Monday, February 28, 2011
2. Southwest Research Institute has announced contracts today to fly a payload of three scientists into sub-orbital space. Apparently this is the first time this sort of thing has been contracted out by a private firm. This is a very important development - the division of labor is limited by the extent of the market. Clearly we're seeing a growth in demand sufficient enough not just for NASA to contract out, but for private companies to as well. That means greater division of labor, greater specialization, and more innovation.
- William Milberg, of the New School for Social Research, suggests we need a new Keynes. He talks about methodological disputes in economics in the past, and the current dispute that's going on. He also suggests that the three contenders in that dispute aren't up to the task, and that we need a new Keynes with a more holistic, revolutionary solution rather than one that just patches up old arguments.
- Tom Walker compares Hutt and Keynes and finds Hutt lacking. Has anybody ever read Hutt? That's one I've always thought would be worth reading some day.
- Karl Marx, 18th Brumaire of Louis Bonaparte (HT Matt Yglesias)
Sunday, February 27, 2011
- Ludwig von Mises, Economic Calculation in the Socialist Commonwealth
True, it's only monotonic preferences. But that's still something. Plus it's wine.
- Brian Leiter critiques Paul Krugman on market efficiency? What do you think of his argument? I obviously think it's pretty badly put (but then, I'm one of those economists). Market failures are real, but you don't point to one specific failure and say "gee, it all must be suspect". It doesn't work when people do that with the government and call it "Public Choice Theory", and it doesn't work when people do that with the market.
- Brad DeLong highlights a portion of Christina Romer's discussion of empiricists vs. theorists at the Fed. She says empiricists note deflationary pressures because that's in the data and theorists worry about inflationary pressures because that's in their theories. A while back, I contrasted John Dewey and Murray Rothbard on empiricists vs. theorists. Dewey argued that empiricists were more likely to stay grounded, to make valuable claims about reality, to support democracy and liberalism and self-government, and that theorists (rationalists specifically) where more likely to entertain high-falutin radical ideas that were less grounded to reality, and more likely to discount the value of democracy and other liberal institutions. Rothbard - with a logic that I'm still having trouble grasping - precisely reversed Dewey's argument. The distinction probably isn't as clean as either of them like to make it, but I think DeLong and Romer seem to be in Dewey's corner on this one.
- Catherine Rampell with an update on government spending and the economy.
Both are worth reading. I've argued here before (here and here) that mercantilism gets more criticism than it really deserves. It is treated as synonymous with protectionism, which it really wasn't. What it was was an early monetary disequilibrium theory. "Lord Keynes" doesn't go over the monetary stuff in his post, but he does frame protectionism as a boost to effective demand, with attendant second order problems (he cites Peter Temin - not a no-name - he's a very well regarded economic historian). So protectionism creeped into the mercantilist writings, but it was not the centerpiece. The first link I provide above to things I've written on mercantilism gives more detail on that. The Gavin Kennedy link is somewhat less satisfying - it make the old Ha-Joon Chang argument that protectionism is good for developing states. In a very narrow Alexander Hamilton/New Trade Theory sense this may be true. But as Paul Krugman has pointed out, that's a dangerous game to play. I would not defend mercantilists on these grounds, although I think there's probably something to a very targeted infant industry argument (particularly if you're doing a revenue tariff anyway).
The primary reason is social media, which has played a major role in all of these movements. It's easy to forget what this accomplishes. Gary is somewhere out West - I don't know where exactly. Jonathan is in California, Mattheus is in Florida, Gene is in New York, Prateek I believe is in England right now (?), stickman is in South Africa (when he's not in Europe), and I thought Lee (who we haven't seen around for a while - anyone know what happened to him?) was down south somewhere, and Evan is in Chicago. The confluence of ideas on this blog are entirely due to social media. Even people I've connected with that live within a few miles of me, like Kevin Rollins and Jan Helfeld, I've connected to because of social media. My first article was published because a professor in New York saw it online and thought it was worth submitting. I've had an internationally known economist comment on this blog because I've linked to a lot of his work.
