Liberal With the Facts

by Don Boudreaux on October 28, 2008

in Myths and Fallacies

Here are two letters that I sent recently to the Wall Street Journal:

24 October 2008

To the Editor:

Robert Inlow writes that “Liberals have been responsible for gaining women equal rights” (Letters, October 24).  To make such a claim is akin to crediting the diplomats who negotiate an enemy-country’s military surrender for doing all the hard work that won the war.  Capitalism’s ethos of freedom of contract – and its creation of inexpensive washing machines, vacuum cleaners, disinfectants, and other household appliances and products – have done far more to promote women’s rights than has any “liberal” crusader or politician.

Sincerely,
Donald J. Boudreaux

And

To the Editor:

Rober Inlow, relying on a dictionary definition, praises modern “liberals” (as they are mistakenly, if widely, called in the English-speaking world) for being “tolerant of the ideas and behavior of others” (Letters, October 24).

Huh?

Has Mr. Inlow forgotten about the so-called “liberals” who want to restrict people’s ability to smoke and to eat trans-fats?  How does he account for “liberals’” intolerance of workers who wish voluntarily to agree to work for less than the minimum-wage?  And what’s his explanation for “liberals’” officious insistence that individuals cannot be trusted to provide for their own retirements?

Modern “liberals” – although tolerant on a few important fronts – generally are eager to regulate, mandate, and otherwise intolerantly order ordinary people about.  True liberals in the tradition of Milton Friedman and F.A. Hayek abhor such officiousness.

Sincerely,
Donald J. Boudreaux

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{ 50 comments }

Methinks October 28, 2008 at 7:28 pm

As a woman, I can hardly stop laughing. And as liberals, they can't stop lumping me with other women and insisting that I let Oprah tell me what to think. Tell "us" what to think.

Quarken October 28, 2008 at 8:45 pm

As soon as I see the word "liberal" or "conservative" used as a generalization in the context of political criticism, I know the author is being manipulated by either one side or the other. If you think liberals are the only political persuasion "generally … eager to regulate, mandate, and otherwise intolerantly order ordinary people about," then you are most surely being manipulated.

Methinks October 28, 2008 at 8:56 pm

No, Quarken, the modern liberals are absolutely not the only political persuasion "generally … eager to regulate, mandate, and otherwise intolerantly order ordinary people about,". However, they are the only ones mandating behaviour while claiming to be tolerant of differences and proponents of individual expression. See? It's ironic.

Hibiscus October 28, 2008 at 8:58 pm

As soon as I see the word "liberal" or "conservative" used as a generalization in the context of political criticism, I know the author is being manipulated by either one side or the other. If you think liberals are the only political persuasion "generally … eager to regulate, mandate, and otherwise intolerantly order ordinary people about," then you are most surely being manipulated.

Nothing in Mr. Boudreaux's letter should indicate that he thinks liberals are the only ones guilty.

dave smith October 28, 2008 at 9:05 pm

To add to Hibiscus' point, if one reads this blog for any amount of time at all, you'll know that Dr. Bourdeaux (and Dr. Roberts) realize correctly that the entire political spectrum is eager to impose their will on others.

Methinks October 28, 2008 at 9:25 pm

the entire political spectrum is eager to impose their will on others.

Yes, but the bible thumpers aren't claiming to be tolerant as they subjugate others to their visions.

vidyohs October 28, 2008 at 9:33 pm

Yobdamit ju lumpkins!

Don't ju unnerstanding that dis tolerance things is only being shown to udder liberals. Dem udder chumps not be peoples, dey desurf whad dey getting.

brotio October 28, 2008 at 11:49 pm

The old adage, "Liberals don't care what you do as long as it's mandatory" comes to mind.

Sam Grove October 29, 2008 at 12:33 am

Liberals are protecting us from a serf-like existence. /sarcasm

Martin Brock October 29, 2008 at 8:46 am

Liberals are protecting us from a serf-like existence.

Genuine liberals are trying. Conservatives are trying to preserve established propriety by "protecting the investors".

Martin Brock October 29, 2008 at 9:00 am

Capitalism's ethos of freedom of contract – and its creation of inexpensive washing machines, vacuum cleaners, disinfectants, and other household appliances and products – have done far more to promote women's rights than has any "liberal" crusader or politician.

