Some Links

by Don Boudreaux on April 20, 2011

in Health, Inequality, Nanny State, Regulation, Science, Video

Robert Higgs contemplates truth-seeking.  Here’s one of my favorite paragraphs:

In my career in academia, however, I discovered to my dismay that many of my colleagues had little interest in the search for truth, however one might understand or pursue it. To them, their research and publication amounted to a game in which the winning players receive the greatest rewards in salary, research funding, and professional acclaim. They understood that because of cloistered academic inbreeding, economists at the most prestigious universities consider the “smartest guys” to be those who employ the most advanced, complex, and incomprehensible mathematics in their “modeling” and “empirical testing.” I observed colleagues who became excited by their discovery of a mathematical theorem that had never been applied in economic research. These economists would look around for a plausible way to use the newly discovered mathematical theorem, to give it the appearance of economic relevance. In this way, mere technique drove research and publication. These economists did not consider, or care, whether the theorem would assist them in the discovery of economic truth; they cared only about showing off their analytical powers to impress their technically less advanced colleagues and journal editors. Unfortunately, these colleagues often did feel intimidated by the authors of articles they could not understand because they did not know the mathematical techniques employed in the exposition. This entire enterprise, which continues even now, consumes valuable time and brainpower in a misguided carnival of intellectually irrelevant one-upmanship.

The great Richard Epstein argues for letting the rich get richer.  (HT Manny Klausner)  Richard is right.

Heather Mac Donald productively ponders graffiti and vandalism.

Shikha Dalmia criticizes Rep. Paul Ryan for conceding too much to the nanny-statists.

Limousine ‘liberals’ are no fans of the Institute for Justice!

I want to be in this catalog!  (Perhaps I could fetch as much as $10 per hour.)

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{ 109 comments }

rhhardin April 20, 2011 at 2:47 pm

The leftist line is that so long as there’s a single rich person, wages are too low. Some blood is there to be squeezed out of the turnip.

Rich people, though, are the providers of capital; capital is extra money, and the rich are the ones with extra money. They spend the tiniest proportion of their income on consumption of any group, and the most becomes capital.

Capital is why the ditch digger with power equipment earns a lot more than the ditch digger with a shovel.

So the rich are the ones keeping wages high.

Squeezing the rich lowers wages, far from raising them.

JohnK April 20, 2011 at 3:22 pm

“The leftist line is that so long as there’s a single rich person, wages are too low.”

The leftist line is that rich people don’t pay their fair share by virtue of the fact that they are rich. If they paid their fair share then they wouldn’t be rich. It is institutionalized envy.

The end result of leftist egalitarian policy is to reduce everyone (except the political class) to the lowest common denominator: poverty.

Only then will there be nobody to envy.

DG Lesvic April 20, 2011 at 2:56 pm

Wow!

That gives me new respect for Higgs.

But, like Elaine, I must ask, how does he stand on Public Choice.

Daniel Kuehn April 20, 2011 at 2:58 pm

I quickly tire of these points by Higgs. Whether he likes it or not, the vast majority of academic economists are interested in the pursuit of truth, and it’s really condescending to read him over and over again insist that they’re not.

His points are always vague. What theorem is he talking about here exactly? It’s his evaluation that they just like using these theorems, but he never gives any evidence of this – it’s just his stake on things. The peer-review pressure cooker is intense, and if someone doesn’t think an innovation is relevant or important they usually have no reservations about saying so and rippin the innovator to shreds. It’s easy for Higgs to avoid these sorts of criticisms when he stays hopelessly vague on what “theorems” he’s refering to here. And it’s easy for him to get plaudits from people who like the sound of the critique but similarly aren’t interested in providing details on the appropriateness of any given theorem.

Higgs talks about physics envy a lot too, but again there’s rarely any detail. The one guy he talks about with more specificity is Paul Samuelson – particualrly the work he did over sixty years ago in his textbook. Constrained optimization didn’t survive sixty years because economists just want fancy math and are envious of physicists. Afterall, (1.) constrained maximization isn’t fancy math, it’s high school math, and (2.) it’s not cutting edge physics – it’s physics that’s centuries old. The reason why economists frame things as a constrained optimization problem is relatively straightforward – it seems pretty reasonable to think agents are trying to maximize either their welfare or their profits, and it seems pretty reasonable to think that one of the decisive elements of this choice is the constraints they face: scarcity and their budget and credit limitations. Hence – optimize [profits, welfare], contrained by [budget, scarcity, etc.]. It’s not “physics envy” – there’s only so many ways you can model that! Who cares if physicists use basic calculus too?

This obsession with the idea that people are obsessed with math is a substitute for real critiques. If there is something wrong with a given approach, get specific. What is objectionable about it? Don’t decry “fancy math” in general.

I find the concern with boosting careers with impressive publication records ironic too… whenever I raise any doubts about regime uncertainty as the primary factor explaining the depression or the current recession I always, without fail hear “But Higgs published in JEH – that’s a major journal.”

Don Boudreaux April 20, 2011 at 3:33 pm

The fact that Bob publishes in top journals and with top university presses gives him more, not less, authority to issue the criticisms that he issues. Likewise the fact that he was a tenured professor in a top, mainstream Econ department (Univ. of Washington), and the fact that he’s got decades of experience in the academy and with academicians.

