Economics: Principles and Issues

Thaler on Discounting

This is a companion to “Richard Thaler, Nobel Laureate” and “Thaler’s Non-Revolution in Economics“. See also the long list of related posts at the end of “Richard Thaler, Nobel Laureate”.

Richard Thaler, the newly minted Noble laureate in economics, has published many papers, including one about discounting as a tool of government decision-making. The paper, “Discounting and Fiscal Constraints: Why Discounting is Always Right”, appeared in August 1979 under the imprimatur of the think-tank where Thaler was a consultant. It was also published in the October 1979 issue of the now-defunct Defense Management Journal (DMJ). Given the lead time for producing a journal, it’s almost certain that there is no substantive difference between the in-house version and the DMJ version. But only the in-house version seems to be available online, so the preceding link leads to it, and the quotations below are taken from it.

The aim of Thaler’s piece is to refute an article in the March 1978 issue of DMJ by Commander Rolf Clark, “Should Defense Managers Discount Future Costs?”. Specifically, Thaler argues against Clark’s conclusion that discounting is irrelevant in a regime of fiscal constraints.*

Clark took the position that a defense manager faced with fiscal constraints should simply choose among alternatives by picking the one with the lowest undiscounted costs. Why? Because the defense manager, unlike a business manager, can’t earn interest by deferring an expenditure and investing the money where it earns interest. To put it another way, deferring an expenditure doesn’t result in a later increase in a defense manager’s budget. Or in the budget of any government manager, for that matter.

Viewed in perspective, the dispute between Thaler and Clark is a tempest in a teaspoon  — a debate about how to arrange the deck chairs on the Titanic. Discounting is of little consequence against this backdrop:

  • uncertainty about future threats to U.S. interests (e.g., their sources, the weapons and tactics of potential enemies, and the timing of attacks)
  • uncertainty about the actual effectiveness of U.S. systems and tactics (e.g., see this)
  • uncertainty bout the costs of systems, especially those that are still in the early stages of development
  • a panoply of vested interests and institutional constraints that must be satisfied (e.g., a strong Marine Corp “lobby” on Capitol Hill, the long dominance of aviation in the Navy, the need to keep the peace within the services by avoiding drastic changes in any component’s share of the budget)
  • uncertainty about the amounts of money that Congress will actually appropriate, and the specific mandates that Congress will impose on spending (e.g., buy this system, not that one, recruit to a goal of X active-duty personnel in the Air Force, not Y).

But the issue is worth revisiting because it reveals a blind spot in Thaler’s view of decision-making.

Thaler begins his substantive presentation by explaining the purpose of discounting:

A discount rate is simply a shorthand way of defining a firm’s, organization’s, or person’s time value of money. This rate is always determined by opportunity costs. Opportunity costs, in turn, depend on circumstances. Consider the following example: An organization must choose between two projects which yield equal effectiveness (or profits in the case of a firm). Project A will cost $200 this year and nothing thereafter. Project B will cost $205 next year and nothing before or after. Notice that if project B is selected the organization will have an extra $200 to use for a year. Whether project B is preferred simply depends on whether it is worth $5 to the organization to have those $200 to use for a year. That, in turn, depends on what the organization would do with the money. If the money would just sit around for the year, its time value is zero and project A should be chosen. However, if the money were put in a 5 percent savings account, it would earn $10 in the year and thus the organization would gain $5 by selecting project B. [pp. 1-2]

In Thaler’s simplified version of reality, a government decision-maker (manager) faces a choice between two projects that (ostensibly) would be equally effective against a postulated threat, even though their costs would be incurred at different times. Specifically, the manager must choose between project A, at a cost of $200 in year 1, and project B, at a cost of $205 in year 2. Thaler claims that the manager can choose between the two projects by discounting their costs:

A [government] manager . . . cannot earn bank interest on funds withheld for a year. . . .  However, there will generally exist other ways for the manager to “invest” funds which are available. Examples include cost-saving expenditures, conservation measures, and preventive maintenance. These kinds of expenditures, if they have positive rates of return, permit a manager to invest money just as if he were putting the money in a savings account.

. . . Suppose a thorough analysis of cost-saving alternatives reveals that [in year 2] a maintenance project will be required at a cost of $215. Call this project D. Alternatively the project can be done [in year 1] (at the same level of effectiveness) for only $200. Call this project C. All of the options are displayed in table 1.

Discounting in the public sector_table 1

[pp. 3-4]

Thaler believes that his example clinches the argument for discounting because the choice of project B (an expenditure of $205 in year 2) enables the manager to undertake project C in year 1, and thereby to “save” $10 in year 2. But Thaler’s “proof” is deeply flawed:

  • If a maintenance project is undertaken in year 1, it will pay off sooner than if it is undertaken in year 2 but, by the same token, its benefits will diminish sooner than if it is undertaken in year 2.
  • More generally, different projects cannot, by definition be equally effective. Projects A and B may be about equally effective by a particular measure, but because they are different they will differ in other respects, and those differences could be crucial in choosing between A and B.
  • Specifically, projects A and B might be equally effective when compared quantitatively in the context of an abstract scenario, but A might be more effective in an non-quantifiable but crucial respect. For example, the earlier expenditure on A might be viewed by a potential enemy as a more compelling deterrent than the later expenditure on B because it would demonstrate more clearly the U.S. government’s willingness and ability to mount a strong defense against the potential enemy. Alternatively, the earlier expenditure on B might cause the enemy to accelerate his own production of weapons or mobilization of troops. These are the kinds of crucial issues that discounting is powerless to illuminate, and may even obscure.
  • For a decision to rest on the use of a particular discount rate, there must be great certainty about the future costs and effectiveness of the alternatives. But there seldom is. The practice of discounting therefore promotes an illusion of certainty — a potentially dangerous illusion, in the case of national defense.
  • Finally, the “correct” discount rate depends on the options available to a particular manager of a particular government activity. Yet Thaler insists on the application of a uniform discount rate by all government managers (p. 6). By Thaler’s own example, such a practice could lead a manager to choose the wrong option.

So even if there is certainty about everything else, there is no “correct” discount rate, and it is presumptuous of Thaler to prescribe one on the assumption that it will fit every defense manager’s particular circumstances.**

Thaler does the same thing when he counsels intervention in personal decisions because too many people — in his view — make irrational decisions.

In the context of personal decision-making — which is the focal point of Thaler’s “libertarian” paternalism — the act of discounting is rational because it serves wealth-maximization. But life isn’t just about maximizing wealth. That’s why some people choose to have a lot of children, when doing so obviously reduces the amount that they can save. That’s why some choose to retire early rather than stay in stressful jobs. Rationality and wealth maximization are two very different things, but a lot of laypersons and too many economists are guilty of equating them.

If wealth-maximization is your goal, just stop drinking, smoking, enjoying good food, paying for entertainment, subscribing to newspapers and magazines, buying books, watering your lawn, mowing the grass, driving your car (except to work if you have no feasible alternative), and on into the night. You will accumulate a lot of money — if you invest wisely (there’s the rub of uncertainty) — but you will live a miserable life, unless you are the rare person who is a true miser.
__________
* If you are unfamiliar with the background of the Clark-Thaler exchange, and the reference to fiscal constraints, here’s the story: Since 1969 the Secretary of Defense has required the military departments to propose multi-year spending programs that are constrained by an explicit ceiling on each year’s spending. Fiscal guidance, as it is called, was lacking before that. But, in reality, defense budgets have always been constrained, ultimately by Congress. Fiscal guidance represents only a rough guess as to the total amount of defense spending that Congress will approve, and a rougher guess about the distribution of that spending among the military departments.

** Thaler’s example of a cost-saving investment is also a stretch, given how government budgets are decided. I gave it a pass in order to make the point that it wouldn’t save Thaler’s argument even if it were realistic. Here’s the missing reality:

Even if the Secretary of Defense (the grand panjandrum of defense managers) makes the kinds of moves counseled by Thaler, and even if his multi-year program sails through the Office and Management and Budget without a scratch, Congress has the final say. And Congress, though it pays attention to the multi-year plans coming from the Executive Branch, still makes annual appropriations. When it does so, it essentially ignores the internal logic of the multi-year plans (assuming that the Defense plan has an internal logic after it has been subjected to Pentagon politics). Instead, Congress divides the defense budget into various spending programs (see the list for national defense, here), and adjusts each program to suit the tastes, preferences, and moods of staffers, committee members, and committee chairman. Thus it is unlikely that the services’ maintenance and procurement budgets will emerge from Congress as they entered, with cross-temporal tradeoffs intact. A more rational budgeting strategy, from the perspective of the Secretary of Defense, is to submit plans that accord with the known preferences of Congress. Such plans may not incorporate the kind of trivial fine-tuning favored by Thaler, but they will more likely serve the national interest by yielding a robust defense.

Another (Big) Problem with “Nudging”

I’ve written recently about Richard Thaler’s Nobel prize and my objections to his (and Cass Sunstein’s) cheerleading for “nudging”. That’s a polite term for the use of business and government power to get people to make the “right” decisions. (“Right” according to Thaler, at least.) It’s the government part that really bothers me. Ilya Somin of The Volokh Conspiracy is of the same mind:

Thaler and many other behavioral economics scholars argue that government should intervene to protect people against their cognitive biases, by various forms of paternalistic policies. In the best-case scenario, government regulators can “nudge” us into correcting our cognitive errors, thereby enhancing our welfare without significantly curtailing freedom.

But can we trust government to be less prone to cognitive error than the private-sector consumers whose mistakes we want to correct? If not, paternalistic policies might just replace one form of cognitive bias with another, perhaps even worse one. Unfortunately, a recent study suggests that politicians are prone to severe cognitive biases too – especially when they consider ideologically charged issues….

Even when presented additional evidence to help them correct their mistakes, Dahlmann and Petersen found that the politicians tended to double down on their errors rather than admit they might have been wrong….

Politicians aren’t just biased in their evaluation of political issues. Many of them are ignorant, as well. For example, famed political journalist Robert Kaiser found that most members of Congress know little about policy and “both know and care more about politics than about substance.”….

But perhaps voters can incentivize politicians to evaluate evidence more carefully. They can screen out candidates who are biased and ill-informed, and elect knowledgeable and objective decision-makers. Sadly, that is unlikely to happen, because the voters themselves also suffer from massive political ignorance, often being unaware of even very basic facts about public policy.

Of course, the Framers of the Constitution understood all of this in 1787. And they wisely acted on it by placing definite limits on the power of the central government. The removal of those limits, especially during and since the New Deal, is a constitutional tragedy.

Thaler’s Non-Revolution in Economics

James R. Rogers writes about Richard Thaler and behavioral economics:

[M]edia treatments of Thaler’s work, and of behavioral economics more generally, suggest that it provides a much-deserved comeuppance to conventional microeconomics. Well . . . Not quite….

… Economists, and rational choice theorists more generally, have a blind spot, [Thaler] argues, for just how often their assumptions about human behavior are inconsistent with real human behavior. That’s an important point.

Yet here’s where spin matters: Does Thaler provide a correction to previous economics, underscoring something everyone always knew but just ignored as a practical matter, or is Thaler’s work revolutionary, inviting a broad and necessary reconceptualization of standard microeconomics?…

… No. He has built a career by correcting a blind spot in modern academic economics. But his insight provides us with a “well, duh” moment rather than a “we need totally to rewrite modern economics” moment that some of his journalistic (and academic) supporters suggest it provides….

Thaler’s work underscores that the economist’s rationality postulates cannot account for all human behavior. That’s an important point. But I don’t know that many, or even any, economists very much believed the opposite in any serious way. [“Did Richard Thaler Really Shift the Paradigm in Economics?“, Library of Law and Liberty, October 11, 2017]

I have made the same point:

Even in those benighted days when I learned the principles of “micro” — just a few years ahead of Thaler — it was understood that the assumption of rationality was an approximation of the tendency of individuals to try to make themselves better off by making choices that would do so, given their tastes and preferences and the information that they possess at the time or could obtain at a cost commensurate with the value of the decision at hand.

Highly recommended reading: my previous post about Thaler and the many related posts listed at the end of it.

Richard Thaler, Nobel Laureate

I am slightly irked by today’s news of the selection of Richard Thaler as the 2017 Noblel laureate in economics. (It’s actually the Swedish National Bank’s Prize in Economic Sciences in Memory of Alfred Nobel, not one of the original prizes designated in Alfred Nobel’s will.) Granted, Thaler did some praiseworthy and groundbreaking work in behavioral economics, which is nicely summarized in this post by Timothy Taylor.

But Thaler, whom I knew slightly when he was a consultant to the outfit where I worked, gets a lot of pushback when he translates his work into normative prescriptions. He was already semi-famous (or infamous) for his collaboration with Cass Sunstein. Together and separately they propounded “libertarian paternalism”, an obnoxious oxymoron that they abandoned in favor of “nudging”. Thus their book-length epistle to true believers in governmental omniscience, Nudge: Improving Decisions about Health and Happiness.

It would be a vast understatement to say that I disagree with Thaler and Sunstein’s policy prescriptions. I have recorded my disagreements in many posts, which are listed below.

Sunstein at the Volokh Conspiracy
More from Sunstein
Cass Sunstein’s Truly Dangerous Mind
An (Imaginary) Interview with Cass Sunstein
Libertarian Paternalism
A Libertarian Paternalist’s Dream World
Slippery Sunstein
The Short Answer to Libertarian Paternalism
Second-Guessing, Paternalism, Parentalism, and Choice
Another Thought about Libertarian Paternalism
Back-Door Paternalism
Sunstein and Executive Power
Another Voice Against the New Paternalism
The Feds and “Libertarian Paternalism”
A Further Note about “Libertarian” Paternalism
Apropos Paternalism
Beware of Libertarian Paternalists
Discounting and Libertarian Paternalism
The Mind of a Paternalist
The Mind of a Paternalist, Revisited
Another Entry in the Sunstein Saga
The Sunstein Effect Is Alive and Well in the White House
Sunstein the Fatuous
Not-So-Random Thoughts (XVI) – first item
The Perpetual Nudger

Not-So-Random Thoughts (XXI)

An occasional survey of web material that’s related to subjects about which I’ve posted. Links to the other posts in this series may be found at “Favorite Posts,” just below the list of topics.

