people in the privacy of their own homes – not by any branch of the government, legislative, judicial or executive. The court here isn’t regulating conduct. It’s preserving the right of free people to act as they please as long as their behavior is consensual and does not harm others. The court is not creating a right to sodomy; it’s denying the right of government to interfere in the private lives of free citizens. Big difference.The more I see of this decision, the more it becomes apparent that it's a huge victory for liberty and should be celebrated by all opponents of an intrusive government, no matter their beliefs about homosexuality. The point is that three people, making a majority, ought not legislate what two others can do in the privacy of their own home. Would that this doctrine not stop at gay sex but be extended to all human conduct.
Key quote from Kennedy opinion:
"This, as a general rule, should counsel against attempts by the State, or a court, to define the meaning of the relationship or to set its boundaries absent injury to a person or abuse of an institution the law protects. It suffices for us to acknowledge that adults may choose to enter upon this relationship in the confines of their homes and their own private lives and still retain their dignity as free persons. When sexuality finds overt expression in intimate conduct with another person, the conduct can be but one element in a personal bond that is more enduring. The liberty protected by the Constitution allows homosexual persons the right to make this choice."
And Scalia, though dissenting, drives home the point:
"This effectively decrees the end of all morals legislation."
We can only hope that he is correct.
Well, I'm all for getting rid of the prostitution laws, but I don't want to get rid of the laws against child molestation -- and I don't want nine old people deciding the issue, especially when they haven't been elected dog catcher by the people.
David Bernstein on the recent Supreme Court legislation:
SODOMY DECISION: We spent a lot of time in my Con Law II class last semester talking about how the Supreme Court is affected by the attitudes of the times the Justices live in. By the time we got to the Bowers (the earlier sodomy case), my students had decided that this was a persuasive way of analysing the Courts' decisions, and were unanimously convinced, or so it seemed to me, that Bowers would be overruled this term. They were right.
News flash for Andrew Sullivan -- morality is not a product of our reason. Sullivan has always struck me as a rationalistic Millian liberal, rather than a Oakeshottian or Burkian conservative. Consider this statement:
surely the government does need to provide some kind of reasonable justification for a law expressing "morality," which doesn't just rely on what people have always believed or always assumed.
Conservatism doesn't rule out reflective consideration, but it does rule out the sort of naive rationalism which would hope to derive morality through "reason" or a morality which would meet hope to some ultimate demand for justification. This way leads nihilism and scepticism -- both in morality and epistemology. And it's all based on a grossly mistake demand for justification, modelled on the example of geometric proof. An interesting story, but one I won't pursue further here.
Clayton Cramer has an insightful discussion of what our Supreme Legislature is up to -- and it has very little to do with the system of Liberal Constitutionalism within which the founders of our country were working.
Eugene Volokh on the logic of the new sexual freedom legislation passed by the nine appointees on the U.S.'s law-making panel.
Read the most recent legislation enacted by our Supreme, er, Court. Nine unelected old people decide what they want the laws to be, and you obey. A crazy system in a Liberal democracy -- and more than a bit out of control.
June 25, 2003
William Bennett comes out of hiding long enough to comment on the Michigan rulings. And he comes up with a great quote from Justice Harlan's dissent in Plessy v. Ferguson:
"The law regards man as man, and takes no account of his surroundings or of his color...."
Harlan was flagging the significance of equal -- as in equal before the law -- in "equal protection". A person's equal humanity was not to be squished like a bug for any "compelling state interest".
A Hayek-type trade cycle and another refutation of Keynes in four graphs.
Arnold on the Stern show talking about nudity .. oh, and public service:
At one point or another, after having thought so much about yourself and building yourself a career . . . and making $30 million (a movie), all of those kinds of things -- it's time to give something back to the community," he said. "For the last 15 years, I've been working very hard to give something back to this country that has given me so much."
And this:
Schwarzenegger said that .. he pushes his four kids to stretch the boundaries. But in sports, he doesn't like to hear excuses like "they maybe have a better team. (I say) 'There is no such thing as a better team,' " he laughed. " 'Now, go out there and crush the enemy.' "
Sowell on the Supreme Court's Michigan ruling -- including quotes from Scalia's blistering attack on O'Connor's "logic".
Must reading -- Alan Reynolds on the Fed:
After the Fed cut the fed funds and discount rates a quarter of a point, the usual pundits offered the usual opinions about the brilliance or foolishness of that move. To think sensibly about what the Federal Reserve does, however, it helps to start with reasonable (low) expectations about what any central bank can do.Congress gave the Fed enormous power to mess things up but no mandate about what the central bank's goal should be. Lacking any legitimate job description, the dozen members of the Federal Open Market Committee (FOMC) came to think of themselves as expert central planners in charge of fixing whatever problems they could dream up. At this moment, the FOMC central planners proclaim that the economy "has yet to exhibit sustainable growth."
From the fourth quarter of 2001 through the first quarter of this year, the economy grew at an annual rate of 2.7 percent. That was slow, but there is no evidence to suggest it was not or is not "sustainable." By saying the economy's growth is not "sustainable," did the Fed mean growth would grind to a halt were it not for this miraculous quarter-point dip in the interest rates on bank reserves?
In reality, the headline statement about growth not being sustainable meant nothing at all. "The committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal." That is, the FOMC thinks the economic growth -- which has heretofore been unsustainable -- is nonetheless likely to be sustained. And it boldly forecast a 50-50 chance that things could get better or worse.
The Fed started issuing such absurd "balance of risk" statements a few years ago -- implying Fed policymakers alone could achieve the perfect balance between too little economic growth and too much. The hidden assumption behind that balancing act is that inflation supposedly arises from excessive real growth. Unfortunately, that assumption makes inflationary recessions conveniently impossible, by definition, which also makes dangerous nonsense of the whole ritual.
The latest FOMC missive takes this foolhardy Keynesian trade-off even further, predicting that "the probability, though minor, of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation ..." A "substantial fall in inflation" is now officially "unwelcome." Why? Because lower inflation is assumed to be associated with slower economic growth, and vice-versa.
Perhaps the FOMC meant to say that a broad-based decline in prices (deflation) would be unwelcome. But that is not what it said. What it said was that lower inflation would be unwelcome. For the year ending in May, the broad deflator for personal consumption was up 2.3 percent and the CPI was up 2.1 percent. Excluding food and energy cuts that to 1.6 percent. Would it really be so unwelcome if inflation fell to 1 percent, as it has in China?
The FOMC says the risk of substantially lower inflation is "minor," yet it says that minor risk is nonetheless greater than the risk of higher inflation. Since substantially lower inflation is unwelcome, that seems to suggest it might welcome higher inflation. Yet the FOMC went on to say that "the latter concern" (about a pickup in inflation) "is likely to predominate for the foreseeable future." For the foreseeable future, the Fed is more likely to be concerned about a pickup in inflation, but for the moment it is more concerned about a "minor" risk of lower inflation.
All the big monetary policy questions come down to what targets the Fed should aim at and what instruments it should use to hit those targets. The Fed is sometimes criticized for treating interest rates as a target, but that is not quite fair. When the Fed says it will now keep the fed funds rate close to 1 percent, that means it will buy more Treasury bills whenever that rate tends to move above that level. The Fed pays for those T-bills by writing a check on itself. Those checks end up being credited to some banks' reserves at the Fed. With more reserves, banks can make more loans or buy more securities, putting new money into checking accounts (which require the extra reserves).
The distinction some draw between lowering the fed funds target and providing more liquidity (bank reserves) is normally misleading. The only way the Fed can keep interest rates on bank reserves lower than before is to provide more reserves to the banking system, most often by monetizing more federal debt.
It is sometimes said the Fed can only affect short-term interest rates, not long-term rates. That, too, is usually misleading. Long rates almost always move in the same direction as short rates, although not as much. If the Fed tries to keep short rates too low for too long, however, the market will gradually sense that this is an unsustainable policy and widen the spread between short and long rates.
The Fed now tries to target some mix of "sustainable" real growth and "welcome" inflation mostly by using information about the real economy (it rarely mentions prices) that is inherently backward-looking. Trying to fine-tune the economy's past performance has often contributed to instability, partly because even schoolchildren can figure out the Fed's game. Because consumers and firms rightly expected the Fed to keep pushing interest rates lower so long as the economy looked sluggish, for example, it made sense to postpone interest-sensitive purchases until rates seemed to have bottomed. And it will likewise make perverse sense, given the Fed's lagged reactions, to rush to borrow and spend after rates begin heading up.
Another problem with reducing the fed funds rate because of a perception that past economic growth has been inadequate is that it virtually invites the Fed to raise the fed funds rate after growth improves, even if inflation remains very low.
The Fed has given itself too many chores over the years, which makes it less likely that it will do any of them very well. It is up to Congress, not the Fed, to reduce tax and regulatory obstacles to economic growth. That will make the Fed's job easier because additional supply, innovation and productivity help to hold inflation down, contrary to Fed dogma. It is also up to Congress to give the Fed a clear assignment -- to keep some acceptable measure of inflation within a narrow range.
When Fed officials start fretting about lower inflation being unwelcome and assigning itself the arrogant task of creating "sustainable" economic growth, it is clear it cannot be trusted to even make sensible statements, much less sensible policy.
Text of the Fed statement.
Jacob Levy reflects on the tension between Liberal reform and Conservative institutional reverence as the British Constitution undergoes a new round of revolutionary change concocted on the fly by Tony Blair:
In the past the system has tottered along largely on the strength of British institutional conservatism. The traditional constitutional order exercised a hold on the political imagination; upheavals were out of character. But New Labour's modernizing project shows that this Burkean conservatism has dwindled, and it's further contributing to its diminution. Whatever emotional attachment Britons might have had to the centuries-old Lord Chancellorship--with its pomp, circumstance, and Great Seal--they are unlikely to extend to the new Minister of Constitutional Affairs.It's long been known that the British system allows for rapid and extreme swings in economic policy; the postwar move to socialism went further faster than the New Deal or Great Society, and the Thatcherite reforms went further faster in the opposite direction than did the Reagan so-called Revolution. With the old attachments falling away and no new restraints developing, constitutional policy now looks to be moving the same way. The most obvious red flag here is the absence of a bill of rights and a prime ministers' ability to curtail traditional criminal procedural protections (e.g. the right against self-incrimination) and freedom of speech in response to short-term concerns. And though at least some in Britain are mollified by the entrenchment of European human rights law as a constraint on Parliament, that may be small comfort in a country that has seen many civil liberties have been eroded in the past twenty-five years. Meanwhile, the possibility of wild gyrations in institutions and procedures--swinging from quasi-federalism back to centralization and back again, partisan back-and-forth over the rules governing the upper house, delegations of power to and reclamations of power from Europe, instability in electoral rules or the place of the monarchy or the Anglican Church--is even more worrying. Democratic politics depends on moderately stable background procedures, and Britain is losing its ability to treat those procedures as settled.
Keynes, the political insider, reassured Hayek, the foreign-born theorist, that "dangerous acts can be done safely in a community which thinks and feels rightly, which would be the way to hell if they were executed by those who think and feel wrongly." By contrast, Hayek was concerned with how institutions altered character, and how reliable action depended on a firm background of stable and well-adapted principles, institutions, and practices -- e.g. things like the system of the rule of law. He saw danger in a more "pragmatic" system which depended so much on the whim of particular men -- and which increasingly privileged ever changing particular purposes, undermining a system ordered largely according to long proven principles and institutions. It was no secondary accident, of course, that Hayek had witnessed what had happened on the Continent in the 1930's as the deeply stressed German Liberal system was progressivly betrayed -- and power came to be concentrated in the hands and at the whim of a single man.
Is Blair strengthening or weakening a system of checks and balances in Britian? Tradition and the institutions of the past have been themselves one of the strongest of various checks and balances in the British system. The paradox of Liberal constitutional reform is that you can always be charged with weakening this genuinely important check on arbitrary power -- when in other respects you you aiming to add weight and legitimacy to institutions which had steadily been losing their authority. My own sense is that Blair on many fronts has been going in the right direction, if not according to any well considered blueprint. For example, I give Blair very high marks for his move giving autonomy to the Bank of England. And in general I support his move toward a Federal system. How things work on the ground is a different issue -- all be it a very important one. I'd welcoming hearing from folks on the ground in Britain -- what's the feeling out there among "right thinking people"?
What to make of the "Issa was a car thief" accusations? Well, it's more reason to hope that Arnold will make the run. But I can't help but point out that lots of very cynical political folks were all too comfortable with a President accused of being a rapist by a very credible victim with very compelling testimony and evidence. If Issa was a car thief, I don't want him in the Governor's Mansion, just as I don't want a rapist in the White House. But with so much money and power on the line with today's all-powerful political arrangements vast numbers of people are ready to sell out for all that comes with the money and power. It's part of the logic of "why the worst get to the top" in a government-heavy system, as Friedrich Hayek explained long ago in The Road to Serfdom.
What is Davis resigns? The details from Election Law. (via Kausfiles, where you'll find more on what a resignation might mean.)
The light slowly dawns on a young economist:
I guess this post is about meaning. Two years ago, when I first learnt calculus (yes, i was that bad) My wonderul quantitative techniques lecturer, Tony Humm, explained why economists use calculus. It was wonderful--it all became clear. I understand and like differential equations and their resulting phase diagrams, but I can't help but feel something is missing.
Read the whole thing. It begins this way: "Professor David Begg .. once told us that in the 1970s phase diagrams were the rage in economics ... "
As Eric Rasmusen points out the recent Supreme Court decision allowing unequal treament of individuals for racial purposes is far worse a violation of the spirit of the 14th amendment than even Plessy v. Ferguson:
What made me think of Plessy v. Ferguson, though, was the recent Grutter decision . Plessy v. Ferguson, people rarely note, was not a pro-South decision. It did require equal treatment of different races, and merely noted that segregation did not imply inequality. The difference in Brown v. Board of Education was that Brown said that separate treatment based on race was inherently demeaning and discriminatory, even if the treatments were equal. O'Connor's majority opinion is more pro-segregationist than even Plessy v. Ferguson. On O'Connor's logic, separate treatment is clearly allowed, for "diversity" purposes. But it does not have to be separate but equal. Blacks (or, if the argument is anything but special pleading, whites) could get extra scholarship money, or other special treatment. Bakke's conclusion that quotas are illegal does not fit her logic. If a university claims that having a separate all-black luxury dorm has an educational purpose, that should be allowed, by her logic. As should a separate, all-white university. Thus, the U. of Mississippi was in the right in 1962, in the current Supreme Court's view.
Think about that for a minute.
June 24, 2003
"no state...shall deny any person within its jurisdiction the equal protection of the law"
-- Sandra Day O'Connor edits the U.S. Constitution. Peter Kirsanow has a helpful analysis of some of the details.
Dan Walters on the California budget disaster -- how Davis did it. Money quote:
The failure of Davis and lawmakers to wisely manage the bounty was a gross dereliction of public duty.
UPDATE: And don't miss this USA Today report -- bad government and not the economy is to blame in state after state around the country.
UPDATE: California Insider has the scope on the count .. the numbers on hand and in the pipeline are much higher than those reported. Weintraub's conclusion, "I still think the campaign has an excellent chance of qualifying by July 23."
Conference Program:
"Dewey, Hayek and Embodied Cognition: Experience, Beliefs and Rules"
-- 3rd Annual Symposium on the Foundations of the Behavioral Sciences
American Institute for Economic Research
Division Street, Great Barrington, Mass.
July 18-20, 2003
Keynote Speaker:
Gerald Edelman “Naturalizing Consciousness: From Hard Science to Human Science” [Abstract]
Participants in Plenary Sessions:
Antonio R. Damasio (TBA))
Jean-Pierre Dupuy “Intersubjectivity and Embodiment”
Rodolfo Llinás (TBA)
Douglass C. North “Understanding the Process of Economic Change”
Richard Posner “The Epistemological and Policy Views of Dewey and Hayek”
John R. Searle (TBA)
Vernon Smith “Constructivist and Ecological Rationality in Economics” [Abstract]
Invited Participants:
Bruce Caldwell “Hayek, The Sensory Order, and Psychology”
Thomas C. Dalton “Value, Belief and Inquiry: A Deweyan Perspective” [Abstract]
Kurt Dopfer and Jason Potts “Embodied Cognition in an Evolving Economic Environment: Genetic Invariants and Adoptable Rules”
Edward Feser “Naturalism, Evolution and Hayek's Philosophy of Mind” [Abstract]
Geoffrey M. Hodgson “Instinct and Habit before Reason: Dewey, Hayek and Veblen”
J. Rogers Hollingsworth “Are There Regularities in the Cognitive and Organizational Properties which Facilitate Major Discoveries in Basic Science”
Mark Johnson “How the Embodied Mind Thinks Disembodied Thoughts”
Elisabeth Krecké and Carine Krecké “Law and Experience”
Howard Margolis “Merging Rational Choice with Cognitive Arguments: Some Evidence from Public Goods Experiments”
Bart Nooteboom “Elements of a Cognitive Theory of the Firm”
Mark Perlman “Competing and Complementary Authority Systems” [Table 1][Table 2][Abstract]
John Pickering “Signs and Beliefs: Hayek's Inquiry and Biosemiotics” [Abstract]
Salvatore Rizzello “Knowledge as a Path-dependence Process: Microfoundations and Economic Implications”
Frank X. Ryan “Neuroscience and Dewey’s Critique of Behaviorism”
Ulrich Witt “The Cognitive Underpinnings of the Generation of Novelty”
Contributed Papers:
Timothy L. Adamson “Judgment as Measurement: The Flesh of Thought” [Abstract]
Avner Ben-Ner and Massoud Stephane “The Salience of Different Attributes of Identity: Experimental Evidence” [Abstract]
Harry Binswanger “Consciousness: An Objectivist Approach” [Abstract]
Stephan Boehm “Computation, Markets and Central Planning: The View from Hayek and Searle” [Abstract]
Paul Bohan Broderick “Should Neuroscience Lead to a Reconstruction in Philosophy?” [Abstract]
William N. Butos and Thomas J. McQuade “Sensory Order and Other Natural
Classifier Systems” [Abstract]
Adam Gifford, Jr. “Meaning, Action and Uncertainty” [Abstract]
Nancy J. Holland “The Knot of Nature: Behavioral/Perceptual Holism in Dewey, Edelman, and Merleau-Ponty” [Abstract]
Elias L. Khalil “The Two Faces of Beliefs: Newcomb Paradox, Book of Job, Chain Letters, and Other Paradoxes of Rationality” [Abstract]
Janet T. Landa and Michael T. Ghiselin “The Bioeconomics of Folk and Scientific Classification” [Abstract]
Gregory P. La Blanc “Embodied Cognition, Psychoneuroimmunology, and the Placebo Response” [Abstract]
Richard N. Langlois “Embodied Cognition and the Economics of Organization” [Abstract]
David Mitch “Professional Education as Embodied Cognition: Legal and Medical Training in Historical Perspective” [Abstract]
Julie A. Nelson “Freedom, Reason, and More: Feminist Economics and Human Development” [Abstract]
Stephen O'Sullivan “The Knot of Nature: What Tought? Whose Mnd? Pragmatic and PenomenologicalResolutions of the Problem of Mental Individuation” [Abstract]
Harold Wolozin “The Unconscious and Emotion in Economic Decision-making:
Convergent Voices” [Abstract]
For registration and submission of papers, visit
or contact:
Elias L. Khalil, BRC, AIER, PO Box 1000, Great Barrington, MA 01230
TEL: (413) 528-1216; Email: elk@aier.org; FAX: (413) 528-0103
John McWhorter on the Michigan rulings:
This is the worst day in civil rights history since the Bakke case in 1978. First of all, black students do not like being used as pawns of diversity and class. You hear this from black students again and again, that it's a burden to be sought for your views on race in classrooms. I've heard this so often when I've given talks that it gets almost monotonous -- it's a standard opinion. I felt that way, too, when I was a kid. Second, poll after poll of African-Americans, when you ask them, "Do you agree with admitting black students to higher institutions with lowered standards?" they say no, overwhelmingly.So what we've now seen is that the highest court in the land has ratified a policy that black people do not approve of, especially when really apprised of what makes up that policy. Instead, what we've got is the idea that it's OK to take race into account. Of course, many people think that in saying that, you're adding a little bit of nuance, and it's assumed people will follow that with a certain kind of forbearance. But since 1978 we've seen what actually happens: It gives the leeway to admit black people under the bar, even those who've suffered no particular disadvantage in their lives -- which is the case with most people admitted to higher institutions. Indeed, now it's been said that there can't be quotas, but frankly, that was already old news. The general idea that you can take race into account means that all of these [institutions] can continue admitting black students with lower standards. And they will.
So the status quo will continue: Good, smart white people deeply assuming that it's not cool to submit any brown-skinned person, regardless of ability or achievement, to the [high] standards they would submit their own kids to. That's tragic. Not to mention that the people who are mistakenly in favor of this policy are now going to have in their pocket the fact that the Supreme Court has ratified it.
For about 10 years the quota idea has been out of fashion. What the issue has required is finer minds, more judgment, more reflection and a broader view. This is the whole notion of diversity. Diversity is a cute way of saying, "Shall we submit black students to lowered standards?" And now it's, "OK, now you can't have a quota," but that doesn't mean the practice won't continue. Nobody who's seen that practice up close -- and I have spent a lifetime in higher education -- should consider this a good thing. Many of the people making the decisions about this have not seen how it operates close up. It's a hideous policy.
I'm saddened by this ruling, and I'm surprised that what we would regard as nine of the most sophisticated legal thinkers in the land could not come out in a majority against a policy that is so full of holes, so unjust, so condescending.
Yes, it is condescending, but it gives white folks a warm feeling and a racial get out of jail free card. And of course, it gives jobs, power, and money to those in the race industry.
Heidegger and anti-Americanism:
The fifth and final stratum in the construction of the concept of anti-Americanism - and the one that still most powerfully influences contemporary discourse on America - was the creation of the philosopher Martin Heidegger. Like his predecessors in Germany, Heidegger once offered a technical or philosophical definition of the concept of Americanism, apart, as it were, from the United States. Americanism is "the still unfolding and not yet full or completed essence of the emerging monstrousness of modern times." But Heidegger in this case clearly was less interested in definitions than in fashioning a symbol - something more vivid and human than "technologism." In a word - and the word was Heidegger's - America was katestrophenhaft, the site of catastrophe.In his earliest and perhaps best known passages on America, Heidegger in 1935 echoed the prevalent view of Europe being in a "middle" position:
Europe lies today in a great pincer, squeezed between Russia on the one side and America on the other. From a metaphysical point of view, Russia and America are the same, with the same dreary technological frenzy and the same unrestricted organization of the average man.
Even though European thinkers, as the originators of modern science, were largely responsible for this development, Europe, with its pull of tradition, had managed to stop well short of its full implementation. It was in America and Russia that the idea of quantity divorced from quality had taken over and grown, as Heidegger put it, "into a boundless et cetera of indifference and always the sameness." The result in both countries was "an active onslaught that destroys all rank and every world creating impulse.... This is the onslaught of what we call the demonic, in the sense of destructive evil."
