John Cochrane- economist at his blop. The Grumpy Economist, Economic Growth.
Second, we should separate the tax code from the subsidy and redistribution code.Let us agree, the tax code serves to raise revenue at minimal distortion. All other economic policy goes into the subsidy code. And subsidies should be on-budget and explicit. So, you want a subsidy for home mortgage interest payments? Sure, let’s talk about it. But it will be an on-budget expense — we will send checks to home buyers if we do it. You want to give $7,500 to each purchaser of electric cars? Sure, let’s talk about it. But it will be an on-budget expense. We will send $7,500 checks to electric car purchasers if we do it.
Charles C.W. Cooke in The National Review, Our Presidents Are Beginning to Act Like Kings
Which is all to say that, pace Woodrow Wilson & Co., the recipe for political liberty is as it ever was. For men to be free, the law must be difficult to change, and it must be changed only by those whom we send to represent us; it must be universal and comprehensible in its application; it must be limited in its scope (by both hard rules and soft conventions); and it must be contrived, executed, and overseen by parties whose specialized functions are clearly set apart from one another. These conventions took a long time to develop, and they will take a long time to forget. But if they are circumvented often and egregiously enough, forgotten they will eventually be. There is always a crown beyond the horizon.
Kevin Williason From The National Review, Davos’s Destructive Elites-“None of us is as dumb as all of us”
Conservatives are generally inclined to make a moral case for limited government: that transfers are corrupting, that taxes should be collected only to the extent that they are essential, that regulation is a necessary evil and that as such it should be kept to a minimum. That is generally true and persuasive, but the more important argument is the problem of ignorance. Even if Congress were populated exclusively by saintly super-geniuses, there is only so much that 535 human beings can know and understand. The more that decision-making is centralized in political agencies, or even in elites outside of formal government, the more intensively those decisions will be distorted by ignorance. This is true of market-oriented institutions, too, in the sense that big businesses make big mistakes. One of the lessons of the 2007 financial crisis is that the guys who run the banks do not actually know that much about how banks work, even if they know 100 times what the banking regulators know. Free markets offer a critical, if imperfect and partial, corrective to that in the form of financial losses and business failures, which is why things like cars and computers consistently improve while schools and welfare programs don’t. Big markets with lots of competing buyers and sellers are the biggest thinking machines we have, offering the broadest epistemic horizon that our species has figured out how to achieve.
There is a deep philosophical challenge for progressives in that: Progressives say that they want inclusive social decision-making, but the most radically inclusive process we have for social decision-making is the thing that they generally distrust and often hate: capitalism — or, as our left-leaning friends so often put it, “unfettered” capitalism. And who should decide what sort of fetters are applied to whom? The view from Davos is, unsurprisingly: the people at Davos.
Daniel Greenfield at Sultan Knish, A Tour of Our Decadent Civilization
The decadents are great categorizers. They know where everything should belong. They employ armies of bureaucrats to operate vast filing systems which never quite work as planned. They don’t cure diseases. That’s what vigorous civilizations do. But they do spend billions on medical record systems that never seem to be compatible with each other.
Decadents have a great deal of information and no idea what to do with it. The great task of decadent civilizations is a futile effort to organize all the information they have so that they can make use of it. The internet is the ultimate such mechanism and it is largely a failure as such. It has many entertaining and useful aspects, but it is actually becoming more disorganized with time, rather than less so. ObamaCare is another information organizational failure. So is the VA.
The decadent civilization is convinced that if it can amass enough information, its interpretations will be superior, but its information gathering techniques and its interpretative techniques are both fatally flawed by an inability to focus, by ideologically obsessions and societal corruption. Scientists may have more rapid access to more information, but the scientific community is more contaminated leading to worse results. Similarly, corruption undermines information gathering efforts from the start as projects are diverted to crony contractors by corrupt politicians.
Kurt Schlichter at Townhall, Trump Is Going To Break Your Heart
As a young man, I learned that sometimes that hot chick you’re dating is also completely crazy and, as much fun as it is to go out with her, it’s going to end badly. That’s Donald Trump, the super hottie of the “I Hate the GOP Establishment with a Burning Passion That Has Rendered Me Insusceptible to Reason” crew. He’s sexy, he likes to party, and he certainly puts out – in the sense that he fulfills your fantasies about giving it to the RINOs good and hard.
