Archive for the ‘Economics’ Category

Happy Birthday, Mr. Mencken!

In honor of the birthday of this blog’s Patron Saint, who would have been 133 today, I offer the following:

“All the quacks and cony-catchers now crowding the public trough at Washington seem to be agreed upon one thing, and one thing only. It is the doctrine that the capitalistic system is on its last legs, and will present give place to something nobler and more “scientific”. There is, of course, no truth in this doctrine whatsoever. It collides at every point with the known facts. There is not the slightest reason for believing that capitalism is in collapse, or that anything proposed by the current wizards would be any better…

We owe to [capitalism] almost everything that passes under the general name of civilization today. The extraordinary progress of the world since the Middle Ages has not been due to the mere expenditure of human energy, nor even to the flights of human genius, for men had worked hard since the remotest times, and some of them had been of surpassing intellect. No, it has been due to the accumulation of capital. That accumulation permitted labor to be organized economically and on a large scale and thus greatly enhanced its productiveness. It provided the machinery that gradually diminished human drudgery, and liberated the spirit of the worker, who had formerly been almost indistinguishable from a mule. Most of all, it made possible a longer and better preparation for work, so that every art and handicraft greatly widened its scope and range, and multitudes of new and highly complicated crafts came in.” H. L. Mencken, “Capitalism”, as reprinted in A Mencken Chrestomathy

Elegant Argument Against American Protectionism

“In the United States, the East has had over the West all the advantages which protectionists say make it impossible for a new country to build up its manufacturing industries against the competition of an older country – larger capital, longer experience, and cheaper labor. Yet without any protective tariff between the West and the East, manufacturing has steadily moved westward with the movement of population, and is moving westward still. This is a fact that of itself conclusively disproves the protective theory.” – Henry George, Protection or Free Trade

Found via the always-excellent Cafe Hayek.

The Tragedy of Holiday Weekend Festivals

Scheduling festivals for holiday weekends makes a lot of sense in the individual case. If you’re the organizer for a multiday festival like Bumbershoot, scheduling for a long weekend allows you to pack in more acts (and sell up to 50% more tickets) without worrying that you’ll lose a lot of your attendees to work on the final day of the festival. Considered in isolation, scheduling for a holiday weekend, is a no-brainer.

The problem is that this leads to a prisoner’s dilemma. If all festival organizers follow this same logic, then they end up competing for attendees, many of which might want to go to several of the festivals.

Case in point: Labor Day 2013. There are three festivals (that I know of) that I would love to attend: Penny Arcade Expo, Bumbershoot, and Libertopia. I actually ended up with tickets to both PAX and Bumbershoot and might try to split my time between them, since they’re both right here in Seattle. But the vast majority of people will only pick one, thus potentially reducing the turnout at the other two. If all three were scheduled for separate weekends, they might actually all profit, even though two of them (at least) gave up the coveted Labor Day Weekend.

Note that this effect is irrespective of festival topic. The three I mentioned cover video game/nerd culture, music, and libertarianism respectively. But there are many people who have at least two of those interests for whom attending any of the festivals contains the implicit opportunity cost of not being able to attend the others.

One possible solution to this is a hypothetical agreement of festival organizers to just all schedule for different weekends, potentially with the caveat that no one gets the coveted three-day holiday weekends. But, as with all such agreements, this only works until one party defects, schedules for a three-day weekend, and enjoys the benefits both of having the long weekend and of having no competition for festival-goers’ time and dollars. I strongly suspect that there isn’t a Nash Equilibrium for the problem of festival scheduling, and so organizers are stuck taking the possibly sub-optimal route of always scheduling for the long weekend, even when that might reduce their take through competition with one another.

All of this is a long, boring way of saying: I’m going to Bumbershoot this year, but I really wish I could go to PAX and Libertopia as well.

Bastiat on Legal Plunder

“There are people who think that plunder loses all its immorality as soon as it becomes legal. Personally, I cannot imagine a more alarming situation. However that may be, one thing is certain, and that is that the economic results are the same…

Moral: To use force is not to produce, but to destroy.” – Frédéric Bastiat

Found via Coyote Blog

A “History” of Taxation

Could stand to have a little more of the history, but all around a great video.

