Not-So-Random Thoughts (XV)

Links to the other posts in this occasional series may be found at “Favorite Posts,” just below the list of topics.

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Victor Davis Hanson writes:

This descent into the Dark Ages will not end well. It never has in the past. [“Building the New Dark-Age Mind,” Works and Days, June 8, 2015]

Hamson’s chronicle of political correctness and doublespeak echoes one theme of my post, “1963: The Year Zero.”

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Timothy Taylor does the two-handed economist act:

It may be that the question of “does inequality slow down economic growth” is too broad and diffuse to be useful. Instead, those of us who care about both the rise in inequality and the slowdown in economic growth should be looking for policies to address both goals, without presuming that substantial overlap will always occur between them. [“Does Inequality Reduce Economic Growth: A Skeptical View,” The Conversible Economist, May 29, 2015]

The short answer to the question “Does inequality reduce growth?” is no. See my post “Income Inequality and Economic Growth.” Further, even if inequality does reduce growth, the idea of reducing inequality (through income redistribution, say) to foster growth is utilitarian and therefore morally egregious. (See “Utilitarianism vs. Liberty.”)

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In “Diminishing Marginal Utility and the Redistributive Urge” I write:

[L]eftists who deign to offer an economic justification for redistribution usually fall back on the assumption of the diminishing marginal utility (DMU) of income and wealth. In doing so, they commit (at least) four errors.

The first error is the fallacy of misplaced concreteness which is found in the notion of utility. Have you ever been able to measure your own state of happiness? I mean measure it, not just say that you’re feeling happier today than you were when your pet dog died. It’s an impossible task, isn’t it? If you can’t measure your own happiness, how can you (or anyone) presume to measure and aggregate the happiness of millions or billions of individual human beings? It can’t be done.

Which brings me to the second error, which is an error of arrogance. Given the impossibility of measuring one person’s happiness, and the consequent impossibility of measuring and comparing the happiness of many persons, it is pure arrogance to insist that “society” would be better off if X amount of income or wealth were transferred from Group A to Group B….

The third error lies in the implicit assumption embedded in the idea of DMU. The assumption is that as one’s income or wealth rises one continues to consume the same goods and services, but more of them….

All of that notwithstanding, the committed believer in DMU will shrug and say that at some point DMU must set in. Which leads me to the fourth error, which is an error of introspection….  [If over the years] your real income has risen by a factor of two or three or more — and if you haven’t messed up your personal life (which is another matter) — you’re probably incalculably happier than when you were just able to pay your bills. And you’re especially happy if you put aside a good chunk of money for your retirement, the anticipation and enjoyment of which adds a degree of utility (such a prosaic word) that was probably beyond imagining when you were in your twenties, thirties, and forties.

Robert Murphy agrees:

[T]he problem comes in when people sometimes try to use the concept of DMU to justify government income redistribution. Specifically, the argument is that (say) the billionth dollar to Bill Gates has hardly any marginal utility, while the 10th dollar to a homeless man carries enormous marginal utility. So clearly–the argument goes–taking a dollar from Bill Gates and giving it to a homeless man raises “total social utility.”

There are several serious problems with this type of claim. Most obvious, even if we thought it made sense to attribute units of utility to individuals, there is no reason to suppose we could compare them across individuals. For example, even if we thought a rich man had units of utility–akin to the units of his body temperature–and that the units declined with more money, and likewise for a poor person, nonetheless we have no way of placing the two types of units on the same scale….

In any event, this is all a moot point regarding the original question of interpersonal utility comparisons. Even if we thought individuals had cardinal utilities, it wouldn’t follow that redistribution would raise total social utility.

Even if we retreat to the everyday usage of terms, it still doesn’t follow as a general rule that rich people get less happiness from a marginal dollar than a poor person. There are many people, especially in the financial sector, whose self-esteem is directly tied to their earnings. And as the photo indicates, Scrooge McDuck really seems to enjoy money. Taking gold coins from Scrooge and giving them to a poor monk would not necessarily increase happiness, even in the everyday psychological sense. [“Can We Compare People’s Utilities?,” Mises Canada, May 22, 2015]

See also David Henderson’s “Murphy on Interpersonal Utility Comparisons” (EconLog, May 22, 2015) and Henderson’s earlier posts on the subject, to which he links. Finally, see my comment on an earlier post by Henderson, in which he touches on the related issue of cost-benefit analysis.