America and the Soviet Union comprised, one might say, the axis of evil. But America, in Heidegger's view, represented the greater and more significant threat, as "Bolshevism is only a variant of Americanism." In a kind of overture to the Left after the Second World War, Heidegger spoke of entering into a "dialogue" with Marxism, which was possible because of its sensitivity to the general idea of history. A similar encounter with Americanism was out of the question, as America was without a genuine sense of history. Americanism was "the most dangerous form of boundlessness, because it appears in a middle class way of life mixed with Christianity, and all this in an atmosphere that lacks completely any sense of history." When the United States declared war on Germany, Heidegger wrote: "We know today that the Anglo Saxon world of Americanism is resolved to destroy Europe.... The entry of America into this world war is not an entry into history, but is already the last American act of American absence of historical sense."
In creating this symbol of America, Heidegger managed to include within it many of the problems or maladies of modern times, from the rise of instantaneous global communication, to an indifference to the environment, to the reduction of culture to a commodity for consumption. He was especially interested in consumerism, which he thought was emblematic of the spirit of his age: "Consumption for the sake of consumption is the sole procedure that distinctively characterizes the history of a world that has become an unworld.... Being today means being replaceable." America was the home of this way of thinking; it was the very embodiment of the reign of the ersatz, encouraging the absorption of the unique and authentic into the uniform and the standard. Heidegger cited a passage from the German poet Rainer Maria Rilke:
Now is emerging from out of America pure undifferentiated things, mere things of appearance, sham articles.... A house in the American understanding, an American apple or an American vine has nothing in common with the house, the fruit, or the grape that had been adopted in the hopes and thoughts of our forefathers.
Following Nietzsche, Heidegger depicted America as an invasive force taking over the soul of Europe, sapping it of its depth and spirit: "The surrender of the German essence to Americanism has already gone so far as on occasion to produce the disastrous effect that Germany actually feels herself ashamed that her people were once considered to be 'the people of poetry and thought.'" Europe was almost dead, but not quite. It might still put itself in the position of being ready to receive what Heidegger called "the Happening," but only if it were able to summon the interior strength to reject Americanism and push it back to the other hemisphere.
Heidegger's political views are commonly deplored today because of his early and open support of Nazism, and many suppose that his influence on subsequent political thought in Europe has been meager. Yet nothing could be further from the truth. Heidegger's major ideas were sufficiently protean that with a bit of tinkering they could easily be adopted by the Left. Following the war, Heidegger's thought, shorn of its national socialism but fortified in its anti-Americanism, was embraced by many on the left, often without attribution. Through the writings of thinkers like John-Paul Sartre, "Heideggerianism" was married to communism, and this odd coupling became the core of the intellectual Left in Europe for the next generation. Communist parties, for their own obvious purposes, seized on the weapon of anti-Americanism. They employed it with such frequency and efficacy that it widely came to be thought of as a creation of communism that would vanish if ever communism should cease. The collapse of communism has served, on the contrary, to reveal the true depth and strength of anti-Americanism. Uncoupled from communism, which gave it a certain strength but also placed limits on its appeal, anti-Americanism has worked its way more than ever before into the mainstream of European thought.
As Hayek long ago pointed out (and he wasn't the first) the Left and the German National Socialists had a lot in common. And they still do. Both were hostile to Western institutions, particularly those most closely identified with Britain and America -- things like the market economy and democracy. What we would call the institutions of freedom (think rule of law). The common sense is that Western liberalism is the enemy of solidarity, community, culture -- as well as the centralized perfection of the nation and the world. It is also somehow the enemy of both the the elite of society and the mass of the people. While the later gets the official propaganda, often this is used only to advance the psychological needs and material interests of the former.
Make no mistake, there is stuff in Heidegger's technical philosophy that heads in the right direction. But it's not clear that this is the stuff that attracts so many to the man. (link via Instapundit)
June 23, 2003
A good analysis of what the Fed is up to -- and what it means for the bond markets. Quotable:
The Fed's aggressive efforts to steer the economy away from deflation will be conducive to mini-bubbles in a range of asset markets. The Fed does not necessarily want more bubbles to grow but they are seen as an acceptable price to pay.
But there's much more, with lots of good details.
Labor historian Philip Foner is immune from criticism, despite a record of plagiarism, unreliable footnotes, and phony archive references. Why? Because he's a hero to the Leftist who dominate labor history, says John Haynes, host of the H-HOAC elist. Read the article if your interested in how the internet continues to wreck havoc with old hierarchies built upon entrenched interests and closed conversational communities. Let the sunlight in!
A state-by-state analysis of how state governments are handling taxing & spending during the current lean years.
Here is the report for California:
Fiscal management: PoorAnnual spending change: +9.1%
Annual tax rate change: -1.0%
2002 budget: $133.1 billion
The state borrowed $11 billion last week to cover its 2003 deficit. It will borrow another $2 billion to make a required contribution to the state employees' retirement system. Democrats, who control the Legislature and the governor's mansion, have been spending $1 billion a month more than the state takes in for two years.
Check out Drezner for more on how France stands in the way of a more liberal world farm economy -- and what this means for both France and the very poor of the world.
What does Volcker think? Sean Corrigan of the Mises Economics Blog posts the following important remarks from Paul Volcker:
Hitting the professional Bloomberg wires were the following quotes from Greenspan's predecessor, the still-influential Paul Volcker, speaking at the LSE ... "We have a record current-account deficit and we're living off the munificence of strangers. The only reason we're getting enough to fund the deficit is that Asian central banks are vigorously buying dollars.""We have an amount of stimulus beyond anything I've heard of in history," he also marvelled, before giving his verdict on the current financial market obsession:
"If I were setting odds on deflation in the U.S. the probability wouldn't reach 0.1 percent. I see no prospect of real deflation like we had in the U.S. and other countries in the 1930s."
Posted by Greg Ransom | Permalink
Brad DeLong defends Milton Friedman in response to Paul Krugman's less-than-subtle dismissal of Friedman's monetarism. But note to Brad, Friedman has repeatedly endorsed free banking. [Ed. note -- In an earlier version of this post I unfairly characterized Krugman's short remarks on Friedman as a "hatchet job". It wasn't -- see comments. Krugman uses a much blunter instrument -- and a softer one. Call it a "rubber mallet" job.]
State government spending continues to skyrocket with no ceiling in sight.
Who needs the Onion?
Gephardt Issues Order Making Himself President (2003-06-23) -- Just a day after announcing that he would use executive orders to overturn Supreme Court decisions, Rep. Dick Gephardt, D-MO, announced today that he has appointed himself President of the United States, effective immediately ... President Gephardt has already issued an executive order making it illegal to "challenge the constitutionality of my reign as president."Clarence Thomas Gets 'Super Vote' On Supreme Court (2003-06-23) -- In a little-noticed addendum to today's Supreme Court ruling allowing universities to use racial factors in some admissions, Justice Clarence Thomas has been granted "super vote" powers on the court.
In a rules change designed to compensate for the court's historical discrimination against blacks, Justice Thomas' vote will now be worth 1.5 votes ... Justice Sandra Day O'Connor, writing for the majority, said, "There's no way we can make up for the Dred Scott decision, but we all feel better now that Clarence gets extra credit for his vote."
When there's ScrappleFace
Racial descrimination is constitutionally protected -- that's the bottom line truth of the matter coming out of the Supreme Court today. But only whatever sort of decrimination the particular members have a taste for at the given moment -- this might be different depending on what racial or social results each of the folks on this body might prefer at some different point in the future. Politics and institutional bureaucracies will largely determine who these people are and what racial descrimination preferences these folks will have at any point in time. None of this will rely on principles written or unwritten in our liberal constitution -- it will continue to be a matter of the personal social tastes of the particular members of the Supreme Court. What you have, in other words, is judicial pragmatism as explained and endorsed by Richard Posner in his new book LAW, PRAGMATISM, AND DEMOCRACY, which I discussed here. So if the personal tastes and concerns of the members of the Supreme Court lead them to prefer certain national security outcomes, there is nothing in principle to stop us from taking the road back to Manzanar. It's all a matter of the pragmatics of the moment, reflecting the personal wishes of nine men and women with a lifetime privilege to rule over the rest of us. And as you may have guessed, I don't think this is a really great idea.
Martin Feldstein's class notes, "What Should the Federal Reserve do Now" from April, 2003 (pdf). (Voodoo will increase my traffic, right?)
June 22, 2003
Of monkeys, voodoo and crazy-man posting -- traffic tips for bloggers. Quotable:
I know how to get a ton of traffic: post a lot of crazy stuff about monkeys, voodoo, weird crime & other oddities. We learned this doing Tabloid.net in the 1990s, and back when a significantly smaller percentage of Americans were online -- say, 1997 -- we had 100,000-visitor days on a regular basis. We also worked 17 hours a day & didn't make any money to speak of, so I no longer believe a lot of traffic is the key to the kingdom. Getting a lot of regular traffic takes hard work. Glenn Reynolds is smart & funny & writes well & has interesting views, but more than all of that he's a hard worker. He posts like a crazy man. I love going to his site in the morning to see how much stuff he posted on a dozen topics.
(via Joanne Jacobs)
Forget the idea that Gray Davis might resign. As California Insider explains, it ain't going to happen, and folks like Bob Novak have the law all wrong in any case:
If, somehow, he does [resign], let’s clarify what happens. Novak wrongly states in his column that Davis could derail the recall "at any time prior to the actual balloting by just quitting." Not true. The state elections code says the election goes forward if Davis quits after the petitions have been filed.
Poor and Stupid's Krugman Watch uses the way-back machine to expose how clueless Paul Krugman was about the macroeconomic situation at the top of the bubble in 2000:
Here's what Krugman was really saying then about the market and the economy. On January 5, 2000, just nine days before the Dow Jones Industrial Average topped out at the never-seen-again level of 11,723 Krugman wrote in his still brand new New York Times column,"...current stock prices already have built in the expectation of economic performance that not long ago we would have considered incredible; performance that is merely terrific would be seen as a big letdown. So which will it be -- terrific or incredible? We all have our opinions -- being a pessimist by nature, I think that things will be merely terrific..."
"Merely terrific"? You can't make this stuff up. This classic top-of-the-market epiphany for Krugman came after a decade of singing in a Greek chorus of Ivy League economists who were forecasting that Japan and Europe would take over the world economy and leave American industry in the dust (see Krugman's The Age of Diminished Expectations). Several weeks later, on February 27, after the Dow had drifted lower while the NASDAQ and the S&P 500 were still climbing toward their March 2000 peaks, Krugman said to ignore the falling Dow, and offered this apologia for the economy in his Times column:
"The social and psychological hallmarks of a bubble -- like the fact that the TV in my local greasy pizza place is now tuned to CNBC, not ESPN -- are plain to see, but so is the spectacular pace of technological progress. I'm not sure that the current value of the Nasdaq is justified, but I'm not sure that it isn't. In any case, the fall in the Dow is not a verdict on the economy as a whole. As long as we have full employment and low inflation, I say let the blue chips fall where they may."
Good thing there's that little institution call tenure -- and that most other macroeconomists are just as lost in the woods.
The "behavioral economics" of time preference and sugar pills -- it seems that candy eaters lose the will to delay gratification. File this under "studies shows that teen-aged boys are attracted to girls". But note well, this bit of "science" studies what people say, not what they actually do -- and then the whole thing is hyped as if they'd done the latter, and not the former.
Get out of town "or else" -- French general to Congo tribal forces. It wasn't immediately clear which American movie hero the French general was attempting to imitate .. nor was it clear whether the Congo troops would comply fully with the demand.
Uncompetitive America -- the cost of workers comp insurance continues to skyrocket.
Microsoft, America Online, Earthlink, eBay and Yahoo back national anti-SPAM regulations.
"By the end of the year, we will see growth above potential". What the h*ll does that mean? It sounds a lot like what lawyers call "talking out of one's a**". Gregory Mankiw might have aimed too low with is new post at the Council of Econ Advisors -- he seems a natural for the Fed.
Here is Nick Schulz's LA Times article, "Internet Puts the 'e' in Recall".
It's mission creep for the hapless U.N. forces in Congo. They've now been authorized to use deadly force -- but will they? And is there light at the end of this tunnel?
Microsoft lobbies California legislature to ease anti-SPAM regulations.
Meanwhile Matt Drudge comes out strongly in favor of the right to SPAM, telling of his own SPAM powered rise to fame and success on his KFI Sunday night radio show.
Incredibly encouraging news:
But nearly half of the [67 economists surveyed by USA Today] — 44% — said that if they were on the Fed, they would vote to keep interest rates where they are. They say the economy is already showing signs of improvement, and cutting rates to the lowest level since 1958 could put too much stimulus into the pipeline and generate undesirably high levels of activity and inflation.
I'm sorry to say that I'm amazed that there are so many sound heads in the economics profession today. And more good news -- though much less surprising:
95% [of these economists] said deflation was "not very likely" to happen.
With the money supply racing ahead in May, this is a no-brain call.
Brad De Long is back from counting bears in Canada and fighting bugs -- and he's blogging about corporate control, interest rates, and the National Tourist Board of Canada midge conspiracy. De Long flags this quote from the Washington Post's John Berry:
to the surprise of economists and policymakers, the recovery has been halting and "jobless" despite huge doses of monetary and fiscal stimulus...
If your "models" are un-scientific math playthings -- and your explanations are incompatible with any plausible causal mechanism (e.g. one which would include capital structure through time and real world relative price mechanisms), you shouldn't be surprised by what happens, because you have no sound justification for anticipating anything. And in my considered judgment, that is just the situation that modern macro finds itself. It's fantasy football without a football, players, or ball field. It's fake science. And you can quote me on that.
Pathetic Earthlings is doing some good recall blogging, including this Issa update.
The wonders of the web -- transcript: inside the Sac Bee's editorial room debate on what to think the recall. The Bee invited Prof. Bruce Cain of UC Berkeley, and Prof. Kenneth Miller of Claremont-McKenna College to participate.
And here is what the Bee decided.
Why no Demos in the race to replace Davis? Well, this is why:
One after another, at the urging of labor leaders who support the governor, five of Davis' fellow Democratic officeholders said last week that they do not intend to run should a recall make the ballot.
Read the article for a rundown on what the race for Governor may look like.
UPDATE: Feinstein is out.
June 21, 2003
Slate profiles Gray Davis, including this:
Davis certainly won't ward off a recall by selling his winning personality to voters. If a man is to be judged by the friends he keeps, Davis is hard to judge—because he doesn't have any. "Gray doesn't really have any friends," an anonymous "Davis associate" told the LA Weekly last year. "He has supporters. His friends are his supporters." Or, as one of Davis' Stanford fraternity brothers complained to the Los Angeles Times, "He's a cipher." Unlike the typical gregarious pol, Davis appears to be completely uninterested in people. As a former Davis staffer put it to the Orange County magazine OC Metro, Davis is "not the type of individual who wants to get to know you. He's interested in what you produce, but not interested in you."
Calblog gives a good Fisking to the Democrats who write the editorials for the NY Times -- on the topic of the California recall.
Arnold Schwarzenegger will make his decision to run for Governor in early July, his top political advisor says. But it looks to me like he's already made the decision:
When asked this week by the Entertainment Tonight television show whether he was interested in running for governor of the state once ruled by another ex-actor called Ronald Reagan, Arnie replied: "I am always interested."And last week, the Austrian-born screen icon told Esquire magazine: "If the state needs me, and if there's no one I think is better, then I will run."
Gov. Davis -- what do you think about the recall? ..
The Weekly wanted to ask Davis about Schwarzenegger’s pointed recall joke after Davis gave a rare public speech — he is only now starting to talk in public about his budget — last week to the L.A. Chamber of Commerce (the chamber backs tax hikes), but the governor evaded waiting reporters by slipping down a back fire escape.
Worth quoting from Richard Bernstein of Merrill Lynch:
What Japan has shown us is that the way to fight deflation is to get rid of overcapacity as fast as you can. The Fed is doing the exact opposite now. What the Fed is doing is keeping the oversupply situation intact by lowering the cost of capital.
June 20, 2003
It's another "Is it Hayek?" moment, as folks all over the place are independently rediscovering many of the basics of Hayek's account of money and the the boom - bust cycle, and the central role which capital investment plays in that process. This is from The Capital Spectator:
Avoiding Japan's economic slump has been the Federal Reserve's obsession for some time now. We know that because the usual list of speakers from the central bank have been talking up the powers of the printing press on the subject of money supply. And it's more than just talk.The latest money stock figures confirm what everyone already knows: the Fed's liquidity-injecting machine is pumping out greenbacks at a healthy clip. The M2 measure of money supply climbed a seasonally adjusted annualized rate of 8.4% for the three months through May. That's more than triple the expected growth rate of the GDP for the U.S. this year. In a plan to juice the economy and at the same time fend off any deflationary threats, Greenspan and company are clearly intent on putting more money into circulation than the economy otherwise requires for normal operations.
The assumption is that if the consumer can be induced to spend more, the economy will recover, and all will be right with the world. For much of the post-World War Two era, the assumption has proven itself a practical, though hardly magical strategy. But the economic dynamic of the 21st century to date is nothing if not different from the preceding decades. Front and center is the issue of the consumer. In particular, Joe Sixpack isn't the problem; rather, his employer has stumbled and can't get up.
The capacity utilization for the U.S. is a prime example of what ails the U.S. A measure of how much, or how little, spare capacity resides in the nation's factories, mines and utilities, the capacity utilization rate is a barometer of traditional economic activity. On that score, there is no mystery to the metric's message: business activity is a shadow of its former vigorous self. The latest number from the Fed puts this measure at 74.3%. That's down from nearly 84% three years ago, and additional declines can't be ruled out.
Such bearish trends in the business world convince some to worry that excess capacity is the gremlin harassing the forces of economic revival. Foremost in that camp is Merrill Lynch's Richard Bernstein, who's recently warned that additional interest rate cuts won't do much to promote recovery, and may even be counterproductive. Arguing that the key problem is excess supply, rather than weak demand, Merrill's chief investment strategist says the solution is reducing corporate debt and trimming the glut of unused equipment on the market, both refugees from the previous decade's boom. Loosening credit only makes this job tougher, he posits, because it delays the inevitable restructuring that looms for American companies. The same challenge faces Japan. In fact, the challenge has been front and center in the land of the rising sun for the better part of a decade now, and the nation by most accounts has failed miserably in cleaning up the mess.
Is the U.S. poised to make a similar mistake? Or to quote the Globe and Mail's Mathew Ingram from his piece yesterday, "Is Greenspan reinflating the bubble?"
Robert Blumen flags this analysis of the recent boom-bust:
The seeds for the subsequent drop in investment were actually sown during the boom years of the late 1990s.Much of the surge in business investment during the late 1990s was linked to computers and information technology. During these years, measured productivity growth picked up, inflation remained low, and the unemployment rate declined. Such observations were often cited as evidence of a permanent structural change-one that portended faster trend growth in the years ahead. Widespread belief in the so-called "new economy" caused investors to bid up stock prices to unprecedented levels relative to earnings (see Lansing 2002).
It is now clear that the investment boom of the late 1990s was overdone. Firms vastly overspent in acquiring new technology and in building new productive capacity—with an attendant increase in employee headcount—in an effort to satisfy a level of demand for their products that proved to be unsustainable.
In a recent paper, Caballero and Hammour (2002) present the view that the stock market bubble and the investment boom were mutually reinforcing phenomena. In particular, rapidly rising stock prices provided firms with a low-cost source of funds from which to finance their investment projects. The resulting surge in capital accumulation served to increase measured productivity growth which, in turn, appeared to justify the enormous run-up in stock prices. Figure 4 shows that the trajectory of the S&P 500 stock index, both before and after the 2001 recession, is strikingly similar to the trajectory of investment.
About two quarters after the bubble burst in March 2000, firms started to cut back sharply on new investment as it became clear how much excess capital had been accumulated. Rather than investing in new technology or capacity, firms started to make better use of the technology and capacity they already had. Firms also began to undertake the painful but necessary steps to bring their cost structures into line with the post-bubble demand environment.
The article is by Kevin Lansing at the San Francisco Fed, and I might suggest reading the whole thing.
Samuel Brittan examines the thinking behind Britain's decision to say "not now" to the Euro. And he adds this:
Behind the technical discussion there is a more human point. It is what Friedrich Hayek called in his Nobel Prize Address, "the pretence of knowledge". By pretending we know more about the characteristics of the economy than we really do we actually throw away the more modest improvements which our limited knowledge makes possible. It took us the closing decades of the 20th century to learn this lesson; I hope we do not spend the first few decades of the new century in unlearning it.
(via Institutional Economics).
Nearly all of the missing uranium at the Tuwaitha site in Iraq has been recovered, IAEA officials are quoted as saying in Science. More good news. Very good news.
UPDATE: A more complete story can be found here. (Via Instapundit)
This is rich. Belgium's Foreign Minister is war criminal, charges a suit filed under Belgium's international war crimes statutes -- the same laws which were used against Pres. Bush, Donald Rumsfeld, Colin L. Powell and Tony Blair, among others. Think the Belgiumians have ever heard of the expression "get a grip"?
Some historical background on the California recall. I liked this line:
It's kind of the American equivalent of the vote of no confidence that parliamentary systems have.
California Insider gets an email from a recall petition volunteer:
"I have not taken a single penny and I am now approaching 4000 signatures. I will be in Galt on Saturday with my eleven year old daughter working a table at the Galt auction getting signatures. Tonight we are going over to the People's Advocate to process petitions. This movement has a viral effect. Everytime I obtain a signature, I ask the person if they would like two petitions to take with them. I had one woman take ten and return them signed. I pick them up from people everyday. One man who works at a Chevron here in Elk Grove has collected 75 signatures for me and is still going strong. This is OUR Boston Tea Party! This is the first time I have actually been politically active in my life. I wanted to prove to friends and family one man can make a difference...I was out talking to Farmers in Herald this morning with my two little girls in tow. They had already signed the petition. The feedback is the same with teachers, rank and file union, state workers, truck drivers, and people from other walks of life ad infinitum."
And don't miss Weintraub's thoughts on the charge that the recall process is anti-democratic.
Davis & Co. pull the trigger on the California car tax -- sealing the governor's fate and guaranteeing a tax revolt like California has not seen in a generation. Tom McClintock, John & Ken, and an army of millions now plan to either reduce the car tax to $1 per vehicle or eliminate the car tax altogether. Here is McClintock's article on car tax and the budget. You can download and sign either the $1 statutory measure or the constitutional measure to eliminate the car tax at McClintock's web page.
The recall in San Diego. A voter weighs in:
"It just seems he has his hand in the till all the time and I'd like to slam his fingers in it.""