It's not a new observation, but we may be in for considerably more self-organization in the coming century. That's much like democracy (duh!) - it is both a good and a bad thing. It is certainly a better thing than less self-organization. But that doesn't mean it will always produce good results. I don't think the Tea Party is going to be good for the country in the long-run. I think the whole union movement in Wisconsin may or may not be a good thing (I strongly support the maintenance of collective bargaining rights where unions exist and make sense, but am not so sure a revitalization of the union movement will be a good thing). We all know about the risks posed by democracy in the Middle East too. It's easy to get caught up in the immediate negatives of, say, having a bunch of Tea Partiers in the Congress. But the point is - it's better to have an active citizenry than not have one. It's better to have Egyptians elect some not so savory leaders initially than have a not so savory leader imposed on them while civil society deteriorates. The trick is to educate and improve. Demonstrate to people who gravitate towards the Tea Party why they offer bad policy options. Make connections to Egyptians to foster liberalism there. Just because there's some work involved in making democracy work doesn't mean we should be suspicious of it. Just because there are some risks of it failing miserably doesn't mean it's not worth pursuing. What is the alternative?
Saturday, February 26, 2011
Take a recent post from Troy Camplin - an Austrian blogger
"One of the things the Mises Institute is big on is opposing intellectual property. In that spirit, I have decided to try something, which is to offer one of my plays, a satire called Hef's Bunnies for anyone who wants to produce it. The entire text is on my blog Interdisciplinary World. Producers may feel free to pay me a commission, or not, as I discuss there. Please, feel free to spread the word. Only if it gets produced will this experiment work, after all."
On his other blog, Camplin provides much the same introduction to the satire. He says "I've decided to give their idea a try". The problem is, he's not giving a rights regime that does not include intellectual property rights "a try" at all! He is decidedly acting within the existing IP rights regime. He is exercising a fairly conventional right to alienate his property. The same goes for collectivists who "give up" private property in communes. They are actually exercising fundamental property rights. Now, perhaps they are building a social group which, within its own context, does not acknowledge and therefore does not enforce rights in the same way that the wider community does. In this sense they are attempting at least to socially re-construct rights. But the regular failure of these communes demonstrates not only the efficiency of property rights, but also how ingrained these rights are in our psychology. Commune dwellers could live in squalor, after all. The squalor of an American commune dweller is probably better than the way a lot of the third-world lives, and there may even be bit of romance in it given the common cause they share. It doesn't break down for the squalor alone - it breaks down because people find deliberate social reconstruction quite unnatural.
But at least they have a "society" to speak of - a social fabric - and thus some prospect of erecting a substantially new rights regime! Troy Camplin doesn't have a social fabric. He is one guy exercising his property rights, which is why it's so ironic that he thinks he's experimenting in dismantling the very property rights he's exercising.
Rights are social. Rights are relational, to put it more precisely. You can't change a regime of relations by staying within the domain of your own relational priveleges. You have to at least do something yourself that transcends the rights you had in the first place, but even that doesn't construct a new rights regime. That just rebels against the old. A better example is Julian Assange at Wikileaks. He is doing something that actually breaks out of the constraints placed by the existing property rights regime. Now he's just violating that rights regime until it catches on, of course. Until society reconstructs its understanding of rights. But Assange's work can at least be properly characterized as an "experiment" in an alternative intellectual property rights regime. He is not exercising the rights he has in the existing regime in the way that Camplin is.
Kidrock did a youtube video a while back that was actually trying to discourage IP theft in the music industry by facetiously saying it was OK, and people oughta just steal everything while they were at it. Now, he wasn't sincere here - but this is similarly what "experimenting" in a new rights regime would constitute. Not an exercise of rights you have, and not an opportunistic violation of those rights, but the erection of a new ethical alternative to those rights - the promotion of a basis for a new rights regime:
Anyway, rights are socially constructed which means its very hard for determined individuals to just create them from scratch. And you're certainly not creating them by exercising your existing property rights!!!
I got Keynes's Essays in Persuasion. Most of it is essays on monetary topics, and most are from the 1920s. I'm especially excited to read his open letter on the franc (which, based on the first page, I think may reveal some parallel's to Jefferson's reaction to Hamilton) and a piece he wrote in response to an H.G. Wells novel (I'm not sure which one). He was apparently an H.G. Wells fan.
