Month: October 2007

Bum Dope

An econblogger whose posts I read regularly says:

At this website (WHOIS Search database), you can look up the real name of the owner of any website on the Internet.

Via Reason.

It doesn’t work if a site’s URL is,, or the like. Nor does it work if the owner of a site has masked his or her identity.

The Fallacy of Particularism


Here. Robin Hanson makes a mistake that is common to “rationalists”: He examines every thread of human behavior for “reasonableness.”

It is the fabric of human behavior that matters, not each thread. Any thread, if pulled out of the fabric, might look defective under the microscope of “reason.” But pulling threads out of a fabric — one at a time — can weaken a strong and richly textured tapestry.

Whether a particular society is, in fact, a “strong and richly textured tapestry” is for its members to determine, through voice and exit. The “reasonableness” of a society’s norms (if they are voluntarily evolved) should be judged by whether those norms — on the whole — foster liberty (as explained here), not by the whether each of those norms, taken in isolation, is “reasonable” to a pundit inveighing from on high.

UPDATE (11/01/07: Hanson has updated his post (first link above). But he digs himself a deeper, rationalistic hole when he says

I’ll now only complain about [Russ Roberts’s] bias to hold his previous beliefs to a lower standard than he holds posssible alternatives.

He should complain, rather, about his own, too-easy willingness to reject the wisdom of inherited beliefs on the basis of statistical analysis.


Ross Douthat writes:

Maybe it isn’t a conscious strategy for the Democrats, but it makes a certain sense: Take from the super-rich, who aren’t tax-sensitive, and the pretty-damn-rich, who will probably vote for the GOP no matter what, and give to upper-middle class professionals, a constituency where the Dems have been making inroads for a while now.

Sorry, Ross, but it’s evident that the “inroads” are more like “surrender.” Higher taxes on the super-rich and pretty-damn-rich will affect constituencies that have pretty much gone over to the dark side (the Democrat Party, that is).

A Non-Believer Defends Religion

Theodore Dalrymple, writing at City Journal (“What the New Atheists Don’t See“) smacks down Daniel Dennett, Richard Dawkins, Christopher Hitchens, Sam Harris, and their ilk. Dalrymple’s case is made all the more convincing by his admission, in the second paragraph of the essay, that he is a non-believer.

Among Dalrymple’s many excellent and well-aimed observations, this is my favorite:

The thinness of the new atheism is evident in its approach to our civilization, which until recently was religious to its core. To regret religion is, in fact, to regret our civilization and its monuments, its achievements, and its legacy. And in my own view, the absence of religious faith…can have a deleterious effect upon human character and personality.

I (an agnostic) have made that point, and others, in my various defenses of religion against the “new atheism” of Dennett, Dawkins, et al.:

Going Too Far with the First Amendment
Atheism, Religion, and Science
The Limits of Science
Beware of Irrational Atheism
Religion and Personal Responsibility
Science, Evolution, Religion, and Liberty
Science, Logic, and God
Capitalism, Liberty, and Christianity
Debunking “Scientific Objectivity”
The Big Bang and Atheism
The Universe: Four Possibilities
Einstein, Science, and God
Atheism, Religion, and Science Redux
Religion as Beneficial Evolutionary Adaptation

Parents and the State

Timothy Sandefur (Freespace) has it almost right:

[T]he danger of allowing the state to control such decisions [whether a child must have a blood test] is far greater than the threat here [to public health]…. Give the state the power to take children away from parents for the children’s own good, and you have opened a door to the persecution of religious minorities….

Not to mention the denial of the right of parents to educate their children in private schools or at home, as the parents see fit.

But…I wonder if Sandefur means that the state should never have the power to take children from their parents, for the good of the children. Never? Not even in the case of children who are abused persistently?

It’s true that, in such cases, intervention by other parties (e.g., friends, family, church) would be preferable to intervention by the state, given the state’s power (and demonstrated ability) to act peremptorily and capriciously. But, given the dearth of private intervenors (because the state has so deeply sundered the social fabric), we are forced to rely on the state as the intervenor of last resort.


A lucid and rather sympathetic exposition of Austrian (Hayekian) economics by J. Bradford DeLong, an admitted non-believer (see second paragraph under IV.B).

Related posts:
Liberty and Its Prerequisites (scroll down to “The Evolution of Libertarian Thought: The Unification of Economic and Personal Liberty”)
More Hayek

See also: F.A. Hayek Articles & Books, Etc. (links)

Baseball Roundup

REVISED, 10/29/07

In light of the outcome of the 2007 World Series (Boston Red Sox over the Colorado Rockies, 4 games to zip), and other baseball events of the past year or two, I have updated several posts:

A New Curse for the Red Sox REVISED TODAY
The Next Winner of the World Series? RE-REVISED TODAY
The Meaning of the World Series
Pennant Winner vs. Best Team
Baseball’s Losers
World Series Contestants: Not [Always] the Best Teams

A Tale of Three Franchises

The American League had eight teams from 1901 through 1960; the National League had eight teams from 1901 through 1961. I have written elsewhere about post-1960/61 expansion and its influence on the quality and competitiveness of baseball. I focus here on three of the AL’s original franchises: the three with the worst overall records, among the original eight, from 1901 through 2007.

The three franchises — now known as the Oakland Athletics, Minnesota Twins, and Baltimore Orioles — are noteworthy not just because they, among the original eight, have won the lowest proportion of regular-season games. They are noteworthy also because they were the among the six major league teams to pick up and move in the span 1953-61. (The three NL teams that moved were the Braves, from Boston to Milwaukee in 1953 — and thence to Atlanta in 1966; the Dodgers, from Brooklyn to Los Angeles in 1958; and the Giants, from New York to San Francisco in 1958)

Going back a bit, the American League’s eight original franchises had stayed put from 1903 through 1953. The Baltimore Orioles franchise (1901-2) became the New York Highlanders in 1903 (renamed the Yankees in 1913). The Milwaukee Brewers franchise (1901) resided in St. Louis (as the Browns) from 1902 through 1953. The Browns, in 1954, became — and remain — the Baltimore Orioles.

