About Economic Forecasting

In the the previous post I disparaged the ability of economists to estimate the employment effects of the minimum wage. I’m skeptical because economists are notoriously bad at constructing models that adequately predict near-term changes in GDP. That task should be easier than sorting out the microeconomic complexities of the labor market.

Take Professor Ray Fair, for example. Prof. Fair 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, Prof. Fair has been forecasting changes in real GDP over the next four quarters. He has made 80 such forecasts based on a model that he has undoubtedly tweaked over the years. The current model is here. His forecasting track record is here. How has he done? Here’s how:

1. The median absolute error of his forecasts is 30 percent.

2. The mean absolute error of his forecasts is 70 percent.

3. His forecasts are rather systematically biased: too high when real, four-quarter GDP growth is less than 4 percent; too low when real, four-quarter GDP growth is greater than 4 percent.

4. His forecasts have grown generally worse — not better — with time.

How hard can it be to forecast the direction and magnitude of macroeconomic activity given the plethora of relevant data at hand? It can’t be as hard as estimating the employment effects of changes in the minimum wage, where such effects are subtle and perhaps impossible to measure (e.g., employers shave unmandated employee benefits or allow working conditions to deteriorate; businesses are not continued or started that might otherwise continue or start).

By the way, Prof. Fair also has a model of presidential elections that he first published in 1978 and has tweaked six times. (Links are here.) According to the current model, Pres. Bush will receive 51.7 percent of the popular vote even under three extreme conditions: zero percent real GDP growth in the first three quarters of 2004, 5 percent growth in the GDP deflator over the first 15 quarters of the Bush administration, and zero quarters (out of the first 15) with real GDP growth at an annual rate of more than 3.2 percent. In other words, a Republican incumbent is a shoo-in for re-election. Ha!

I rest my case.

On the One Hand…

…Tyler Cowen of Marginal Revolution, quotes Steven E. Landsburg, writing in Slate, who says:

Now that we’ve re-evaluated the evidence…, here’s what most labor economists believe: The minimum wage kills very few jobs, and the jobs it kills were [sic] lousy jobs anyway. It is almost impossible to maintain the old argument that minimum wages are bad for minimum-wage workers.

That’s easy to say if you’re a well-fed economist who thinks it better to kill a “lousy” job than to have such a job filled by a person who’d be glad to have the income.

On the other hand, Landsburg goes on to say:

In fact, the minimum wage is very good for unskilled workers [those who don’t lose their jobs: ED]. It transfers income to them. And therein lies the right argument against the minimum wage….

[T]he minimum wage places the entire burden [of income redistribution] on one small group: the employers of low-wage workers and, to some extent, their customers. Suppose you’re a small entrepreneur with, say, 10 full-time minimum-wage workers. Then a 50 cent increase in the minimum wage is going to cost you about $10,000 a year. That’s no different from a $10,000 tax increase. But the politicians who imposed the burden get to claim they never raised anybody’s taxes.

Which means that the minimum wage causes unemployment among unskilled workers by 1) helping to drive small businesses out of business and 2) shrinking the market for unskilled labor by discouraging the formation of small businesses. Have those effects been measured adequately by our oh-so-clever coterie of economists, whose ilk cannot forecast economic growth from quarter to quarter with anything resembling accuracy? I don’t think so.

Your Vote May Count

The Volokh Conspiracy’s Tyler Cowen, writing about votes for third-party candidates, asserts this: “Your vote will not count, no matter what. If the election is close, the courts will decide it. ‘They’ won’t let me…decide an election.”

Balderdash! The outcome of the 2000 presidential election, supposedly “decided” in the courts, was really decided by the voters of Florida. Here’s why:

Bush won in 2000 because of Florida’s electoral votes. Bush won Florida’s electoral votes because he had 537 more votes than Gore when the U.S. Supreme Court stopped the recount in Florida. It’s safe to say that not a single Florida voter anticipated the events following the closing of the polls in Florida. It’s also safe to say that voters who cast valid ballots for Bush, valid ballots for Nader, and invalid ballots for Gore decided the election in Bush’s favor.

Suppose Floridians had cast 538 fewer valid votes for Bush. The U.S. Supreme Court might have stepped in with Gore ahead by one vote. Would the U.S. Supreme Court have stopped the recount there? We’ll never know.

Suppose Floridians had cast 536 fewer valid votes for Bush, giving him a lead of only one vote when then U.S. Supreme Court stepped in. Would the U.S. Supreme Court have let that result stand? We’ll never know.

Suppose 538 of the 97,488 Floridians who voted for Nader had voted for Gore, instead….

In a State where there’s a close race (as there will be in several States this year), individual voters have no way of knowing how close the race might be. Nor do they have any way of knowing how many votes might be invalidated for one reason or another. Nor do they have any way of knowing how a recount might proceed, or knowing at what point the courts might step in (if at all), or knowing what the courts might do if and when they step in.

In other words, the outcome of a close election is unpredictable. Tyler Cowen’s dictum, therefore, strikes me as pure hindsight. The outcome of an election, even one that is “decided” in the courts, does depend on voters.

The only sensible thing to do when you anticipate a close election in your State, and you favor a particular major-party candidate, is to vote for that candidate. If you don’t vote, or if you vote for a third-party candidate, you are effectively voting against your favored major-party candidate.