Second, I got Martin Luther King's Where Do We Go From Here?. This is the last book he wrote before he was killed. I referenced this book in this post on the macroeconomics of the black community. King talks about full employment policies and the guaranteed income in here, although I'm not sure how prominent a role that discussion plays in the book.
Mr. Keynes and Dr. King - not a bad haul.
I have to say - anyone who was in that Border's store today has got to question traditional neoclassical economics just a little. Everything in the store was 20% off (except magazines, which were 40%), which is nice but not huge. Nevertheless, the store was packed. I counted a forty person back-up in the line, despite the fact that they had twice as many cashiers working as usual. This was also about 1:30 in the afternoon, so it was not a traditional lunch-hour busy period (although it could have caught the tail end of that). The demand elasticity for a retail bookstore in a major city is simply not that high. Something psychological is going on here that we don't talk about in traditional economics.
Friday, February 25, 2011
The results pretty much predict what I would expect. This is the abstract:
"We use state and county level variation to examine the impact of the American Recovery and Reinvestment Act on employment. A cross state analysis suggests that one additional job was created by each $170,000 in stimulus spending. Time series analysis at the state level suggests a smaller response with a per job cost of about $400,000. These results imply Keynesian multipliers between 0.5 and 1.0, somewhat lower than those assumed by the administration. However, the overall results mask considerable variation for different types of spending. Grants to states for education do not appear to have created any additional jobs. Support programs for low income households and infrastructure spending are found to be highly expansionary. Estimates excluding education spending suggest fiscal policy multipliers of about 2.0 with per job cost of under $100,000."
Big multipliers on non-grant, non-education stuff, modest multipliers on the whole shebang. A couple thoughts:
1. Krugman notes that this is going to still underestimate multipliers because of spillover. If New Jersey stimulus boosts New York and New York stimulus boosts New Jersey this will cancel that out and miss the effect because the model is identified off the variation between states.
2. So the education multiplier was small, but this also seems like it would be the component of spending where the instrument is weakest. I don't know how the sausage-factory that is the Congress works on these things, but I would guess grants to states are likely to be far more formulaic (and therefore less correlated with Congressional seniority, and therefore biased downward in these IV estimates) than spending on other grants and projects. I'm guessing there's some kind of per-student or per-Medicaid beneficiary or per-dollar-state-budget-shortfall calculations that go into that. So while the low education multiplier isn't especially surprising compared to infrastructure spending, it may still be an underestimate.
3. This goes for support programs for low-income families as well, many of which are run through the states. These programs were already found to have high multipliers. If the disbursements were formulaic rather than based on politics, then the actual multiplier is likely to be even higher.
UPDATE: So for those not familiar with my typical unease with IV models, I should probably say why this is more convincing, otherwise it seems a little self-serving. This instrument does two things that a lot of instruments don't that makes me more confident in it. First - the causal relationship between Congressional representation/seniority and fund disbursements is very real and very clear. There's no subtlety to it - you can take this relationship to the bank. It's not like Angrist and Krueger's birth cohort schtick where you were taking a very, very subtle causal relationship and identifying a model off of it. This relationship is clear and there's no clear alternative channel through which this could be affecting state growth besides through federal spending that even comes close to the effect on spending. The second thing that encourages me about this is the expected direction of the bias. In studies on the returns to education, the endogeneous processes people worry about bias estimates upwards. So when you get a positive result from an IV model on those studies, you're always secretly wondering "is this a real positive effect or not?". In fiscal multiplier analyses, the endogenous process people worry about biases estimates downwards. Unlike returns to education studies, empirical multiplier estimates (not calibration of Keynesian models with various MPC estimates - but actual empirical studies like this) are always conservative estimates. When you get a positive result on one of these, you can be more confident in it (if anything it's an underestimate).
UPDATE 2: Scott Sumner does not agree on this paper. I think he's wrong on at least one point, but I think he makes an additional very interesting criticism of the paper that has some validity. One way to look at this (as Sumner does) is that it is a "micro study" because it is not a "national study". This isn't exactly right (what would constitute a "macro" study in the EU these days? A national study? An EU-wide study?). The difference between macro and micro is an aggregation of economic activity across all markets. It doesn't matter at what level that aggregation is - if you're discussing the behavior of aggregates, you're discussing macro. But it does raise some important questions. A lot of fiscal policy is supposed to operate through the bond market - and that is a national market (and thus it is differenced out in this analysis for the same reason that spillovers across state lines are). I'll try to post more on it this weekend, but if I don't that should give you a flavor of my thoughts on Sumner's critique.
