Thursday, June 29, 2006

To deal with the inadequacies of Blogger and others

Co.mments will track all comment pages you bookmark and keep you updated easily. Yay. Read more.
Capitalism and Freedom

A while back Greg Mankiw linked an article which proposed that,
Much of the Left still longs to sneer at the very idea of capitalism, especially at the claim that it has real ethical foundations (all the more so, in comparison with the attempted alternatives). There is still a wish to regard the whole thing as a scam: gulled and witless consumers; scheming and rapacious businesses; phony markets and bogus "competition"; politicians, media hacks, and other assorted apologists for "the system," all cozily in the pockets of the people in charge. It is a comprehensively false diagnosis.

The comments were predictable. One concluded that the idea that there were moral (rather than merely efficient) grounds for capitalism was laughable, and every attempt to establish such had failed. Another told us that, "The American left. . . has rightly called for its regulation."

Of course, if Mankiw agreed with any sentiment in the original quote, it wasn't on objectivist grounds. No, he undoubtedly--like so many of us others--is looking to Milton Friedman's Capitalism and Freedom. From the first chapter:
A citizen of the United States who under the laws of various states is not free to follow the occupation of his own choosing unless he can get a license for it, is likewise being deprived of an essential part of his freedom. So is the man who would like to exchange some of his goods with, say, a Swiss for a watch but is prevented from doing so by a quota. So also is the Californian who was thrown into jail for selling Alka Seltzer at a price below that set by the manufacturer under so-called "fair trade" laws. So also is the farmer who cannot grow the amount of wheat he wants. And so on. Clearly, economic freedom, in and of itself, is an extremely important part of total freedom.

And any other number of examples can be found daily. This is a very simple but very important point: no matter what externalities the "rightly called" regulation can clear up, they always come at a loss of freedom. Sometimes the benefit may still outweigh that cost; it often depends on how valuable you consider personal freedom.

But there are many who will not even concede this much. And that's always surprised me. So, for the unbelievers, one of many instances of capitalism and freedom (Hat tip to Hit and Run):
Last September, a man came to Stutzman's weathered, two-story farmhouse, located in a pastoral region in northeast Ohio that has the world's largest Amish settlement. The man asked for milk.

Stutzman was leery, but agreed to fill up the man's plastic container from a 250-gallon stainless steel tank in the milkhouse.

After the creamy white, unpasteurized milk flowed into the container, the man, an undercover agent from the Ohio Department of Agriculture, gave Stutzman two dollars and left.

The department revoked Stutzman's license in February. In April, he got a new license, which allows him to sell to cheese houses and dairies, but received a warning not to sell raw milk to consumers again.

"You can't just give milk away to someone other then (sic) yourself. It's a violation of the law," said LeeAnne Mizer, spokeswoman for the department.
Read more.

Wednesday, June 28, 2006

They will bite you if you give them half a chance

Many of Brad DeLong's posts are just long quotations of other people's articles. It's kind of a shame, because when he wants to say something, he's often much more effective than the people he links.

So read this and remember: Wall Street Journal good, Financial Times very good, most other newspapers (or tv stations), at least when it comes to economic reporting, very bad. Do not trust the media. Read more.

Tuesday, June 27, 2006

Minimum Wage-tastic

The minimum wage debate is wreaking havoc across the econ blogs right now. (You can tell a button has been pressed when the comments at Cafe Hayek reach more than 30 on any entry.) The entire problem seems to be divided along the lines of unemployment: "The minimum wage causes unemployment" vs. "No it doesn't." The former side never forgets to mention the law of demand and constantly wonders why minimum wage proponents ignore basic economics. The latter side touts about Card & Krueger as if it was hand-delivered at Mount Sinai on sacred stone tablets. Because of the complexity of the issue, a straightforward cost-benefit analysis is about impossible. (How many people will be put out of a job? Is that not worth the increased wages for the rest of the workers? How big will the resulting price increases be? Will they cancel out the increased wages for most people? Who makes the minimum wage, anyway? Are they worth directly transferring money from employers and consumers?) All things considered, it's kind of a shame that the analysis is rarely more serious than a supply and demand graph with arbitrary elasticities.