Fred Reed, in a perceptive post worth reading in its entirety, says this:

Democracy works better the smaller the group practicing it. In a town, people can actually understand the questions of the day. They know what matters to them. Do we build a new school, or expand the existing one? Do we want our children to recite the pledge of allegiance, or don’t we? Reenact the Battle of Antietam? Sing Christmas carols in the town square? We can decide these things. Leave us alone….

Then came the vast empire, the phenomenal increase in the power and reach of the federal government, which really means the Northeast Corridor. The Supreme Court expanded and expanded and expanded the authority of Washington, New York’s store-front operation. The federals now decided what could be taught in the schools, what religious practices could be permitted, what standards employers could use in hiring, who they had to hire. The media coalesced into a small number of corporations, controlled from New York but with national reach….

Tyranny comes easily when those seeking it need only corrupt a single Congress, appoint a single Supreme Court, or control the departments of one executive branch. In a confederation of largely self-governing states, those hungry to domineer would have to suborn fifty congresses. It could not be done. State governments are accessible to the governed. They can be ejected. They are much more likely to be sympathetic to the desires of their constituents since they are of the same culture.

Tyranny is often justified by invoking “the will of the people”, but as I say here:

It is a logical and factual error to apply the collective “we” to Americans, except when referring generally to the citizens of the United States. Other instances of “we” (e.g., “we” won World War II, “we” elected Barack Obama) are fatuous and presumptuous. In the first instance, only a small fraction of Americans still living had a hand in the winning of World War II. In the second instance, Barack Obama was elected by amassing the votes of fewer than 25 percent of the number of Americans living in 2008 and 2012. “We the People” — that stirring phrase from the Constitution’s preamble — was never more hollow than it is today.

Further, the logical and factual error supports the unwarranted view that the growth of government somehow reflects a “national will” or consensus of Americans. Thus, appearances to the contrary (e.g., the adoption and expansion of national “social insurance” schemes, the proliferation of cabinet departments, the growth of the administrative state) a sizable fraction of Americans (perhaps a majority) did not want government to grow to its present size and degree of intrusiveness. And a sizable fraction (perhaps a majority) would still prefer that it shrink in both dimensions. In fact, The growth of government is an artifact of formal and informal arrangements that, in effect, flout the wishes of many (most?) Americans. The growth of government was not and is not the will of “we Americans,” “Americans on the whole,” “Americans in the aggregate,” or any other mythical consensus.


I am pleased to note that my prognosis for Trump’s presidency (as of December 2016) was prescient:

Based on his appointments to date — with the possible exception of Steve Bannon [now gone from the White House] — he seems to be taking a solidly conservative line. He isn’t building a government of bomb-throwers, but rather a government of staunch conservatives who, taken together, have a good chance at rebuilding America’s status in the world while dismantling much of Obama’s egregious “legacy”….

Will Donald Trump be a perfect president, if perfection is measured by adherence to the Constitution? Probably not, but who has been? It now seems likely, however, that Trump will be a far less fascistic president than Barack Obama has been and Hillary Clinton would have been. He will certainly be far less fascistic than the academic thought-police, whose demise cannot come too soon for the sake of liberty.

In sum, Trump’s emerging agenda seems to resemble my own decidedly conservative one.

But anti-Trump hysteria continues unabated, even among so-called conservatives. David Gelertner writes:

Some conservatives have the impression that, by showing off their anti-Trump hostility, they will get the networks and the New York Times to like them. It doesn’t work like that. Although the right reads the left, the left rarely reads the right. Why should it, when the left owns American culture? Nearly every university, newspaper, TV network, Hollywood studio, publisher, education school and museum in the nation. The left wrapped up the culture war two generations ago. Throughout my own adult lifetime, the right has never made one significant move against the liberal culture machine.

David Brooks of The New York Times is one of the (so-called) conservatives who shows off his anti-Trump hostility. Here he is writing about Trump and tribalism:

The Trump story is that good honest Americans are being screwed by aliens. Regular Americans are being oppressed by a snobbish elite that rigs the game in its favor. White Americans are being invaded by immigrants who take their wealth and divide their culture. Normal Americans are threatened by an Islamic radicalism that murders their children.

This is a tribal story. The tribe needs a strong warrior in a hostile world. We need to build walls to keep out illegals, erect barriers to hold off foreign threats, wage endless war on the globalist elites.

Somebody is going to have to arise to point out that this is a deeply wrong and un-American story. The whole point of America is that we are not a tribe. We are a universal nation, founded on universal principles, attracting talented people from across the globe, active across the world on behalf of all people who seek democracy and dignity.

I am unaware that Mr. Trump has anything against talented people. But he rightly has a lot against adding to the welfare rolls and allowing jihadists into the country. As for tribalism — that bugbear of “enlightened” people — here’s where I stand:

There’s a world of difference between these three things:

  1. hating persons who are different because they’re different
  2. fearing persons of a certain type because that type is highly correlated with danger
  3. preferring the company and comfort of persons with whom one has things in common, such as religion, customs, language, moral beliefs, and political preferences.

Number 1 is a symptom of bigotry, of which racism is a subset. Number 2 is a sign of prudence. Number 3 is a symptom of tribalism.

Liberals, who like to accuse others of racism and bigotry, tend to be strong tribalists — as are most people, the world around. Being tribal doesn’t make a person a racist or a bigot, that is, hateful toward persons of a different type. It’s natural (for most people) to trust and help those who live nearest them or are most like them, in customs, religion, language, etc. Persons of different colors and ethnicities usually have different customs, religions, and languages (e.g., black English isn’t General American English), so it’s unsurprising that there’s a tribal gap between most blacks and whites, most Latinos and whites, most Latinos and blacks, and so on.

Tribalism has deep evolutionary-psychological roots in mutual aid and mutual defense. The idea that tribalism can be erased by sitting in a circle, holding hands, and singing Kumbaya — or the equivalent in social-diplomatic posturing — is as fatuous as the idea that all human beings enter this world with blank minds and equal potential. Saying that tribalism is wrong is like saying that breathing and thinking are wrong. It’s a fact of life that can’t be undone without undoing the bonds of mutual trust and respect that are the backbone of a civilized society.

If tribalism is wrong, then most blacks, Latinos, members of other racial and ethnic groups, and liberals are guilty of wrong-doing.

None of this seems to have occurred to Our Miss Brooks (a cultural reference that may be lost on younger readers). But “liberals” — and Brooks is one of them — just don’t get sovereignty.


While we’re on the subject of immigration, consider a study of the effect of immigration on the wages of unskilled workers, which is touted by Timothy Taylor. According to Taylor, the study adduces evidence that

in areas with high levels of low-skill immigration, local firms shift their production processes in a way that uses more low-skilled labor–thus increasing the demand for such labor. In addition, immigrant low-skilled labor has tended to focus on manual tasks, which has enabled native-born low-skilled labor to shift to nonmanual low-skilled tasks, which often pay better.

It’s magical. An influx of non-native low-skilled laborers allows native-born low-skilled laborers to shift to better-paying jobs. If they could have had those better-paying jobs, why didn’t they take them in the first place?

More reasonably, Rick Moran writes about a

Federation for American Immigration Reform report [which] reveals that illegal aliens are costing the U.S. taxpayer $135 billion.  That cost includes medical care, education, and law enforcement expenses.

That’s a good argument against untrammeled immigration (legal or illegal). There are plenty more. See, for example, the entry headed “The High Cost of Untrammeled Immigration” at this post.


There’s a fatuous argument that a massive influx of illegal immigrants wouldn’t cause the rate of crime to rise. I’ve disposed of that argument with one of my own, which is supported by numbers. I’ve also dealt with crime in many other posts, including this one, where I say this (and a lot more):

Behavior is shaped by social norms. Those norms once were rooted in the Ten Commandments and time-tested codes of behavior. They weren’t nullified willy-nilly in accordance with the wishes of “activists,” as amplified through the megaphone of the mass media, and made law by the Supreme Court….

But by pecking away at social norms that underlie mutual trust and respect, “liberals” have sundered the fabric of civilization. There is among Americans the greatest degree of mutual enmity (dressed up as political polarization) since the Civil War.

The mutual enmity isn’t just political. It’s also racial, and it shows up as crime. Heather Mac Donald says “Yes, the Ferguson Effect Is Real,” and Paul Mirengoff shows that “Violent Crime Jumped in 2015.” I got to the root of the problem in “Crime Revisited,” to which I’ve added “Amen to That” and “Double Amen.” What is the root of the problem? A certain, violence-prone racial minority, of course, and also under-incarceration (see “Crime Revisited”).

The Ferguson Effect is a good example of where the slippery slope of free-speech absolutism leads. More examples are found in the violent protests in the wake of Donald Trump’s electoral victory. The right “peaceably to assemble, and to petition the Government for a redress of grievances” has become the right to assemble a mob, disrupt the lives of others, destroy the property of others, injure and kill others, and (usually) suffer no consequences for doing so — if you are a leftist or a member of one of the groups patronized by the left, that is.

How real is the Ferguson effect? Jazz Shaw writes about the rising rate of violent crime:

We’ve already looked at a couple of items from the latest FBI crime report and some of the dark news revealed within. But when you match up some of their numbers with recent historical facts, even more trends become evident. As the Daily Caller reports this week, one disturbing trend can be found by matching up locations recording rising murder rates with the homes of of widespread riots and anti-police protests.

As we discussed when looking at the rising murder and violent crime rates, the increases are not homogeneous across the country. Much of the spike in those figures is being driven by the shockingly higher murder numbers in a dozen or so cities. What some analysts are now doing is matching up those hot spots with the locations of the aforementioned anti-police protests. The result? The Ferguson Effect is almost undoubtedly real….

Looking at the areas with steep increases in murder rates … , the dots pretty much connect themselves. It starts with the crime spikes in St. Louis, Baltimore and Chicago. Who is associated with those cities? Michael Brown, Freddie Gray and Laquan McDonald. The first two cities experienced actual riots. While Chicago didn’t get quite that far out of hand, there were weeks of protests and regular disruptions. The next thing they have in common is the local and federal response. Each area, rather than thanking their police for fighting an increasingly dangerous gang violence situation with limited resources, saw municipal leaders chastising the police for being “too aggressive” or using similar language. Then the federal government, under Barack Obama and his two Attorney Generals piled on, demanding long term reviews of the police forces in those cities with mandates to clean up the police departments.

Small wonder that under such circumstances, the cops tended to back off considerably from proactive policing, as Heather McDonald describes it. Tired of being blamed for problems and not wanting to risk a lawsuit or criminal charges for doing their jobs, cops became more cautious about when they would get out of the patrol vehicle at times. And the criminals clearly noticed, becoming more brazen.

The result of such a trend is what we’re seeing in the FBI report. Crime, which had been on the retreat since the crackdown which started in the nineties, is back on the rise.


It is well known that there is a strong, negative relationship between intelligence and crime; that is, crime is more prevalent among persons of low intelligence. This link has an obvious racial dimension. There’s the link between race and crime, and there’s the link between race and intelligence. It’s easy to connect the dots. Unless you’re a “liberal”, of course.

I was reminded of the latter link by two recent posts. One is a reissue by Jared Taylor, which is well worth a re-read, or a first read if it’s new to you. The other, by James Thompson, examines an issue that I took up here, namely the connection between geography and intelligence. Thompson’s essay is more comprehensive than mine. He writes:

[R]esearchers have usually looked at latitude as an indicator of geographic influences. Distance from the Equator is a good predictor of outcomes. Can one do better than this, and include other relevant measures to get a best-fit between human types and their regions of origin?… [T]he work to be considered below…. seeks to create a typology of biomes which may be related to intelligence.

(A biome is “a community of plants and animals that have common characteristics for the environment they exist in. They can be found over a range of continents. Biomes are distinct biological communities that have formed in response to a shared physical climate.”)

Thompson discusses and quotes from the work (slides here), and ends with this:

In summary, the argument that geography affects the development of humans and their civilizations need not be a bone of contention between hereditarian and environmentalist perspectives, so long as environmentalists are willing to agree that long-term habitation in a particular biome could lead to evolutionary changes over generations.

Environment affects heredity, which then (eventually) embodies environmental effects.


Returning to economics, about which I’ve written little of late, I note a post by Scott Winship, in which he addresses the declining labor-force participation rate:

Obama’s Council of Economic Advisers (CEA) makes the argument that the decline in prime-age male labor is a demand-side issue that ought to be addressed through stimulative infrastructure spending, subsidized jobs, wage insurance, and generous safety-net programs. If the CEA is mistaken, however, then these expensive policies may be ineffective or even counterproductive.

The CEA is mistaken—the evidence suggests there has been no significant drop in demand, but rather a change in the labor supply driven by declining interest in work relative to other options.

  • There are several problems with the assumptions and measurements that the CEA uses to build its case for a demand-side explanation for the rise in inactive prime-age men.
  • In spite of conventional wisdom, the prospect for high-wage work for prime-age men has not declined much over time, and may even have improved.
  • Measures of discouraged workers, nonworkers marginally attached to the workforce, part-time workers who wish to work full-time, and prime-age men who have lost their job involuntarily have not risen over time.
  • The health status of prime-age men has not declined over time.
  • More Social Security Disability Insurance claims are being filed for difficult-to-assess conditions than previously.
  • Most inactive men live in households where someone receives government benefits that help to lessen the cost of inactivity.

Or, as I put it here, there is

the lure of incentives to refrain from work, namely, extended unemployment benefits, the relaxation of welfare rules, the aggressive distribution of food stamps, and “free” healthcare” for an expanded Medicaid enrollment base and 20-somethings who live in their parents’ basements.