June 19, 2003
Cool new article by Virginia Postrel (did I just say that?) on corporate vertical disintergration -- it's a Alfred Chandler vs. Richard Langlois knock-down, drag-out over whether or not "the visible hand of managerial coordination [has] replaced the invisible hand of the market". Langlois is a Hayek-inspired market-process economist. Chandler comes out of a business history and management studies background.
UPDATE: The Knowledge Problem has some thoughts on Postrel's article, including this:
The move away from vertical integration is an indication that transacting through markets has gotten easier.
Virginia also has new blogging up, including this request:
My blogroll is woefully out of date. Instead of my usual haphazard update, I'm soliciting reader input. If you read and like a blog that isn't on my current list, please send me an email with the subject line "Blogroll nominee" and explain in a sentence why this site's blogroll should include that blog. Do not nominate your own blog. I'm always happy to hear from bloggers themselves, but this process is designed to elicit input from blog readers. The deadline for nominees is midnight Friday, June 20, Central time.
Like a broken clock telling the correct time, Krugman manages to get one right.
A random check of Contra Costa recall petitions shows a 90.6 percent validity rate, the highest rate ever seen by county clerk-recorder Steve Weir.
The internet -- it's taking Davis down:
"We've had five million hits on our Web site in the five weeks since we started this"
-- Sal Russo, Davis recall organizer, May 30.
Gov. Davis Recalled by Consumer Safety Commission (2003-06-10)-- Short-circuiting a voter campaign to remove California Gov. Gray Davis through a special election, the U.S. Consumer Product Safety Commission (CPSC) today issued a recall on the faulty politician.
During Mr. Davis' re-election campaign, CPSC members watched with concern as his claims of fiscal responsibility inflated uncontrollably. Now that he's in office, the same thing is happening to the state budget deficit, which has ballooned to $38 billion.
"It reminds us of the automobile airbag issue a couple of years ago," said an unnamed member of the commission. "Those things would just blow up. We're recalling the product to protect the people of California."
It's ScrappleFace
Posted by Greg Ransom | Permalink
The campaign to Crush Dissent continues. The enemies of free speech are at it again, attacking Issa's right to political expression. Last time I looked, we still had a 1st amendment.
Now its Lt. Gov. Bustamante who says he's out if the recall happens. Evidently the political geniuses in the Democratic party believe that the Governor's chances of staying in office are higher if there are no Democratic choices on the ballot for Governor at the time of the recall vote. Fat chance. Quotable:
over 35 percent of the people in [Davis's] own party say they'll sign our petition if they have the opportunity," said Dave Gilliard, director of Rescue California Recall Gray Davis.
Ouch. This comes on top of news that Davis's approval rating has sunk to only 38% among Democrats.
Roger Scruton reviews The Future of Freedom: Illiberal Democracy at Home and Abroad by Fareed Zakaria. Quotable:
His argument is particularly pertinent now, when allied forces are attempting to bring freedom to Iraq by imposing democratic procedures on its people. As Zakaria points out, democracy could as well lead to an elected dictatorship of mullahs as to a modern civil society. For democracy without the rule of law is mob rule, and the rule of law is not built by democratic means.Elected dictatorships, which extinguish opposition, destroy the political process too. It is only where people are free to dissent that genuine democratic choice is possible. Hence liberty should come higher than democracy in the wish list of our politicians. You can have liberty without democracy, but not democracy without liberty: such is the lesson of European history. Before imposing democratic regimes, therefore, we should ensure that civil liberty is properly entrenched in a rule of law, a rotation of offices, and the freedom to dissent. These institutions tend to arise naturally, Zakaria argues, with the emergence of a socially mobile middle class. That is why the transition to democracy is successful in countries with a per capita GDP of $3,000 to $6,000 but not in countries where it is significantly less.
Radley Balko
takes on the Bush administration's $1.5 billion "marriage promotion" legislation. Some of the basic truths about what it is to be an American are getting lost by those on "the right", i.e. conservatives are moving further left all the time. Good stuff, and some important reminders.
The Crushing of Dissent (I think that's what Instapundit calls it) -- AOL blocks the Heritage foundations daily email containing the ideas of folks like Thomas Sowell, Jack Kemp, Mona Charen, and Jonah Goldberg. It seems that complaints had been coming in from a handful of people about the contents of the emailing. AOL, of course, is the same outfit that puts pornography in the email box of the underaged on a regular basis. The Heritage Foundation emailing was blocked for two weeks.
Andrew Stuttaford has a Hayek story:
All this chat about Hayek is the perfect excuse (particularly as I am stuck in a near deserted hotel in the middle of nowhere) to tellonly story about the great man. It was some time in the late 1970s and the venue was (appropriately or inappropriately enough) the Keynes Auditorium (or Hall, or something like that) in Cambridge. Hayek was the speaker and most of the audience, stuck in the orthodoxies of that era, was either astonished, appalled or both.At the end of his talk (which was, needless to say, quite brilliant) Hayek bravely asked for questions. Brimming with indignation and bubbling with bile, one man rose to his feet and asked “that’s all very well, Professor Hayek, but don’t you believe it is possible to have an egalitarian society.”
“Oh yes, “ replied Hayek, “you can have an egalitarian society – but only at the lowest possible level.”
Xrlq has coverage of the tactics being used by anti-recall folks. Hot stuff! (via Calblog).
It's a story of Liberals vs. bureaucrats and statists battling for the soul of Europe in John Gillingham's European Integration 1950-2002: Superstate or New Market Economy?, reviewed by Barry Eichengreen. From the review:
Enterprise privatization and market deregulation thus became the economic tools du choix. A single European market free of barriers to the internal movement of merchandise, capital, and labor -- Hayek's vision -- came to be seen as a solution to the problems of stagflation and high unemployment. A continental market would allow European firms to reap the benefits of economies of scale and scope, and the need to attract footloose factors of production would force national governments to remove barriers to production and innovation. A single currency, a creation with both symbolic and real value for integrating markets and intensifying competition, capped the process in 1999.But this finale proved anticlimatic for the Hayekians, for it neither reduced the reach of the state nor led to the devolution of regulatory functions to regional and local governments. To the contrary, the creation of the single market starting in 1986 led to a greater role for the European Commission, the EU's proto-executive in Brussels. With the benefit of hindsight, this result is unsurprising. The cross-border spillovers of policies grow more pervasive as markets are integrated, creating a logic for centralizing the regulatory functions required for the operation of a single market. Even a classical liberal economy must have a trade policy and a competition policy, and an integrated international market can have only one of each. As Gillingham notes, Jacques Delors, the EU's head technocrat from the mid-1980s through the early 1990s, saw this as a convenient opportunity to expand the responsibilities of the European Commission and to turn it into the EU's central policymaking organ.
Jerry Muller's The Mind and the Market: Capitalism in Modern European Thought has been reviewed in Foreign Affairs by Sheri Berman. Snippet:
Muller has written a lively and accessible survey of what dozens of major European thinkers have thought about capitalism. The value of the book lies less in its contribution to the literature on any particular individual than in its gathering together in one place of a wealth of information on figures from Burke, Smith, and Voltaire to Schumpeter, Keynes, and Hayek. Muller's masterful sketches of intellectuals from across the political spectrum help put today's battles over globalization in proper historical perspective. He reminds us just how venerable many of the current antiglobalization movement's concerns actually are, and thus how they need to be understood and addressed not as the consequences of recent policies or conditions but rather as inherent in the dynamics of capitalism itself. What becomes painfully clear in the process is how far the level of debate has fallen in recent decades and how impoverished and narrow contemporary thought about the market has become ...Hegel believed that in order to lead a truly full and satisfying life, individuals needed a sense of identity, a feeling of being connected to some larger whole beyond themselves. In the precapitalist world these connections were provided by things such as religion, tradition, and shared cultural norms, but in modern society Hegel thought they would have to come from institutions such as the state and the civil service.
Indeed, perhaps the only defender of capitalism whom Muller finds largely unmoved by the critiques is the twentieth-century Austrian liberal Friedrich Hayek (which undoubtedly explains a large part of his contemporary appeal). Hayek had little sympathy for talk of virtue or "higher ends" and was skeptical of any state role in controlling the market or in fostering so-called public goods. Instead, he praised precisely what was often criticized, the emergence of a society in which individuals were as free as possible to do as they pleased and states served merely as "pieces of utilitarian machinery intended to help individuals in the fullest development of their individual personality." But Hayek is the exception that proves the rule, for he was honest enough to recognize that the libertarianism he championed would not necessarily be very popular because it would be too personally and socially destabilizing for many to handle. Rather than try to alleviate such concerns, however, he was content to suppress them and accept limitations on democracy in the process -- an aspect of his thinking that receives little attention from his admirers today.
Jeff Tucker has a money supply update:
The new Monetary Trends published by the St. Louis Fed includes some revealing data on May's money creation rates (percentage change at annual rates). See page 18.
-- M1: +20.16% -- MZM: +14.52% -- M2: +17.49% -- M3: +12.96%
The archives of Comintern are going digital, and will be up on the web later this month. What an amazing world we live in. Have a drink, raise you glass to George Orwell, and smile.
Drudge is hyping Ann Coulter's TREASON: Liberal Treachery from the Cold War to the War on Terrorism. If it knocks Hillary of the top of the charts, I guess I'll hype it too.
"it is a matter of time before [the computer and the internet] transform the way we govern ourselves". -- Gray Davis
From a great piece by Nick Schulz in the LA Times on the internet and the Davis recall. A tasty chunk:
There have been 31 attempts to recall California governors, but so far none has gotten the requisite number of valid signatures to make it to the ballot — 12% of the number of people who voted in the last gubernatorial election. But combine direct democracy with technology and the process gets a goose.For instance, there is a proliferation of Web sites, such as http://www.RescueCalifornia.com , that makes the once-arduous process of signature gathering a lot easier.
At http://www.RecallGrayDavis.com , the Web site for the recall organization started by former California Assemblyman Howard Kaloogian, it's possible to download and fill out the petition form in a matter of seconds. You have to mail it in, but it still means that if you're listening to the radio at work and another story about the California budget crisis airs, you no longer need to vent your civic frustration at the water cooler. Instead, log on and turn your anger into action.
Pat Knepley, a California resident, recently wrote to the Los Angeles Times, proudly claiming that she had done just that: "I signed the recall petition against Davis. I took the initiative to download it through my computer because I am so frustrated with what he is doing and has done to our state."
Political revolutionaries, especially of the armchair variety, never had it so good.
Or consider how new technology can steamroll the traditional dynamic between business and politics.
The California Business Roundtable, made up of California chief executives, came out against the recall effort, believing the tumult would not be good for business. But in short order, the Roundtable and its member businesses such as Safeway and Southern California Edison were inundated with complaints about their position.
"I've gotten besieged with e-mails," Doug Kline of San Diego-based Sempra Energy told The Times. "Most of them say something like, 'We can't believe you've opposed the recall of Gray Davis. He's hurting small businesses.' "
Not that long ago, establishment groups like the Roundtable would have spoken for business interests in California. But with e-mail and the Internet, the monopoly on message has been broken.
Moreover, the Internet creates an echo-chamber effect, amplifying political noise across various forms of media. Most talk-radio shows now have an online component, and they use their Web sites as repositories to get information to their fans and listeners. Fans of the "John and Ken Show" can go to http://www.JohnandKen.com , where they'll be fed news and information of the recall.
And Web logs — "blogs" — the increasingly popular online diaries, are fast becoming another recall tool. PrestoPundit.com and similar sites have a small audience, but they have outsized influence because journalists and news junkies spend a considerable amount of time searching blogs for story ideas, commentary and political dish. When an issue catches fire in the blogosphere, it can boost the buzz and prolong the life cycle of a story. Just ask Trent Lott.
Yep, that's PrestoPundit mentioned there. Check out the "tracker" on the major blogs and you'll notice that folks from the NY Times, Reuters, Fox, etc. are reading. They've been reading me. And I'm just one of the new kids on the block.
There is a Recall in California reference page with lots of links from the UC-Berkeley library.
All political power is inherent in the people. Government is instituted for their protection, security, and benefit, and they have the right to alter or reform it when the public good may require.
I trust that you read that in your best Gregory Peck or Charlton Heston voice.
Davis is a goner for lots of reasons, but the whole thing is symbolized by how Davis & Co. are giving it to us with the car tax. The California Insider explains:
I'm blogging this morning aboard the Capitol Corridor train to the Bay Area, via a wireless connection through my cell phone. Pretty cool. Here is a link to today's column, in which I describe how the Legislature's lawyer has cast doubt on the legality of the governor's plan to triple the car tax. My colleague Alexa Bluth, meanwhile, reports that the administration is set to pull the car tax trigger any day. I wouldn't expect the new legal opinion to affect that decision. There is a long history in the Capitol of ignoring the Legislative Counsel when their advice goes against what the majority wants to do. But don't be surprised if someday a court throws the whole thing out.Also, aside from the legal questions, isn't the way Davis is raising this tax incredibly cowardly? Does he really expect people to believe that it's somehow a decision made by robotics, untouched by human hands? I still maintain that this habit of his of denying responsiblity for his decisions is as big a factor in his unpopularity as his policies themselves. This one is starting to look remarkably like the electricity rate increase of 2001. That was the right thing to do, but Davis could never bring himself to advocate for it, and denied that he had anything to do with it after it happened.
The Davis recall Radio ads are up on the web.
UPDATE: I can get the text, but the MP3 isn't working. hmm. Yesterday the link went to a blank page. Looks like the RecallGrayDavis.com techies are still figuring things out.
What it's like out there:
If Gov. Gray Davis has any doubts that he's in deep, deep political trouble, he should spend a few hours with Burt Pronin.I ran into Burt outside an Albertsons supermarket in Brea the other day. An affable, silver-haired 73-year-old wearing shorts and a Hawaiian-style shirt, Burt was relaxing in a lawn chair near the store entrance, next to a tiny sign that said "Recall (Remove) Governor Davis," holding a sheaf of blank recall petitions in his lap.
And passers-by were eagerly lining up to fill in the blanks.
"Where do I sign?" one guy walked up and demanded. "Can I sign more than once?" a woman asked. "Can I sign it, like, a million times?" a store checker on break wanted to know.
And so on. In 15 minutes, with virtually no effort on his part, and without ever stirring from his lawn chair, Burt collected seven signatures – along with a dozen expressions of support from passers-by who said they had already signed a recall petition.
"This is not a hard sell," Burt said, chuckling. "I don't even have to approach them; they come to me!"
Read the rest. And the numbers:
Recall organizer Ted Costa told me that as of Tuesday he had turned in 506,496 signatures to the secretary of state's office, and that 300,000 more signatures are already "in the pipeline."
900,000 valid signatures are required for recall.
June 18, 2003
I've added a PayPal tip jar. What I'd like to do is upgrade my bandwidth, and then add a team blog with some of the Hayek-L all-stars. This will take a bit more cash and bit more effort. I'm willing to put in the added effort. Any help with the cash would be genuinely appreciated.
Richard Stroup's new book is out, titled Eco-nomics: What Everyone Should Know About Economics and the Environment. Walter Williams has a review here. As usual, Williams cuts through to what's important.
Clint Bolick has an interesting piece defending freedom of asssociation as a cornerstone right. Worth quoting:
Gays and Lesbians for Individual Liberty, represented by my organization, the Institute for Justice, submitted a brief disdaining the Boy Scouts' discriminatory policies but defending their right to maintain them. The brief argued that "[w]hile a creeping infringement of [freedom of association] would harm all Americans, it would particularly threaten the welfare of gay and lesbian Americans, who have historically suffered when government has not respected citizens' right to gather together free from government harassment."
The Wall Street Journal --on California & the growth of small business:
California is still one of the best places in America to build a successful small business. All you have to do is start with a successful large one.
It's a joke. Just a joke.
Ted Costa offers the Governor a deal -- "balance the budget and get the state out of the financial mess it's in" and he'll cancel the recall. That's right, Costa, as the man who filed the original recall, can withdraw his notice of recall at anytime, bringing the recall effort to an immediate halt. Quotable:
"I'm willing to stop the recall if he's willing to stop handling the budget crisis with smoke and mirrors.''
Who wrote these laws, anyway?
MORE: Costa on the campaign trail.
Ted Costa runs People's Advocate, founded by tax fighting legend Paul Gann. Worth quoting:
The California Constitution gives enumerated powers to the legislature. But the people of California have reserved the right of initiative, referendum and recall. We promote the use of these powers reserved by the people to fight higher taxation and to promote reform.
The signatures roll in from Napa Valley. But some wine & cheese Democrats get verbally abusive with signature collectors. On a positive note, it's good to see so many volunteers are out collecting signatures, not just the hired professional folks.
Total recall -- blame the internet:
If people aren't swarming shopping malls and camping out at post offices, how are people getting petitions and signing them? The mail and the Internet .. Charles C. Turner, assistant professor of political science at Chico State University, said the recall is at the confluence of technology, a weak economy and a $40 billion state budget deficit. "It's really weird that there is so little (visibility)," Turner said. "When (Ross) Perot was trying to get on the ballot, there were swarms of people and campaign signs." Turner was astounded that proponents were able to collect so many signatures in so little time. The threshold is 12 percent of voters from the last election, not the 5 percent needed to qualify an initiative.
Imagine the whining if Bill O'Reilly was governor of California, and not simply a TV celebrity.
What did Leo Strauss say? What did he believe? Quotable:
Unless a philosopher is bent on self-destruction, like Socrates appears to be when he chooses hemlock over escape and exile, he will not say everything he thinks openly, and may say some things in a way that keeps him out of trouble with the authorities. This is most true in the most oppressive societies and regimes, and the least true in the least repressive. For "esotericism" is a hypothesis about self-preservation, not about the secret communication of a conspiracy.
The author of this article, a WSJ ed-page guy, does a bit of a white-wash of Heidegger in the piece. In all sorts of ways Herr Dr. Heidegger was part of the anti-liberal, anti-Western ethos of Nazi Germany -- and he contributed to that ethos as much as he was influenced by it. Great philosopher or not, Heidegger had German national socialism in his soul.
There are continued reports across the state of California that the Davis anti-recall campaign is running a bogus petition drive, which fools folks into signing a meaningless anti-recall petition, when what the voter would like to do is dump the governor out on his behind. It's big time union money paying for hired gun hacks without an ethical bone.
June 17, 2003
Why do they hate us? Germans award Susan Sontag a "Peace Prize". Which raises the question, what do the Germans know about peace?
U.S. bureaucrats block business efforts in Iraq. Iraqi-American businessman Rubar Sandi boasts:
In 10 days, I managed to do more than ORHA has done in two months.
Richard Riordan discusses the Davis recall. Quotable:
somebody like Arnold Schwarzenegger, I think, would be a great new governor, somebody who would put power and hard, hard work into the equation. We are running, what, $28 billion, $38 billion budget behind. We have to borrow $21 billion to pay our cash needs through the end of August. We're in big trouble.
State tax increases hammer families twice. Worth quoting:
Higher taxes reduce economic growth over the long run, and thus impose a second loss on family incomes. This can be seen by ranking the 50 states by their overall tax burden and comparing state income growth from 1980 to 2000. Real personal income increased an average 96 percent during this period for the 10 states with the lowest state/local taxes (measured as a percent of income), but just 52 percent for the 10 highest-tax states. New Hampshire is notable as the lowest-tax state in the country and its 117 percent real income growth during the period.
The Institute for Justice is studying government barriers to entrepreneurship around the country. A key finding, "More than 500 occupations — approximately 10 percent of all jobs in the United States — require that individuals have permission from the state, in the form of a license, before they can pursue their chosen occupation. "
Prices are up -- you are paying higher prices this month for food, housing, medical care, and recreation. Gasoline prices are down, but natural gas prices are up. So much for the "deflation crisis".
Thomas Sowell on the late, great Eric Hoffer. Worth quoting:
How many people today even know of this remarkable man with no formal schooling, who spent his life in manual labor -- most of it as a longshoreman -- and who wrote some of the most insightful commentary on our society and trends in the world? You need only read one of his classics like The True Believer: Thoughts on the Nature of Mass Movements to realize that you are seeing the work of an intellectual giant.Having spent several years in blindness when most other children were in school, Hoffer could only do manual labor after he recovered his sight, but was determined to educate himself. He began by looking for a big book with small print to take with him as he set out on a job as a migratory farm worker. The book that turned out to fill this bill -- based on size and words -- was the essays of Montaigne .. If ever there was a walking advertisement for the Great Books approach to education, it was Eric Hoffer.
Among Hoffer's insights about mass movements was that they are an outlet for people whose individual significance is meager in the eyes of the world and -- more important -- in their own eyes. He pointed out that the leaders of the Nazi movement were men whose artistic and intellectual aspirations were wholly frustrated. Hoffer said: "The less justified a man is in claiming excellence for his own self, the more ready he is to claim all excellence for his nation, his religion, his race or his holy cause."
People who are fulfilled in their own lives and careers are not the ones attracted to mass movements: "A man is likely to mind his own business when it is worth minding," Hoffer said. "When it is not, he takes his mind off his own meaningless affairs by minding other people's business."
What Hoffer was describing was the political busybody, the zealot for a cause -- the "true believer," who filled the ranks of ideological movements that created the totalitarian tyrannies of the 20th century .. Contrary to the prevailing assumptions of his time, Eric Hoffer did not believe that revolutionary movements were based on the sufferings of the downtrodden. "Where people toil from sunrise to sunset for a bare living, they nurse no grievances and dream no dreams," he said. He had spent years living among such people and being one of them.
Hoffer's insights may help explain something that many of us have found very puzzling -- the offspring of wealthy families spending their lives and their inherited money backing radical movements. He said: "Unlimited opportunities can be as potent a cause of frustration as a paucity or lack of opportunities."
What can people with inherited fortunes do that is at all commensurate with their unlimited opportunities, much less what their parents or grandparents did to create the fortune in the first place, starting from far fewer opportunities?
Like the frustrated artists and failed intellectuals who turn to mass movements for fulfillment, rich heirs cannot win the game of comparison of individual achievements. So they must change the game. As zealots for radical movements, they often attack the very things that made their own good fortune possible, as well as undermining the freedom and well-being of other people.
"Sources tell this writer Schwarzenegger has agreed to run, that ex-L.A. Mayor Richard Riordan supports him, that he has begun to reach out to the right" -- Pat Buchanan
Dick Morris all but describes Bill Clinton as a traitor to the nation in his new book Off with Their Heads : Traitors, Crooks & Obstructionists in American Politics, Media & Business, just out today. I'd pay money to see this book knock Hillary off number one. On the radio today Morris described how New York Times writers and editors switched from being reporters to being political hacks working in conjunction with Morris to assist Bill Clinton in the run-up to the 1996 election. Sad and sickening stuff.
UPDATE: Here's the Clinton-NY Times story.