But it's exactly that complexity which leads me to oppose the minimum wage. We are not discussing arbitrary numbers. We are discussing the results of millions of individuals interracting based upon some specific givens (e.g. the money supply). Competition, as a process by which the knowledge and entrepreneurship of individuals is revealed to and taken into account by others, is the single greatest measure to ensure the best possible outcome for individuals. Guessing how many individuals will be displaced by the minimum wage, or whether those individuals will be teenagers or adults, black or white, or middle class or poor does not help matters. After all, it's just guessing.

Furthermore, I do not like the way our country of about 300 million people is portrayed as some sort of whole, across which conditions are roughly equal. Card & Krueger's complex monopsony case may be entirely irrelevant for southern states. And, in fact, the minimum wage has historically not only seen support from trade unions to squash competition, as Milton Friedman was so fond of pointing out, but also from businesses in high cost-of-living areas (such as northern states). A wage increase in a high cost-of-living state, where the cost of labor is also higher, may have a negligible effect on employment, though it may put many people out of work where wages are lower. It's no surprise that, in past minimum wage debates, we get Congressmen like Russel V. Mack from Washington declaring,
The southern manufacturers thereby have a competitive advantage over our west coast mills, where wages are higher. . . . It is not fair that western producers of lumber, plywood, furniture, and other forest products who pay an average wage of $1.80 an hour must compete with the southern lumber, plywood and furniture manufacturers who pay an average wage of only about 86 cents an hour. This unjust differential can be remedied by requiring that southern manufacturers pay at least a minimum wage of $1 an hour.

Or corporate chairmen sending letters like this to their congressmen. Henry S. Reuss noted in the Congressional Record:
I am proud of the fact that employers from my district have written to me asking my support for the $1.25 minimum wage because they do not want sweatshop competition. Some of these letters from MIlwaukee employers show a high level of social responsibility and business morality which I wish to quote for the Record:
Dear Congressman Reuss:
This is to advise you that the Schmitt-Orlon Co. subscribes to the $1.25 minimum wage, as it will serve to bring closer the wage differentials between the low and high labor areas. . . .
We, Wisconsin textile garment manufacturers, would then be placed on a better competitive basis.

I do not share Representative Reuss's opinion that the desire to destroy their competitor's jobs through government intervention demonstrated Schmitt-Orlon's "business morality."

Whatever the effects of a small increase in the minimum wage in a specific geographic area, on a nationwide scale it is a form of protectionism--a tariff, largely on the south. (For more, including the original quotes and many similar ones, see this paper (PDF) by GMU's own Thomas Rustici.)

The issue is indeed more complex than a standard supply-demand analysis. The world is more intricate than one graph representing millions of interacting individuals. That is precisely why I oppose government intervention into the price system. Read more.

Sunday, June 25, 2006

No surprise indeed. Read more.

Friday, June 23, 2006

And people wonder why I hate movies

I just sent this letter to Roger Ebert:
"Click," it seems, has a plot that would make an excellent premise for a 15 or 30 minute cartoon. (Even the bit of wit that you noted in the "Bed, Bath, and what's up with Beyond?" joke is rehashed from an episode of Family Guy.) But it's not alone. "The Ringer," in which a character fakes a handicap to win the Special Olympics, was the plot for a South Park episode. Now we're about to be fed "Little Man," a movie about a criminal midget mistaken for a baby. That's nothing more than an episode of Merrie Melodies, "Baby Buggy Bunny"--except with more penis jokes. Are Hollywood producers now so strapped for ideas that they must turn 15 minutes worth of material recycled from old cartoons into full-length movies, or have they always been this desperate?
Read more.

Saturday, June 17, 2006

Just an old sweet song made new by your body

Summer generally means two things: Law & Order and, uh. Actually, these days it's just Law & Order.

What is it about that show? Pacing, maybe. Interesting storylines? Not always. To me it's watching people who are good at their jobs. I've never cared for the idea of perpetual youth. Youth offers some nice things, sure. Your body's in its prime, man! (But I don't really use my body. I sit an awful lot. I expect to do the same throughout my life, perhaps reading books and journals rather than blogs.) That youthful look is attractive. (And here I am writing in a MySpace blog. So?) You don't have to deal with taxes and insurance and Big Adult Things. (You will eventually, no matter how long you try to stay young. Unless you get thrown in prison. Loser.)

So I like watching a show about adults who are good at what they do. Compare to most other shows, which are about adults who have the personalities of teenagers and aren't mature enough to handle their jobs (or don't even have them). Grey's Anatomy, for instance--what the hell are those people doing? Falling in love with patients and throwing proms for dying girls and having sex in random rooms and bitching about your dog dying? Get back to work you humps!