An additional incentive — if adopted in the U.S. — would be a universal basic income (UBI) or basic income guarantee (BIG), which even some libertarians tout, in the naive belief that it would replace other forms of welfare. A recent post by Alberto Mingardi reminded me of UBI/BIG, and invoked Friedrich Hayek — as “libertarian” proponents of UBI/BIG are wont to do. I’ve had my say (here and here, for example). Here’s I said when I last wrote about it:

The Basic Income Guarantee (BIG), also known as Universal Basic Income (UBI), is the latest fool’s gold of “libertarian” thought. John Cochrane devotes too much time and blog space to the criticism and tweaking of the idea. David Henderson cuts to the chase by pointing out that even a “modest” BIG — $10,000 per adult American per year — would result in “a huge increase in federal spending, a huge increase in tax rates, and a huge increase in the deadweight loss from taxes.”

Aside from the fact that BIG would be a taxpayer-funded welfare program — to which I generally object — it would necessarily add to the already heavy burden on taxpayers, even though it is touted as a substitute for many (all?) extant welfare programs. The problem is that the various programs are aimed at specific recipients (e.g., women with dependent children, families with earned incomes below a certain level). As soon as a specific but “modest” proposal is seriously floated in Congress, various welfare constituencies will find that proposal wanting because their “entitlements” would shrink. A BIG bill would pass muster only if it allowed certain welfare programs to continue, in addition to BIG, or if the value of BIG were raised to a level that such that no welfare constituency would be a “loser.”

In sum, regardless of the aims of its proponents — who, ironically, tend to call themselves libertarians — BIG would lead to higher welfare spending and more enrollees in the welfare state.


-30-

Politics Trumps Economics

Years ago I was conversing with a hard-core economist, one of the benighted kind who assume that everyone behaves like a wealth-maximizing robot. I observed that even if he were right in his presumption that economic decisions are made rationally and in a way that comports with economic efficiency, government stands in the way of efficiency. In my pithy phrasing: Politics trumps economics.

So even if the impetus for efficiency isn’t blunted by governmental acts (laws, regulations, judicial decrees), those acts nevertheless stand in the way of efficiency, despite clever workarounds. A simple case in point is the minimum wage, which doesn’t merely drive up the wages of some workers, but also ensures that many workers are unemployed in the near term, and that many more workers will be unemployed in the long-term. Yes, the minimum wage causes some employers to substitute capital (e.g., robots) for labor, but they do so only to reduce the bottom-line damage of the minimum wage (at least in the near-term). Neither the employer nor the jobless is made better off by the employer’s machinations. Thus politics (the urge to regulate) trumps economics (the efficiency-maximizing state of affairs that would otherwise obtain).

I was reminded of my exchange with the economist by a passage in Jean-François Revel’s Last Exit to Utopia: The Survival of Socialism in a Post-Soviet Era:

Karl Jaspers, in his essay on Max Weber, records the following conversation between Weber and Joseph Schumpeter:

The two men met at a Vienna cafe… Schumpter indicated how gratified he was by the socialist revolution in Russia. Henceforth socialism would not be just a program on paper — it would have to prove its viability.

To which Weber … replied that Communism at this stage of development in Russia virtually amounted to a crime, and that to take this path would lead to human misery without equal and to a terrible catastrophe.

“That’s exactly what will happen,” agreed Schumpeter, “but what a perfect laboratory experiment.”

“A laboratory in which mountains of corpses will be heaped!” retorted Weber….

This exchange must have occurred at the beginning of the Bolshevik regime, since Max Weber died in 1920. Thus one of the twentieth century’s greatest sociologists and one of its greatest economists were in substantial agreement about Communism: they had no illusions about it and were fully aware of its criminogenic tendencies. On one issue, though, they differed. Schumpeter was still in thrall to a belief that Weber did not share, namely the illusion that the failures and crimes of Communism would serve as a lesson to humanity. [pp. 141-142]

Weber was right, of course. Politics trumps economics because people — especially people in power — will cling to counterproductive beliefs, even despite evidence that they are counterproductive. Facts and logic don’t stand a chance against power-lust, magical thinking, virtue-signalling, and the band-wagon effect.


Related posts:
“Intellectuals and Society”: A Review
The Left’s Agenda
The Left and Its Delusions
A Keynesian Fantasy Land
The Spoiled Children of Capitalism
Politics, Sophistry, and the Academy
Subsidizing the Enemies of Liberty
Income Inequality and Economic Growth
A Case for Redistribution, Not Made
Ruminations on the Left in America
Academic Ignorance
Superiority
Whiners
A Dose of Reality
God-Like Minds
Non-Judgmentalism as Leftist Condescension
An Addendum to (Asymmetrical) Ideological Warfare
The Rahn Curve Revisited
Retrospective Virtue-Signalling
Four Kinds of “Liberals”
Leftist Condescension
The Vast Left-Wing Conspiracy
Leftism As Crypto-Fascism: The Google Paradigm
What’s Going On? A Stealth Revolution

Stagnation: ‘Tis a Tale Told by the Stock Market

I have just come across two articles about the shrinking number of firms listed on U.S. stock exchanges:

Kathleen Kahle and René M. Stulz, “Is the American Public Corporation in Trouble?”, Journal of Economic Perspectives, Volume 31, Number 3, Summer 2017

Michael J. Mauboussin, Dan Callahan, and Darius Majd, “The Incredible Shrinking Universe of Stocks: The Causes and Consequences of Fewer U.S. Equities“, Credit Suisse, Global Financial Strategies, March 22, 2017

I will refer to the first article as K&S and the second article as MC&M. (Despite the publication dates, K&S predates MC&M.) The articles tell this tale:

  • From the mid-1970s to the mid-1990s, the number of listed companies rose sharply.
  • Since the min-1990s, the number of listed companies has dropped sharply.
  • The declining number of listed companies has been accompanied by consolidation within many industries and — among the surviving firms — greater size, higher profits, bigger payouts to shareholders, and higher average market capitalization (market value of outstanding shares).

Here are some relevant observations from K&S:

If consolidation has nothing to do with being a public firm, we should see the total number of firms decreasing, whether firms are public or private. We don’t. The United States has become an economy dominated by service industries, and so a good way to demonstrate this is to look at the service industries. Even though the number of firms in the service industries increases by 30 percent from 1995 to 2014 and employment increases by 240 percent, the number of public firms falls by 38 percent. A similar evolution occurs in the finance industry, in which the number of firms increases by 18.7 percent from 1995 to 2014, but over the same time the number of listed firms falls by 42.3 percent. Further, … the propensity of firms to be listed … falls across all firm-size categories when size is measured by employment….

The drop in the propensity to be listed suggests that there is a problem with being a public firm…. In the United States, corporate law is governed by state of incorporation, but public firms are subject to federal securities laws. As a result, Congress can regulate public firms in ways that it cannot regulate private firms….

Our data show that the fraction of small public firms has dropped dramatically…. [T]he drop in initial public offerings is particularly acute among small firms. Why are public markets no longer welcoming for small firms?… [R]esearch and development investments have become more important. Generally, R&D is financed with some form of equity rather than debt, at least in early stages before a firm has accumulated lucrative patents. Raising equity in public markets to fund R&D can be difficult. Investors want to know what they invest in, but the more a firm discloses, the more it becomes at risk of providing ammunition to its competitors. As a result, R&D-intensive firms may be better off raising equity privately from investors who then have large stakes….

There are several additional potential explanations for why small firms are staying out of public markets… First, public markets have become dominated by institutional investors…. Investing in really small firms is unattractive for institutional investors, because they cannot easily invest in a small firm on a scale that works for them. As a result, small firms receive less attention and less support from financial institutions. This makes being public less valuable for these firms. Second, developments in financial intermediation and regulatory changes have made it easier to raise funds as a private firm. Private equity and venture capital firms have grown to provide funding and other services to private firms. The internet has reduced search costs for firms searching for investors. As a result, private firms have come to have relatively easier access to funding.

… According to [the economies of scope] hypothesis, small firms have become less profitable and less able to grow on a stand-alone basis, but are more profitable as part of a larger organization that enables them to scale up quickly and efficiently. Thus, small firms are better off selling themselves to a large organization that can bring a product to market faster and realize economies of scope. This dynamic arises partly because it has become important to get big quickly as technological innovation has accelerated. Globalization also means that firms must be able to access global markets quickly. Further, network and platform effects can make it more advantageous for small firms to take advantage of these effects by being acquired. This hypothesis is consistent with our evidence that the fraction of exchange-listed firms with losses has increased and that average cash flows for smaller firms have dropped…. [M]any mergers do involve small firms, so small firms do indeed choose to be acquired rather than grow as public firms.

The increased concentration we document could also make it harder for small firms to succeed on their own, as large established firms are more entrenched and more dominant….

[Gerald] Davis … argues [in The Vanishing American Corporation] that it has become easier to put a new product on the market without hard assets…. When all the pieces necessary to produce a product can be outsourced and rented, a firm can bring a product to market without large capital requirements. Hence, the firm does not need to go public to raise vast amounts of equity to acquire the fixed assets necessary for production… Ford’s largest production facility in the 1940s, the River Rouge complex, employed more than 100,000 workers at its peak. Of today’s largest US firms, only Amazon has substantially more employees than that complex at its peak. With this evolution, there is no point in going public, except to enable owners to cash out.

These explanations imply that there are fewer public firms both because it has become harder to succeed as a public firm and also because the benefits of being public have fallen. As a result, firms are acquired rather than growing organically. This process results in fewer thriving small public firms that challenge larger firms and eventually succeed in becoming large. A possible downside of this evolution is that larger firms may be able to worry less about competition, can become more set in their ways, and do not have to innovate and invest as much as they would with more youthful competition. Further, small firms are not as ambitious and often choose the path of being acquired rather than succeeding in public markets. With these possible explanations, the developments we document can be costly, leading to less investment, less growth, and less dynamism.

This is all consistent with the creeping stagnation of the U.S. economy, as it collapses under the weight of government spending and regulation:

The “Public Goods” Myth

The argument for the provision of public goods by the state goes like this:

People will free ride on a public good like a clean atmosphere because they can benefit from it without contributing to it. Mimi will enjoy more breathable air when others switch to a Prius even if she doesn’t drive one herself. So the state is justified as a means of forcing people like Mimi to contribute: for instance, by creating laws that penalize pollution….

Standard models predict that public goods will be underprovided because of free riding. Public goods are non-excludable, meaning that you cannot be excluded from enjoying them even if you didn’t contribute to them. Public goods are also non-rivalrous, meaning that my enjoyment of the good doesn’t subtract from yours. Here’s an example. A storm threatens to flood the river, a flood that would destroy your town. If the townspeople join together to build a levee with sandbags, the town will be spared. However, your individual contribution won’t make or break the effort. The levee is a public good. If it prevents the flood, your house will be saved whether or not you helped stack the sandbags. And the levee will protect the entire town, so protecting your house doesn’t detract from the protection afforded to other houses.

It’s typically assumed that people won’t voluntarily contribute to public goods like the levee. Your individual contribution is inconsequential, and if the levee does somehow get provided, you enjoy its protection whether or not you helped. You get the benefit without paying the costs. So the self-interested choice is to watch Netflix on your couch while your neighbors hurt their backs lugging sandbags around. The problem is, your neighbors have the exact same incentive to stay home— if enough others contribute to the levee, they’ll enjoy the benefits whether or not they contributed themselves. Consequently, no one has an incentive to contribute to the levee. As a result of this free-rider problem, the town will flood even though the flood is bad for everyone. [Christopher Freiman, Unequivocal Justice, 2017]

The idea is that private entities won’t provide certain things because there will be too many free riders. And yet, people do buy Priuses and similar cars, and do volunteer in emergencies, and do commit myriad acts of kindness and generosity without compensation (other than psychic). These contrary and readily observable facts should be enough to discredit public-goods theory. But I shall continue with a critical look at key terms and assumptions.

What is a public good? It’s a good that’s “underprovided”. What does that mean? It means that someone who believes that a certain good should be provided in a certain quantity at a certain price is dissatisfied with the actual quantity and/or price at which the good is provided (or not provided).

Who is that someone? Whoever happens to believe that a certain good should be provided at a certain price. Or, more likely, that it should be provided “free” by government. There are many advocates of universal health care, for example, who are certain that health care is underprovided, and that it should be made available freely to anyone who “needs” it. They are either ignorant of the track record of socialized medicine in Canada and Britain, or are among the many (usually leftists) who prefer hope to experience.

What is a free rider, and why is it bad to be a free rider? A free rider is someone who benefits from the provision and use of goods for which he (the free rider) doesn’t pay. There are free riders all around us, all the time. Any product, service, or activity that yields positive externalities is a boon to many persons who don’t buy the product or service, or engage in the activity. (Follow the link in the preceding sentence for a discussion and examples of positive externalities.) But people do buy products and services that yield positive externalities, and companies do stay in business by provide such products and services.

In sum, “free rider” is a scare term invoked for the purpose of justifying government-provided public goods. Why government-provided? Because that way the goods will be “free” to many users of them, and “the rich” will be taxed to provide the goods, of course. (“Free” is an illusion. See this.)

Health care — which people long paid for out of their own pockets or which was supported by voluntary charity — is demonstrably not a public good. If anything, the more that government has come to dominate the provision of health care (including its provision through insurance), the more costly it has become. The rising cost has served to justify greater government involvement in health care, which has further driven up the cost, etc., etc., etc. That’s what happens when government provides a so-called public good.

What about defense? As I say here,

given the present arrangement of the tax burden, those who have the most to gain from defense and justice (classic examples of “public goods”) already support a lot of free riders and “cheap riders.” Given the value of defense and justice to the orderly operation of the economy, it is likely that affluent Americans and large corporations — if they weren’t already heavily taxed — would willingly form syndicates to provide defense and justice. Most of them, after all, are willing to buy private security services, despite the taxes they already pay….