Bob’s points ring very true to me. I’ve encountered way too many economists who confuse technical proficiency with scholarship; who mistake their success at constructing complex-seeming models for an understanding of the real-world. The typical economist – typical, mind you, not every economist – has too little knowledge of history and thinks about scientific method with as much sophistication as an 11-year-old whiz kid. And the typical economist’s judgment about what is and what is not a worthwhile research project is very often weak.

THAT is my own personal experience, gleaned from countless years attending the annual meetings of the AEA, the SEA, and the WEA. The quality of the papers presented at these meetings is so consistently poor that I’ve stopped attending. It’s a waste of time. (I recall when this sensation first hit me. It was at a meeting, I think of the AEA around 1985 in New York, listening to a slew of economists present papers discussing the Very Serious Problem of – I’m not making this up – “predatory product innovation.” Sheesh.)

E.G. April 20, 2011 at 3:44 pm

“I’m not making this up – “predatory product innovation.” Sheesh.”

Jesse Jackson Jr?

Methinks1776 April 20, 2011 at 3:44 pm

the Very Serious Problem of – I’m not making this up – “predatory product innovation.” Sheesh.

Sweet Heysoos! You can’t make this stuff up.

SaulOhio April 22, 2011 at 8:59 am

But they do anyway. “Never underestimate the power of human stupidity”–Robert Heinlein.

Daniel Kuehn April 20, 2011 at 3:52 pm

Oh I’m not shrugging off where he gets published. It’s just a refrain I hear a lot which is odd in light of this particular post. Let me put it this way – clearly his supporters think highly of “success as defined by academia” too.

Daniel Kuehn April 20, 2011 at 3:55 pm

If I’m not mistaken, the IO literature uses “predatory” to mean “reduce own profits temporarily to gain market share”. Given that use of the word “predatory”, and not the average person on the streets’ use of the term, what’s so odd about “predatory product innovation”? I’m assuming this is a reference to something like bringing an unprofitable innovation to market that doesn’t break even, but does drive competitors out of the market – which might have longer term benefits.

Don Boudreaux April 20, 2011 at 3:58 pm

And you would take models of such an alleged phenomenon seriously?

Daniel Kuehn April 20, 2011 at 4:03 pm

Well I don’t know about this predatory product innovation literature. But sure – “predatory” behavior (as defined by your IO colleagues) does on all the time.

I was just talking to my mother in law who’s replacing windows in her house and she’s benefiting (and Home Depot is suffering) from predatory pricing by a window maker who is trying to break into the Arlington market and is giving Arlingon home owners lower deals than are offered online. It’s a strategic decision that makes good rational sense, and the IO literature has termed it “predatory”. Asian steel companies are on record doing this too, as I understand it – sell considerably under cost, take market share, and then work the price up to a profit maximizing level.

When you say “predatory product innovation” of course it sounds goofy to the average person. But when you know how IO uses the word “predatory” (as a description of a specific strategy – not as some sort of value judgement) it’s not all that strange.

Don Boudreaux April 20, 2011 at 4:12 pm

Daniel,
Show me one clear instance in reality of successful predatory pricing (or predatory product innovation) that led to net consumer harm.

The fact that “the literature” is stuffed with clever models showing that it is *possible* for a firm to cut prices today and then tomorrow to inflict net harm on consumers as that firm earns monopoly profits is irrelevant. Such modeling is child’s play. Gaining the wisdom to distinguish that which is plausible from that which is merely possible requires far deeper thought.

Among the traits of typical economists most disturbing to me is their thoughtless fascination with modeling possibilities – and then proclaiming, like a little kid who found a four-leaf clover, how important and relevant this finding is. And when these “scholars” insist that government use their Brilliant Findings to formulate policy, well, it drives me mad.

Daniel Kuehn April 20, 2011 at 4:28 pm

…I wasn’t talking about theoretical literature Don.

Burns (1986) with empirical evidence on predatory pricing in the tobacco industry. Shin (1998) looks at anti-dumping cases and determines which are and which aren’t legitimate instances of predatory pricing. Lieberman (1987) finds it less common in chemicals.

Yes, that is frustrating – I’m not sure how common it is, personally. Certainly people specialize in theoretical or empirical work but off the top of my head I can’t think of a significant theory that hasn’t been empirically scrutinized.

vikingvista April 20, 2011 at 9:15 pm

It’s possible for a pair of flapping butterfly wings in Africa to launch a hurricane in the Caribbean. Who cares if it’s plausible. It’s just the excuse needed to justify controlling every motion of every person in the world.

It’s possible for large populations of free people to engage perpetually in a monumental multi-person game of Prisoner’s Dilemma. Who cares if it’s plausible. It’s just the excuse needed to squash freedom.

Don Boudreaux April 20, 2011 at 4:38 pm

I have to teach tonight, so I have no time now to post further. I’ll do so tomorrow.

But very quickly: anyone who believes that it is even theoretically possible to distinguish “predatory” price cuts from non-predatory price cuts (or “predatory” innovations from non-predatory innovations) has simply not thought seriously about the nature of costs, production, and competition. With the possible exception of government-subsidized price cuts, there is no there there; it’s a stupid illusion that has fooled Very Smart Economists (and lawyers) for a long time – and continues to do so.