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Here’s a slice of what Robert Tracinski has to say about “reform conservatism”:

The key premise of this non-reforming “reform conservatism” is the idea that it’s impossible to really touch the welfare state. We might be able to alter its incentives and improve its clanking machinery, but only if we loudly assure everyone that we love it and want to keep it forever.

And there’s the problem. Not only is this defeatist at its core, abandoning the cause of small government at the outset, but it fails to address the most important problem facing the country.

“Reform conservatism” is an answer to the question: how can we promote the goal of freedom and small government—without posing any outright challenge to the welfare state? The answer: you can’t. All you can do is tinker around the edges of Leviathan. And ultimately, it won’t make much difference, because it will all be overwelmed in the coming disaster. [“Reform Conservatism Is an Answer to the Wrong Question,” The Federalist, May 22, 2015]

Further, as I observe in “How to Eradicate the Welfare State, and How Not to Do It,” the offerings of “reform conservatives”

may seem like reasonable compromises with the left’s radical positions. But they are reasonable compromises only if you believe that the left wouldn’t strive vigorously to undo them and continue the nation’s march toward full-blown state socialism. That’s the way leftists work. They take what they’re given and then come back for more, lying and worse all the way.

See also Arnold Kling’s “Reason Roundtable on Reform Conservatism” (askblog, May 22, 2015) and follow the links therein.

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I’ll end this installment with a look at science and the anti-scientific belief in catastrophic anthropogenic global warming.

Here’s Philip Ball in “The Trouble With Scientists“:

It’s likely that some researchers are consciously cherry-picking data to get their work published. And some of the problems surely lie with journal publication policies. But the problems of false findings often begin with researchers unwittingly fooling themselves: they fall prey to cognitive biases, common modes of thinking that lure us toward wrong but convenient or attractive conclusions. “Seeing the reproducibility rates in psychology and other empirical science, we can safely say that something is not working out the way it should,” says Susann Fiedler, a behavioral economist at the Max Planck Institute for Research on Collective Goods in Bonn, Germany. “Cognitive biases might be one reason for that.”

Psychologist Brian Nosek of the University of Virginia says that the most common and problematic bias in science is “motivated reasoning”: We interpret observations to fit a particular idea. Psychologists have shown that “most of our reasoning is in fact rationalization,” he says. In other words, we have already made the decision about what to do or to think, and our “explanation” of our reasoning is really a justification for doing what we wanted to do—or to believe—anyway. Science is of course meant to be more objective and skeptical than everyday thought—but how much is it, really?

Whereas the falsification model of the scientific method championed by philosopher Karl Popper posits that the scientist looks for ways to test and falsify her theories—to ask “How am I wrong?”—Nosek says that scientists usually ask instead “How am I right?” (or equally, to ask “How are you wrong?”). When facts come up that suggest we might, in fact, not be right after all, we are inclined to dismiss them as irrelevant, if not indeed mistaken….

Given that science has uncovered a dizzying variety of cognitive biases, the relative neglect of their consequences within science itself is peculiar. “I was aware of biases in humans at large,” says [Chris] Hartgerink [of Tilburg University in the Netherlands], “but when I first ‘learned’ that they also apply to scientists, I was somewhat amazed, even though it is so obvious.”…

One of the reasons the science literature gets skewed is that journals are much more likely to publish positive than negative results: It’s easier to say something is true than to say it’s wrong. Journal referees might be inclined to reject negative results as too boring, and researchers currently get little credit or status, from funders or departments, from such findings. “If you do 20 experiments, one of them is likely to have a publishable result,” [Ivan] Oransky and [Adam] Marcus [who run the service Retraction Watch] write. “But only publishing that result doesn’t make your findings valid. In fact it’s quite the opposite.”9 [Nautilus, May 14, 2015]

Zoom to AGW. Robert Tracinski assesses the most recent bit of confirmation bias:

A lot of us having been pointing out one of the big problems with the global warming theory: a long plateau in global temperatures since about 1998. Most significantly, this leveling off was not predicted by the theory, and observed temperatures have been below the lowest end of the range predicted by all of the computerized climate models….

Why, change the data, of course!