… It may nevertheless be desirable to have a state monopoly on police and justice — but only on police and justice, and only because the alternatives are a private monopoly of force, on the one hand, or a clash of warlords, on the other hand.

The environment? See this and this. Global warming? See this, and follow the links therein.

All in all, the price of “free” government goods is extremely high; government taketh away far more than it giveth. With a minimal government restricted to the defense of citizens against force and fraud there would be far fewer people in need of “public goods” and far, far more private charity available to those few who need it.


Related posts:
A Short Course in Economics
Addendum to a Short Course in Economics
Monopoly: Private Is Better than Public
Voluntary Taxation
What Free-Rider Problem?
Regulation as Wishful Thinking
Merit Goods, Positive Rights, and Cosmic Justice
More about Merit Goods
Don’t Just Stand There, “Do Something”

The Social Security Mess Revisited

Laurence Kotlikoff draws attention to the Social Security mess in his recent column, “Will Social Security Be There for You?“. He states the problem and poses two stark options for solving it:

Social Security’s trustees just released their annual report. It’s a very long document, with the most important part buried deep in appendix table VIF1.

Table VIF1 shows the system is $34.2 trillion in the red. That’s its unfunded liability. Stated differently, the system’s trust fund needs to be $37 trillion, not its actual $2.8 trillion, to permit Social Security to pay all scheduled benefits into the future. How large is $34.2 trillion? Very large. It’s almost two years of GDP!

There is, of course, more than one way to make ends meet. If we can’t get the good lord to drop $34.2 trillion into Social Security’s coffers as manna from heaven, we can raise taxes. One option is to take 4.2 percent more out of everyone’s paycheck (up to the taxable earnings ceiling, now $127,500) on a permanent basis. Since Social Security’s FICA payroll tax rate is 12.4 percent, we’re talking a 33.9 (4.2/12.4) percent immediate and permanent Social Security tax hike!

Another option is to cut all Social Security benefits (retirement, spousal, divorcee, widow(er), young child, disabled child, child-in-care spousal, mother (father), disability and parent benefits) immediately and permanently by 25 percent!

There are, in fact, other options. One is to keep kicking the can down the road, as long as foreign investors are willing, in effect, to underwrite Social Security’s deficit. They do this by shipping the proceeds of their “trade surplus” (our “trade deficit”) back to the U.S. in exchange for stocks, bonds, and real estate. Some of their money goes directly into U.S. government bonds; the rest helps to relieve the crowding out that occurs when the U.S. government borrows to sustain its profligate spending, which includes Social Security.

Here’s another one. The unfunded liability isn’t a current liability; it’s the  present value of future Social Security deficits. Which means that another way of kicking the can down the road is to gradually increase Social Security taxes and/or reduce benefits to a sustainable level while foreigners to underwrite the transition.

I prefer a third option, which is usually considered politically unthinkable: eventual privatization of Social Security. How would that work? Here’s my plan:

1. Abolish Social Security payroll taxes as of a date certain (Abolition Day).

2. Pay normal benefits (those implicitly promised under the present system) to persons who are then collecting Social Security and to all other qualifying persons who have then reached the age of 62.

3. Persons who are 55 to 61 years old would receive normal benefits, pro-rated according to their contributions as of Abolition Day.

4. The retirement age for full benefits would be raised for all persons who are younger than 55 as of Abolition Day. The full retirement age is now scheduled to rise to 67 in 2027. It could rise to 70 by, say, 2025. Moreover, the minimum age for receiving partial benefits would rise from 62 to 65.

4. Persons who are 45 to 54 years old also would receive prorated benefits based on their contributions as of Abolition Day. But their initial benefits would be reduced on a sliding scale, so that the benefits of those persons who are 45 as of Abolition Day would be linked entirely to the CPI rather than the wage index.

5. Persons who are younger than 45 would receive a lump-sum repayment of their contributions (plus accrued interest) at full retirement age, in lieu of future benefits. That payment would automatically go to a surviving spouse or next-of-kin if the recipient dies intestate. Otherwise, the recipient could bequeath, transfer, or sell his interest in the payment at any time before it comes due.

The residual obligations outlined in steps 2-5 would be funded in part by a payroll tax, which would diminish as those obligations are paid off. The U.S. government would continue to borrow as necessary to fund the Social Security deficit, but — unlike the first two options — the borrowing would eventually come to an end. Social Security would be “saved”, there would be less crowding-out in financial markets, and — best of all — everyone’s retirement savings would be plowed into investment-inducing vehicles: stocks, bonds, CDs, savings accounts. This would push up the rate of economic growth and make privatization all the more affordable, and desirable.

The Danger of Marginal Thinking

The “marginal revolution” in economics, which occurred in the latter part of the 19th century, introduced marginalism,

a theory of economics that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. The reason why the price of diamonds is higher than that of water, for example, owes to the greater additional satisfaction of the diamonds over the water. Thus, while the water has greater total utility, the diamond has greater marginal utility.

Although the central concept of marginalism is that of marginal utility, marginalists, following the lead of Alfred Marshall, drew upon the idea of marginal physical productivity in explanation of cost. The neoclassical tradition that emerged from British marginalism abandoned the concept of utility and gave marginal rates of substitution a more fundamental role in analysis. Marginalism is an integral part of mainstream economic theory.

But pure marginalism can be the road to ruin for a business if the average cost of a unit of output is greater than average revenue, that is, the price for which a unit is sold.

Marginalism is the road to ruin in law and politics. If a governmental act can be shown to have a positive effect “at the margin”, its broader consequences are usually ignored. This kind of marginalism is responsible for the slippery sloperatchet effect enactment and perpetuation of one economically and socially destructive government program after another. Obamacare, same-sex “marriage”, and rampant transgenderism are the most notorious examples of recent years. Among the many examples of earlier years are the Pure Food and Drug Act, the Supreme Court’s holding in Wickard v. Filburn, the Social Security Act and its judicial vindication, the Civil Rights Act of 1964, and the various enactments related to “equal employment opportunity”, including the Americans with Disabilities Act.

Frédéric Bastiat’s wrote about it more than 160 years ago, in “What Is Seen and What Is Not Seen“:

[A] law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

The unseen effects — the theft of Americans’ liberty and prosperity — had been foreseen by some (e.g., Tocqueville and Hayek). But their wise words have been overwhelmed by power-lust, ignorance, and greed. Greed manifests itself in the interest-group paradox:

The interest-group paradox is a paradox of mass action….

Pork-barrel legislation exemplifies the interest-group paradox in action, though the paradox encompasses much more than pork-barrel legislation. There are myriad government programs that — like pork-barrel projects — are intended to favor particular classes of individuals. Here is a minute sample:

  • Social Security, Medicare, and Medicaid, for the benefit of the elderly (including the indigent elderly)
  • Tax credits and deductions, for the benefit of low-income families, charitable and other non-profit institutions, and home buyers (with mortgages)
  • Progressive income-tax rates, for the benefit of persons in the mid-to-low income brackets
  • Subsidies for various kinds of “essential” or “distressed” industries, such as agriculture and automobile manufacturing
  • Import quotas, tariffs, and other restrictions on trade, for the benefit of particular industries and/or labor unions
  • Pro-union laws (in many States), for the benefit of unions and unionized workers
  • Non-smoking ordinances, for the benefit of bar and restaurant employees and non-smoking patrons.

What do each of these examples have in common? Answer: Each comes with costs. There are direct costs (e.g., higher taxes for some persons, higher prices for imported goods), which the intended beneficiaries and their proponents hope to impose on non-beneficiaries. Just as importantly, there are indirect costs of various kinds (e.g., disincentives to work and save, disincentives to make investments that spur economic growth)….

You may believe that a particular program is worth what it costs — given that you probably have little idea of its direct costs and no idea of its indirect costs. The problem is millions of your fellow Americans believe the same thing about each of their favorite programs. Because there are thousands of government programs (federal, State, and local), each intended to help a particular class of citizens at the expense of others, the net result is that almost no one in this fair land enjoys a “free lunch.” Even the relatively few persons who might seem to have obtained a “free lunch” — homeless persons taking advantage of a government-provided shelter — often are victims of the “free lunch” syndrome. Some homeless persons may be homeless because they have lost their jobs and can’t afford to own or rent housing. But they may have lost their jobs because of pro-union laws, minimum-wage laws, or progressive tax rates (which caused “the rich” to create fewer jobs through business start-ups and expansions).

The paradox that arises from the “free lunch” syndrome is…. like the paradox of panic, in that there is a  crowd of interest groups rushing toward a goal — a “pot of gold” — and (figuratively) crushing each other in the attempt to snatch the pot of gold before another group is able to grasp it. The gold that any group happens to snatch is a kind of fool’s gold: It passes from one fool to another in a game of beggar-thy-neighbor, and as it passes much of it falls into the maw of bureaucracy.

As far as I know, only one agency of the federal government has been abolished in my lifetime, while dozens have been created and expanded willy-nilly at the behest of politicians, bureaucrats, and cronies. The one that was abolished — the Interstate Commerce Commission — still had “residual functions” that were transferred elsewhere. That’s the way it works in Washington, and in State capitals.

So one obvious danger of marginal thinking is that the nose of the camel under the edge of the tent is invariably followed by its neck, its humps, its tail, another camel’s nose, etc., etc. etc.

There’s a less obvious danger, which is typified by the penchant of faux-libertarians for dismissing objections to this and that “harmless” act. Economist Mark Perry, for example, regurgitates Milton Friedman’s 30-year-old plea for the decriminalization of drugs. Just because some behavior is “private” doesn’t mean that it’s harmless to others. Murder behind a closed door is still murder.

In the case of drugs, I turn to Theodore Dalrymple:

[I]t is not true that problems with drugs arise only when or because they are prohibited.

The relationship between crime and drug prohibition is also much more complex than the legalizers would have us believe. It is certainly true that gangs quickly form that try to control drug distribution in certain areas, and that conflict between the aspirant gangs leads to violence…. But here I would point out two things: first that the violence of such criminal gangs was largely confined to the subculture from which they emerged, so that other people were not much endangered by it; and second that, in my dealings with such people, I did not form the impression that, were it not for the illegality of drugs, they would otherwise be pursuing perfectly respectable careers. If my impression is correct, then the illegality of drugs might protect the rest of society from their criminality: the illegal drug trade being the occasion, but not the cause, of their violence.

What about Prohibition, is the natural reply? It is true that the homicide rate in the United States fell dramatically in the wake of repeal. By the 1960s, however, when alcohol was not banned, it had climbed higher than during Prohibition…. Moreover, what is less often appreciated, the homicide rate in the United States rose faster in the thirteen years before than in the thirteen years during Prohibition. (In other respects, Prohibition was not as much of a failure as is often suggested: alcohol-related problems such as liver disease declined during it considerably. But no consequences by themselves can justify a policy, otherwise the amputation of thieves’ hands would be universal.) Al Capone was not a fine upstanding citizen before Prohibition turned him into a gangster. [“Ditching Drug Prohibition: A Dissent”, Library of Law and Liberty, July 23, 2015, and the second in a series; see also “The Simple Truth about J.S. Mill’s Simple Truth”, op. cit., July 20, 2015; “Myths and Realities of Drug Addiction, Consumption, and Crime”, op. cit., July 31, 2015; and “Closing Argument on the Drug Issue”, op. cit., August 4, 2015]

This reminds me of my post, “Prohibition, Abortion, and ‘Progressivism’”, in which I wrote about the Ken Burns series, Prohibition. Here’s some of it:

Although eugenics is not mentioned in Prohibition, it looms in the background. For eugenics — like prohibition of alcohol and, later, the near-prohibition of smoking — is symptomatic of the “progressive” mentality. That mentality is paternalistic, through and through. And “progressive” paternalism finds its way into the daily lives of Americans through the regulation of products and services — for our own good, of course. If you can think of a product or service that you use (or would like to use) that is not shaped by paternalistic regulation or taxes levied with regulatory intent, you must live in a cave.

However, the passing acknowledgement of “progressivism” as a force for the prohibition of alcohol is outweighed by the attention given to the role of “evangelicals” in the enactment of prohibition. I take this as a subtle swipe at anti-abortion stance of fundamentalist Protestants and adherents of the “traditional” strands of Catholicism and Judaism. Here is the “logic” of this implied attack on pro-lifers: Governmental interference in a personal choice is wrong with respect to the consumption of alcohol and similarly wrong with respect to abortion.

By that “logic,” it is wrong for government to interfere in or prosecute robbery, assault, rape, murder and other overtly harmful acts, which — after all — are merely the consequences of personal choices made by their perpetrators. Not even a “progressive” would claim that robbery, assault, etc., should go unpunished, though he would quail at effective punishment.

“Liberals” of both kinds (“progressive” fascists and faux-libertarian) just don’t know when to smack camels on the nose. Civilization depends on deep-seated and vigorously enforced social norms. They reflect eons of trial and error, and can’t be undone peremptorily without unraveling the social fabric — the observance of mores and morals that enable a people to coexist peacefully and beneficially because they are bound by mutual trust, mutual respect, and mutual forbearance.

A key function of those norms is to inculcate self-restraint. For it is the practice of self-restraint that underlies peaceful, beneficial coexistence: What goes around comes around.


Related pages and posts:
Leftism
Social Norms and Liberty
*****
On Liberty
In Defense of Marriage
Myopic Moaning about the War on Drugs
Facets of Liberty
Burkean Libertarianism
The Myth That Same-Sex “Marriage” Causes No Harm
Lock ‘Em Up
Liberty and Society
The Eclipse of “Old America”
Genetic Kinship and Society
The Fallacy of Human Progress
Defining Liberty
The Pseudo-Libertarian Temperament
Getting Liberty Wrong
“Liberalism” and Personal Responsibility
Crime Revisited
A Cop-Free World?
The Beginning of the End of Liberty in America
Marriage: Privatize It and Revitalize It
More About Social Norms and Liberty
Amen to That
The Opposition and Crime
“And the Truth Shall Set You Free”
Double Amen
Economically Liberal, Socially Conservative
The Transgender Fad and Its Consequences
The Harm Principle Revisited: Mill Conflates Society and State
Liberty and Social Norms Re-examined
Natural Law, Natural Rights, and the Real World
Natural Law and Natural Rights Revisited
If Men Were Angels
Death of a Nation
Self-Made Victims

Another Angle on Alienation

In an earlier post about alienation I said that

the life of the hunter-gatherer, however fraught, is less rationalized than the kind of life that’s represented by intensive agriculture, let alone modern manufacturing and office work.