Anyone who wants a preview of my argument can ponder this brilliant 1959 paper by Armen Alchian, linked here:

http://cafehayek.com/2010/09/some-links-49.html

Mao_Dung April 20, 2011 at 7:50 pm

Don, you are trolling on your own blog. Are you telling me that the best the country, consumers, etc. could do, was to let J.D. Rockerfeller run wild with Standard Oil, Corp. and become the richest man in the world? Maybe there is too much “tar” in the cigarettes you smoke. You think that whatever a robber baron does, that the results will be “optimal.” Of course the results are optimal for the robber baron, hence the epithet.

http://en.wikipedia.org/wiki/John_D._Rockefeller
http://en.wikipedia.org/wiki/Standard_Oil
http://en.wikipedia.org/wiki/Robber_baron_(industrialist)

Ken April 20, 2011 at 5:30 pm

I’m assuming this is a reference to something like bringing an unprofitable innovation to market that doesn’t break even, but does drive competitors out of the market – which might have longer term benefits.

Name two.

E.G. April 20, 2011 at 3:42 pm

What you’re saying is in essence correct, but it isn’t really addressing the points Higgs makes in his piece. While I’m not familiar (or interested) in the argument of whether this or that level of math ought to be used, the basic starting point for disciplines like economics, or even finance, is that all models are cr*p. It isn’t so in physics or engineering (primarily because they can recognize what resolution they want to be looking at) . And this perhaps is the main differentiation, and his criticism that reliance on models, and turning modeling into its own end, is an error.

I don’t know much about academia in economics, but the academia I have experience with and have worked with, is certainly guilty of all the accusations he makes.

Daniel Kuehn April 20, 2011 at 3:58 pm

Physicists and chemists use models differently than biologists and economists. Physicists and chemists have stable laws that they can model deterministically. It’s nonsensical to bring that expectation over to models in biology or economics and judge them as being crap because they don’t do what they were never intended by anyone to do.

This is another irony of these critiques… the ones who talk about physics envy the most are inevitably the ones who fault economics for not being the same sort of science as physics and who measure the performance of economic models against physics models.

Don Boudreaux April 20, 2011 at 4:02 pm

What are you talking about? Have you read McCloskey?

Daniel Kuehn April 20, 2011 at 4:04 pm

I have read many of her articles – haven’t read her book yet. What do you have in mind specifically?

E.G. April 20, 2011 at 4:16 pm

“I have read many of her articles – haven’t read her book yet. What do you have in mind specifically?”

What she says about statical significance, and the misapplication of the concept in economics. Can’t say much about economics, but her observation is dead on for other areas of social sciences I’ve looked at. IE…its the application of a tool that is designed and works specifically for physics or engineering, into social sciences.

Daniel Kuehn April 20, 2011 at 4:40 pm

Yes I’ve read that one (the article not the book). But that doesn’t really speak to the uses of modeling that you and I were discussing. That article is also considered to be overstated by a lot of people, myself included. How many people who have read the McCloskey article have read the Hoover and Siegler article where they note that everyone agrees statistical significance is not in itself meaningful, but that it provides information on the reliability of our results, given a properly specified model (and therefore is not “cultish” to be concerned about).

I was assigned McCloskey and I was told ad nauseum what statistical significance could and couldn’t tell you. As I say a lot on here – it’s a sample of one, but there’s nothing especially atypical about my econometrics education. I like Andrew Gelman’s reaction to the McCloskey exchange best – he called it a case of “gradually escalating verbal fireworks”. Just like Higgs’s point here – the best way to get attention is to accuse a wide swath of the field of missing an insight that you haven’t missed and call their work “child’s play” as Don does above.

Daniel Kuehn April 20, 2011 at 4:42 pm

EG – and by the way – statistical testing is not “a tool that is designed and works specifically for physics and engineering”. Give me a break.

Historians and philosophers used logic and prose before economists did.

Should I accuse economists who eschew math of having “history envy” or “philosophy envy”? Of course not. You use what makes sense for what you’re doing and if someone else is using it too you shouldn’t care. It’s math for God’s sake. It’s the universal language. Why should we be surprised that it’s useful in all sorts of places?

E.G. April 20, 2011 at 7:05 pm

“You use what makes sense for what you’re doing and if someone else is using it too you shouldn’t care. It’s math for God’s sake. It’s the universal language. Why should we be surprised that it’s useful in all sorts of places?”

Its about the specific tests used. I think you need to re-read the article again.

E.G. April 20, 2011 at 4:08 pm

“judge them as being crap because they don’t do what they were never intended by anyone to do.”

Well thats the point. They are often used specifically to try and do just that.

Daniel Kuehn April 20, 2011 at 4:14 pm

Name me a single economist who thinks a model they build represents a deterministic law of the economy comparable to physics, rather than a formalization of a general set of relations.

As I said above – these accusations are made, rarely with any specifics. Tell me one economist that thinks he’s doing more than just formalizing some relations between variables. Tell me one economist that doesn’t think about his models in the same way that biologists think of their models. Tell me one economist that will swear by a parameter estimate in the way that physicists will swear by their parameters. Name me a single one alive today.

I can think of one economist who’s fairly deterministic in his understanding of his model – and he has a big bushy beard, has been dead for over a century, and is on the outs with most economists.

E.G. April 20, 2011 at 4:18 pm

I’m not the one to ask about economics. It ain’t my field. I can give you examples in peripheral fields, if you’d like.

Daniel Kuehn April 20, 2011 at 4:45 pm

Why would you write “They are often used specifically to try and do just that” in response to my point about economists if you have no examples of economist trying to “do just that”?