Well, I blew up a long piece on Judge Richard Posner's new book LAW, PRAGMATISM, AND DEMOCRACY. There is a review of the book here. Quotable:
Posner’s legal pragmatism recognizes fewer theoretical constraints on judicial power than does conventional constitutional theory. He admits that “ideology, in the sense of moral and political values that transcend the merely personal or partisan, is not an illegitimate, but an inescapable, feature of legal judgment” (p. 353), and he concedes pragmatic adjudication “will inevitably be based to a disquieting extent on hunches and subjective preferences rather than on hard evidence” (p. 126). The discretion of pragmatist judges is limited not by fidelity to interpretive theory or traditional legal constraints, but by “psychological, career and institutional factors.” Pragmatists accord “due respect for rule of law virtues;” however, this respect is practical, not principled, and sometimes outweighed when social change is necessary (p. 61). Posner acknowledges the practical necessity “for deference to democratic preferences and modesty about the power of legal reasoning to put judges in touch with the truth.” Such constraints “limit the discretion even of the perfectly self-aware judge.” But these constraints are practical and political, not theoretical.
And this:
Posner’s applications of legal pragmatism are equally provocative. He considers the Supreme Court’s opinion in CLINTON v. JONES “notably unpragmatic.” Clinton should have been granted official immunity from the civil suit because “a president’s extramarital sex life is a politically explosive subject.” To Posner, “recognition of this fact should have been at the center of the Court’s consideration, even though it was a fact without conventional legal significance” (pp. 318-319).
I find Posner's illiberalism and his disrespect for the rule of law nothing less than shocking. But this sort of shock is by now actually boring. It's been over a hundred years since the illiberal historicism of Holmes and more than 50 years since the illiberalism "legal realism" of Douglas. The wonder is why we allow these unelected rulers their power -- when they so disrespect the limitations on arbitary whim presupposed by the liberal principles of our legal and political system. I see no problem with the impeachment of such folks on the ground that they have knowingly violated their constitutional oath of office.
Here is the official description of Posner's book:
A liberal state is a representative democracy constrained by the rule of law. Richard Posner argues for a conception of the liberal state based on pragmatic theories of government. He views the actions of elected officials as guided by interests rather than by reason and the decisions of judges by discretion rather than by rules. He emphasizes the institutional and material, rather than moral and deliberative, factors in democratic decision making.Posner argues that democracy is best viewed as a competition for power by means of regular elections. Citizens should not be expected to play a significant role in making complex public policy regarding, say, taxes or missile defense. The great advantage of democracy is not that it is the rule of the wise or the good but that it enables stability and orderly succession in government and limits the tendency of rulers to enrich or empower themselves to the disadvantage of the public. Posner's theory steers between political theorists' concept of deliberative democracy on the left and economists' public-choice theory on the right. It makes a significant contribution to the theory of democracy--and to the theory of law as well, by showing that the principles that inform Schumpeterian democratic theory also inform the theory and practice of adjudication. The book argues for law and democracy as twin halves of a pragmatic theory of American government.
UPDATE: There's also a new review of WILD BILL: THE LEGEND AND LIFE OF WILLIAM O. DOUGLAS by Bruce Allen Murphy. I'm not very proud of the fact that this man is from Eastern Washington.
It's "a profound threat to democracy". What is? Well, a democratic vote on whether to remove Gray Davis from office, and elect -- yes, elect -- a new Governor. Says who? So says California's very frightened Demo attornery general -- who seems to have flunked both civics in high school and constitutional jurisprudience in law school. The article notes that a majority of the state's top Demo state officials say they won't run if Davis is recalled. Could it be that a Republican will run unopposed on the ballot by any major Democrat?
Dianne Feinstein fights the recall, warning again "fringe candidates". But the big question is, will she run and who would replace her?
Noah Feldman goes to Baghdad. Assignment -- close the "freedom gap". Quotable:
There are hopeful signs of a desire for freedom in the Middle East. Arab intellectuals have called on Arab governments to address the "freedom gap" so their peoples can fully share in the progress of our times. Leaders in the region speak of a new Arab charter that champions internal reform, greater politics participation, economic openness, and free trade.
It's still 1930 in the world of academic labor history.
UPDATE: Lisa Mary Wichowski sends the following to the LIB/CON list:
As my placard in the academic freakshow reads I am the "world's only conservative/libertarian labor historian," I often find myself defending persons and ideas from those on the far opposite end of the spectrum (George Bush and Martha Stewart most recently). Now however I feel that I must defend labor historians from similar attack. Mr Lewis makes two mistakes in his essay 1) tarring with a very wide brush, 2)misreading the fundamental flaw of most labor historians. Discussion lists like H-Labor are generally have a pretty diverse readership. The main posters to any discussion are those with the most radical positions. Those who feel most passionately are those that make the most noise. Posting in this discussion were McCartin and Dubofsky, and they certainly are on the far left. For every David Roediger however, there is an Eric Arnesen. Most of the labor historians I have met are not Communists, they are instead New Deal Liberals-bad enough, but certainly nothing to be damned for. ILWICH does not attempt to hide it's politics, but neither does Labor History a more mainstream but certainly still quite liberal journal. Mr Lewis misses what may be a more important problem in labor history. It's not that labor historians are Marxists but that most Marxists have never labored. This is the same in any area there are self appointed spokesmen for a group, such as feminists supporting women's empowerment in third world countries. The middle class academics believe that they would feel deprived if they were working class. They feel that all the world should have safe, cushy, lifetime employment just like they do, after all, look how happy they are.
Economist John Cochran has a very useful primer on the current economic situation -- and the crucial role of money and capital in the trade cycle. Oh, and he says a thing or two about Professor Phelps and Governor McTeer.
June 16, 2003
Phony-con Larry Kudlow is high with the sort of glee only a true Keynesian crank could have at the prospect of massive increases in government borrowing and spending -- and a promised giant new dose of funny money from the Fed. We've basically had a double-dip recession -- and now folks like Kudlow are cheering for a double-bubble stock explosion .. and inevitable implosion. Is there no-one anymore but these silly Keynesian cranks on the Republican side of the aisle?
What up with the bond market? Arnold Kling shares Huston McCulloch's view that:
the long-term expected inflation rate that is implicit in Treasury bonds is implausibly low.
One mystery, why aren't people buying inflation-indexed securities instead?
429,531 signatures files so far by the Gray Davis Recall Committe -- only one of several groups collecting recall signatures.
Government workers are funding the anti-recall campaign .. and they're also behind a bill which would give cities and counties the power to confiscate worker incomes. Another backer of the anti-recall campaign is the Zenith Insurance Co., a company dependent on California's insane workers' comp system -- one of the leading job killers in the state.
The California recall forces have an anti-Davis radio spot up on the air.
Issa's Davis recall site can be found here. The SF Chronicle has Issa already in the race for governor. Roger Hedgecock of San Diego's KOGO is keeping a web link rundown of recall coverage.
Paul Cwik at the Mises Economics Blog posts this telling reminder of what economics teaches -- and what the Keynesian cranks in the media need to learn:
Lionel Robbins writes concerning deflation .. "the belief that there is nothing detrimental to the smooth working of the economic machinery in the changes which result in a consumers' goods price index falling with increased productivity, is not the esoteric creed of a handful of 'sadistic deflationists'as is sometimes suggested nowadays. It is the view which has been held by the majority of the men who have made modern monetary theory in English-speaking countries what it is -- Marshall, Edgeworth, Taussig, Hawtrey, Robertson, Pigou. That a belief that prices cannot fall without causing depression should be able to co-exist with the overwhelmingly convincing demonstration of the contrary proposition in nearly all the standard works on the subject is a most disquieting revelation of the gulf which still exists between scientific knowledge and popular opinion."
Calblog is blogging the recall -- and making sure to take some time out to have a life.
The LA Times on Issa and the recall. A pro-Davis, anti-Issa talking points roll call.
"Tax refunds" for non-taxpayers -- it's a Republican thing. Bruce Bartlett explains how this mess got started.
An interview with Niall Ferguson, author of Empire: The Rise and Demise of the British World Order and Its Lessons for Global Power. Quotable:
by the time you get into the 19th and early 20th centuries, the British Empire was something unique. It was the world's first liberal empire, trying to export not only free trade and free markets, but also with institutions that many Americans today would regard as very good things, the rule of law being one and non-corrupt administration being another. And that's, of course, what many economists would say the poorer countries of the world most badly need.So when the United States intervened in a country like Afghanistan, or, most recently Iraq, and talks in terms of creating a market economy and above all democracy there, in many ways it's acting quite like the Victorian British empire did without, I think, admitting it to itself. I know Americans have a kind of allergy to the word "empire." I'm constantly amazed at the legacy of the War of Independence even today.
TCS: As a former colony, I guess it's to be expected to some degree.
FERGUSON: Absolutely, and I think it's understandable, but, you know, in a way, it's time to realize that you're no longer the former rebel colony, you are now the world empire and this brings with it responsibilities and I think admitting the extent of America's imperial power might go a long way to making it more of a force for good than it perhaps has been in the past.
TCS: Are we talking about whether an empire is a good thing or are we talking about whether the English speaking empire was, on balance, a good thing?
FERGUSON: I think the latter. One of the key points I try to make in the book is that compared with the available alternatives in the 19th and the first half of the 20th century, the British empire was really clearly preferable. Whether you think in terms of the other 19th century empires from the Belgian empire to the Russian empire, or by the time you get to the 1930's to the kind of empires that Hitler and Hirohito wanted to create in the world. By comparison with those alternatives, people who were living under British rule in, say, India or in sub-Saharan Africa were pretty well off.
June 15, 2003
Welfare geezers -- they will be the budget, pretty much the whole budget, and nothing but the budget:
the percentage of the federal budget spent on Social Security and Medicare will balloon from 41% in 2000 to 74% in 2040.
And this is without the new "free drugs for geezers" / loot-for-votes legislation. Bottom line, no reform means huge and constant tax increases.
Campaign buttons for the Terminator are out. The Davis anti-recall strategy is pretty much what you'd expect. Scroll down for lots more recall news.
Will the Fed cut rates? An anticipated cut is already factored into many market prices. Which tarot cards fall in this week's econ data will be decisive for the Fed, analysts believe -- and these numbers will move financial markets even before the Fed reads their meanings, and then makes its stab at manipulating the market. Which happens a week from Wednesday.
Hyping hydrogen:
Under Tolan's pedal-to-the-metal scenario, the country could completely wean itself off imported oil by 2015 by flooding the market with fuel-cell vehicles. Most of the hydrogen needed to power the cars would come from plentiful North American natural gas piped to existing filling stations, then processed into hydrogen. Imagine: In little more than a decade, half the cars on American highways would run on clean-burning hydrogen costing 40 percent less per mile than gasoline. Yes, Tolan agrees, some unusual things would have to happen first: You'd need annual federal subsidies of $10 billion to $20 billion in the early years to make the cars affordable and to scale up production. Oil and gas companies and utilities would have to plow some $280 billion into hydrogen infrastructure in the United States alone.
Explain to be again how this could cost less than gasoline, yet still requires the heavy hand of government and confiscation of other peoples property? If it's a good idea -- i.e. if it's one that will prove itself through the price signal of PROFITS -- you shouldn't have to steal my money with a Federal agents gun in order to get it done. And why don't folks realize that this is just what they are proposing -- forceably taking other people's money in order to prove the "efficiency" of their own "I'm God" for a day scheme? It isn't moral and it nearly always creates waste, not gains to economic efficiency.
Economics ain't rocket science, but as David Bernstein points out, for the business journalists at the NY Times, it might as well be astrophysics:
This article in the NY Times about rent decontrol in Boston and Cambridge shows typical reportorial ignorance of economics. For one thing, the article harps on the vast increase in rents in those two cities since the end of rent control. What the article fails to mention is that housing prices in Boston and Cambridge have also skyrocketed during the same period. It's hardly a market failure for rental prices to go up at a similar (though, from the data I've seen, somewhat lower) rate than real estate in general. Also, the article notes admonishingly that most new construction has been of luxury apartments, not low income housing. Counterpoint: That's irrelevant, it's the total number of units relative to demand that's important. If new luxury housing gets built, older luxury housing becomes less desirable, and so on down the line, so that building luxury units makes things more affordable for those at the bottom of the housing pyramid.<
The battle over Blair's constitution changes is going to get nasty in the House of Lords. William Rees-Mogg asks, does Blair have the brains for it? Short answer, no. Quotable:
A reform on which the nation’s whole legal system depends has been settled by a tired man, not a genius, in the midst of other pressing business. Not surprisingly it has been botched. No one who was the Prime Minister would have employed the Prime Minister to do this work.That is bad enough. Yet the situation is worse than that. These proposals are strategic: they will govern British jurisprudence for years to come. Indeed, they will leave an indelible mark even if they have to be reversed. Yet they have been adopted for tactical, not strategic, reasons. The decision to opt for a supreme court seems only to be a few days old.
The Prime Minister had to complete his reshuffle. There was a crisis over the euro. There was another crisis over Iraq and the missing weapons of mass destruction. Alan Milburn had unexpectedly decided to resign. At some stage there had been a plan for a Ministry of Justice amalgamating some of the powers of the Home Office with those of the Lord Chancellor.
David Blunkett would not have that; he thumped the table. Derry Irvine would not have his office abolished; he thumped the table. Tony Blair had more to fear from losing David Blunkett, so he backed the Home Office. The resulting package left the Home Office with all its powers but abolished the Lord Chancellor. This was not the careful constitutional consideration which might have resolved so fundamental an issue. It was a short-term defensive deal, done under pressure at the last minute; from conception to birth seems only to have been a matter of a few days.
TIME has some spam recommendations:
Outlook users might be better off buying a third-party program, and the market's flooded with them. Ella ($29.95) stands out for its simplicity .. it uses an adaptive engine to "learn" your preferences — what qualifies as junk, which messages are top priority and which can be put aside for later — and organizes your e-mail accordingly. QURB ($24.95) and Mailblocks ($9.95 a year) are also worth a look. Finally, there's a community project that attacks spam .. with a blacklist. For $4.99 a month, SpamNet checks your incoming mail against its own ever expanding database. The service's 475,000-plus members contribute by "voting" on what's spam and what isn't, using the BLOCK and UNBLOCK buttons that the SpamNet program adds to your Outlook task bar. Enough votes from individual members and a message is blocked for all. With thousands of reports coming in every second, it can be pretty effective.
And Virginia Postrel has this:
The combination of SpamAssassin at the server and Entourage's next to highest setting mostly works, except Entourage still misclassifies a lot of my NYT reader mail as junk.
The key to brain differences between chimps and human comes down to regulator genes, not brain making genes, researchers believe. And then there is FOXP2:
a team of researchers at Oxford University showed that this language disorder is due to a mutation in a single gene called FOXP2. But perhaps even more impressive was a molecular analysis of the gene, again undertaken by Wolfgang Enard and colleagues. When they compared the FOXP2 sequence between humans and chimpanzees, they found that the human form differed from the chimpanzee's by a single mutation that was dated to about 200,000 years ago. This is the time when language is thought to have arisen.
Philosopher Bernard Williams has died. You couldn't have spent any time studying philosophy and not have read at least two or three things by Williams. Worth quoting:
He argued that philosophers should look at moral life as it is experienced, rather than see our decisions in relation to some abstract, all-encompassing theory of right and wrong. He wanted a moral philosophy that was accountable not only to psychology but also to other branches of human enquiry, especially history.In this, he was to become best known for his criticism of Utilitarianism, the school of thought which holds that actions are right in so far as they promote the greatest happiness for the greatest number of people. Williams's contribution to the field was Utilitarianism, For and Against, one of the most influential critiques of the school.
Williams attacked Utilitarianism on a number of grounds. In one example, a bandit chief tells you that if you kill one of his captives, he will allow the other prisoners to go free; but that if you don't, he will kill all of them. On Utilitarian grounds, the right thing to do would be to do what causes the fewest deaths and kill the captive. But Williams wanted us to see that it is not just what happens (or the consequences) of an action that matter, but who does it. To perform such an act would damage our integrity as a moral agent and, incidentally, our psychological identity.
Similarly, Williams pointed out, a very quick way to stop people from parking on double yellow lines in London would be to threaten to shoot anyone that did. If only a couple of people were shot for this, it could be justified on a simple Utilitarian model, since it would promote happiness for the majority of Londoners.
Williams also famously attacked the philosopher Kant for his overly theoretical view of morals. Kant proposed that we can be properly blamed only for what we do voluntarily and intentionally and that what we should do (in accordance with the motive of duty) is the same for all of us and is discoverable by reason. In Moral Luck (1981) Williams suggested that some of our evaluations on whether or not we have done right or wrong are contingent.
For example, if you drive carefully and, through no fault of your own, strike and kill a child, you may well feel what Williams calls "agent-centred" regret: regret not only that the accident happened but also for the fact that you did it. Even though it was plainly bad luck, you may still feel a sense of guilt and the need to make amends.
In describing this conundrum, Williams looked to the life of the artist Paul Gauguin, who left his wife and children to go to the South Seas and paint. The fact that he produced great paintings, for Williams, made his life justifiable. Had Gauguin not been successful, he would have been at fault for having left his family. The outcome ultimately depended on luck, not - as Kant would have suggested - merely on having the right intentions (or "maxim for action").
Tom Palmer has read as many books on capitalism and freedom as anybody. Right now he's reading Jerry Muller's The Mind and the Market: Capitalism in Modern European Thought -- which includes a great chapter on Friedrich Hayek. I'm pleased the Muller is a Hayek-L list member -- and I'll be looking for Palmer's review. In the mean time Tom gives us a helpful and very positive review to a collection of original reading on Commerce, Culture and Liberty collected by Henry Clark. Bonus: scroll down and you'll also find a link to Palmer's essay on why "Globalization Is Grrrreat".
BusinessPundit is reading Final Accounting: Ambition, Greed, and the Fall of Arthur Anderson. Quotable:
The book goes from a story about Anderson himself standing up to a railroad giant over a depreciation issue (they fired Anderson over it, but he was right), to stories from the late 90s about internal bickering, client overbilling, and large errors being labeled immaterial. I don't know how anyone with a conscience could have worked in such a place. I guess to me, capitalism is like a religion. I want to get ahead by having the best idea, being the most efficient, and producing the highest quality product or service. Lying, cheating, overbilling, and manipulating the system is fraud, not capitalism ..
Count me a member of the same church.
David Warsh has a long, interesting piece on Arthur Sulzberger, Jr.
Has the cost of health care actually declinded? Truck and Barter makes the case.
Atomic level "tuning" achieved at Oak Ridge in nano breakthrough. Money quote:
The physicists' sophisticated experiments demonstrated that the Schottky barrier – the boundary at the edge of a substance where electrons are confined, long considered an inflexible limitation – can in fact be manipulated, and that "barrier height" is, in Buongiorno Nardelli's words, "no longer a problem, but an opportunity."
Issa on Issa -- and the recall:
In many ways I'm like that 17-year-old who wanted to go to the Army to save the world. I may not be the most equipped, but I'm the most motivated.
And this:
Getting rid of a thoroughly dangerous man who is destroying our state is what the recall is all about,Posted by Greg Ransom | Permalink
California Insider -- non-union workers back Davis recall:
In the latest sign that the Davis Recall is going mainstream, the Associated Builders and Contractors of California has just announced that it will join the effort and will contribute money and muscle to help it pass. The group cited crises in workers compensation and health insurance and what it called the governor's "endless crusade" on behalf of labor unions against non-union, or merit shop, employers. Among the administration actions that have angered the contractors are a recent move to expand the prevailing wage standards to cover fabrication and assembly work done off-site for public works projects, and a years long campaign to shut down non-union apprentice training programs. ABC lobbyist Matt Tennis said he expects many of the association's 1,400 members to help gather signatures and provide other services to help oust Davis. ABC is the biggest major interest group to join the recall campaign.
Issa -- a single candidate is needed to win the Governorship and fix California. Money quote:
That candidate cannot be a candidate that has a social agenda. That candidate has to be a candidate willing for three years to be hated, be hard, be difficult, be cantankerous, be 'veto' and 'veto' and 'veto,' if necessary, to straighten out this state."
June 13, 2003
Historian Paul Johnson on the history of empire and America's new destiny as The Empire of Liberty.
Greg Packer stood in line for eight hours before getting a chance to read PrestoPundit at a New York City cyber cafe.
PrestoPundit is "must reading" says Greg Packer, the New York Times go-to "man on the street". Packer is making his first appearance here, but this average joe has offered his punditry in literally dozens of news stories for the Times and others -- most recently in a feature NY Times story on Hillary Clinton's new book.
UPDATE: Announcing a "NAME THE CAPTION" contest. Just hit the "comments" button, and give your caption. The winner gets a weeks worth of promotion here on PrestoPundit for his or her favorite website. So what is Greg Packer up to?
UPDATE: Lots of good captions. I particularly like this one -- "Huh ? PRESTOpundit ?!? Where's the Instapundit line?"
It's time to get over the notion that anybody is going to be cutting your taxes. Medicare is is serious crisis. Not only must the country pay off its already staggering debt to lenders, it must prepare to pay the endless bills of the spoiled generation, as these fat and happy folks begin to fall off their slot-machine chairs and are taken to the doctor for tests and more test, pills and more pills. Money quote:
Today, Medicare consumes 12 percent of the federal budget and similar shares of most state budgets. By 2030, it will devour 28 percent to 38 percent of federal taxes, based on the latest projections from Medicare's board of trustees. This means substantial tax increases ..
Matt Welch looks at France, and decides the glass is half full. But what I want to know is -- what does typical New Yorker Greg Packer think?
A supreme court and a new constitution for Britain. iain Murry at The Volokh Conspiracy has some thoughts. Money quote:
The British constitution survived unwritten for over 300 years because no-one, not even the socialist governments of the 40s, 50s and 60s, broke its conventions. Blair has seen fit to ride roughshod over those conventions. In the unwritten British sense, his actions are clearly unconstitutional.
A Michael Kinsley article on how American's reacted to losing one of their basic freedoms in the 1970's has inspired a discussion of price controls and the modern history of the freedom movement over at The Volokh Conspiracy. Worth quoting:
Nixon's [price control] edict was the precipitating event for the founding of the Libertarian Party by a group of activists who thought the Republican Party had finally become entirely hopeless. Whatever has become of the LP since then, I think that fact was and is important. Largely under Nozick's influence, academics often talk as if the defining issue for libertarians is opposition to welfare or poverty relief by the state. (Not that Nozick himself thought this; he talked about it more because it was an interestingly hard case.) But Republicans had been administering and expanding the welfare state for years; and Friedman and Hayek and their followers had been arguing about extent and incentives, but didn't believe that state-directed poverty relief was wrong per se and both Hayek and Friedman advocated a particular form of it. It was the assertion of control over the price system that broke the activists' back.
The discussion was started by this quotation from Kinsley:
The notion that the government could tell everyone from General Motors to a baby-sitting teenager what they could charge—and did so—seems shocking in retrospect, at least to me. There was no real national emergency. It was part of a cynical re-election strategy to gun the economy while holding inflation temporarily in check. But at the time, controls were not just accepted but popular. When they disappeared, even those (like me) who had opposed them found it strange and, at first, unnatural. You mean, anyone can just charge whatever they want? How does that work? The analogy isn't perfect. The right to set your own price isn't as profound as the right to express your own political opinion. But it is, if anything, even more a part of every citizen's daily life. And yet when they took it away, we freedom-loving Americans didn't even miss it.