You left out birth control. The Chinese Communists discovered the "demographic dividend" too, and it's also working for them, presently. They presumably have fewer washing machines and vacuum cleaners per capita to account for their impressive growth. If we could ask some oracle to settle the question definitively, I'd wager a lot that washing machines and vacuum cleaners are hardly significant by comparison. Washing machines didn't free women's labor so much as a fall in the volume of laundry.

We'll know in the U.S. how valuable this "dividend" really is in another decade or so. We're seeing the first signs now. Japan and Europe saw them earlier.

Hammer October 29, 2008 at 9:05 am

Politics: War by other means.

That should be made into a Cafe Hayek t-shirt.

Sam Grove October 29, 2008 at 10:30 am

Genuine liberals are trying.

Agreed Martin, but I think here we are speaking of "progressives" disguised as "liberals".

The left is fond of rhetorical disguises, as in the "Peace and Freedom" party.

Methinks October 29, 2008 at 11:02 am

Washing machines didn't free women's labor so much as a fall in the volume of laundry.

Yes they do. Fewer clothes combined with manual washing means laundry every day. since machines can be loaded with a lot of clothes which are then washed while the person does something else, washing machines certainly do free up women's time.

China's growth is hardly surprising considering the very low level of economic activity on which that growth is calculated.

Brandon October 29, 2008 at 11:15 am

Well stated and very true.

Martin Brock October 29, 2008 at 1:57 pm

… washing machines certainly do free up women's time.

More than not raising a child? Laundry was never any housewife's full-time job. I guarantee you that tending two young children is, and doing their laundry is only a small part of the job, with or without a washing machine.

Maybe two woman can tend ten children in a daycare center more efficiently than three mothers can tend the same children at home, in the coldest possible economic calculation, but no one woman saves remotely as much time using a washing machine as she saves by not tending a child she never had.

Emphasizing the washing machine while ignoring the birth control is political science, not economic science. In purely economic terms, the falling fertility is a far more significant factor, and we don't know the impact until at least twenty years after the fall in fertility. Until then, we haven't measured any rising productivity, because raising a child is a long term capital investment.

By having fewer children, we've substituted one set of investments for another, and we can't know the effect of this substitution until the long term capital we haven't created ceases to play the role it would otherwise have played.

Suppose we need industrial robots to build cars, and suppose building one industrial robot requires twenty years. One day, we decide to stop building new robots, but we continue construction of the robots we've already started.

Our production of cars is unaffected for twenty years. During this time, we produce lots of other stuff with all of the resources no longer employed to build the robots, so we're apparently much richer. But what happens to car production after the twenty years?

I have news for you. We do need industrial robots to build cars, and they do require twenty years to construct. They're called "children".

Martin Brock October 29, 2008 at 2:19 pm

In case this fact isn't obvious, we don't need these robots only to build cars. We need them to produce everything we produce. We have nothing like a fully autonomous robot able to produce anything useful. A fully autonomous robot can't even unpack itself from its own shipping container, despite considerable efforts to design a robot with this capacity. People get along O.K. without robots, only a bit less productively, but robots are useless without highly skilled people.

Thus productivity enhancing technology only multiplies the production lost from each child we don't have.

I learned this lesson from Julian Simon.

Trumpit October 29, 2008 at 2:37 pm

"liberals" who want to restrict people's ability to smoke…

Most tobacco products SHOULD be outlawed. Besides being a poisonous substance that the FDA should prohibit, second-hand smoke is highly toxic and harms everyone who come in contact with it. Smoker's are so involved in their addiction that they couldn't care less about who they are killing while they are killing themselves. The cost to society by the illnesses caused by smokers is monumental. How do you feel about ingesting cyanide? Well you get some when you smoke. You are not merely wrong about this, Don, you are wrong, wrong, wrong.

Mcwop October 29, 2008 at 2:56 pm

The cost to society by the illnesses caused by smokers is monumental.

Sure about that?