Will your vote make a difference? It might. You can’t know in advance. Therefore, you should vote as if your vote will make a difference.

  • Comments? Click here.
  • Things a Libertarian Can Believe In

    The United States of America exists for the benefit of Americans. Any benefit we may happen to confer on the rest of the world should be calculated to advance the interests of Americans. Done properly, these things can ensure and enhance our life, liberty, and happiness:

  • Alliances
  • Military assistance to other nations and foreign factions
  • Forward defense
  • Pre-emptive defense
  • Assassination of terrorists abroad
  • Indefinite detention of terrorists and enemy combatants, including persons seized on U.S. soil
  • Quotas and standards for immigration
  • Thorough surveillance of our borders
  • No subsidies for, and immediate deportation of, illegal aliens
  • Mistakes can and will be made. But we shouldn’t be paralyzed by the fear of making mistakes. Passivity is a greater mistake.

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  • Reich Is (Inadvertently) Right

    Eugene Volokh quotes Robert Reich in The American Prospect. Reich’s target is the religious right, which he finds less threatening than terrorism: “Terrorism will disrupt and destroy lives. But terrorism itself is not the greatest danger we face.” In spite of ample evidence that al Qaida and its ilk are indeed acting out of religious hatred for infidels, Reich asserts that “Terrorism is a tactic, not a belief.” I say that the tactic is inseparable from the belief.

    Here’s where Reich is inadvertently right:

    The great conflict of the 21st century will not be between the West and terrorism….The true battle will be between …those who believe in the primacy of the individual and those who believe that human beings owe their allegiance and identity to a higher authority….

    It’s true. The great conflict of the 21st century will be between those who believe in the primacy of the individual and those who believe that human beings owe their allegiance and identity to a higher authority: the state.

    I know that Reich is on the side of the state. He is therefore my intellectual enemy.

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  • Fun Facts about Electoral Votes

    I just learned that Lloyd Bentsen, Dukasis’s running mate in 1988, received one electoral vote because an elector from West Virginia voted for Bentsen as president and Dukakis as vice president. Well, what do you expect from a State that went for Bush but also sends Jay (raise taxes, I can afford it) Rockefeller and Bobby (Ku Klux Klan) Byrd to the Senate?

    Libertarian Nay-Saying on Foreign and Defense Policy

    I’ve noticed that most “professional libertarians” — those affiliated with places like Cato Institute and Reason Foundation — have an isolationist (or “hands off”) view of foreign policy and military ventures. (See the writings of Cato’s Ted Galen Carpenter, for example.)

    It’s wise to be skeptical about the emanations from Foggy Bottom and the Pentagon. But knee-jerk isolationism is unwise — and unbecoming a libertarian. Libertarians generally take the view that defense is a legitimate function of government. Waiting until the enemy is at our shores or hidden among us isn’t an effective defense strategy.

    Yes, we can go — and often have gone — too far in the other direction: making unnecessary commitments to “allies” of dubious worth and wasting billions on ineffective and inappropriate weapons. But there are worthwhile alliances and suitable military postures. Libertarian specialists in foreign and defense affairs would be more credible if they would spend more time saying what’s worthwhile and suitable, and less time saying “no” to whatever comes out of Foggy Bottom and the Pentagon.

    In sum, libertarian think-tankers should be innovators, and not mere reactionaries, when it comes to foreign and defense policy. A detailed, coherent libertarian statement with a positive vision of foreign policy and military posture could be a compelling document. But it must a white paper, not a book. The executive summary should fit on one typeset page; the text should run no more than 10 typeset pages. Are you listening out there at Cato and Reason?

    P.S. A nutty, Mises Institute-type position paper that tries to explain why defense isn’t a public good will get you laughed out of town and might even cost you some big contributions.

    Call-Blocking and Free Speech

    The Corner‘s Jonah Goldberg, noting that political organizations aren’t covered by the Do Not Call Registry Law, says “it would in fact be worse if the government could block political speech because it’s inconvenient” to the person receiving an unsolicited call. Let’s put aside the Do Not Call Registry for a moment, and consider the real issue.

    Remember door-to-door salesmen? (If you don’t, you certainly don’t remember bums.) Well, if you didn’t want salesmen or bums knocking at your door, you would post a “No Soliciting” sign on your gate or at your front door. That would usually deflect unwanted callers (as we used to refer to people who came to the front door). If that didn’t work, you would post a “No Trespassing” sign, which clearly meant “Don’t come here without an invitation unless you’re a postman, census taker, sheriff, police officer, or fireman.”

    Unsolicited phone calls are like door-to-door salesmen and bums. The callers have a right to call people who are willing to be called, but they don’t have a right to call people who don’t want to be called. It’s my phone and my house, dammit. There’s no free speech issue. Does freedom of speech give anyone the right to burst into your house at dinner time and shout “Joe Schmoe for dogcatcher!”? I don’t think so.

    Now, the only question is how to block those uninvited calls. The best way is to sign up for caller ID and buy a call bouncer, which blocks calls from designated numbers and diverts calls from other numbers to your answering machine unless you’ve flagged them as “acceptable.” Calls from acceptable numbers will ring longer before going to the answering machine. That gives you a chance to pick up if you’re there and want to do so. (The setup also allows you to screen your calls and avoid long-winded conversations with friends and family when you don’t have time for such conversations.) The technology works and it’s cheap.

