Not with a Bang

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.

T.S. Elliot, The Hollow Men

It’s also the way that America is ending. Yes, there are verbal fireworks aplenty, but there will not be a “hot” civil war. The country that my parents and grandparents knew and loved — the country of my youth in the 1940s and 1950s — is just fading away.

This would not necessarily be a bad thing if the remaking of America were a gradual, voluntary process, leading to time-tested changes for the better. But that isn’t the case. The very soul of America has been and is being ripped out by the government that was meant to protect that soul, and by movements that government not only tolerates but fosters.

Before I go further, I should explain what I mean by America, which is not the same thing as the geopolitical entity known as the United States, though the two were tightly linked for a long time.

America was a relatively homogeneous cultural order that fostered mutual respect, mutual trust, and mutual forbearance — or far more of those things than one might expect in a nation as populous and far-flung as the United States. Those things — conjoined with a Constitution that has been under assault since the New Deal — made America a land of liberty. That is to say, they fostered real liberty, which isn’t an unattainable state of bliss but an actual (and imperfect) condition of peaceful, willing coexistence and its concomitant: beneficially cooperative behavior.

The attainment of this condition depends on social comity, which depends in turn on (a) genetic kinship and (b) the inculcation and enforcement of social norms, especially the norms that define harm.

All of that is going by the boards because the emerging cultural order is almost diametrically opposite that which prevailed in America. The new dispensation includes:

  • casual sex
  • serial cohabitation
  • subsidized illegitimacy
  • abortion on demand
  • easy divorce
  • legions of non-mothering mothers
  • concerted (and deluded) efforts to defeminize females and to neuter or feminize males
  • gender-confusion as a burgeoning norm
  • “alternative lifestyles” that foster disease, promiscuity, and familial instability
  • normalization of drug abuse
  • forced association (with accompanying destruction of property and employment rights)
  • suppression of religion
  • rampant obscenity
  • identity politics on steroids
  • illegal immigration as a “right”
  • “free stuff” from government (Social Security was meant to be self-supporting)
  • America as the enemy
  • all of this (and more) as gospel to influential elites whose own lives are modeled mostly on old America.

As the culture has rotted, so have the ties that bound America.

The rot has occurred to the accompaniment of cacophony. Cultural coarsening begets loud and inconsiderate vulgarity. Worse than that is the cluttering of the ether with the vehement and belligerent propaganda, most of it aimed at taking down America.

The advocates of the new dispensation haven’t quite finished the job of dismantling America. But that day isn’t far off. Complete victory for the enemies of America is only a few election cycles away. The squishy center of the electorate — as is its wont — will swing back toward the Democrat Party. With a Democrat in the White House, a Democrat-controlled Congress, and a few party switches in the Supreme Court (of the packing of it), the dogmas of the anti-American culture will become the law of the land; for example:

Billions and trillions of dollars will be wasted on various “green” projects, including but far from limited to the complete replacement of fossil fuels by “renewables”, with the resulting impoverishment of most Americans, except for comfortable elites who press such policies).

It will be illegal to criticize, even by implication, such things as abortion, illegal immigration, same-sex marriage, transgenderism, anthropogenic global warming, or the confiscation of firearms. These cherished beliefs will be mandated for school and college curricula, and enforced by huge fines and draconian prison sentences (sometimes in the guise of “re-education”).

Any hint of Christianity and Judaism will be barred from public discourse, and similarly punished. Islam will be held up as a model of unity and tolerance.

Reverse discrimination in favor of females, blacks, Hispanics, gender-confused persons, and other “protected” groups will be required and enforced with a vengeance. But “protections” will not apply to members of such groups who are suspected of harboring libertarian or conservative impulses.

Sexual misconduct (as defined by the “victim”) will become a crime, and any male person may be found guilty of it on the uncorroborated testimony of any female who claims to have been the victim of an unwanted glance, touch (even if accidental), innuendo (as perceived by the victim), etc.

There will be parallel treatment of the “crimes” of racism, anti-Islamism, nativism, and genderism.

All health care in the United States will be subject to review by a national, single-payer agency of the central government. Private care will be forbidden, though ready access to doctors, treatments, and medications will be provided for high officials and other favored persons. The resulting health-care catastrophe that befalls most of the populace (like that of the UK) will be shrugged off as a residual effect of “capitalist” health care.

The regulatory regime will rebound with a vengeance, contaminating every corner of American life and regimenting all businesses except those daring to operate in an underground economy. The quality and variety of products and services will decline as their real prices rise as a fraction of incomes.

The dire economic effects of single-payer health care and regulation will be compounded by massive increases in other kinds of government spending (defense excepted). The real rate of economic growth will approach zero.

The United States will maintain token armed forces, mainly for the purpose of suppressing domestic uprisings. Given its economically destructive independence from foreign oil and its depressed economy, it will become a simulacrum of the USSR and Mao’s China — and not a rival to the new superpowers, Russia and China, which will largely ignore it as long as it doesn’t interfere in their pillaging of respective spheres of influence. A policy of non-interference (i.e., tacit collusion) will be the order of the era in Washington.

Though it would hardly be necessary to rig elections in favor of Democrats, given the flood of illegal immigrants who will pour into the country and enjoy voting rights, a way will be found to do just that. The most likely method will be election laws requiring candidates to pass ideological purity tests by swearing fealty to the “law of the land” (i.e., abortion, unfettered immigration, same-sex marriage, freedom of gender choice for children, etc., etc., etc.). Those who fail such a test will be barred from holding any kind of public office, no matter how insignificant.

Are my fears exaggerated? I don’t think so, given what has happened in recent decades and the cultural revolutionaries’ tightening grip on the Democrat party. What I have sketched out can easily happen within a decade after Democrats seize total control of the central government.

Will the defenders of liberty rally to keep it from happening? Perhaps, but I fear that they will not have a lot of popular support, for three reasons:

First, there is the problem of asymmetrical ideological warfare, which favors the party that says “nice” things and promises “free” things.

Second, What has happened thus far — mainly since the 1960s — has happened slowly enough that it seems “natural” to too many Americans. They are like fish in water who cannot grasp the idea of life in a different medium.

Third, although change for the worse has accelerated in recent years, it has occurred mainly in forums that seem inconsequential to most Americans, for example, in academic fights about free speech, in the politically correct speeches of Hollywood stars, and in culture wars that are conducted mainly in the blogosphere. The unisex-bathroom issue seems to have faded as quickly as it arose, mainly because it really affects so few people. The latest gun-control mania may well subside — though it has reached new heights of hysteria — but it is only one battle in the broader war being waged by the left. And most Americans lack the political and historical knowledge to understand that there really is a civil war underway — just not a “hot” one.

Is a reversal possible? Possible, yes, but unlikely. The rot is too deeply entrenched. Public schools and universities are cesspools of anti-Americanism. The affluent elites of the information-entertainment-media-academic complex are in the saddle. Republican politicians, for the most part, are of no help because they are more interested on preserving their comfortable sinecures than in defending America or the Constitution.

On that note, I will take a break from blogging — perhaps forever. I urge you to read one of my early posts, “Reveries“, for a taste of what America means to me. As for my blogging legacy, please see “A Summing Up“, which links to dozens of posts and pages that amplify and support this post.

Il faut cultiver notre jardin.

Voltaire, Candide


Related reading:

Michael Anton, “What We Still Have to Lose“, American Greatness, February 10, 2019

Rod Dreher, “Benedict Option FAQ“, The American Conservative, October 6, 2015

Roger Kimball, “Shall We Defend Our Common History?“, Imprimis, February 2019

Joel Kotkin, “Today’s Cultural Engineers“, newgeography, January 26, 2019

Daniel Oliver, “Where Has All the Culture Gone?“, The Federalist, February 8, 2019

Malcolm Pollack, “On Civil War“, Motus Mentis, March 7, 2019

Fred Reed, “The White Man’s Burden: Reflections on the Custodial State“, Fred on Everything, January 17, 2019

Gilbert T. Sewall, “The Diminishing Authority of the Bourgeois Culture“, The American Conservative, February 4, 2019

Bob Unger, “Requiem for America“, The New American, January 24, 2019

A Summing Up

I started blogging in the late 1990s with a home page that I dubbed Liberty Corner (reconstructed here). I maintained the home page until 2000. When the urge to resume blogging became irresistible in 2004, I created the Blogspot version of Liberty Corner, where I blogged until May 2008.

My weariness with “serious” blogging led to the creation of Americana, Etc., “A blog about baseball, history, humor, language, literature, movies, music, nature, nostalgia, philosophy, psychology, and other (mostly) apolitical subjects.” I began that blog in July 2008 and posted there sporadically until September 2013.

But I couldn’t resist commenting on political, economic, and social issues, so I established Politics & Prosperity in February 2009. My substantive outpourings ebbed and flowed until March 2019. Now, more than two decades and almost 3,700 posts since my blogging debut, I am taking another rest from blogging — perhaps a permanent rest.

To mark this event, I have chosen what I consider to be the best of my blogging, and assigned each of my choices to one of fifteen broad topics. (Many of the selections belong under more than one heading, but I avoided repetition for the sake of brevity.) You may jump directly to any of the fifteen topics by clicking on one of these links:

I. The Academy, Intellectuals, and the Left

II. Affirmative Action, Race, and Immigration

III. Americana, Etc.: Movies, Music, Nature, Nostalgia, Sports, and Trivia

IV. Conservatism and Other Political Philosophies

V. The Constitution and the Rule of Law

VI. Economics: Principles and Issues

VII. Humor, Satire, and Wry Commentary

VIII. Infamous Thinkers and Political Correctness

IX. Intelligence and Psychology

X. Justice

XI. Politics, Politicians, and the Consequences of Government

XII. Science, Religion, and Philosophy

XIII. Self-Ownership (abortion, euthanasia, marriage, and other aspects of the human condition)

XIV. War and Peace

XV. Writing and Language

Posts are listed in chronological order under each heading. If you are looking for a post on a particular subject, begin with the more recent posts and work your way backward in time, by moving up the list or using the “related posts” links that are included in most of my posts.

Your explorations may lead you to posts that no longer represent my views. This is especially the case with respect to John Stuart Mill’s “harm principle,” which figures prominently in my early dissertations on libertarianism, but which I have come to see as shallow and lacking in prescriptive power. Thus my belief that true libertarianism is traditional conservatism. (For more, see “Social Norms and Liberty” and many of the posts under “IV. Conservatism and Other Political Philosophies.”)

For readings that cut across many categories, I suggest my “Not-So-Random Thoughts” series: I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXII, and XXIII. See also “The Tenor of the Times” and “Roundup: Civil War, Solitude, Transgenderism, Academic Enemies, and Immigration“.

Finally, I draw your attention to the feature pages in the sidebar, especially these:

Abortion Q & A

Climate Change

Constitution: Myths and Realities

Economic Growth Since World War II

Intelligence

Keynesian Multiplier: Fiction vs. Fact

Leftism and Leftism: A Bibliography

Movies

Presidents: Key Dates and Various Trivia

Social Norms and Liberty

Spygate (a.k.a. Russia-gate)

U.S. Supreme Court: Lines of Succession and Ideological Alignment

Writing: A Guide

Those pages span much of what I have written, and include many links to posts, articles, and books by other writers.

Now, the tour d’horizon:

I. The Academy, Intellectuals, and the Left
Like a Fish in Water
Why So Few Free-Market Economists?
Academic Bias
Intellectuals and Capitalism
“Intellectuals and Society”: A Review
The Left’s Agenda
We, the Children of the Enlightenment
The Left and Its Delusions
The Spoiled Children of Capitalism
Politics, Sophistry, and the Academy
Subsidizing the Enemies of Liberty
The Culture War
Ruminations on the Left in America
The Euphemism Conquers All
Defending the Offensive
Superiority
Whiners
Non-Judgmentalism as Leftist Condescension
An Addendum to (Asymmetrical) Ideological Warfare
Retrospective Virtue-Signalling
The Left and Violence
Four Kinds of “Liberals”
Leftist Condescension
The Vast Left-Wing Conspiracy
Leftism
Leftism As Crypto-Fascism: The Google Paradigm
What Is Going On? A Stealth Revolution
“Capitalism” Is a Dirty Word
“Tribalists”, “Haters”, and Psychological Projection
Utopianism, Leftism, and Dictatorship
Pronoun Profusion
Preemptive (Cold) Civil War
Abortion, the “Me” Generation, and the Left
Whence Polarization?
Social Norms, the Left, and Social Disintegration
The Lesson of Alfie Evans
Can Left and Right Be Reconciled?
“Liberalism” and Virtue-Signaling
The Fourth Great Awakening
It’s Them or Us

II. Affirmative Action, Race, and Immigration
Affirmative Action: A Modest Proposal
After the Bell Curve
A Footnote . . .
Schelling and Segregation
Illogic from the Pro-Immigration Camp
Affirmative Action: Two Views from the Academy, Revisited
Race and Reason: The Victims of Affirmative Action
Race and Reason: The Achievement Gap — Causes and Implications
Evolution and Race
“Wading” into Race, Culture, and IQ
Evolution, Culture, and “Diversity”
The Harmful Myth of Inherent Equality
Nature, Nurture, and Inequality
Immigration and Crime
Immigration and Intelligence
Let’s Have That “Conversation” about Race
The IQ of Nations
Race and Social Engineering
Who’s Obsessing, Professor McWhorter?
Racism on Parade
Immigration Blues
Why Race Matters

III. Americana, Etc.: Movies, Music, Nature, Nostalgia, Sports, and Trivia
Speaking of Modern Art
Making Sense about Classical Music
An Addendum about Classical Music
Reveries
My Views on Classical Music, Vindicated
But It’s Not Music
Mister Hockey
Testing for Steroids
Explaining a Team’s W-L Record
The American League’s Greatest Hitters
The American League’s Greatest Hitters: Part II
Conducting, Baseball, and Longevity
Who Shot JFK, and Why?
The Passing of Red Brick Schoolhouses and a Way of Life
Baseball: The King of Team Sports
May the Best Team Lose
All-Time Hitter-Friendly Ballparks (With Particular Attention to Tiger Stadium)
A Trip to the Movies
Another Trip to the Movies
The Hall of Fame Reconsidered
Facts about Presidents (a reference page)
Great (Batting) Performances
Baseball’s Greatest and Worst Teams
Mister Hockey, R.I.P.
Baseball’s Greatest 40-and-Older Hitters
Pennant Droughts, Post-Season Play, and Seven-Game World Series
Bigger, Stronger, and Faster — But Not Quicker?
The American League’s Greatest Hitters: III
Babe Ruth and the Hot-Hand Hypothesis
Competitiveness in Major-League Baseball (III)
The Seven-Game World Series
V-J Day Stirs Memories
It’s Time to Revive 1920s Jazz
“The Little Drummer Girl” and War