Harvard economist Kip Viscusi ran the numbers on smoking (and this was before the big payday for the government known as the tobacco settlement). Smokers tend to die after they have contributed to Social Security and Medicare, but before they've collected all of their Social Security pension and Medicare benefits. As a result, there is a cost savings at the end of smokers' lives, and a cost increase earlier. But, on balance, the cost savings offsets the cost increase, so that smokers offer a net financial gain to the government…society saves almost $30 billion a year in Social Security benefits and Medicare benefits that would otherwise have had to be paid out, had smokers lived." And those smokers pay taxes on each cigarette they smoke.

Hans Luftner October 29, 2008 at 4:13 pm

China's growth is hardly surprising considering the very low level of economic activity on which that growth is calculated.

Sort of like that rapid increase in GDP after much of the New Deal was rolled back. You know, the one that somehow proves that FDR was good for the economy.

Methinks October 29, 2008 at 4:50 pm

Martin, I must have missed your point. I wasn't arguing that child rearing was less time consuming than doing laundry manually. If that were true, I might have chosen to have children.

Maybe two woman can tend ten children…

The very thought fills me with a sense of dread. What did your fiance say? I'd rather do time. And I actually like kids. But, career success makes having children very expensive. Opportunity cost is outrageous!

and we can't know the effect of this substitution until the long term capital we haven't created ceases to play the role it would otherwise have played.

My money is on working longer will be the result. Why is that such a big deal? Do you know what happens to people after they retire? Their brain turns to mush. That's okay if you only have 10 years to live post retirement, but living 30 years focused on absolutely nothing is a lot less exciting than one would think.

Trumpit,

The cost to society by the illnesses caused by smokers is monumental.

From my experience, no amount of facts or logic will disabuse you of your fantasies, but I have to try. Something like 95% of people who get lung cancer from smoking die within five years, with most dying way before the five years are up. Smoking kills people quickly. No meaningful study has shown that there is an increase in lung cancer risk for incidental second hand smoke inhalation and there's little evidence that non-smoking adults living with smokers develop cancer at a statistically significant increased rate. There is a small but statistically significant increase in probability of lung cancer in people who were subjected to copious amounts of second hand smoke as children. Smokers are not the problem.

You should focus your enormous capacity for hatred on obese people. They die slowly and cost more. Not only are the not "green" because it takes more fuel to cart them around in cars and airplanes but because they tend to develop chronic illnesses which are expensive to treat. So fat people (and I mean Obese, not slightly pudgy people) are a strain on both our health care system and on Mother Earth. Maybe we should make fatness illegal!

Also, old people are a huge strain on the health care system because illness is positively correlated with age. It's about time we regulated how long people are allowed to live.

Sam Grove October 29, 2008 at 4:56 pm

It's about time we regulated how long people are allowed to live."

That's why there is significant support for totalitarian, uh, excuse me, government controlled medical care. Get bureaucrats to deny care for budgetary reasons.

Marcus October 29, 2008 at 5:09 pm

I think your first letter is very good and provides important insights which many people overlook.

I think your second letter is less impressive. I personally know plenty of liberals who smoke and have debated conservatives who want it banned. I think the ideological boundary on that issue is smokers vs. non-smokers and not left vs. right or liberal vs. libertarian.

Additionally, I think your second letter misses a larger point. As an example to what that point is, legalizing illicit drug use is not the same thing as condoning its use.

So, you do not have to defend the right to shoot up on heroine (or smoke, or eat transfats or work for pennies). There's nothing anti-libertarian about opposing any of these things. What is anti-libertarian is the use of government to impose these things on people.

Mcwop October 29, 2008 at 5:50 pm

Methinks,

Your comment brings back Logan's Run, the future society from the William Nolan and George Johnson. In that future society, to reduce population, and consumption of resources, everyone that reaches their 21st birthday is killed.

Been hoping someone would remake the movie.

Martin Brock October 29, 2008 at 6:38 pm

Martin, I must have missed your point. I wasn't arguing that child rearing was less time consuming than doing laundry manually. If that were true, I might have chosen to have children.

I know, but I was arguing that not having children is more time saving than doing laundry automatically. Unlike the automatic washing, not having children does not increase productivity. [Sorry for the double negative.] Not having children is a decrease in very long term investments or the substitution of other investments. Women may seem to become more productive, but I'm not sure they really do, particularly since the brightest women typically have the lowest birthrates.

The very thought fills me with a sense of dread.