    The Do Not Call Registry is just another pseudo-panacea. It’s a “gift” from the same people who gave you the McCain-Feingold Act.

    So, It’s Not About Religion?

    From BBC News World Edition:

    Iraq captors ‘free Turk hostages’

    Three Turkish men kidnapped by militants in Iraq last week have been released, say Turkish government officials.

    The men were apparently held by a group linked to a man said to be al-Qaeda’s Iraq chief – Abu Musab al-Zarqawi.

    A masked man in a video aired by Arab TV al-Jazeera said the men were freed because Turkey’s Muslims had protested against the US.

    The kidnappers had earlier threatened to behead the men.

    Headlines I’d Like to Read

    Some headlines and subheads that came to mind as I fumed about the Supremes’ power grab in the detainee cases:


    Bush Defies Court on Detainees, Citing Liberty Corner

    8 Justices Resign in Protest of Bush Move

    President Nominates Thomas as Chief Justice,

    Vows to Name 8 “Like Justice Thomas” to Fill Vacancies

    Nader on Ballot in 50 States, Endorsed by Gephardt

    Bush Wins

    First Candidate with Popular Vote Majority since 1988

    Coat Tails Enlarge GOP Majority in House

    Senate Majority Grows to 67-33

    Bush’s First Post-Election Budget a Stunner

    Cuts Non-Defense Spending in Half

    “Just a Start,” President Says

    Bush Sends Social Security Reform to Congress

    Easy Passage of Privatization Seen

    Eventual Doubling of Average Retiree’s Benefit “A Cinch,”

    According to Leading Economists

    Bonus headlines:


    Senate Ousts Kerry for Poor Attendance

    Mass. State Police Reopen Kopechne Case

    Hollywood Liberals in Mass Exodus to France

    Chirac Nationalizes French Film Industry,

    Caps Stars’ Salaries at $1,000 a Week



    Gore Admitted to Bellevue Hospital

    Sources Cite “Bizarre Behavior” on Election Night

    Others Say Gore “Seemed His Usual Self”

    Michael Moore’s Studio Burns to Ground, No One Injured

    Investigators Say Lightning Struck on Sunny Day

    Moore Sees Bush in Plot with God

    Something Completely Different

    Michelle Malkin is having an “All Wet T-Shirt Contest”. As she says, “it’s not what you think.” She got the idea from a “USA Today feature on Hollywood leftists who are marketing political t-shirts.” So she’s “inviting readers to leave their suggested t-shirt slogans for their favorite stars.” Just click on the link above and add your entry by scrolling to “Post a comment” at the bottom.

    Most of the entries are fairly lame, but there are a few good ones, espcially this one from “KB”:

    Because of George W. Bush, I lost my job, my home, and my two sons were killed in an unjust war. Stop the madness. Vote Kerry.

    -Saddam Hussein

    Here are mine:

    T-shirts for any left-wing celebrity:

    Front:
    Freedom Is Precious
    Back:
    Why Waste It on Iraqis?

    Front:
    Peace on Earth
    Back:
    At Any Price

    Front:
    Guns Kill
    Back:
    So Beware My Bodyguard

    Front:
    I Love GIs
    Back:
    If They’re Cute
    (suitable for either gender, in Hollywood)

    Front:
    Bush and Ashcroft Are Fascist Pigs
    Back:
    So Why Am I Still Walking Around Wearing This Stupid T-shirt?

    You be the judge.

    More about War and Civil Liberties

    In the previous post I chastised the U.S. Supreme Court for finding that enemy combatants taken on foreign soil have access to American courts, saying that the Court’s rulings “give aid and comfort to our enemies.” That is the effect of the Court’s rulings, it seems to me. But I’m certainly not accusing the Court of treason. (There will be no “Impeach Earl Warren” bumper stickers on this site.)

    I am nevertheless irked by the Court’s willingness to intrude into matters where it need not intrude. That is why I cited the counter-example of an earlier Court’s ruling in the case of the Japanese-Americans who were relocated during World War II.

    Some might think that my views on the Court’s present rulings are inconsistent with my trashing of Cass Sunstein for his statist views (see here, here, here, here, and here). I see a vast difference between Sunstein’s philosophy and mine.

    Sunstein proposes a permanent diminution of liberty for the sake of achieving certain outcomes, such as avoiding group polarization (though how this can be achieved by government coercion is beyond me) and advancing FDR’s essentially socialist agenda for America (which, to our detriment, has been achieved in the main).

    I am not talking about the diminution of anyone’s liberty (unless it counts as a diminution of liberty to capture enemy soldiers). What I am saying is this: It is a perfectly legitimate defense of liberty to treat our enemies as enemies when we are engaged in a legal war. When we begin to treat our enemies as mere criminals, and inject them into civilian courts, we accord them a status they do not deserve, and we put ourselves at greater risk of losing liberty, life, and happiness.

    For a much longer treatment of this and related issues, click here.

    P.S. to Previous Post

    If I were commander-in-chief, I might say, in Jacksonian fashion: “The Supreme Court has made its decision, now let them enforce it.”