One year after the Browns’ shift to Baltimore, the Philadelphia Athletics jumped to Kansas City, where they played 1955-67. The A’s then packed off to Oakland where they have been from 1968 to the present.

Then came the metamorphosis of the Washington Senators, often last in the American League during the years 1901-60. The Nats (a nickname of yore) were reborn in 1961 as the still-extant Minnesota Twins.

Why did the Browns, A’s, and Senators move? Short answer: Fans don’t flock to see losers. And losers they had been, and often continued to be. Here are their season-by-season records for 1901 through 2007 (overall records shown in the legend):

And here are easier-to-read (and more informative) nine-year records:

Fans of the reborn Browns (Orioles) and Senators (Twins) didn’t suffer long before the replanted franchises produced winners. The Orioles got a fresh start under new ownership, following Bill Veeck‘s disastrous years at the Browns’ helm. The Senators/Twins remained under Calvin Griffith‘s control for more than two decades, however. So, it would seem that a change of scenery (more tickets sold to newly enchanted fans) can go just as far as a change of ownership (more money to spend on players’ salaries).

What about the A’s? They moved to Kansas City under new ownership, after more than five decades under Connie Mack and his sons. But that didn’t pan out; the A’s remained a lousy team. Another new owner (Charles O. Finley) moved the team from Kansas City to Oakland. A few years passed and the A’s became big winners, for a while. In this instance, success followed both a change of scenery and new ownership.

New ownership can work against a team, of course. It has in the case of the O’s, whose resurgence in the 1990s was reversed by an especially obnoxious and meddlesome owner, Peter Angelos. In that vein, it is obvious that the New York Yankees‘ resurgence in the mid-to-late 1970s is owed to George Steinbrenner. But if Steinbrenner can take credit for that resurgence (as he would), he can (but will not, I am sure) take responsibility for the Yankees’ mediocrity from the early 1980s to early 1990s, and for their inability to win a World Series since 2000.

Anyway, the tale of the A’s, Senators/Twins, and Browns/O’s is this: persistent mediocrity and failure, punctuated by fleeting glory. The O’s came closest, of the three teams, to having a baseball dynasty (from the late 1960s to the early 1980s), but the Yankees they never were. The long periods of failure on the part of the A’s were self-inflicted in the days of Connie Mack‘s ownership. (Follow the link for more on that.) The failure of Washington’s baseball teams seems to be a law of nature, as evidenced by the records of the original Senators, the expansion Senators, and the Expos/Nationals, a.k.a Three Losers.

In the zero-sum game that is baseball, failure is self-inflicted. You either spend the money it takes to win, and spend it wisely, or you do not. Yes, the Yankees have loomed dominantly, most of the time, from the 1920s to the present. And, given that, some teams must have losing records. But why — so often and so persistently — have those teams been the A’s, Senators/Twins, and Browns/Orioles?

It almost makes me believe in destiny.

In the Pipeline

When I resumed blogging in earnest on July 1 — after eight months in which I seldom posted anything of substance — I had a backlog of about thirty posts in draft form. I have, since July 1, polished and published many of those drafts. I also have deleted a handful that seemed, in retrospect, not worth pursuing.

My backlog of draft posts now numbers nine:

The United Way or the Highway?

There Ain’t No Such Thing as Free Health Care

Is America Resegregating? And So What If It Is?

Cell Phones and Driving, Once More

Creationism, Intelligent Design, Science, and Politics

Homosexuality and Other Gender Matters

The Folly of Contractual Libertarianism

Liberty, Harm, Nationalism, Federalism, and Individualism

A Summing Up

Will all see the light of day, in one form or another? Will I continue to blog after the nine have been published or purged? Stay tuned…


See conclusion #3, here. Be sure to follow the link to the 8th-grade exam from 1895.

Clarification: Conclusion #3 (which is part of a post at Carpe Diem) and this post are about public education. “GIGO” stands for “garbage in, garbage out” — a phrase that was common in my early days as a defense analyst. It’s a shorthand way of saying that the results produced by a model will be erroneous (“garbage”) if the model itself and/or the input values chosen to represent the model’s parameters are ill-founded or empirically incorrect (“garbage”). (Much like today’s climate models.)

I don’t mean to refer to today’s public-school students as “garbage” (though some undoubtedly are just that). What I mean is that they are taught too much “garbage” (socially relevant clap-trap, sex education, etc.) and, therefore, not taught enough readin’ (including Latin and other languages), writin’, ‘rithmetic, geography, and history* by teachers who actually know those subjects. That has happened largely because public education in this country has been taken over by a cabal of university “education” departments and teachers’ unions (both Left-wing), which dictate the kinds of clap-trap being taught in (most) schools and discourage the thorough training of teachers in those subjects that are worth teaching (readin’, etc.).

As for the students, their main deficit — aside from having been let down by the “system” — is the growing absence of one or both parents, because the of the marked increase in the incidence of working mothers, divorce, and illegitimacy over the last 50 to 100 years. Today’s students (on the whole) therefore suffer (relative to their predecessors of 50 to 100 years ago) from a lack of parental interest, guidance, and compulsion.

I haven’t discussed manners, obedience, and violence because the differences between now and 50-100 years ago are too painfully obvious.

Related reading, here.

More about public schools from Carpe Diem, here. And more.
* By history, I mean not only “history” but also something modeled on Kenneth Clark’s Civilisation, with the addition of instruction in the formal development of music through the nineteenth century (the rest is noise). Desirable options: instruction in the performance of music and creation of art, as long as its music (not noise) and art (not doodles and blobs).