I can imagine, but this division of women's labor is an important part of the story. It's not just about technology like washing machines. It's about the creation of commercial child rearing factories (day care centers) and the resulting economies of scale from specialization. Ignoring this factor is incredible. It's undoubtedly more significant than washing machines.

But, career success makes having children very expensive. Opportunity cost is outrageous!

Expensive for the women maybe, because mothers are not entitled to any yield on their investment. If Don and Russ couldn't expect people to pay off their student loans, their business might be very expensive for them too. And would they continue in the business?

How much value does higher education add to labor compared with a good upbringing? The answer is not obvious, particularly since the good upbringing is practically a prerequisite to the higher education.

My money is on working longer will be the result. Why is that such a big deal? Do you know what happens to people after they retire? Their brain turns to mush. That's okay if you only have 10 years to live post retirement, but living 30 years focused on absolutely nothing is a lot less exciting than one would think.

I agree.

Also, old people are a huge strain on the health care system because illness is positively correlated with age. It's about time we regulated how long people are allowed to live.

We only need to withdraw subsidies for incredibly costly life extension, and the results could be surprising. Maybe we'd live longer with fewer pacemakers. I'm very skeptical of the benefits of high tech medicine, so I have a living will.

Martin Brock October 29, 2008 at 6:47 pm

… to reduce population, and consumption of resources, everyone that reaches their 21st birthday is killed.

Increasing population increases resources. The more people we have, the more we produce per capita. Higher population density is correlated with higher productivity. Here again is the interview with Julian Simon that Don posted a while back.

The baby bust and the resulting "demographic dividend" presumably created a misleading impression of productivity increase to some extent, but I still think Simon was right, and he was right when practically everyone else in the academy was wrong.

Methinks October 29, 2008 at 7:32 pm

Expensive for the women maybe, because mothers are not entitled to any yield on their investment.

"yield" on children is difficult to calculate – particularly if you've just raised a pack of lazy, snot-nosed, entitled bastards currently hitting the labour market. The more productive the the woman, the higher the yield on the child must be to make it worth her while. The return on my labour is insanely high and I'm willing to work until I croak and accept whatever changes in return on the investment in my career. I fear not randomness but I don't want to give birth and even if SS is available when I'm of retirement age, I don't want it. Why is this a problem?

I have to listen to that interview and I have to think about this some more. Something about your thesis bothers me but I'm not sure if I'm missing something or you are.

Women may seem to become more productive, but I'm not sure they really do, particularly since the brightest women typically have the lowest birthrates.

SOMEBODY saw Idiocracy. Although, all of my female friends quit their extremely high paying careers in fiance and law (such a waste of a Harvard education) when they started breeding. They are much brighter than I am but don't mind being trophy wives/helicopter moms. I tried the upper east side lady who lunches and hangs out with the kids when the nanny isn't around thing once after I decided WS was too full of arrogant yet stupid pricks for it to be worth my while. I lasted two days (barely). I have no idea how these women can muster the energy. Which brings me to another point….

Women who aren't particularly interested in being mothers don't usually give children the best upbringing. I'm not sure that's a net positive. There are plenty of people having children. I know because they lived in NY housing projecta and I used to subsidize them with my taxes when I lived in NYC (and because I used to live in those ghettos). More children did not equal more production there.

Sam Grove October 29, 2008 at 7:32 pm

Increasing population increases resources. The more people we have, the more we produce per capita. Higher population density is correlated with higher productivity.

The more people that exist, the greater (in many ways) the market.

Simon impacted the world in surprising ways.

Bjorn Lomborg set out to disprove Simon's claim that conditions in the world were generally improving. Lomborg discovered that Simon was correct.

The ultimate resource is a great resource.

Martin Brock October 30, 2008 at 7:09 am

- particularly if you've just raised a pack of lazy, snot-nosed, entitled bastards currently hitting the labour market.

Exactly. We don't really know yet the consequences of lowering fertility and dividing the labor of mothers. This experiment didn't end when millions of women deferred or avoided fertility to earn wages. It started then. We don't know the relative value of their alternative investments until a decades later, because the investments they avoid take decades to bear fruit.

We're now entering a period of slower labor force growth, but that's only part of the result, the easiest part to quantify. We don't yet know much about the snot in the nose of this more slowly growing workforce. Is your insanely valuable labor really valuable enough to replace the lost productivity of the children we didn't raise? That's the question. Maybe the value is an insane illusion, like the value of all these illiquid CDOs.