Hence a blockbuster new report: a new analysis of temperature data since 1998 “adjusts” the numbers and magically finds that there was no plateau after all. The warming just continued….

How convenient.

It’s so convenient that they’re signaling for everyone else to get on board….

This is going to be the new party line. “Hiatus”? What hiatus? Who are you going to believe, our adjustments or your lying thermometers?…

The new adjustments are suspiciously convenient, of course. Anyone who is touting a theory that isn’t being borne out by the evidence and suddenly tells you he’s analyzed the data and by golly, what do you know, suddenly it does support his theory—well, he should be met with more than a little skepticism.

If we look, we find some big problems. The most important data adjustments by far are in ocean temperature measurements. But anyone who has been following this debate will notice something about the time period for which the adjustments were made. This is a time in which the measurement of ocean temperatures has vastly improved in coverage and accuracy as a whole new set of scientific buoys has come online. So why would this data need such drastic “correcting”?

As climatologist Judith Curry puts it:

The greatest changes in the new NOAA surface temperature analysis is to the ocean temperatures since 1998. This seems rather ironic, since this is the period where there is the greatest coverage of data with the highest quality of measurements–ARGO buoys and satellites don’t show a warming trend. Nevertheless, the NOAA team finds a substantial increase in the ocean surface temperature anomaly trend since 1998.

….

I realize the warmists are desperate, but they might not have thought through the overall effect of this new “adjustment” push. We’ve been told to take very, very seriously the objective data showing global warming is real and is happening—and then they announce that the data has been totally changed post hoc. This is meant to shore up the theory, but it actually calls the data into question….

All of this fits into a wider pattern: the global warming theory has been awful at making predictions about the data ahead of time. But it has been great at going backward, retroactively reinterpreting the data and retrofitting the theory to mesh with it. A line I saw from one commenter, I can’t remember where, has been rattling around in my head: “once again, the theory that predicts nothing explains everything.” [“Global Warming: The Theory That Predicts Nothing and Explains Everything,” The Federalist, June 8, 2015]

Howard Hyde also weighs in with “Climate Change: Where Is the Science?” (American Thinker, June 11, 2015).

Bill Nye, the so-called Science Guy, seems to epitomize the influence of ideology on “scientific knowledge.”  I defer to John Derbyshire:

Bill Nye the Science Guy gave a commencement speech at Rutgers on Sunday. Reading the speech left me thinking that if this is America’s designated Science Guy, I can be the nation’s designated swimsuit model….

What did the Science Guy have to say to the Rutgers graduates? Well, he warned them of the horrors of climate change, which he linked to global inequality.

We’re going to find a means to enable poor people to advance in their societies in countries around the world. Otherwise, the imbalance of wealth will lead to conflict and inefficiency in energy production, which will lead to more carbon pollution and a no-way-out overheated globe.

Uh, given that advanced countries use far more energy per capita than backward ones—the U.S.A. figure is thirty-four times Bangladesh’s—wouldn’t a better strategy be to keep poor countries poor? We could, for example, encourage all their smartest and most entrepreneurial people to emigrate to the First World … Oh, wait: we already do that.

The whole climate change business is now a zone of hysteria, generating far more noise—mostly of a shrieking kind—than its importance justifies. Opinions about climate change are, as Greg Cochran said, “a mark of tribal membership.” It is also the case, as Greg also said, that “the world is never going to do much about in any event, regardless of the facts.”…

When Ma Nature means business, stuff happens on a stupendously colossal scale.  And Bill Nye the Science Guy wants Rutgers graduates to worry about a 0.4ºC warming over thirty years? Feugh.

The Science Guy then passed on from the dubiously alarmist to the batshit barmy.

There really is no such thing as race. We are one species … We all come from Africa.

Where does one start with that? Perhaps by asserting that: “There is no such thing as states. We are one country.”

The climatological equivalent of saying there is no such thing as race would be saying that there is no such thing as weather. Of course there is such a thing as race. We can perceive race with at least three of our five senses, and read it off from the genome. We tick boxes for it on government forms: I ticked such a box for the ATF just this morning when buying a gun.

This is the Science Guy? The foundational text of modern biology bears the title On the Origin of Species by Means of Natural Selection, or the Preservation of Favored Races in the Struggle for Life. Is biology not a science?