Rich Voter, Poor Voter: Revisited


All manner of good (and bad) stuff has popped up about the relationship between income and political preferences. Tyler Cowen of Marginal Revolution points to this post at Free exchange, which I shamelessly repeat in its entirety (with the addition of some comments and additional links) and then expand upon:

PAUL KRUGMAN, brimming with conscience [a reference to Krugman’s recently published The Conscience of a Liberal: LC], continues to scrounge for evidence [here also: LC] that the monied prefer the Grand Old Party. “There’s a weird myth among the commentariat that rich people vote Democratic,” Mr Krugman sighs.

Well, I suppose it’s weird for the commentariat to believe Pew Research Center reports that find “Democrats pulling even with Republicans among registered voters with annual family incomes in excess of roughly $135,000 per annum.” $135,000 may not sound exactly “rich” to some of us, but it is well into the top decile of the income distribution, which counts as the “upper class” if we’re doing decile-based class analysis. As part of his myth-slaying efforts, Mr Krugman offers a chart from Columbia’s Andrew Gelman from whom we have also learned that the wealthiest American states now lean Democratic (as was noted in this August post on precisely this issue). [I wrote here about an earlier version of the Gelman paper that is linked in the preceding sentence. Krugman links to a recently updated version, which is here: LC] Wealthy localities remains likely to tilt Republican in the South, Gelman finds. But in “media center” states such as New York, California, and the states contiguous to the Imperial Capital, Democrats dominate the country clubs. [See this post by Gelman, especially the x-y plots and the final sentence. See also this list of the 100 Zip Codes with the highest incomes: LC]

Furthermore, the writer and bon vivant Julian Sanchez points us to this Daniel Gross column in Slate wherein we are informed of a poll showing that:

The petit bourgeoisie millionaires were passionately for Bush: Those worth between $1 million and $10 million favored Bush by a 63-37 margin. But the haute millionaires, those worth more than $10 million, favored Kerry 59-41.

Mr Sanchez smartly comments:

You hit a point at which you don’t just have a lot of money; you’ve got “f[—] you” money. … At which point “voting your economic self-interest” ceases to mean much, since your economic interests are covered [by] whoever’s in power. You can afford to stop voting your pocketbook and start voting whatever makes you feel like a mensch. [You can vote your inner adolescent or your irrespsonsible “take that” attitude: LC]…

Ironically, this may be a point in favor of those who appeal to the declining marginal utility of money as an argument for economic redistribution. If this is right, then the efficient place to start imposing really crushing marginal taxes is at the income or wealth level where people start voting heavily Democratic.

Ha! But seriously, the real issue here is whether economic interests are a major determinant of voting patterns at all. If wealthy voters in certain culturally similar states prefer Democrats and those in other culturally similar states prefer Republicans, we might plausibly infer that something other than their wealth is determining wealthy votes. And since individual votes are drops in an ocean, with barely a whisper of causal power, those of us who take economic logic seriously might expect citizens, wealthy or not, to forget about voting their interests and instead cast ballots that will reliably supply utility by, say, expressing their moral values, political identity, or sense of solidarity with an imagined community. As Loren Lomasky and Geoffrey Brennan write in their classic work “Democracy and Decision“:

It would be an error of method to assume whenever electoral behavior is consistent with the self-interest hypothesis that citizens vote in order to further self-interest. And it is an error of logic to assume that rational agents will, purely as a matter of course, vote in a self-interested manner.

I fear that Mr Krugman’s book may turn on at least one of these.

I have no doubt that Krugman’s book is both erroneous of method and logic.

I entirely agree with Julian Sanchez’s point that very rich voters vote mainly to make a statement. As I wrote here,

[t]he “rich” in the rich States — as is obvious from casual reading about limousine liberals and wannabe limousine liberals in New York and California — have by and large bought into the regulatory-welfare state, which is mainly a creation of the Democrat Party. So, the rich-State rich vote their “consciences” or, rather, they tend to vote Democrat because the think they can
  • keep the unwashed masses at bay with the modern equivalent of bread and circuses.
  • salve their (misplaced) guilt about the “good luck” that made them rich….

Why does it work like that? Because where you live has a lot to do with your values. People tend to adapt (“go along and get along”) or migrate.

The same principle applies to academia [e.g., see this]. Conservative and libertarian intellectuals tend to avoid academic careers (call it pre-emptive migration) because they don’t want to adapt their thinking to fit in with the liberal supermajority on most campuses.

Joining Andrew Gelman and the Pew Research Center, I offer this evidence of Krugman’s displacement from reality:

Sources: Kerry’s vote, as a percentage of the total number of popular votes cast in each State, is from RealClearPolitics (here). I derived the percentage of tax returns with an adjusted gross income of $200,000 or more from “Table 2.–Individual Income and Tax Data, by State and Size of Adjusted Gross Income, Tax Year 2005,” which is available through this page at the IRS website.

What could be clearer than that? The more you make, once you have crossed a threshold, the more likely you are to vote Democrat. That threshold, according to the Pew Research Center, is a household income in 2007 of $135,000 — the point at which one joins the top 10 percent.

Let’s take a closer look at the graph. The red dot — at 2.7 percent of tax returns and 48.3 percent of the popular vote — represents the U.S. in the aggregate. The Red-State outliers are represented by the many points that lie to the left of the red dot and well below the regression line, which include Nebraska (1.7, 32.4), Idaho (1.8, 30.3), Utah (2.0, 26.5), and Wyoming (2.2, 29.1) — States that are deeply Republican, far from the effete East and West Coasts, and too small to carry any weight in a national election. Their political opposites are (well above the line) Maine (1.7, 53.0), Vermont (2.0, 59.1) and Rhode Island (2.5, 59.6), and (on the far right, graphically speaking) New York (3.3, 57.8), Virginia (3.4, 45.2 — a high Blue vote for this once deep-Red State), California (3.5, 54.6), Maryland (3.5, 55.4), Massachusetts (3.9, 62.1), New Jersey (4.4, 52.3), D.C. (the Imperial Capital) (4.6, 89.3), and Connecticut (4.9, 54.2). We know all we need to know about the pathological politics of the Northeastern States and California. As for the formerly conservative States of Maryland and Virginia, elections there are increasingly dominated by the affluent and rapidly growing suburbs that border the Imperial Capital.