Maybe it's that the characters don't really have personal lives aside from work. The show never explores their marital problems or their children or stupid, pointless problems--unless, of course, it's required to throw a wrench into the case somehow. (See: Lenny's old drinking problem.) Maybe I identify. These days I haven't spent much thought on anything but economics. It's all-consuming. Every time I have a conversation with someone, my brain turns to it eventually. I guess I've been captured by the economic way of thinking. Which is why it's been so hard to write ridiculous, long, personal blog entries on the internet recently. Maybe it's a good thing. My dream, as of now, is fairly simple: Get a job and get a library. People ask me what I'm going to do when I graduate and I have no idea. Research for the Mercatus Center? Intern for Reason? Cato? Am I old enough? That's the thing with youth. I'm looking forward to grad school, but I'm much more looking forward to being an established economist who does good work. When you're young, everything's so darned questionable.

The very first thing I want in my library--the cornerstone, the ultimate building block--is Friedrich Hayek's Law, Legislation and Liberty--all three volumes. As far as I'm concerned, all great economics starts with Hayek. After that, the classics (including Das Kapital, all three volumes) and the modern public-choice classics (yes, I know Calculus of Consent is available online). I could use a copy of Lawrence White's Free Banking in Britain and Arthur Marget's The Theory of Prices (both volumes), if I can find it. After that, who knows? There's so much I need to collect. They're like Pokémon, these things.

That's it. A job doing economic research and a personal library. Everything else isn't distant enough for me to care. God bless aging. Read more.

Tuesday, June 13, 2006

They make it so easy

Libertarianism in One Lesson.

"Better to abolish all regulations, consider everything as property, and solve all controversy by civil lawsuit over damages. The US doesn't have enough lawyers, and people who can't afford to invest many thousands of dollars in lawsuits should shut up."

The funny part being that lawyers are so expensive precisely because it is a regulated profession. By restricting output (the number of practicing lawyers), legal licensing greatly increases the price of lawyers.

(Protip: If you think it is in the "public good" to restrict access to unlicensed or only partially educated lawyers, why are you allowed to defend yourself in court?) Read more.

Sunday, June 11, 2006

Politics and Sex

"Kate, I'm a libertarian. There's no way I'd ever be down with master-slave play." Read more.

Thursday, June 08, 2006


Several years ago I read Thomas Sowell's The Vision of the Anointed, which concludes that much liberal political philosophy is a result of an underlying narcissism. (He establishes the dichotomy between the "constrained" and "unconstrained" worldviews in A Conflict of Visions. Bryan Caplan criticizes, in my opinion effectively, that book here.) Though I don't necessarily agree with Sowell's conclusion, I do admire him. One particular passage regarding Noam Chomsky and positive versus negative liberties stuck with me:
The cosmic perspective of course extends beyond the law. But, in whatever field it appears, its adherents are quick to say that people did not really have a "free choice" in what they did. Thus to Noam Chomsky "freedom is illusion and mockery when conditions for the exercise of free choice do not exist"—and those conditions do not exist for "the person compelled to sell his labor power to survive," i.e., for anyone who works for a living. Any circumstantial constraints or potential consequences hanging over people's decisions makes their choices not "really" free. But this conception of a free choice requires an unconstrained universe. Only God could have a free choice—and only on the first day of creation, since He would be confronted on the second day by what He had already done on the first.

Curious if Chomsky could really be so blatantly silly as to suggest that people are not free if they must work for a living, I checked the original quote, which appears in an essay titled "Equality":
Turning to the relation between equality and freedom, allegedly inverse, we also find nontrivial questions. Workers' control of production certainly increases freedom along some dimensions -- extremely important ones, in my judgment -- just as it eliminates the fundamental inequality between the person compelled to sell his labor power to survive and the person privileged to purchase it, if he so chooses. At the very least, we should bear in mind the familiar observation that freedom is illusion and mockery when conditions for the exercise of free choice do not exist. We only enter Marx's "realm of freedom" when labor is no longer "determined by necessity and mundane considerations," an insight that is hardly the precept of radicals and revolutionaries alone.

There is a movement to define freedom as freedom from consequences, and I see Chomsky as an advocate for it (see, for instance, the infamous Robert Faurisson affair, in which Chomsky defended a well-known Holocaust denier's academic lecturing job on the grounds of freedom of speech--government censorship was not involved). Sowell misrepresents the quoted passage, but it does effectively say just that: Humans ought to be free from economic pressures.