IV. Conservatism and Other Political Philosophies
The Roots of Statism in the United States
Libertarian-Conservatives Are from the Earth, Liberals Are from the Moon
Modern Utilitarianism
The State of Nature
Libertarianism and Conservatism
Judeo-Christian Values and Liberty
Redefining Altruism
Fundamentalist Libertarians, Anarcho-Capitalists, and Self-Defense
Where Do You Draw the Line?
Moral Issues
A Paradox for Libertarians
A Non-Paradox for Libertarians
Religion and Liberty
Science, Evolution, Religion, and Liberty
Whose Incompetence Do You Trust?
Enough of Altruism
Thoughts That Liberals Should Be Thinking
More Thoughts That Liberals Should Be Thinking
The Corporation and the State
Libertarianism and Preemptive War: Part II
Anarchy: An Empty Concept
The Paradox of Libertarianism
Privacy: Variations on the Theme of Liberty
The Fatal Naïveté of Anarcho-Libertarianism
Liberty as a Social Construct
This Is Objectivism?
Social Norms and Liberty (a reference page)
Social Norms and Liberty (a followup post)A Footnote about Liberty and the Social Compact
The Adolescent Rebellion Syndrome
Liberty and Federalism
Finding Liberty
Nock Reconsidered
The Harm Principle
Footnotes to “The Harm Principle”
The Harm Principle, Again
Rights and Cosmic Justice
Liberty, Human Nature, and the State
Idiotarian Libertarians and the Non-Aggression Principle
Slopes, Ratchets, and the Death Spiral of Liberty
Postive Rights and Cosmic Justice: Part I
Positive Rights and Cosmic Justice: Part II
The Case against Genetic Engineering
Positive Rights and Cosmic Justice: Part III
A Critique of Extreme Libertarianism
Libertarian Whining about Cell Phones and Driving
The Golden Rule, for Libertarians
Positive Rights and Cosmic Justice: Part IV
Anarchistic Balderdash
Compare and Contrast
Irrationality, Suboptimality, and Voting
Wrong, Wrong, Wrong
The Political Case for Traditional Morality
Compare and Contrast, Again
Pascal’s Wager, Morality, and the State
The Fear of Consequentialism
Optimality, Liberty, and the Golden Rule
The People’s Romance
Objectivism: Tautologies in Search of Reality
Morality and Consequentialism
On Liberty
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Fascism with a “Friendly” Face
Democracy and Liberty
The Interest-Group Paradox
Inventing “Liberalism”
Civil Society and Homosexual “Marriage”
What Is Conservatism?
Utilitarianism vs. Liberty
Fascism and the Future of America
The Indivisibility of Economic and Social Liberty
Law and Liberty
Negative Rights
Negative Rights, Social Norms, and the Constitution
Tocqueville’s Prescience
Accountants of the Soul
Invoking Hitler
The Unreality of Objectivism
“Natural Rights” and Consequentialism
Rawls Meets Bentham
The Left
Our Enemy, the State
Pseudo-Libertarian Sophistry vs. True Libertarianism
What Are “Natural Rights”?
The Golden Rule and the State
Libertarian Conservative or Conservative Libertarian?
Bounded Liberty: A Thought Experiment
Evolution, Human Nature, and “Natural Rights”
More Pseudo-Libertarianism
The Meaning of Liberty
Positive Liberty vs. Liberty
On Self-Ownership and Desert
Understanding Hayek
Corporations, Unions, and the State
Facets of Liberty
Burkean Libertarianism
Rights: Source, Applicability, How Held
What Is Libertarianism?
Nature Is Unfair
True Libertarianism, One More Time
Human Nature, Liberty, and Rationalism
Utilitarianism and Psychopathy
A Declaration and Defense of My Prejudices about Governance
Libertarianism and Morality
Libertarianism and Morality: A Footnote
What Is Bleeding-Heart Libertarianism?
Liberty, Negative Rights, and Bleeding Hearts
Cato, the Kochs, and a Fluke
Why Conservatism Works
A Man for No Seasons
Bleeding-Heart Libertarians = Left-Statists
Not Guilty of Libertarian Purism
Liberty and Society
Tolerance on the Left
The Eclipse of “Old America”
Genetic Kinship and Society
Liberty as a Social Construct: Moral Relativism?
Defending Liberty against (Pseudo) Libertarians
The Fallacy of the Reverse-Mussolini Fallacy
Defining Liberty
Getting It Almost Right
The Social Animal and the “Social Contract”
The Futile Search for “Natural Rights”
The Pseudo-Libertarian Temperament
Parsing Political Philosophy (II)
Modern Liberalism as Wishful Thinking
Getting Liberty Wrong
Romanticizing the State
Libertarianism and the State
Egoism and Altruism
My View of Libertarianism
Sober Reflections on “Charlie Hebdo”
“The Great Debate”: Not So Great
No Wonder Liberty Is Disappearing
The Principles of Actionable Harm
More About Social Norms and Liberty
Superiority
The War on Conservatism
Old America, New America, and Anarchy
The Authoritarianism of Modern Liberalism, and the Conservative Antidote
Society, Polarization, and Dissent
Social Justice vs. Liberty
Does Liberty Still Have a Fighting Chance?
Economically Liberal, Socially Conservative
The Left and “the People”
Why Conservatives Shouldn’t Compromise
The Harm Principle Revisited: Mill Conflates Society and State
Liberty and Social Norms Re-examined
Natural Law, Natural Rights, and the Real World
FDR and Fascism: More Data
Natural Law and Natural Rights Revisited
Rescuing Conservatism
If Men Were Angels
Liberty in Chains
Libertarianism, Conservatism, and Political Correctness
Altruism, One More Time
“Liberalism” and Leftism
Disposition and Ideology
Altruism, Self-Interest, and Voting
My View of Mill, Endorsed
Suicide or Destiny?
Conservatism vs. Ideology
O.J.’s Glove and the Enlightenment
James Burnham’s Misplaced Optimism
A Flawed Ideological Taxonomy
True Populism

V. The Constitution and the Rule of Law
Unintended Irony from a Few Framers
Social Security Is Unconstitutional
What Is the Living Constitution?
The Legality of Teaching Intelligent Design
The Legality of Teaching Intelligent Design: Part II
Law, Liberty, and Abortion
An Answer to Judicial Supremacy?
Final (?) Words about Preemption and the Constitution
More Final (?) Words about Preemption and the Constitution
Who Are the Parties to the Constitutional Contract?
The Slippery Slope of Constitutional Revisionism
The Ruinous Despotism of Democracy
How to Think about Secession
Secession
A New, New Constitution
Secession Redux
A Declaration of Independence
First Principles
The Constitution: Original Meaning, Corruption, and Restoration
The Unconstitutionality of the Individual Mandate
Does the Power to Tax Give Congress Unlimited Power?
Does Congress Have the Power to Regulate Inactivity?
Substantive Due Process and the Limits of Privacy
The Southern Secession Reconsidered
Abortion and the Fourteenth Amendment
Obamacare: Neither Necessary nor Proper
Privacy Is Not Sacred
Our Perfect, Perfect Constitution
Reclaiming Liberty throughout the Land
Obamacare, Slopes, Ratchets, and the Death-Spiral of Liberty
Another Thought or Two about the Obamacare Decision
Secession for All Seasons
Restoring Constitutional Government: The Way Ahead
“We the People” and Big Government
How Libertarians Ought to Think about the Constitution
Abortion Rights and Gun Rights
The States and the Constitution
Getting “Equal Protection” Right
How to Protect Property Rights and Freedom of Association and Expression
The Principles of Actionable Harm
Judicial Supremacy: Judicial Tyranny
Does the Power to Tax Give Congress Unlimited Power? (II)
The Beginning of the End of Liberty in America
Substantive Due Process, Liberty of Contract, and States’ “Police Power”
U.S. Supreme Court: Lines of Succession (a reference page)
Why Liberty of Contract Matters
Judicial Supremacy: Judicial Tyranny
The Answer to Judicial Supremacy
There’s More to It Than Religious Liberty
Turning Points
Equal Protection in Principle and Practice
A Resolution of Secession
Polarization and De-facto Partition
Freedom of Speech and the Long War for Constitutional Governance
Equality
Academic Freedom, Freedom of Speech, and the Demise of Civility
Restoring the Contract Clause
Preemptive (Cold) Civil War
The Framers, Mob Rule, and a Fatal Error
The Constitution: Myths and Realities
Freedom of Speech: Getting It Right
Suicide or Destiny?
Freedom of Speech, to What End?
The Polarized Court
Nullification and Secession
Judging the Justices: The Thomas Standard
The Constitution vs. Reality
How Roe v. Wade Could Die

V. Economics: Principles and Issues
Economics: A Survey (a reference page that gives an organized tour of relevant posts, many of which are also listed below)
Fear of the Free Market — Part I
Fear of the Free Market — Part II
Fear of the Free Market — Part III
Trade Deficit Hysteria
Why We Deserve What We Earn
Who Decides Who’s Deserving?
The Main Causes of Prosperity
That Mythical, Magical Social Security Trust Fund
Social Security, Myth and Reality
Nonsense and Sense about Social Security
More about Social Security
Social Security Privatization and the Stock Market
Oh, That Mythical Trust Fund!
The Real Meaning of the National Debt
Socialist Calculation and the Turing Test
Social Security: The Permanent Solution
The Social Welfare Function
Libertarian Paternalism
A Libertarian Paternalist’s Dream World
Talk Is Cheap
Giving Back to the Community
The Short Answer to Libertarian Paternalism
Second-Guessing, Paternalism, Parentalism, and Choice
Another Thought about Libertarian Paternalism
Why Government Spending Is Inherently Inflationary
Ten Commandments of Economics
More Commandments of Economics
Capitalism, Liberty, and Christianity
Risk and Regulation
Back-Door Paternalism
Liberty, General Welfare, and the State
Another Voice Against the New Paternalism
Monopoly and the General Welfare
The Causes of Economic Growth
Slippery Paternalists
The Importance of Deficits
It’s the Spending, Stupid!
There’s More to Income than Money
Science, Axioms, and Economics
Mathematical Economics
The Last(?) Word about Income Inequality
Why “Net Neutrality” Is a Bad Idea
The Feds and “Libertarian Paternalism”
The Anti-Phillips Curve
Status, Spite, Envy, and Income Redistribution
Economics: The Dismal (Non) Science
A Further Note about “Libertarian” Paternalism
Apropos Paternalism
Where’s My Nobel?
Toward a Capital Theory of Value
The Laffer Curve, “Fiscal Responsibility,” and Economic Growth
Stability Isn’t Everything
Income and Diminishing Marginal Utility
What Happened to Personal Responsibility?
The Causes of Economic Growth
Economic Growth since WWII
A Short Course in Economics
Addendum to a Short Course in Economics
Monopoly: Private Is Better than Public
The “Big Five” and Economic Performance
Does the Minimum Wage Increase Unemployment?
Rationing and Health Care
The Perils of Nannyism: The Case of Obamacare
More about the Perils of Obamacare
Health-Care Reform: The Short of It
Trade
Toward a Risk-Free Economy
Enough of “Social Welfare”
A True Flat Tax
The Case of the Purblind Economist
How the Great Depression Ended
Why Outsourcing Is Good: A Simple Lesson for “Liberal” Yuppies
Microeconomics and Macroeconomics
The Illusion of Prosperity and Stability
The Deficit Commission’s Deficit of Understanding
“Buy Local”
“Net Neutrality”
The Bowles-Simpson Report
The Bowles-Simpson Band-Aid
Competition Shouldn’t Be a Dirty Word
Subjective Value: A Proof by Example
The Stagnation Thesis
Taxing the Rich
More about Taxing the Rich
Money, Credit, and Economic Fluctuations
A Keynesian Fantasy Land
“Tax Expenditures” Are Not Expenditures
The Keynesian Fallacy and Regime Uncertainty
Does “Pent Up” Demand Explain the Post-War Recovery?
Creative Destruction, Reification, and Social Welfare
What Free-Rider Problem?
Why the “Stimulus” Failed to Stimulate
The Arrogance of (Some) Economists
The “Jobs Speech” That Obama Should Have Given
Say’s Law, Government, and Unemployment
Regime Uncertainty and the Great Recession
Regulation as Wishful Thinking
Extreme Economism
We Owe It to Ourselves
In Defense of the 1%
Lay My (Regulatory) Burden Down
Irrational Rationality
The Burden of Government
Economic Growth Since World War II
The Rationing Fallacy
Government in Macroeconomic Perspective
Keynesianism: Upside-Down Economics in the Collectivist Cause
How High Should Taxes Be?
The 80-20 Rule, Illustrated
Economic Horror Stories: The Great “Demancipation” and Economic Stagnation
Baseball Statistics and the Consumer Price Index
Why Are Interest Rates So Low?
Vulgar Keynesianism and Capitalism
America’s Financial Crisis Is Now
“Ensuring America’s Freedom of Movement”: A Review
“Social Insurance” Isn’t Insurance — Nor Is Obamacare
The Keynesian Multiplier: Phony Math
The True Multiplier
Discounting in the Public Sector
Some Inconvenient Facts about Income Inequality
Mass (Economic) Hysteria: Income Inequality and Related Themes
Social Accounting: A Tool of Social Engineering
Alienation
Playing the Social Security Trust Fund Shell Game
Income Inequality and Economic Growth
A Case for Redistribution, Not Made
McCloskey on Piketty
The Rahn Curve Revisited
The Slow-Motion Collapse of the Economy
Nature, Nurture, and Inequality
Understanding Investment Bubbles
The Real Burden of Government
Diminishing Marginal Utility and the Redistributive Urge
Capitalism, Competition, Prosperity, and Happiness
Further Thoughts about the Keynesian Multiplier
The Essence of Economics
Economics and Science
Economists As Scientists
Mathematical Economics
Economic Modeling: A Case of Unrewarded Complexity
Today’s Lesson in Economics: How to Think about War
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
The Public-Goods Myth
Thaler on Discounting
Big Government and Disguised Unemployment
Rethinking Free Trade
Rethinking Free Trade II
Revisiting the Laffer Curve
Unorthodox Economics: 5. Economic Progress, Microeconomics, and Microeconomics
Rethinking Free Trade III
Macroeconomic Modeling Revisited
Shiller’s Folly