A geographical breakdown confirms the generalization that the more you make (above the threshold), the more likely you are to vote Blue:

Sources as above. States in each region (from left to right on the x-axis): West — North Dakota, Montana, South Dakota, Nebraska; Southeast — Mississippi, Arkansas, Kentucky, Oklahoma, Alabama, Louisiana, South Carolina, Missouri, Tennessee, North Carolina, Georgia, Texas, Florida, Virginia; North Central — West Virginia, Iowa, Indiana, Ohio, Michigan, Wisconsin, Minnesota, Illinois; West Coast & Far Southwest — New Mexico, Hawaii, Oregon, Arizona, Nevada, Washington, California; Northeast — Maine, Vermont, Pennsylvania, Delaware, Rhode Island, New Hampshire, New York, Maryland, Massachusetts, New Jersey, D.C., Connecticut.

In ascending order of Blueness (or descending order of Redness) we have:

North Central/West Coast & Far Southwest (about the same)

A few observations and explanations: The Southeast isn’t as Red as it was a few elections ago — owing to the rapid urbanization of such States as Georgia, Florida, and Virginia — but most Southeastern States remain on the Red side of the ledger, most of the time. Maryland and D.C., as long-standing denizens of the super-urban Bos-Wash corridor, belong in the Northeast region, just as West Virginia — a unionized, industrial State — belongs in the North Central region with its neighbor, Ohio.

Out of curiosity, I tried moving Maryland and D.C. from the Northeast to the Southeast, with these results: a flat trendline for the Northeast; a more positive slope on the trendline for the Southeast. In other words, the Northeast without Maryland and D.C. displays a constant degree of Blueness (about 55 percent for Kerry), regardless of the proportion of tax returns with AGI of $200,000 or more. Thus, the omission of Maryland and D.C. from the Northeast simply underscores the deep-rooted Blueness of the “old” Northeast. It just is Blue, from its heavily unionized “working stiffs” to its super-affluent “masters of the universe.” But, as I say in the preceding paragraph, Maryland and D.C. merged into the Northeast quite some time ago.

In any event, the positive relationship between income and Blueness holds for each region, even though there are also inter-regional differences. (“Birds of a feather…,” as suggested above.) If Blueness were simply a regional trait, each of the trendlines would be flat — but, in fact, each one slopes upward to the right. Thus (to say it again):

The more you make (above a threshold which is now $135,000), the more likely you are to vote Democrat.

Paul Krugman (no prole he) is living evidence of that statement.

The Laffer Curve, "Fiscal Responsibility," and Economic Growth

The Laffer Curve and Supply-Side Economics

The Laffer curve is the centerpiece of so-called supply-side economics. The idea behind both concepts is straightforward. Here it is, in my words:

Taxes inhibit economic activity, especially because progressive tax rates reduce saving among persons with higher incomes and, thereby, reduce the flow of funds available for growth-producing capital investments (e.g., new manufacturing equipment, better computers, R&D on drugs that improve the health of workers and others). Lower tax rates therefore foster a higher rate of economic growth. The economic growth that is fostered by tax-rate reductions may, in some instances, cause tax revenues to rise.

Many commentators accept that reductions in tax rates spur economic growth. Far fewer accept that faster economic growth will, in turn, cause tax revenues to rise. (For various views on the matter, see this, this, this, this, this, and this.)

Questions and Brief Answers

The Laffer hypothesis, and criticisms of it, stir me to ask (and answer) these questions:

  1. Would tax rates below (above) the current level spur (inhibit) economic growth?
  2. If so, by how much?
  3. At what tax rate would revenues be maximized?
  4. Are tax revenues more important than economic growth?

My brief answers are these:

  1. Yes, changes in tax rates cause economic growth to move in the opposite direction.
  2. By a lot.
  3. It is possible to estimate the rate at which tax revenues are maximized, but who would want to maximize them, other than a “fiscally responsible” (i.e., tax-and-spend) “liberal”?
  4. Only to a tax-and-spend “liberal.”

In what follows, I enlarge on those answers.

The Laffer Curve, in Theory

I begin with this depiction of the Laffer curve (via Wikipedia):

t* represents the rate of taxation at which maximal revenue is generated. Note: This diagram is not to scale; t* could theoretically be anywhere, not necessarily in the vicinity of 50% as shown here.

Many criticisms of the Laffer curve are recited here (not all of which I accept). My main reservation about the curve is its span:

  • With real taxes (i.e., government spending) at zero or close to it, the rule of law would break down and the economy would collapse. Thus the curve should not extend to zero on the x-axis.
  • With real taxes (i.e., government spending) at very high rates (much about the level of 50 percent, which the U.S. reached in World War II), the economy would be subsumed by government.

The Proper Range of the Laffer Curve

With regard to the first problem, I would set the minimum tax rate at 15 percent of GDP. The normal peacetime burden of government spending between the end of the Civil War and the eve of the Great Depression ranged from 5 to 10 percent of GDP,1 enough to maintain law and order and to provide minimal “social services.” To that I would add 5 to 10 percent for the kind of defense that we need in these parlous times. (See this post, for example.)

I therefore consider a tax rate of 15 percent to be the lowest rate of interest along the x-axis of the Laffer curve. I include in that 15-percent rate taxes levied by all levels of government, not only to to fund governmental functions (e.g., justice and defense) but also to fund social transfers (e.g., Social Security).

As for the second problem, at a very high tax rate we would have a command economy (as in the former Soviet Union). At a tax rate of 100 percent, for example, government would have to confiscate everyone’s income, then turn around and refund that income to everyone in the form of government-dictated access to goods and services. Those goods and services would, of necessity, be produced by the populace at the direction of government; there would be no private sector.2 Everyone — excepting brave black-marketeers — would be a government employee or contractor. The distribution of income in a Soviet-style economy does not, of course, match the distribution of income in a market economy. A Soviet-style economy, rather, operates on the following principle: “From each according to his ability, to each — especially the commissariat and its favorites — according to his needs.”