    But I would go further than that and remind the Court of what an earlier Court ruled when it held for the government’s relocation of Japanese-Americans during World War II (Justice Frankfurter in a concurring opinion):

    The provisions of the Constitution which confer on the Congress and the President powers to enable this country to wage war are as much part of the Constitution as provisions looking to a nation at peace. And we have had recent occasion to quote approvingly the statement of former Chief Justice Hughes that the war power of the Government is “the power to wage war successfully.”…Therefore, the validity of action under the war power must be judged wholly in the context of war. That action is not to be stigmatized as lawless because like action in times of peace would be lawless.

    Justice Frankfurter was writing about American citizens being relocated, involuntarily, within the United States. Today’s Court rulings are about enemy soldiers who were captured overseas in a war being waged legally by the United States.

    I used the Frankfurter quotation in an earlier post, where I argued, among other things, that the suspension of civil liberties in the course of a legal war hasn’t — and needn’t — put us on the path to serfdom. War is war, and our enemies are the real threat to our civil liberties. Today’s rulings give aid and comfort to our enemies.

    The Court Opines

    The U.S. Supreme Court has found against the government in the cases of Yaser Esam Hamdi, an American citizen being held at Gitmo as an enemy combatant, and several foreign nationals also being held at Gitmo. All were captured abroad, fighting in the cause of the Taliban.

    Specifically, the Court has ruled that the plaintiffs in both cases are entitled to access to American courts — Hamdi because he is a citizen, the others because they are being held at Gitmo, which is effectively U.S. territory. These narrow decisions aren’t unmitigated losses for the forces of anti-terrorism. (You can read them here and here.)

    I take away this lesson: Don’t ship enemy combatants to Gitmo, hand them over to the Afghanis or Iraqis.

    Current Reading

    I’m 79 pages into A Student of Weather, a novel by Elizabeth Hay. Brilliant — that overused adjective — is in order here. Hay is one of those rare, observant writers who can capture character, feeling, mood, and setting in a few words, phrases, or sentences.

    The book begins in a small farming community on the Saskatchewan prairie, in the dust-bowl year of 1938. A leading character is Maurice, a 23-year old botanist from Ottawa who comes to the farming community several times a year to study prairie grasses. A middle-aged woman who develops a crush on Maurice discovers that he doesn’t remember her from his previous visit:

    [H]e trailed disappointment behind him and was unaware of it. She was only a vague face in his mind, a farmwife from Belgium, or was it Holland?

    And then she realized the value of Prairie reserve. It was reliable, it did not set you up for disappointment, it let you alone and it was balanced by steady courtesy. People never failed to recognize you, and they never pried.

    Hay has been doing this for 79 pages. I have no doubt that she will continue doing it for the next 285 pages.

    An (Imaginary) Interview with Cass Sunstein

    This is the last of this series of posts about Cass Sunstein, unless he deigns to reply to me. I have many positive things to say about many subjects, and I have been neglecting other targets of opportunity.

    Liberty Corner: Apropos the preceding post, I wish you, Cass Sunstein, would quit beating around the bush. If you want something, you have to spell it out. Don’t be coy, Cass, tell us how you would amend the Constitution to ensure that all internet users are exposed to points of view that they would otherwise eschew.

    Cass Sunstein: Let’s start with the First Amendment, which deals with freedom of speech and of the press, among other things. I’m suggesting that we simply recognize that not all speech is protected and use that fact to force the purveyors of extreme points of view to acknowledge opposing points of view.

    LC: Tell us how you would restate the First Amendment so that it does the right thing.

    CS: I would add the following codicil: Congress, in order to promote a more efficacious deliberative democracy, may require persons to acknowledge opposing points of view when they communicate on a subject. Further, Congress may require communications media to assist in that endeavor and to transmit points of view other than those which they might willingly transmit.

    LC: So, in the name of political freedom you would curtail freedom?

    CS: I don’t think of it that way. We’re all more free, in an intellectual way, when we’re exposed to a diversity of experiences and points of view. Besides, freedom is something we receive from government; government may therefore withdraw some freedom from us when it’s for our good.

    LC: Let’s assume, for the sake of this discussion, that people desire political freedom, and the other types of freedom that flow from it. Would we really be more free if government forced us to hear or at least take part in the transmission of views with which we disagree, or would we simply be encumbered with more rules about how to live our lives?

    CS: That’s a negative way of looking at it.

    LC: Let me draw an analogy from fiction. Have you read Portnoy’s Complaint?

    CS: You aren’t about to slur my ethnicity, are you?

    LC: No, not at all. It’s just that the novel’s protagonist, Alex Portnoy, has an experience that reminds me of your proposed codicil to the First Amendment. His mother stood over him with a knife in an effort to make him eat his dinner. Do you think government should act like Alex Portnoy’s mother?

    CS: Well, she didn’t need to pull a knife on Alex, but she obviously needed to exert her maternal authority.

    LC: You don’t think Alex would have voluntarily eaten his dinner, in a day or two, rather than starve?

    CS: Why take chances?

    LC: So not doing what’s good for one’s self is the moral equivalent of doing harm to another?

    CS: Yes. Alex’s mother obviously suffered from anxiety caused by Alex’s refusal to eat his dinner.

    LC: But Alex’s mother — being older and larger than Alex, though evidently not wiser — might have reflected on the ramifications of her threat. She didn’t really save Alex from starvation, but she did cause him to disrespect and hate her.