Over time it's simply not true that the right to set your own price is not as profound as your right to express your own opinion -- and this is what folks quickly were learning in the early 1970s. It was a lesson learned not in the least instance by the economists and bureaucrats around Nixon. After having taken a crash-course in the significance of prices to the functioning of an economy - and the hopelessness and destructiveness and blocking this function from occuring -- many of these folks found their thinking changing decisively. Among these you might include George Schultz. Schultz not only played a key role the administration of prices control -- he also helps bring them to an end. As Schultz puts it, "A line of talented people were involved, and even with all that talent we couldn't make wage and price controls work. They're terrible. So at least maybe we proved the negative." Only a few years later, Schultz was supporting Ronald Reagan -- who ran on a plank promising to end the last vestiges of Nixon's failed price control program -- controls on energy prices. The move which finally ended the "energy crisis". Another lesson learned by economist aligned with both major parties. A lesson, by the way, which Hayek had been teaching since his first successful conference paper on housing price controls. And it was no accident that Hayek's work on the coordinating role of prices was rediscovered to wide acclaim during the 1970s. Without the failed monetary policies of stagflation and the failed microeconomic policies of wage and price controls, one wonders whether Hayek would have won the Nobel Prize.
Japan has courageously and selflessly sacrificed its national wealth in one gigantic "experimental test" proving that the Keynesian theory is false. Isn't it time now to put a fork in it? Come on guys, get the journal article written, and then get back to saving capital and producing goods. Worth quoting:
You'd think that after 10-plus years of economic recession, despite having forced interest rates down to near-zero levels in their never-ending quest to pump new money into the economy, the central banking Samurai at the Bank of Japan would show the good sense to admit defeat and fall on their swords. Instead .. the BOJ has announced a new policy of buying corporate debt, including some with a junk-grade rating, as though loose money policies will finally have the effect they were supposed to have the several times they were implemented throughout the 1990s.
I don't think there's a 12 step program for this:
"Hi. My name is John Cole, and I still think running deficits is bad."
Don't miss the rather dramatic graphic from Reuters.
What does the California legislature want to do with it's $2.4 billion federal bailout? It wants to waste it on NEW spending programs, of course. Jill Stewart reports from Sacramento:
NOT LONG AGO the Assembly Appropriations Committee, facing California's $38.2 billion budget deficit, shelved one proposed spending bill after another, spending being a pointless topic. I watched as committee chairman Darrell Steinberg noted the only good news was that President Bush was sending Sacramento $2.4 billion in relief. Hearing news of the inbound $2.4 billion, a member of the committee declared, "Well, maybe now we'll be able to fund some of these programs we are talking about!" .. One man remarked how easily fat cats burn our money. But to my consternation, many in the hearing room were nodding, agreeing the $2.4 billion should be quickly spent.
More:
Gov. Gray Davis and the majority Democrats are asking taxpayers to cough up $8.3 billion in new taxes -- including $4 billion in tripled auto license fees, making California's taxes the highest by far .. Democrats have clung to huge spending programs and made only the barest in real cuts -- $3 billion or so from a $78 billion budget. Up nearly $20 billion from 1998, California spends almost twice per capita what Arizona spends to deliver state services.
A reply from Clyde Crews to Chris Caldwell's knee-jerk response to SPAM. A key issue -- will the utopian mentalitiy of top-down out-of-thin-air "design" trump open-ended evolutionary adaptation?
The Internet wasn't originally designed to be the mass commercial and consumer medium that it is today. If one were to design a commercial network today from the bottom up, it would probably incorporate authentication of the senders of e-mail. That seems to be something law cannot do. Now that we're in midstream, we wonder if law can get us there, or must technology do it? Might legislation even impede that end? .. Such major overhaul of the Net architecture has been likened to widening all the nation's roads six inches. It is a monumental undertaking. But if it truly is the case that lack of authentication is at the root of the spam problem, it's also likely that legislation doesn't directly solve it. It may be that a system in which originators of messages remain anonymous is altogether inappropriate for a commercial information society of tomorrow. If so, neither is it appropriate to expect law to accomplish what ultimately must be a technological and market undertaking.
If you think about this, it should be clear the today's Weekly Standard "conservatives" are missing the central gene which any true conservative should have -- a profound sense for the significance of the fact that real-life -- including technological life -- has evolved through undesigned processes. And that the dictator's eye view from no-where utterly detached from the adaptive process of the social organism promises not some sort of top-down miracle, but a botched constriction of the decentralized adjustment processes that allows for piece-meal improvement on the part of folks who know what they are doing and how things actually work.
UPDATE: Caldwell is all wrong about SPAM and internet taxes, as explained here and here.
June 12, 2003
Arnold Kling answers the Weekly Standard on the political economy of SPAM and the technology of the internet.
This is rich. While Gray Davis runs the state of California as his personal shake down operation, his supporters attempt to smear Issa with charges that Issa's recall support violates new federal anti-free speech legislation.
Let's face it folks, the party of Reagan is dead -- road kill. A "Reaganite" in Alabama is pushing through a huge tax increase . Worth quoting:
it was Reagan who understood, and warned against, the mantra of big-government: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Andrew Sullivan reflects on prior work and contemplates liberalism, Britian and the EU:
What I was trying to do .. was to distinguish between those aspects of the EU that truly do violate sovereignty in profound ways and those aspects that are, properly speaking, liberal and unobjectionable, like free trade or an independent European court. Here's the money graf:Institutions which can directly regulate, legislate and tax citizens of member countries should be resisted. Powers to determine the ends of national policies should be blocked or opposed. There should be no strengthening of the European parliament, the European commission, or a weakening of any nation-state's veto power over communal decisions.
For those reasons, I still find the proposed U.S.E. Constitution abhorrent. But I tried to posit a way in which Britain could improve the structure of the EU, without withdrawing from it:
At the same time, however, those measures that merely determine the means by which Europeans interact--rules of trade, the rights of the citizen against the state or, indeed, the currency in which individuals trade- -are a different matter. They create an atmosphere of cooperation. They determine the rules of play, but they do not determine who wins the game. They are the mechanisms of procedure, not results.
I still believe Britain should stay in the EU as it is, help reform it in more classically liberal directions and refuse to be coopted into a more ambitious anti-American project.
Posted by Greg Ransom | Permalink
An "economic conservative" who believes in Keynesian crankonomics is -- predictably --unreliable as an advocate of the free market or limited government. Why? Because the deep failure of economic understanding represented by the belief in the psuedoscience of Keynes can alway be counted on to over-rule the sound principles of limited government liberalism when bad government has created serious economic problems. Today's exhibit -- Andrew Stuttaford at National Review:
Is Bush spending too much money? Possibly. It may be heresy to say so (at least around here), but there is one area where the Feds may not be spending enough, and that’s in helping the states through their current fiscal crises. There’s no doubt that the states went on an irresponsible spending binge in the 1990s, and there’s no doubt that repeated federal bail-outs of the states run the risk of creating a significant moral hazard, but government is about facing matters as they are – not as they should be. There must be a significant danger that any chance of a sustained recovery will be choked off by a forced contraction in the states’ spending and/or tax increases at the local level as the states confront their budgetary shambles. Raising taxes and cutting spending at this stage in the economic cycle makes very little sense and may well offset the stimulative effect of tax cuts at the federal level. The administration, however, doesn't seem too concerned. It should be.
It's always sad to see "economic conservatives" dishing up Keynesian recipes for rewarding -- and sustaining -- horrendous budget irresponsibility. This is part of the reason why Friedrich Hayek called Keynesian economics disastrous for liberal (limited government) societies.
Mark Levin on George Bush -- our Lefty president:
It appears that President Bush is not only a supply-sider who supports tax cuts, but he's a demand-sider who supports massive new government spending. President Bush opposed, and then supported, expanding federal spending for agriculture subsidies. He opposed, and then supported, repeated extentions of unemployment insurance. He joined with Ted Kennedy in massively increasing federal spending for education. He opposed, and then supported, federalizing tens of thousands of airport security personnel. He supported billions in subsidies to the airline industry. He opposed, and then supported, the establishment of a huge and cumbersome new bureaucracy to oversee homeland security. He's pressuring Republican House leaders to support a $10 billion gift to non-taxpayers in the form of child-tax-credit increases. He opposed, and now supports, an expensive expansion of the soon-to-be bankrupt Medicare program to include prescription drug subsidies to all seniors, regardless of ability to pay. Meanwhile, Social Security continues to pile up tens of billions in obligations, and the president has yet to submit to Congress a long-promised privatization program--once a domestic priority.
Jonah Goldberg on Lyndon Baines Bush. -- no, make that Franklin Delano Bush. Highlight:
the years 2000 to 2003 marked the biggest spending spree in the history of the United States, except for WWII. Total spending has gone up nearly 14 percent in Bush's first three years, and discretionary spending has gone up nearly 20 percent. Bush spent a pile not only on guns, but on butter. Non-defense spending has gone up by almost the same amount as defense spending, and defense spending constitutes barely a fifth of the total increase in spending from 2000 to 2003.
Speaking on the radio today about the Gray Davis recall, Darrell Issa said make no mistake about it "this is a tax revolt." Commenting on the budget crisis and state of the economy he added, "You can't tax yourself into prosperity".
The OC Register has a profile on Issa and the recall drive.
An new poll brings bad news for Gov. Davis in California:
Three out of four likely voters -- 75 percent -- disapprove of his performance on the state budget and taxes. Among Californians in general, 64 percent disapprove of his overall job performance.
The complete poll can be found here.
Krauthammer always says it best:
Everyone thought Saddam had weapons because we knew for sure he had them five years ago and there was no evidence that he disposed of them. The WMD- hyping charge is nothing more than the Iraqi museum story Part II: A way for opponents of the war--deeply embarrassed by the mass graves, torture chambers and grotesque palaces discovered after the war--to change the subject and relieve themselves of the shame of having opposed the liberation of 25 million people.
It looks like the Clinton's did kill Vince Foster. But they didn't use a gun ..
"This is really embarrassing. I just forgot our state governor's name, but I know that you will help me recall him."
John Fund: Gray Davis -- meet the Terminator. Money quote:
California's .. revenues grew dramatically -- by 27% during Mr. Davis's first term. But spending went up 36% during the same period. If the state had only held spending growth to the increase in population and inflation, it would be enjoying a $5.5 billion surplus now.
June 11, 2003
Everything you ever wanted to know about the Davis Recall calendar. Scroll down for MAJOR NEWS on the Davis recall effort.
BW transcript -- Osvaldo Rosales on the Chile-US free trade agreement.
A shameless anti-American France is understandable in the context of a once great country now crippled by deficits, debts and unemployment. With low growth rates France is in rapid decline. From 1990 to 2000, among the EU countries, the French standard of living dropped from third-place to 12th. In 1980, an Irish citizen had 40 percent of the purchasing power of a Frenchman. That figure is now 125 percent.Incapable of making any policy other than raising taxes, increasing public spending, enacting more social laws, creating more welfare and fostering more irresponsibility, current politicians and elites are to blame for the French decline, and they know it. Just like failed politicians in the Third World, French politicians know they must divert attention onto scapegoats.
Pop quiz -- what the big difference between Ireland and France?
Production firms to money lenders -- we don't want your stinkin' money.
Have they found our most direct human ancestors? If so, it adds still more support for the out of Africa thesis. The original Nature article is here.
Even the NY Times can't help but belittle the U.N. "peace keeping forces" in Congo. There is no way The Onion can compete with this kind of stuff. These U.N. forces give new meaning to the word "pathetic".
The Bush team has a well-earned reputation for dishonesty in the scientific community. Fooled me once, shame on me ... fooled me twice ... ???
Economists are still confused about what might cause growth in undeveloped countries.
Apparently, this is true:
Another average individual eager to get Hillary's book was Greg Packer, who was the centerpiece of the New York Times' "man on the street" interview about Hillary-mania. After being first in line for an autographed book at the Fifth Avenue Barnes & Noble, Packer gushed to the Times: "I'm a big fan of Hillary and Bill's. I want to change her mind about running for president. I want to be part of her campaign." It was easy for the Times to spell Packer's name right because he is apparently the entire media's designated "man on the street" for all articles ever written. He has appeared in news stories more than 100 times as a random member of the public. Packer was quoted on his reaction to military strikes against Iraq; he was quoted at the St. Patrick's Day Parade, the Thanksgiving Day Parade and the Veterans' Day Parade. He was quoted at not one -- but two -- New Year's Eve celebrations at Times Square. He was quoted at the opening of a new "Star Wars" movie, at the opening of an H&M clothing store on Fifth Avenue and at the opening of the viewing stand at Ground Zero. He has been quoted at Yankees games, Mets games, Jets games -- even getting tickets for the Brooklyn Cyclones. He was quoted at a Clinton fund-raiser at Alec Baldwin's house in the Hamptons and the pope's visit to Giants stadium. Are all reporters writing their stories from Jayson Blair's house?
Here is a story on the guy from July 2002. You can't make this kind of stuff up.
FTC seeks special SPAM powers. The government gets its foot in the door with this claim: "66 percent of spam contained obvious indicia of falsity". Who knew? And why do bureaucrats talk like that?
CALIFORNIA BULLETIN:
"Our elected officials in Sacramento are facing a budget crisis unseen in this state since the Great Depression, and it was entirely avoidable .. Teachers are getting pink slips, cops are getting laid off and the taxpayers are facing an increase in taxes and California's future is in danger."
Arnold Schwarzenegger, last night before the Club for Growth in Los Angeles -- an event making the 25th anniversary of the Proposition 13 tax revolt.
Schwarzenegger at one point in the speech remarked that he'd forgotten the governor's name, but added, "I know that you will help me recall him."
More Schwarzenegger:
"There comes a point when we the people must demand more out of our elected officials than for them just showing up .. Howard Jarvis used to say it is time to show the politicians who is the boss. We are at such a point right now, ladies and gentlemen."
The two best Gray Davis recall web sites I've found is are these: RescueCalifornia.com and RecallGrayDavis.com
And who opposes the recall? -- Those who've pocketed the most cash: state prison guards, firefighters, and big business.
UPDATE: A new California polls show voters ready to lash out at politicians behind the state's budget meltdown -- and the constant drumbeat for ever higher tax increases.
Time magazine has a consultant saying this:
"The odds of the recall qualifying have increased to the point of near certainty."
The Washington Post has a long story on the Davis recall.
The LA Times has a feature story on Congressman Darrell Issa, who's leading the recall of Gov. Davis in California. Key fact: Issa has given $645,000 to the recall effort -- so far. Most of the article appears to be a bit of an early hit piece against Issa and his likely run against Davis should the recall succeed. All indications are that it will.
Meanwhile, Reuters leads with news that the Davis recall is moving ahead quickly. Key fact: recall organizers likely have 700,000 signatures already -- only 897,158 valid signatures are required. Organizers say that something like 1.2 million recall signatures should assure enough valid signers for recall success.
CALIFORNIA BULLETIN: Arnold Schwarzenegger backs Gov. Davis recall, calls for voter revolt. Tells audience he can't remember the governor's name, would like them to help him recall .. California's can join the recall at GrayDavisRecall.com
Japan and the non-paradox of being non-thrifty. Perhaps there are better explanations for what has happened in Japan than Krugman's Keynesian nonsense. (Via the Mises Econ Blog, where you'll find additional commentary).
You can have a negative interest rate. This from Nikkei:
Overnight call money transactions are believed to have declined Tuesday. Also, the market saw a transaction with a negative 0.03% rate. As a result, the weighted average rate was zero percent for the second straight day.Transactions carrying negative rates -- an abnormal situation in which a lender pays a borrower interest -- are being conducted in the call market entirely by foreign banks. They can take yen funds procured through currency swaps at even lower negative rates, so these banks are able to lend out their excess funds at negative rates in the money market without taking any losses.
"Foreign banks are able to increase their transactions at negative rates as much as they want. Therefore, so it is not hard for the weighted average rate to fall into negative territory," according to an official at one foreign bank that is lending its funds at negative rates.
(via Institutional Economics)
I love this. The owner of the NY Times is complaining about poor journalism. Well boo hoo.
Finally, stainable growth based on increasing wealth and rising profits or another Fed. generated stock bubble without corresponding real increases in wealth? A look at some fundamentals.
The NY Times has a page devoted to its full "rally behind the welfare check" coverage of the political battle aiming to give the "child tax credit" to those who pay no taxes. What you get is flood the zone coverage and social activism -- all on one page. Remember when newspapers did their part to help the poor by running donation drives?
June 10, 2003
The "flood the zone" strategy of the NY Times on the so-called "child tax credit" for those who don't pay taxes continues. The Times uses conventionally distorted language to well-hide the dirty little secret that the "child tax credit" for very low income workers has absolutely nothing to do with cutting taxes, and has everthing to do with increasing the size of an alternative form of the welfare check. The closest that the Times comes to spilling the beans is this short aside:
The majority leader's defiance of the White House reflected growing frustration among conservatives about pressure from the administration to provide a benefit to millions of minimum-wage families who pay little or nothing in federal income taxes.
Which can only leave the average reader bewildered, wondering what relation this discussion of a "benefit" has to do with the political battle between the forces of good and evil over the slam dunk issue of whether or not to give tax cuts for low income workers with children -- when rich folks with kids are already getting them. It's always a fixed game with loaded dice at the Times. Only now, in the post-Raines era, weirdly misplaced "fig-leaf" lines show up here and there in a desperate stab at "cover-my-***" objectivity-- so out of place that one has trouble making sense of their meaning in the context of the story the Times would prefer to be telling.
UPDATE: This is how Howard Kurtz intrerprets the meaning of the NY Times story:
"Now we find out who really runs the country – and his name may just be DeLay .. One gets the impression that low-income families are not part of his core constituency."
Which is exactly the impression the NY Times wished Mr. Kurtz to have. As I say, it works. And note well, Kurtz's quote from the story leaves the false impression -- like the Times -- that the fight is over a cut in taxes for the poor, not over a newly minted or much increased welfare check to lower income earners. This is where for all practical purposes you have a bold type lie passing for news -- something much beyond mere everyday partisan spin at the Times and the Post. Where are Sullivan, Reynolds and Kaus on this story?
An AP piece on the complexities of the Euro includes this incisive comment:
"The German economy is not lacking low interest rates,'' said economist Michael Schubert at Commerzbank in Frankfurt. "It's lacking structural reforms.''
Boeing & Washington State -- let the little guys pull the tax wagon.
Tax privileges for the wealthy and powerful. You just have to admire the way a larger government and a larger tax burden always has a knack of slamming the little guy and working out cozy well for the big fish. The Leftiest are always promising just the opposite, but hard-lived reality is always a better educator than blow-hard rhetoric.
Important stuff from Randy Barnett on the 9th amendment and judicial review. Worth quoting:
Where I most strongly disagree with judicial conservatives is over their stance on unenumerated rights. If it is improper “judicial activism” to ignore the text, structure, and original meaning of the Constitution, then when assessing the proper scope of federal power it is improper to ignore the Ninth Amendment ,which says "The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people." And when addressing the proper scope of state power, it is improper to ignore the Privileges or Immunities Clause of the Fourteenth Amendment, which reads: "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States. . . ."Judicial conservative deny and disparage both clauses because, in their view, this language provides insufficient guidance to judges to count as "law." .. Unfortunately Justice Scalia has adopted this same skepticism towards unenumerated rights with a vengeance, a stance that skews his entire approach to the Constitution. In contrast, Justice Thomas supported, for example, the judicial protection of the unenumerated right of parents to raise their children, in his concurrence in Troxel v. Granville, while signaling that protection of fundamental rights from infringement by state governments should properly be grounded in the Privileges or Immunities Clause (rather than in the Due Process Clauses). Moreover, he contended that laws interfering with fundamental unenumerated rights should receive strict scrutiny. (Read it -- his concurrence is only 2 paragraphs plus a crucial footnote.) For this and many other reasons, Justice Thomas would have my enthusiastic support to succeed Chief Justice Rehnquist when he retires.
Now I am fully aware that judicial conservatives believe that, because unenumerated rights are supposedly so open-ended, allowing judges to protect them would lead to, in Raoul Berger’s famous phrase, "Government by Judiciary." I will respond to this criticism at length in my forthcoming book Restoring the Lost Constitution: The Presumption of Liberty ..
For now, suffice it to say that, unlike limiting Congress to its enumerated powers which drives Democrats and leftists into a tizzy, discarding portions of the text (and its original meaning) because these provisions fail to meet your vision of the "Rule of Law" -- as judicial conservatives do both on and off the bench -- is something that may accurately be called “conservative judicial activism.” And it's no different than those on the left discarding the text because it fails to meet their vision of "Justice."
It’s a shame that many conservative Republicans do not understand all this because, if the protection of unenumerated liberties was added to their sometime support for limiting federal powers and their better-than-the-left enthusiasm for free speech, their views would not only be correct, they would resonate with the vast majority of Americans -- resulting in more and better judicial appointments.
When I worked at CATO I did a very small bit of library research on the 9th amendment for Randy (who likely had no idea who was doing it). Even before doing this research I'd thought that this line of thinking was important (taking my own cue from Marbary vs. Madison and the "English Constitution" as much as from the 9th). Barnett continues to show just how deep and strong the idea of unenumerated rights is for our understanding liberal constitutionalism.
Is France finished? -- as a Western country, that is? A juicy quote I can't pass up:
The more I study the history of France in the 20th century, the more I come to the conclusion that the psyche of the French people might justifiably warrant an entire psychiatric conference. Throughout the entire 20th century, the French seemed to spend most of their time desperately craving being crushed by some kind of foreign totalitarian power. Their dreams, obviously, were shattered by the Americans, who rescued them from the Nazis and subsequently protected them from the Soviets. But now the French have cleverly figured it all out: to be taken over by Islam from within.
And a bit more seriously, this thought from Jean-François Revel:
France is the prey of an anti-American obsession. For the French, Americans are the enemy they have to hate in every circumstance. They have to hate Americans because Americans are successful, because Americans are powerful, because the French prefer resentment to achievement. They are so obsessed by their hatred of the United States they do not see anymore the real dangers confronting France. It’s a very dangerous situation. I do not know how we could go out of this situation. I honestly don’t know if it is even still possible.
Rather depressing news continues to come out of France. Instapundit, of course, is all over the story of corrupt and strike-ridden France, with continued updates from bloggers and correspondents on the ground in Paris and elsewhere. One wants to think that things can't be nearly so bad as analysts have it -- they usually never are-- but as things stand, the long term situation in France does look rocky, at the very least.