Sixty-nine years ago today, one of the first unidentified flying objects to receive substantial national press coverage was spotted and fired upon in Los Angeles. The incident would come to be known as "The Battle of Los Angeles". As most of you have probably heard, there's a movie based on the incident coming out next month.
At the time there wasn't a lot of discussion of aliens. For one thing, Roswell hadn't happened yet and aliens weren't firmly embedded in the American consciousness. But we were also newly at war with Japan, who had launched a strike on Hawaii less than three months previously. Attention immediately turned to the Japanese rather than extraterrestrials.
The government concluded it was a weather balloon. But then, that's what we'd expect them to say, isn't it?
These idiosyncrasies (along with a few other market failure/competitiveness concerns I won't get into here) have turned a lot of people against the title insurance industry. Lots of people feel like something is amiss, and the fact that it's hard to shop around for title insurance doesn't make people feel any more assured.
Anyway, what's been interesting to me in writing up the findings is that I'm turning up other instances where title insurance is emerging. Title insurance started in the U.S. in the 1800's to clarify property disputes. These sorts of disputes weren't new to America. They plagued a lot of land speculators in the late colonial period and early republic who held contradictory titles to land. Two other industries with the same sorts of ownership chain complications have apparently also picked up the practice: art, and intellectual property (although this is just a proposal for intellectual property... I'm not sure if it's actually used).
Title insurance for art makes intuitive sense. You hear all the time about fine art being stolen and resold. It's also auctioned off, perhaps from an estate, and if there is something wrong with the way a will is executed that can introduce competing claims. Not to mention the fact that some fine art simply has a long title chain, and the longer the chain, the higher the likelihood of mistakes or counter-claims emerging. And note that this isn't an issue of insuring a valuable piece of property in case it is destroyed or stolen - this is insuring against losses if someone emerges and asserts that it's not even your rightful property.
The intellectual property case is even more intriguing. I don't know much IP law, but I know you have to cite prior patents that contribute to your invention, and of course it has to be your original idea. If your intellectual property rights are subsequently challenged by another inventor, you stand to lose a valuable asset. So title insurance here makes sense, and it's even more tricky than art or real estate. There is no chain of ownership for intellectual property - there's a whole range of prior inventions that a title insurer would have to be familiar with and scrutinize. I'm sure this is something patent attorneys already do, of course. What's original is the idea of insuring the title to the invention - insuring the risk that the patent attorney did not properly do his search.
What other goods or services would benefit from the emergence of title insurance? Can you think of any?
Thursday, February 24, 2011
One day I want to write a book called Jeffersonian Political Economy and American Keynesianism: 1729-1947, tracing the American tradition in economic thought back to its early days, and demonstrating how that formed the basis of an approach to the economy that made the ground fertile for the thorough adoption of Keynesianism in the 1930s and 1940s. Franklin figures prominently in that early story (not for this piece specifically - but for another paper he wrote even earlier), along with Jefferson, of course. I've been thinking about this for a while, but of course it's not something that you just sit down and write. Some day, though...
Wednesday, February 23, 2011
I've started reading a somewhat more obscure book - David M. Hart's Forged Consensus: Science, Technology, and Economic Policy in the United States, 1921-1953. I think it's fairly well known in the science and technology policy community, but it's not a landmark book like Kuhn. Very good so far - he's trying to take the whole Vannevar Bush story of the emergence of science policy in the mid-forties, and stretch it back to Hoover's time as Commerce Secretary in the twenties, and incorporate a lot of other actors and factions that are usually excluded from the traditional Vannevar Bush narrative.
If you think it's been too long since I've substantially ruffled some Austrian/libertarian feathers...