VII. Humor, Satire, and Wry Commentary
Political Parlance
Some Management Tips
Ten-Plus Commandments of Liberalism, er, Progressivism
To Pay or Not to Pay
The Ghost of Impeachments Past Presents “The Trials of William Jefferson Whatsit”
Getting It Perfect
His Life As a Victim
Bah, Humbug!
PC Madness
The Seven Faces of Blogging
DWI
Wordplay
Trans-Gendered Names
More Names
Stuff White (Liberal Yuppie) People Like
Driving and Politics
“Men’s Health”
I’ve Got a LIttle List
Driving and Politics (2)
A Sideways Glance at Military Strategy
A Sideways Glance at the Cabinet
A Sideways Glance at Politicians’ Memoirs
Daylight Saving Time Doesn’t Kill
Amazon and Austin
Driving Is an IQ Test
Screen Shots: The Glass Castle, Victoria, and The Crown
The Renaming Mania Hits a New Low

VIII. Infamous Thinkers and Political Correctness
Sunstein at the Volokh Conspiracy
More from Sunstein
Cass Sunstein’s Truly Dangerous Mind
An (Imaginary) Interview with Cass Sunstein
Professor Krugman Flunks Economics
Peter Singer’s Fallacy
Slippery Sunstein
Sunstein and Executive Power
Nock Reconsidered
In Defense of Ann Coulter
Goodbye, Mr. Pitts
Our Miss Brooks
How to Combat Beauty-ism
The Politically Correct Cancer: Another Weapon in the War on Straight White Males
Asymmetrical (Ideological) Warfare
Social Justice
Peter Presumes to Preach
More Social Justice
Luck-Egalitarianism and Moral Luck
Empathy Is Overrated
In Defense of Wal-Mart
An Economist’s Special Pleading: Affirmative Action for the Ugly
Another Entry in the Sunstein Saga
Obesity and Statism (Richard Posner)
Obama’s Big Lie
The Sunstein Effect Is Alive and Well in the White House
Political Correctness vs. Civility
IQ, Political Correctness, and America’s Present Condition
Sorkin’s Left-Wing Propaganda Machine
Baseball or Soccer? David Brooks Misunderstands Life
Sunstein the Fatuous
Tolerance
Good Riddance
The Gaystapo at Work
The Gaystapo and Islam
The Perpetual Nudger
Brandeis’s Ignorance
Babbling Brooks
Andrew Cuomo’s Fatuous Casuistry
H.L. Mencken’s Final Legacy
The Problem with Political Correctness
Mencken’s Pearl of Wisdom
Richard Thaler, Nobel Laureate
Thaler’s Non-Revolution in Economics
Another (Big) Problem with “Nudging”
The Ken Burns Apology Tour Continues
Thaler on Discounting
A Bobo in Cloud-Cuckoo Land

IX. Intelligence and Psychology
Conservatism, Libertarianism, and “The Authoritarian Personality”
The F Scale, Revisited
The Psychologist Who Played God
Intelligence, Personality, Politics, and Happiness
Intelligence as a Dirty Word
Intelligence and Intuition
Nonsense about Presidents, IQ, and War
IQ, Political Correctness, and America’s Present Condition
Alienation
Greed, Conscience, and Big Government
Tolerance
Privilege, Power, and Hypocrisy
Intelligence, Assortative Mating, and Social Engineering
The IQ of Nations
Hayek’s Anticipatory Account of Consciousness
The Internet-Media-Academic Complex vs. Real Life
More about Intelligence
Institutional Bias
Nature, Nurture, and Leniency
Some Notes about Psychology and Intelligence
The Midwest Is a State of Mind
How’s Your (Implicit) Attitude?
Jerks and Psychopaths
Selected Writings about Intelligence
The Fourth Great Awakening

X. Justice
I’ll Never Understand the Insanity Defense
Does Capital Punishment Deter Homicide?
Libertarian Twaddle about the Death Penalty
A Crime Is a Crime
Crime and Punishment
Abortion and Crime
Saving the Innocent?
Saving the Innocent?: Part II
A Useful Precedent
More on Abortion and Crime
More Punishment Means Less Crime
More About Crime and Punishment
More Punishment Means Less Crime: A Footnote
Clear Thinking about the Death Penalty
Let the Punishment Fit the Crime
Cell Phones and Driving: Liberty vs. Life
Another Argument for the Death Penalty
Less Punishment Means More Crime
Crime, Explained
Clear Thinking about the Death Penalty
What Is Justice?
Myopic Moaning about the War on Drugs
Saving the Innocent
Why Stop at the Death Penalty?
A Case for Perpetual Copyrights and Patents
The Least Evil Option
Legislating Morality
Legislating Morality (II)
Round Up the Usual Suspects
Left-Libertarians, Obama, and the Zimmerman Case
Free Will, Crime, and Punishment
Stop, Frisk, and Save Lives
Poverty, Crime, and Big Government
Crime Revisited
A Cop-Free World?

XI. Politics, Politicians, and the Consequences of Government
Starving the Beast
Torture and Morality
Starving the Beast, Updated
Starving the Beast: Readings
Presidential Legacies
The Rational Voter?
FDR and Fascism
The “Southern Strategy”
An FDR Reader
The “Southern Strategy”: A Postscript
The Modern Presidency: A Tour of American History
Politicizing Economic Growth
The End of Slavery in the United States
I Want My Country Back
What Happened to the Permanent Democrat Majority?
More about the Permanent Democrat Majority
Undermining the Free Society
Government Failure: An Example
The Public-School Swindle
PolitiFact Whiffs on Social Security
The Destruction of Society in the Name of “Society”
About Democracy
Externalities and Statism
Taxes: Theft or Duty?
Society and the State
Don’t Use the “S” Word When the “F” Word Will Do
The Capitalist Paradox Meets the Interest-Group Paradox
Is Taxation Slavery?
A Contrarian View of Universal Suffrage
The Hidden Tragedy of the Assassination of Lincoln
America: Past, Present, and Future
IQ, Political Correctness, and America’s Present Condition
Progressive Taxation Is Alive and Well in the U.S. of A.
“Social Insurance” Isn’t Insurance — Nor Is Obamacare
“We the People” and Big Government
The Culture War
The Fall and Rise of American Empire
O Tempora O Mores!
Presidential Treason
A Home of One’s Own
The Criminality and Psychopathy of Statism
Surrender? Hell No!
Social Accounting: A Tool of Social Engineering
Playing the Social Security Trust Fund Shell Game
Two-Percent Tyranny
A Sideways Glance at Public “Education”
Greed, Conscience, and Big Government
The Many-Sided Curse of Very Old Age
The Slow-Motion Collapse of the Economy
How to Eradicate the Welfare State, and How Not to Do It
“Blue Wall” Hype
Does Obama Love America?
Obamanomics in Action
Democracy, Human Nature, and the Future of America
1963: The Year Zero
Society
How Government Subverts Social Norms
Turning Points
The Twilight’s Last Gleaming?
“Fairness”
My Platform
How America Has Changed
Civil War?
The “H” Word, the Left, and Donald Trump
The Hypocrisy of “Local Control”
Cost Disease in the Quasi-Government Sector
Red-Diaper Babies and Enemies Within
Suicidal Despair and the “War on Whites”
Death of a Nation
The Invention of Rights
The Danger of Marginal Thinking
Politics Trumps Economics
The Dumbing-Down of Public Schools
“Why Can’t We All Just Get Along?”
Mass Murder: Reaping What Was Sown
The South, Racism, and the GOP
The American Electorate’s “Squishy Center”
The Decline of Collegiality
Do We “Belong” to Government?
The Fickle Electorate

XII. Science, Religion, and Philosophy
Same Old Story, Same Old Song and Dance
Atheism, Religion, and Science
The Limits of Science
Beware of Irrational Atheism
The Creation Model
Free Will: A Proof by Example?
Science in Politics, Politics in Science
Evolution and Religion
Science, Evolution, Religion, and Liberty
What’s Wrong with Game Theory
Is “Nothing” Possible?
Pseudo-Science in the Service of Political Correctness
Science’s Anti-Scientific Bent
Flow
Science, Axioms, and Economics
The Purpose-Driven Life
The Tenth Dimension
The Universe . . . Four Possibilities
Atheism, Religion, and Science Redux
“Warmism”: The Myth of Anthropogenic Global Warming
More Evidence against Anthropogenic Global Warming
Yet More Evidence against Anthropogenic Global Warming
Pascal’s Wager, Morality, and the State
Achilles and the Tortoise: A False Paradox
The Greatest Mystery
Modeling Is Not Science
Freedom of Will and Political Action
Fooled by Non-Randomness
Randomness Is Over-Rated
Anthropogenic Global Warming Is Dead, Just Not Buried Yet
Beware the Rare Event
Landsburg Is Half-Right
What Is Truth?
The Improbability of Us
Wrong Again
More Thoughts about Evolutionary Teleology
A Digression about Probability and Existence
Evolution and the Golden Rule
A Digression about Special Relativity
More about Probability and Existence
Existence and Creation
Probability, Existence, and Creation
Temporal and Spatial Agreement
In Defense of Subjectivism
The Atheism of the Gaps
The Ideal as a False and Dangerous Standard
Demystifying Science
Religion on the Left
Analysis for Government Decision-Making: Hemi-Science, Hemi-Demi-Science, and Sophistry
Scientism, Evolution, and the Meaning of Life
Luck and Baseball, One More Time
Are the Natural Numbers Supernatural?
The Candle Problem: Balderdash Masquerading as Science
Mysteries: Sacred and Profane
More about Luck and Baseball
Combinatorial Play
Something from Nothing?
Pseudoscience, “Moneyball,” and Luck
Something or Nothing
Understanding the Monty Hall Problem
My Metaphysical Cosmology
Further Thoughts about Metaphysical Cosmology
The Fallacy of Human Progress
Nothingness
The Glory of the Human Mind
Pinker Commits Scientism
Spooky Numbers, Evolution, and Intelligent Design
AGW: The Death Knell
Mind, Cosmos, and Consciousness
The Limits of Science (II)
Not Over the Hill
The Pretence of Knowledge
“The Science Is Settled”
The Compleat Monty Hall Problem
“Settled Science” and the Monty Hall Problem
Evolution, Culture, and “Diversity”
Some Thoughts about Probability
Rationalism, Empiricism, and Scientific Knowledge
AGW in Austin?
My War on the Misuse of Probability
Ty Cobb and the State of Science
Understanding Probability: Pascal’s Wager and Catastrophic Global Warming
Revisiting the “Marketplace” of Ideas
The Technocratic Illusion
The Precautionary Principle and Pascal’s Wager
AGW in Austin? (II)
Is Science Self-Correcting?
“Feelings, Nothing More than Feelings”
Taleb’s Ruinous Rhetoric
Words Fail Us
Fine-Tuning in a Wacky Wrapper
Is Consciousness an Illusion?
Beating Religion with the Wrong End of the Stick
Quantum Mechanics and Free Will
“Science” vs. Science: The Case of Evolution, Race, and Intelligence
Modeling Revisited
Bayesian Irrationality
The Fragility of Knowledge
Global-Warming Hype
Pattern-Seeking
Babe Ruth and the Hot-Hand Hypothesis
Deduction, Induction, and Knowledge
A (Long) Footnote about Science
Further Thoughts about Probability
Religion, Creation, and Morality
Luck: The Loser’s Excuse
The Balderdash Chronicles
The Probability That Something Will Happen
Analytical and Scientific Arrogance
The Pretence of Knowledge
Wildfires and “Climate Change”
Atheistic Scientism Revisited
Why I Don’t Believe in “Climate Change”
Ford, Kavanaugh, and Probability

XIII. Self-Ownership (abortion, euthanasia, marriage, and other aspects of the human condition)
Feminist Balderdash
Libertarianism, Marriage, and the True Meaning of Family Values
Law, Liberty, and Abortion
Privacy, Autonomy, and Responsibility
Parenting, Religion, Culture, and Liberty
The Case against Genetic Engineering
A “Person” or a “Life”?
A Wrong-Headed Take on Abortion
In Defense of Marriage
Crimes against Humanity
Abortion and Logic
The Myth That Same-Sex “Marriage” Causes No Harm
Abortion, Doublethink, and Left-Wing Blather
Abortion, “Gay Rights,” and Liberty
Dan Quayle Was (Almost) Right
The Most Disgusting Thing I’ve Read Today
Posner the Fatuous
Marriage: Privatize It and Revitalize It
The Transgender Fad and Its Consequences
Another Angle on Alienation The Invalid “Viability” Argument for Abortion
Andrew Sullivan almost Gets It
Abortion, the “Me” Generation, and the Left

XIV. War and Peace
Getting It Wrong: Civil Libertarians and the War on Terror (A Case Study)
Libertarian Nay-Saying on Foreign and Defense Policy, Revisited
Right On! For Libertarian Hawks Only
Understanding Libertarian Hawks
Defense, Anarcho-Capitalist Style
The Illogic of Knee-Jerk Civil Liberties Advocates
Getting It All Wrong about the Risk of Terrorism
Conservative Revisionism, Conservative Backlash, or Conservative Righteousness?
But Wouldn’t Warlords Take Over?
Sorting Out the Libertarian Hawks and Doves
Shall We All Hang Separately?
September 11: A Remembrance
September 11: A Postscript for “Peace Lovers”
Give Me Liberty or Give Me Non-Aggression?
NSA “Eavesdropping”: The Last Word (from Me)
Riots, Culture, and the Final Showdown
Thomas Woods and War
In Which I Reply to the Executive Editor of The New York Times
“Peace for Our Time”
Taking on Torture
Conspiracy Theorists’ Cousins
September 11: Five Years On
How to View Defense Spending
The Best Defense . . .
A Skewed Perspective on Terrorism
Not Enough Boots: The Why of It
Here We Go Again
“The War”: Final Grade
Torture, Revisited
Waterboarding, Torture, and Defense
Liberalism and Sovereignty
The Media, the Left, and War
Torture
Getting It Wrong and Right about Iran
The McNamara Legacy: A Personal Perspective
The “Predator War” and Self-Defense
The National Psyche and Foreign Wars
Inside-Outside
A Moralist’s Moral Blindness
A Grand Strategy for the United States
The Folly of Pacifism
Rating America’s Wars
Transnationalism and National Defense
The Next 9/11?
The Folly of Pacifism, Again
September 20, 2001: Hillary Clinton Signals the End of “Unity”
Patience as a Tool of Strategy
The War on Terror, As It Should Have Been Fought
The Cuban Missile Crisis, Revisited
Preemptive War
Preemptive War and Iran
Some Thoughts and Questions about Preemptive War
Defense as an Investment in Liberty and Prosperity
Riots, Culture, and the Final Showdown (revisited)
The Barbarians Within and the State of the Union
The World Turned Upside Down
Utilitarianism and Torture
Defense Spending: One More Time
Walking the Tightrope Reluctantly
The President’s Power to Kill Enemy Combatants
My Defense of the A-Bomb
Pacifism
Today’s Lesson in Economics: How to Think about War
Presidents and War
LBJ’s Dereliction of Duty
Terrorism Isn’t an Accident
The Ken Burns Apology Tour Continues
Planning for the Last War
A Rearview Look at the Invasion of Iraq and the War on Terror
Preemptive War Revisited
It’s a MAD, MAD, MAD, MAD World
The Folly of Pacifism (III)
MAD, Again
“MAD, Again”: A Footnote
More MADness: Mistaking Bureaucratic Inertia for Strategy

XV. Writing and Language
Punctuation
“Hopefully” Arrives
Hopefully, This Post Will Be Widely Read
Why Prescriptivism?
A Guide to the Pronunciation of General American English
Rules of Writing to Disregard?
On Writing (a comprehensive essay about writing, which covers some of the material presented in other posts in this section)

–30–

The Good News and Real News about Inflation and Earnings

GOOD NEWS

The CPI isn’t signalling a recession.