E.G. April 20, 2011 at 7:11 pm

” if you have no examples of economist trying to “do just that”?”

I’m sure there’s plenty of examples, I’m just not the one to give them to you. McCloskey’s paper provides several examples.

Daniel Kuehn April 21, 2011 at 6:48 am

Are you thinking of the McCloskey and Ziliak paper?

You seem very confused about what’s in that paper – it doesn’t discuss these questions about physicist use of math vs. economists’ use of math – it discusses how economists talk about statistical significance. There are some great points in there, but a lot of it is overstated – again I’d refere you to Hoover and Siegler’s response and to Andrew Gelman’s response – not because I think McCloskey is wrong but because I think you really need McCloskey + Hoover + Siegler + Gelman (plus probably a few others) to get a clearer picture. I get the feeling you’re thinking of another article than I am – which are you talking about?

E.G. April 21, 2011 at 1:31 pm

I am talking about the McCloskey, Ziliak paper (1996). But there’s something deeper in there which relates to what I was talking about; and something that has been pointed out long before McCloskey of course (but often ignored); that many of these tests work for physics or engineering because scales and probability measures are clear. Not so in the social sciences, or economics.

Now the problem is that many economists (and most social scientists) don’t recognize this.

Sam Grove April 20, 2011 at 9:46 pm

I quickly tire of these points by Higgs.

I’m wondering if you are honest about yourself as to why Higgs tires you, but, IAC, just don’t read him, end of problem.

Whether he likes it or not, the vast majority of academic economists are interested in the pursuit of truth.

The vast majority? How can you tell?

Daniel Kuehn April 21, 2011 at 6:53 am

re: “IAC, just don’t read him, end of problem”

Shutting out voices that you think are misleading or mistaken is a very dangerous road to go down. Anyway, it’s not like I’m buried in him anyway – I read what Don posts on here, I read what he writes at independent review, and I’ve read a couple of his articles. I don’t think we really have the luxury of shutting out opposing viewpoints in a liberal society.

Methinks1776 April 21, 2011 at 8:29 am

Well, actually, it is precisely that luxury that we have in a liberal society.

Daniel Kuehn April 21, 2011 at 9:18 am

I was thinking of that when I was writing it, but I figured my meaning was obvious: liberalism is maintained by practicing pluralism. Our institutions can respect pluralism all they want, but if we don’t practice it you’re quickly going to see those institutions crumble.

Sam Grove April 20, 2011 at 10:57 pm

Whether he likes it or not, the vast majority of academic economists are interested in the pursuit of truth, and it’s really condescending to read him over and over again insist that they’re not.

The vast majority of PEOPLE already know the truth and spend most of their intellectual energy engaging in confirmation bias.

Pingry April 21, 2011 at 12:41 am

It’s really about the diminishing returns to research which is present in many academic fields.

Would Bob Higgs whine about the same thing if the profession were concerned with Austrian deductive reasoning or exclusively doing historical work?

If we followed Murray Rothard’s radical apriorism, then we would all go to AEA meetings to listen to economists describe in infinite granularity about qualitative nonsense like how Rothbard included cash surrender values of insurance policies in the money supply.

-Pingry

Steve C. April 20, 2011 at 3:00 pm

You have to feel sorry for Adam Smith. Imagine how much shorter The Wealth of Nations could have been if he had used some math.

John Dewey April 20, 2011 at 3:03 pm

Epstein: “President Obama is incapable of asking candidly whether high taxation can ever reduce the level of output. In his world, the efforts of the rich and of the poor remain constant, regardless of the return guaranteed to labor.”

Apparently, 61 percent of the U.S. population is likewise incapable. That is so depressing.

muirgeo April 20, 2011 at 3:49 pm

Is Epstein capable of asking candidly the reverse. Like why the Clinton tax regime saw the most properous post WW2 growth while the Bush era was the most anemic?

Yeah I know he and the free marketeers have all sorts of explainations on this… but the difference in growth rates is a tsunami of real life fact that drowns out these silly inept excuses. There is no excuse… they are wrong… and all the hold up idle wealth rotting away the current economy is just that much more clear evidence of the same. Trickle down is bullshit!

John Dewey April 20, 2011 at 4:02 pm

A reply to your comments will convince you of nothing. My reply is not directed to you, but to anyone who might take your comments seriously.

Economic growth does not derive from government action, of course. So comparing the economic growth of the U.S. during two periods and trying to ascribe the difference to some government policy doesn’t make any sense.

Government actions can inhibit the economic growth of a nation. Both Democrats and Republicans have taken actions to harm the U.S. economy.

Muirgeo seems to be arguing that Clinton always acted contrary to free market principles while Bush always embraced them. That’s wrong on both counts, as almost everyone who comments here should know.

Methinks1776 April 20, 2011 at 4:12 pm

Um…I cannot take you seriously when you say “Muirdiot seems to be arguing..”

Did you read the entirety of the moron’s post? The one that included “idle wealth” and “trickle down” and a claim that the most sluggish post-war economic growth was not in the1970′s (I’m just being generous by ignoring the rebuilding of that which was destroyed in the war as some kind of economic win)?

He doesn’t argue. He drools.

Also, the thing that made Clinton such an awesome politician is that he HAD no principles. Therefore, he didn’t act on free market principles. He acted on whatever he needed to to be a successful politician.

