Some Links

by Don Boudreaux on June 1, 2011

in Complexity & Emergence, History, State of Macro, The Crisis, Trade, Travel

Cato’s Dan Ikenson explains some of the craziness of “antidumping duties.

In my most recent column in the Pittsburgh Tribune-Review, I ponder what I might say were some college foolish enough to ask me to speak at its undergraduate commencement.

The Institute for Justice identifies one source of slow job growth.

Arnold Kling’s idea of PSST – Patterns of Sustainable Specialization and Trade – deserves much more attention.  It makes worlds of sense.

Regime uncertainty.  (HT Mark Perry)

I just discovered – to my delight – that this paper by my GMU Econ colleague Dan Klein and UC-Santa Barbara history prof John Majewski on turnpikes and tollroads in 19th-century America is available on-line.

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{ 37 comments }

Scott G June 1, 2011 at 5:55 pm

Wow! Great column! The closing is worth remembering and quoting:

“Your sense of accomplishment will be real only if you exercise your creative faculties and work to be worthy of the love and friendship you receive from those who are close to you — and only if you exercise your creative faculties and work to be worthy of whatever income you receive in exchange for whatever you produce.

“I cannot imagine a more nauseating feeling than the one I would suffer if I found myself lavished with a prince’s ransom of material goods and luxuries, yet knew that I did nothing to earn that bounty.

“I’d feel poor because the part of me that matters most, my soul, would in fact be poor.

“No need to check your programs. I am indeed an economist who just suggested that your soul is more important than your wallet.”

Also, I’m surprised you wouldn’t say anything negative about government. Did you consider saying anything about government, and then change your mind?

WhiskeyJim June 2, 2011 at 3:37 am

I agree with Scott.

This then, is the ultimately moral rejoinder to folks who view capitalism as greed.

For money is only a medium of exchange. Free markets first and foremost allow the actualization of our talent and our interest. We live and work and play to be worthy of our ideals and the exchange of good men and women who deal with us.

Regulation can not emulate that. And forced re-distribution by bureaucracy prevents this actualization. In fact, it nurtures narcissism and masochistic personalities, much like forcing a child to share all his toys without ever being able to call any of them his own.

Pingry June 1, 2011 at 6:38 pm

Read DeLong for a critique of Kling’s PSST, and why it’s not such a good idea:

http://delong.typepad.com/sdj/2011/05/the-marx-mellon-schumpeter-hoover-hayek-axis-is-back.html

And as for regime uncertainty via Mark Perry: Nothing like a nonrandom sample size of one to keep conformation bias alive and well. Instead, maybe you should look at some of the surveys in which poor sales, not regime uncertainty, which is keeping the economy below NAIRU.

http://economix.blogs.nytimes.com/2010/09/14/whats-holding-back-small-businesses/

–Pingry

Pingry June 1, 2011 at 7:04 pm

And here’s another graph to make the point clear:

http://modeledbehavior.com/2010/09/17/sales-vs-labor-quality/

Again, it’s all about insufficient aggregate demand. Were Milton Friedman alive today, he would say the same thing.

–Pingry

Sam Grove June 1, 2011 at 7:13 pm

insufficient aggregate demand

Yup, that’s all there is to it, no need to ponder why there is insufficient “aggregate” demand any more than a physician needs to wonder why a patient has a fever.

BZ June 1, 2011 at 9:50 pm

Hmm.. I see where you are going Sam. Perhaps a better analogy would be: no need to ponder why there is insufficient “aggregate” demand any more than a physician needs to wonder about aggregate “discomforts”.

What do you think?

Sam Grove June 1, 2011 at 11:02 pm

I dunno.

I’m just questioning the use of “insufficient aggregate demand” as some sort of final explanation.

Pingry has asserted this non-explanation before but never seems willing to explain the why of it.

Seems to me that’s where Austrian theory comes in, to explain the causes of insufficient aggregate demand.

Keynesians seem uninterested in going there.

Ken June 2, 2011 at 4:17 pm

Sam,

Maybe you don’t understand. That patient has a fever because his aggregate temperature is too high. That’s it. What else could there possibly be?

Regards,
Ken

Sam Grove June 1, 2011 at 7:14 pm

So Pingry, WHY is there insufficient aggregate demand, huh?

vikingvista June 1, 2011 at 7:17 pm

Come on, Sam. What kind of question is that to ask a keynesiac? That’s like asking “Where does God come from?”

vikingvista June 1, 2011 at 7:22 pm

…or the equally mystical question: “Why do animal spirits arise?”

tarran June 1, 2011 at 10:53 pm

I guess when an economy produces 2 left shoes for every right one, the warehouses full of left shoes are the result of insufficient demand. Of course, if the government were to purchase all those left shoes, then we get… teh prosperity!