The hunter-gatherer isn’t “a cog in a machine”, he is the machine. He is the shareholder, the manager, the worker, and the consumer, all in one. His work with others is truly cooperative. It is like the execution of a game-winning touchdown by a football team, and unlike the passing of a product from stage to stage in an assembly line, or the passing of a virtual piece of paper from computer to computer.

What really matters in life — perhaps as much as love and friendship — is the sense of accomplishment that derives from producing something of value to others, something that they willingly pay for.

In decades of post-collegiate work, nothing gave me more satisfaction than the weekly publication of the Pennysaver that — in the late 1970s — I owned, operated, and poured my labor (and a large share of my savings) into for three years. “Publish or perish” was far truer of me than it is of the academics who exclaim it.

I bought the Pennysaver to escape the “rat race” of the D.C.-area government-contractor milieu: big-city anonymity, commuting, high taxes, and — most of all — disconnect between work and accomplishment. In fact, I doubted that the work that I and thousands of others like me accomplished anything but the appropriation of taxpayers’ money.

During the Pennysaver years I concentrated intensly on making a living. But more than that, I was producing something of real value — a publication supported by willing advertisers and eagerly awaited by local residents, who found it in their mailboxes every Wednesday.

I gave up the Pennysaver to return to the “rat race” of the D.C. area, so that I could earn enough to retire comfortably. (Life is full of choices; that was mine.) I often took pride in some of what I accomplished in the ensuing 18 years. But it wasn’t the same sense of accomplishment that I experienced as a business owner. It was just the satisfaction of doing a job well, even if the job wasn’t worth doing.

I worked hard in those final 18 years — from 60 to 70 hours a week until the end was nigh. But I was no longer the captain of my own ship, though I usually worked directly for the CEO. There were three of them in those years. The first one was deposed (deservedly) in a coup, brought about in part by internal opposition to his Queegish management. The second one was a careerist of high professional and ethical standards who steered the organization back to its roots as an empirical, objective, and apolitical operations research outfit.

Then along came the third one, and a new kind of alienation descended on me: I couldn’t even derive a sense of satisfaction from doing a useless job well because he corrupted the organization. Not in a criminal way, but — almost as bad — in a political way. He was prone to magical thinking (e.g., there should be a greater percentage of black Ph.D.s on the staff but standards shouldn’t be lowered), and he pushed the organization away from empirical research into “policy analysis” (a.k.a., advocacy bullshit) with a partisan edge. It was all in keeping with his proud self-identification as a “Carter Democrat”.

The stress of working for such a man became almost debilitating. So I arranged for early retirement on favorable terms before the stress became absolutely unbearable. My foreboding was borne out when, in the years after my retirement, the organization took an overtly political turn (e.g., backing for some of Obama’s domestic programs, “global warming” as a national-security issue).

Alienation comes in many forms. And it isn’t restricted to workers who are just “cogs in a machine”. Alienation is a sense of uselessness that can descend on anyone in any job at any income level.

Modeling Revisited

Arnold Kling comments on a post by John Taylor, who writes about the Macroeconomic Modelling and Model Comparison Network (MMCN), which

is one part of a larger project called the Macroeconomic Model Comparison Initiative (MMCI)…. That initiative includes the Macroeconomic Model Data Base, which already has 82 models that have been developed by researchers at central banks, international institutions, and universities. Key activities of the initiative are comparing solution methods for speed and accuracy, performing robustness studies of policy evaluations, and providing more powerful and user-friendly tools for modelers.

Kling says: “Why limit the comparison to models? Why not compare models with verbal reasoning?” I say: a pox on economic models, whether they are mathematical or verbal.

That said, I do harbor special disdain for mathematical models, including statistical estimates of such models. Reality is nuanced. Verbal descriptions of reality, being more nuanced than mathematics, can more closely represent reality than can be done with mathematics.

Mathematical modelers are quick to point out that a mathematical model can express complex relationships which are difficult to express in words. True, but the words must always precede the mathematics. Long usage may enable a person to grasp the meaning of 2 + 2 = 4 without consciously putting it into words, but only because he already done so and committed the formula to memory.

Do you remember word problems? As I remember them, the words came first:

John is twenty years younger than Amy, and in five years’ time he will be half her age. What is John’s age now?

Then came the math:

Solve for J [John’s age]:

J = A − 20
J + 5 = (A + 5) / 2

[where A = Amy’s age]

What would be the point of presenting the math, then asking for the words?

Mathematics is a man-made tool. It probably started with counting. Sheep? Goats? Bananas? It doesn’t matter what it was. What matters is that the actual thing, which had a spoken name, came before the numbering convention that enabled people to refer to three sheep without having to draw or produce three actual sheep.

But … when it came to bartering sheep for loaves of bread, or whatever, those wily ancestors of ours knew that sheep come in many sizes, ages, fecundity, and states of health, and in two sexes. (Though I suppose that the LGBTQ movement has by now “discovered” homosexual and transgender sheep, and transsexual sheep may be in the offing.) Anyway, there are so many possible combinations of sizes, ages, fecundity, and states of health that it was (and is) impractical to reduce them to numbers. A quick, verbal approximation would have to do in the absence of the real thing. And the real thing would have to be produced before Grog and Grok actually exchanged X sheep for Y loaves of bread, unless they absolutely trusted each other’s honesty and descriptive ability.

Things are somewhat different in this age of mass production and commodification. But even if it’s possible to add sheep that have been bred for near-uniformity or nearly identical loaves of bread or Paper Mate Mirado Woodcase Pencils, HB 2, Yellow Barrel, it’s not possible to add those pencils to the the sheep and the loaves of bread. The best that one could do is to list the components of such a conglomeration by name and number, with the caveat that there’s a lot of variability in the sheep, goats, banana, and bread.

An economist would say that it is possible to add a collection of disparate things: Just take the sales price of each one, multiply it by the quantity sold, and if you do that for every product and service produced in the U.S. during a year you have an estimate of GDP. (I’m being a bit loose with the definition of GDP, but it’s good enough for the point I wish to make.) Further, some economists will tout this or that model which estimates changes in the value of GDP as a function of such things as interest rates, the rate of government spending, and estimates of projected consumer spending.

I don’t disagree that GDP can be computed or that economic models can be concocted. But it is to say that such computations and models, aside from being notoriously inaccurate (even though they deal in dollars, not in quantities of various products and services), are essentially meaningless. Aside from the errors that are inevitable in the use of sampling to estimate the dollar value of billions of transactions, there is the essential meaninglessness of the dollar value. Every transaction represented in an estimate of GDP (or any lesser aggregation) has a different real value to each participant in the transaction. Further, those real values, even if they could be measured and expressed in “utils“, can’t be summed because “utils” are incommensurate — there is no such thing as a social-welfare function.

Quantitative aggregations are not only meaningless, but their existence simply encourages destructive government interference in economic affairs. Mathematical modeling of “aggregate economic activity” (there is no such thing) may serve as an amusing and even lucrative pastime, but it does nothing to advance the lives and fortunes of the vast majority of Americans. In fact, it serves to retard their lives and fortunes.

All of that because pointy-headed academics, power-lusting politicians, and bamboozled bureaucrats believe that economic aggregates and quantitative economic models are meaningful. If they spent more than a few minutes thinking about what those models are supposed to represent — and don’t and can’t represent — they would at least use them with a slight pang of conscience. (I hold little hope that they would abandon them. The allure of power and the urge to “do something” are just too strong.)

Economic aggregates and models gain meaning and precision only as their compass shrinks to discrete markets for closely similar products and services. But even in the quantification of such markets there will always be some kind of misrepresentation by aggregation, if only because tastes, preferences, materials, processes, and relative prices change constantly. Only a fool believes that a quantitative economic model (of any kind) is more than a rough approximation of past reality — an approximation that will fade quickly as time marches on.

Economist Tony Lawson puts it this way:

Given the modern emphasis on mathematical modelling it is important to determine the conditions in which such tools are appropriate or useful. In other words we need to uncover the ontological presuppositions involved in the insistence that mathematical methods of a certain sort be everywhere employed. The first thing to note is that all these mathematical methods that economists use presuppose event regularities or correlations. This makes modern economics a form of deductivism. A closed system in this context just means any situation in which an event regularity occurs. Deductivism is a form of explanation that requires event regularities. Now event regularities can just be assumed to hold, even if they cannot be theorised, and some econometricians do just that and dedicate their time to trying to uncover them. But most economists want to theorise in economic terms as well. But clearly they must do so in terms that guarantee event regularity results. The way to do this is to formulate theories in terms of isolated atoms. By an atom I just mean a factor that has the same independent effect whatever the context. Typically human individuals are portrayed as the atoms in question, though there is nothing essential about this. Notice too that most debates about the nature of rationality are beside the point. Mainstream modellers just need to fix the actions of the individual of their analyses to render them atomistic, i.e., to fix their responses to given conditions. It is this implausible fixing of actions that tends to be expressed though, or is the task of, any rationality axiom. But in truth any old specification will do, including fixed rule or algorithm following as in, say, agent based modelling; the precise assumption used to achieve this matters little. Once some such axiom or assumption-fixing behaviour is made economists can predict/deduce what the factor in question will do if stimulated. Finally the specification in this way of what any such atom does in given conditions allows the prediction activities of economists ONLY if nothing is allowed to counteract the actions of the atoms of analysis. Hence these atoms must additionally be assumed to act in isolation. It is easy to show that this ontology of closed systems of isolated atoms characterises all of the substantive theorising of mainstream economists.

It is also easy enough to show that the real world, the social reality in which we actually live, is of a nature that is anything but a set of closed systems of isolated atoms (see Lawson, [Economics and Reality, London and New York: Routledge] 1997, [Reorienting Economics, London and New York: Routledge] 2003).

Mathematical-statistical descriptions of economic phenomena are either faithful (if selective) depictions of one-off events (which are unlikely to recur) or highly stylized renditions of complex chains of events (which almost certainly won’t recur). As Arnold Kling says in his review of Richard Bookstaber’s The End of Theory,

people are assumed to know, now and for the indefinite future, the entire range of possibilities, and the likelihood of each. The alternative assumption, that the future has aspects that are not foreseeable today, goes by the name of “radical uncertainty.” But we might just call it the human condition. Bookstaber writes that radical uncertainty “leads the world to go in directions we had never imagined…. The world could be changing right now in ways that will blindside you down the road.”

I’m picking on economics because it’s an easy target. But the “hard sciences” have their problems, too. See, for example, my work in progress about Einstein’s special theory of relativity.


Related reading:

John Cochrane, “Mallaby, the Fed, and Technocratic Illusions“, The Grumpy Economist, July 5, 2017

Vincent Randall: “The Uncertainty Monster: Lessons from Non-Orthodox Economics“, Climate Etc., July 5, 2017

Related posts:

Modeling Is Not Science
Microeconomics and Macroeconomics
Why the “Stimulus” Failed to Stimulate
Baseball Statistics and the Consumer Price Index
The Keynesian Multiplier: Phony Math
Further Thoughts about the Keynesian Multiplier
The Wages of Simplistic Economics
The Essence of Economics
Economics and Science
Economists As Scientists
Mathematical Economics
Economic Modeling: A Case of Unrewarded Complexity
Economics from the Bottom Up
Unorthodox Economics: 1. What Is Economics?
Unorthodox Economics: 2. Pitfalls
Unorthodox Economics: 3. What Is Scientific about Economics?
Unorthodox Economics 4: A Parable of Political Economy

Roundup: Civil War, Solitude, Transgenderism, Academic Enemies, and Immigration

Civil War II

Are Americans really in the midst of Civil War II or a Cold Civil War? It has seemed that way for many years. I have written about it in “A New (Cold) Civil War or Secession?”, “The Culture War“, “Polarization and De-facto Partition“, and “Civil War?“.* Andrew Sullivan, whom I quit following several years ago for reasons that are evident in the following quotation (my irrepressible comments are in boldface and bracketed), has some provocative things to say about the situation:

Certain truths about human beings have never changed. We are tribal creatures in our very DNA; we have an instinctive preference for our own over others, for “in-groups” over “out-groups”; for hunter-gatherers, recognizing strangers as threats was a matter of life and death. We also invent myths and stories to give meaning to our common lives. Among those myths is the nation — stretching from the past into the future, providing meaning to our common lives in a way nothing else can. Strip those narratives away, or transform them too quickly, and humans will become disoriented. Most of us respond to radical changes in our lives, especially changes we haven’t chosen, with more fear than hope. We can numb the pain with legal cannabis or opioids, but it is pain nonetheless.

If we ignore these deeper facts about ourselves, we run the risk of fatal errors. It’s vital to remember that multicultural, multiracial, post-national societies are extremely new for the human species [but they are not “societies”], and keeping them viable and stable is a massive challenge. Globally, social trust is highest in the homogeneous Nordic countries, and in America, Pew has found it higher in rural areas than cities. The political scientist Robert Putnam has found that “people living in ethnically diverse settings appear to ‘hunker down,’ that is, to pull in like a turtle.” Not very encouraging about human nature — but something we can’t wish away, either. In fact, the American elite’s dismissal of these truths, its reduction of all resistance to cultural and demographic change as crude “racism” or “xenophobia,” only deepens the sense of siege many other Americans feel….

… Within the space of 50 years, America has gone from segregation to dizzying multiculturalism; … from homosexuality as a sin [or dangerous aberration] to homophobia as a taboo; from Christianity being the common culture to a secularism no society has ever sustained before ours [but mainly within the confines of the internet-media-academic complex, except where they have successfully enlisted government in the task of destroying social norms]….