The U.S. economy was practically a command economy during World War II, when government commandeered as much as 50 percent of the nation’s output. (See the graph in the footnote to this post.) I therefore regard 50 percent as the highest meaningful value along the x-axis of the Laffer curve.

Quantifying the Laffer Curve and More Important Values

In sum, the Laffer curve is relevant over the range of a 15-percent to 50-percent tax rate. And the Laffer curve can be quantified over that range. To quantify it, I draw on “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks,” by Christina D. Romer and David H. Romer, both of the Department of Economics at the University of California, Berkeley. (A free copy of the paper is available here. A copy is available here for $5.)

The Romers’ estimate, among other things, the effects of exogenous changes in taxes on GDP. (“Exogenous” meaning tax cuts aimed at stimulating the economy, as opposed — for example — to tax increases aimed at reducing government deficits.) Here is the key finding, from pages 21 and 22 of the free version of the paper:

Figure 4 summarizes the estimates by showing the implied effect of a tax increase of one percent of GDP on the path of real GDP (in logarithms), together with the one-standard-error bands. The effect is steadily down, first slowly and then more rapidly, finally leveling off after ten quarters. The estimated maximum impact is a fall in output of 3.0 percent. This estimate is overwhelmingly significant (t = –3.5). The two-standard-error confidence interval is (–4.7%,–1.3%). In short, tax increases appear to have a very large, sustained, and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects.

The Romers assess the effects of tax cuts over a period of only 12 quarters (3 years). Some of the resulting growth in GDP during that period takes the form of greater spending on capital investments, the payoff from which usually takes more than 3 years to realize. So, a 1-percent tax cut yields more than a 3-percent rise in GDP, over the longer run. How much more? About 0.25 percent. Thus a tax cut of 1 percent of GDP yields a total, long-run increase in GDP of about 3.25 percent.3

With that number in hand, and knowing the current, effective tax rate (28 percent of GDP in 20064), it is then easy to compute GDP, tax revenues, and after-tax GDP as a function of the overall tax rate. The following graphs display those values in index form, where 1.00 is the value in 2006. Figure 1 is my estimate of the Laffer curve. Figure 2 contrasts the Laffer curve with more important values, namely, the effects of tax-rate changes on GDP and after-tax GDP.

Questions and Answers, Revisited

I return now to the earlier questions, and expand on my brief answers to them:

  1. Q. Would tax rates below/above the current level spur/inhibit economic growth? A. Yes, lower tax rates would spur growth and higher tax rates would inhibit growth — markedly, in both cases.
  2. Q. If so, by how much? A. Reducing taxes to an effective rate of 15 percent of GDP, for example, would lead to an increase in GDP of about 50 percent and an increase in after-tax GDP of about 80 percent. An effective tax rate of 40 percent, on the other hand, would lead to a one-third decrease in GDP and a 45-percent decrease in after-tax GDP.
  3. Q. At what tax rate would revenues be maximized? A. An increase in the effective tax rate from 28 percent to 30 percent would cause tax revenues to rise by 0.3 percent (that’s three-tenths of 1 percent). Wow! As a result of that “fiscally responsible” increase, GDP would drop by 6 percent and after-tax GDP would drop by 9 percent.
  4. Q. Are tax revenues more important than economic growth? A. No. Why? First, see the answer to question number 3. Then, consider this: It is blind stupidity to focus on tax revenues. The economy does not exist for the purpose of generating tax revenues, it exists for the purpose of providing goods and services for today’s use and “wealth” (in such forms as housing and savings) for use over the longer term (e.g., for our children’s education and our retirement). It is necessary to divert a minimal fraction of economic output to government (about 15 percent, nowadays), for the purpose of protecting ourselves and our economic activities from predators, foreign and domestic. Any diversion beyond that is pure waste.

The Laffer Curve Puts the Emphasis on the Wrong Economic Variable

I cannot over-emphasize this point: The Laffer curve does a great disservice by emphasizing tax revenues, when the proper emphasis is on economic growth. Government doesn’t create jobs; on balance, it only destroys them, through taxation (and regulation).

By focusing on tax revenues, Lafferites play into the hands of “fiscally responsible” (i.e., tax-and-spend) “liberals” (i.e. Leftists). The Left is interested in neither fiscal responsibility nor economic growth. The Left simply wants to raise taxes in order to pay for more social goodies, and that’s that. In return for those goodies, most of us — even including the Left’s protégés — would get less of everything. The proof of that statement is found not only in the Romers’ analysis, but also in the case study of economic suicide that is Michigan, and in the retrogressive economic history of the United States.

Yet, the Left (i.e., Charlie Rangel and friends) want to pay for their social goodies by levying punitive taxes on the so-called “super-rich” — those high-earning, highly productive citizens who, on the one hand, finance economic growth and, on the other hand, implement it through hard work, entrepreneurship, and innovativeness. They already subsidize the rest of us when it comes to taxes (e.g., here, here, here, here, and here). Forcing the “rich” to pay more will only cause economic harm to the rest of us.

(UPDATE, 10/31/07: It is good news that the tax-rate cuts in 2003 seem to have yielded higher tax revenues, because the apparent correlation between lower tax rates and higher revenues seems to confirm the Laffer effect. It is bad news that tax revenues have risen, because the money would have been used more productively in the private sector. My take, however, is that tax revenues have risen mainly because of cyclical growth. I don’t doubt the stimulus afforded by tax-rate cuts; I simply doubt the presence of a Laffer effect at the effective tax rate in 2003, which was 26 percent.

This, on the other hand is good news: lower taxes for the highest earners. The highest earners save and invest more than the rest of us. And that means more economic growth for all of us.