That intensely troubling metaphor aside, the point is still valid. Donald Trump is not a keeper, not the one you want to marry. He’s never going to make you happy. For now, he’s going to say what makes you happy, and for now he’s going to make a lot of the right people go nuts, but if you get hitched he’ll cheat on you with the liberals. At the end of the day, you’ll walk out of the courtroom wearing a barrel while Trump and the pool boy jet off to Tahiti on your dime.
But I gotta be straight with you – Trump’s bad news, and everyone else sees it. He’s using you, and he’s going to toss you away when he’s done and never look back. Break it off before it’s too late – this is just a fling, and if it keeps up one day you’re going to find your wallet missing and probably your car too. And you’ll wake up with a political rash.
Trump doesn’t want to make America great. He doesn’t want to make you great. He wants to make you tell him that he’s great. He doesn’t love you, any more than the stripper in the Champagne Room loves you when you’ve still got money in your wallet.
From The Wall Street Journal, Matt Ridley, The Myth of Basic Science
Technological advances are driven by practical men who tinkered until they had better machines; abstract scientific rumination is the last thing they do. As Adam Smith, looking around the factories of 18th-century Scotland, reported in “The Wealth of Nations”: “A great part of the machines made use in manufactures…were originally the inventions of common workmen,” and many improvements had been made “by the ingenuity of the makers of the machines.”
After all, in the late 19th and early 20th centuries, the U.S. and Britain made huge contributions to science with negligible public funding, while Germany and France, with hefty public funding, achieved no greater results either in science or in economics. After World War II, the U.S. and Britain began to fund science heavily from the public purse. With the success of war science and of Soviet state funding that led to Sputnik, it seemed obvious that state funding must make a difference.
In 2003, the Organization for Economic Cooperation and Development published a paperon the “sources of economic growth in OECD countries” between 1971 and 1998 and found, to its surprise, that whereas privately funded research and development stimulated economic growth, publicly funded research had no economic impact whatsoever. None. This earthshaking result has never been challenged or debunked. It is so inconvenient to the argument that science needs public funding that it is ignored.
from George Will in The Washington Post, The danger of a government with unlimited power
Lack of “a limiting principle” is the essence of progressivism, according to William Voegeli, contributing editor of the Claremont Review of Books, in his new book “Never Enough: America’s Limitless Welfare State.” The Founders, he writes, believed that free government’s purpose, and the threats to it, are found in nature. The threats are desires for untrammeled power, desires which, Madison said, are “sown in the nature of man.” Government’s limited purpose is to protect the exercise of natural rights that pre-exist government, rights that human reason can ascertain in unchanging principles of conduct and that are essential to the pursuit of happiness.
Wilsonian progressives believe that History is a proper noun, an autonomous thing. It, rather than nature, defines government’s ever-evolving and unlimited purposes. Government exists to dispense an ever-expanding menu of rights — entitlements that serve an open-ended understanding of material and even spiritual well-being.
The name “progressivism” implies criticism of the Founding, which we leave behind as we make progress. And the name is tautological: History is progressive because progress is defined as whatever History produces. History guarantees what the Supreme Court has called “evolving standards of decency that mark the progress of a maturing society.”
The cheerful assumption is that “evolving” must mean “improving.” Progressivism’s promise is a program for every problem, and progressivism’s premise is that every unfulfilled desire is a problem.
from The Wall Street Journal, Greece and the Flight From Reality by Bret Stephens
These and other details give the lie to the claim that Athens’s woes are somehow the product of powerful and indifferent economic forces beyond its control: the value of the euro, or the machinations of high finance, or the mood swings of Angela Merkel. Greece wanted to be prosperous without being competitive. It wanted to run a five-star welfare state with a two-star economy. It wanted modernity without efficiency or transparency, and wealth without work. It wanted control over its own destiny—while someone else picked up the check.
from Cafe Hayek, Krugman and Other Stuff by Russ Roberts.