John Dewey April 20, 2011 at 4:58 pm

Methinks,

I agree that Clinton was and is a man of few principles. What I meant by my comment was that Clinton’s actions – regardless of what motivated him to act – were not always contrary to the principles of those who call themselves free market and limited government proponents.

According to Daniel Mitchel of Cato institute, Clinton’s free market/limited government actions included: the 1997 tax cuts; the reduction of government (as a percent of GDP); the reform of welfare; signing of NAFTA; tariff reductions; and farm subsidy reductions.

Certainly Clinton could have done much more. And certainly some of his actions interfered with free markets.

muirgeo April 20, 2011 at 8:41 pm

“The one that included “idle wealth” and “trickle down” and a claim that the most sluggish post-war economic growth was not in the1970′s…”

Yeah because it wasn’t DUMBASS!

http://4.bp.blogspot.com/_8rpY5fQK-UQ/THMd8lvQQDI/AAAAAAAAKDI/On4DswFUwSg/s1600/realGDPsect.png

Methinks1776 April 20, 2011 at 9:02 pm

John Dewey,

I remember all that. I guess misread your comment. When Clinton didn’t veto that which the congress put before him, he didn’t embrace anything but his political future.

muirgeo April 20, 2011 at 8:36 pm

“Economic growth does not derive from government action, of course. :”

Baloney…. there is a very plausible argument that getting idle dollars back into circulation creating the infrastructure to support the private economy and pushing more dollars faster through the economy actually might increase demand and grow the economy.

You dismiss the idea out of hand… but the evidence… the last two crashes… occuring after pooling of money at the top and the recoveries occuring with relative re-distribution suggest the real world doesn’t agree with the commandments you choose to believe based on nothing.

It makes sense to me.

Methinks1776 April 20, 2011 at 9:06 pm

It makes sense to me.

Of course it does. Pink dancing bears riding unicorns to their Octoberists meetings makes sense to you. You have a fantasy life rich in a fascinating variety of stupidity.

brotio April 20, 2011 at 11:29 pm

Pink dancing bears riding unicorns to their Octoberists meetings makes sense to you.

HSIROTFLMFAO!

E.G. April 20, 2011 at 4:03 pm

“Like why the Clinton tax regime saw the most properous post WW2 growth”

Are you really so ignorant? The “Clinton tax regime” saw marginal income tax rates that were 20% LOWER than they were in 1986. Capital gains taxes that were considerably lower. The last time the US had rates as low was in 1931. The “Clinton tax regime” was a continuation of lowering and low tax rates, even if they were slightly higher than the previous 5 years. Growth rates of the time are not “the most prosperous” of anything. They are unusual because of the long period of growth, not the magnitude of growth. And they were consistently strong because they were due to technological change and massive increase in free trade. Tax rates after all don’t drive economic growth, they simply affect it.

This is the most ignorant and boring arguments from the Dems. It may convince only high school students in its stupidity.

Ken April 20, 2011 at 5:31 pm

EG,

Where is the evidence of your claims like “marginal income tax rates that were 20% LOWER than they were in 1986″?

It’d be nice to know the numbers better, I just don’t know where to look.

Regards,
Ken

E.G. April 20, 2011 at 7:08 pm

In 1986 the top marginal income tax was 50%. It had gone down considerably, and continued to go down. The Clinton era bumps were still relatively small, considering that the rates had gone down from a high of 90+%. So these people take a small upward bump in a decisively downward trend, and think its the only piece of data that has ever showed increase in tax rates.

Methinks1776 April 20, 2011 at 8:58 pm

More precisely, the top marginal tax rate was reduced to 50% from 70% in 1981. The Tax Reform Act of 1986 reduced the top marginal tax rate to 28%. Bush I and Clinton raised the top marginal tax rate and it stood at just over 39% when Clinton left office.

But, tax rates don’t tell the whole story. Among many other factors (including re-regulation and deregulation), we had one very important “killer app” – the internet and every day a million dotcoms were thrust into existence.

muirgeo April 20, 2011 at 8:44 pm

The mental contortions you all need to put yourself through to hold your positions are indeed impressive.

Clintons tax rates were higher than Bush’s and Reagans. The economy did not crash like all the libertairans at the time claimed it would…. IT BOOMED!!!!

Methinks1776 April 20, 2011 at 8:59 pm

No, idiot. What’s impressive is the lack of any discernible mental function between your ears. You’ve flatlined.

Yes, I remember the BOOM. It happened in March of 2000.

vikingvista April 20, 2011 at 9:21 pm

“The economy did not crash like all the libertairans at the time claimed it would…. IT BOOMED!!!!”

It’s a readily accessible fact that the NASDAQ peaked in 3/2000, and lost about 60% of its value by the time the first Bush budget was even voted on. Somehow, though, that bust wasn’t Clinton’s fault. Or, if you’re one of the stupidest frickin morons who ever lived, the bust didn’t even exist.

John Dewey April 20, 2011 at 11:15 pm

muirgeo, you’re mistaken. The marginal tax rate for high income taxpayers was higher during the first 6 years of the Reagan presidency, and about the same in the 7th:

1981 – 70%
1982 – 50%
1983 – 50%
1984 – 50%
1985 – 50%
1986 – 50%
1987 – 38.5%
1988 – 28%

The marginal tax rate for high income taxpayers was 39.1% for all 8 years of the Clinton presidency.