Household income, adjusted for inflation, continues to rise to new heights.

BUT . . .

Inflation is in the eye (or wallet) of the beholder. It is arbitrarily estimated by sampling the prices of defined “baskets” of products and services. Your “basket” probably differs greatly from the official ones used by the Bureau of Labor Statistics.

Almost no household is a typical one.

REAL NEWS

Aggregate statistics are almost meaningless. There is no such thing as social welfare. Only you can decide if you’re better off than you were yesterday.


Related posts:
Microeconomics and Macroeconomics
Unorthodox Economics: 2. Pitfalls (especially the third entry about social welfare)
Unorthodox Economics: 5. Economic Progress, Microeconomics, and Microeconomics

Recent Updates

In case you hadn’t noticed, I have in the past few days added new links to the following post and pages:

The Green New Deal Is a Plan for Economic Devastation

Climate Change

Favorite Posts

Intelligence

Spygate

I have also updated “Writing: A Guide“.

The Green New Deal Is a Plan for Economic Devastation

Here’s the essence of the “plan”:

The annual cost of the Green New Deal (GND) is about $5 trillion a year over the first ten years.

At the end of the ten years, government’s share of GDP would rise from about 40 percent to about 60 percent. This assumes, unrealistically, that the prospect and realization of the GND wouldn’t cause a drastic reduction in the size of the private sector.

Even making that assumption, the real rate of economic growth would decline from a weak 2 percent to a devastating minus 5 percent*.

In fact, within a generation what’s left of GDP would consist almost entirely of government spending. The socialist dream would have become reality, complete with long queues (physical and virtual) and rationing of shoddy products and services doled out by the state.

USSR, here we come.

__________

* My rough estimate of the GND’s effect of on the rate of growth is based on the equation presented here.


Related reading:

Erich Wallach’s interview with Deirdre McCloskey, Distinguished Professor Emerita of Economics and of History, University of Illinois-Chicago, February 10, 2019

Douglas Holtz-Eakin, Dan Bosch, Ben Gitis, Dan Goldbeck, and Philip Rossetti, “The Green New Deal: Scope, Scale, and Implications“, American Action Forum, February 25, 2019

The Shutdown Was a Plus for the Economy

The “non-partisan” (but pro-government) Congressional Budget Office has assessed the economic effects of the five-week partial shutdown of the government that started on December 22, 2018, and ended on January 25, 2019. According to CBO,

real (that is, inflation-adjusted) gross domestic product (GDP) in the fourth quarter of 2018 was reduced by $3 billion (in 2019 dollars) in relation to what it would have been otherwise…. In the first quarter of 2019, the level of real GDP is estimated to be $8 billion lower than it would have been….

Although most of the real GDP lost during the fourth quarter of 2018 and the first quarter of 2019 will eventually be recovered, CBO estimates that about $3 billion will not be.

In truth, real GDP will rise as a result of the inactivity of government bureaucrats. By how much? Not a lot, relative to real GDP, which is measured in the trillions of dollars. But it will rise, as I explain in “Keynesian Multiplier: Fiction vs. Fact“, because there is a negative relationship between government spending and real GDP, other things being equal:

kT = ∆Y/∆F = -0.340Y0

Where,

kT = the true multiplier

Y = real GDP

F = fraction of GDP spent by governments at all levels, including transfer payments (e.g., Social Security, Medicare, and Medicaid)

Y0 = real GDP in the period during which F changes

Even a slight decrease in government spending has an out-sized — and beneficial — effect on GDP.

More Stock-Market Analysis (II)

Today’s trading on U.S. stock markets left the Wilshire 5000 Total Market Full-Cap index 17 percent below its September high. How low will the market go? When will it bounce back? There’s no way to know, which is the main message of “Shiller’s Folly” and “More Stock-Market Analysis“.

Herewith are three relevant exhibits based on the S&P Composite index as reconstructed by Robert Shiller (commentary follows):

In the following notes, price refers to the value of the index; real price is the inflation-adjusted value of the index; total return is the value with dividends reinvested; real total return is the inflation-adjusted value of total return.

  • The real price trend represents an annualized gain of 1.8 percent (through November 2018).
  • The real total return trend represents an annualized gain of 6.5 percent (through September 2018).
  • In month-to-month changes, real price has gone up 56 percent of the time; real total return has gone up 61 percent of the time.
  • Real price has been in a major decline about 24 percent of the time, where a major decline is defined as a real price drop of more than 25 percent over a span of at least 6 months.
  • The picture is a bit less bleak for total returns (about 20 percent of the time) because the reinvestment of dividends somewhat offsets price drops.
  • Holding a broad-market index fund is never a sure thing. Returns fluctuate wildly. Impressive real returns (e.g., 20 percent and higher) are possible in the shorter run (e.g., 5-10 years), but so are significantly negative returns. Holding a fund longer reduces the risk of a negative return while also suppressing potential gains.
  • Long-run real returns of greater than 5 percent a year are not to be scoffed at. It takes a lot of research, patience, and luck to do better than that with individual stocks and specialized mutual funds.

More Stock-Market Analysis

I ended “Shiller’s Folly” with the Danish proverb, it is difficult to make predictions, especially about the future.

Here’s more in that vein. Shiller uses a broad market index, the S&P Composite (S&P), which he has reconstructed back to January 1871. I keep a record of the Wilshire 5000 Full-Cap Total-Return Index (WLX), which dates back to December 1970. When dividends for stocks in the S&P index are reinvested, its performance since December 1970 is almost identical to that of the WLX:

It is a reasonable assumption that if the WLX extended back to January 1871 its track record would nearly match that of the S&P. Therefore, one might assume that past returns on the WLX are a good indicator of future returns. In fact, the relationship between successive 15-year periods is rather strong:

But that seemingly strong relationship is an artifact of the relative brevity of the track record of the WLX.  Compare the relationship in the preceding graph with the analogous one for the S&P, which goes back an additional 100 years:

The equations are almost identical — and they predict almost the same real returns for the next 15 years: about 6 percent a year. But the graph immediately above should temper one’s feeling of certainty about the long-run rate of return on a broad market index fund or a well-diversified portfolio of stocks.


Related posts:
Stocks for the Long Run?
Stocks for the Long Run? (Part II)
Bonds for the Long Run?
Much Ado about the Price-Earnings Ratio
Whither the Stock Market?
Shiller’s Folly

Shiller’s Folly

Robert Shiller‘s most famous (or infamous) book, is Irrational Exuberance (2000). According to the Wikipedia article about the book,

the text put forth several arguments demonstrating how the stock markets were overvalued at the time. The stock market collapse of 2000 happened the exact month of the book’s publication.

The second edition of Irrational Exuberance was published in 2005 and was updated to cover the housing bubble. Shiller wrote that the real estate bubble might soon burst, and he supported his claim by showing that median home prices were six to nine times greater than median income in some areas of the country. He also showed that home prices, when adjusted for inflation, have produced very modest returns of less than 1% per year. Housing prices peaked in 2006 and the housing bubble burst in 2007 and 2008, an event partially responsible for the Worldwide recession of 2008-2009.

However, as the Wikipedia article notes,

some economists … challenge the predictive power of Shiller’s publication. Eugene Fama, the Robert R. McCormick Distinguished Service Professor of Finance at The University of Chicago and co-recipient with Shiller of the 2013 Nobel Prize in Economics, has written that Shiller “has been consistently pessimistic about prices,”[ so given a long enough horizon, Shiller is bound to be able to claim that he has foreseen any given crisis.

(A stopped watch is right twice a day, but wrong 99.9 percent of the time if read to the nearest minute. I also predicted the collapse of 2000, but four years too soon.)

One of the tools used by Shiller is a cyclically-adjusted price-to-earnings ratio known as  CAPE-10 . It is

a valuation measure usually applied to the US S&P 500 equity market. It is defined as price divided by the average of ten [previous] years of earnings … , adjusted for inflation. As such, it is principally used to assess likely future returns from equities over timescales of 10 to 20 years, with higher than average CAPE values implying lower than average long-term annual average returns.

CAPE-10, like other economic indicators of which I know, is a crude tool:

For example, the annualized real rate of price growth for the S&P Composite Index from October 2003 to October 2018 was 4.6 percent. The value of CAPE-10 in October 2003 was 25.68. According to the equation in the graph (which includes the period from October 2003 through October 2018), the real rate of price growth should have been -0.6 percent. The actual rate is at the upper end of the wide range of uncertainty around the estimate.

Even a seemingly more robust relationship yields poor results. Consider this one:

The equation in this graph produces a slightly better but still terrible estimate: price growth of -0.2 percent over the 15 years ending in October 2018.

If you put stock (pun intended) in the kinds of relationships depicted above, you should expect real growth in the S&P Composite Index to be zero for the next 15 years — plus or minus about 6 percentage points. It’s the plus or minus that matters — a lot — and the equations don’t help you one bit.

As the Danish proverb says, it is difficult to make predictions, especially about the future.

Not-So-Random Thoughts (XXIII)

CONTENTS

Government and Economic Growth

Reflections on Defense Economics

Abortion: How Much Jail Time?

Illegal Immigration and the Welfare State

Prosperity Isn’t Everything

Google et al. As State Actors

The Transgender Trap


GOVERNMENT AND ECONOMIC GROWTH

Guy Sorman reviews Alan Greenspan and Adrian Wooldridge’s Capitalism in America: A History. Sorman notes that

the golden days of American capitalism are over—or so the authors opine. That conclusion may seem surprising, as the U.S. economy appears to be flourishing. But the current GDP growth rate of roughly 3 percent, after deducting a 1 percent demographic increase, is rather modest, the authors maintain, compared with the historic performance of the postwar years, when the economy grew at an annual average of 5 percent. Moreover, unemployment appears low only because a significant portion of the population is no longer looking for work.

Greenspan and Wooldridge reject the conventional wisdom on mature economies growing more slowly. They blame relatively slow growth in the U.S. on the increase in entitlement spending and the expansion of the welfare state—a classic free-market argument.

They are right to reject the conventional wisdom.  Slow growth is due to the expansion of government spending (including entitlements) and the regulatory burden. See “The Rahn Curve in Action” for details, including an equation that accurately explains the declining rate of growth since the end of World War II.


REFLECTIONS ON DEFENSE ECONOMICS

Arnold Kling opines about defense economics. Cost-effectiveness analysis was the big thing in the 1960s. Analysts applied non-empirical models of warfare and cost estimates that were often WAGs (wild-ass guesses) to the comparison of competing weapon systems. The results were about as accurate a global climate models, which is to say wildly inaccurate. (See “Modeling Is not Science“.) And the results were worthless unless they comported with the prejudices of the “whiz kids” who worked for Robert Strange McNamara. (See “The McNamara Legacy: A Personal Perspective“.)


ABORTION: HOW MUCH JAIL TIME?

Georgi Boorman says “Yes, It Would Be Just to Punish Women for Aborting Their Babies“. But, as she says,

mainstream pro-lifers vigorously resist this argument. At the same time they insist that “the unborn child is a human being, worthy of legal protection,” as Sarah St. Onge wrote in these pages recently, they loudly protest when so-called “fringe” pro-lifers state the obvious: of course women who willfully hire abortionists to kill their children should be prosecuted.

Anna Quindlen addressed the same issue more than eleven years ago, in Newsweek:

Buried among prairie dogs and amateur animation shorts on YouTube is a curious little mini-documentary shot in front of an abortion clinic in Libertyville, Ill. The man behind the camera is asking demonstrators who want abortion criminalized what the penalty should be for a woman who has one nonetheless. You have rarely seen people look more gobsmacked. It’s as though the guy has asked them to solve quadratic equations. Here are a range of responses: “I’ve never really thought about it.” “I don’t have an answer for that.” “I don’t know.” “Just pray for them.”

You have to hand it to the questioner; he struggles manfully. “Usually when things are illegal there’s a penalty attached,” he explains patiently. But he can’t get a single person to be decisive about the crux of a matter they have been approaching with absolute certainty.

… If the Supreme Court decides abortion is not protected by a constitutional guarantee of privacy, the issue will revert to the states. If it goes to the states, some, perhaps many, will ban abortion. If abortion is made a crime, then surely the woman who has one is a criminal. But, boy, do the doctrinaire suddenly turn squirrelly at the prospect of throwing women in jail.

“They never connect the dots,” says Jill June, president of Planned Parenthood of Greater Iowa.

I addressed Quindlen, and queasy pro-lifers, eleven years ago:

The aim of Quindlen’s column is to scorn the idea of jail time as punishment for a woman who procures an illegal abortion. In fact, Quindlen’s “logic” reminds me of the classic definition of chutzpah: “that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.” The chutzpah, in this case, belongs to Quindlen (and others of her ilk) who believe that a woman should not face punishment for an abortion because she has just “lost” a baby.

Balderdash! If a woman illegally aborts her child, why shouldn’t she be punished by a jail term (at least)? She would be punished by jail (or confinement in a psychiatric prison) if she were to kill her new-born infant, her toddler, her ten-year old, and so on. What’s the difference between an abortion and murder? None. (Read this, then follow the links in this post.)