If you’re super-duper rich — as is Warren Buffet — and you think your taxes are too low, take this advice: Voluntarily write a check to the Treasury, and shut up. But don’t propound a rise in marginal tax rates at the high end of the income distribution.)


So, Mr. Laffer is entirely correct when he writes:

Lower tax rates change people’s economic behavior and stimulate economic growth….

Unfortunately, instead of stopping there, he adds:

…which can create more–not less–tax revenues.

Tax-rate reductions (down to about 15 percent of GDP) will always stimulate economic growth, but they will not always result in higher tax revenues. The mistake that Mr. Laffer and his followers make is to argue that tax cuts lead inexorably to higher tax revenues. In doing so, they play into the hands of tax-and-spend Leftists.

Growth, growth, growth! That’s the winning mantra.
1. See “Martin’s estimates” in Series F216-225, “Percent Distribution of National Income or Aggregate Payments, by Industry, in Current Prices: 1869-1968,” in Chapter F, National Income and Wealth, Historical Statistics of the United States, Colonial Times to 1970: Part 1.

2. Aggregate income (the claims on or distribution of output) must be equal to the aggregate of all types of output.Income and output (the two faces of GDP) in a closed economy (no imports or exports) can be expressed in terms of certain parameters:

Income = C + S + T
Output = C + I + G,
where the parameters are defined as follows:
C = consumption (private-sector consumption of goods and services produced domestically, excluding consumption that is subsidized by government transfer payments to the beneficiaries of such programs Social Security and Medicare)
S = saving (private-sector income not consumed, taxed, or spent on imports)
I = private-sector investment (output invested by non-governmental entities in technology, buildings, equipment, etc., for the purpose of increasing the future output of goods and services)
T = taxes, including transfer-payment taxes for Social Security, etc.
G = government spending (including spending that is subsidized by transfer payments for such programs as Social Security and Medicare)

(These definitions vary from the standard version in that any spending subsidized by government transfer payments for such programs as Social Security and Medicare is included in G rather than C . These definitions also implicitly reject a role for government in saving and investment, for reasons spelled out in my post, “Joe Stiglitz, Ig-Nobelist.”)

It is trivial to show that as government commandeers all output (G = GDP), the values for C and I must shrink to zero.

But, since C (if not I) cannot be reduced to zero without starving the populace and thus reducing its output to zero, government must allocate some G to C. That which it does not allocate to C or fritter away in entirely wasteful endeavors becomes S (and therefore I), by default. But under such a regime, C, S, and I become entirely different — quantitatively and qualitatively — than they would be under a quasi-free-market regime, such as we have in the United States.

Related posts:
Why Government Spending Is Inherently Inflationary
Trade, Government Spending, and Economic Growth

3. Figure 14.c on page 70 of the free version of the Romers’ paper indicates that a 1-percent tax cut leads to a rise in fixed, nonresidential (i.e., business) investment of about 6 percent. Given that business investment is about one-tenth of GDP (see table 3, here), business investment accounts for about 1.8 percentage points of a 3 percentage point rise in GDP (6 x 1/10 x 3 = 1.8).

More importantly, that 1.8-percent rise in investment spending yields, over the longer run, something like an additional 0.25-percent growth in GDP, assuming a rate of return on business investment (capital) of 10-15 percent. See, for example, the bottom panel of figure 3 in “Growth, Productivity, and the Rate of Return on Capital,” by Charles Adams and Bankim Chadha. (For more about investment and its economic effects, see this tutorial.)

Additional growth of 0.25 percent a year might seem like small change, but over 25 years it adds 5 percent to GDP. That’s $660 billion in 2006 dollars — more than $200 per capita.

4. Taxes collected by all levels of government in the U.S. in 2006 (including “social insurance contributions”) amounted to $3,697 billion. GDP in 2006 was $13,195 billion. (These estimates are from the U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, tables 1.1.5 and 3.1, respectively.) Thus the effective tax rate in 2006 was 28.0 percent.

Why Would We Want to Do That?

Ilya Somin asks “can we make the Constitution more democratic?” His answer seems to be “why would we want to do that?” Right answer. Here’s why:
Democracy vs. Liberty
Something Controversial
Liberty, Democrarcy, and Voting Rights
More about Democracy and Liberty
Yet Another Look at Democracy
Conservatism, Libertarianism, Socialism, and Democracy
If Liberty Depends on Democracy, We’re Doomed to Slavery
Democracy and the Irrational Voter
The Ruinous Despotism of Democracy

Academic Bias

Neil Gross (of Harvard University) and Solon Simmons (of George Mason University), writing in “The Social and Political Views of American Professors,” do two things:

  • assess many previous studies of academicians’ politics, and
  • report their own findings on the matter, based on a survey of 1,417 professors.

The bottom line is that Gross and Simmons try hard — but fail — to minimize the Left’s domination of academia.

This is from the concluding section of the paper:

Although we would not contest the claim that professors are one of the most liberal occupational groups in American society, or that the professoriate is a Democratic stronghold, we have shown that there is a sizable, and often ignored, center/center-left contingent within the faculty…. (page 72)

But “center/center left” is a subjective and misleading description. Going back to pages 35 and 36, we find this:

To get a better handle on the relationship between political orientation and party affiliation, we constructed a new variable by performing a factor analysis on three items from our survey: the political orientation variable, allowed to remain on a seven point scale; the party affiliation variable, also kept in its original seven point scale; and a question we wrote that asked respondents to locate themselves on a continuum ranging from “extremely left” to “extremely right.” The analysis extracted one common underlying dimension, accounting for nearly 85 percent of the variance on the three items, and in our view representing a more robust measure of overall political orientation than has typically been employed in faculty surveys. Figure 1 [p. 36] shows the distribution of this new politics variable. The further to the left a professor is, the lower her or his score. A score of four indicates the middle of the distribution, which may be interpreted as a moderate political identity…. [T]he figure indicates not simply that most respondents are located on the left hand side of the distribution, but also that significant numbers of them are located near the center left, a fact too often ignored in discussions that treat the university as a site of uniform liberalism.