The more productive the woman, the higher the yield on the child must be to make it worth her while. The return on my labour is insanely high …

So the yield of your mother's investment is insanely high. Your labor is the yield of her production of you. If you were literally a robot, no one would dispute this point. Your father and others also contributed, but you didn't enter the world with insanely valuable labor. Developing this value was a long, very costly process of investment that began before you were a gleam in your daddy's eye. We can simply ignore most of this investment as though it's inconsequential, but the ignorance is not economics. It's politics, and it's the politics we call "capitalism".

Martin Brock October 30, 2008 at 11:46 am

Except the Chinese. They call the same politics "socialism".

Methinks October 30, 2008 at 11:57 am

Is your insanely valuable labor really valuable enough to replace the lost productivity of the children we didn't raise? That's the question. Maybe the value is an insane illusion, like the value of all these illiquid CDOs.

A CDO? You're kidding. My production can't be compared to a CDO. CDO's are illiquid and opaqe pass-throughs. My labour is easily valued every day and very liquid. I eat what I kill. What makes you think your production is not an illusion? What makes you think that having children is a better use of all women's lives and what makes you think that women can't figure it out for themselves?

If you think my production may be an illusion, perhaps you can have chat with the IRS. They're taxing me as if it's real.

We can simply ignore most of this investment as though it's inconsequential, but the ignorance is not economics.

What's your point? My parents gave up a portion of their production both in sharing their production with me and in foregone production. Nobody disputes that. Let's assume that aggregate production declines because there are no productivity gains and fewer people due to reduced birth rates. What do you propose, enslaving all women to produce children?

Sam Grove October 30, 2008 at 12:11 pm

What do you propose, enslaving all women to produce children?

T don't think so.

The point is that entitlement to consume when one is no longer a producer is entirely dependent on available production at the time.

Maintenance, elder care, medical care, etc., can't be warehoused for later consumption.

Methinks October 30, 2008 at 12:29 pm

Sam, savings entitle you to consume your savings when you are no longer producing. The fact that others produce does not mean that you necessarily have an entitlement to consume their production.

So, what's the point? We may have to abandon transfer payments from the young to the old due to a lack of young? We may have to work longer? We are going to compel women to bear children?

Hammer October 30, 2008 at 1:46 pm

Martin: Thanks for linking that interview. Very interesting. I think he was using his average life expectancy data incorrectly, but that is trivial and does not alter his point.

A few things I might point out with your argument though:

1) I don't think it is the case that more people necessarily results in more productivity. I think that like every resource, not being able to make free and best use of the resource can severely limit its capacity. As Simon points out, China had a HUGE number of people working in argiculture which did very little until they were allowed to freely (or more freely) go about their production. Likewise Hong Kong was a particularly small place, but had a hell of a productive economy.
I think that implies that economic freedom is an economic multiplier, with greater freedom allowing for vastly more productivity from the same resources.

2) I would be very leery of suggesting economies of scale when it comes to raising children. I am all for specialization in that sense, but it seems to be the case that children do much better with more individualized attention. One on one isn't a necessity, but fewer seems better than more.
I believe Methinks makes an excellent point that someone who doesn't care to be a mother is going to make a very poor quality mother. It is the same in nearly all human endeavour. I think that if there were any indication that more people does not necessarily result in more productivity, it is easy to see in her example.

3) One has to be very, very careful tracing back "investment" in children's productivity. Using the logic you describe, one could essentially assert that the future production is really property of all society, to a greater or lesser extent. The trouble with that is that it makes everyone slaves to everyone else. If you are not the only person entitled to your own production, you are right back to the government deciding who gets what as a result.

The assertion that everyone is obligated to take care of their parents after their parents can no longer support themselves is a tricky one. Basing it on the notion that the parents decided to have children as an investment implies that the children are naught but property of their parents. One could attempt to account for the initiative of the child themselves, such as by working extra hard, or succeeding despite having worthless parents, but then you are in the awkward position of deciding just how much the children owe their parents.
And of course, it is merely a small logical step to then reach "Well, everyone invests in children, so they are all entitled to the returns."