Quindlen (who predictably opposes capital punishment) asks “How much jail time?” in a cynical effort to shore up the anti-life front. It ain’t gonna work, lady.

See also “Abortion Q & A“.


ILLEGAL IMMIGRATION AND THE WELFARE STATE

Add this to what I say in “The High Cost of Untrammeled Immigration“:

In a new analysis of the latest numbers [by the Center for Immigration Studies], from 2014, 63 percent of non-citizens are using a welfare program, and it grows to 70 percent for those here 10 years or more, confirming another concern that once immigrants tap into welfare, they don’t get off it.

See also “Immigration and Crime” and “Immigration and Intelligence“.

Milton Friedman, thinking like an economist, favored open borders only if the welfare state were abolished. But there’s more to a country than GDP. (See “Genetic Kinship and Society“.) Which leads me to…


PROSPERITY ISN’T EVERYTHING

Patrick T. Brown writes about Oren Cass’s The Once and Future Worker:

Responding to what he cutely calls “economic piety”—the belief that GDP per capita defines a country’s well-being, and the role of society is to ensure the economic “pie” grows sufficiently to allow each individual to consume satisfactorily—Cass offers a competing hypothesis….

[A]s Cass argues, if well-being is measured by considerations in addition to economic ones, a GDP-based measurement of how our society is doing might not only be insufficient now, but also more costly over the long term. The definition of success in our public policy (and cultural) efforts should certainly include some economic measures, but not at the expense of the health of community and family life.

Consider this line, striking in the way it subverts the dominant paradigm: “If, historically, two-parent families could support themselves with only one parent working outside the home, then something is wrong with ‘growth’ that imposes a de facto need for two incomes.”…

People need to feel needed. The hollowness at the heart of American—Western?—society can’t be satiated with shinier toys and tastier brunches. An overemphasis on production could, of course, be as fatal as an overemphasis on consumption, and certainly the realm of the meritocrats gives enough cause to worry on this score. But as a matter of policy—as a means of not just sustaining our fellow citizen in times of want but of helping him feel needed and essential in his family and community life—Cass’s redefinition of “efficiency” to include not just its economic sense but some measure of social stability and human flourishing is welcome. Frankly, it’s past due as a tenet of mainstream conservatism.

Cass goes astray by offering governmental “solutions”; for example:

Cass suggests replacing the current Earned Income Tax Credit (along with some related safety net programs) with a direct wage subsidy, which would be paid to workers by the government to “top off” their current wage. In lieu of a minimum wage, the government would set a “target wage” of, say, $12 an hour. If an employee received $9 an hour from his employer, the government would step up to fill in that $3 an hour gap.

That’s no solution at all, inasmuch as the cost of a subsidy must be borne by someone. The someone, ultimately, is the low-wage worker whose wage is low because he is less productive than he would be. Why is he less productive? Because the high-income person who is taxed for the subsidy has that much less money to invest in business capital that raises productivity.

The real problem is that America — and the West, generally — has turned into a spiritual and cultural wasteland. See, for example, “A Century of Progress?“, “Prosperity Isn’t Everything“, and “James Burnham’s Misplaced Optimism“.


GOOGLE ET AL. AS STATE ACTORS

In “Preemptive (Cold) Civil War” (03/18/18) I recommended treating Google et al. as state actors to enforce the free-speech guarantee of the First Amendment against them:

The Constitution is the supreme law of the land. (Article V.)

Amendment I to the Constitution says that “Congress shall make no law … abridging the freedom of speech”.

Major entities in the telecommunications, news, entertainment, and education industries have exerted their power to suppress speech because of its content…. The collective actions of these entities — many of them government- licensed and government-funded — effectively constitute a governmental violation of the Constitution’s guarantee of freedom of speech (See Smith v. Allwright, 321 U.S. 649 (1944) and Marsh v. Alabama, 326 U.S. 501 (1946).)

I recommended presidential action. But someone has moved the issue to the courts. Tucker Higgins has the story:

The Supreme Court has agreed to hear a case that could determine whether users can challenge social media companies on free speech grounds.

The case, Manhattan Community Access Corp. v. Halleck, No. 17-702, centers on whether a private operator of a public access television network is considered a state actor, which can be sued for First Amendment violations.

The case could have broader implications for social media and other media outlets. In particular, a broad ruling from the high court could open the country’s largest technology companies up to First Amendment lawsuits.

That could shape the ability of companies like Facebook, Twitter and Alphabet’s Google to control the content on their platforms as lawmakers clamor for more regulation and activists on the left and right spar over issues related to censorship and harassment.

The Supreme Court accepted the case on [October 12]….

the court of Chief Justice John Roberts has shown a distinct preference for speech cases that concern conservative ideology, according to an empirical analysis conducted by researchers affiliated with Washington University in St. Louis and the University of Michigan.

The analysis found that the justices on the court appointed by Republican presidents sided with conservative speech nearly 70 percent of the time.

“More than any other modern Court, the Roberts Court has trained its sights on speech promoting conservative values,” the authors found.

Here’s hoping.


THE TRANSGENDER TRAP

Babette Francis and John Ballantine tell it like it is:

Dr. Paul McHugh, the University Distinguished Service Professor of Psychiatry at Johns Hopkins Medical School and the former psychiatrist-in-chief at Johns Hopkins Hospital, explains that “‘sex change’ is biologically impossible.” People who undergo sex-reassignment surgery do not change from men to women or vice versa.

In reality, gender dysphoria is more often than not a passing phase in the lives of certain children. The American Psychological Association’s Handbook of Sexuality and Psychology has revealed that, before the widespread promotion of transgender affirmation, 75 to 95 percent of pre-pubertal children who were uncomfortable or distressed with their biological sex eventually outgrew that distress. Dr. McHugh says: “At Johns Hopkins, after pioneering sex-change surgery, we demonstrated that the practice brought no important benefits. As a result, we stopped offering that form of treatment in the 1970s.”…

However, in today’s climate of political correctness, it is more than a health professional’s career is worth to offer a gender-confused patient an alternative to pursuing sex-reassignment. In some states, as Dr. McHugh has noted, “a doctor who would look into the psychological history of a transgendered boy or girl in search of a resolvable conflict could lose his or her license to practice medicine.”

In the space of a few years, these sorts of severe legal prohibitions—usually known as “anti-reparative” and “anti-conversion” laws—have spread to many more jurisdictions, not only across the United States, but also in Canada, Britain, and Australia. Transgender ideology, it appears, brooks no opposition from any quarter….

… Brown University succumbed to political pressure when it cancelled authorization of a news story of a recent study by one of its assistant professors of public health, Lisa Littman, on “rapid-onset gender dysphoria.” Science Daily reported:

Among the noteworthy patterns Littman found in the survey data: twenty-one percent of parents reported their child had one or more friends who become transgender-identified at around the same time; twenty percent reported an increase in their child’s social media use around the same time as experiencing gender dysphoria symptoms; and forty-five percent reported both.

A former dean of Harvard Medical School, Professor Jeffrey S. Flier, MD, defended Dr. Littman’s freedom to publish her research and criticized Brown University for censoring it. He said:

Increasingly, research on politically charged topics is subject to indiscriminate attack on social media, which in turn can pressure school administrators to subvert established norms regarding the protection of free academic inquiry. What’s needed is a campaign to mobilize the academic community to protect our ability to conduct and communicate such research, whether or not the methods and conclusions provoke controversy or even outrage.

The examples described above of the ongoing intimidation—sometimes, actual sackings—of doctors and academics who question transgender dogma represent only a small part of a very sinister assault on the independence of the medical profession from political interference. Dr. Whitehall recently reflected: “In fifty years of medicine, I have not witnessed such reluctance to express an opinion among my colleagues.”

For more about this outrage see “The Transgender Fad and Its Consequences“.

Macroeconomic Modeling Revisited

Modeling is not science. Take Professor Ray Fair, for example. He teaches macroeconomic theory, econometrics, and macroeconometric models at Yale University. He has been plying his trade since 1968, first at Princeton, then at M.I.T., and (since 1974) at Yale. Those are big-name schools, so I assume that Prof. Fair is a big name in his field.

Well, since 1983 Professor Fair has been forecasting changes in real GDP four quarters ahead. He has made dozens of forecasts based on a model that he has tweaked many times over the years. The current model can be found here. His forecasting track record is here.

How has he done? Here’s how:

1. The mean absolute error of his forecasts is 70 percent; that is, on average his predictions vary by 70 percent from actual rates of growth.

2. The median absolute error of his forecasts is 33 percent.

3. His forecasts are systematically biased: too high when real, four-quarter GDP growth is less than 3 percent; too low when real, four-quarter GDP growth is greater than 3 percent. (See figure 1.)

4. His forecasts have grown generally worse — not better — with time. (See figure 2.)

5. In sum, the overall predictive value of the model is weak. (See figures 3 and 4.)

FIGURE 1

Figures 1-4 are derived from The Forecasting Record of the U.S. Model, Table 4: Predicted and Actual Values for Four-Quarter Real Growth, at Fair’s website.

FIGURE 2

FIGURE 3

FIGURE 4

Given the foregoing, you might think that Fair’s record reflects the persistent use of a model that’s too simple to capture the dynamics of a multi-trillion-dollar economy. But you’d be wrong. The model changes quarterly. This page lists changes only since late 2009; there are links to archives of earlier versions, but those are password-protected.

As for simplicity, the model is anything but simple. For example, go to Appendix A: The U.S. Model: July 29, 2016, and you’ll find a six-sector model comprising 188 equations and hundreds of variables.

Could I do better? Well, I’ve done better, with the simple model that I devised to estimate the Rahn Curve. It’s described in “The Rahn Curve in Action“, which is part III of “Economic Growth Since World War II“.

The theory behind the Rahn Curve is simple — but not simplistic. A relatively small government with powers limited mainly to the protection of citizens and their property is worth more than its cost to taxpayers because it fosters productive economic activity (not to mention liberty). But additional government spending hinders productive activity in many ways, which are discussed in Daniel Mitchell’s paper, “The Impact of Government Spending on Economic Growth.” (I would add to Mitchell’s list the burden of regulatory activity, which grows even when government does not.)

What does the Rahn Curve look like? Mitchell estimates this relationship between government spending and economic growth:

Rahn curve_Mitchell

The curve is dashed rather than solid at low values of government spending because it has been decades since the governments of developed nations have spent as little as 20 percent of GDP. But as Mitchell and others note, the combined spending of governments in the U.S. was 10 percent (and less) until the eve of the Great Depression. And it was in the low-spending, laissez-faire era from the end of the Civil War to the early 1900s that the U.S. enjoyed its highest sustained rate of economic growth.

Elsewhere, I estimated the Rahn curve that spans most of the history of the United States. I came up with this relationship (terms modified for simplicity (with a slight cosmetic change in terminology):

Yg = 0.054 -0.066F

To be precise, it’s the annualized rate of growth over the most recent 10-year span (Yg), as a function of F (fraction of GDP spent by governments at all levels) in the preceding 10 years. The relationship is lagged because it takes time for government spending (and related regulatory activities) to wreak their counterproductive effects on economic activity. Also, I include transfer payments (e.g., Social Security) in my measure of F because there’s no essential difference between transfer payments and many other kinds of government spending. They all take money from those who produce and give it to those who don’t (e.g., government employees engaged in paper-shuffling, unproductive social-engineering schemes, and counterproductive regulatory activities).

When F is greater than the amount needed for national defense and domestic justice — no more than 0.1 (10 percent of GDP) — it discourages productive, growth-producing, job-creating activity. And because government spending weighs most heavily on taxpayers with above-average incomes, higher rates of F also discourage saving, which finances growth-producing investments in new businesses, business expansion, and capital (i.e., new and more productive business assets, both physical and intellectual).

I’ve taken a closer look at the post-World War II numbers because of the marked decline in the rate of growth since the end of the war (Figure 2).

Here’s the revised result, which accounts for more variables:

Yg = 0.0275 -0.340F + 0.0773A – 0.000336R – 0.131P

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).

The r-squared of the equation is 0.74 and the F-value is 1.60E-13. The p-values of the intercept and coefficients are 0.093, 3.98E-08, 4.83E-09, 6.05E-07, and 0.0071. The standard error of the estimate is 0.0049, that is, about half a percentage point.

Here’s how the equation stacks up against actual 10-year rates of real GDP growth:

What does the new equation portend for the next 10 years? Based on the values of F, A, R, and P for 2008-2017, the real rate of growth for the next 10 years will be about 2.0 percent.

There are signs of hope, however. The year-over-year rate of real growth in the four most recent quarters (2017Q4 – 2018Q3) were 2.4, 2.6, 2.9, and 3.0 percent, as against the dismal rates of 1.4, 1.2, 1.5, and 1.8 percent for four quarters of 2016 — Obama’s final year in office. A possible explanation is the election of Donald Trump and the well-founded belief that his tax and regulatory policies would be more business-friendly.

I took the data set that I used to estimate the new equation and made a series of out-of-sample estimates of growth over the next 10 years. I began with the data for 1946-1964 to estimate the growth for 1965-1974. I continued by taking the data for 1946-1965 to estimate the growth for 1966-1975, and so on, until I had estimated the growth for every 10-year period from 1965-1974 through 2008-2017. In other words, like Professor Fair, I updated my model to reflect new data, and I estimated the rate of economic growth in the future. How did I do? Here’s a first look:

FIGURE 5

For ease of comparison, I made the scale of the vertical axis of figure 5 the same as the scale of the vertical axis of figure 2. It’s obvious that my estimate of the Rahn Curve does a much better job of predicting the real rate of GDP growth than does Fair’s model.

Not only that, but my model is less biased:

FIGURE 6

The systematic bias reflected in figure 6 is far weaker than the systematic bias in Fair’s estimates (figure 1).

Finally, unlike Fair’s model (figure 4), my model captures the downward trend in the rate of real growth:

FIGURE 7

The moral of the story: It’s futile to build complex models of the economy. They can’t begin to capture the economy’s real complexity, and they’re likely to obscure the important variables — the ones that will determine the future course of economic growth.

A final note: Elsewhere (e.g., here) I’ve disparaged economic aggregates, of which GDP is the apotheosis. And yet I’ve built this post around estimates of GDP. Am I contradicting myself? Not really. There’s a rough consistency in measures of GDP across time, and I’m not pretending that GDP represents anything but an estimate of the monetary value of those products and services to which monetary values can be ascribed.

As a practical matter, then, if you want to know the likely future direction and value of GDP, stick with simple estimation techniques like the one I’ve demonstrated here. Don’t get bogged down in the inconclusive minutiae of a model like Professor Fair’s.