And how can you seriously regard our political system and culture as worse than ever before in history? How self-centered do you have to be to dismiss the unprecedented freedom for women, racial minorities, and homosexuals? [How self-centered to you have to be to dismiss the fact that much of that “unprecedented freedom” has been bought at the expense of freedom of speech, freedom of association, property rights, and advancement based on merit — things that are at the very heart of liberty?]….

If the neo-reactionaries were entirely right, the collapse of our society would surely have happened long before now [Strawman alert: How does Sullivan know when “society” would have collapsed?]. But somehow, an historically unprecedented mix of races and cultures hasn’t led to civil war in the United States. [Not a shooting war, but a kind of civil war nevertheless.] … America has assimilated so many before, its culture churning into new forms, without crashing into incoherence. [Strawman alert 2: “America”, note being a “society”, doesn’t have a “culture”. But some “cultures” (e.g., welfare-dependency, “hate whitey”, drugs, political correctness) are ascendant, for those with eyes to see.] [“The Reactionary Temptation“, New York, April 30, 2017]

All in all, I would say that Mr. Sullivan protests too much. He protests so much that he confirms my view that America is smack in the middle of a Cold Civil War. (Despite that, and the fatuousness of Mr. Sullivan’s commentary, I am grateful to him for a clear explanation of the political philosophy of Leo Strauss,** the theme of which had heretofore been obscure to me.)

For other, more realistic views of the current state of affairs, see the following (listed in chronological order):

David French, “A Blue State ‘Secession’ Model I Can Get Behind” (National Review, March 19, 2017)

Daniel Greenfield, “The Civil War Is Here” (Frontpage Magazine, March 27, 2017)

Daniel Greenfield, “Winning the Civil War of Two Americas” (Frontpage Magazine, April 4, 2017)

Rick Moran, “War Between U.S. Government and Sanctuary Cities Heating Up” (American Thinker, April 10, 2017)

Angelo M. Codevilla, “The Cold Civil War” (Claremont Review of Books, April 25, 2017)


Solitude for the Masses

Paul Kingsworth reviews Michael Harris’s Solitude in “The End of Solitude: In a Hyperconnected World, Are We Losing the Art of Being Alone?” (New Statesman, April 26, 2017):

Harris has an intuition that being alone with ourselves, paying attention to inner silence and being able to experience outer silence, is an essential part of being human….

What happens when that calm separateness is destroyed by the internet of everything, by big-city living, by the relentless compulsion to be with others, in touch, all the time? Plenty of people know the answer already, or would do if they were paying attention to the question. Nearly half of all Americans, Harris tells us, now sleep with their smartphones on their bedside table, and 80 per cent are on their phone within 15 minutes of waking up. Three-quarters of adults use social networking sites regularly. But this is peanuts compared to the galloping development of the so-called Internet of Things. Within the next few years, anything from 30 to 50 billion objects, from cars to shirts to bottles of shampoo, will be connected to the net. The internet will be all around you, whether you want it or not, and you will be caught in its mesh like a fly. It’s not called the web for nothing….

What is the problem here? Why does this bother me, and why does it bother Harris? The answer is that all of these things intrude upon, and threaten to destroy, something ancient and hard to define, which is also the source of much of our creativity and the essence of our humanity. “Solitude,” Harris writes, “is a resource.” He likens it to an ecological niche, within which grow new ideas, an understanding of the self and therefore an understanding of others.

The book is full of examples of the genius that springs from silent and solitary moments. Beethoven, Dostoevsky, Kafka, Einstein, Newton – all developed their ideas and approach by withdrawing from the crowd….

Yet it is not only geniuses who have a problem: ordinary minds like yours and mine are threatened by the hypersocial nature of always-on urbanity….

So, what is to be done about all this? That’s the multibillion-dollar question, but it is one the book cannot answer. Harris spends many pages putting together a case for the importance of solitude and examining the forces that splinter it today….

Under the circumstances – and these are our circumstances – the only honest conclusion to draw is that the problem, which is caused primarily by the technological direction of our society, is going to get worse. There is no credible scenario in which we can continue in the same direction and not see the problem of solitude, or lack of it, continue to deepen….

… Short of a collapse so severe that the electricity goes off permanently, there is no escape from what the tech corporations and their tame hive mind have planned for us. The circle is closed, and the net is being hauled in. May as well play another round of Candy Crush while we wait to be dragged up on to the deck.

Well, the answer doesn’t lie in the kind of defeatism exemplified by Harris (whose book is evidently full of diagnosis and empty of remedy) or Kingsworth. It’s up to each person to decide whether or not to enlarge his scope of solitude or be defeated by the advance of technology and the breakdown of truly human connections.

But it’s not an all-or-nothing choice. Compromise is obviously necessary when it comes to making a living these days. That still leaves a lot of room for the practice of solitude, the practice and benefits of which I have addressed in “Flow“, “In Praise of Solitude“, “There’s Always Solitude“, and “The Glory of the Human Mind“.


More about the Transgender Fad

Is the transgender fad fading away, or is it just that I’m spending more time in solitude? Anyway, is was reminded of the fad by “Most Children Who Identify As Transgender Are Faking It, Says ‘Gender Clinic’ Psychiatrist” (The College Fix, April 17, 2017). It’s a brief post and the title tells the tale. So I’ll turn to my own post on the subject, “The Transgender Fad and Its Consequences“. Following a preamble and some long quotations from authoritative analysis of transgenderism, I continue with this:

Harm will come not only to  those who fall prey to the transgender delusion, but also to those who oppose its inevitable manifestations:

  • mandatory sex mingling in bathrooms, locker rooms, and dorm rooms — an invitation to predators and a further weakening of the norms of propriety that help to instill respect toward other persons
  • quotas for hiring self-described transgender persons, and for admitting them to universities, and for putting them in the ranks of police and armed forces, etc.
  • government-imposed penalties for saying “hateful and discriminatory” things about gender, the purpose of which will be to stifle dissent about the preceding matters
  • government-imposed penalties for attempts to exercise freedom of association, which is an unenumerated right under the Constitution that, properly understood, includes the right to refuse business from anyone at any time and for any reason (including but far from limited to refusing to serve drug-addled drag queens whose presence will repel other customers)….

How did America get from the pre-Kinsey view of sex as a private matter, kept that way by long-standing social norms, to the let-it-all-hang-out (literally) mentality being pushed by elites in the media, academy, and government?

I attribute much of it to the capitalist paradox. Capitalism — a misnomer for an economic system that relies mainly on free markets and private-property rights — encourages innovation, entrepreneurship, and economic growth. One result is that a “capitalist” economy eventually produces enough output to support large numbers of persons who don’t understand that living off the system and regulating it heavily will bring it down….

The social paradox is analogous to the capitalist paradox. Social relations are enriched and made more productive by the toleration of some new behaviors. But to ensure that a new behavior is enriching and productive, it must be tested in the acid of use.* Shortcuts — activism cloaked in academese, punditry, and political posturing — lead to the breakdown of the processes by which behaviors become accepted because they are enriching and productive.

In sum, the capitalist paradox breeds the very people who are responsible for the social paradox: those who are rich enough to be insulated from the vicissitudes of daily life, where living among and conversing with similar folk reinforces a distorted view of the real world.

It is the cossetted beneficiaries of capitalism who lead the way in forcing Americans to accept as “natural” and “of right” behavior that in saner times was rarely engaged in and even more rarely flaunted. That restraint wasn’t just a matter of prudery. It was a matter of two things: respect for others, and the preservation of norms that foster restraint.

How quaint. Avoiding offense to others, and teaching one’s children that normal behavior helps them to gain the acceptance and trust of others. Underlying those understood motivations was a deeper one: Children are susceptible creatures, easily gulled and led astray — led into making mistakes that will haunt them all their lives. There was, in those days, an understanding that “one thing leads to another.”…

… If the Kennedy Court of Social Upheaval continues to hold sway, its next “logical” steps  will be to declare the illegality of sexual identifiers and the prima facie qualification of any person for any job regardless of “its” mental and physical fitness for the job….

… [T[he parents of yesteryear didn’t have to worry about the transgender fad, but they did have to worry about drinking, drug-taking, and sex. Not everyone who “experimented” with those things went on to live a life of dissolution, shame, and regret. But many did. And so, too, will the many young children, adolescents, and young adults who succumb to the fad of transgenderism….

When did it all begin to go wrong? See “1963: The Year Zero.”

Thank you for working your way through this very long quotation from my own blog. But it just has to be said again and again: Transgenderism is a fad, a destructive fad, and a fad that is being used by the enemies of liberty to destroy what little of it is left in America.


The Academic Enemies of Liberty

Kurt Schlichter quite rightly says that “Academia Is Our Enemy So We Should Help It Commit Suicide“:

If Animal House were to be rebooted today, Bluto – who would probably be updated into a differently–abled trans being of heft – might ask, “See if you can guess what am I now?” before expelling a whole mass of pus-like root vegetable on the WASPrivileged villains and announcing, “I’m a university – get it?”

At least popping a zit gets rid of the infection and promotes healing. But today, the higher education racket festers on the rear end of our culture, a painful, useless carbuncle of intellectual fraud, moral bankruptcy, and pernicious liberal fascism that impoverishes the young while it subsidizes a bunch of old pinkos who can’t hack it at Real World U….

If traditional colleges performed some meaningful function that only they could perform, then there might be a rationale for them in the 21st Century. But there’s not. What do four-year colleges do today?

Well, they cater to weenies who feel “unsafe” that Mike Pence is speaking to their graduates. Seventy-some years ago, young people that age were feeling unsafe because the Wehrmacht was trying to kill them on Omaha Beach….

And in their quest to ensure their students’ perpetual unemployment, colleges are now teaching that punctuality is a social construct. Somewhere, a Starbucks manager is going to hear from Kaden the Barista that, “I like, totally couldn’t get here for my shift on time because, like intersectionality of my experience as a person of Scandinavianism and stuff. I feel unsafe because of your racist vikingaphobia and tardiness-shaming.”

Academia is pricing itself out of reach even as the antics of its inhabitants annoy and provoke those of us whose taxes already pick up a big chunk of the bill even without the “free college” okie-doke….

The quarter million dollar academic vacation model is economically unsustainable and poisonous to our culture. The world of Animal House was a lot more fun when it didn’t mean preemptive bankruptcy for its graduates and the fostering of a tyrannical training ground for future libfascists. It’s time to get all Bluto on the obsolete boil that is academia; time to give it a squeeze. [Townhall, April 13, 2017]

Cue my post, “Subsidizing the Enemies of Liberty“:

If there is a professional class that is almost solidly aligned against liberty it is the teachers and administrators who control the ideas that are pumped into the minds of students from kindergarten through graduate school. How are they aligned against liberty? Most of them are leftists, which means that they are statists who are dedicated to the suppression of liberty in favor of current left-wing orthodoxies. These almost always include the coddling of criminals, unrequited love for America’s enemies, redistribution of income and jobs toward less-productive (and non-productive) persons, restrictions on speech, and the destruction of civil society’s bulwarks: religion, marriage, and family.

In any event, spending on education in the United States amounted to $1.1 trillion in 2010, about 8 percent of GDP.  Most of that $1.1 trillion — $900 billion, in fact — was spent on public elementary and secondary schools and public colleges and universities. In other words, your tax dollars support the leftists who teach your children and grandchildren to bow at the altar of the state, to placate the enemies of liberty at home and abroad, and to tear down the traditions that have bound people in mutual trust and respect….

And what do tax-paying Americans get for their money? A strong left-wing bias, which is inculcated at universities and spreads throughout public schools (and a lot of private schools). This has been going on, in earnest, since the end of World War II. And, yet, the populace is roughly divided between hard-headed conservatives and squishy-minded “liberals.” The persistence of the divide speaks well for the dominance of nature over nurture. But it does not change the fact that American taxpayers have been subsidizing the enemies of liberty who dominate the so-called education system in this country.

See also “Academic Bias“, “Politics, Sophistry, and the Academy“, “Academic Ignorance“, and John C. Goodman’s “Brownshirts, Subsidized with Your Tax Dollars” (Townhall, May 20, 2017).


The High Cost of Untrammeled Immigration

The third entry in “Not-So-Random Thoughts (XVIII)” is about illegal immigration. It opens with this:

Ten years ago, I posted “An Immigration Roundup”, a collection of 13 posts dated March 29 through September 22, 2006. The bottom line: to encourage and allow rampant illegal immigration borders on social and economic suicide. I remain a hardliner because of the higher crime rate among Hispanics (“Immigration and Crime“), and because of Steven Camarota’s “So What Is the Fiscal and Economic Impact of Immigration?“ [National Review, September 22, 2016].

I suggest that you go to Camarota’s article, which I quote at length, to see the evidence that he has compiled. For more facts — as opposed to leftish magical thinking about immigration — see also “Welfare: Who’s on It, Who’s Not” (Truth Is Justice, April 16, 2017), which draws on

a report called “Welfare Use by Immigrant and Native Households.” The report’s principle finding is that fully 51 percent of immigrant households receive some form of welfare, compared to an already worrisomely high 30 percent of American native households. The study is based on the most accurate data available, the Census Bureau’s Survey of Income and Program Participation (SIPP). It also reports stark racial differences in the use of welfare programs.

I’ll throw in some excerpts:

Needless to say, the percentage of immigrants using some form of welfare varies enormously according to the part of the world from which they come. Rates are highest for households from Central America and Mexico (73 percent), the Caribbean (51 percent), and Africa (48 percent). Those from East Asia (32 percent), Europe (26 percent), and South Asia (17 percent) have the lowest rates….

A majority of native black and Hispanic households are on some form of means-tested welfare, compared to just 23 percent of native white households….

A striking 82 percent of black households with children receive welfare–double the white rate. Hispanic families are not far behind blacks….

