Watch these two videos of idealistic children, which at first would seem to have nothing in common, and tell me if you see any thematic parallels. The first is a commercial from the World Wildlife Fund and the second is from the excellent 1972 film Cabaret.
Haven’t had time to blog in a while, but thought I’d take a minute to post a couple of links pertaining to the 20th anniversary of the fall of the Berlin Wall.
I don’t think so, but I haven’t found the right words to describe why I believe this. Don Boudreaux of George Mason University who blogs at the excellent web site Cafe Hayek summed it up nicely (original here):
Genuine rights – such as freedom of speech – are not commodities to be purchased; nor does their existence require the on-going application of human labor and other resources to ensure that they are adequately supplied.
Genuine rights are negative, in the sense that they demand only that each of us refrains from harassing others. Because each unit of health care requires labor and resources for its production, no one can have a ‘right’ to health-care in the same way that she can have a right to speak freely or to worship the God of her choice. Enforcing Jones’s ‘right’ to health care necessarily means forcing Smith to work to produce this health care. A political ‘right’ that cannot even in principle exist without the confiscation of persons’ labor and property is no right at all; it’s a wrong.
As a followup from yesterday’s post on regulation, here is a link to an excellent article by David Boaz of the Cato Institute entitled “What is Regulation?”. He touches on a few topics I would like to blog about further and that I have been reading about lately, including spontaneous order. The purpose of his short article is to clarify the nature of the work of Elinor Ostrom and Oliver Williamson, the two recent recipients of the Nobel Prize in Economics. As a layman, I am not that familiar with their work but a recent article by David Henderson in the Wall Street Journal sums it up nicely.
A sampling of my latest order from Amazon below. This is a pretty eclectic list as I’ve had a renewed interest in a lot of random topics lately.
- Homage to Catalonia by George Orwell. This I purchased based on its inclusion as #3 on the 100 Best Non-Fiction Books of the (20th) Century, compiled by National Review.
- Where Men Win Glory: The Odyssey of Pat Tillman by Jon Krakauer. The only other book by Krakauer I’ve read so far was Into the Wild but it was extremely moving and this new book looks like a very interesting story.
- Vagabonding: An Uncommon Guide to the Art of Long-Term World Travel by Rolf Potts. I like traveling, but usually prefer to travel in style. Nevertheless, this book may provide some good insights.
- Stranger in a Strange Land by Robert Heinlein. This has been on my Amazon wish list for a long while, so I decided it had waited there long enough and bought it.
- The 5000 Year Leap: A Miracle That Changed the World by W. Cleon Skousen. I’ve heard a lot of good things about this book so we’ll see if they’re true.
- How to Take Over Teh Wurld: A LOLcat Guide 2 Winning. One of my favorite topics (taking over the world) so how could this book be bad?
That’s a good question. A very very good question.
(HT: Fake Steve Jobs)
Following up from my previous post, another topic of conversation that came up at dinner last night was the merits (or lack thereof) of regulation. Interestingly, the importance of regulation was cited in response to my suggestion that Social Security was largely a scam. Ignoring the incongruities of the two topics, we had an interesting discussion largely revolving around food safety. My father currently works for the US Department of Agriculture as an inspector at a meat-packing plant, so the topic is somewhat close to home. I was not ready to argue (yet) that we do not need government food safety inspectors, but my father’s own observations working at the plant suggest that the corporations running the plants have a very keen interest in maintaining food safety and if the government inspectors were not present, it is highly unlikely that there would be no safety inspections occurring at all, just that they would be performed by employees working for the company that runs the plant instead of the government. One of the friends suggested that perhaps the plants would still have an interest in maintaining food safety, but only “good enough” safety, i.e. people might not die from the food but would be more likely to get sick. I think this is an interesting topic worth researching further, namely the question of whether or not our food is safer than it would be without government safety inspectors.