Economic Growth Since World War II, Updated

Here, using data through September 2018. I will tantalize you with a few tid-bits:

(Note: The first, and brief, post-war cycle is omitted.)

The Rahn Curve depicts the relationship between government spending, as a share of the economy, and the rate of growth. My analysis, which takes into account more than government spending, yields this result:

For a full explanation, go to III. The Rahn Curve in Action.

No Recession on the Horizon — As of Now

UPDATED 03/02/19

Henry Hazlett explains the relationship between inflation and recession:

[W]hen an inflation has long gone on at a certain rate, the public expects it to continue at that rate. More and more people’s actions and demands are adjusted to that expectation. This affects sellers, buyers, lenders, borrowers, workers, employers. Sellers of raw materials ask more from fabri­cators, and fabricators are willing to pay more. Lenders ask more from borrowers. They put a “price premium” on top of their normal interest rate to offset the ex­pected decline in purchasing pow­er of the dollars they lend. Workers insist on higher wages to compensate them not only for present higher prices but against their expectation of still higher prices in the future.

The result is that costs begin to rise at least as fast as final prices. Real profit margins are no longer greater than before the inflation began. In brief, inflation at the old rate has ceased to have any stimulative effect. Only an in­creased rate of inflation, only a rate of inflation greater than gen­erally expected, only an acceler­ative rate of inflation, can con­tinue to have a stimulating effect.

But in time even an accelerative rate of inflation is not enough. Expectations, which at first lagged behind the actual rate of inflation, begin to move ahead of it. So costs often rise faster than final prices. Then inflation actu­ally has a depressing effect on business.

This would be the situation even if all retail prices tended to go up proportionately, and all costs tended to go up proportionately. But this never happens — a crucial fact that is systematically con­cealed from those economists who chronically fix their attention on index numbers or similar aver­ages. These economists do see that the average of wholesale prices usually rises faster than the aver­age of retail consumer prices, and that the average of wage-rates also usually rises faster than the average of consumer prices. But what they do not notice until too late is that market prices and costs are all rising unevenly, dis­cordantly, and even disruptively. Price and cost relationships be­come increasingly discoordinated. In an increasing number of in­dustries profit margins are being wiped out, sales are declining, losses are setting in, and huge layoffs are taking place. Unem­ployment in one line is beginning to force unemployment in others. [“How Inflation Breeds Recession“, Foundation for Economic Education, March 1, 1975]

Inflation is a symptom — or early-warning signal — of disruptions that lead to recessions. It does not cause recessions. Here’s some evidence, based on post-World War II experience:


Derived from GDP statistics available here and CPI statistics available here. The correlation coefficient is highly significant, with a p-value <.0001.

Correlations where the change in CPI leads the change in GDP are uniformly and significantly better than correlations where there is no lead or the change in GDP leads the change in CPI. Further, the correlation where the change in CPI leads the change in GDP by 3 quarters is better than correlations with 1, 2, and 4-quarter lead — but not by much. So there is good statistical evidence on which to base my claim that the change CPI is a leading indicator of recessions.

Specifically, the strongest signal is a rising quarterly change in CPI:


Recessions are defined here, in the discussion that follows figure 1.

The good news is that, as of now, CPI isn’t signalling a recession: annualized quarterly changes aren’t on the rise.

Is the Unemployment Rate Really at a 49-Year Low?

I give due credit to President Trump, whose pro-business rhetoric and policies are fueling a robust recovery from the Obama-induced economic doldrums. But I am compelled to note that there is a long row to hoe when it comes to removing decades’ worth of regulatory shackles from the economy.

As it happens, the real unemployment rate, as I measure it, has receded not to its 1969 level, as advertised, but to a level attained in 2009:

Here’s my explanation:

Since the first four months of 2000, when the labor-force participation rate peaked at 67.3 percent, it declined to 62.3 percent in 2015 before rebounding slightly to a range between 62.7 and 63 percent. It now stands at 62.7 percent.

Further, workers who were pushed into part-time status during the Great Recession were not as fully employed as they were when they were full-time workers. The nominal unemployment rate doesn’t reflect that shift, thus further understating the real unemployment rate.

I constructed the actual unemployment rate by adjusting the nominal rate for (a) the change in the labor-force participation rate and (b) the change in the fraction of workers in full-time status.

The sad fact is that the real unemployment rate didn’t peak at 10 percent in 2010, nor has it declined steadily since then. In fact, the rate peaked in the range of 13 to 14 percent, and remained in that range (with a few exceptions) from September 2009 to February 2014.

The real rate is now 10.3 percent — not the 3.7 percent advertised by the Bureau of Labor Statistics. The last time the real rate was lower than 10.3 percent was in January 2009.

New Pages

In case you haven’t noticed the list in the right sidebar, I have converted several classic posts to pages, for ease of access. Some have new names; many combine several posts on the same subject:

Abortion Q & A

Climate Change

Constitution: Myths and Realities

Economic Growth Since World War II

Intelligence

Keynesian Multiplier: Fiction vs. Fact

Leftism

Movies

Spygate

Rethinking Free Trade III

From Part I:

Economists defend free trade and open borders because, in the aggregate, such things — in the long run — lead to greater economic efficiency and thus to greater total output (measured in constant dollars). And they are right about that. I have no doubt of it. But, to paraphrase John Maynard Keynes, in the long run we are all dead, and in the meantime some of us pay for the betterment of others.

Moreover, there are economists and others who like to conjoin the economic truth about the long-run consequences of free trade and open borders with statements about liberty: People ought to be free to exchange goods and services voluntarily. People ought to be free to live where they like.

Only a jejune anarchist will take such pronouncements as absolutes. Murder for hire is almost almost universally disapproved, as are many other crimes, even in this “enlightened”age. And I am unaware of a movement among affluent leftists to open their living rooms to the homeless, nor to repeal laws against trespass.

The question is, as always, where to strike a balance between the interests of those who benefit from free trade and open borders, and the interests of those for whom such things mean loss of income or higher taxes. How do the gains that accrue to some (e.g., less-expensive Lexi and abundant, low-priced nanny services) offset the burdens borne by working-class taxpayers whose jobs move overseas and whose school taxes rise to cover the costs of educating migrant children?

I ask these questions in connection with a broader issue: the purpose of our national government….

To put it bluntly but correctly, the national government exists not for the benefit of the people of the whole world or any part of it outside the United States, but for the benefit of the citizens of the United States.

From Part II:

[T]here will be in the short run (and sometimes even in the long run) a downward shift in the demand for labor in some sectors of the economy due to actions taken by foreign governments. Those actions [include] direct subsidies to industries that export goods to the U.S., … indirect subsidies in the form of tariffs and quotas on goods imported from the U.S. [, and the manipulation of exchange rates to make foreign goods cheaper relative to U.S.-made goods].

I have seen “libertarian” economists justify direct subsidies because they benefit American consumers. (The same economists are glaringly silent about the disbenefits to American workers whose jobs are lost because of the subsidies.) It is jarring to read justifications of that kind from “libertarians”, who are usually quick to put Americans and foreigners on the same plane; for example, by promoting and praising “open borders” despite considerable disbenefits to some Americans. (I am thinking of  those whose neighborhoods are threatened by gangs of illegals. I am also thinking of those who pay higher taxes to subsidize the education, shelter, sustenance, and schooling of illegals — but who, unlike more affluent Americans, don’t engage the services of low-priced nannies and yard workers.)

And I must point out that those foreign-government subsidies aren’t free. They’re paid for, one way or another, by the citizens of foreign countries. Why would a “libertarian” transnationalist overlook such a thing? To justify “free trade” I guess.

It’s only fair to note that the U.S. government subsidizes American industries in ways that harm foreigners, that is, through direct subsidies, tariffs on imports, and import quotas. But any gains to workers in the industries thus subsidized do not offset the harm that foreign-government subsidies do to workers in other American industries.

All in all, international trade is a real mess. (So is domestic trade, given the myriad distortions wrought by taxes and regulations.) But it’s fair to say that some American workers are harmed by what can only be called unfair practices in international trade. The harm to them isn’t offset by the gains to other Americans. Only an economist or socialist would think otherwise.

In sum, I have come around to Mr. Trump’s view of this issue. Trade should be conducted on a level playing field. Given that that won’t happen soon — if ever — what should be done for American workers who are harmed by unfair trade? Stay tuned.

One thing that shouldn’t be done for American workers is to establish government-run “retraining” programs, which would enable civil servants and contractors to feed at the public trough while doing little or nothing for workers. What would the workers be retrained to do? Government entities are notoriously good at stasis, and notoriously bad at responding to market signals.

Then there is the challenge of identifying and quantifying the effects of unfair trade on specific American workers. I can see it now: quotas for persons of color, persons with gender dysphoria, persons of the female persuasion, etc., etc., etc. All of which would add up to another vast misallocation of resources.

What about vouchers instead of government programs? See the preceding paragraph.

Here’s how I would do it:

  • Estimate the amount by which the price of a foreign product or service is reduced by the actions of foreign governments or their proxies.
  • Add that amount to the price as a tariff.
  • Regularly review and adjust the schedule of tariffs.

All other trade would be unencumbered, excepting:

  • the importation of products and services otherwise restricted by U.S. law (e.g., tanks, artillery pieces)
  • the exportation of products and services that are used directly in the development, manufacture, and operation of sensitive military systems (e.g., fighter aircraft, anti-missile defenses).

Selective tariffs, based on actual costs of production, would encourage the efficient use of resources and protect American workers who would otherwise be victimized by unfair trade. But that’s it. Sweeping tariffs on imports — just to “protect” American workers — do more than protect them. They also penalize American consumers, most of whom are also workers.

No “solution” can be perfect in an imperfect (i.e., real) world. That’s the best I can do for now.

Not-So-Random Thoughts (XXII)

This is a long-overdue entry; the previous one was posted on October 4, 2017. Accordingly, it is a long entry, consisting of these parts:

Censorship and Left-Wing Bias on the Web

The Real Collusion Story

“Suicide” of the West

Evolution, Intelligence, and Race

Will the Real Fascists Please Stand Up?

Consciousness

Empathy Is Over-Rated

“Nudging”



CENSORSHIP AND LEFT-WING BIAS ON THE WEB

It’s a hot topic these days. See, for example, this, this, this, this, and this. Also, this, which addresses Google’s slanting of search results about climate research. YouTube is at it, too.

A lot of libertarian and conservative commentators are loath to demand governmental intervention because the censorship is being committed by private companies: Apple, Facebook, Google, Twitter, YouTube, et al. Some libertarians and conservatives are hopeful that libertarian-conservative options will be successful (e.g., George Gilder). I am skeptical. I have seen and tried some of those options, and they aren’t in the same league as the left-wingers, which have pretty well locked up users and advertisers. (It’s called path-dependence.) And even if they finally succeed in snapping up a respectable share of the information market, the damage will have been done; libertarians and conservatives will have been marginalized, criminalized, and suppressed.

The time to roll out the big guns is now, as I explain here:

Given the influence that Google and the other members of the left-wing information-technology oligarchy exert in this country, that oligarchy is tantamount to a state apparatus….

These information-entertainment-media-academic institutions are important components of what I call the vast left-wing conspiracy in America. Their purpose and effect is the subversion of the traditional norms that made America a uniquely free, prosperous, and vibrant nation….

What will happen in America if that conspiracy succeeds in completely overthrowing “bourgeois culture”? The left will frog-march America in whatever utopian direction captures its “feelings” (but not its reason) at the moment…

Complete victory for the enemies of liberty is only a few election cycles away. The squishy center of the American electorate — as is its wont — will swing back toward the Democrat Party. With a Democrat in the White House, a Democrat-controlled Congress, and a few party switches in the Supreme Court, the dogmas of the information-entertainment-media-academic complex will become the law of the land….

[It is therefore necessary to] enforce the First Amendment against information-entertainment-media-academic complex. This would begin with action against high-profile targets (e.g., Google and a few large universities that accept federal money). That should be enough to bring the others into line. If it isn’t, keep working down the list until the miscreants cry uncle.

What kind of action do I have in mind?…

Executive action against state actors to enforce the First Amendment:

Amendment I to the Constitution says that “Congress shall make no law … abridging the freedom of speech”.

Major entities in the telecommunications, news, entertainment, and education industries have exerted their power to suppress speech because of its content. (See appended documentation.) The collective actions of these entities — many of them government- licensed and government-funded — effectively constitute a governmental violation of the Constitution’s guarantee of freedom of speech (See Smith v. Allwright, 321 U.S. 649 (1944) and Marsh v. Alabama, 326 U.S. 501 (1946).)

And so on. Read all about it here.



THE REAL COLLUSION STORY

Not quite as hot, but still in the news, is Spygate. Collusion among the White House, CIA, and FBI (a) to use the Trump-Russia collusion story to swing the 2016 election to Clinton, and (b) failing that, to cripple Trump’s presidency and provide grounds for removing him from office. The latest twist in the story is offered by Byron York:

Emails in 2016 between former British spy Christopher Steele and Justice Department official Bruce Ohr suggest Steele was deeply concerned about the legal status of a Putin-linked Russian oligarch, and at times seemed to be advocating on the oligarch’s behalf, in the same time period Steele worked on collecting the Russia-related allegations against Donald Trump that came to be known as the Trump dossier. The emails show Steele and Ohr were in frequent contact, that they intermingled talk about Steele’s research and the oligarch’s affairs, and that Glenn Simpson, head of the dirt-digging group Fusion GPS that hired Steele to compile the dossier, was also part of the ongoing conversation….

The newly-released Ohr-Steele-Simpson emails are just one part of the dossier story. But if nothing else, they show that there is still much for the public to learn about the complex and far-reaching effort behind it.

My take is here. The post includes a long list of related — and enlightening — reading, to which I’ve just added York’s piece.



“SUICIDE” OF THE WEST

Less “newsy”, but a hot topic on the web a few weeks back, is Jonah Goldberg’s Suicide of the West. It received mixed reviews. It is also the subject of an excellent non-review by Hubert Collins.

Here’s my take:

The Framers held a misplaced faith in the Constitution’s checks and balances (see Madison’s Federalist No. 51 and Hamilton’s Federalist No. 81). The Constitution’s wonderful design — containment of a strictly limited central government through horizontal and vertical separation of powers — worked rather well until the Progressive Era. The design then cracked under the strain of greed and the will to power, as the central government began to impose national economic regulation at the behest of muckrakers and do-gooders. The design then broke during the New Deal, which opened the floodgates to violations of constitutional restraint (e.g., Medicare, Medicaid, Obamacare,  the vast expansion of economic regulation, and the destruction of civilizing social norms), as the Supreme Court has enabled the national government to impose its will in matters far beyond its constitutional remit.

