Sunday, September 4, 2011

Assault of Thoughts - 9/4/2011

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

- Finally, the ambiguity is over! Or at least that's what I thought last night when I first read Paul Krugman's new post referencing broken windows which was careful to specifically talk about "demand", "employment" and "spending", rather than make vaguer statements like "some good" that apparently lead some people to conclude that Krugman thinks disaster and devastation is "morally acceptable". Alas, I may have thought that too soon - this morning I got an email from a world-renowned Austrian economist saying that while it "technically" didn't say anything, this sort of post leads people to jump to conclusions about Krugman. Oh well. Back to the drawing board. One of the things that I really liked about this post was this line: "Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment." Creative destruction, if you will. The thing is, life is full of disasters and disaster responses. Thankfully in the developed world these are mostly mini-disasters, but it's true nonetheless. And that's the creation of real value. We get new cars when our old ones wear out. Is that valueless? No, of course not. I got a crown last week because I've got genetics that give me deep grooves in my teeth that make them prone to cavities. Is that valueless? No. Insulating ourselves from the vicissitudes of life and physics is a huge part of the value we create in the market. Recognizing that as a major contributor to economic activity doesn't mean you love broken down cars or tooth decay (or hurricanes or earthquakes).

- And another good Krugman post on the reality of austerity. And if you say "it's not as little government purchases as I would have liked - if they did as little as I would have liked things would have been better" - just remember how apoplectic you got when we said that. Nobody thinks that what is being done is perfect, so everyone is making a form of the argument "if they just did a little more in my direction everything would be better". It's obnoxious when people act like this is an absurd argument that only the other side is making, and then turn around and say the exact same thing themselves.

- Jonathan Catalan on spreading libertarianism. I think he's right in the end. For a while he goes on about how the moral case for libertarianism is hard to make, but there's also the consequentialist case. My first response was "well the consequentialist case is AT LEAST as hard to make as the moral case!!". He seems to say this too in the end - that both can be challenging. For non-libertarian readers, I think people are wrong to make the accusation that libertarians don't care about poor people (an issue that comes up in the article). Their ideas may hurt poor people, but that's very different from not caring about them and we shouldn't claim that. I don't think I've ever said anything like that on here. It's similar to their claims that we're statists or that we don't care about liberty or that we're no pro-market. Don't fall into that same trap. When I criticize libertarians, I try to stick closely to what they actually say. They oppose democratic problem solving by communities, for example. This is explicit in most cases and I think it's a really bad thing to oppose. So I try to take it down from vague complaints about "the state" to the actual claim - you want to close off or at least limit an avenue for communities solving their own problems. Stick to their actual claims - no libertarian claims they don't like poor people.

- Mark Thoma shares Gary Burtless's masterful take down of the regime uncertainty theory of the crisis. It's not that regulatory or policy uncertainty doesn't weaken growth. Everyone thinks this. The problem is it's a very poor way of explaining the current situation.

- A great Brad DeLong post on what to do about jobs.


  1. " want to close off or at least limit an avenue for communities solving their own problems."

    Well, so do you. There isn't a single constitutionalist framework that doesn't I'd say. This is why this criticism of yours is just doesn't make any sense. Progressives hate all manner of voluntary arrangements between people to solve problems that libertarians do not take issue with; indeed, they try to foreclose such by law all the time. That is at the heart of much of the economics legislation which progressives propose. Conservatives work similarly I would add. You favor certain types of social interactions and disfavor other types; well, disfavoring certain types of social interactions and holding up as normative other types is limiting the avenues of "communities" to solve problems. Indeed, this is at the heart of much of Ostrom talks about - that you have progressives and conservatives which make claims about CRPs that have nothing to do with what the communities involved in them think, or desire, or whatever. Instead progressives and conservatives come up with their ten point bullet plan which those communities are supposed to follow because it is often assumed that those communities cannot solve those problems themselves - when in fact there are lots of examples of communities doing so (none of which to my knowledge really conflict with libertarian thinking).

  2. Daniel,

    Let me restate my point a bit. Progressives have all kinds of ideas about what is appropriate and inappropriate as far as "community involvement" is concerned (much of it concerning "appropriate" religious values amongst other things, but it also includes appropriate "resource allocation" values as well) - so to suggest that progressives have some sort of monopoly on the avenues community problem solving or that they are more open to such than libertarians is wrongheaded to say the least (now if that is not what you are suggesting, that's fine). In other words, progressives are more open to what they view as appropriate community problem solving, just like any other constitutionalist viewpoint is, and that is all they are open to.

  3. Indeed, much of it has to do with how you define community - you see this all the time in Western resource politics (which are always more than about the resource - they are about ideology, the way people see themselves, etc.). A group of people in county X in western state Z want to use resource Y, and they have been using it that way for a long time in an effective manner, then outside group D from the coasts discovers this use and gets upset (even though they will likely never visit the area - I hear this language all the time - it is the fact that resource Y is there that makes them feel good). So who is the community here? And who is foreclosing community decision making? Your cute little statement avoids all these sorts of ambiguities and questions.

  4. re: "Well, so do you. There isn't a single constitutionalist framework that doesn't I'd say. This is why this criticism of yours is just doesn't make any sense."

    No Gary. The difference is I don't cordon off one set of institutional arrangements as vorboten. I want to let people decide this.

  5. Daniel,

    No, Daniel, you do cordon off all sorts of institutional arrangements if you are constitutionalist, otherwise there wouldn't be any point of advocating constitutions.

  6. Daniel,

    I don't take your comment seriously in other words.

  7. Indeed, I will make a stronger statement; no one believes in an institutional free for all. Everyone advocates one or another limit on the sorts of institutions, policies, decision-making systems, etc. on how human beings interact. Everyone makes normative claims about this sort of stuff; which is why libertarians argue with non-libertarians about subjects like ticket scalping or organ sale. A lot of people find ticket scalping and organ sale immoral; so they go no, we will not allow legal institutions or frameworks which allow for such.

  8. Sorry Daniel, I call bullshit on Krugman's post, it's one of the most aggravating things I have ever read and really shows that he thinks destruction is good for economic growth.

    His own words:
    "And now you can see why tighter ozone regulation would actually have created jobs: it would have forced firms to spend on upgrading or replacing equipment, helping to boost demand. Yes, it would have cost money — but that’s the point!"

    Sure he doesn't advocate destruction, but is essentially calling for government to force business to spend money, thus completely disregarding what I think was Bastiat's point with the broken window fallacy. Krugman doesn't take into account what the money would have been spent on or even if businesses could even afford such an upgrade.

    What if these new regulations do in fact cause some businesses to go under because they can't afford to remodel? Why does he not consider this? And what happens once the capital is spent and facilities are remodeled? I don't see the demand as being self perpetuating.

    Sorry, but Krugman really took the cake with this one. He quite literally says government should force businesses to upgrade their facilities without even considering the other possibilities the money could be spent on or whether those businesses could afford it.

    If it is all that easy, then why doesn't the government force every business to update its computer/IT system? Think of all the demand that will be created!

    I will take my Nobel Prize now.

  9. "Their ideas may hurt poor people, but that's very different from not caring about them and we shouldn't claim that."

    Hmm, that's funny. That is the same thing that we libertarians say about etatists.


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