Hammer October 30, 2008 at 1:50 pm

"The point is that entitlement to consume when one is no longer a producer is entirely dependent on available production at the time.

Maintenance, elder care, medical care, etc., can't be warehoused for later consumption."

Money or other goods CAN be warehoused, which is exactly why people use and save currency instead of say pickels. It is to the benefit of those who provide the healthcare and such to trade for that currency (or pickels I suppose) at that time. That's how "retirement" works in a sensible system, as opposed to how the US (and most of the rest of the world) works it today.

Martin Brock October 30, 2008 at 2:51 pm

… savings entitle you to consume your savings when you are no longer producing.

In a market capitalist system, saving entitles you to purchase capital now and to consume the yield of this capital, if any, when you are no longer producing. The entitlement ultimately depends critically on what we're calling "capital".

We may have to abandon transfer payments from the young to the old due to a lack of young?

I doubt it, but I'd like to see children supporting their own supportive parents, rather the demographically dubious system of entitling the old generally to the output of the young generally. That would help a lot.

I'd also like to see the end of many rents, because these rents do transfer wealth from the young to the old regardless of any investment in the young. Paying FICA taxes now and receiving benefits later differs little from buying Treasury now and receiving principal and interest payments later, and it's not so different from buying real estate now and receiving rents later, though it is different.

We may have to work longer?

Yes.

We are going to compel women to bear children?

I'm not. I wouldn't put it past the Chinese in a few decades.

Sam Grove October 30, 2008 at 3:09 pm

Nonetheless, at any point in time, consumers compete for available product.

Saving your money entitles you to some portion of available product at another point in time in the future.

If the number of producers falls relative to consumers, then the price of product will increase unless the investment of savings enables a mitigating increase in productivity such that the increasing ratio of consumers to producers is offset by the increase in productivity.

Given the increasing government intervention in the market, I suggest some concern is due about how much productivity will increase.

I've started talking like Martin and now you don't understand me.

For a dramatic example: many people in Germany after WWI had saved entitlements to consume. Hyperinflation had wiped out their entitlements.

A similar thing can happen if output declines.

The question is whether productivity will increase enough to offset the increasing ration of consumers to producers.

Yes, somethings can be warehoused. Food will likely not be a big issue.

The issue is having enough people available to distribute food: truckers, grocery workers, and other services: nurses, therapists, orderlies, maintenance workers, etc.

Quarken October 30, 2008 at 4:36 pm

[i][Liberals] are the only ones mandating behaviour while claiming to be tolerant of differences and proponents of individual expression. See? It's ironic.[/i]

If you think liberals are the only ones mandating behavior while being proponents of individual expression, then you haven't been paying attention.

Quarken October 30, 2008 at 4:38 pm

Nothing in Mr. Boudreaux's letter should indicate that he thinks liberals are the only ones guilty.

The fact that he singled out "liberals" most certainly does.

Methinks October 30, 2008 at 4:49 pm

If you think liberals are the only ones mandating behavior while being proponents of individual expression, then you haven't been paying attention.

What? That's it? You're not going to enlighten me? It is so because you say so. Trot out an example, please.

Hammer October 30, 2008 at 4:54 pm

Sam, it is true that certain big problems can really change the way savings works out. Saving the results of production instead of consuming it entails a certain amount of risk, but then again so does not saving.
For instance, say a terrible virus hits the US ala Stephen King's "The Stand" and 90% of everone dies. Well, I might be pissed I have all that money in my 401k rather than having spent it on coke and hookers the week before. Assuming I am not dead, that is. There are a number of "Oh crap!" scenarios that holds true for.
However, most of those are much less likely than the scenario of "some inflation, and perhaps a need to work a bit part time". So saving seems like a decent idea.

Now, having saved does entitle you to later consumed what you have saved (assuming you are not a zombie), however that does not guarantee any level of consumption based on trading that which you saved. Hence, saving gold, or corn, or coke and hookers might be more beneficial than say Deutsch Marks right before WW2.
However, one needs to consider just how long a period of time significant decline occurs relative to the time the market has to adjust. WW2 falls into the "Oh crap!" category of things that happened quickly with little time to react. A shrinking pool of labor due to demographic changes does not. Rather, a shrinking labor pool would seem to be slowed by negative feedback, as rising labor costs increase incentives to automate, as well as increasing incentives for retired folks to come back into the labor market.
Now, if over a long period of time cultural or political influences continued to depress the birth rates below replacement and expansion levels, or people become sterile as in "Children of Men", I could see issues arising that would cause serious problems. However, it seems unlikely, and since increased prosperity seems to lead to increased child birth in the Western world at least, it seems more likely that the economy will be shot dead by something else.