Darwin said that populations of a species long separated from each other will diverge in their biological characteristics, forming races. If the separation goes on long enough, any surviving races will diverge all the way to separate species. Was Ol’ Chuck wrong about that, Mr. Science Guy?

“We are one species”? Rottweilers and toy poodles are races within one species, a species much newer than ours; yet they differ mightily, not only in appearance but also—gasp!—in behavior, intelligence, and personality. [“Nye Lied, I Sighed,” Taki’s Magazine, May 21, 2015]

This has gone on long enough. Instead of quoting myself, I merely refer you to several related posts:

Demystifying Science
AGW: The Death Knell
Evolution and Race
The Limits of Science (II)
The Pretence of Knowledge
“The Science Is Settled”
The Limits of Science, Illustrated by Scientists
Rationalism, Empiricism, and Scientific Knowledge
AGW in Austin?

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How to Eradicate the Welfare State, and How Not to Do It

I’ll begin with how not to do it. One way of not doing it is simply not to do it, which is the left’s way. In fact, the left is always on the lookout for ways to expand the welfare state.

Reform conservatives offer less obvious ways not to do it. And the left loves them for it. Consider, for example, Noah Smith’s list of “People I Admire” and see if you can spot what Smith’s “admirable” persons have in common. Hint: They are either lefties or they do things that lefties like.

What’s James Pethokoukis doing on that list? Pethokoukis is an economist at American Enterprise Institute (AEI), which has been described as right-leaning and conservative. Why, then, does Smith admire Pethokoukis? Because, in Smith’s words, Pethokoukis is a “reform conservative.”

And what is reform conservatism? According to Ross Douthat,

It’s rooted in two major premises, which I would summarize as follows:

1) The core economic challenge facing the American experiment is not income inequality per se, but rather stratification and stagnation — weak mobility from the bottom of the income ladder and wage stagnation for the middle class. These challenges are bound up in a growing social crisis — a retreat from marriage, a weakening of religious and communal ties, a decline in workforce participation — that cannot be solved in Washington D.C. But economic and social policy can make a difference nonetheless, making family life more affordable, upward mobility more likely, and employment easier to find.

2) The existing welfare-state institutions we’ve inherited from the New Deal and the Great Society, however, often make these tasks harder rather than easier: Their exploding costs crowd out every other form of spending, require middle class tax increases and threaten to drag on economic growth; their tangled web of subsidies and credits and tax breaks often benefit the already-affluent and create perverse incentives for the poor, and the distortions created by the way they pay for health care, in particular, contribute mightily to the rising cost of health insurance and thus the stagnation of middle class incomes. So we don’t face a choice between streamlining the welfare state and making it more supportive of work and family; we should be doing both at once.

Proceeding from these premises, the basic “reform conservative” agenda looks something like this:

a. A tax reform that caps deductions and lowers rates, but also reduces the burden on working parents and the lower middle class, whether through an expanded child tax credit or some other means of reducing payroll tax liability. (Other measures that might improve the prospects of low-skilled men, ranging from a larger earned income tax credit to criminal justice reforms that reduce the incarceration rate, should also be part of the conversation.)

b. A repeal or revision of Obamacare that aims to ease us toward a system of near-universal catastrophic health insurance, and includes some kind of flat tax credit or voucher explicitly designed for that purpose.

c. A Medicare reform along the lines of the Wyden-Ryan premium support proposal, and a Social Security reform focused on means testing and extending work lives rather than a renewed push for private accounts.

d. An immigration reform that tilts much more toward Canadian-style recruitment of high-skilled workers, and that doesn’t necessarily seek to accelerate the pace of low-skilled immigration. (Any amnesty should follow the implementation of E-Verify rather than the other way around, guest worker programs should not be expanded, etc.)

e. A “market monetarist” monetary policy as an alternative both to further fiscal stimulus and to the tight money/fiscal austerity combination advanced by many Republicans today.

f. An attack not only on explicit subsidies for powerful incumbents (farm subsidies, etc.), but also other protections and implicit guarantees, in arenas ranging from copyright law to the problem of “Too Big To Fail.” [“What Is Reform Conservatism?,” The New York Times, May 30, 2013]

Such proposals may seem like reasonable compromises with the left’s radical positions. But they are reasonable compromises only if you believe that the left wouldn’t strive vigorously to undo them and continue the nation’s march toward full-blown state socialism. That’s the way leftists work. They take what they’re given and then come back for more, lying and worse all the way. As Saul Alinsky (a source of inspiration for Barack Obama) says in Rules for Radicals:

The third rule of the ethics of means and ends is that in war the end justifies almost any means.