    CS: What does that have to do with my version of the First Amendment?

    LC: It has a lot to do with what happens to the cohesiveness of society, which you seem to value, when government forces people to behave in certain, non-neutral ways. You can figure it out if you think about it. But let’s move on. What about the rules that would require the acknowledgement of opposing points of view? Who would make those rules? In particular, with respect to web sites, who would select those “sites that deal with substantive issues in a serious way”? And who would identify “highly partisan” web sites that “must carry” icons pointing to those “sites that deal with substantive issues in a serious way”?

    CS: An agency authorized by Congress to do such things.

    LC: The FCC, for instance?

    CS: The FCC might be the appropriate agency, but Congress would have to take its oversight role more seriously.

    LC: Pressuring the FCC to pressure a broadcaster to stifle a certain radio personality isn’t enough for you?

    CS: What?

    LC: Never mind. Let’s assume it’s the FCC, whose members are appointed by the president, subject to confirmation by the Senate. The FCC is essentially a political body, composed of some mix of Democrats and Republicans.

    CS: That’s inevitably the case with any regulatory agency.

    LC: Right you are. So the FCC, or any agency newly created for the purpose, wouldn’t be neutral about such issues as what constitutes an opposing point of view, which sites deal with substantive issues in a serious way, and which sites are highly partisan.

    CS: You have to rely on the judgment of those appointed to perform the task of making such evaluations.

    LC: But not the judgment — or preferences — of purveyors of news and views?

    CS: No, because they’re likely to be wedded to their positions and not open to opposing ideas.

    LC: Unlike the political appointees on the FCC?

    CS: Well, those political appointees would be scrutinized by Congress.

    LC: Which, of course, is always balanced and neutral in its views, and which never tries to inflict particular points of view on regulatory agencies.

    CS: You’re trying to get me to say that my version of the First Amendment would impose the judgment of politicians and their minions on the news and views of corporate and individual communicators.

    LC: Isn’t that exactly what would happen?

    CS: But we’re better off when our duly elected representatives and their agents make such decisions. That’s how deliberative democracy is supposed to work.

    LC: Oh, we elect them to tell us how to live our lives?

    CS: If that’s what it takes to make us better citizens, yes.

    LC: You think coercion of that sort would make us a more cohesive society and would make us more appreciative of points of view that differ from our own?

    CS: It’s worth a try.

    LC: And where do you stop?

    CS: What do you mean?

    LC: How do you know when society is sufficiently cohesive and that an acceptable fraction of its members have become appreciative of differing points of view? What do you do if society simply refuses to cooperate with your program?

    CS: Well, as to your first question, the FCC would simply monitor the content of broadcasts and web sites. As to your second question, the FCC might shut down uncooperative outlets or place them in the hands of an appointed operator, much as bankruptcy courts use court-appointed receivers to hand the affairs of bankrupt businesses. In the extreme, the FCC might have to resort to criminal sanctions — fines and imprisonment. But that probably wouldn’t happen more than a few times before communicators began to comply with the law.

    LC: Or simply quit trying to communicate.

    CS: Well, that’s always an option.

    LC: I’m beginning to get the picture. Before we stop, however, I’d like to pose a hypothetical. Suppose the FCC were composed entirely of members who had a peculiar regard for the original meaning of the Constitution. Suppose, further, that we had, at the same time, a president who felt the same way about the Constitution, and that Congress was in the hands of a sympathetic majority. Now, in the course of monitoring web sites the FCC comes across your essay on “The Future of Free Speech” and deems it an extremist screed, subversive of the Constitution. What do you suppose would happen?

    CS: The FCC should order The Little Magazine to post a link to Liberty Corner‘s commentary on my essay. Or it might order The Little Magazine to remove my essay from its site.

    LC: Suppose the FCC did neither. Suppose the FCC gave the matter some thought and concluded that it would do nothing about your essay. Instead, it would hew to the original meaning of the Constituion and let you bloviate to your heart’s content.

    CS: I would turn myself in to the FCC and demand to be sanctioned to the letter of the law.

    LC: Oh, really? Can I count on that? I just want to be sure that you’re willing to live by the rules that you would impose on others.

    CS: Most assuredly.

    LC: Thank you very much for your (imaginary) time. That’s all for now. But don’t worry, I’ll be keeping an eye on you.

    Cass Sunstein’s Truly Dangerous Mind

    UPDATED BELOW

    Cass Sunstein’s recent blatherings about FDR’s “Second Bill of Rights” at The Volokh Conspiracy made me want to find out more about his understanding of the proper role of government in our society. I Googled the eminent professor and hit upon “The Future of Free Speech”, which appears in The Little Magazine, a South Asian journal (thus the British English spellings in the quotations below). Hold your nose and follow Sunstein’s argument in these quotations from “The Future of Free Speech”:

    My purpose here is to cast some light on the relationship between democracy and new communications technologies. I do so by emphasising the most striking power provided by emerging technologies: the growing power of consumers to “filter” what it is that they see. In the extreme case, people will be fully able to design their own communications universe. They will find it easy to exclude, in advance, topics and points of view that they wish to avoid. I will also provide some notes on the constitutional guarantee of freedom of speech.