Source: U.S. Federal Individual Income Tax Rates History, 1913-2011

Do some research before you waste everyone’s time with your comments.

Methinks1776 April 20, 2011 at 4:07 pm

Like why the Clinton tax regime saw the most properous post WW2 growth while the Bush era was the most anemic?,/i>

Obviously, the Glorious Clinton Years were a direct result of the presidential sidekick’s inventing the internet. The only thing Bush’s sidekick invented was multiple heart attacks. Everybody Knows That.

Ken April 20, 2011 at 5:33 pm

muirgeo,

I’d still like you to explain to me what “idle wealth” is, who has it, and how to identify it. Otherwise your comment is just so much bullshit.

Regards,
Ken

JohnK April 20, 2011 at 6:33 pm

I would be interested in his explanation as well, though only for entertainment purposes.
Since he cannot distinguish between income, wealth and money, I’m sure his explanation would go straight into vid’s muirpidity file.

muirgeo April 20, 2011 at 8:46 pm

Do you understand that corporate profits are at ann all time high? 1-2 trillion dollars are just sitting their with no where better then oof shore accounts and treasuries to invest in because etheir is NO DEMAND.

Play a god damn game of monopoly some day. After the guy wins the game tell me how much rent he collects.

Methinks1776 April 20, 2011 at 9:09 pm

What’s an “oof shore account”? Is that like a Norwegian accent or something?

Muirdog, ‘splain to the class how corporate profits can be at an all time high in the presence of “NO DEMAND”? If there is “NO DEMAND” WTF is driving revenue increases on which these profits are based?

Finally, did your mommy forget to tell you that Monopoly is pretend?

Ken April 20, 2011 at 9:30 pm

muirgeo,

No, I don’t understand that corporate profits are at an all time high. Where did you get this information? What off shore accounts? Which companies? And why is having MONEY NOT WEALTH in an account so bad? Or do you not understand that money is not wealth?

Monopoly? You really think that Monopoly is even a good approximation to the real world? No wonder you’re such an idiot when it comes to business and economics. You learned what you know about them from board games.

Regards,
Ken

brotio April 21, 2011 at 2:37 am

You learned…

Ken!

This is Yasafi we’re talking about. Are you so sure?

SheetWise April 21, 2011 at 1:50 am

“Is Epstein capable of asking candidly the reverse. Like why the Clinton tax regime saw the most properous post WW2 growth while the Bush era was the most anemic?”

I’m always amazed that people use the President as the face of history when reflecting on prosperity, when all economic policy is initiated by Congress.

To answer your question –

Clinton had the good luck of working with a relatively conservative Congress for six years of his presidency.

Bush had the poor luck of working with a liberal Congress for six years of his presidency.

Sandre April 20, 2011 at 3:32 pm

Paul Ryan is a nanny statist. He voted for all the wars, and he voted for the bailouts too. Paul is no different from the average pol in D.C.

E.G. April 20, 2011 at 3:46 pm

So you’re saying that degrees don’t matter at all. Something is either “cold” or “hot”, and nothing in between?

Sandre April 20, 2011 at 4:11 pm

Explain how Paul Ryan is different, in matters of degree? Was there any spending that he disliked when Bush was in the Whitehouse?

E.G. April 20, 2011 at 4:22 pm

I’m not defending him from being a hypocrite. But people can be forced to change. Politicians don’t do what is right for the rest of us, out of the goodness of their heart.

Fearsome Tycoon April 20, 2011 at 4:36 pm

You don’t see any difference in degree between spending from 2001-2008 and 2008-present? Because I’m pretty sure we can quantify the degree.

Sandre April 20, 2011 at 6:32 pm

Yes, I see a difference in degree. It started with Bush, and Ryan was all in favor of it.

Mao_Dung April 20, 2011 at 7:29 pm

I agree with you 100%. Ryan is a self-aggrandizing fraud.

GP Hanner April 20, 2011 at 3:46 pm

His criticism of the use or arcane mathematical models is right on point. In my limited experience, all that mathmatical modeling doesn’t really answer any of the questions its meant to resolve.

indianajim April 20, 2011 at 4:16 pm

A co-author and I have published several papers (and one is forthcoming in Social Science History) that compile evidence on the the hypothesis of Donald F. Gordon (in his article entitled “Operational Propositions in Economic Theory”) that: Mathematical complexity and operationalism are negatively related in economic theory. Evidence supports the Gordon Hypothesis which is consistent with Professor Higgs’ experiences and sentiments.

Don Boudreaux April 20, 2011 at 4:20 pm

Can’t wait to read the forthcoming paper, Jim. BTW, for those who aren’t aware, Doug North credits Don Gordon for teaching him (North) economics.

indianajim April 20, 2011 at 4:40 pm

After Gordon died, the Western Econ Association had a session on his contributions. Gordon published a small number of very good papers in top journals. The discussion was, as you would expect, very interesting. But session speaker who absolutely stunned me with his cleverness was Walter Oi when he put up on the overhead a transparency of a photo of Gordon so that the audience could see how handsome a man Gordon was. (The reason this was so clever is, for those who don’t know, Walter is without the ability to see).

Slappy McFee April 20, 2011 at 5:30 pm

If you could also include a “community-college-educated” edition also, that would be fantastic.