Methinks1776 June 1, 2011 at 7:38 pm

More ketchup.

W.E. Heasley June 1, 2011 at 9:05 pm

More ketchup.

Methinks clearly enjoys Heinz® Tomato Ketchup.

Methinks1776 June 1, 2011 at 9:49 pm

Like Pingry, I prefer the Krugman brand. It’s less sweet and more sour.

Slappy McFee June 2, 2011 at 10:28 am

I’ll take the bait, but first I want to know, if demand is what drives us, where did the demand go?

vidyohs June 1, 2011 at 7:20 pm

I agree with Scott. That would be a speech well worth giving to a graduating class, and one well worth the time for them to hear. It would be appropriate in its entirety because they would be graduating, proof that they did at least make an effort to earn and therefore could relate to what you were saying.

Now, when those youngsters do step outside the ivied fences of their colleges, they are going to find that yes indeed it is possible to enculturate some people to be totally comfortable with living on public charity. Just as it is a historic fact that some people, royalty, could be perfectly comfortable with living off the efforts of others and absolutely convinced that it was their God given right to do so, “I am the prince, what I have is mine by divine right”; is easily converted to “I am the descendant of victims, you owe me.”

You and I may refuse charity in any form, but we both know that there are many out there who will embrace it…..and as much as they can get.

But, this is a part you’d let them find out for themselves, I would assume. Why, ruin their day.

jorod June 1, 2011 at 8:05 pm

More Good News….

Mike Nobis of the Quincy Area Action Council pinch-hits:

This past week the Illinois General Assembly passed through two very controversial bills affecting small business owners, HB 3237 would have made it a Class 4 felony for a contractor who “willful and knowingly” violates the prevailing wage requirement and HB 2987 codifies an existing gubernatorial order requiring the state to use union only labor on state projects.

WhiskeyJim June 2, 2011 at 9:02 pm

The future of Illinois is Michigan and Detroit.

Too bad. I love Chicago. But then, there’s more than one place to listen to great Blues.

JCE June 1, 2011 at 8:18 pm

What’d you do Don, copy John Galt’s speech right out of the book??

you know, I was reading Schumpeter’s History of Economic Analysis the other day and I came across a sentence that perfectly describes you:

“…the same fervor of conviction, similar controversial talent, quite the same inability to take any other but the orthodox view of anything, comparable capacity for bitter resentment, and equal absence of self criticism.”

Methinks1776 June 1, 2011 at 9:48 pm

My goodness, how you do project, little one.

vikingvista June 1, 2011 at 11:38 pm

“Orthodox”? Perhaps the most DB post and Galt’s speech have in common is that they are not orthodox. What planet are you from?

JCE June 2, 2011 at 12:34 pm

“any other but the orthodox view of anything” means any other but the ‘purest’ view of anything. it doesn´t refer to economic orthodoxy as is understood today

that is to say, don is quite unable to take any but the purest version of laissez faire: politicians are ALWAYS corrupt and dumb; ALL actions of ALL governments are counterproductive, immoral (when not downright criminal), social security and all such programs are nothing but THEFT and its not like they arose out of any specific historical circumstances when they were somehow thought necessary, ANY AND ALL forms of planning are doomed to utter failure; society is an UTTERLY MEANINGLESS concept, and the aggregation of all individuals can in no way be more complex than the sum of individual parts…..

don doesn´t take seriously any but the views of the CATO institute. all other economists are ignorant cranks that serve the agenda of Big Brother

in the planet i’m from things don´t work, and people don´t act, exactly as they do on galt’s gulch. it´s called earth

Brad Petersen June 2, 2011 at 1:13 pm

JCE, you have inspired me. Let me take a crack at it:

JCE ALWAYS sets up straw men and is SO LAME he can’t even knock them down. He NEVER fairly represents the views of those he disagrees with… rejects ANY AND ALL forms of logical argument in favor of mere assertion… ALWAYS makes broad, sweeping generalizations about EVERYTHING… and has NEVER shown even a shred of intelligence.

And by the way, the reason Galt’s Gulch even exists in Atlas Shrugged is because things didn’t work, and people didn’t act, the way they did in the Gulch. If they did, there’d have been no need for Galt’s Gulch. Nor would we so desperately need one now.

Chucklehead June 2, 2011 at 3:59 pm

” politicians are ALWAYS corrupt and dumb” No, just most are disingenuous at times, especially during a campaign. None are as smart as they think they are. None have the information (price) to make the right decision.
“ALL actions of ALL governments are counterproductive” No, even a blind man hits a bullseye once in a while. Government invests for a political return, not a economic return.
“social security and all such programs are nothing but THEFT ” No, they represent theft of some people, but a gift to others.
” ANY AND ALL forms of planning are doomed to utter failure” Central planning (top Down) does not achieve the market efficiencies of bottom up free markets, due to the lack of price information.
“society is an UTTERLY MEANINGLESS concept” No, you confuse society with government.

vikingvista June 2, 2011 at 7:03 pm

Scholars of the Cato Institute don’t espouse the purest form of laissez faire.