Astrophysicist and science educator Neil DeGrasse Tyson is on record saying that he much prefers the movie Deep Impact to Armageddon, because the former gets a lot more of the facts right. I have to disagree with Tyson - Armageddon has long been a favorite of mine. If I wanted factual accuracy, I wouldn't go to the movies, damn it*! But certainly part of the reason I like Armageddon better must be that I would prefer we use a lot of really expensive (tax-payer funded) equipment to send Bruce Willis up there to blow it up, rather than have it hit (as it did in Deep Impact). Many libertarians disagree apparently (although some qualify their support for the preservation of the human race), and Brad DeLong called them out on it here. Bob Murphy responded, and DeLong took that up too, here.
This was my comment on DeLong's second post:
"Your last line [that the Sabbath was made for man, not man for the Sabbath] encapsulates the whole controversy. Libertarians in general and Austrians specifically enshrine what they understand to be deductive logic (although its a conspicuously anemic sort of deductive logic that often eschews math) at the center of their assessment of any question. If you start where they do - axiomatically defining what a "right" is and defining "immorality" as being the violation of that right - then both the Volokh and Murphy version of the argument follows naturally.
The problem is not the logic itself - that logic is simple enough. The problem is their decision to apply that logic to this circumstance. Deductive logic is a tool - we have long since passed the point where we can claim that it deserves any deeper epistemological priority. Is it really true that taxing to avoid an asteroid is immoral? Well, if you start with the right assumptions, yes. But who cares about that? You don't care. I don't care. As you say, reasonable people don't care. But modern libertarians who swear by a few choice axioms that are easy to logically manipulate into a doctrine of anarcho-capitalist orthodoxy have infused a great deal of meaning to it all. Logic is not a tool for them, as most careful thinkers know it should be. For them it is a path, not to truth contingent on assumptions, but to some deeper absolute truth.
So to expand on your concluding thought, deductive logic is a tool for humanity, and not the other way around. "Rights" as the libertarians conceive of them are nonsense on stilts, and any strict deductions from that are at real risk of being nonsense as well.
Brad, Keynes had it right eighty years ago when he wrote of Hayek that he provided an "example of how, starting with a mistake, a remorseless logician can end up in Bedlam". Hayek wasn't always guilty of this - he was a good thinker. Modern Hayekians aren't always guilty of this either - many of them are decent thinkers. But they seem to have a tendency of ending up in Bedlam for precisely the same reasons that Hayek did back then."
Bob Murphy was disappointed I didn't defend him (he and I get along decently enough, although we disagree on a lot), but as I pointed out to him - I do confirm in my comment what Bob said in the Mises piece of his that I linked above. I say that the Volokh/Murphy logic on the question is quite simple to grasp, and given certain assumptions they're exactly right. Maybe Murphy wouldn't have needed to write his Mises Institute response if DeLong said this more clearly - "the logic isn't the problem, the problem is that you think that logical chain has any relevance". Murphy points out that Brad also misinterpreted a side-point of Volokh's, and Murphy seems right about that, but I think Murphy completely misses the point that what's most aggravating is that there is any equivocation at all (from the Volokh line of reasoning or the Murphy line of reasoning, which are slightly different) on this question.
The whole problem with the Volokh/Murphy logic here is their fundamental assumptions about rights, of course. Rights are social constructions - they are threats of violence from a well-defined group of people that allow individuals to appropriate and use goods and services. A right is essentially three hundred million people saying "we will beat the crap out of anyone that tries to take this property from this person". In that sense, society is certainly being coercive (and government is too to the extent that it legally recognizes property rights). The difference between that and gangs asserting ownership of territory is only one of etiquette and tradition. Rights are not some Platonic ideal floating around that are innate. They are functional, of course, but they are not innate. As Bentham pointed out, to pretend otherwise is "non-sense on stilts".