Among natives, blacks receive cash handouts at more than three times the white rate; Hispanics at more than twice the white rate. Rates for black and Hispanic immigrants are relatively lower due to often-ignored restrictions on immigrant use of these programs….

Among all households, native blacks and Hispanics receive food handouts at three times the white rate; for Hispanic immigrants, the figure is four times the white rate. Among households with children, nearly all immigrant Hispanics–86 percent–get food aid. Native blacks and Hispanics aren’t far behind, with rates of 75 and 72 percent, respectively.

The takeaway: Tax-paying citizens already heavily subsidize native-born blacks and Hispanics. Adding welfare-dependent immigrants — especially from south of the border — adds injury to injury.

As long as the welfare state exists, immigration should be tightly controlled so that the United States admits only those persons (with their families) who have verifiable offers of employment from employers in the United States. Further, an immigrant’s income should be high enough to ensure that (a) he is unlikely to become dependent on any welfare program (federal, State, or local) and (b) he is likely to pay at least as much in taxes as he is likely to absorb in the way of schooling for his children, Social Security and Medicare benefits, etc.

(See also: Bob le Flambeur, “Against Open Borders“, Rightly Considered, February 8, 2017.)


* Sharp-eyed readers will notice that with this post I am adopting a “new” way of using quotation marks. The American convention is to enclose commas and periods within quotation marks, even where the commas and periods are not part of the quoted text or other material that belongs inside quotation marks (e.g., the title of a post). The American convention creates some ambiguity and awkwardness that is avoided by the British convention, which is to enclose inside quotation marks only that punctuation which is part of the quoted text or other material.

** This is from the article by Sullivan cited in the first section of this post:

[Leo] Strauss’s idiosyncratic genius defies easy characterization, but you could argue, as Mark Lilla did in his recent book The Shipwrecked Mind, that he was a reactionary in one specific sense: A Jewish refugee from Nazi Germany, Strauss viewed modernity as collapsing into nihilism and relativism and barbarism all around him. His response was to go back to the distant past — to the works of Plato, Aristotle, and Maimonides, among others — to see where the West went wrong, and how we could avoid the horrific crimes of the 20th century in the future.

One answer was America, where Strauss eventually found his home at the University of Chicago. Some of his disciples — in particular, the late professor Harry Jaffa — saw the American Declaration of Independence, with its assertion of the self-evident truth of the equality of human beings, as a civilizational high point in human self-understanding and political achievement. They believed it revived the ancient Greek and Roman conception of natural law. Yes, they saw the paradox of a testament to human freedom having been built on its opposite — slavery — but once the post–Civil War constitutional amendments were ratified, they believed that the American constitutional order was effectively set forever, and that the limited government that existed in the late-19th and early-20th centuries required no fundamental change.

Presidents and Economic Growth

There’s an old and recurring claim that Democrat presidents produce greater economic growth than Republican ones. I addressed and debunked such a claim nine years ago, saying this (in part):

Given the long, downward trend in the real rate of GDP growth, it is statistical nonsense to pin the growth rate in any given year to a particular year of a particular president’s term. It is evident that GDP growth has been influenced mainly by the cumulative, anti-growth effects of government regulation. And GDP growth, in any given year, has been an almost-random variation on a downward theme.

How random? This random:


Derived from Bureau of Economic Analysis, “Current dollar and ‘real’ GDP,” as of April 28, 2017.

The one-year lag (which is usual in such analyses) allows for the delayed effects (if any) of a president’s economic policies. The usual suspects are claiming, laughably, that the tepid growth rate in the first calendar quarter of 2017 is somehow Trump’s fault.

Anyway, here’s the real story:

This is an updated version of a graph in “The Rahn Curve Revisited.,” from which the following equation is taken:

Yg = 0.0275 – 0.347F + 0.0769A – 0.000327R – 0.135P , where

Yg = real rate of GDP growth in a 10-year span (annualized)

F = fraction of GDP spent by governments at all levels during the preceding 10 years

A = the constant-dollar value of private nonresidential assets (business assets) as a fraction of GDP, averaged over the preceding 10 years

R = average number of Federal Register pages, in thousands, for the preceding 10-year period

P = growth in the CPI-U during the preceding 10 years (annualized).

Random, short-run fluctuations in GDP growth have almost nothing to do with the policies of a particular president (see the first graph). But there’s nothing random about the steady growth of government spending, the steadier growth of the regulatory burden, and the combined investment-killing and inflationary effects of both (see the second graph).

The long-run trend in GDP growth reflects the cumulative effects of policies carried out by the “deep state” — the apparatus that churns on with little change in direction from president to president: the special interests represented in the many committees of Congress, the Social Security Administration (which also encompasses Medicare and Medicaid), and the entire alphabet soup of federal regulatory agencies. Most of those entities became committed, long ago, to the growth of government spending and regulation. It will take more than a slogan to drain the swamp.

John H. Arnold characterizes war as “long periods of boredom punctuated by short moments of excitement.” I would say that the economy of the United States has been on a long slide into stagnation punctuated by brief periods of misplaced optimism.

How to Pay for Streets and Highways

Tolls. Yes, everyone hates them. That’s an overstatement, of course. I love toll roads, as do a lot of people who either enjoy the less-stressful experience of driving on them or just want to get somewhere faster than they otherwise could.

Tolls are the way to go, because: Users — and only users — should pay for roads, in accordance with the frequency with which they use them and the amount of wear and tear to which they subject them. Sure, there are some taxes that are supposed to pay for streets and highways, but they don’t cover the full cost cost of construction and maintenance, and they’re often diverted to other uses.

It’s a simple matter to issue everyone a registration sticker that includes a toll tag. Big rigs get one kind of tag (which charges at the highest rate), and so on down to motorcycles and bicycles. Yes, that means you, the traffic-clogging bicyclist. From now on you’ll have to pay for the privilege of mixing with motor vehicles or cavorting in your own little-used lane, It’s a privilege that contributes to congestion by reducing the space available for motor-vehicle lanes and flow-enhancing features (e.g., turning lanes).

With mandatory toll tags, there would be no more mail-in payments, which means no more deadbeats. Everyone who wants to use a public highway would have to register a valid payment method: credit card, debit card, or direct debit to a checking account. No checking account? Too bad. Take the bus. If you don’t have a checking account, you probably can’t afford auto insurance. So you’re driving without it, and driving up other people’s insurance rates.

What about all the tag readers that would be required? I forgot to mention that registration stickers would have GPS trackers embedded in them.

Problem solved, except for the matter of “privacy,” that all-purpose excuse for the subversion of social norms. But “privacy” worshipers might be persuaded to go along, given these considerations:

  • “Unnecessary” trips would be discouraged, thus reducing the use of fossil fuels.
  • Businesses, as buyers of goods shipped over highways, would pay their “fair share.” (The cost of tolls would be passed on to customers, of course, but that wouldn’t negate the feel-good effect for anti-business crowd.)
  • “Sprawl” would be discouraged.
  • “Buy local” would be encouraged.
  • Internet retail would grow even faster than it has been growing (a negation of the preceding point, but the “buy local” crowd wouldn’t notice), which would further reduce the use of fossil fuels.

I suspect that the net effect of all this would be next to zero, but it would please me no end if users (and only users) paid for roads, and if bicyclists were forced to pay for the privilege of adding to traffic congestion — and for their smugness.

Another Thought about Prices

Prices are invaluable signals to buyers and sellers. When government acts to abolish prices (in effect) by commanding them (as in the minimum wage and edicts against “price gouging”), or when it interferes with the signals through regulation (as in whether certain products and services may be imported), it robs buyers and sellers of options, and thus diminishes their well-being.

But prices aren’t everything. This is from “A Man for No Seasons“:

[T]oo many economists justify free markets on utilitarian grounds, that is, because free markets produce more (i.e., are more efficient) than regulated markets. This happens to be true, but free markets can and should be justified mainly because they are free, that is, because they allow individuals to pursue otherwise lawful aims through voluntary, mutually beneficial exchanges of products and services. Liberty is a principle, a deep value; economic efficiency is merely a byproduct of adherence to that value.

In fact, prices only reflect marginal valuations of things. Both Joe and I might be willing to part with $2 for a gallon of gasoline, but that coincidence says nothing about the utility that Joe and I gain (separately) from the use of the gasoline. In sum, prices aren’t a guide to the well-being of an individual person, let alone millions of disparate persons whose values are incommensurable. (This is one reason why GDP doesn’t mean much.)

Here’s a good case in point. In an area that’s growing rapidly, real-estate prices tend to rise rapidly. That’s a boon to home owners, right? Not necessarily. It’s not a boon to homeowners who strongly prefer to stay where they are. It usually means that the cost of staying where they are rises: higher property taxes, more noise and traffic, more crime, etc. Even taking into account the higher prices that they (or their heirs) will one day realize when their homes are sold, many (perhaps most) of them will feel worse off — and will be worse off, materially.

No one promised them a rose garden, did they? Of course not. And I would be the last person to suggest that they be “made whole,” which would require burdening other persons with higher taxes.

My point is that prices are an uncertain and often misleading guide to the well-being of persons who aren’t involved in the transactions that are represented by prices. And prices provide only a glimpse of the fleeting and idiosyncratic valuations placed on those transactions by those who engage in them.

Institutional Bias

Arnold Kling:

On the question of whether Federal workers are overpaid relative to private sector workers, [Justin Fox] writes,

The Federal Salary Council, a government advisory body composed of labor experts and government-employee representatives, regularly finds that federal employees make about a third less than people doing similar work in the private sector. The conservative American Enterprise Institute and Heritage Foundation, on the other hand, have estimated that federal employees make 14 percent and 22 percent more, respectively, than comparable private-sector workers….

… Could you have predicted ahead of time which organization’s “research” would find a result favorable to Federal workers and which organization would find unfavorable results? Of course you could. So how do you sustain the belief that normative economics and positive economics are distinct from one another, that economic research cleanly separates facts from values?

I saw institutional bias at work many times in my career as an analyst at a tax-funded think-tank. My first experience with it came in the first project to which I was assigned. The issue at hand was a hot one on those days: whether the defense budget should be altered to increase the size of the Air Force’s land-based tactical air (tacair)  forces while reducing the size of Navy’s carrier-based counterpart. The Air Force’s think-tank had issued a report favorable to land-based tacair (surprise!), so the Navy turned to its think-tank (where I worked). Our report favored carrier-based tacair (surprise!).

How could two supposedly objective institutions study the same issue and come to opposite conclusions? Analytical fraud abetted by overt bias? No, that would be too obvious to the “neutral” referees in the Office of the Secretary of Defense. (Why “neutral”? Read this.)

Subtle bias is easily introduced when the issue is complex, as the tacair issue was. Where would tacair forces be required? What payloads would fighters and bombers carry? How easy would it be to set up land bases? How vulnerable would they be to an enemy’s land and air forces? How vulnerable would carriers be to enemy submarines and long-range bombers? How close to shore could carriers approach? How much would new aircraft, bases, and carriers cost to buy and maintain? What kinds of logistical support would they need, and how much would it cost? And on and on.

Hundreds, if not thousands, of assumptions underlay the results of the studies. Analysts at the Air Force’s think-tank chose those assumptions that favored the Air Force; analysts at the Navy’s think-tank chose those assumptions that favored the Navy.

Why? Not because analysts’ jobs were at stake; they weren’t. Not because the Air Force and Navy directed the outcomes of the studies; they didn’t. They didn’t have to because “objective” analysts are human beings who want “their side” to win. When you work for an institution you tend to identify with it; its success becomes your success, and its failure becomes your failure.

The same was true of the “neutral” analysts in the Office of the Secretary of Defense. They knew which way Mr. McNamara leaned on any issue, and they found themselves drawn to the assumptions that would justify his biases.

And so it goes. Bias is a rampant and ineradicable aspect of human striving. It’s ever-present in the political arena The current state of affairs in Washington, D.C., is just the tip of the proverbial iceberg.

The prevalence and influence of bias in matters that affect hundreds of millions of Americans is yet another good reason to limit the power of government.

Not-So-Random Thoughts (XX)

An occasional survey of web material that’s related to subjects about which I’ve posted. Links to the other posts in this series may be found at “Favorite Posts,” just below the list of topics.

In “The Capitalist Paradox Meets the Interest-Group Paradox,” I quote from Frédéric Bastiat’s “What Is Seen and What Is Not Seen“:

[A] law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

This might also be called the law of unintended consequences. It explains why so much “liberal” legislation is passed: the benefits are focused a particular group and obvious (if overestimated); the costs are borne by taxpayers in general, many of whom fail to see that the sum of “liberal” legislation is a huge tax bill.

Ross Douthat understands:

[A] new paper, just released through the National Bureau of Economic Research, that tries to look at the Affordable Care Act in full. Its authors find, as you would expect, a substantial increase in insurance coverage across the country. What they don’t find is a clear relationship between that expansion and, again, public health. The paper shows no change in unhealthy behaviors (in terms of obesity, drinking and smoking) under
Obamacare, and no statistically significant improvement in self-reported health since the law went into effect….

[T]he health and mortality data [are] still important information for policy makers, because [they] indicate[] that subsidies for health insurance are not a uniquely death-defying and therefore sacrosanct form of social spending. Instead, they’re more like other forms of redistribution, with costs and benefits that have to be weighed against one another, and against other ways to design a safety net. Subsidies for employer-provided coverage crowd out wages, Medicaid coverage creates benefit cliffs and work disincentives…. [“Is Obamacare a Lifesaver?The New York Times, March 29, 2017]

So does Roy Spencer:

In a theoretical sense, we can always work to make the environment “cleaner”, that is, reduce human pollution. So, any attempts to reduce the EPA’s efforts will be viewed by some as just cozying up to big, polluting corporate interests. As I heard one EPA official state at a conference years ago, “We can’t stop making the environment ever cleaner”.

The question no one is asking, though, is “But at what cost?

It was relatively inexpensive to design and install scrubbers on smokestacks at coal-fired power plants to greatly reduce sulfur emissions. The cost was easily absorbed, and electricty rates were not increased that much.