Of course, Chomsky is still wrong on numerous other grounds. First, he ignores the freedom of the "person privileged to purchase" labor. Freedom is not arithmetical; increased freedom for 20 people at the expense of one person's does not mean a net gain in freedom by 19--especially accounting for the key difference between positive and negative freedoms. He simply assumes away the idea that private property, as an institution, may be a natural right. But history has not spoken well for the conditions of freedom or equality in countries where private property has been abolished.

In fact, it would have done Chomsky well to tell us how, exactly, the workers are going to gain control of production. Armed revolution? By use of government intervention? Surely not the latter, as he claims to be an anarchist. The Mises Institute, as (rightly) dismissive and snarky as always, points out the problem with his economic worldview:
Critical to understanding Chomsky and the syndicalists is the fact that their favored mode of production—worker-owned cooperatives—can lawfully exist in a free market system. They are inefficient of course—dilettantes cannot compete with specialists. They will be limited to those who have an ideological or philosophical commitment to them. . .

Thus, based on all the evidence, it is reasonable to conclude that Chomsky and the gang are not satisfied with the opportunity to practice syndicalism. No, what they really want is to prevent others who disagree with them from engaging in forms of production based on private property. And, though they rarely say as much, they apparently intend to put their rivals out of business by brute force

Furthermore, his use of verbs and adjectives betrays his misleading assumptions. (Though, as a linguist, I'm sure he intended that.) The worker is "compelled" to sell his labor "to survive," while the implied capitalist is "privileged." But that, like so much other discussion on the evils of capitalism, starts in the middle. How did the capitalist come across this "privilege"? What happens if another privileged capitalist competes with the one in question through higher employee wages? Will he not be "compelled" to offer higher wages or other benefits? If he does not, will he not soon lose his privilege?

The answer is, Of course he will. Freedom from economic forces is unattainable, sorry to say. The "privileged" capitalist is no more free to set wages at whatever he pleases than the worker is to not work. Those competitive forces--contestability included--make us all very constrained.

Chomsky's economic illiteracy is no secret. But it fascinates me that someone so admired in the intellectual sphere can say something so profoundly silly with so little reasoned criticism. (Most Chomsky critics devolve to declaring him a fascist-supporter ad infinitum.) Perhaps it's best that economists just ignore Chomsky, much as academic historians do. But, gosh, couldn't he find another subject to pretend he knows something about? His followers are doing it too. (Unfortunately, my favorite Amazon review of Hayek's The Road To Serfdom is gone; a Chomsky fan completely ignored the content of the book and instead spent several paragraphs explaining to us how awesome syndicalism is and how evil corporations are.) Read more.

Sunday, June 04, 2006

If You Don't Have Anything To Say. . .

One particularly annoying thought running around the internet, often used by atheist arghChristianssuck! types, is that religion causes war. Some of them go as far as to say most or even all wars. Usually I don't care enough to respond, especially since I'm not normally a member of the forums I see this tripe on, but a quick question for any religion-causes-war types: just which wars are you talking about? The Trojan War? The Persian Wars? The Pelopponesian War? The Punic Wars? The Jugurthine War, or Sulla's civil wars? The Chinese or Korean Civil Wars? The campaigns of the Mongol Empire? The Hundred Years' War? The War of the Roses? The Seven Years' War? The Thirty Years' War? The French Revolution? The Napoleonic Wars? The American Revolutionary War, or the War of 1812? The Spanish Civil War? The Crimean War? The Anglo-Zulu War? The World Wars? The Cold War? The various African civil wars throughout the late 50s and 60s? Vietnam? Countless revolutions throughout centuries and centuries?

Okay, so which wars really did have something to do with religion? The Crusades, yeah. There were several of those, so I guess it's pretty big. The French Huguenot Wars, obviously. The Islamic conquests of various countries. Several conflicts following the protestant Reformation. Certainly many others. But a majority of wars? No. Anything greater than 10%? Not likely. Probably much less than that, especially if we keep in mind that Jews are most often persecuted as an ethnic group rather than a religious sect.

Is there anything more ridiculous than to condemn religion in its entirety because a handful of wars were started in its name? Far more dangerous is nationalism and territorial greed. Which, I would argue, was the principle cause of a majority of the Crusades as well, go figure.

(This has been your "duh" report for the day.) Read more.