In sum, the “poison pill” baked into the nation at the time of the Founding is human nature, against which no libertarian constitution is proof unless it is enforced resolutely by a benign power.

See also my review essay on James Burnham’s Suicide of the West: An Essay on the Meaning and Destiny of Liberalism.



EVOLUTION, INTELLIGENCE, AND RACE

Evolution is closely related to and intertwined with intelligence and race. Two posts and a page of mine (here, here, and here) delve some of the complexities. The latter of the two posts draws on David Stove‘s critique of evolutionary theory, “So You Think You Are a Darwinian?“.

Fred Reed is far more entertaining than Stove, and no less convincing. His most recent columns on evolution are here and here. In the first of the two, he writes this:

What are some of the problems with official Darwinism? First, the spontaneous generation of life has not been replicated…. Nor has anyone assembled in the laboratory a chemical structure able to metabolize, reproduce, and thus to evolve. It has not been shown to be mathematically possible….

Sooner or later, a hypothesis must be either confirmed or abandoned. Which? When? Doesn’t science require evidence, reproducibility, demonstrated theoretical possibility? These do not exist….

Other serious problems with the official story: Missing intermediate fossils–”missing links”– stubbornly remain missing. “Punctuated equilibrium,” a theory of sudden rapid evolution invented to explain the lack of fossil evidence, seems unable to generate genetic information fast enough. Many proteins bear no resemblance to any others and therefore cannot have evolved from them. On and on.

Finally, the more complex an event, the less likely it is to  occur by chance. Over the years, cellular mechanisms have been found to be  ever more complex…. Recently with the discovery of epigenetics, complexity has taken a great leap upward. (For anyone wanting to subject himself to such things, there is The Epigenetics Revolution. It is not light reading.)

Worth noting is that  that the mantra of evolutionists, that “in millions and millions and billions of years something must have evolved”–does not necessarily hold water. We have all heard of Sir James Jeans assertion that a monkey, typing randomly, would eventually produce all the books in the British Museum. (Actually he would not produce a single chapter in the accepted age of the universe, but never mind.) A strong case can be made that spontaneous generation is similarly of mathematically vanishing probability. If evolutionists could prove the contrary, they would immensely strengthen their case. They haven’t….

Suppose that you saw an actual monkey pecking at a keyboard and, on examining his output, saw that he was typing, page after page, The Adventures of Tom Sawyer, with no errors.

You would suspect fraud, for instance that the typewriter was really a computer programmed with Tom. But no, on inspection you find that it is a genuine typewriter. Well then, you think, the monkey must be a robot, with Tom in RAM. But  this too turns out to be wrong: The monkey in fact is one. After exhaustive examination, you are forced to conclude that Bonzo really is typing at random.

Yet he is producing Tom Sawyer. This being impossible, you would have to conclude that something was going on that you did not understand.

Much of biology is similar. For a zygote, barely visible, to turn into a baby is astronomically improbable, a suicidal assault on Murphy’s Law. Reading embryology makes this apparent. (Texts are prohibitively expensive, but Life Unfolding serves.) Yet every step in the process is in accord with chemical principles.

This doesn’t make sense. Not, anyway, unless one concludes that something deeper is going on that we do not understand. This brings to mind several adages that might serve to ameliorate our considerable arrogance. As Haldane said, “The world is not only queerer than we think, but queerer than we can think.” Or Fred’s Principle, “The smartest of a large number of hamsters is still a hamster.”

We may be too full of ourselves.

On the subject of race, Fred is no racist, but he is a realist; for example:

We have black football players refusing to stand for the national anthem.  They think that young black males are being hunted down by cops. Actually of  course black males are hunting each other down in droves but black football players apparently have no objection to this. They do not themselves convincingly suffer discrimination. Where else can you get paid six million green ones a year for grabbing something and running? Maybe in a district of jewelers.

The non-standing is racial hostility to whites. The large drop in attendance of games, of television viewership, is racial blowback by whites. Millions of whites are thinking, that, if America doesn’t suit them, football players can afford a ticket to Kenya. While this line of reasoning is tempting, it doesn’t really address the problem and so would be a waste of time.

But what, really, is the problem?

It is one that dare not raise its head: that blacks cannot compete with whites, Asians, or Latin-Americans. Is there counter-evidence? This leaves them in an incurable state of resentment and thus hostility. I think we all know this: Blacks know it, whites know it, liberals know it, and conservatives know it. If any doubt this, the truth would be easy enough to determine with carefully done tests. [Which have been done.] The furious resistance to the very idea of measuring intelligence suggests awareness of the likely outcome. You don’t avoid a test if you expect good results.

So we do nothing while things worsen and the world looks on astounded. We have mob attacks by Black Lives Matter, the never-ending Knockout Game, flash mobs looting stores and subway trains, occasional burning cities, and we do nothing. Which makes sense, because there is nothing to be done short of restructuring the country.

Absolute, obvious, unacknowledged disaster.

Regarding which: Do we really want, any of us, what we are doing? In particular, has anyone asked ordinary blacks, not black pols and race hustlers. “Do you really want to live among whites, or would you prefer a safe middle-class black neighborhood? Do your kids want to go to school with whites? If so, why? Do you want them to? Why? Would you prefer black schools to decide what and how to teach your children? Keeping whites out of it? Would you prefer having only black police in your neighborhood?”

And the big one: “Do you, and the people you actually know in your neighborhood, really want integration? Or is it something imposed on you by oreo pols and white ideologues?”

But these are things we must never think, never ask.

Which brings me to my most recent post about blacks and crime, which is here. As for restructuring the country, Lincoln saw what was needed.

The touchy matter of intelligence — its heritability and therefore its racial component — is never far from my thoughts. I commend to you Gregory Hood’s excellent piece, “Forbidden Research: How the Study of Intelligence is Crippled by Ideology“. Hood mentions some of the scientists whose work I have cited in my writings about intelligence and its racial component. See this page, for example, which give links to several related posts and excerpts of relevant research about intelligence. (See also the first part of Fred Reed’s post “Darwin’s Vigilantes, Richard Sternberg, and Conventional Pseudoscience“.)

As for the racial component, my most recent post on the subject (which provides links to related posts) addresses the question “Why study race and intelligence?”. Here’s why:

Affirmative action and similar race-based preferences are harmful to blacks. But those preferences persist because most Americans do not understand that there are inherent racial differences that prevent blacks, on the whole, from doing as well as whites (and Asians) in school and in jobs that require above-average intelligence. But magical thinkers (like [Professor John] McWhorter) want to deny reality. He admits to being driven by hope: “I have always hoped the black–white IQ gap was due to environmental causes.”…

Magical thinking — which is rife on the left — plays into the hands of politicians, most of whom couldn’t care less about the truth. They just want the votes of those blacks who relish being told, time and again, that they are “down” because they are “victims”, and Big Daddy government will come to their rescue. But unless you are the unusual black of above-average intelligence, or the more usual black who has exceptional athletic skills, dependence on Big Daddy is self-defeating because (like a drug addiction) it only leads to more of the same. The destructive cycle of dependency can be broken only by willful resistance to the junk being peddled by cynical politicians.

It is for the sake of blacks that the truth about race and intelligence ought to be pursued — and widely publicized. If they read and hear the truth often enough, perhaps they will begin to realize that the best way to better themselves is to make the best of available opportunities instead of moaning abut racism and relying on preferences and handouts.



WILL THE REAL FASCISTS PLEASE STAND UP?

I may puke if I hear Trump called a fascist one more time. As I observe here,

[t]he idea … that Trump is the new Hitler and WaPo [The Washington Post] and its brethren will keep us out of the gas chambers by daring to utter the truth (not)…. is complete balderdash, inasmuch as WaPo and its ilk are enthusiastic hand-maidens of “liberal” fascism.

“Liberals” who call conservatives “fascists” are simply engaging in psychological projection. This is a point that I address at length here.

As for Mr. Trump, I call on Shawn Mitchell:

A lot of public intellectuals and writers are pushing an alarming thesis: President Trump is a menace to the American Republic and a threat to American liberties. The criticism is not exclusively partisan; it’s shared by prominent conservatives, liberals, and libertarians….

Because so many elites believe Trump should be impeached, or at least shunned and rendered impotent, it’s important to agree on terms for serious discussion. Authoritarian means demanding absolute obedience to a designated authority. It means that somewhere, someone, has unlimited power. Turning the focus to Trump, after 15 months in office, it’s impossible to assign him any of those descriptions….

…[T]here are no concentration camps or political arrests. Rather, the #Resistance ranges from fervent to rabid. Hollywood and media’s brightest stars regularly gather at galas to crudely declare their contempt for Trump and his deplorable supporters. Academics and reporters lodged in elite faculty lounges and ivory towers regularly malign his brains, judgment, and temperament. Activists gather in thousands on the streets to denounce Trump and his voters. None of these people believe Trump is an autocrat, or, if they do they are ignorant of the word’s meaning. None fear for their lives, liberty, or property.

Still, other elites pile on. Federal judges provide legal backup, contriving frivolous theories to block administrations moves. Some rule Trump lacks even the authority to undo by executive order things Obama himself introduced by executive order. Governors from states like California, Oregon and New York announce they will not cooperate with administration policy (current law, really) on immigration, the environment, and other issues.

Amidst such widespread rebellion, waged with impunity against the constitutionally elected president, the critics’ dark warnings that America faces a dictator are more than wrong; they are surreal and damnable. They are what amounts to the howl of that half the nation still refusing to accept election results it dislikes.

Conceding Trump lacks an inmate or body count, critics still offer theories to categorize him in genus monsterus. The main arguments cite Trump’s patented belligerent personality and undisciplined tweets, his use of executive orders; his alleged obstruction in firing James Comey and criticizing Robert Mueller, his blasts at the media, and his immigration policies. These attacks weigh less than the paper they might be printed on.

Trump’s personality doubtless is sui generis for national office. If he doesn’t occasionally offend listeners they probably aren’t listening. But so what? Personality is not policy. A sensibility is not a platform, and bluster and spittle are not coercive state action. The Human Jerk-o-meter could measure Trump in the 99th percentile, and the effect would not change one law, eliminate one right, or jail one critic.

Executive Orders are misunderstood. All modern presidents used them. There is nothing wrong in concept with executive orders. Some are constitutional some are not. What matters is whether they direct executive priorities within U.S. statutes or try to push authority beyond the law to change the rights and duties of citizens. For example, a president might order the EPA to focus on the Clean Air Act more than the Clean Water Act, or vice versa. That is fine. But, if a president orders the EPA to regulate how much people can water their lawns or what kind of lawns to plant, the president is trying to legislate and create new controls. That is unconstitutional.

Many of Obama’s executive orders were transgressive and unconstitutional. Most of Trump’s executive orders are within the law, and constitutional. However that debate turns out, though, it is silly to argue the issue implicates authoritarianism.

The partisan arguments over Trump’s response to the special counsel also miss key points. Presidents have authority to fire subordinates. The recommendation authored by Deputy Attorney General Rod Rosenstein provides abundant reason for Trump to have fired James Comey, who increasingly is seen as a bitter anti-Trump campaigner. As for Robert Mueller, criticizing is not usurping. Mueller’s investigation continues, but now readily is perceived as a target shoot, unmoored from the original accusations about Russia, in search of any reason to draw blood from Trump. Criticizing that is not dictatorial, it is reasonable.

No doubt Trump criticizes the media more than many modern presidents. But criticism is not oppression. It attacks not freedom of the press but the credibility of the press. That is civically uncomfortable, but the fact is, the war of words between Trump and the media is mutual. The media attacks Trump constantly, ferociously and very often inaccurately as Mollie Hemingway and Glenn Greenwald document from different political perspectives. Trump fighting back is not asserting government control. It is just challenging media assumptions and narratives in a way no president ever has. Reporters don’t like it, so they call it oppression. They are crybabies.

Finally, the accusation that Trump wants to enforce the border under current U.S. laws, as well as better vet immigration from a handful of failed states in the Middle East with significant militant activity hardly makes him a tyrant. Voters elected Trump to step up border enforcement. Scrutinizing immigrants from a handful of countries with known terrorist networks is not a “Muslim ban.” The idea insults the intelligence since there are about 65 majority Muslim countries the order does not touch.

Trump is not Hitler. Critics’ attacks are policy disputes, not examples of authoritarianism. The debate is driven by sore losers who are willing to erode norms that have preserved the republic for 240 years.

Amen.



CONSCIOUSNESS

For a complete change of pace I turn to a post by Bill Vallicella about consciousness:

This is an addendum to Thomas Nagel on the Mind-Body Problem. In that entry I set forth a problem in the philosophy of mind, pouring it into the mold of an aporetic triad:

1) Conscious experience is not an illusion.

2) Conscious experience has an essentially subjective character that purely physical processes do not share.

3) The only acceptable explanation of conscious experience is in terms of physical properties alone.

Note first that the three propositions are collectively inconsistent: they cannot all be true.  Any two limbs entail the negation of the remaining one. Note second that each limb exerts a strong pull on our acceptance. But we cannot accept them all because they are logically incompatible.

This is one hard nut to crack.  So hard that many, following David Chalmers, call it, or something very much like it, the Hard Problem in the philosophy of mind.  It is so hard that it drives some into the loony bin. I am thinking of Daniel Dennett and those who have the chutzpah to deny (1)….

Sophistry aside, we either reject (2) or we reject (3).  Nagel and I accept (1) and (2) and reject (3). Those of a  scientistic stripe accept (1) and (3) and reject (2)….

I conclude that if our aporetic triad has a solution, the solution is by rejecting (3).

Vallicella reaches his conclusion by subtle argumentation, which I will not attempt to parse in this space.

My view is that (2) is false because the subjective character of conscious experience is an illusion that arises from the physical properties of the central nervous system. Consciousness itself is not an illusion. I accept (1) and (3). For more, see this and this.



EMPATHY IS OVER-RATED

Andrew Scull addresses empathy:

The basic sense in which most of us use “empathy” is analogous to what Adam Smith called “sympathy”: the capacity we possess (or can develop) to see the world through the eyes of another, to “place ourselves in his situation . . . and become in some measure the same person with him, and thence from some idea of his sensations, and even feel something which, though weaker in degree, is not altogether unlike them”….