    An understanding of the dangers of filtering permits us to obtain a better sense of what makes for a well-functioning system of free expression. Above all, I urge that in a heterogeneous society, such a system requires something other than free, or publicly unrestricted, individual choices. On the contrary, it imposes two distinctive requirements. First, people should be exposed to materials that they would not have chosen in advance….Second, many or most citizens should have a range of common experiences. Without shared experiences, a heterogeneous society will have a much more difficult time addressing social problems; people may even find it hard to understand one another….

    Imagine…a system of communications in which each person has unlimited power of individual design….Our communications market is moving rapidly toward this apparently utopian picture….[A]s of this writing, a number of newspapers allow readers to create filtered versions, containing exactly what they want, and excluding what they do not want….

    I seek to defend a particular conception of democracy — a deliberative conception — and to evaluate, in its terms, the outcome of a system with perfect power of filtering. I also mean to defend a conception of freedom, associated with the deliberative conception of democracy, and oppose it to a conception that sees consumption choices by individuals as the very embodiment of freedom….

    The US Supreme Court has…held that streets and parks must be kept open to the public for expressive activity. Hence governments are obliged to allow speech to occur freely on public streets and in public parks — even if many citizens would prefer to have peace and quiet, and even if it seems irritating to come across protesters and dissidents whom one would like to avoid….

    A distinctive feature of this idea is that it creates a right of speakers’ access, both to places and to people. Another distinctive feature is that the public forum doctrine creates a right, not to avoid governmentally imposed penalties on speech, but to ensure government subsidies of speech….Thus the public forum represents one place in which the right to free speech creates a right of speakers’ access to certain areas and also demands public subsidy of speakers….

    [T]he public forum doctrine increases the likelihood that people generally will be exposed to a wide variety of people and views. When you go to work, or visit a park, it is possible that you will have a range of unexpected encounters, however fleeting or seemingly inconsequential. You cannot easily wall yourself off from contentions or conditions that you would not have sought out in advance, or that you would have chosen to avoid if you could. Here too the public forum doctrine tends to ensure a range of experiences that are widely shared — streets and parks are public property — and also a set of exposures to diverse circumstances. A central idea here must be that these exposures help promote understanding and perhaps in that sense freedom. And all of these points can be closely connected to democratic ideals, as we soon see….

    The public forum doctrine is an odd and unusual one, especially insofar as to create a kind of speakers’ access right to people and places, subsidised by taxpayers. But the doctrine is closely associated with a longstanding constitutional ideal, one that is far from odd: that of republican self-government. From the beginning, the American constitutional order was designed to be a republic, as distinguished from a monarchy or a direct democracy. We cannot understand the system of freedom of expression, and the effects of new communications technologies and filtering, without reference to this ideal….

    The specifically American form of republicanism…involved an effort to create a “deliberative democracy.” In this system, representatives would be accountable to the public at large, but there was also supposed to be a large degree of reflection and debate, both within the citizenry and within government itself. The system of checks and balances — evident in the bicameral system, the Senate, the Electoral College and so forth — had, as its central purpose, a mechanism for promoting deliberation within the government as a whole….

    We are now in a position to distinguish between two conceptions of sovereignty. The first involves consumer sovereignty; the second involves political sovereignty. The first ideal underlies enthusiasm for “the Daily Me.” The second ideal underlies the democratic challenge to this vision, on the ground that it is likely to undermine both self-government and freedom, properly conceived.

    Of course, the two conceptions of sovereignty are in potential tension. A commitment to consumer sovereignty may well compromise political sovereignty — if, for example, free consumer choices result in insufficient understanding of public problems, or if they make it difficult to have anything like a shared culture….

    Group polarisation is highly likely to occur on the Internet. Indeed, it is clear that the Internet is serving, for many, as a breeding ground for extremism, precisely because like-minded people are deliberating with one another, without hearing contrary views….

    The most reasonable conclusion is that it is extremely important to ensure that people are exposed to views other than those with which they currently agree, in order to protect against the harmful effects of group polarisation on individual thinking and on social cohesion….

    The adverse effects of group polarization…show that with respect to communications, consumer sovereignty is likely to produce serious problems for individuals and society at large — and these problems will occur by a kind of iron logic of social interactions….

    The phenomenon of group polarisation is closely related to the widespread phenomenon of ‘social cascades’. No discussion of social fragmentation and emerging communications technologies would be complete without a discussion of that phenomenon….

    [O]ne group may end up believing something and another the exact opposite, because of rapid transmission of information within one group but not the other. In a balkanised speech market, this danger takes on a particular form: different groups may be led to dramatically different perspectives, depending on varying local cascades.

    I hope this is enough to demonstrate that for citizens of a heterogeneous democracy, a fragmented communications market creates considerable dangers. There are dangers for each of us as individuals; constant exposure to one set of views is likely to lead to errors and confusions. And to the extent that the process makes people less able to work cooperatively on shared problems, there are dangers for society as a whole.

    In a heterogeneous society, it is extremely important for diverse people to have a set of common experiences….

    This is hardly a suggestion that everyone should be required to participate in the same thing. We are not speaking of requirements at all. In any case a degree of plurality, with respect to both topics and points of view, is also highly desirable. My only claim is that a common set of frameworks and experiences is valuable for a heterogeneous society, and that a system with limitless options, making for diverse choices, will compromise the underlying values.