And even you surely know that what you said about Don is of course false.

I’m not sure what your purpose is in presenting a parade of obvious falsehoods.

W.E. Heasley June 1, 2011 at 8:47 pm

Go forth & earn it – Pittsburgh Tribune-Review

Which Pittsburgh area university might be a taker , of one Don Boudreaux, regarding his invitation?

Pitt’s administration likely would not have any part of this commencement speech. Penn State? Nay. Slippery Rock? Probably not. Carnegie Mellon University is straight out.
Duquesne University? Likely not.

We must travel south. Cross river and stream until ….the mountain empire!

Yes, Morgantown. Where couches are burned and greatness is learned! Yes, that marginal anarchy group that has never lost a party – ever! There, one will find liberty reins supreme.

muirgeo June 1, 2011 at 9:36 pm

“I cannot imagine a more nauseating feeling than the one I would suffer if I found myself lavished with a prince’s ransom of material goods and luxuries, yet knew that I did nothing to earn that bounty.” Don

But in Dons world the people he’d be giving his speech to would indeed be born of privilege and wealth handed down not from the government but privately from one generation to another. A lot of the Economic Royalist progeny he’d be talking to would indeed take offense at him telling them they should feel nauseated for being born into massive wealth and privilege completely unrelated to anything they did or even the fathers did to deserve it.

BZ June 1, 2011 at 9:47 pm

I have no idea what universe this is referring to. Forgive me for not saying more, but I have to get to work to pay off my student loans. I will tell my folks about their membership in the Economic Royalist Progeny; they always enjoy a good laugh in the evenings.

Sam Grove June 1, 2011 at 10:55 pm

Don’s world..

In muirgeo’s world, we’d all be federal peons.

If you can do it, I can do it.

danphillips June 1, 2011 at 9:50 pm

Stephen L Carter wrote:

“… I ponder. As an academic with an interest in policy, I tend to see businesses as abstractions, fitting into a theory or data set. Most policy makers do the same. We rarely encounter the simple human face of the less-than-giant businesses we constantly extol. And when they refuse to hire, we would often rather go on television and call them greedy than sit and talk to them about their challenges.

Recessions have complex causes, but as the man in the aisle reminded me, we do nothing to make things better when companies on which we rely see Washington as adversary rather than partner.”

I barely know where to begin. Does he want us businessmen to see Washington as a partner? One of Hitler’s Nazi apologists couldn’t have said it better. As a businessman I don’t want to see Washington’s ugly face at all!

Government is force. Government is violence. Government cannot be benevolent. Benevolence is contrary to its nature. Expecting government to be benevolent is like expecting a bear to not crap in the woods. Government cannot enter into ANY activity without bringing force and violence (or threat of same). What self-respecting businessman would want that kind of partner?

I’m sure Mr. Carter thought he was writing a nice little article defending the poor “little” businessman. Instead he adds one more brick to the road to servitude.

Economiser June 2, 2011 at 2:27 pm

I’m offended that Mr. Carter sees businesses as abstractions. Most people he comes across every day work for a small or mid-size business. Businessmen aren’t like Rich Uncle Pennybags from the Monopoly game. They’re regular people trying to peer through the economic fog like everyone else.

The economy is nothing but a swarm of human faces. That’s why concepts like “aggregate demand” are so misplaced.

Slappy McFee June 2, 2011 at 10:32 am

The reply function malfunctioning for anyone else?

Nemoknada June 3, 2011 at 3:57 pm

The Cato artilcle says we shouldn’t impose tariffs on dumped foreign raw materials and intermediate goods because doing so imposes higher costs on the American assembler-exporter and makes him less competitive. The claim is surely accurate, yet why doesn’t Cato protest the asinine laws that forbid manufacturers from STEALING raw materials and intermediate parts, or evading taxes? Such tactics surely lower the cost of production without affecting quality. The answer, I suppose, is that the externalities of theft are unacceptable. Dumping, of course, has no externalities we care about.

Sam Grove June 1, 2011 at 7:45 pm

Maybe it’s due to some aggregate demand god.

vikingvista June 1, 2011 at 11:40 pm

“Pingry has asserted this non-explanation before but never seems willing to explain the why of it.”

You expect understanding from a parrot?

brotio June 1, 2011 at 11:56 pm

Pingry is just Yasafi with a better spell-check.

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