Fearsome Tycoon April 20, 2011 at 4:41 pm

Don, I’m surprised that you would post this quote from Higgs without any discussion of the economics of higher ed that lead to this sort of thing. Our industry (I’m an academic as well, but in mechanical engineering) is replete with bizarre incentives, like government grants, the tenure system, subsidized student loans, etc. And what it shows is that this idea that you can create an environment for the disinterested pursuit of truth by eliminating market incentives is utter bull. You merely create a different set of incentives that leads to different interests.

indianajim April 20, 2011 at 5:17 pm

There are many bizarre incentives in the academy, but I am persuaded that tenure is probably NOT one of them:

http://00prcoelho.iweb.bsu.edu/TENURE%20AND%20NON-PROFIT%20FIRMS.pdf

Seth April 21, 2011 at 9:41 am

The main problem in the marketplace of ideas (higher ed) is the lack of a reliable sorting mechanism for discovering the truth.

Fearsome Tycoon April 22, 2011 at 3:08 pm

Reality is a pretty reliable sorting mechanism, but one effect of tenure and subsidy is to insulate academia from reality.

WhiskeyJim April 20, 2011 at 6:48 pm

Dierdre McCloskey wrote a beautiful book called Economical Writing.

But I believe Higgs implies a larger systemic issue. For education is a classic example of misaligned incentives. But that is not all that is wrong with the system.

We live in a world of both ideas and action. Just because a tautology is irrefutable on paper does not mean it can survive the physical world’s feedback. If a certain amount of pure theory is good for society, by now it threatens the whole system.

Take as example the billions of academic dollars spent conducting ‘formal’ research, published in the most venerated of inaccessible journals, studying the poor and disadvantaged. Virtually all of it with only passing relevance to reality, most inspired by Progressive ideology. And only a very small percentage even attempted on the ground. Imagine the number of bad ideas piling on top of each other because they have not survived reality’s forge. Read Dan Ariely’s experiments for a laugh.

We mistakenly believe that thought is best untied by outside influence. By now we have over-built a monopolized money hole captured by government telling our children how great government is. Our academics live a monk’s life in a world of complexity where someone somewhere can perform a multi-variate regression to prove their points. It is surprising that ‘theories’ like free markets survive at all.

Lastly, the thought of 20+ years of relatively passive classroom instruction is ludicrous given that 40% of our most demanded jobs didn’t exist 10 years ago. If it were not controlled by government, education would have evolved decades ago under price pressure. Even our understanding of how we learn rejects the very system that delivers it. Monopolized education is a beautiful refutation of bureaucracy and the Progressive ideal; a collection of our brightest minds can not even institute what they already know.

Mao_Dung April 20, 2011 at 7:10 pm

I just emailed Mr. Epstein at NYU. This is what I wrote:

Close to 40 million people including 1 in 4 children rely on food stamps to eat. The top 1% of the population earns 25% of the national income and owns 40% of the wealth aka capital. The American capitalist system is irreparably broken without a doubt in my opinion. It must be replaced with a system that gives the less fortunate hope for a better future. If you want to keep the failed status quo, you must realize that even that is impossible with the current corrupt alliance between corporations and the government. Revolution is not just for Tunisians, Libyans, Iranians, Syrians and Egyptians. The handwriting is on the wall as to where the country is headed. Can you spell “toilet.”

Please get your head out of the toilet. You’re too old to be thinking reactionary thoughts. It’s sickening really.

E.G. April 20, 2011 at 7:21 pm

Yeah the real Mao Dung had a way of solving that problem too.

WhiskeyJim April 20, 2011 at 9:00 pm

It is ironic this commentary sits below a post about Higgs. For surely the education system is as close to Progressive / socialist nirvana as we are likely to get.

How is that working out for us? Other than the fact that it is bankrupt, I mean.

Ken April 20, 2011 at 11:59 pm

Dung,

The top 1% of income earners work a LOT of hours. How many hours per week do you think Bill Gates worked when he was CEO of Microsoft? I’d be willing to bet at least 70 hours per week with many over 100 hours in a week. And how many billions of lives has he affected positively?

And what do you think these people do with their wealth once they’ve earned it? They save and invest it.

Again I have to ask why do you hate the rich so much and why do you hate that they work so hard and save so much?

Regards,
Ken

Mao_Dung April 21, 2011 at 12:04 pm

You sound like someone who uses a pacifier regularly. Perhaps like one of these:
http://www.amazon.com/Baby-Pants-Adult-Pacifier-Pink/dp/B003NN06KK/ref=sr_1_1?ie=UTF8&qid=1303401717&sr=8-1

Ken April 22, 2011 at 12:39 am

Dung,

Do you have anything useful to say?

Or are you just going to get mad, shake your little fists, and say something inane? Maybe tell us how the capitalist system, which has brought billions of people out of poverty in just the last decade is irreparably broken? Or is it broken BECAUSE it lifted billions out of poverty? How about insist that I turn myself in for legally owning guns to someplace in MO? Perhaps link to wikipedia about abstract algebra, although I doubt you know what an exact sequence is and it’s importance in the snake lemma? Or how you heard to math professors had a conversation this one time?

Let me know when you know something.

Regards,
Ken

JGoebbels April 20, 2011 at 8:10 pm

I see that the ugly “Comment Awaiting Moderation” censorship tag has appeared. Right-wingers favor sanitization and thought police as do libertarians. “Private property” trumps all, but only for the time being. True freedom will arise out of your ashes.This blog will no longer be read in that case. Another deceitful, defunct blog in the making.