Martin, as an interesting thing you might be especially interested in, you might want to check out the trends in SE Asian countries reguarding women in the workplace. I know in Korea, for instance, a woman is essentially a career woman or a mother, but not both. There seems to be a lot of pressure to quit one's job and be a stay at home mom in the traditional vein once one gets married, and so many women get married very late in life.
Hong Kong is similar, though the male female dynamic is rather different, and the "traditional vein" has pretty much been slashed. But those might be good countries to look at for evidence of what happens when women work instead of having kids.

Martin Brock October 30, 2008 at 5:03 pm

Given the increasing government intervention in the market, I suggest some concern is due about how much productivity will increase.

I was concerned already, but I'm definitely more concerned now.

I've started talking like Martin and now you don't understand me.

Welcome to reality. It's not a popular destination, but it's home.

Food will likely not be a big issue.

I agree, but it's more of an issue than people realize. China now has around eight workers (20-64) per retiree (>65). Over the next twenty years, the Chinese ratio falls to four-to-one, while the U.S. ratio falls from roughly 4.7 to 2.7. China's ratio in twenty years is only a bit lower than our ratio now, but China's per capita GDP now is only around 15% of ours, so the rapid drop for China, even from such a high level, could be more perilous.

Which is why China won't be bailing us out of our predicament. On the contrary, we owe them, and one thing they'll want from us is food. That's not a huge problem, because China is now practically self-sufficient in food with over four times our population on a comparable land mass.

We can easily double our output of food in the U.S. and then some, and we can do it with only a fraction of our labor. We won't do it to increase our own consumption. We'll do it to continue importing goods from China as we do now, if we're lucky.

Martin Brock October 30, 2008 at 5:33 pm

A shrinking pool of labor due to demographic changes does not.

It doesn't shrink in the U.S. It only grows much less rapidly. In Japan, it actually shrinks.

… a shrinking labor pool would seem to be slowed by negative feedback, as rising labor costs increase incentives to automate …

You would think so. I expect rising wages if markets are really free, but I don't assume that markets are really free. Even if nominal wages rise, I worry about prices and rents rising faster. We're facing a battle for consumption between the boomers and the Xers, and the boomers are winning at the moment.

They boomers have been selling entitlement to tax revenue like there's no tomorrow for nearly a decade, and they're selling it at a dizzy rate now. They're selling it and handing the proceeds of the sale to bankers to pay out as dividends. If you aren't holding lots of bank shares yet, you're boned up the butt big time. I hope you like that kinda thing, 'cause it ain't over yet.

… increasing incentives for retired folks to come back into the labor market.

I expect lots of opportunity there. I wouldn't invest in retirement homes in Florida and vacation resorts or even so much in medical care for the elderly. I figure those assets are overbought by now. I'd invest in businesses positioned to offer part-time employment to semi-retired people with fixed incomes, especially businesses permitting people to work from whereever. These workers potentially add a lot of value at low cost and will be happy to do it.

… since increased prosperity seems to lead to increased child birth in the Western world at least

Prosperity is correlated with lower birth rate. The U.S is exceptional to some extent, but our birth rate certainly didn't rise as we became richer in the twentieth century, and it's hardly above replacement now. Replacement is an average of 2.1 children per woman's lifetime. The U.S. has a high immigration rate, and immigrants have a higher birth rate for the first generation or two, making immigration an even more potent force in our demographics. We'd probably be shrinking without it.

… you might want to check out the trends in SE Asian countries reguarding women in the workplace …

I'll do that. Thanks.

Sam Grove October 30, 2008 at 6:29 pm

Now, having saved does entitle you to later consumed what you have saved (assuming you are not a zombie), however that does not guarantee any level of consumption based on trading that which you saved. Hence, saving gold, or corn, or coke and hookers might be more beneficial than say Deutsch Marks right before WW2.