    The points thus far raise questions about whether a democratic order is helped or hurt by a system of unlimited individual choice with respect to communications. It is possible to fear that such a system will produce excessive fragmentation, with group polarisation as a frequent consequence. It is also possible to fear that such a system will produce too little by way of solidarity goods, or shared experiences. But does the free speech principle bar government from responding to the situation? If that principle is taken to forbid government from doing anything to improve the operation of the speech market, the answer must be a simple Yes.

    I believe, however, that this is a crude and unhelpful understanding of the free speech principle, one that is especially ill-suited to the theoretical and practical challenges of the next decades and beyond. If we see the Free Speech Principle through a democratic lens, we will be able to make a great deal more progress.

    There should be no ambiguity on the point: free speech is not an absolute. The government is allowed to regulate speech by imposing neutral rules of property law, telling would-be speakers that they may not have access to certain speech outlets….Government is permitted to regulate unlicensed medical advice, attempted bribery, perjury, criminal conspiracies (“Let’s fix prices!”), threats to assassinate the President, criminal solicitation (“Might you help me rob this bank?”), child pornography, false advertising, purely verbal fraud (“This stock is worth $100,000”), and much more….And if one or more of these forms of speech can be regulated, free speech absolutism is a kind of fraud, masking the real issues that must be confronted in separating protected speech from unprotected speech….

    If the discussion thus far is correct, there are three fundamental concerns from the democratic point of view. These include:
    • the need to promote exposure to materials, topics, and positions that people would not have chosen in advance, or at least enough exposure to produce a degree of understanding and curiosity;
    • the value of a range of common experiences;
    • the need for exposure to substantive questions of policy and principle, combined with a range of positions on such questions.

    Of course, it would be ideal if citizens were demanding, and private information providers were creating, a range of initiatives designed to alleviate the underlying concerns….But to the extent that they fail to do so, it is worthwhile to consider government initiatives designed to pick up the slack….

    1. Producers of communications might be subject…to disclosure requirements….On a quarterly basis, they might be asked to say whether and to what extent they have provided educational programming for children, free airtime for candidates, and closed captioning for the hearing impaired. They might also be asked whether they have covered issues of concern to the local community and allowed opposing views a chance to be heard….Websites might be asked to say if they have allowed competing views a chance to be heard….

    2. Producers of communications might be asked to engage in voluntary self-regulation….[T]here is growing interest in voluntary self-regulation for both television and the Internet….Any such code could, for example, call for an opportunity for opposing views to speak, or for avoiding unnecessary sensationalism, or for offering arguments rather than quick ‘sound-bytes’ whenever feasible.

    3. The government might subsidise speech, as, for example, through publicly subsidised programming or Websites….Perhaps government could subsidise a ‘public.net’ designed to promote debate on public issues among diverse citizens — and to create a right of access to speakers of various sorts.

    4. If the problem consists in the failure to attend to public issues, the government might impose “must carry” rules on the most popular Websites, designed to ensure more exposure to substantive questions. Under such a program, viewers of especially popular sites would see an icon for sites that deal with substantive issues in a serious way….Ideally, those who create Websites might move in this direction on their own. If they do not, government should explore possibilities of imposing requirements of this kind, making sure that no program draws invidious lines in selecting the sites whose icons will be favoured….

    5. The government might impose “must carry” rules on highly partisan Websites, designed to ensure that viewers learn about sites containing opposing views….Here too the ideal situation would be voluntary action. But if this proves impossible, it is worth considering regulatory alternatives….

    Emerging technologies are hardly an enemy here….But to the extent that they weaken the power of general interest intermediaries, and increase people’s ability to wall themselves off from topics and opinions that they would prefer to avoid, they create serious dangers….

    So let’s all put on our brown shirts and march to a public rally at which we will be “allowed” to shout: “Dark is light; black is white; Sunstein is right.”

    In an earlier post I said that Cass Sunstein is to the integrity of constitutional law as Pete Rose is to the integrity of baseball. It’s worse than that: Sunstein’s willingness to abuse constitutional law in the advancement of a statist agenda reminds me of Hitler’s abuse of German law to advance his repugnant agenda.

    Oops, I should link to an opposing view. Sunstein doesn’t have a blog, so how about this?

    UPDATE (04/05/05): Tom G. Palmer has an excellent take on Sunstein at NRO. (Thanks to Freespace for the tip.)

    Sen(seless) Economics

    Cass Sunstein’s penultimate Volokh Conspiracy essay on FDR’s Second Bill of Rights invokes Amartya Sen:

    Randy [Barnett] asks whether the Second Bill should be seen as protecting “natural rights.” To say the least, the natural rights tradition has multiple strands; a good contemporary version is elaborated by Amartya Sen (see his Development as Freedom).

    In other words, the Bill of Rights (the real one) codified certain natural rights, but not all of them, according to Sunstein and his fellow travelers. The Second Bill of Rights envisioned by FDR would (and perhaps did) codify the Sunstein-Sen version of economic freedom as a natural right on a par with, say, freedom of speech, freedom of the press, and freedom from self-incrimination.

    Here’s Dr. Sen (the 1998 Nobel laureate in Economics and a professor at Trinity College, Cambridge) to explain what he means by economic freedom (from an online essay entitled “Development as Freedom”):

    We…live in a world with remarkable deprivation, destitution, and oppression….

