Wednesday, September 15, 2010

Assault of Thoughts - 9/15/2010

"Words ought to be a little wild for they are the assault of thoughts on the unthinking" - JMK

- Really, really fantastic video at Coordination Problem of a panel at a recent GMU conference honoring James Buchanan. It doesn't get much better than this - a panel of three Nobel laureates: Amartya Sen, Elinor Ostrom, and of course James Buchanan. The discussion was quite wide-ranging. It covered a lot of Buchanan's constitutional political economy. Sen talked about how that related to social choice theory. Ostrom put in her two cents about governance, and it really drove home for me how inappropriate it is when people use Ostrom to bash government. I read some of her work in my institutional economics class in graduate school and haven't read her in too much more detail, but there and here her point is more about centralized vs. decentralized governance and scale of governance rather than anything about state vs. non-state governance. The discussion is fascinating all around. I still haven't read Calculus of Consent - but it makes me want to pick it up.

- Sam Arbesman calculates that we'll find an Earth-like planet that is habitable by mid-2011. Is this a reasonable guess? Well, in 2008 Discover magazine guessed at the same thing. They estimated that at the rate we were discovering planets and the advancement of telescope technology, we should find a planet the size of Earth by 2010 and a habitable planet the size of Earth by 2012. They were right on the first prediction. A couple weeks ago the Kepler satellite found a planet roughly the size of Earth 2,000 light years away. So the Discover predictions are on track. Projecting this sort of thing is of course dicey, but not as much as you might think. We know these planets are out there. We know the rate at which our ability to see things in space is improving. It doesn't take much to figure something like this out. Predicting anything else, of course, is a lot more speculative.

- One of the most fascinating things I get from reading Joseph Dorfman is a much deeper appreciation for mercantilist thinking. That statement, unqualified, looks awfully suspicious I know. But what Dorfman brings out is that mercantilism at its heart wasn't really grounded in protectionist logic - by more sophisticated commenters at least. It was actually grounded in a monetary disequilibrium framework with mercantilists regularly worried about a sufficient money supply. This is why advocates of paper money at the time were also usually mercantilists. Adam Smith and David Ricardo, of course, attacked it on the grounds of division of labor, comparative advantage, and mutually beneficial exchange - and of course, they were absolutely right on all of those points. But what I'm realizing now is that those points don't even address the more fundamental arguments of a lot of mercantilists. We equate mercantilism with protectionism, and when we do that Smith and Ricardo unambiguously win. When mercantilism becomes a monetary disequilibrium theory it muddies the waters. Future paper fodder. Anyway - that's a long introduction to a neat little quote in Dorfman from Thomas Fitzsimmons in I wanted to share: "The Balance of Trade is the metaphysics of commerce, which few understand and which serves no other purpose than to disturb the imagination". Indeed. This is on p. 265 of Dorfman - you really appreciate Fitzsimmons point after reading 264 pages, the lion's share of which tries to make the case that mercantilism was early monetary disequilibrium theory. As Peter Boettke often says - we're just rehashing Malthus and Say. If Malthus wrote earlier - before Adam Smith and David Ricardo challenged mercantilism from an anti-protectionist angle - I wonder if the whole debate would have unfolded differently. We might not have had to wait over a hundred years to take the (relatively small) step from Malthus to Keynes and Hicks.

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