The same is not true of carbon dioxide emissions. Efforts to remove CO2 from combustion byproducts have been extremely difficult, expensive, and with little hope of large-scale success.

There is a saying: don’t let perfect be the enemy of good enough.

In the case of reducing CO2 emissions to fight global warming, I could discuss the science which says it’s not the huge problem it’s portrayed to be — how warming is only progressing at half the rate forecast by those computerized climate models which are guiding our energy policy; how there have been no obvious long-term changes in severe weather; and how nature actually enjoys the extra CO2, with satellites now showing a “global greening” phenomenon with its contribution to increases in agricultural yields.

But it’s the economics which should kill the Clean Power Plan and the alleged Social “Cost” of Carbon. Not the science.

There is no reasonable pathway by which we can meet more than about 20% of global energy demand with renewable energy…the rest must come mostly from fossil fuels. Yes, renewable energy sources are increasing each year, usually because rate payers or taxpayers are forced to subsidize them by the government or by public service commissions. But global energy demand is rising much faster than renewable energy sources can supply. So, for decades to come, we are stuck with fossil fuels as our main energy source.

The fact is, the more we impose high-priced energy on the masses, the more it will hurt the poor. And poverty is arguably the biggest threat to human health and welfare on the planet. [“Trump’s Rollback of EPA Overreach: What No One Is Talking About,” Roy Spencer, Ph.D.[blog], March 29, 2017]

*     *     *

I mentioned the Benedict Option in “Independence Day 2016: The Way Ahead,” quoting Bruce Frohnen in tacit agreement:

[Rod] Dreher has been writing a good deal, of late, about what he calls the Benedict Option, by which he means a tactical withdrawal by people of faith from the mainstream culture into religious communities where they will seek to nurture and strengthen the faithful for reemergence and reengagement at a later date….

The problem with this view is that it underestimates the hostility of the new, non-Christian society [e.g., this and this]….

Leaders of this [new, non-Christian] society will not leave Christians alone if we simply surrender the public square to them. And they will deny they are persecuting anyone for simply applying the law to revoke tax exemptions, force the hiring of nonbelievers, and even jail those who fail to abide by laws they consider eminently reasonable, fair, and just.

Exactly. John Horvat II makes the same point:

For [Dreher], the only response that still remains is to form intentional communities amid the neo-barbarians to “provide an unintentional political witness to secular culture,” which will overwhelm the barbarian by the “sheer humanity of Christian compassion, and the image of human dignity it honors.” He believes that setting up parallel structures inside society will serve to protect and preserve Christian communities under the new neo-barbarian dispensation. We are told we should work with the political establishment to “secure and expand the space within which we can be ourselves and our own institutions” inside an umbrella of religious liberty.

However, barbarians don’t like parallel structures; they don’t like structures at all. They don’t co-exist well with anyone. They don’t keep their agreements or respect religious liberty. They are not impressed by the holy lives of the monks whose monastery they are plundering. You can trust barbarians to always be barbarians. [“Is the Benedict Option the Answer to Neo-Barbarianism?Crisis Magazine, March 29, 2017]

As I say in “The Authoritarianism of Modern Liberalism, and the Conservative Antidote,”

Modern liberalism attracts persons who wish to exert control over others. The stated reasons for exerting control amount to “because I know better” or “because it’s good for you (the person being controlled)” or “because ‘social justice’ demands it.”

Leftists will not countenance a political arrangement that allows anyone to escape the state’s grasp — unless, of course, the state is controlled by the “wrong” party, In which case, leftists (or many of them) would like to exercise their own version of the Benedict Option. See “Polarization and De Facto Partition.”

*     *     *

Theodore Dalrymple understands the difference between terrorism and accidents:

Statistically speaking, I am much more at risk of being killed when I get into my car than when I walk in the streets of the capital cities that I visit. Yet this fact, no matter how often I repeat it, does not reassure me much; the truth is that one terrorist attack affects a society more deeply than a thousand road accidents….

Statistics tell me that I am still safe from it, as are all my fellow citizens, individually considered. But it is precisely the object of terrorism to create fear, dismay, and reaction out of all proportion to its volume and frequency, to change everyone’s way of thinking and behavior. Little by little, it is succeeding. [“How Serious Is the Terrorist Threat?City Journal, March 26, 2017]

Which reminds me of several things I’ve written, beginning with this entry from “Not-So-Random Thoughts (VI)“:

Cato’s loony libertarians (on matters of defense) once again trot out Herr Doktor Professor John Mueller. He writes:

We have calculated that, for the 12-year period from 1999 through 2010 (which includes 9/11, of course), there was one chance in 22 million that an airplane flight would be hijacked or otherwise attacked by terrorists. (“Serial Innumeracy on Homeland Security,” Cato@Liberty, July 24, 2012)

Mueller’s “calculation” consists of an recitation of known terrorist attacks pre-Benghazi and speculation about the status of Al-Qaeda. Note to Mueller: It is the unknown unknowns that kill you. I refer Herr Doktor Professor to “Riots, Culture, and the Final Showdown” and “Mission Not Accomplished.”

See also my posts “Getting It All Wrong about the Risk of Terrorism” and “A Skewed Perspective on Terrorism.”

*     *     *

This is from my post, “A Reflection on the Greatest Generation“:

The Greatest tried to compensate for their own privations by giving their children what they, the parents, had never had in the way of material possessions and “fun”. And that is where the Greatest Generation failed its children — especially the Baby Boomers — in large degree. A large proportion of Boomers grew up believing that they should have whatever they want, when they want it, with no strings attached. Thus many of them divorced, drank, and used drugs almost wantonly….

The Greatest Generation — having grown up believing that FDR was a secular messiah, and having learned comradeship in World War II — also bequeathed us governmental self-indulgence in the form of the welfare-regulatory state. Meddling in others’ affairs seems to be a predilection of the Greatest Generation, a predilection that the Millenials may be shrugging off.

We owe the Greatest Generation a great debt for its service during World War II. We also owe the Greatest Generation a reprimand for the way it raised its children and kowtowed to government. Respect forbids me from delivering the reprimand, but I record it here, for the benefit of anyone who has unduly romanticized the Greatest Generation.

There’s more in “The Spoiled Children of Capitalism“:

This is from Tim [of Angle’s] “The Spoiled Children of Capitalism“:

The rot set after World War II. The Taylorist techniques of industrial production put in place to win the war generated, after it was won, an explosion of prosperity that provided every literate American the opportunity for a good-paying job and entry into the middle class. Young couples who had grown up during the Depression, suddenly flush (compared to their parents), were determined that their kids would never know the similar hardships.

As a result, the Baby Boomers turned into a bunch of spoiled slackers, no longer turned out to earn a living at 16, no longer satisfied with just a high school education, and ready to sell their votes to a political class who had access to a cornucopia of tax dollars and no doubt at all about how they wanted to spend it….

I have long shared Tim’s assessment of the Boomer generation. Among the corroborating data are my sister and my wife’s sister and brother — Boomers all….

Low conscientiousness was the bane of those Boomers who, in the 1960s and 1970s, chose to “drop out” and “do drugs.”…

Now comes this:

According to writer and venture capitalist Bruce Gibney, baby boomers are a “generation of sociopaths.”

In his new book, he argues that their “reckless self-indulgence” is in fact what set the example for millennials.

Gibney describes boomers as “acting without empathy, prudence, or respect for facts – acting, in other words, as sociopaths.”

And he’s not the first person to suggest this.

Back in 1976, journalist Tom Wolfe dubbed the young adults then coming of age the “Me Generation” in the New York Times, which is a term now widely used to describe millennials.

But the baby boomers grew up in a very different climate to today’s young adults.

When the generation born after World War Two were starting to make their way in the world, it was a time of economic prosperity.

“For the first half of the boomers particularly, they came of age in a time of fairly effortless prosperity, and they were conditioned to think that everything gets better each year without any real effort,” Gibney explained to The Huffington Post.

“So they really just assume that things are going to work out, no matter what. That’s unhelpful conditioning.

“You have 25 years where everything just seems to be getting better, so you tend not to try as hard, and you have much greater expectations about what society can do for you, and what it owes you.”…

Gibney puts forward the argument that boomers – specifically white, middle-class ones – tend to have genuine sociopathic traits.

He backs up his argument with mental health data which appears to show that this generation have more anti-social characteristics than others – lack of empathy, disregard for others, egotism and impulsivity, for example. [Rachel Hosie, “Baby Boomers Are a Generation of Sociopaths,” Independent, March 23, 2017]

That’s what I said.

Kotlikoffian Casuistry

Economist Lawrence Kotlikoff recently opined to this effect in “Is a Loved One Uninsured? So Are You“:

I met former Supreme Court Justice Sandra Day O’Connor shortly after she retired in 2006, years before Obamacare.

We were both speakers at a conference in Washington, D.C. The justice, a person of extraordinary intellect, is generally exceptionally composed. That day she was upset. In her talk on health care she repeatedly asked, “Why can’t a nation as great and prosperous as ours provide health care for all?”

Universal health care wasn’t a Republican issue, so this seemed an unusual question coming from a prominent Republican. During the break, I asked her if someone she knew was uninsured. She said her son. I asked why. She said he couldn’t afford insurance because his child (her grandchild) had a pre-existing condition.

“This means you too are, in effect, uninsured.”

“Precisely. If they need medical care, I will, of course, help pay the bills, which could be enormous.”….

Yes, our current health care system — all of it — is a mess based on its cost and outcomes. But replacing Obamacare with Trumpcare violates the Hippocratic Oath: “First, do no harm.” If enacted, it will leave far more of us uninsured or underinsured, which means it will leave all of us uninsured or underinsured.

This, in turn, means we all need to save more for that unexpected call for help from a relative or friend.

Well, Trumpcare is off the board, for now. But Obamacare is by no means here to stay. It will erode by piecemeal legislation, regulatory discretion, and market-driven changes in health-care and insurance.

In the meantime, however, the Jesuitical Professor Kotlikoff can be expected to push for universal health care (whatever that means) by spewing nonsense like that quoted above.

I have questions for Herr Doctor Professor Kotlikoff:

Where is it written in the Constitution that the central government has the power to regulate and provide health care? (Don’t tell me that it’s in the General Welfare Clause; that clause confers no such power on the central government.)

Why is the health of a person who lives at the other end of the country any of my business? I have my own health to care for, and (possibly) the health of persons dear to me. And I (and they) have other needs. If the health of a stranger is my problem, doesn’t that make my other needs his problem? Where’s the limit?

And why limit yourself to the United States? Why not create a global version of Britain’s National Health Service, which has worked out so well for the British?

What’s wrong with expecting people to save more for their own health-care needs, if not for the health-care needs of friends and relatives? Isn’t that called personal responsibility? And hasn’t it been eroded by Social Security, Medicare, Medicaid, Obamacare, food stamps, etc., etc., etc.?

And why are you, as an economist, so ignorant of the impoverishing consequences of government spending and regulation? Don’t you know that if government had been minimized — held to its proper role as the defender of Americans from foreign and domestic predators — Americans at all income levels could amply afford market-provided, high-quality health care?

Thoughts for the Day

Excerpts of recent correspondence.

Robots, and their functional equivalents in specialized AI systems, can either replace people or make people more productive. I suspect that the latter has been true in the realm of medicine — so far, at least. But I have seen reportage of robotic units that are beginning to perform routine, low-level work in hospitals. So, as usual, the first people to be replaced will be those with rudimentary skills, not highly specialized training. Will it go on from there? Maybe, but the crystal ball is as cloudy as an old-time London fog.

In any event, I don’t believe that automation is inherently a job-killer. The real job-killer consists of government programs that subsidize non-work — early retirement under Social Security, food stamps and other forms of welfare, etc. Automation has been in progress for eons, and with a vengeance since the second industrial revolution. But, on balance, it hasn’t killed jobs. It just pushes people toward new and different jobs that fit the skills they have to offer. I expect nothing different in the future, barring government programs aimed at subsidizing the “victims” of technological displacement.

*      *      *

It’s civil war by other means (so far): David Wasserman, “Purple America Has All but Disappeared” (The New York Times, March 8, 2017).

*      *      *

I know that most of what I write (even the non-political stuff) has a combative edge, and that I’m therefore unlikely to persuade people who disagree with me. I do it my way for two reasons. First, I’m too old to change my ways, and I’m not going to try. Second, in a world that’s seemingly dominated by left-wing ideas, it’s just plain fun to attack them. If what I write happens to help someone else fight the war on leftism — or if it happens to make a young person re-think a mindless commitment to leftism — that’s a plus.

*     *     *

I am pessimistic about the likelihood of cultural renewal in America. The populace is too deeply saturated with left-wing propaganda, which is injected from kindergarten through graduate school, with constant reinforcement via the media and popular culture. There are broad swaths of people — especially in low-income brackets — whose lives revolve around mindless escape from the mundane via drugs, alcohol, promiscuous sex, etc. Broad swaths of the educated classes have abandoned erudition and contemplation and taken up gadgets and entertainment.

The only hope for conservatives is to build their own “bubbles,” like those of effete liberals, and live within them. Even that will prove difficult as long as government (especially the Supreme Court) persists in storming the ramparts in the name of “equality” and “self-creation.”

*     *     *

I correlated Austin’s average temperatures in February and August. Here are the correlation coefficients for following periods:

1854-2016 = 0.001
1875-2016 = -0.007
1900-2016 = 0.178
1925-2016 = 0.161
1950-2016 = 0.191
1975-2016 = 0.126

Of these correlations, only the one for 1900-2016 is statistically significant at the 0.05 level (less than a 5-percent chance of a random relationship). The correlations for 1925-2016 and 1950-2016 are fairly robust, and almost significant at the 0.05 level. The relationship for 1975-2016 is statistically insignificant. I conclude that there’s a positive relationship between February and August temperatures, but weak one. A warm winter doesn’t necessarily presage an extra-hot summer in Austin.