    Overcoming these problems is a central part of the exercise of development. We have to recognize the role of different freedoms in countering these afflictions. Indeed, individual agency is, ultimately, central to addressing these deprivations. On the other hand, the freedom of agency that we have is inescapably constrained by our social, political, and economic opportunities. We need to recognize the centrality of individual freedom and the force of social influences on the extent and reach of individual freedom. To counter the problems we face, we have to see individual freedom as a social commitment….

    I view the expansion of freedom both as the primary end and as the principal means of development. Development consists of removing various types of unfreedoms that leave people with little choice and little opportunity of exercising their reasoned agency….

    Development requires the removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systemic social deprivation, neglect of public facilities as well as intolerance or overactivity of repressive states.

    What’s wrong with this picture? Sen, Sunstein, and their ilk — clever arguers, all — equate economic freedom (delivered in the form of make-work jobs, welfare, the minimum wage, social security, subsidized housing, free medical care, legalized extortion of employers through unionization, etcetera, etcetera) with political freedom (or liberty as it’s better known). The two things are incommensurate. Indeed, they are incompatible.

    In order for some persons to enjoy the kind of economic freedom envisioned by FDR and his acolytes, government must impose what Sen would call economic unfreedom and on other persons, through taxation and regulation. “Robbing Peter to pay Paul” still says it best.

    Political freedom (liberty) works the other way around. One person’s political freedom — the freedom to speak out, to publish a newspaper, to cast a vote, and so on — doesn’t diminish another person’s political freedom. To the contrary, political freedom is most secure when it is widely held.

    True economic freedom flows from political freedom. True economic freedom encompasses such things as pursuing a better education, limited only by one’s ability and financial resources; finding and keeeping a job, without paying union dues or belonging to a minority group; starting a business of one’s own and running it freely, without extorting or cheating others; making a campaign contribution in any amount to any political candidate; not being forced to subsidize candidates one opposes; and saving for one’s old age (in a real savings account) or buying a sports car, as one chooses. These are just a few of the many economic freedoms that government has circumscribed in its typically Orwellian effort to improve us by making us less free.

    More importantly, from the Sunstein-Sen point of view, FDR-style economic freedom reduces the range of options available to individuals by significantly diminishing the economy (see “The True Cost of Government”). If the economy hadn’t been stunted by FDR-style economic freedom, and if FDR-style economic freedom hadn’t discouraged the habit of private charity, the poor, infirm, and aged of this land — and many other lands — would be far better off than they are today.

    The irony would be amusing if it weren’t tragic.

    "Je ne regrette rien"

    From today’s online edition of the New York Times:

    Cheney Owns Up to Profanity Incident and Says He ‘Felt Better Afterwards’

    By RICHARD W. STEVENSON

    SIOUX CITY, Iowa, June 25 – Vice President Dick Cheney, long portrayed by his aides as unperturbed by partisan attacks, admitted Friday that he “probably” cursed at a senior Democratic senator this week, said he did not regret it and added that he “felt better afterwards.”

    The “probably” is a bit weak, but other than that, I like it. None of that ooze about “I’m sorry if I said anything to offend anyone.” He said what he meant and he meant what he said. Good for him.

    The True Cost of Government

    Americans are far less prosperous than they could be, for three reasons:

    • Government uses resources that would otherwise be used productively in the private sector (19 percent of GDP in 2003).

    • Government discourages work and innovation by taxing income at progressive rates and by transferring income from the productive to the non-productive (12 percent of GDP for recipients of Social Security, Medicare, Medicaid, etc., in 2003).

    • Government regulation stifles innovation and raises the cost of producing goods and services (a net loss of 16 percent of GDP in 2003).

    Because of the cumulative, corrosive effects of government spending, progressive tax rates, redistributive welfare schemes, and regulation, GDP is now as much as 45 percent below where it could be.

    Here’s what happened: Real GDP began to rise sharply in the late 1870s, thanks mainly to the Second Industrial Revolution. Despite the occasional slump — which the economy worked its way out of, thank you — things continued to go well until 1906. Then the trajectory of GDP growth fell suddenly, sharply, and (it seems) permanently.

    Why? First, the regulatory state began to encroach on American industry with the passage of the Food and Drug Act and the vindictive application of the Sherman Antitrust Act, beginning with Standard Oil (the Microsoft of its day). There followed the ratification of Amendment XVI (enabling the federal government to tax incomes); World War I (a high-taxing, big-spending operation); a respite (the boom of the 1920s, which was owed to the Harding-Coolidge laissez-faire policy toward the economy); and the Great Depression and World War II (truly tragic events that imbued in the nation a false belief in the efficacy of the big-spending, high-taxing, regulating, welfare state).

    The Great Depression also spawned the myth that good times (namely the Roaring ’20s) must be followed by bad times, as if good times are an indulgence for which penance must be paid. Thus the Depression often is styled as a “hangover” that resulted from the “partying” of the ’20s, as if laissez-faire — and not wrong-headed government policies — had caused and deepened the Depression.

    You know the rest of the story: Spend, tax, redistribute, regulate, elect, spend, tax, redistribute, regulate, elect, ad infinitum. The payoff: GDP per capita was almost $38,000 in 2003; without government meddling it might have been as much as $68,000.

    The moral: By entrusting our economic security to government, we have lost untold trillions in wealth and income.