Aging as an Expression of the Broken Window Fallacy

I meant to blog this when it first popped up in my RSS feed, but the Fighting Aging blog had a post awhile back relating aging to the Broken Window Fallacy. In short, one argument against longevity research is that longer healthy lives will impede opportunities for the young. Quote:

What is the greatest ongoing disaster, the cause of the greatest destruction? The answer is degenerative aging. Aging destroys human capital: knowledge, skills, talents, the ability to work, the ability to create. It does so at a ferocious rate, a hundred thousand lives a day, and all that they might have accomplished if not struck down. If translated to a dollar amount, the cost is staggering – even shifts in life expectancy have gargantuan value. And why shouldn’t they? Time spent alive and active is the basis of all wealth.

It is unfortunate, but many people advocate for the continuation of aging, for relinquishment of efforts to build medicines to extend health life. Among these are people who welcome aging and death because to their eyes it gives a young person the chance to step into a role vacated by an older person. This is another form of the broken window, however: the advocate for aging looks only at the young person, and dismisses what the older person might have done were they not removed from the picture by death or disability. So too, any apologism for aging based on clearing out the established figures because it provides a greater opportunity for younger people to repeat the same steps, follow the same paths, relearn the same skills, redo the same tasks … these arguments are the broken window writ large.

I think this response is very compelling, but I wanted to highlight one other way in which this pro-aging argument is fallacious. Namely, in saying that aging and death are good because they create opportunities for the young, proponents are arguing that the economy is in some sense a fixed-sized and inflexible resource and that a job possessed by one person is one less job available for everyone else. This simply isn’t the case. Economies are highly metamorphic and flexible and grow to accommodate and use new technologies and resources that become available to them. Curing aging would be a huge economic boon, freeing up resources currently spent on medical care and job retraining, and allowing people to build careers and develop skills unimaginable in the current economy. Such a massive shift in resources and the drastic expansion of people’s time horizons will have huge economic effects, and the economies that result from such a change certainly won’t look anything like the ones we have today.

So to argue that the labor economy we have today can’t survive the end of aging misses the point. Our economy will evolve and grow in response to end aging, producing one that reflects economic patterns more conducive to a world in which people get more than forty productive years. There’s no reason to think that economies in an ageless world will look anything like the economies we have today.

“What Could Possibly Go Wrong?”

It’s a Free World (with Capitalism!)

To be honest, I find this video mawkish and obvious. But I think that its mawkishness is intentional homage and its obviousness is because I’m a member of the choir to which it’s preaching.

But regardless of its artistic merits, the video’s message (that Capitalism has real, positive impacts in our lives) is an important one. It serves as a necessary counterpoint to the principled, moral arguments for Capitalism and the more abstract disagreements about freedom vs. security vs. equality vs. etc. People like me, who can get tediously pedantic and philosophical at times, would do well to keep in mind the practical benefits of Capitalism when arguing its merits, and I think this video does a good job of pithily summarizing the concrete value that Capitalism has added to our lives.

After all, we live in a world where a significant number of people will say sincerely and in good faith:

We don’t want freedom any more … We want regulation. We want control

As easy as it would be to write such people off as idiots or lunatics, a number of them simply have different values and/or a deep ignorance about the practical consequences of the diminution of liberty. We probably won’t win over those that have moral objections to liberty or who subordinate it on principle to other Goods. After all, there are those who would prefer a world where everyone’s chains chafed equally to a world where everyone prospered, but some prospered more.

But what we can do is rehabilitate freedom for those who simply don’t understand the practical benefits that it brings.

After all, Capitalism is just the term we use for freedom in economic exchange. And so any argument against Capitalism is an argument against freedom, and vice versa. So in the face of outright hostility to Freedom, it can be helpful to highlight the real tangible costs of lost liberty.

Helping people to understand the real, concrete benefits of economic freedom can help win minds where abstract philosophizing can’t.

Hitchens on Marx

“Marx’s fundamental error was to assume that there was such a thing as ‘capitalism’, that is to say that normal economic relations were a specific state of being, out of which humanity could escape by adopting a rather vague alternative known as ‘socialism’. I always object, these days, to the very idea of ‘capitalism’. It treats remorseless reality as a dogmatic choice. You might as well call weather ‘ rainism and sunism’, as if we had some way of creating and dwelling in an alternative atmosphere which dispensed with the earth’s climate as it is, and instead provided perpetual delight, warmth, fertility, plenty and joy (details unspecified, to be supplied after you’ve handed over state power to me).”

Link.

Daniel Hannan on Germany in a Unified Europe

Hear, hear!

Another from the brilliant Daniel Hannan on the legacy of pluralism in Europe and how the EU betrays exactly the decentralized competition that made Europe great in the first place.

Daniel Hannan is one of the greatest living rhetoricians and he’s in top form here. He’s also one of the most sensible and effective opponents for national independence in Europe.

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