The left is always at war, and will be at war until the United States becomes unrecognizable by a survivor of the 1950s, let alone a Founding Father: a nation whose official policies punish success, subvert civil society, and leave Americans defenseless against domestic and foreign predators.

What this means is that “reforms” like those listed by Douthat can be achieved only by opposing them, not by agreeing to them up front. But that’s not what Pethokoukis proposes. For example, with respect to Social Security, he endorses a proposal by Andrew Biggs that would work like this, according to Pethokoukis:

First, workers would be enrolled automatically in an employer-sponsored retirement account and contribute at least 1.5% of pay, matched dollar for dollar by their employers. Second, Social Security’s government-provided benefits would be transformed into a flat universal benefit mean to improve social-insurance protections for low-income Americans. Biggs: “If you put the two benefits together, this poverty-level benefit, plus the individual accounts, the result is near what Social Security promised to pay, but can’t afford. It’s a more reliable system for low-income folks and it’s more affordable on the tax end.” [“Joni Ernst, the Tea Party, and Conservative Reform,” AEI.org, February 10, 2014[

Why throw in the towel now? Because, according to Biggs,

President Bush’s 2001 Commission to Strengthen Social Security (on which I was a staffer) wrote that once the program began to run payroll-tax deficits — something that happened this year — policymakers would face difficult choices to raise taxes, cut benefits, reduce other programs, or increase the budget deficit. … With personal accounts, we face the same choices, only sooner. If workers invest part of their Social Security taxes in personal accounts, they could indeed earn higher returns and generate higher benefits without taking more risk. But diverting taxes to accounts leaves the program short of what is needed to pay benefits to today’s retirees. To cover these “transition costs,” we would need to generate new revenues for the program, either by raising taxes, cutting other programs, or borrowing. [“Personal Accounts Are No Cure-All,” National Review Online, August 30, 2010]

The real problem, as Biggs sees it, isn’t that shifting to personal accounts (for younger workers) would lead to transition costs, but that those costs would come sooner. So what? The end of Social Security revenue surpluses doesn’t alter the fact that non-retirees will have to pay higher taxes to avert a reduction of retirees’ benefits, it just makes the fact more apparent.

In other words, the likes of Biggs and Pethokoukis are willing to sacrifice privatization on the altar of public relations. The dog that doesn’t bark in their proposals is real reform of Social Security. Privatization isn’t real reform because it accepts a basic premise of Social Security: Americans must and should be forced to save for retirement. The joke is that Social Security doesn’t foster saving; it’s a transfer-payment Ponzi scheme.

Real reform means eradication, albeit gradual eradication, like this:

1. Repeal and replace Social Security as of a date certain. Call it Abolition Day (AD), which would occur 12 months from the day on which reform legislation is enacted.

2. After AD, the federal government would continue to pay benefits to persons who are then collecting Social Security. The federal government would also pay benefits to persons who turn 55 before AD but who haven’t yet begun to collect benefits. Persons who are 45 to 54 years old on AD would receive benefits that are pro-rated according to the Social Security taxes that they and their employers had paid as of AD. Cost-of-living increases for benefits paid after AD would be tied to chained CPI. (This is a better measure of inflation, and it doesn’t rise as fast as CPI-W, the price index now used to compute cost-of-living increases.)

3. Persons who are younger than 45 on AD would receive a lump-sum repayment of Social Security taxes paid by them and their employers, plus interest at, say, the rate on 10-year Treasury notes. The repayment would be made when a person turns 70. It would automatically go to a surviving spouse or next-of-kin if the recipient dies intestate. Otherwise, the recipient could bequeath, transfer, or sell his interest in the payment at any time before it comes due.

4. For persons who are 45 to 54 years old on AD, the retirement age for full benefits would be raised to 70, and the minimum age for partial benefits would be raised to 65. (Full retirement age is now scheduled to rise to 67 in 2027; the minimum age for partial benefits is currently set at 62.)

5. The residual obligations outlined above would be funded by a special payroll tax, which would diminish as obligations are liquidated, then vanish.