Sam Grove April 20, 2011 at 9:48 pm

Right-wingers favor sanitization and thought police as do libertarians.

Do you pretend that the left does not engage in thought policing?

I haven’t seen this “comment awaiting moderation”.

Scott G April 20, 2011 at 10:17 pm

The “comment awaiting moderation” note appeared once for me when I inserted urls into my comment. I have a feeling Don and maybe Russ don’t want us linking to certain sites within our comments. Is that correct Don?

JGoebbels, did you have an url in your comment?

JGoebbels April 20, 2011 at 10:19 pm

Yes.

Sam Grove April 20, 2011 at 11:41 pm

Perhaps more than one?

Seth April 21, 2011 at 9:44 am

Wordpress has an automated setting to push comments to moderation with more than a specified number of links in order to keep out spam comments.

vikingvista April 21, 2011 at 12:14 am

“did you have an url in your comment”

His comment makes me want to url.

Scott G April 21, 2011 at 10:53 am

LOL

Fearsome Tycoon April 20, 2011 at 10:45 pm

And yet, in this harsh environment of censorship, your comment got through. Fancy that.

crossofcrimson April 21, 2011 at 3:11 pm

“censorship tag”

So, If you stop me from painting some “thoughtful” messages on the side of your house, can I go ahead and claim you’re censoring me?

The mental grasp that people have (or don’t) with regards to liberty/property is sad if not frightening. The fact that you cannot separate the difference between not letting me speak freely and not letting me use your property to speak freely is both.

DeafLeopard April 22, 2011 at 1:07 pm

Would you like it if your comment were removed summarily? Your abuse of your private property ends when it interfere with your neighbors’ property, and the greater society, etc.

Pingry April 21, 2011 at 12:21 am

The excessive mathematics in economics passing as research is no different than the excessive writing/sociology by people like John Kenneth Galbraith and Henry Hazlit.

Either way, this is the natural result of a highly competitive field (which emerged, by the way) in which there is huge diminishing returns to research.

Whether one agrees with Tyler Cowen about how our great stagnation is due to society having plucked all of the low hanging fruit, it is certainly true that the low hanging fruit has been plucked by earlier academic economists.

Anybody up for taking a shot at Baxter-Stockman exchange rate neutrality?

–Pingry

tomharvey April 21, 2011 at 2:08 am

While I enjoy reading and listening to Richard Epstein tremendously, Obama’s crudely populist speech just wasn’t well suited for serious analysis. And to justify why to “Let the Rich Get Richer”, I much prefer the more micro-economic grounding in the essay of another EconTalk guest (and non-economist) Paul Graham: Mind the Gap

http://www.paulgraham.com/gap.html

Mao_Dung April 21, 2011 at 4:07 am

Being a populist is a feather in one’s cap. It is demagoguery that is crude and objectionable. Rush Limbaugh is a perfect example of a demagogue who panders to the rabble’s fears and prejudices to feather his nest to the tune of millions of dollars per year.

crossofcrimson April 21, 2011 at 3:14 pm

I bet he fills a vault with coins like Scrooge McDuck and swims in it every day when he gets home, laughing maniacally all the while.

vikram April 22, 2011 at 4:53 pm

tomharvey,

The Paul Graham article is fantastic. Reading it now.
Have not red a better article in a long time. Thank you so much.

Simple language and it flows well.

Thank you again for sharing this fantastic article.

-vicks

Mathieu Bédard April 21, 2011 at 4:18 am

In Aix-en-Provence our undergraduate economics programs have the reputation of having a lot of mathematics, and ironically it has a much greater focus on maths than our graduate programs. I graduated from these programs. I remember that by graduation pretty much everyone, including the students who had no interest in Austrian economics or the free markets, were disenchanted with maths and were all convinced that using mathematics in economics is ultimately always deterministic. I remember a discussion where us undergrads were unanimously decrying the fact that the widespread economic approach is to develop a mathematical model that provides evidence for the bias you already had in mind prior to research, and it is never really just using mathematics to test your theory. Math generally is a tool used to make economics and/or the data say whatever you want it to say.

This all became very apparent when we had an econometrics wonder boy come and give us a lecture. Paraphrasing;

“To find out which variables you should keep, just test all possible combinations and keep which ever gives you a nice slick correlation. You’ll just need to be convincing when you argue that those are the economically significant variables… To find out what kind of function you need to be using just try a bunch of them and keep the one you that proves your point best… Here is how you modify a graph you don’t like by taking out outliers, see how easy it is… And finally to figure out whether you need a Gaussian distribution, a Poisson, or something a little more exotic, just try them all and see what proves your point best.”

Obviously, some math and some econometrics can be useful. At some point it’s nice to have an idea of the order of magnitude, for example. But people should always remain very skeptical about its use…

E.G. April 21, 2011 at 1:45 pm

I just read a paper today modeling the market penetration of hybrid and NGV vehicles out to 100 years. Wow. The question that comes to mind is not how such trash gets published, but rather why?

vikram April 21, 2011 at 2:14 pm

Prof. Don,

I suggest you to consider addressing Mr. Bill Maher’s continued concern around income inequality.

-Vicks

indianajim April 22, 2011 at 10:45 am

A favorite sentence from the Higgs article:

“Those old enough to remember the so-called energy crises of the period from 1973 to 1981 in the United States will appreciate immediately how poorly the market system works when such price changes and resource reallocations are forbidden.”

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