As if the “center left” were not of the Left. The “center left” is simply a less overtly menacing animal than the “hard left,” just as Nikita Kruschchev was a less overtly menacing figure than Josef Stalin. The crucial fact is that both Kruschchev and Stalin were enemies of liberty, as is the American Left — however its adherents choose to describe themselves.

Gross and Simmons earlier (page 27) reveal the slipperiness of their political taxonomy as they explain how they manipulated respondents’ self-classifications:

In order to assess whether there were differences between the slightlys [those classifying themselves as “slightly liberal” and “slightly conservative”] and their colleagues further at the extremes, we averaged scores on all twelve of the Pew [Values survey] items. In this exercise, a score of 1 would indicate the most liberal response possible on all of the items, a score of 3 would indicate an intermediary position, and a score of 5 would indicate the most conservative response possible on all items. The score of those who stated their political orientation as extremely liberal or liberal was 1.4, while the score of those who identified themselves as conservative or extremely conservative was 3.7. The scores of those respondents closer to the center of the distribution in terms of political orientation were different: the slightly liberal scored at 1.7, middle of the roaders at 2.2, and the slightly conservative 2.8. Although the differences here between the slightly conservative and their more conservative colleagues are greater than the differences between the slightly liberal and their more liberal colleagues, that there are differences at all provides further reason to think that the slightlys should not be treated as belonging to the extremes.

Collapsing the data accordingly to a three point scale, we find that 44.1 percent of respondents [9.4 percent “very liberal” plus 34.7 percent “liberal”] can be classified as liberals, 46.6 percent [18.1 percent “slightly liberal” plus 18.0 percent “moderate” plus 10.5 percent “slightly conservative”] as moderates, and 9.2 percent [8.0 percent “conservative” plus 1.2 percent “very conservative”] as conservatives. Such a recoding thus reveals a moderate bloc that – while consisting of more liberal- than conservative-leaning moderates – is nevertheless equal in size to the liberal bloc.

If a “score” of 3 indicates an “intermediary position” (on a scale of 1 to 5), everyone who self-identifies in the range from “very liberal” (1) to “slightly conservative” (2.8) is left-of-center. Even the average “conservative” and “very conservative” respondent is barely right-of-center. Granting, for the sake of argument, that “slightly conservative” is “moderate” rather than “liberal,” here is the correct breakdown:

80.2 percent “liberal” (Left)
10.5 percent “moderate”
9.2 percent “conservative”

That breakdown is entirely consistent with the most revealing data of all: the voting preferences of the respondents. From page 36:

In Table 10, we show the distribution of Democratic, Republican, and other votes in the 2004 Presidential elections across broad disciplinary fields. Averaging the figures for the social sciences and humanities generates a ratio of Democratic to Republican voters of 8.1 to 1. It is in business and health-science fields that Bush fared better, though even in business Kerry did better than Bush by a margin of more than 2:1.

Table 10





Phys/bio sciences





Social sciences










Comp sci/engineering





Health sciences





















The Gross-Simmons paper is worth reading for its rich detail. But do not be seduced by the authors’ attempt to minimize the academy’s strong Leftward bias. It is real, and the authors’ own data confirm its reality.

P.S. Gross and Simmons — like the typical product of post-World War II “education,” the media, and other fish in water — seem unaware that what now passes for “moderation” is far to the left of the pre-Depression, pre-War, pro-Constitution mainstream.

In the election of 1972, George McGovern polled only 38 percent of the popular vote. In the elections of 2000 and 2004, both Al Gore and John Kerry (nothing, if not McGovernites) polled 48 percent of the popular vote. Throw in the Naderites, and the Left’s share hovers around 50 percent.

Throw in big-government “conservativism,” and you have…well, just what we’ve got: something much closer to socialism than to laissez-faire capitalism. Why? Mises explains, in “Middle-of-the-Road Policy Leads to Socialism“:

The conflict of the two principles [capitalism and socialism] is irreconcilable and does not allow for any compromise. Control is indivisible. Either the consumers’ demand as manifested on the market decides for what purposes and how the factors of production should be employed, or the government takes care of these matters. There is nothing that could mitigate the opposition between these two contradictory principles. They preclude each other.

That is to say, the good intentions (and ill intentions) of those who would intervene willy-nilly in private affairs for the sake of “the public good,” “the children,” and cheap “compassion” can lead to nothing but ruinous state socialism. One cannot be “slightly liberal,” “moderate,” or even “slightly conservative” in the defense of liberty.

I refuse to be nonjudgmental in such matters. You are either for liberty or you are against it.

Related posts:
What Is the Point of Academic Freedom?
How to Deal with Left-Wing Academic Blather
Lefty Profs
Apropos Academic Freedom and Western Values
Why So Few Free-Market Economists?
The Shoe Is on the Other Foot
Affirmative Action for Conservatives and Libertarians?

World Series Contestants: Not the Best Teams

UPDATED, 10/28/07

As I explain here, since the advent of divisional play and the introduction of the wild-card slot in 1995, the best team in a league doesn’t always represent its league in the World Series. Here’s the tally (National League teams listed first, * indicates winner of World Series):

1995 —
Atlanta Braves (division winner, best record)*
Cleveland Indians (division winner, best record)

1996 —
Atlanta Braves (division winner, best record)
New York Yankees (division winner, second-best record)*

1997 —
Florida Marlins (wild-card team, second-best record)*
Cleveland Indians (division winner, fourth-best record)

San Diego Padres (division winner, third-best record)
New York Yankees (division winner, best record)*

Atlanta Braves (division winner, best record)
New York Yankees (division winner, best record)*

New York Mets (wild-card team, fourth-best record)
New York Yankees (division winner, fourth-best record)*

Arizona Diamondbacks (division winner, third-best record)*
New York Yankees (division winner, second-best record)

San Francisco Giants (wild-card team, fourth-best record)
Anaheim Angels (wild-card team, third-best record)*

Florida Marlines (wild-card team, third-best record)*
New York Yankees (division winner, best record)

St. Louis Cardinals (division winner, best record)
Boston Red Sox (wild-card team, second-best record)*

Houston Astros (wild-card team, third-best record)
Chicago White Sox (division winner, best record)*

St. Louis Cardinals (division winner, fourth-best record)*
Detroit Tigers (wild-card team, third-best record)

Colorado Rockies (wild-card team, second-best record)
Boston Red Sox (division winner, tied for best record)*

There you have it. The last year in which the World Series featured both leagues’ best teams was 1999. The only other time, for the years of interest here, was in 1996.