The very public dishonesty of Paul Krugman begins to enter the cringe territory. And it should make us all think a little bit harder about what goes on in academia -- because this man is out of the academic world, and his dishonesty stretches beyond the editorial pages of the NY Times. Among other things, Krugman has grossly and repeatedly misrepresented the ideas of Friedrich Hayek -- and he has repeatedly failed to correct his misrepresentations when informed about them. It's all about "ideology" and partisan politics for Krugman, and this isn't so unusual in academia -- especially for those of a certain age. And the big problem in most of the humanities and "social sciences" is that there is little or no critical check -- beyond pure formalism for its own sake. (And note well, a great deal of the stuff that gives you credit for "empirical" work is privileged just because its allows for a display of formalism, and not because it provides any decisive or even telling critical utility.)
Bruce Bartlett on the "tax cut" for non-tax payers and the power of the NY Times. One question, why can't Bartlett talk straight? Here he is on the so-called "tax cut":
the Senate included a provision that increased refundability of the child credit, which is being raised from $600 to $1,000. Under current law, the credit is refundable for those with an income tax liability less than the credit to which they are otherwise eligible. But refundability is limited to 10 percent of a taxpayer's earned income above $10,500. It is scheduled to rise to 15 percent in 2005, and the Senate would have speeded up that increase to this year.
This would give George Orwell headaches. Why not call a welfare check a welfare check?
The Top 50 political blogs (Alexa rankings):
1) Andrew Sullivan's Daily Dish: 7,203 2) Instapundit: 9,228 3) Poynter Institute: 9,973 4) James Lileks: 14,740 5) Little Green Footballs: 14,740 6) Talking Points Memo: 19,193 7) The Agonist: 19,444 8) The Smirking Chimp: 21,486 9) The Command Post: 24,233 10) Daily Kos: 26,404 11) The USS Clueless: 29,934 12) Blogs Of War: 35,245 13) Dean's World: 36,210 14) Scrappleface: 36,277 15) Howard Dean for America: 37,052 16) Lt. Smash: 37,486 17) Jim Romenesko's Obscure Store & Reading Room: 39,903 18) Right Wing News: 42,802 19) This Modern World: 43,879 20) Maxspeak: 49,274 21) Nick Denton: 55,259 22) Stand Down: 57,756 23) Buzz Machine: 58,426 24) Matthew Yglesias: 59,599 25) The Semi-Daily Journal of Economist Brad DeLong: 59,935 26) Taegan Goddard's Political Wire: 61,223 27) The Truth Laid Bear: 62,166 28) Spinsanity: 63,680 29) Matt Welch: 68,220 30) Talk Left: 72,312 31) Cold Fury: 72,485 32) Oliver Willis: 72,774 33) Samizdata: 75,067 34) Warblogs:CC: 75,182 35) Sgt. Stryker's Daily Briefing: 75,195 36) A Small Victory: 76,482 37) Vodkapundit: 80,019 38) Ken Layne: 82,306 39) Moxie: 82,688 40) Virginia Postrel: 89,783 41) Asymmetrical Information: 90,134 42) Winds Of Change: 90,308 43) Rachel Lucas: 97,302 44) Rantburg: 99,742 45) Overlawyered: 104,341 46) Tacitus: 107,176 47) Amish Tech Support: 109,438 48) Gary Hart: 118,274 49) The Volokh Conspiracy: 136,650 50) Unqualified Offerings:136,929
Compiled by RightWingNews. Don't miss his methodological explanation and caveats.
UPDATE: RWN missed a few, including Karen DeCoster at somewhere in the top 10, and The Agitator at somewhere in the top 20. And of course PrestoPundit.com in the top 50 with a bullet.
Do we really need a rate cut? There's some reason to think we don't. Snippet:
Merrill Lynch chief investment strategist Richard Bernstein argued a cut could actually let economic weakness linger, since the economy's problem has been too much supply, rather than a lack of demand. What needs fixing, according to Bernstein and some economists, is not consumer demand, which has been surprisingly resilient, but corporate balance sheets. Only when companies trim down a glut of debt and unused equipment, the hangover from the 1990s investment orgy, will they be willing to spend again, according to this view. Making credit increasingly easier only delays the painful restructuring necessary to get the economy healthy again, Bernstein believes -- making the United States look suspiciously similar to Japan, the world's second-largest economy, which has struggled for years to escape deflation. "Policy makers seem to continue to believe that they can boost demand enough to alleviate the oversupply situation. They now talk of extraordinary monetary measures and huge tax cuts to stimulate demand," Bernstein wrote. "Although their timing was admittedly very poor, Japanese policy makers attempted the same thing."
And there's more:
Other economists worry Fed policy is only encouraging more 1990s-style speculation. "Artificially low interest rates change people's speculative behavior in ways we may all come to regret," said James Grant, editor of Grant's Interest Rate Observer. "It's already incited a great burst of speculation in the bond market."Sure enough, in the past two months -- during which the Fed has been "jawboning" about how it might be forced to use unconventional warfare to fight deflation, including driving long-term rates lower -- the yield on the 10-year Treasury note, already at extremely low levels, has plunged another 18 percent. The yield on the two-year note has fallen a whopping 31 percent, below the level of the Fed's key short-term rate.
Bond prices and yields move in opposite directions; the plunge in yields means bonds are extremely pricey right now, and some economists have grumbled they could be overinflated. A sudden drop in price could soak investors, and the coincident jump in interest rates and inflation might sucker-punch the economy.Speaking of bubbles, other economists are worried that another flood of cheap, easy money could reinflate that relic of the 1990s, the stock-market bubble. "I'm not worried about inflation per se; I'm worried about inflation in asset prices," said Sherry Cooper, chief economist at BMO Nesbitt Burns. "When the Fed has been aggressively easy in the past, it's ended up having to come in and aggressively raise interest rates and cause a lot of unnecessary dislocation."
That "unnecessary dislocation" could include another popping of another stock-market bubble, such as the one that occurred after the Fed started jacking up interest rates in 1999 and 2000 -- not a rosy time for stock investors, by any stretch.
Brian Wesbury, chief economist at the Chicago investment firm Griffin, Kubik Stephens and Thompson, pointed out several other possible negative repercussions of ever-lower rates, including;
--lower returns for lenders
--lower purchasing power for people on fixed incomes
--lower earnings power for insurance portfolios, putting upward pressure on --insurance premiums"By cutting interest rates too far...the Fed is using the monetary equivalent of a corked bat," Wesbury said. "The end result will be more damage from lower rates, more volatility in future interest rates and more confusion about what monetary policy can and cannot do."
BusinessWeek on blogs. The article is "ok", but I have to ask, how dumb are these guys? BusinessWeek writes:
InstaPundit's Glenn Reynolds .. rounds up conservative opinions from the world's editorial pages.
Has Instapundit ever done this? InstaPundit's beat is the blogosphere, guns, and international news, etc., not the editorial pages. And a better question, did a stringer phone in this report?
Friedman flips! Money -- money -- quote:
"The use of quantity of money as a target has not been a success."
Of course, there is more to the old man than merely money, and Uncle Milton is always good for a strong shot of crystal clear commentary:
"The second President Bush appears to have inherited the free-spending tendencies of the first," he says dismissively. What, then, of the tax cuts that the president recently signed into law? "His insistence on tax cuts is good," he concedes. "That is the only real way of bringing pressure on Congress to hold down spending. In my view, the size of government is determined much more by how much they can raise in taxes than by any ideological theory." The entrees arrive very, very hot."To go back to your original question, the tide of public opinion has continued to go against government. People are as suspicious as ever of government - big or small. Unfortunately, the slowness with which public opinion affects policy has not changed."
His favourite example of the mismatch between public opinion and public policy is school vouchers. Such a scheme, he says, would unleash market forces in the education sector by giving parents the right to choose which school their child attends. Funding would be granted in the first instance to the child, not the school. Schools would then have to compete for business by raising standards or pleasing parents in other ways.
"There is no doubt about public opinion," he says, tucking in to his eggplant. "Everyone knows that the public school system is lousy. The solutions proposed are all ineffective with one exception: a greater degree of parental choice - more competition. The majority of the American public is in favour of child-centred financing. But the teachers unions exercise such strong political control that it is very, very difficult to make any progress."
A great and important man. What is that line about a man who increases the will to live?
Here is the FT summary of the various Treasury reports on British Euro membership.
Former Bundesbank director Liam Halligan trashes the Euro. His argument convinces me the Euro might be a good thing. Money quote:
euro membership has played a major role in limiting [German] policy-making room for manoeuvre. [Furthermore] euro zone rules have cut back public investment to an extent we haven't seen since the war."
The upshot of the piece is that the Euro is bad for Keynesian monetary nationalism. And in my view, that is a good thing for both Germany and Europe. (via Institutional Economics)
Truck and Barter takes up Calpundit's budget cut challenge -- and offers up his own head, er, job for the axe.
John Podhoretz laying it on the line about the New York Times:
The problem with the Times is that it's become a left-wing sheet .. The chief disgrace .. is that they have tried to lay claim to objectivity even as they have consciously attempted to manipulate public opinion. [for example] their paper has time and again spun its own poll data in shocking ways to distort results - and only people who went and studied the numbers closely on the Times' Web site could discern the truth. And when, time and again, they have gotten caught out doing so, they act as though those who have caught them out are the manipulators and deceivers.
Mickey Kaus replies to Seth Mnookin on the Raines resignation -- and takes you inside the Newsweek sausage factory:
It's very Newsweekish to come up with some meta-commentary on the process ("everyone assumed the debate should focus on their concerns"), relieving the magazine (and Mnookin) of the need to decide whose concerns were accurate--a meta-commentary that also manages to squeeze in a sneer at "right wing ideologues" without having to admit that the right-wing ideologues were, in this case, largely right. I worked at Newsweek and know the imperative to come up with these seemingly "smart" Neutral Story Lines (e.g., "Is This Any Way to Elect a President.") I've written a few of them myself. They're almost always a cop-out of some sort, and in this case Mnookin's "all or nothingism" NSL doesn't even really fit the event. ...
Ford's new F-150 pickup rolls out today. The F-150 is America's favorite vehicle and Ford's big money maker. This time the truck is bigger, better and more costly than ever. What you have is pickup truck as status symbol, sexuality token, and luxury item. Oh, and it actual serves as a utility truck as well. I don't know how it can miss -- as long as it's actually a better truck. Can't wait for the Kaus gearbox review.
I'd missed this over the weekend:
the Bush administration is asking Congress to allocate .. $1.5 billion in welfare funds during five years for demonstration projects on marriage education and promotion
The Agitator has some thoughts. Here are my own. The most distructive force attacking the family structure over the past half-century has been the federal government and federal taxes. Case in point. Tax payments to the government by poor and middle income folks have increased substantially since the 1950s -- forcing mother and fathers to be apart from their families in record numbers in order to pay for the increased burned of the government. In many cases, the second income doesn't even cover the increased tax burden. Another $1.5 billion pulled out of the pockets of mom and dad for the sake of another extravagant government "test" program is kind of like spitting on the wound.
P.S. - don't miss The Agitator's Atkin's diet testimonial, including this:
I've even grown philosophically attached to the Atkins diet. If ever there were a "libertarian" diet, this is it. It's a finger in the eye to that dumb food pyramid the FDA has tried to shove down our throats for the last thirty years.
Historic churches deserve equal access -- to your tax dollars. So argues Mr. Volokh. He may be right. But we know that tax dollars are never distributed without a consideration of the political metric. Where are we then? Back to the distribution of other peoples money according to the metric of power, privilege and personal taste -- even with regard to faith affiliation.
June 09, 2003
Why are California gas prices so much higher than in the rest of the country? The Knowledge Problem has located the answers. The upshot:
policy decisions and not price gouging are the fundamental root of higher and more volatile gasoline prices in California.
A drumbeat of stories on the battle to send bigger "tax credit" checks to those who don't pay taxes. David Warsh calls this playing it "straight down the middle" and "a shining example of what good newspapers are supposed to do". Certainly many at the NY Times do see their role as social advocates -- and the news is a vehicle for moving the agenda of the country. And it works.
What is Greenspan afraid of and why?:
The Fed is concerned not about "the issue of deflation in the sense of falling prices per se, but the issue of corrosive deflation, that is, a deflation that essentially feeds on itself, creates falling asset prices, which in turn brings down levels of economic activity," the Fed chairman said .. he also said that the Fed knows so little about what would happen in a deflationary environment .. that monetary policy has to be "extraordinarily cautious."
(via Brad DeLong)
What should we expect as youthful France becomes increasingly Muslim?
Friedrich Hayek's important essay "Competition as a Discovery Procedure" is now available on the web (pdf). This version of the essay is a translation from a lecture given in 1968 at the U. of Kiel. It differs in several small ways from the essay published in Hayek's New Studies.
June 07, 2003
Bill Kristol's Weekly Standard very predicably endorses a government solution to the problem of Spam. Not to say that they have a solution, just that they know apriori were best to look for one. In the blogosphere, it's obvious that lots of folks haven't waited for the government to solve the problem -- they're fighting back with technology like spamarrest, or their own anti-spam hacks. The horizontal knowledge of the pack (not a herd) in action.
Leo Strauss -- his daughter explains the man, rebuts the myth. And a former student gives his account of what Strauss actually taught. Worth quoting:
Strauss perfectly appreciated the fact that the political science bequeathed to us by Machiavelli, Hobbes and Locke had brought into existence functional, humane and prosperous regimes such as the United States. They had done so, moreover, by rejecting the classical idea that the highest purpose of politics was to mold virtuous souls; instead, they settled on the more limited, but realizable, ambition of fashioning a politics in which one might hope in some sense to be "free." This was an immense historical achievement, and Strauss, a refugee from Nazi Germany, knew it very well.Strauss also knew, however, that the "moderns" of political philosophy from Jean-Jacques Rousseau to Karl Marx to Friedrich Nietzche had also been the inspirations for Jacobinism, communism and Nazism, and thus were in some sense responsible for all the blood shed in their respective names. And he knew that even liberal democracies, the most benign of the modern regimes, were susceptible to a corrosive egalitarianism that, left unchecked, could corrode all standards, lead to a soul-deadening conformity, and pave the way to what Alexis de Tocqueville identified as "the tyranny of the majority." ..
As Strauss saw it, it was his duty as a friend and beneficiary of liberal democracy and the duty of academia in general to preserve some critical distance from liberal democracy. This distance could only really be gained by having some sense of the entire catalogue of political alternatives available. This was a comparative politics in the broadest sense, one that included not just existing regimes but also vanished and imaginary ones. In the teachings of the ancients, Strauss found some of the ingredients he believed modern regimes lack: A Socratic concern for human excellence, a Periclean sense of grandeur, an Aristotelian insistence on moderation.
At the same time, Strauss believed that there were dangers involved in this rediscovery of political alternatives. The foundations of liberal democracy may, upon close inspection, not be quite as solid as liberal democrats would like to believe. The trick was to examine and strengthen the foundations without causing the edifice above it to collapse and no less importantly without causing it to collapse on top of those (like Strauss) who examine the foundations.
In other words, prudence was required. If the result of unfettered philosophical inquiry in a liberal democracy was to bring the house down, neither philosophy nor democracy would be well served. Strauss, though in some ways a quiet radical himself, had no patience for the brash academic radicalism that came into vogue in the late 1960s, with its sharp challenges to the moral, cultural and political orthodoxies of the day. Even if liberal democracy was based on nothing but enabling fictions (and Strauss did not believe that at all, only that it was based on incomplete truths), these were fictions that today's academics have a duty to defend. Failure to do so would only invite more oppressive regimes communism, in Strauss's day in which the freedom of inquiry would be much more severely restricted.
Would Hillary Clinton make a good President? Brad DeLong weighs in:
My two cents' worth--and I think it is the two cents' worth of everybody who worked for the Clinton Administration health care reform effort of 1993-1994--is that Hillary Rodham Clinton needs to be kept very far away from the White House for the rest of her life. She had neither the grasp of policy substance, the managerial skills, nor the political smarts to do the job she was then given. And she wasn't smart enough to realize that she was in over her head and had to get out of the Health Care Czar role quickly.So when senior members of the economic team said that key senators like Daniel Patrick Moynihan would have this-and-that objection, she told them they were disloyal. When junior members of the economic team told her that the Congressional Budget Office would say such-and-such, she told them (wrongly) that her conversations with CBO head Robert Reischauer had already fixed that. When long-time senior hill staffers told her that she was making a dreadful mistake by fighting with rather than reaching out to John Breaux and Jim Cooper, she told them that they did not understand the wave of popular political support the bill would generate. And when substantive objections were raised to the plan by analysts calculating the moral hazard and adverse selection pressures it would put on the nation's health-care system...
Hillary Rodham Clinton has already flopped as a senior administrative official in the executive branch--the equivalent of an Undersecretary. Perhaps she will make a good senator. But there is no reason to think that she would be anything but an abysmal president.
Interesting.
Do "prospect theory" and "the house-money effect" trump "efficiency theory" when it comes to stocks? Dirk Olin reports for the NY Times. Snippet:
.. most of us find losses roughly twice as painful as we find gains pleasurable. This radical precept subverts much of ''utility theory,'' the longstanding economic doctrine that says we weigh gain and loss rationally. When combined with the reality that some market winners display the same recklessness as some victorious gamblers .. the market is often revealed to be downright loony. Indeed, the findings of ''behavioral finance'' in recent years have increasingly challenged the fundamental rationality assumed by.. Eugene Fama's famous dictum that prices ''fully reflect available information.''
Just a little note. Although Hayek's work inspired the literature on prices and information, he himself neither believed nor argued that prices fully reflect all available information. In fact, quite the contrary. It remains true, however, that his famous essays "Economics and Knowledge" and "The Use of Knowledge in Society" contain important seeds from which the idea of "efficient markets" eventually arose, however different this conception might be from the specifics of Hayek's own work.
The article includes this bit from Robert Shiller's The New Financial Order: Risk in the 21st Century:
Despite the volatility we observe in speculative markets, no one should conclude from any of my or others' research on financial markets that these markets are totally crazy. I have stressed only that the aggregate stock market in the United States in the last century has been driven primarily by psychology and fads, that it has shown massive excess volatility. But many markets for subindexes relative to the market do not show evidence of excessive volatility, and the market for individual stocks shows substantial evidence supporting the notion that prices in these markets do carry genuine information about future fundamentals.
What was that thing McTeer was saying about the fallacy of composition?
Arnold Kling takes on America's biggest mental health problem -- our insane health care system and the deranged thinking that has produced it.
Amtrak -- George Will gives up and learns to love the the unstoppable monument to tax injustice and democracy gone mad. Money quote:
"The marketplace .. has been completely distorted by government investment."
Thomas Sargent comes to NYU economics -- the story of the drive for Top 10 status.
UPDATE: Institutional Econ has this comment on the article: " Jeffrey Sachs' $8 million townhouse also gets a mention. Who said there was no money in development economics?"
The Hayek-L Email Seminar -- next up Roger Koppl on his book
Big Players and the Economic Theory of Expectations.
For details go here. Read chapter one here (pdf).
June 06, 2003
Who is Ben Barnanke? And what does he want? Well, what he wants is this:
One of his most controversial ideas is inflation targeting .. the idea that the Fed should announce what inflation level it wants and adjust interest rates to make that happen.
Call it the new post-Volcker monetarism. Friedmanism with an extra helping of Keynes.
Truck and Barter has a headup on the new Chile-USA free-trade agreement. The good news:
All tariffs and quotas on all goods will be eliminated immediately or after a four year transition period--without exception
The bad news, well, go here for T & B's summary.
YOU MEAN INSIDER TRADING IS ILLEGAL? Have a suggested caption? Enter it in the comments, below.
UPDATE: "I don't think I can do anything with this cell." -- a posted comment.
A must read on the roots of terrorism from Alan Krueger and Jitka Maleckova. Snippet:
Countries with more freedom were less likely to be the birthplace of international terrorists. Poverty and literacy were unrelated to the number of terrorists from a country. Think of a country like Saudi Arabia: It is wealthy but has few political and civil freedoms. Perhaps it is no coincidence that so many of the September 11 terrorists -- and Osama bin Laden himself -- came from there.
(via Buzzmachine)
Roger Garrison explains it all for you -- an outline of his current LSE lecture series on Hayek, Keynes, Friedman and a macroecon which takes capital goods seriously.
June 05, 2003
Samuel Brittan has a simple solution to the Euro debate -- freedom. Money quote:
Why not then shelve the euro issue indefinitely by declaring that British residents are free to use whatever currency they like and let the euro make its way on its own merits?
Great story with the details on how one newspaper reader with a little help from the internet and the blogosphere exposed Maureen Dowd's fabricated Bush quote. With this great quote from Glenn Reynolds:
Uber-blogger Glenn Reynolds sees the emergence of online group fact-checking in a parallel to Russia's post-Soviet glasnost. "People are appalled, saying it's the decline of journalism," he told me. "But it's the same as when Russia started reporting about plane crashes and everyone thought they were just suddenly happening. It was really just the first time people could read about them."
(via Instapundit)
Randy Barnett has just joined The Volokh Conspiracy. This is a major addition to both the Conspiracy and the blogosphere. Barnett is the author of the perhaps the most important work in post-Hayekian jurisprudence produced in the past decade The Structure of Liberty: Justice and the Rule of Law.
Here is a bit from Chapter Two of the book:
"The problem of knowledge in society is ubiquitous. So are the means by which we cope with it. Perhaps this is why the knowledge problem is so easily overlooked as a problem in need of a solution. The particular problem of knowledge that I am interested in here concerns the knowledge of how to use physical resources in the world.
All human beings are confronted with a multitude of ways that they may use physical resources, including their own bodies. The challenge of making good choices regarding the use of resources would be difficult enough in an "atomistic" world where one's choices had no effect on the choices of others. Since this is not our world, the problem of a person or association making knowledgeable choices among alternative uses of physical resources is compounded by other persons and associations striving to make their own choices. Indeed, given the number of possible choices persons might make, the number of persons making choices, and the physical proximity of each to the others, it is remarkable that the world is not in complete chaos. The world is not in chaos, I suggest, because concepts and institutions have evolved to harness the diverse knowledge about potential uses of resources ins a manner that contributes to harmonious and beneficial interaction.
In this chapter, I discuss what I call the "first-order problem of knowledge." This is the problem of knowledgeable resource use that confronts every person in any society. No one has placed greater stress on this particular knowledge problem than Friedrich Hayek. As he explains:
"The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated from but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources--if "given" is taken to mean given to a single mind which deliberately solves the problem set by those "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only those individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality [1]."
Hayek's account does not assume that everything that people believe is true. Rather, it maintains that (a) there are many things each of us believes that are true and (b) access to these truths by others is severely limited. The limited access to each of these different kinds of knowledge gives rise to a problem of knowledge that every human society must cope with in some manner or other.
[1] Friedrich A. Hayek, "The Use of Knowledge in Society," Individualism and Economic Order (Chicago: University of Chicago Press, 1948), pp. 77-8 (emphasis added). For additional discussion of the knowledge problem see Don Lavoie, Rivalry and Central Planning (New York: Cambridge University Press, 1985); Thomas Sowell, Knowledge and Decisions (New York: Basic Books, 1980)."