The problem with Murphy's position is that he accepts social (and in some cases even government, perhaps - although state recognition is not essential) coercion when he accepts his axiom of rights, but he rejects social coercion in other circumstances. Why? I'm not quite sure. But this is the problem we're dealing with. Libertarians make assumptions about rights that are romantic, idealistic, and unreasonable. Taking this romantic view of property rights is highly functional under most circumstances, which is why I and most others in the classical liberal tradition nod in agreement and swell with pride when we read natural-rights-type proclamations (and even slip into natural-rights lingo ourselves). But that doesn't make it accurate. The only reason for privileging property rights in the way that libertarians do that I can think of is if you accept a sort of "I called it first" ethics. Rights established by society are the status quo ante, so they get special priority in ethical consideration of things like taxes to save the human race from extinction**. So the logic is right, but the assumptions are wrong. Now, Volokh and Murphy's critics usually don't say what I just said, so do I have warrant to defend them with this argument? I certainly can make my own case on the basis of this argument. But I think I can also extend it to others who rebel against Volokh and Murphy's conclusions because to a large extent I think this is intuitive. Intuition and tacit knowledge is under-rated in this society, which worships the expert. People understand the idea of rights, but there are certain applications of that idea where they feel that something is fundamentally wrong. There's an intuitive sense that rights are just a functional fiction which is why people consistently apply it in a lot of circumstances but find rights-talk funny in others. What libertarians identify as an inconsistency in logic is actually (I would wager) a great deal of intuitive insight about the appropriate applications of that logic. Commenter sanjait had a good thought on DeLong's post:
"I'll add that it is continuously remarkable to me how little introspection some people engage in, despite the fact that their puritanical libertarianism leads them so often into places that are both absurd and deeply unpopular. When a system of thought leaves you frequently out in the woods alone, shouldn't you question it's universality?"
I think it's an admonition that Murphy and Volokh (and others) should take to heart. Maybe what they say sounds natural to them at this point, but they should probably interrogate a little deeper about why it sounds so wrong to so many other people. If your arguments are really so self-evident, why is it that so few people agree with them. People like Thomas Jefferson also made claims about self-evidence, and the fact that more and more people agree with Jefferson on those points every year is evidence that he was probably right to assert it in the first place. When you continually get resistance from very thoughtful people, rather than running through the relatively easy logic one more time (a la Murphy's Mises post), maybe you should instead ask questions like "are these assumptions about rights reasonable?", or "am I applying the logic appropriately?". The popularity of a belief is not a guarantor of its accuracy, but it oughta at least inform the questions you ask.
For more on my thoughts on property rights, and where libertarians go wrong you can read this, this, and this is sort of relevant. For me on libertarians and logic you can read this. For me on libertarians and bad axiomatic claims you can read this, this.
* - one big exception that has always bothered me in one of the final scenes is where people all over the globe - America, France, India, China, etc - are all looking up at the exploding asteroid and it's day-time in each of these places.
** - another option for priveleging property rights is available for those that want to toy around with Lockean labor theory of value thinking. I think this is dangerous. Locke may be right in his analysis of the person himself, but to take him any farther than that (i.e. - to actual goods and the proceeds from those goods), requires some really troubling assumptions in value theory that most philosophers and economists have long since rejected.
Tuesday, February 22, 2011
Next I plan on writing two other short pieces:
1. A review of Ettore Gotti Tedeschi's recent remarks on Keynes for Commonweal (Tedeschi is the president of the Vatican Bank), andI think the Space Review piece has a reasonable chance of being accepted, but I'm not sure how easy it is to get something in Commonweal.
2. A quick note about my "end agricultural subsidies/double NASA's budget" idea for The Space Review.
I'm also moving full steam ahead on the NBER paper on engineering labor supply, and will have a few conference calls on that in the next couple weeks. Once that gets substantially drafted I'll pick up a full-length article that's been stewing in limbo for a while.
- First, Tyler Cowen continues to talk about what he calls the "new federalism", this time citing a decision not to build a hospital in New Hampshire. I'm having more and more trouble recognizing this federalism that Cowen has made several posts on at this point. It seems like his "new federalism" is "governors that decide not to spend money on things". On its own, of course, that's fine. The whole point of federalism is that more of these decisions are made at the state level. But I don't think we would have gotten a post from Cowen if the governor decided to build a hospital (or high speed rail, in the case of Florida). If states are going to be empowered of course they have to be judicious, but state empowerment is going to involve the states spending and doing more, all else equal, and the federal government spending less. I don't know if Cowen would recognize this as a "new federalism". I'm used to people applying the label "new federalism" to the late Clinton administration (we had a research agenda at the Urban Institute called "Assessing the New Federalism (ANF)" dedicated to evaluating these reforms. During that period, with respect to welfare specifically, "federalism" was about more being done and decided at the state level, not simply the fact that governors were making cuts. You want to see a rebirth of federalism in the U.S.? Step one is doing away with the state balanced budget requirements.
