Monday, April 20, 2009

Aptly put

Greg Mankiw puts things in perspective:
The Washington Post reports:
President Obama plans to convene his Cabinet for the first time today, and he will order its members to identify a combined $100 million in budget cuts over the next 90 days, according to a senior administration official....Earlier this month, both chambers of Congress passed Obama's $3.5 trillion budget outline for 2010, which includes unprecedented new investments in health care, education and energy. But the huge budget, which contemplates a $1.2 trillion deficit, has drawn the ire of small-government conservatives, who say that such high deficits jeopardize the nation's economic future.
Just to be clear: $100 million represents .003 percent of $3.5 trillion.

To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had be cut? By $3 over the course of the year--approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year.


Edit: More from Megan McArdle. Read more.

Thursday, April 16, 2009

Soc2Econ

Why do I always miss the best April Fool's jokes when they first hit? Read more.

Sunday, April 12, 2009

Space Phallus is finally here!

Indescribably awesome and probably NSFW. Now this is a real game. Read more.

Friday, April 10, 2009

Garage Day

Something about nice weather always puts me in the mood for garage punk.

In light of my inability to find a version of "Teenage Hate" on youtube, have some Coachwhips instead:


Gotta love those homemade music videos kids make specifically for youtube. Read more.

Sunday, April 05, 2009

The Secret Sins of Economics

I immediately need to read more Deirdre McCloskey. Her rhetoric is better than your rhetoric. Read more.

Friday, April 03, 2009

Drugs and the Economy

IOZ asks us not to make drug legalization, which is about liberty, into a macroeconomic issue. He's right but he's wrong. As far as macroeconomics goes, the benefit is not that marijuana could be taxed, and I fully agree that there's no reason to go that route. But legalized pot would 1) Create jobs for entrepreneurial marijuana growers and 2) increase the working population because fewer people are being arrested. Think of it as equivalent to increased immigration--yes some populists would argue against it (perhaps not in this case since these pot users are American), but an increased labor supply increases demand as well as supply. Furthermore there would be fewer taxpayer dollars spent on the counterproductive drug war. Even if pot were not taxed at all it would be a free lunch in terms of GDP. Not an enormous jump for macroeconomic growth, but a positive nonetheless.

I still recommend remembering that the right to ingest into your own body what you choose is principally an issue about liberty and privacy, not economics. Will Wilkinson says it as powerfully as possible. Read more.

Thursday, April 02, 2009

Evolution, Holmes, Lochner

I'm reading Evolution: The Remarkable History of a Scientific Theory by Edward Larson. It's a history of the progress of evolutionary theory, topic-by-topic rather than chronological. I think it's pretty good, but that may just be my ignorance of history. I caught a major mistake on something I actually do know something about, so maybe the rest is full of simplifications or mistakes too. (Does anyone reading know?)

In Chapter 8, the section on the eugenics movement, Larson writes,
Opponents of public-health and welfare programs drew on Social Darwinist thinking to claim that personal freedom demanded nothing less than an end to social legislation--leading Supreme Court Justice Oliver Wendell Holmes to complain bitterly, "The Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics." Holmes wrote these words in a dissenting opinion, however. The court's majority in that landmark case, Lockner v. New York (sic), applied Social Darwinian reasoning to strike down a state worker-protection statute.
It's not exactly a fair characterization. Holmes' quip was intended to ridicule the majority opinion's arguments about individual contract rights as deriving from a popular libertarian/eugenics text. (Apparently it worked.) The rest of his opinion is not about eugenics, but about the economic theory of the majority decision, which he claimed was unpopular and not protected by the Constitution.

That theory may share some roots with Social Darwinism, but it is not correct to conflate the two. Social Darwinism argues that the "best" survive in social competition, and by this society is made "better" just as a species is made more fit for survival. Economic liberalism argues that deregulation leads to efficient outcomes, maximizing consumer and producer surplus. That is, society (including the poor) benefits from highly competitive markets. It is not an argument about survival of the fittest; it's about maximization of welfare. Consumer surplus is maximized for the unfit as well. (To illustrate one major mistake of Social Darwinist forays into economics, see here.)

Lochner v. New York was specifically about a law restricting the number of hours a baker could work per week in New York. One could argue that the decision that the state may not be allowed to take an interest in the health of bakers was a Social Darwinist argument, but the court addressed and dismissed this idea. They write, "It is impossible for us to shut our eyes to the fact that many of the laws of this character, while passed under what is claimed to be the police power for the purpose of protecting the public health or welfare, are, in reality, passed from other motives." In other words, the majority opinion was that the law was not really about the health of bakers, but a bootleggers and baptists story. They furthermore argue that this specific law was not about health:
It is manifest to us that the limitation of the hours of labor as provided for in this section of the statute under which the indictment was found, and the plaintiff in error convicted, has no such direct relation to, and no such substantial effect upon, the health of the employee, as to justify us in regarding the section as really a health law. It seems to us that the real object and purpose were simply to regulate the hours of labor between the master and his employees (all being men, Sui juris), in a private business, not dangerous in any degree to morals, or in any real and substantial degree to the health of the employees.
If you want to read Lochner v. New York, with majority and dissenting opinions, it is available here.

And just to stress the point that Holmes' dissent was about economics and not eugenics, it's worth noting that Holmes was indisputably a Social Darwinist. In the majority opinion of Buck v. Bell, a case concerning whether the state had the power to sterilize Carrie Buck, a young mental illness patient, Holmes wrote,
The principle that sustains compulsory vaccination is broad enough to cover cutting the Fallopian tubes. . . Three generations of imbeciles are enough.
The final paragraph of his decision demarcates (poorly, in my opinion) the limitations of constitutionally-enforced sterilization. But there it is: Oliver Wendell Holmes believed the state had a public health responsibility to keep stupid people from breeding. Indeed a very short section from Larson's otherwise good book, but almost every detail was wrong.

Edit: The Carrie Buck case is mentioned later in the book. I am still not a fan of the structure. Read more.