An excellent interview with Milton Friedman by Peter Robinson of the Hoover Institution discusses the merits of deregulation and libertarian ideals for how the government ought to be run. It doesn’t deal with food safety, but talks a bit about how the FDA’s regulation of prescription drugs has possibly led to more deaths than it has actually saved lives.
Had dinner with a couple of friends/co-workers last night and we had some interesting discussions about economics and politics which I am interested in blogging about further. A few of the topics discussed that I may try to delve in further after I compose my own thoughts on the different subjects:
- The notion that “Wall Street” is too powerful. (I’m not sure how I feel about this yet since “Wall Street” isn’t a single entity you can point to and say “they” did “this”). An interesting article from Atlantic Monthly back in May (which I have not fully read yet) suggests that the economic bailout of financial institutions was more akin to the type of activity that occurs in third world “banana republics” than would be expected to happen in a large economic superpower.
- A more specific version of the above argument, namely that Goldman Sachs is too powerful and has far too many ties, direct and indirect, to the government (see this feature from Forbes in 2007 which refers to Goldman as “The Most Powerful Investment Bank In The World”.)
- Privatization of Social Security. One of my friends suggested George W. Bush was somewhat crazy for having this agenda (even though he never really did anything about it, only delegated to Congress the creation of a Social Security reform plan which ultimately produced nothing). He did however seem to agree with me that Social Security was a scam nonetheless. It makes me wonder if we will ever be able to dislodge the fantasy notion that Social Security is a necessary program, or even a good program, when just looking at the facts suggests otherwise.
- The notion that health care reform is a really really hard problem. I am not so sure anymore that it is that hard, assuming you could unwind most of the government involvement in the current health care system. That, however, is a big assumption so politically I tend to agree that it is nearly impossible (or at least extremely difficult) to make progress on reform in either direction (to either more or less government control).
- The Economist currently has an interesting online debate on health care reform that was mentioned during our conversation (I also haven’t listened to this in full yet).
- The importance of incentives to people’s economic decisions. (I haven’t read the full book yet, but knew this as Principle #4 from Greg Mankiw’s Principles of Economics Textbook). My friend said he performed a test at our Christmas Party last year and offered to trade anyone for their raffle ticket, and then offered to pay anyone $2 for their raffle ticket (when the prize could potentially be in the hundreds of dollars, usually in gift certificates). Apparently no one accepted the trade. He used this as supporting evidence for the notion that people are mainly interested only in what they can gain short term (and by extension, politicians and Wall Street traders and consumers and so on are almost always going to focus on the short term), but I feel this is not really the case. I know professional economists can come up with the technical definitions of the incentives pertaining to such decisions (trading a raffle ticket or something perhaps more significant), but I’m not educated on economics enough yet to formulate a strong academic argument one way or the other.
One of the topics I also brought up was my belief that during the height of the financial ‘crisis’ last year, both the Treasury Secretary (Paulson) and the Federal Reserve Chairman (Bernanke) had absolutely no idea what was going on and the $700 billion TARP ‘bailout’ was not just unhelpful but counterproductive. A simplistic way of making at least the beginnings of the case for this argument is that TARP was not ultimately used for what it was intended (to remove troubled/toxic assets from the balance sheets of various financial institutions) so it couldn’t have been as critical as the public was led to believe in the short debate leading up to the passage of the bill. I’ll try to follow up with a more detailed post with evidence backing up my point of view, and maybe some contrary opinions if I can find anyone who has some evidence to show that TARP actually did do some good (other than as a magical elixir that proved the government was willing to ‘do something’ about the ‘crisis’).
OK, so I did lend some credence to the notion that we are a ‘divided nation’ in yesterday’s post. But to prove I have some of the perspective I argued for in my last post, I would like to call attention to one example (although I know I’ve seen several others in the last year or so, particularly during the election, this was the first result that came back from a Google search) of someone who lacks perspective on what it really means to be divided:
After last week we can finally bury this “Post Racial” myth. The false arrest of Dr. Henry L. Gates proved that this country is more divided than ever.