In making moral choices, many would claim that empathy in this sense makes us more likely to care about others and to consider their interests when choosing our own course of action….

Conversely, understanding others’ feelings doesn’t necessarily lead one to treating them better. On the contrary: the best torturers are those who can anticipate and intuit what their victims most fear, and tailor their actions accordingly. Here, Bloom effectively invokes the case of Winston Smith’s torturer O’Brien in Orwell’s Nineteen Eighty-four, who is able to divine the former’s greatest dread, his fear of rats, and then use it to destroy him.

Guest blogger L.P. addressed empathy in several posts: here, here, here, here, here, and here. This is from the fourth of those posts:

Pro-empathy people think less empathetic people are “monsters.” However, as discussed in part 2 of this series, Baron-Cohen, Kevin Dutton in The Wisdom of Psychopaths, and other researchers establish that empathetic people, particularly psychopaths who have both affective and cognitive empathy, can be “monsters” too.

In fact, Kevin Dutton’s point about psychopaths generally being able to blend in and take on the appearance of the average person makes it obvious that they must have substantial emotional intelligence (linked to cognitive empathy) and experience of others’ feelings in order to mirror others so well….

Another point to consider however, as mentioned in part 1, is that those who try to empathize with others by imagining how they would experience another’s situation aren’t truly empathetic. They’re just projecting their own feelings onto others. This brings to mind Jonathan Haidt’s study on morality and political orientation. On the “Identification with All of Humanity Scale,” liberals most strongly endorsed the dimension regarding identification with “everyone around the world.” (See page 25 of “Understanding Libertarian Morality: The psychological roots of an individualist ideology.”) How can anyone empathize with billions of persons about whom one knows nothing, and a great number of whom are anything but liberal?

Haidt’s finding is a terrific example of problems with self-evaluation and self-reported data – liberals overestimating themselves in this case. I’m not judgmental about not understanding everyone in the world. There are plenty of people I don’t understand either. However, I don’t think people who overestimate their ability to understand people should be in a position that allows them to tamper with, or try to “improve,” the lives of people they don’t understand….

I conclude by quoting C. Daniel Batson who acknowledges the prevailing bias when it comes to evaluating altruism as a virtue. This is from his paper, “Empathy-Induced Altruistic Motivation,” written for the Inaugural Herzliya Symposium on Prosocial Motives, Emotions, and Behavior:

[W]hereas there are clear social sanctions against unbridled self-interest, there are not clear sanctions against altruism. As a result, altruism can at times pose a greater threat to the common good than does egoism.



“NUDGING”

I have addressed Richard Thaler and Cass Sunstein’s “libertarian” paternalism and “nudging in many posts. (See this post, the list at the bottom of it, and this post.) Nothing that I have written — clever and incisive as it may be — rivals Deirdre McCloskey’s take on Thaler’s non-Nobel prize, “The Applied Theory of Bossing“:

Thaler is distinguished but not brilliant, which is par for the course. He works on “behavioral finance,” the study of mistakes people make when they talk to their stock broker. He can be counted as the second winner for “behavioral economics,” after the psychologist Daniel Kahneman. His prize was for the study of mistakes people make when they buy milk….

Once Thaler has established that you are in myriad ways irrational it’s much easier to argue, as he has, vigorously—in his academic research, in popular books, and now in a column for The New York Times—that you are too stupid to be treated as a free adult. You need, in the coinage of Thaler’s book, co-authored with the law professor and Obama adviser Cass Sunstein, to be “nudged.” Thaler and Sunstein call it “libertarian paternalism.”*…

Wikipedia lists fully 257 cognitive biases. In the category of decision-making biases alone there are anchoring, the availability heuristic, the bandwagon effect, the baseline fallacy, choice-supportive bias, confirmation bias, belief-revision conservatism, courtesy bias, and on and on. According to the psychologists, it’s a miracle you can get across the street.

For Thaler, every one of the biases is a reason not to trust people to make their own choices about money. It’s an old routine in economics. Since 1848, one expert after another has set up shop finding “imperfections” in the market economy that Smith and Mill and Bastiat had come to understand as a pretty good system for supporting human flourishing….

How to convince people to stand still for being bossed around like children? Answer: Persuade them that they are idiots compared with the great and good in charge. That was the conservative yet socialist program of Kahneman, who won the 2002 Nobel as part of a duo that included an actual economist named Vernon Smith…. It is Thaler’s program, too.

Like with the psychologist’s list of biases, though, nowhere has anyone shown that the imperfections in the market amount to much in damaging the economy overall. People do get across the street. Income per head since 1848 has increased by a factor of 20 or 30….

The amiable Joe Stiglitz says that whenever there is a “spillover” — my ugly dress offending your delicate eyes, say — the government should step in. A Federal Bureau of Dresses, rather like the one Saudi Arabia has. In common with Thaler and Krugman and most other economists since 1848, Stiglitz does not know how much his imagined spillovers reduce national income overall, or whether the government is good at preventing the spill. I reckon it’s about as good as the Army Corps of Engineers was in Katrina.

Thaler, in short, melds the list of psychological biases with the list of economic imperfections. It is his worthy scientific accomplishment. His conclusion, unsupported by evidence?

It’s bad for us to be free.

CORRECTION: Due to an editing error, an earlier version of this article referred to Thaler’s philosophy as “paternalistic libertarianism.” The correct term is “libertarian paternalism.”

No, the correct term is paternalism.

I will end on that note.

Whither the Stock Market?

Drawing on the database maintained by Robert Shiller, author of Irrational Exuberance, I estimated the constant-dollar value of the S&P Composite Index (S&P) with dividends reinvested. The validity of my estimate is confirmed by comparing it with the Wilshire 5000 Total Return Index (WLX), which is based on the reinvestment of dividends in the underlying stocks:

FIGURE 1

“Real” means that the underlying values are inflation-adjusted. The indices are equated to 1 in December 1970 because that is the first month of the WLX.

Shiller uses a cyclically adjusted price-earnings ratio (CAPE) based on the inflation-adjusted value of S&P and earnings on the constituent stocks. Specifically, he uses the current inflation-adjusted price divided by the average of inflation-adjusted earnings for the preceding 10 years. Accordingly, he calls it CAPE-10:

FIGURE 2

What is the relationship between the value of CAPE-10 for a particular month and the total return on the S&P over an extended period? Shiller’s database (which is reconstructed, of course) goes back to January 1871. January 1881 is therefore the date of his earliest CAPE-10 value. This graph shows the relationship between CAPE-10 and total returns for all 15-year periods beginning January 1881 and ending June 2018:

FIGURE 3

There’s an inverse relationship, as you would expect. But it’s a loose one because of marked shifts in the value of CAPE-10.

There’s a much tighter relationship for the “modern” financial era. I trace the beginning of this era to about 1982, when the stock market bottomed (see Figures 1 and 2) while inflation was receding from its post-World War II peak in 1980:

FIGURE 4

Here’s the relationship between CAPE-10 and real, annualized 15-year returns on the S&P since 1982:

FIGURE 5

The current value of CAPE-10 is about 32. If the relationship in Figure 5 holds true for the next 15 years, investors can expect real, annualized returns (with dividends reinvested) of 2 percent to 4 percent on broadly diversified mutual funds and stock portfolios.

Not great, you say? Well, the current real return on Baa-rated corporate bonds is about 1.5 percent. It’s less than that for Aaa-rated bonds, Treasury issues, most CDs, money-market funds, and deposit accounts. So if you’re into buy-and-hold, the stock market isn’t a bad bet. Alternatively, you can try to pick the next “big thing” — Tesla, for example.

Unorthodox Economics: 5. Economic Progress, Microeconomics, and Microeconomics

This is the fifth entry in what I hope will become a book-length series of posts. That result, if it comes to pass, will amount to an unorthodox economics textbook. Here are the chapters that have been posted to date:

1. What Is Economics?
2. Pitfalls
3. What Is Scientific about Economics?
4. A Parable of Political Economy
5. Economic Progress, Microeconomics, and Macroeconomics

What is economic progress? It is usually measured as an increase in gross domestic product (GDP) or, better yet, per-capita GDP. But such measures say nothing about the economic status or progress of particular economic units. In fact, the economic progress of some economic units will be accompanied by the economic regress of others. GDP captures the net monetary effect of those gains and losses. And if the net effect is positive, the nation under study is said to have made economic progress. But that puts the cart of aggregate measures (macroeconomics) before the horse of underlying activity (microeconomics). This chapter puts them in the right order.

The economy of the United States (or any large political entity) consists of myriad interacting units. Some of them contribute to the output of the economy; some of them constrain the output; some of them are a drain upon it. The contributing units are the persons, families, private charities, and business (small and large) that produce economic goods (products and services) which are voluntarily exchanged for the mutual benefit of the trading parties. (Voluntary, private charities are among the contributing units because they help willing donors attain the satisfaction of improving the lot of persons in need. Voluntary charity — there is no other kind — is not a drain on the economy.)

Government is also a contributing unit to the extent that it provides a safe zone for the production and exchange of economic goods, to eliminate or reduce the debilitating effects of force and fraud. The safe zone is international as well as domestic when the principals of the U.S. government have the wherewithal and will to protect Americans’ overseas interests. The provision of a safe zone is usually referred to as the “rule of law”.

Most other governmental functions constrain or drain the economy. Those functions consist mainly of regulatory hindrances and forced “charity,” which includes Social Security, Medicare, Medicaid, and other federal, State, and local “welfare” programs. In “The Rahn Curve Revisited,” I estimate the significant negative effects of regulation and government spending on GDP.

There is a view that government contributes directly to economic progress by providing “infrastructure” (e.g., the interstate highway system) and underwriting innovations that are adopted and adapted by the private sector (e.g., the internet). Any such positive effects are swamped by the negative ones (see “The Rahn Curve Revisited”). Diverting resources to government uses in return for the occasional “social benefit” is like spending one’s paycheck on lottery tickets in return for the occasional $5 winner. Moreover, when government commandeers resources for any purpose — including the occasional ones that happen to have positive payoffs — the private sector is deprived of opportunities to put those resources to work in ways that more directly advance the welfare of consumers.

I therefore dismiss the thrill of occasionally discovering  a gold nugget in the swamp of government, and turn to the factors that underlie steady, long-term economic progress: hard work; smart work; saving and investment; invention and innovation; implementation (entrepreneurship); specialization and trade; population growth; and the rule of law. These are defined in the first section of “Economic Growth Since World War II“.

It follows that economic progress — or a lack thereof — is a microeconomic phenomenon, even though it is usually treated as a macroeconomic one. One cannot write authoritatively about macroeconomic activity without understanding the microeconomic activity that underlies it. Moreover, macroeconomic aggregates (e.g., aggregate demand, aggregate supply, GDP) are essentially meaningless because they represent disparate phenomena.

Consider A and B, who discover that, together, they can have more clothing and more food if each specializes: A in the manufacture of clothing, B in the production of food. Through voluntary exchange and bargaining, they find a jointly satisfactory balance of production and consumption. A makes enough clothing to cover himself adequately, to keep some clothing on hand for emergencies, and to trade the balance to B for food. B does likewise with food. Both balance their production and consumption decisions against other considerations (e.g., the desire for leisure).

A and B’s respective decisions and actions are microeconomic; the sum of their decisions, macroeconomic. The microeconomic picture might look like this:

  • A produces 10 units of clothing a week, 5 of which he trades to B for 5 units of food a week, 4 of which he uses each week, and 1 of which he saves for an emergency.
  • B, like A, uses 4 units of clothing each week and saves 1 for an emergency.
  • B produces 10 units of food a week, 5 of which she trades to A for 5 units of clothing a week, 4 of which she consumes each week, and 1 of which she saves for an emergency.
  • A, like B, consumes 4 units of food each week and saves 1 for an emergency.

Given the microeconomic picture, it is trivial to depict the macroeconomic situation:

  • Gross weekly output = 10 units of clothing and 10 units of food
  • Weekly consumption = 8 units of clothing and 8 units of food
  • Weekly saving = 2 units of clothing and 2 units of food

You will note that the macroeconomic metrics add no useful information; they merely summarize the salient facts of A and B’s economic lives — though not the essential facts of their lives, which include (but are far from limited to) the degree of satisfaction that A and B derive from their consumption of food and clothing.

The customary way of getting around the aggregation problem is to sum the dollar values of microeconomic activity. But this simply masks the aggregation problem by assuming that it is possible to add the marginal valuations (i.e., prices) of disparate products and services being bought and sold at disparate moments in time by disparate individuals and firms for disparate purposes. One might as well add two bananas to two apples and call the result four bapples.

The essential problem is that A and B will derive different kinds and amounts of enjoyment from clothing and food, and those different kinds and amounts of enjoyment cannot be summed in any meaningful way. If meaningful aggregation is impossible for A and B, how can it be possible for an economy that consists of millions of economic actors and an untold, constantly changing, often improving variety of goods and services?

GDP, in other words, is nothing more than what it seems to be on the surface: an estimate of the dollar value of economic output. It is not a measure of “social welfare” because there is no such thing. (See “Social Welfare” in Chapter 2). And yet it is a concept that infests microeconomics and macroeconomics.

Aggregate demand and aggregate supply are nothing but aggregations of the dollar values of myriad transactions. Aggregate demand is an after-the-fact representation of the purchases made by economic units; aggregate supply is an after-the-fact representation of the sales made by economic units. There is no “aggregate demander” or “aggregate supplier”.

Interest rates, though they tend to move in concert, are set at the microeconomic level by lenders and borrowers. Interest rates tend to move in concert because of factors that influence them: inflation, economic momentum, and the supply of money.

Inflation is a microeconomic phenomenon which is arbitrarily estimated by sampling the prices of defined “baskets” of products and services. The arithmetic involved doesn’t magically transform inflation into a macroeconomic phenomenon.

Economic momentum, as measured by changes in GDP, is likewise a microeconomic phenomenon disguised as a macroeconomic, as previously discussed.

The supply of money, over which the Federal Reserve has some control, is the closest thing there is to a truly macroeconomic phenomenon. But the Fed’s control of the supply of money, and therefor of interest rates, is tenuous.

Macroeconomic models of the economy are essentially worthless because they can’t replicate the billions of transactions that are the flesh and blood of the real economy. (See “Economic Modeling: A Case of Unrewarded Complexity“.) One of the simplest macroeconomic models — the Keynesian multiplier — is nothing more than a mathematical trick. (See “The Keynesian Multiplier: Fiction vs. Fact”.)

Macroeconomics is a sophisticated form of mental masturbation — nothing more, nothing less.