Unless you have saved actual consumables, you don't consume what you save. Savings are notes or records of entitlement to later consumption, which is dependent on later production.

So we can't just blithely rack up savings in our accounts, we must also take a hand in seeing to it that later production is sufficient to meet later demand.

This may mean devising strategies for communicating the nature of the problem and the likely necessity of managing increased immigration, getting government out of the business of planning, etc.

Also investment strategies need to be more than just expectation of monetary profits, but with an eye toward long term productivity, lower cost energy, etc.

Quarken October 30, 2008 at 6:50 pm

What? That's it? You're not going to enlighten me? It is so because you say so. Trot out an example, please.

Like you did, right?

Blue laws, gay marriage, flag burning, ID, abortion, medical marijuana, stem cell research, adoption, faith based funding, basically the entire Republican social agenda. Legislating religious values while preaching religious tolerance (as long as by religious you mean Christian) isn't irony? We haven't even begun talking about foreign policy.

Implicitly, both sides have had zero reservations ordering how you spend your money through current taxation (and future taxation via government debt), and spending it on pork government consumption. Discretionary spending minus defense has been greater under Bush & the Republican congress than under any administration going back at least as far as LBJ. Small government what? Fiscal discipline who? Prescription drug program where? No irony here, nosiree!

Want more? Should we talk about exporting freedom & democracy by bomber, tank & rifle? Should we talk about fighting communism by arming drug dealers?

Oh but I forgot, only "liberals" would stoop to such lows. Pardon my irony. Good thing we have someone like Dr. Boudreaux to point that out for us.

Sam Grove October 30, 2008 at 8:52 pm

Quarken,

Are you saying that Republicans claim to "tolerant of differences and proponents of individual expression"?

Martin Brock October 30, 2008 at 8:59 pm

Everybody talks about freedom. Nobody does anything about it.

Sam Grove October 31, 2008 at 12:30 am

Nobody does anything about it.

Often they surrender it.

Methinks October 31, 2008 at 10:52 am

Like you did, right?

You want me to prove a negative?

Blue laws, gay marriage, flag burning, ID, abortion, medical marijuana, stem cell research, adoption, faith based funding, basically the entire Republican social agenda. Legislating religious values while preaching religious tolerance (as long as by religious you mean Christian) isn't irony?

No. This is not irony. The Republican social agenda has nothing to do with liberalism and they don't claim that it does. Whether you agree with the Republican social agenda (and I don't) or not, they don't claim to be liberal and tolerant. They claim to be conservative and they claim to know "what's right". This makes them no different in practice than the left. The only difference is that the left claims go be different – free, tolerant. That's irony.

Want more? Should we talk about exporting freedom & democracy by bomber, tank & rifle?

Is there another way to dislodge tyranny? I seem to remember freeing slaves with rifles and bombs. I also seem to remember that's how Americans shook off British rule.

Methinks October 31, 2008 at 11:12 am

This may mean devising strategies for communicating the nature of the problem and the likely necessity of managing increased immigration, getting government out of the business of planning, etc.

Sam, I think you of all people know how hard getting the government out of business is going to be. However, As I said before (and it was on one of those threads that no longer accepted comments, and I don't remember if it posted), you don't actually have to import labour into the United States. As long as there continues to be no restriction on capital movements, you can invest directly in foreign labour in their home country. In the past, the United States had the most liberal and prosperous economy. Other countries learned from that and have liberalized their economies. Now, people in other countries have the ability to produce at levels they were unable to in the past without having to physically immigrate to the United States.

Also investment strategies need to be more than just expectation of monetary profits, but with an eye toward long term productivity, lower cost energy, etc.

There has always been an eye on those things. Companies sole focus is no maximizing profit margin by increasing turnover while reducing costs. In fact all of that is baked into what you're calling "monetary profits". I think this confusion stems from you lack of understanding of what finance is. It is not how consumers gain an entitlement to consumeproduction. Finance is a branch of economics – it is applied economics and it is the practice of providing liquidity, which is another way of saying "facilitating resource allocation". The more liquid the capital markets, the faster and more efficiently funding meets entrepreneurs and innovation finds the funding to flourish. It is, in fact, how producers find the means with which to produce. Consumers gain the right to consume by producing (or using government to steal from producers – whatever).

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