My response to this is a great big “OH REALLY??!” More divided than during the Civil War, when the country was literally divided and over 600,000 soldiers and who knows how many civilians were killed? I would argue that no matter how many Harvard professors are unjustly arrested in their own homes (a travesty to be sure), our metaphorical ‘divisions’ are plenty preferable to the literal divisions we’ve experienced in the past.
One of the things that annoys me often when reading the news is the constant hyperbole about how bad the economy is or how terrible the financial ‘crisis’ was, or how “we brought the global economy back from the brink“. The brink of what, exactly? The phrases “since the 1930s” or “since the Great Depression” have become two of the most overused phrases of the year, almost as annoying as “perfect storm” was in 2007 or “Barack Obama” was in 2008 (kidding on that last part).
A recent article by Mark Perry of the American Enterprise Institute suggests that while things may not seem rosy right now, several key economic indicators were even worse as recently as the 80s:
The prime rate was more than six times higher in 1980 compared to today, core inflation in 1980 was six times higher than today, the unemployment rate in November and December of 1982 was more than a percentage point higher than the August 2009 rate, the 30-year mortgage rate in 1981 was almost four times higher than today’s 5 percent, the car loan rate in 1981 was 2.5 times higher than today, and real gas prices were 32 percent more expensive in 1981 than today. So before we start talking about the “worst economy since the 1930s” couldn’t we first look at the early 1980s as a benchmark of how bad economic conditions can get, using a more recent period?
My memory of the early 1980s isn’t perfect because I had just turned 4 when Ronald Reagan was first elected, but this does seem to gel with anecdotes from my parents, whose mortgage rate was in the mid-teens when they built our house in Harristown, Illinois in 1984.
To take another example of the media and the public’s lack of perspective, last year during the peak of the financial ‘crisis’ (late September 2008), I was traveling in Europe through Germany, Switzerland and Poland. I went to visit an old friend from college who lives in Warsaw and while there I visited the museum of the Warsaw Uprising. This is not the same as the Warsaw Ghetto Uprising, which involved the suppression of the Jews living in the Warsaw inner city. The Warsaw Uprising was an attempt by the Polish Home Army, starting in August 1944, to rise up against the occupying German forces to take back the city in advance of the approaching Soviet army. The long story made short is that the Polish Home Army failed to oust the Nazis and the Soviets of course later expelled the Nazis on their push through to Berlin. I had never really learned about the Warsaw Uprising before and visiting the museum was quite an informative and moving experience. What struck me the most was that this occurred less than 65 years earlier, well within the lifetime of my grandfather and near the time my stepfather was born. The result of the Warsaw Uprising was that approximately 16,000 Polish patriots were killed, 150,000-200,000 civilians were killed and, by the end of the war, 85% of Warsaw had been destroyed. (According to the website of the Warsaw Uprising Museum: “85% of Warsaw’s left bank buildings were destroyed: 25% in the course of the Warsaw Uprising, 35% as the result of systematic German actions after the Uprising, the rest as a combination of the war in September 1939 and the Warsaw Ghetto Uprising.”)
I live in Colorado Springs and Denver is about an hour to the north. I tried imagining a city like Denver (which today is somewhat close in population and area to Warsaw) being virtually wiped off of the map. What is great today is seeing that Warsaw is a thriving modern city. But not so long ago at the end of the Second World War, Warsaw almost disappeared thanks to the ravages of war and brutal tactics of the Nazis.
OK, so we’re not exactly comparing apples to apples when talking about a major world war and a financial ‘crisis’ (I don’t like that word but don’t know what else to call it) brought about by complex financial instruments and imprudent government-subsidized lending. But I think it’s worth bearing in mind that we (humans that is, not just Americans) have come back from worse crises before and the previous crises really were quite a bit worse, as long as you accept that having your country almost burned completely to the ground is a bad thing.