The witches brew recommended by Keynesian crankonomics isn't working. The market continues to shake out misallocated capital and labor from the Fed. induced bubble of the late 1990s. U.S. factory orders are down in the biggest drop since 2001, unemployment claims are up, and:
The yield on the benchmark 10-year note dropped to a low of 3.24 percent, its lowest level in 45 years.
David Bernstein has good stuff on the early Stalinist beginnings of the ACLU -- and its current embarrassment about its past history. Needless to say, today's Leftists at the ACLU aren't embarrassed about the groups prior sympathy for the blood soaked system of government which once ruled Russia.
Economist John Cochran's latest on Phelps & McTeeter:
At the heart of Phelps’s misrepresentation or misinterpretation of Austrian business cycle theory is his capital theory and a lack of an appreciation for the important role of saving in the wealth creation process. Robert D. McTeer, “The Dismal Science? Hardly! (WSJ, June 4, 2003) makes a similar error in his defense of Keynes’s paradox of thrift, which he uses as an example of the fallacy of composition, “Individually, most consumers need to save more. But if all or many consumers start trying to save more, the economy will be in deep trouble.” McTeer, President of the Federal Reserve Bank of Dallas, fails to recognize that the paradox of thrift is just the broken window fallacy, which he does an excellent job of explaining, in a more subtle guise.
This really shouldn't be a sign of a revolution, but it is. In any other business, Howell Raines and Gerald Boyd would have resigned weeks ago. And a few years ago, they would have been able to ride out the storm, using the Times' enormous media power to protect themselves. But the Internet has changed things. It means that the errors and biases of the new NYT could be exposed not just once but dozens and dozens of times. It means that huge and powerful institutions such as the New York Times cannot get away with anything any more. The deference is over; and the truth will out. And this is what this campaign was all about. It wasn't personal pique. I started to criticize the drift of the Raines Times months before he decided to purge anyone at the Times who dissented from his politics and his personal agendas. It was about stopping a hugely important media institution from becoming completely captive to the elite left and a mercurial, power-crazy Southern liberal. Of course, that battle isn't over. But the massive power-grab that Raines attempted was foiled in the end. And Lelyveld is the perfect interim choice. This is good news - for the media, the Times, above all for the blogosphere, which played a critical part in keeping this story alive - and lethal.
A reply to McTeer. Snippet
McTeer’s endorsement of Keynes’s concept of the Paradox of Thrift is most troubling and a setback to economic education. Economy wide saving is not bad for the economy; it is the engine of economic growth. Saving does not cause recessions, it is a cure-all for economic ills. The economic problem is that Americans have not saved enough, largely because the Fed has kept rates too low, driving savers into the stock market where they were clobbered. Some have tried to refill their savings and to protect themselves from the recession, but by and large Americans continue to spend like a drunken Congress. President McTeer implores us to avoid the Luddite fallacy of keeping jobs for jobs sake—a good point. However, he has long advocated the Fed driving interest rates down to keep consumers buying more than they can afford, businesses investing in sub-marginal projects, and the propping up of businesses and investments that need to be liquidated before a real recovery can begin.
So much for the strong Euro -- as the European Central Bank slashes interest rates. Money quote from the BBC.
The new level of 2% .. is lower than at any time anywhere in Europe since World War II.
Roger Garrison explains why the false Krugman/Phelps "overinvestment" account of the Mises-Hayek boom-bust cycle gets everything wrong in the sense that it leaves out everthing which is important in the theory, including its central causal mechanism -- sort of like a criticism of the Darwinian theory of evolution which betrays a complete lack of awareness of the causal mechanism of natural selection (Hayek-L posting):
Fiona writes: >>But, on another issue, I wonder why the great aversion to the term "overinvestment" if Austrians regard I/GDP increasing out of sync with consumers' preferences as a part of their story?<<The aversion stems from the popular misinterpretation of the Austrian theory as a theory that's all about overinvestment, a characterization that overlooks the malinvestment emphasized by the Austrians. The malinvestment is the first phase of the self-reversing process. In my own view, the Austians need not deny--and in fact should affirm--that there is overinvestment during the boom. What they should deny is that overinvestment is the whole story .. As understood in the context of a macroeconomy, it would seem that while malinvestment is unique to the Austrian theory, both malinvestment and overinvestment (along with overconsumption) are essential to it. Malinvestment without overinvestment would allow the counter-movements to set in early, nipping the boom in the bud. Overinvestment (along with overconsumption) without malinvestment would allow the economy to experience a temporarily high growth rate, moving first beyond and then back to the PPF but without there being any intertemporal misallocations requiring painful adjustments that can send the economy inside the frontier. Only with both prefixes (mal- and over-) in play do we have (1) a problem of intertemporal misallocation and (2) time for that problem to fester before the internal conflict of market forces eventually turns boom into bust.
The idiot king of the Fourth Estate in New York now looks for a new toady from the Village:
"Arthur Hayes begat Arthur Ochs ("Punch") who was considered so dim by his mother and father that he was pushed out of the way for a sister's bright husband, and pushed in when the poor chap died young. Punch muddled through by listening to his much smarter editors, and begat Arthur Ochs Jr. ("Pinch"), who listened to no one. To give him credit, he did go through an apprenticeship, and tried hard to master the newspaper business.
Once installed, Pinch started to epater le bourgeoisie his great-grandfather had courted, trying to turn the paper of record into the Village Voice, or rather what the Voice would look like if it ran ads from Tiffany's. The motif of the Times became late-60s protest, bent on annoying the male and the white.
As a result, there were numerous reasons before the Blair rumpus to believe the Gray Lady was losing her grip. There was the coverage of the Augusta golf club as if it were the 1963 march on Selma, the gassy effusions of R.W. Apple, the "polls" that found trouble for Bush where no one else saw it, the endless forecasts of defeat. If you read the op-ed page of the Washington Post, you will in time find the best possible argument on all sides of all current political questions, and regular columns by people from George Will and Charles Krauthammer to Michael Kinsley and E.J. Dionne. In the Times, with one exception, opinions tend to range from Maureen Dowd to Paul Krugman, who go after the right with all the subtlety of a claxon horn.
It had gotten so bad that the Times was on its way to becoming a laughingstock before the Blair scandal: The paper even accomplished the amazing feat of losing readership during the Iraq war, with circulation sinking by some 5.3 percent. If it is hard to imagine a scene in the real world in which Pinch Sulzberger would have gotten his job, it is harder to imagine one in which he would be keeping it after such a performance. But royalty tends to hang on.
Why is a great institution in the 21st century acting as if this were France in 1500, and it were the House of Valois? Most monarchies have long since dropped this system, disposing of kings, or making them figureheads--having realized that the genetic lottery is even riskier than the electoral one, and a lot harder to rectify. The Raines-Sulzberger dynamic is best seen as another example of the prince and court favorite, the age-old pattern of public disaster that has brought down so many regimes.
This is the trouble with dynastic endeavors: They may work for a time, but sooner or later comes an idiot child--Henry VI, Nicholas Romanov--who wrecks the entire regime. Pinch Sulzberger is doing to the Adolph Ochs Times what Edward VIII almost did to the Windsors and England. And there's no Mrs. Simpson in sight."
June 04, 2003
Some excellent remarks from Steven Kates, Chief Economist of the Australian Chamber of Commerce & Industry (Hayek-L posting):
"My intent was not to argue that the world has changed so much since the 1930s that the theories developed then are no longer relevant. My intent was instead to argue that the theories that have developed since the 1930s are vastly inferior to the ones that were current at the time and before.
My point was basically that pre-Keynesian models of the cycle that were based on misdirected production are superior to the models which have come since, virtually all of which have a large demand-side component. And while Martin Wolf may think that these are theories that were developed during the 1920s and 30s, they have a much longer provenance than that. As just one example from the hundreds that might be culled, let me quote briefly from Walter Bagehot writing in Lombard Street published in 1873.
In Chapter VI Bagehot specifically deals with the business cycle, and notes that with the division of labour, one must anticipate what others will be willing to buy with the ever-present danger that producers will miscalculate. He wrote:
'A produces what he thinks B wants, but it may be a mistake, and B may not want it. A may be able and willing to produce what B wants, but he may not be able to find B - he may not know of his existence'.
If miscalculation occurs on a large scale, the consequences spill across the economy: Bagehot therefore continued as follows:
'No single large industry can be depressed without injury to other industries; still less can any great group of industries. Each industry when prosperous buys and consumes the produce probably of most (certainly of very many) other industries, and if industry A fail and is in difficulty, industries B, and C, and D, which used to sell to it, will not be able to sell that which they had produced in reliance on A's demand, and in future they will stand idle till industry A recovers, because in default of A there will be no one to buy the commodities which they create.'
This was written without any reference to money, but then with the introduction of credit, it is still miscalculation on the part of producers which leads to recession:
'The state of credit is thus influential, because of the two principles which have just been explained. In a good state of credit, goods lie on hand a much less time than when credit is bad; sales are quicker; intermediate dealers borrow easily to augment their trade, and so more and more goods are more quickly and more easily transmitted from the producer to the consumer.
'These two variable causes are causes of real prosperity. They augment trade and production, and so are plainly beneficial, except where by mistake the wrong things are produced, or where also by mistake misplaced credit is given, and a man who cannot produce anything which is wanted gets the produce of other people's labour upon a false idea that he will produce [what other people want].
To this form of miscalculation Bagehot adds the greater potential for catastrophe which occurs through large-scale speculation, which is usually induced and encouraged by inflation, very similar to the argument on bubbles put by Martin Wolf. According to Bagehot, higher prices encourage a false optimism which eventually is overtaken by the actual facts of the situation. Higher prices induce misjudgements, the ultimate outcome of which is an economic crisis and recession. Nor is Bagehot describing a process which is in any way ephemeral or without pain. He wrote that 'it takes two or three years to produce this full calamity, and the recovery from it takes two or three years also'.
The interesting aspect in reading Martin Wolf's article is to see that such theories are coming back into use, undoubtedly because current models based on AS/AD or ISLM are so incompetent to deal with current economic conditions. Such models, built on demand considerations, assume that the answers lie in higher levels of spending and that deficits can contribute to growth. No classical economist would have made this mistake."
The lies of Joe Klein and Time about taxes and the poor are contravened by CATO's Chris Edwards, who finally tells the truth about how the tax system is quickly becoming an arm of the welfare state.
Each recent major tax bill - 1986, 1990, 1993, 1997, 2001, 2003 - took taxpayers off the tax rolls as the EITC and other benefits were expanded. However, exempting more citizens from tax and mailing them bigger checks is bad policy. For one thing, if over one-third of Americans think that the government is "free," they'll vote for too much of it. For another, refundable credits cause an administrative nightmare: IRS studies routinely find that more than 20 percent of all refundable EITC payments are erroneous or fraudulent. Cash hand-outs attract crooks using ploys such as inventing children to boost tax credits.
Hal Varian explain it all for you -- deflation, that is. Varian, I'm guessing, has never read Hayek or Garrison or Selgin:
Today we have some of the excess supply pressures of the 1890's along with the weak demand pressures of the 1930's, albeit in a far milder form.The big difference today is that the Fed is pursuing active monetary growth and has made it clear that it will be aggressive in dealing with any further economic deterioration. The excess supply we see today comes from two related forces: the investment binge of the late 1990's and the strong productivity growth in recent years. Because of these two factors, businesses have had little inclination to make new investments, leading to slack demand and downward pressure on prices. The Fed has responded appropriately by loosening monetary policy to stimulate aggregate demand. Consumers have responded to low interest rates by refinancing their mortgages and continuing to buy, keeping aggregate demand stronger than it would have been under a tighter monetary policy. Prices aren't increasing, but they aren't falling, either. The worry is that the loose monetary policy won't be effective indefinitely. If economic activity stays slow, and unemployment rises, consumers will become more cautious, making them more reluctant to spend. As John Maynard Keynes put it, "You can't push on a string," meaning you can give people more dollars, but you can't make them spend them. To pursue the medical analogy introduced earlier: the symptom is deflation (or, at least, soft prices), the diagnosis is weak aggregate investment demand, and the recommended treatment is money supply growth. But the critical question is, as always, will the patient recover?
Productivity is up strongly. Prices should be dropping just as strongly ..
Eugene Volokh fields questions on academic blogging. Snippet:
I used to read the stories that the editors of the L.A. Times, the N.Y. Times, or the Wall Street Journal think are worth reading. Now I read blogs -- such as InstaPundit, Mickey Kaus's Kausfiles on Slate, Andrew Sullivan, during the war The Command Post, and so on -- and read the stories (in a wide range of newspapers and magazines) that the bloggers think are worth reading. Blogs provide a much wider range of editorial judgment to choose from, and it turns out that I like the editorial judgment of some bloggers more than I like the editorial judgment of some newspaper editors.
"Officials .. told me .. to .. $%&*#. But .. I don't .. let public opinion get in the way," writes Maureen Dowd in today's NY Times. More Dowdification fun found here.
The typical member of Congress, now an older baby boomer, ought to wonder: What am I doing to my children (and their children)? From 2010 to 2030, the over-65 population is projected to rise by about 30 million; meanwhile, the working-age population (20-64) will increase by only 10 million. The pressures on younger families to pay for Social Security and Medicare benefits must rise. Piling new benefits atop the old -- today drugs, tomorrow nursing-home care and then who knows what -- compounds the pressures. We cannot know the full consequences of these larger burdens. But the possibilities must include slower economic growth and smaller families -- because the economy becomes less dynamic and because young couples feel they can't afford children. The Congressional Budget Office projects that the costs of today's Social Security and Medicare benefits will nearly double by 2030 -- from 6.4 percent of national income (gross domestic product) to 11.1 percent. Put differently, the increase equals 25 percent of today's federal budget. It implies a massive transfer from the working-age population that must occur through (a) higher taxes, (b) higher deficits, (c) cuts in other government programs -- or all three. Now, suppose Congress adds a drug benefit ..
Robert Samuelson, explaining the insufferable generation's new road to serfdom.
Why is this man smiling? Well, perhaps its because he's an employee of the Federal Reserve Bank, living fat and happy off the profits earned every time the Fed. inflates the currency and depreciates the value of your savings. How dumb is this man? Well, he's suppose to be the one Fed. bank president who's a great and true believer in the free market. But it turns out he doesn't believe in the very best thing which capitalism provides us -- the accumulation of capital goods through investments savings. I.e. the thing which makes our wealth possible. Unbelievably, McTeer seeks to illustrate the value of an economics education using perhaps the most damaging fallacy every brewed up out of the witchcraft of Keynesian crankonomics:
Economics training will help you understand fallacies and unintended consequences. In fact, I'm inclined to define economics as the study of how to anticipate unintended consequences. Most fallacies in economics probably are fallacies of composition: What's true of the individual may not be true of the whole. You may be able to see better if you stand up -- but not if everyone stands up. John Maynard Keynes' paradox of thrift provides a currently relevant example: Individually, most consumers need to save more. But, if all or many consumers start trying to save more, the economy will be in deep trouble.
From today's Wall Street Journal, subscription required. The original speech.
I can't resist this. A fine letter from Mark Thorton to Jude Wanniski:
Thanks for sending out the Wall Street Journal editorial by Professor Phelps. Some good points to be sure, but he presents an incorrect view of the Austrian school's theory of the business cycle. The Austrian theory is not an overinvestment (i.e. "too much") theory, it is a malinvestment (i.e. "wrong ones"). Naturally, his analysis that follows is flawed.Austrian economists rarely speak favorably in terms of aggregates, or like an accountant or historian might. They speak and write in terms of prices, economic decisions, and resource allocation--real life "price theory." They are concerned about the structure of production (the economy from natural resources to consumer goods) and the structure of production was completely out-of-whack in 1999 despite rosy statistics and record breaking stock markets. You don't need much "extra" investment to change the structure of production and entrepreneurs were doing just that--radically changing the structure of production--under the influence of Alan Greenspan's monetary policy.
Many of these investments have now been shown to be bad investments (hence malinvestment theory). The recession need not be a long one, as Professor Phelps wrongly attributes to the Austrians, if the investments are allowed to liquidate quickly. So-called stimulus policy (monetary ease and loose budgets) only make things worse and drag out and worsen the correction-recession-recovery.
Don't miss Thorton's kicker punchline at the end of the full letter.
Some of the myths of deflation are exposed by economist Jacek Rostowski. (via Mises Econ Blog) Money quote:
There are five ways in which deflation is supposed to plunge the world into a spiral of economic contraction. First, once deflation has started, falling prices will make people put off spending, causing prices to fall further. Second, with prices falling and the value of debt fixed in nominal terms, the real indebtedness of households and firms will grow, acting as a drag on the market, as in Japan since 1990. Third, nominal interest rates cannot fall below zero because companies and households always have the choice of holding cash, which gives a zero return. Banks cannot therefore offer interest rates below zero to depositors so cannot charge negative nominal interest rates on loans. The demand for loans will fall, shrinking the banking sector and the economy with it. Fourth, because nominal interest rates cannot turn negative, central banks will be powerless to offset the effects of deflation. Finally, with prices falling and nominal interest rates stuck at zero, real interest rates will keep increasing, turning the deflationary screw.In fact, all of these supposed effects either do not matter much, or are the result of inflation being lower than expected, or happen because institutions have not yet adjusted to a potentially deflationary world. They are not the inevitable result of falling prices.
Economist John Cochran has another response to Phelps:
Edmund Phelps’s "False Hopes for the Economy-and False Fears" (WSJ 6/3/03) attempt to undermine the current resurgence of interest in Austrian cycle. He states, "One of the most unreasoning fears, yet pervasive, is the nightmare of interwar Austrian cycle theory: 'overinvestment'. But in truth, what should be real is the fear of the consequences unsustainable boom and what is blatantly false if Phelps's characterization of the Austrian cycle theory.The Austrian cycle theory is a theory of the misdirection of production-malinvestments-which may be accompanied by overinvestment and overconsumption. Most 'Austrians' would agree with Phelps that "world markets would react to the addition of capital with a sharp drop of interest, a skyward jump of capital goods prices, and immediate lift of real wages and jobs."
But Phelps, unlike the Austrian, fails to realize that a sudden addition of capital is not heaped on the world; it comes from increased saving. The boom-bust cycle develops because credit creation through central bank intervention in the economy causes markets ro respond as if more 'capital' was available when in fact it is not. The bust and necessary readjustments develop when the misdirections of production of the economy and the relative scarcity and possible consumption of capital are discovered.
Glenn Reynolds is loving life, eating pizza and coining cool new expressions like "Horizontal Knowledge": Killer cut:
Just try this thought experiment: Imagine that it's 1993. The Web is just appearing. And imagine that you - an unusually prescient type - were to explain to people what they could expect in the summer of 2003. Universal access to practically all information. From all over the place - even in bars. And all for free!I can imagine the questions the skeptics would have asked: How will this be implemented? How will all of this information be digitized and made available? (Lots of examples along the line of "a thousand librarians with scanners would take fifty years to put even a part of the Library of Congress online, and who would pay for that?") Lots of questions about how people would agree on standards for wireless data transmission - "it usually takes ten years just to develop a standard, much less put it into the marketplace!" - and so on, and so on. "Who will make this stuff available for free? People want to be paid to do things!" "Why, even if we start planning now, there's no way we'll have this in ten years!"
Actually, that final statement is true. If we had started planning in 1993, we probably wouldn't have gotten here by now. The Web, Wi-Fi, and Google didn't develop and spread because somebody at the Bureau of Central Knowledge Planning planned them. They developed, in large part, from the uncoordinated activities of individuals. Why can you find all sorts of stuff, from information about the Hephthalite huns to recipes for brewing beer and even recipes for cooking squirrel, on the Web? Because people thought it was cool enough (to them) to be worth the effort (on their part) of putting it online. We didn't need a thousand librarians with scanners, because we had a billion non-librarians with computers and divergent interests. Wi-Fi is springing up the same way: not as part of a national plan by the Responsible Authorities, but as part of a ground-up movement composed of millions of people who just want it.
There are two lessons here. One is that the skeptics, despite all their reasonable-sounding objections, would have been utterly wrong about the future of the Web, a mere ten years after it first appeared. And the second is why they would have been wrong: because they didn't appreciate what lots of smart people, loosely coordinating their actions with each other, are capable of accomplishing. It's the power of horizontal, as opposed to vertical knowledge.
"It is too early to get any real fix on the American economy in the period ahead .. There are indications that we are stabilizing, and there is some indication of a return [sic] but it is at this stage not by any means clear .. The best that we can judge is that the acceleration has not yet begun".
These are the remarks of: 1) a stock analyst faking an understanding of the economy in order to impress his clients 2) Alan Greenspan. He also said this:
We have concluded ... inflation was not something of significance for the Federal Reserve to be concerned about, which means that we would be far more inclined -- as we have had over the last several years -- to be taking out insurance against economic weakness.
Alan Greenspan is going to be taking out some insurance for you. A little fire protection plan, perhaps. Doesn't that make you feel all safe and warm?
June 03, 2003
Explain to me what sort of parenting and schooling produces this:
Now, what is the argument again for government education? And why did so many of my family members have to work so hard to pay for the sort of education which produces this? (via Sharkblog. And don't miss his backstory on this event.)
File this under POSEUR ALERT:
Kagan considers that the United States and Europe have come to reflect the incompatible views of the world held by two great philosophers, Thomas Hobbes and Immanuel Kant. The former lived through the English civil war of the 164o's, whose horrors impressed on him that the law of the jungle is the natural order of mankind and that the sole resource available to tame the general beastliness is the state’s possession of superior power, coupled with the resolve to wield it. Kant, on the other hand, living in the relative calm of the 18th century, maintained that reason is the tool for perfecting society and ensuring perpetual peace.
The fear that has a name -- how the Left enforces the party line. Worth quoting:
After all, these [Leftists] at the party were people with the equivalent of tenure, living in a free country with all sorts of protection of speech - not like the communist party or totalitarian racist South Africa in the old days. What were they afraid of? The fear, as I began to examine it, had two flavors. One was the same as the fear I had experienced in South Africa, in the communist party, in Hungary. It was fear for one's future, one's career. Even tenured faculty have lost their jobs and been disgraced because of an impolitic remark during the height of political correctness - I have known some of the hapless victims. One man, a friend whose health was poor, had been hounded, completely innocent, to his death by a whole conspiracy of gossip, secret caucuses and official administrative action.
Sometimes great teachers are also great scientists. This is the case with U.W. professor Rodney Stark. Stark is now giving a good kick in the pants to sociologists of religion, point out how they have failed to come to grips with the fact that people truly believe in their Gods, and this belief has made a difference to world history. Stark's new book is For the Glory of God: How Monotheism Led to Reformations, Science, Witch-Hunts, and the End of Slavery
Another state does it -- billions in spending cuts and zero tax increases. The goons in Sacramento have no excuses.
"Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime. Allow a man to take property rights in fish, and you won't have to teach him a thing. Soon enough, he'll be fishing better than you, and he'll be selling you fish for less than it costs you to provide them for yourself." -- Greg Ransom
The central villain in the poverty causing farm policy of Europe is -- surprise -- France. French farm policy arguable leaves more innocents dead each week than the total number of non-combatants killed in all of American wars over the last two decades. Socialism in one country leads to poverty in a hundred countries. (via Daniel Drezner)
Limited government Republicans are missing in action, and Larry Kudlow is as confused as Paul Krugman. James Antle goes on a rant. Snippet:
Many economic conservatives have also bought into the fallacy that the Federal Reserve is pursuing an overly tight monetary policy. Rather than allow bad investments to liquidate themselves and the free market to undertake its internal cleansing process, they propose more liquidity, more growth in the money supply, more private debt and government interventions to forestall the inevitable. On these issues, Larry Kudlow makes scarcely more sense than Paul Krugman. Near-zero interest rates and monetary growth have failed to induce recovery in Japan; these same conservatives would recognize the error of these policies if their delivery mechanism was instead direct federal subsidies to uncreditworthy businesses.
According to Bill Jamieson in The Scotsman we are at point with Fed policy where the tide of history is decisively shifting:
Economist Stephen King at HSBC believes that the Fed, with the knowledge and support of the US government, is already in the middle of a "five stage strategy" designed to prevent the emergence of deflation and to cure deflation should it actually arrive. The first and second stages - lower short term interest rates and looser fiscal policy - have already been enacted, with mixed results thus far. The third stage, potentially imminent, lies in manipulating the yield curve. The fourth stage, not yet discussed by the Fed but a growing possibility given the high level of private sector debt, is a debt bail-out involving protection against deflation. The fifth stage is the creation of future inflation expectations through any one of a number of options: printing money, price level targets, and incredibly large budget deficits. For a generation of economists and commentators driven by the inflationary crisis of the 1970s into the arms of the Austrian school of economics, this is high heresy. The prime role of central banks was the control of inflation and the very first step was the halting of the printing presses. We are indeed at an historical inflection point, where the established wisdom of the past 30 years is already half way to the incinerator.
(thanks to Jeff Tucker)
In a major embarassment for the editorial page of the Wall Street Journal, the Journal op-ed page carries an opinion piece by economist Edmund Phelps which in content is something like a biochemists raging against evolution -- but with the evolutionary theory completely mistaken. Imagine, for example, if the Journal opinion page ran an editorial by a biologist which dismissed the theory of natural selection because the author believed that the theory of natural selection was a theory of the inheritance of acquired characteristics and was incompatible with modern genetics. The Journal and that biologist would be laughed off the stage of serious scientific commentary. And this is just what should happen to the Wall Street Journal and Edmund Phelps when it comes to economic commentary.
False Hopes for the Economy -- And False Fears
By EDMUND S. PHELPS
The towering investment boom of 1996-2000, now over, was a huge lift -- and not just for wages, profits and employment. There may never been a time in U.S. history when innovative activity was more engaging and working life more rewarding. The task now is not to create artificially a replacement boom by assorted stimulants, which would be hard at best to do anyway. It is to maintain and improve the vitality and creativity of the economy so that high performance is the norm rather than the exception.
The public, though, is not in a frame of mind for talk of fundamental reform. The loss of the boom has left people uncertain, uneasy. They know that after the 1920s boom came the Great Depression. Some know that the '50s boom was followed by the '60s boom. There is a cacophony of opinion on the economy's prospects and recent policy interventions. Conflicts among dormant theories have broken out in the open. We cannot get to the deep issues until we dispel the more unlikely Cassandra scenarios and Pollyanna theories that plague present discourse.
The False Hopes
The most mindless optimism speaks ritually of "recession" from which we can expect "recovery" -- in labor, product and capital markets. But what recession? Standard interpretations of the usual charts estimate that in 1995-96 the economy was at or close to its long-run normal state -- with monetary disturbances in abeyance and no big nonmonetary disturbances either. (The core inflation rate was steady, averaging the same rate as in 1993-94.) Of course, what is normal is always evolving. Yet, impressively, the period's unemployment rate (5.5%), the share of GDP going to labor (65.8%), and stock-market wealth relative to the GDP (about 115%), were on the whole not far from their levels in two other pretty normal periods, 1987-88 and 1971. In the next four years the economy boomed, posting records in all these respects and others. Since 2000 it has fallen back: labor's share to its 1995-96 level, the stock market to its 1997 level and the unemployment rate -- at 6.1% -- to its 1994 level. So we're more or less back to normalcy. It was the boom that was abnormal.
Yet some take the view, many unconsciously, that there is no normal state to which the economy tends to return, even given current institutions, tax rates and welfare rules, and entrepreneurs' spirits. The normal level of employment, they say, is a statistical artifact that moves up if the government takes any of the straightforward measures to raise the level of economic activity -- if the Fed gives support with low interest rates and ample liquidity or Congress does by spending more money.
Behind that view is the "aggregate demand" fallacy: the government can deliver high employment simply by pumping up high aggregate demand -- by easier money or bigger budgetary deficits. A.W. Phillips sensed the mistake here, arguing in 1958 that a pumped-up employment level typically brings a higher rate of inflation (illustrated with his famous curve). Milton Friedman and I corrected Phillips, explaining in 1968 that, to keep on doing the pumping trick, the rate of inflation would have to be driven higher and higher -- until the payments system broke down or the policy was halted. Unemployment cannot be kept forever below its "natural" rate or path, along which the rate of inflation is neither rising nor falling. In natural rate thinking, a tax cut boosts employment, as supply-side economists knew, only through its effects on incentives to work and to save, the cost of labor and the cost of capital -- not its effect on demand.
There is much overconfidence too that depressions cannot happen, now that proper monetary policy is understood. For one thing, natural rate thinking has a role for aggregate demand. ("It's a question," to paraphrase Humpty Dumpty, "of who is the master, that's all.") For actual employment to home in on the natural employment path, market mechanisms have to drive demand up or down, as needed, to tailor it to the GDP producible at natural employment. But economists don't know accurately where the natural rate is, so how can the market? The gyrations of the dollar show the markets struggling with uncertainty. If the natural rate is again 5.5%, its mid-'90s norm, the fall of unemployment to the natural level would seem to require that exports get back to the share of GDP they had in 1995-96. That would appear to require the dollar to fall to its mid-'90s level -- about $1.35 to the euro.
Moreover, bad things can happen to the natural unemployment rate. If CEOs, seeing more difficulties or risks for profits ahead, cut back budgets for new business assets, the natural rate will go up. There can be structural slumps -- with or without disinflation.
The False Fears
One of the most unreasoning fears, yet pervasive, is the nightmare of interwar Austrian cycle theory: "over-investment." Wall Street gurus say that the investment boom, with its extra purchases of capital goods (and extra jobs to make them), caused capital stock to get "ahead of itself," with the result that capital-goods spending (and output) will for years be below its normal path -- to give wear & tear and obsolescence the chance to work off some of the excess capital and to permit the economy to grow into the rest. If that is right, employment will also stay for years below its normal path. A slump after the boom.
But, first, what if only a small part of '90s investment is proved to be overinvestment? No slump should follow an investment boom inspired by new expectations of some outsize future productivity gain if they prove correct -- a sort of rational boom. The capital stock surges up only in proportion to the expected rise of productivity, and when the productivity gain is realized annual investment drops back to its normal ratio to (increased) output -- never below its trend-path -- and employment falls back to normal.
On overinvestment, the Austrians really had no argument. Imagine a sudden addition of capital was heaped on the world. The growth rate of capital stock would have to drop. But, for that, it would be more than enough that gross investment not increase as a ratio to the (increased) capital stock; it wouldn't require a decrease of investment or of jobs, let alone collapse. Indeed, a model of mine says world markets would react to the addition of capital with a sharp drop of interest rates, a skyward jump of capital goods prices, and an immediate lift of real wages and jobs! The saving point for the Austrian contention is that if the overinvestment is concentrated in the U.S., the U.S. alone cannot achieve the full drop in interest rates required because it is just one part of the world economy. But that won't wash if overinvestment was not much less important in Europe and Asia.
Before finishing with overinvestment, consider a related fear. It is that, with the capital stock pushed far higher in the last decade than will be justified by productivity gains in this one, expected rates of return on business assets must have fallen, so the rates of interest required for unemployment to attain and stay at its natural rate must have fallen similarly. The worry is that, if a recession were to arise, the economy would be faced with the need for interest rates of close to zero, even below zero. Should that come to pass, vast parts of the financial system would go under, unable to provide a return competitive with that of good old cash. Then disinflation would pick up and lead to deflation, intensifying the problem.
But the present overhang of '90s overinvestment appears far too small to have caused a decline in rates of return large enough to put us close to that interest-rate trap. From 1996 to 2000, the extra investment going on was 2% of GDP. So the increase in the capital stock in those five years was about 10% of annual GDP. That would likely have boosted the capital-GDP ratio by about 5% -- from, 2.0, say, to 2.1. Hardly enough to push us to the edge of the interest-rate trap. Besides, while we never want to get too close to the trap, fear that the risk of falling into it has greatly increased seems overblown. Medium- and long-term interest rates today are like those in the '50s.
The question du jour is what the information revolution means for jobs now. Since the boom ended, the result is not just that the extra jobs created in the capital-goods sector are gone. It is that the newly installed software embodying the new information technologies seems to have opened a Pandora's box of cost savings that are now destroying old jobs in the consumer goods sector -- in securities, airlines and communications.
Mistakes have been made on productivity by several economists. I will say this: It has been a terrible mistake to see productivity increases as creating jobs. Distinctions are required. It is new expectations of future productivity increases that are a strong job creator. The left was dead wrong that dynamism spells wide joblessness. Actual increases in productivity are different. An unanticipated economy-wide increase could be approximately neutral for employment, raising wages and nonwage incomes about equally.
The lesson of rational booms is that realization of a long-anticipated productivity gain -- hence long reflected in the value CEOs put on a customer, an employee, an office, so it has already largely generated the extra investments that the gain justified -- brings a cut in investment activity, causing employment to decline. (The productivity gain raises the cost of acquiring more assets.) The gain represents an increase in the cost of keeping employees off production to train new employees; so that is the time to stop hiring, so jobs decrease and output increases. Such anticipated gains are why booms end, not how they are created.
But this gloomy outlook is not the only tenable one. Recall that current expectations of future productivity gains not already anticipated in past investing serve to boost current investment activity, which generally lowers the natural rate. The decade could yet see a revival in expectations for future productivity growth.
A real fear is that CEOs have turned sour on the prospective returns on investment or have hiked the risk premium on what they see to be their cost of capital. If they have, the causes of this loss of confidence must be identified and addressed. Another real fear is that maybe our economic institutions and government policies are subtly tilting toward old capital, entrenched management and CEO pay ungeared to results. We need to guard against European corporatism and old-fashioned cronyism. The real hope is that the enterprising spirit is so strong here that, even if the system is not tuned up for best results, there will continue to be enough upstart entrepreneurs and established ones that will hit upon ideas for new products and methods worth developing and trying to market. With just our accustomed dynamism we can look forward to normal times, with their ups and downs.
Mr. Phelps is McVickar Professor of Political Economy at Columbia University.
Columbia University should be embarrassed as well.
What does the "Austrian" theory really say? Go here to find out, and check out this for a bit of irony.
UPDATE: Hayek-Ler John Cochran has a response to Phelps. And Casey Khan response as well.
June 02, 2003
Daniel Drezner considers the pros and cons of academic blogging:
I think the piece underemphasizes the scholarly reason for blogging. Picking apart the scholarship of a Michael Bellesiles or a John Lott is a rare occurrence. More important is the way blogs can engage an audience outside the small world of students and colleagues. At their best, scholar blogs can function as what Hayek called "second-order intellectuals," applying abstruse theories to real-world problems. They can open a window on the inner workings of ivory tower, debunking stereotypes of academics as detached from the real world. At their worst, no one reads them and you get denied tenure for engaging in such base pursuits.
Repeat after me, "I -- state your race -- ". More and more, college applicants are simply declining to state.
Global Warming -- it was a good thing:
the warmest, or most extreme, climate for those locations over approximately the last 1000 years tended to occur sometime between the 9th and 14th centuries, in what is called the Medieval Warm Period. That period of extreme climate - long before the air's significant increase in greenhouse gas concentration from human activities - must have natural explanations. Whatever they are, the consequences of the warming, as far as man was concerned, were scarcely dangerous. Vikings made their way to Greenland, Iceland and North America in that period. England had vineyards. H.H. Lamb, the founder of the climatic research unit at East Anglia University, found that England's climate was warm enough in the 12th and 13th Centuries to support more than 50 vineyards, signifying that May frosts were rare. William of Malmesbury noted in De Pontificibus: "No county in England has so many or so good vineyards as this Gloucester." By the 14th Century, that warmth had eroded, heralding a period now known as the Little Ice Age, lasting approximately from 1300 to 1900 C.E. Europe, for example, experienced more acute winters, frost and year-to-year climate variability, and the worst of the Little Ice Age from 1550 to 1700. The human effects were tragic: In Scotland severe weather in seven of the last eight years of the 18th century produced one of Scotland's deadliest famines of the last 1000 years.
They have guns. They will use them if you don't obey. They want your money. You have no choice but to give it to them. And your money goes up in smoke. They aren't crack addicts or heroin addicts. Their are Congress, the President & their Federal minions. And they've just stolen your money, and they and their friends are having a ball with it.
Speaking of evil -- and not just for rhetorical effect -- Radley Balko has the goods on true evil:
Asking every American for 53 cents to help fight pictures of AIDS babies isn't bold. It's easy. Bold would be standing up to the politically savvy cotton industry, for example, and saying "no" to the $3.4 billion subsidy it got from the 2002 Farm Bill. The average cotton farmer in the United States is worth $800,000. He can get up to half of his annual income from government subsidies. And thanks to the 2002 Farm Bill, he can expect to earn about 16% more in the years ahead. Meanwhile, in impoverished Mali - where cotton is pretty much the only export - U.S. and European subsidies will drain an additional 10% from what little income Malian cotton farmers managed to bring in last year. Economists estimate that U.S. cotton subsidies take a quarter of a billion dollars from African farmers every year. And that's just cotton. Thanks to subsidies, American corn sells on the international market at just 80% of the cost of production. Wheat sells at just 54%. There's simply no way African farmers can compete with behemoth western corporate farms that, while feeding at the public trough, sell grain on the world market at a fraction of what it costs them to actually grow it. The United Nations estimates that American and European agricultural subsidies cost African farmers $50 billion annually.
If you think about the massive poverty and disease of Africa -- and the massive wealth of fat and happy American agribusiness and its kept politicians -- you can't help but see evil in this. For the language challenged academics out there, we'll call it "structural injustice". But I -- like the President -- like the plain old word evil.
UPDATE 1: From Bloomberg -- "The World Bank estimates that a WTO agreement, including cuts in industrial duties and greater access for banks, telecommunications and insurance companies in worldwide markets, would add $800 billion a year to the $31 trillion global economy. Still, in order to get that accord, the U.S. has said that the 15 members of the EU need to agree to cut their $40 billion a year in agricultural subsidies. The Geneva-based WTO missed a March deadline on how to open trade in farm products."
UPDATE 2: Peter Beinart -- "A year ago, Bush signed the Farm Security and Rural Investment Act of 2002. The law—crafted to help Democratic and Republican farm-state senators up for reelection —boosted agricultural subsidies by an astonishing 80 percent. And, because the president signed it, many Africans will die. To understand why, consider just one provision of the legislation: the subsidy on cotton, which the 2002 law more than doubled, from 35 to 72 cents per pound. The United States is a highly inefficient cotton producer; in fact, America's production costs are roughly three times those in the West African nation of Burkina Faso. Yet Burkina Faso is losing market share because the United States subsidizes its cotton industry by roughly $2 billion per year (three times as much as the U.S. Agency for International Development spends annually on Africa). According to Oxfam, the United States actually spends more subsidizing the production of cotton than it earns selling it—making the industry a net loss to the U.S. economy. Those subsidies go to America's 25,000 cotton farmers, who boast an average net worth of $800,000; by contrast, the average yearly wage in Burkina Faso is roughly $200. Burkina Faso relies on cotton for 60 percent of its exports. And Oxfam calculates that, as a result of U.S. subsidies, its export earnings have dropped 12 percent. (Neighboring Mali has seen a drop of 8 percent, which translates to more money than it receives annually in U.S. aid.) Before the 2002 farm bill, the cotton industry was bringing real benefits to Burkina Faso's people. Last summer, the Times of London noted that, in the village of Sobara, cotton exports had funded the construction of 21 new schools and a rudimentary health clinic that distributed anti-malaria pills and polio inoculations. Upon hearing of last year's legislation, the treasurer of the town's cottongrowing cooperative told the Times, "This means our schools and our health centres will close down." That means people in Sobara will die."
The Dallas Fed has a primer on deflation and its cures -- for those who worship at the Golden Calf of the very dead Lord Keynes.
Arnold Kling explains the Economic Attribution Error:
That is when someone attributes the behavior of key macroeconomic indicators, such as the exchange rate, the Budget deficit, or the unemployment rate, to the fundamental character traits of government officials, such as the President or the Chairman of the Federal Reserve. In fact, the values of these variables depend mostly on the context provided by the private sector - the influence of fiscal and monetary policy tends to be vastly overstated.
But there are some things you can hold a politician accountable for:
I want to make clear that while I am arguing against making the economic attribution error, I am not giving President Bush a "pass" on economic policy. The Bush economic policy can be evaluated on its own merits. I would give the administration a bad grade on trade, because of the steel tariffs. I would give the administration a bad grade on fiscal policy, because it is making no attempt to identify and implement spending reductions, and because it has not pursued any sort of "exit strategy" for Medicare, which threatens to capture a huge share of GDP for the government. I would give the administration a bad grade on energy policy, because the proposal to subsidize hydrogen fuel cells shows a failure to understand Oil Econ 101. I would give the administration a bad grade on education policy, because it continues to undermine local control of schools.
From the land of George Orwell:
Smokers and overweight people will be asked to sign contracts with their doctors to agree a programme to quit smoking and lose weight under radical plans being drawn up by the [British] government .. In an attempt to remind people of their own responsibilities the health secretary, Alan Millburn, is examining plans for patients and doctors to agree a formal programme of treatment.
More on "self-responsibility" as imagined by the British Labor party here.
The markets -- and the people of Iraq -- are beginning to work. So who are the foreign imperialists out to kill the baby of Iraqi recovery in the crib? Our man Mark Steyn reports:
So what precisely is happening .. that requires an Oxfam/ICRC summit? Well, the problem, as they see it, is that, sure, there's plenty of food available but "the prices are too high". That's why the World Food Programme and the other NGOs need to be brought in, to distribute more rations to more people. Can you think of anything Iraq needs less? If prices really are "too high", it's because storekeepers are in the first flush of a liberated economy. Given that the main drag in Rutbah has a gazillion corner shops lined up side by side, competition will soon bring prices down to what the market can bear, if it hasn't already. Offering folks WFP rations will only put some of those storekeepers out of business and ensure that even more people need rations. But perhaps that's the idea. And perhaps that's why I found rather more hostility towards the WFP, the United Nations High Commissioner for Refugees et al than towards the military. "Americans only in the sky," one man told me, grinning as a chopper rumbled overhead. "No problem." Down on the ground, meanwhile, the new imperial class are the NGOs. They shuttle across the globe, mingling with their own kind - other SUV users - and bringing with them the values of the mother country, or the momother bureaucracy. Like many imperialists, they're well-meaning: they see their charges as helpless and dependent, which happy condition has the benefit of justifying an ever-growing aid bureaucracy in perpetuity. It will be very destructive for Iraq if the tentativeness of the American administration in Baghdad allows the ambulance-chasers of the NGOs to sink their fangs into the country.
More on the lies of Sidney Blumenthal. This time it's David Horowitz who's trying to set the record straight. Many of Blumenthal's lies were first published by the Washington Post while Blumenthal worked there.
Bruce Bartlett celebrates the 25th anniversary of Prop 13. I loved this bit:
economists at the University of California at Los Angeles predicted that the state's unemployment rate would rise by 4.5 percentage points .. if [Prop 13] was enacted.
Of course, instead of rising 4.5 percent the unemployment rate in California fell below the national rate for the first time in years.
LewRockwell.com has a new blog. Pro-freedom, anti-government, anti-war, anti-empire politics served up hot.
Memo to Gray Davis -- Washington State does it with cuts and freezes and no tax increases.
It's an amazing world. Yesterday I ran into a young warrior already returned from combat in Baghdad. A few weeks ago he was exchanging gunfire with the enemy. Now he has a new apartment in Orange County, CA and he was out getting himself a vacuum to keep it clean. In the short time we spoke he didn't have much to say about the war. He did say he'd traveled and fought with several of the embedded reporters, Ollie North among others. Ollie, he says, tended to hang out with the high ranking officers rather than with the young enlisted men.
Imagine if magically every dollar bill in your wallet turned into two dollar bills -- and every 20 dollar bill turned into two 20 dollar bills. This, essentially, is what has happened to your money since Alan Greenspan joined the Fed. Reserve in 1987. We continue to live in the Great Age of Inflation. M-3 has grown from $3.6 trillion 16 years ago to $8.6 trillion today. As Doug French esplains, this means that:
In his almost 16 years on the job Greenspan has created more money out of thin air than ever had been created in all the years leading up to his appointment.
America's only major truly liberal newspaper may sell out to Gannett. This is not a good thing. The paper will move from hand-on local family ownership to national corporate management.
"Whenever I go to conservative events on campus and tell people I'm gay, no one seems to mind. But whenever I go to gay events on campus and tell people I'm conservative, everyone throws a hissy fit."
Read more here.
Nuclear blackmail of America worked for N. Korea. Now Iran wants its tribute from America.
Institutional Economics pulls out this great quote from the Chronical article on academic bloggers:
"I've certainly changed my picture of what libertarians are like," says Chris Bertram, a senior lecturer in philosophy at the University of Bristol, in England, whose blog persona is "Junius." Mr. Bertram, a social democrat, says that he and his fellow political philosophers sometimes suffer from a constricted field of vision, with "all kinds of received opinions that just aren't shared by most other people." Mr. Bertram says that debates with other bloggers have taught him that many libertarians do not follow Robert Nozick's philosophical principles, but instead favor markets "for other, basically more pragmatic, reasons." He adds, "There's been a mildly rightward pressure on my politics."
Has Paul Krugman gone mad? Or is he just a crazed ideological flake completely outside of his area of competence? You decide.
June 01, 2003
Is blogging the CB radio of the 00s? Or the future of academic discourse? The Chronicle of Higher Ed investigates. And don't miss a blogger's rise to greatness and the CHE's academic bloggers of note.
EconLog is ruminating on deflation & the "liquidity trap". The verdict:
The fact that there are many interest rates in the economy, and that most of them are well above zero, makes it difficult for me to accept the liquidity trap as a description of reality. To me, the liquidity trap ultimately seems to rely on the textbook simplification of a single interest rate ..