When it’s convenient, Krugman ignores the “other stuff.” (We all do.) So according to Krugman, the economy of Kansas is struggling because the governor cut taxes. One variable explains everything. We can ignore the other stuff. Or Iceland is doing better than Ireland because Iceland didn’t listen to those foolish austerians and rejected the fiscal austerity that Ireland fell prey to. One variable, fiscal policy, explains everything. When it’s convenient, when it confirms our worldview, the other stuff can be ignored. More troubling for Krugman’s claims is that it appears that Iceland actually embraced austerity big time—raising taxes and cutting spending. How will Krugman explain Iceland’s success? Must be other stuff. But there is always other stuff. The world is a complicated place. I would suggest that our job as economists is to always remember the existence of other stuff, all the time and not just when it’s convenient.
So my point for Krugman and others is that too many macroeconomists suffer from the post hoc ergo propter hoc fallacy—after this, therefore because of this and ignoring other causal factors. We are all prone to confirmation bias, interpreting the events of the word and sophisticated econometric studies as all on our side. I think government regulation is too intrusive. Does that explain the mediocre recovery from the Great Recession? Convenient for my worldview as an explanation, but very unproven. Is there evidence? Sure, but it is nothing close to decisive. It’s just a correlation. This is a problem that afflicts all parts of the ideological spectrum. An honest economist should concede that the world is a complicated place and that teasing out causality or the impact of one variable on a massively-complex economy is a fool’s game.
Nassim Taleb calls it the narrative fallacy, the tendency we all have to construct a consistent narrative by emphasizing some aspects of the world around us while ignore others. Jonathan Haidt uses the metaphor of the elephant and the rider. The elephant is our heart, the rider, our mind. The elephant usually goes where it wants but it is not so hard for the rider to convince himself after the fact that that was indeed the direction he was headed all along. Macroeconomists and economists in general would be wise to read Taleb and Haidt.
From a lecture given at Caltech by writer Michael Crichton in 2003 entitled Aliens Cause Global Warming
Stepping back, I have to say the arrogance of the model-makers is breathtaking. There have been, in every century, scientists who say they know it all. Since climate may be a chaotic system-no one is sure-these predictions are inherently doubtful, to be polite. But more to the point, even if the models get the science spot-on, they can never get the sociology. To predict anything about the world a hundred years from now is simply absurd.
Look: If I was selling stock in a company that I told you would be profitable in 2100, would you buy it? Or would you think the idea was so crazy that it must be a scam?
Let’s think back to people in 1900 in, say, New York. If they worried about people in 2000, what would they worry about? Probably: Where would people get enough horses? And what would they do about all the horse****?
Horse pollution was bad in 1900, think how much worse it would be a century later, with so many more people riding horses? But of course, within a few years, nobody rode horses except for sport.
And in 2000, France was getting 80% its power from an energy source that was unknown in 1900. Germany, Switzerland, Belgium and Japan were getting more than 30% from this source, unknown in 1900. Remember, people in 1900 didn’t know what an atom was.
They didn’t know its structure. They also didn’t know what a radio was, or an airport, or a movie, or a television, or a computer, or a cell phone, or a jet, an antibiotic, a rocket, a satellite, an MRI, ICU, IUD, IBM, IRA, ERA, EEG, EPA, IRS, DOD, PCP, HTML, internet. interferon, instant replay, remote sensing, remote control, speed dialing, gene therapy, gene splicing, genes, spot welding, heat-seeking, bipolar, prozac, leotards, lap dancing, email, tape recorder, CDs, airbags, plastic explosive, plastic, robots, cars, liposuction, transduction, superconduction, dish antennas, step aerobics, smoothies, twelve-step, ultrasound, nylon, rayon, teflon, fiber optics, carpal tunnel, laser surgery, laparoscopy, corneal transplant, kidney transplant, AIDS. None of this would have meant anything to a person in the year 1900. They wouldn’t know what you are talking about.
Now. You tell me you can predict the world of 2100. Tell me it’s even worth thinking about. Our models just carry the present into the future. They’re bound to be wrong. Everybody who gives a moment’s thought knows it.