Of the 13 Series from 1995 through 2007, five were won by the inferior team, as measured by the two teams’ performance in their respective leagues. The best team in either league has won only five of the 13 Series.

Wild-card teams have gone on to play in seven of the 13 Series from 1995 through 2007. In 2002 there was an all-wild-card Series.

As always, the winner of this year’s Series will be able to claim nothing more than having been the better team over a span of four to seven games.

Psychology and Libertarianism

I wrote here about “the Big Five personality traits,”

five broad factors or dimensions of personality discovered through empirical research (Goldberg, 1993). These factors are Neuroticism, Extraversion, Agreeableness, Conscientiousness, and Openness to Experience.

My scores and my analysis of them:

Extraversion — 4th percentile
Agreeableness — 4th percentile
Conscientiousness — 99th percentile
Emotional stability — 12th percentile
Openness — 93rd percentile

Note that “emotional stability” is also called “neuroticism,” “a tendency to experience unpleasant emotions easily, such as anger, anxiety, depression, or vulnerability.” My “neuroticism” doesn’t involve anxiety, except to the extent that I am super-conscientious and, therefore, bothered by unfinished business. Nor does it involve depression or vulnerability. But I am easily angered by incompetence, stupidity, and carelessness. There is far too much of that stuff in the world, which explains my low scores on “extraversion” and “agreeableness.” “Openness” measures my intellectual openness, of course, and not my openness to people.

(You can test yourself by going here.)

Those scores — coupled with my introspective bent (typical of an INTJ) — led me to ask myself if I display the symptoms of Asperger Syndrome or High Functioning Autism, which the Autism Research Centre describes thusly:

Asperger Syndrome (AS), a subgroup conceptualised as part of the autistic spectrum, shares the features of autism but without the associated learning difficulties (normal or even above average IQ) and without any language delay.

Are AS (Asperger Syndrome) or HFA (High Functioning Autism) disabilities?

  • Both can be thought of as a personality style in which the individual does not ‘tune in’ naturally to people and is more attracted by objects, systems, and how things work
  • Both involve strengths in attention to detail, and can be associated with talent in areas such as mathematics, science, fact-collecting or rule-based subjects
  • Both are disabilities only in environments where the individual is expected to be both sociable and a good communicator

What is the difference between AS and HFA?

Both share:

  • Abnormalities in social development
  • Abnormalities in communicative development
  • The presence of unusual and strong, narrow repetitive behaviours (sometimes called obsessions)
  • Average or above average intelligence (IQ)

But in HFA there is language delay; in AS there is not.

AS is more likely than HFA; I began talking quite early.

Do I have AS? To answer that question, without going to a psychologist, I self-administered the Autism Quotient (AQ), scored my answers, and read these two papers:

M. Woodbury-Smith, J. Robinson and S. Baron-Cohen, (2005)
Screening adults for Asperger Syndrome using the AQ : diagnostic validity in clinical practice
Journal of Autism and Developmental Disorders 35:331-335 S. Baron-Cohen, S. Wheelwright, R. Skinner, J. Martin and E. Clubley, (2001)

The Autism Spectrum Quotient (AQ) : Evidence from Asperger Syndrome/High Functioning Autism, Males and Females, Scientists and Mathematicians
Journal of Autism and Developmental Disorders 31:5-17

(Links to AQ, scoring key, and papers are here.)

What does my AQ score of 32 (out of 50) indicate? According to the second of the papers listed above,

A score of 32+ appears to be a useful cut-off for distinguishing individuals who have clinically significant levels of autistic traits. Such a high score on the AQ however does not mean an individual has AS or HFA, since a diagnosis is only merited if the individual is suffering a clinical level of distress as a result of their autistic traits. As shown in the subsample of students in Group 3 above, 80% of those scoring 32+ met DSM-IV criteria for HFA, but did not merit a diagnosis as they were not suffering any significant distress.

Hey, no distress, no AS or HFA. I’m just your typical, weird, leave-me-alone kind of conservative libertarian.

But, being introspective, I recognize my weirdness and understand that it is a poor foundation on which to build a political philosophy. That is why I scoff at anarcho-libertarians, whose solipsism leads them to believe in a never-never land of contractualism, “untainted” by broadly accepted and long-evolved social norms. (More about contractualism in a future post.)

A Glaring Omission

An AP “story” about capital punishment (really a thinly disguised anti-punishment editorial) ends with this:

Nearly 1,100 people have been put to death since 1977 and more than 3,000 others are on death row.

Not a word about the lives taken by those 4,100 “fine” individuals. Nor about the lives saved by capital punishment. Nor about justice.

Related posts:
Does Capital Punishment Deter Homicide?
Libertarian Twaddle about the Death Penalty
Crime and Punishment
Abortion and Crime
Saving the Innocent?
Saving the Innocent?: Part II
More on Abortion and Crime
More Punishment Means Less Crime
More About Crime and Punishment
More Punishment Means Less Crime: A Footnote
Clear Thinking about the Death Penalty
Let the Punishment Fit the Crime
A Precedent for the Demise of the Insanity Defense?
Another Argument for the Death Penalty
Less Punishment Means More Crime