But what about retirees (and their households) whose incomes are below the poverty line? It might be necessary to provide for them, to ensure the passage of reform legislation. But it would be self-defeating to offer a program for the indigent. An important goal of Social Security reform is to encourage work and saving — not to preemptively discourage work and saving by rewarding indolence.

A deal for the passage of reform might include separate legislation that provides for stringently means-tested income support. The amount of support would be aimed at boosting the total income of a retiree (or his household) to the poverty line. Examiners would take into account an applicant’s income (including income in kind) from all sources, and an applicant’s assets (with a look-back period of several years and criminal penalties for hiding assets). For an applicant who is married or a member of a household, the income and assets of a spouse and/or other members of the household would be taken into account. Benefits wouldn’t be paid to able-bodied and able-minded persons who are unemployed and below retirement age.  (No handouts to slackers who still live at home.)

How might such a “radical” plan be enacted?

Proponents of reform — Republicans, presumably — must launch a vigorous, pro-reform campaign the minute that they gain control of both Houses of Congress and the White House. They must sustain the campaign for several months before Congress sends a bill to the president, to ensure broad support for the enactment of reform. And to prevent their efforts from being stymied by Democrats, they must change the rules of the Senate to eliminate the filibuster and other obstructive tactics.

Here are the key elements of the campaign:

  • Document, publicize, and ceaselessly emphasize the the size of the tax increases that will result if Social Security benefits aren’t reduced to match projected revenues.
  • Point out, relentlessly, that a large fraction of Americans (cite number) who “contribute” to Social Security will earn worse “returns” that they would by putting their money into safe, interest-bearing investments (e.g., investment-grade corporate bonds).
  • Emphasize the true, original purpose of Social Security: keep the poorest of the elderly out of poverty.
  • Show how much less costly it would be if Social Security were restored to its original purpose.
  • Explain that their program (a) achieves the original purpose of Social Security, (b) enables the non-poor to do better for themselves than they would with Social Security, and (c) fosters economic growth that reduces dependence on Social Security:

Enough of Social Security. What about Douthat’s other “reforms”?

Tax reform that caps deductions and lowers rates, but also reduces the burden on working parents and the lower middle class, whether through an expanded child tax credit or some other means of reducing payroll tax liability.

This is too complex and easily manipulated. What’s needed is a true flat tax.

Repeal or revision of Obamacare that aims to ease us toward a system of near-universal catastrophic health insurance, and includes some kind of flat tax credit or voucher explicitly designed for that purpose.

Just repeal Obamacare and its partners-in-crime — Medicare and Medicaid — and phase them out gracefully (along the lines of my proposal for Social Security). Eliminate regulations that hinder interstate competition. Provide for the indigent — and only the indigent — through means-tested vouchers (along the lines of my proposal for Social Security).

Medicare reform along the lines of the Wyden-Ryan premium support proposal.

See above.

Immigration reform that tilts much more toward Canadian-style recruitment of high-skilled workers, and that doesn’t necessarily seek to accelerate the pace of low-skilled immigration. (Any amnesty should follow the implementation of E-Verify rather than the other way around, guest worker programs should not be expanded, etc.)

Immigration reform should discourage low-skilled immigration, as opposed to Obama’s policy of encouraging it. Discouraging it requires stronger security at the borders, a vigorous and well-publicized deportation effort, and the end of subsidies (no free health care, no free schooling, no eligibility for income or housing subsidies, no drivers’ licenses, etc.).

A “market monetarist” monetary policy as an alternative both to further fiscal stimulus and to the tight money/fiscal austerity combination advanced by many Republicans today.

Eliminate the Federal Reserve, a leading cause of the Great Depression and Great Recession. Allow free banking. Fiscal and monetary policy should be “none,” as in the case of the Depression of 1920-21, the depression that cured itself. (NB: The Fed caused that one, too.)

An attack not only on explicit subsidies for powerful incumbents (farm subsidies, etc.), but also other protections and implicit guarantees, in arenas ranging from copyright law to the problem of “Too Big To Fail.”

Douthat gets this one right. But one out of seven is a batting average of 0.143 — abject failure in any league.

“Attack” is the key word in Douthat’s unusual stroke of boldness. Liberty is born of attack, not compromise.

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