- I am a big Mars booster on here, and I'm skeptical about talk of bothering much with the Moon. I'm not even sure of the value of another manned mission there. That's because I'm largely focused on human settlement. But Jennifer Ouellette shares information about some intriguing mining prospects (helium-3) on the Moon. Add that to the recent discovery of ice and I may have to reevaluate. It still oughta be automated for the most part. It's not a place for humans to thrive. But it's probably worth looking into. Aside from some up-front start up costs that could be subsidized, etc., note that this is just mining. Whereas I'd see a state role for human colonization for reasons I've reviewed in the past, mining is something we've done for millenia and oughta be an entirely private endeavor.
- Robert Stavins in the AER on the tragedy of the commons (HT Mark Thoma)
- Stickman argues that tort law is no panacea for the environment. I strongly agree - I talked about this issue here and here. I must register a complaint with stickman, though. He piqued my interest by saying in the beginning that he would talk about "non-representation of future claimants", but he never seems to have gotten around to it. Stickman also links to a new Buchanan paper titled "The Limits of Market Efficiency". A great excerpt from stickman:
"I think that scepticism of government is absolutely justified in many cases, as I have tried to indicate at the beginning of this post and in a number of my previous posts. If there are market imperfections, it doesn't necessarily follow that government involvement will adequately address them. Indeed, it could exacerbate the situation and, frankly, it’s ridiculous to pretend otherwise. Where possible, I absolutely support community/individual management of resources above that of the State, just I support individual responsibility in many economic aspects. I also think that tort law can play an important role in controlling for localised environmental externalities. However, as per my reasons above, I disagree that regulations are inherently inefficient in comparison to a purely market-based system underpinned by tort law. Again, the danger is in applying blanket rules to complex situations that require evaluation on an individual basis."
Monday, February 21, 2011
2. Mark Thoma points us to Frans de Waal on evolution and morality. Stickman has shared the work of de Waal on here before, most recently his appearance in...
3. ...this video - a discussion by Richard Dawkins of the implications of evolution for social organization.
Sunday, February 20, 2011
The bottom line of Lovecraft's grave says "I Am Providence". Several online sources simply say that that line comes from one of his letters, but I could have sworn he got it from antiquity - I want to say Cicero for some reason. Does anyone know/remember? I can't put my finger on where I heard that.
Saturday, February 19, 2011
Some readers may not be aware of this, but captain Ahab was real... sort of. The real captain Ahab was more pathetic than the one in Melville's book. Perhaps it is better to say that Moby Dick was real in the sense that Melville was inspired by stories he heard of a giant sperm whale smashing the the whaleship Essex to pieces in the middle of the Pacific Ocean.
The captain, George Pollard, made it to a rescue boat and was later picked up by another whaler that then crashed again in shoals right outside Honolulu. They just recently found the wreckage of this second ship of Pollard's. Pollard survived that wreck as well and eventually made it back to Massachusetts where he talked at length with Melville about the ordeal, inspiring the epic novel.
Why am I posting on this particular find? Well the story of the Essex is one I've heard several times before Evan shared this link with me, because one of our ancestors was the second mate on that ship (Matthew Joy, who is mentioned in the post). Joy is my maternal grandmother's name, and as I've mentioned before on here, they've been in Massachusetts since the early 1600s. Matthew Joy did not fare as well as George Pollard - he also got in a rescue boat, but he was never picked up and died at sea. The crew on the other boats ended up descending into cannibalism (of the dead, that is) before they were rescued (I think only one or two were left by that point). If I recall, Matthew Joy died before all that began, so I think his earthly remains avoided that fate.
You can read about the whole thing in In the Heart of the Sea: The Tragedy of the Whaleship Essex, and also The Wreck of the Whaleship Essex (which was written by the first mate). I've read the first book, but not the second. Thomas Jefferson wrote two reports on the whale fishery as Secretary of State, in 1788 and 1791. The two authoritative histories about the fishery that you usually hear about are Starbuck's history (1878) and Tower's history (1907). These books are massive - I've leafed through them but haven't read them. I've always dreamed of doing something with the mountains of data in them. And speaking of whaling data, this is a great site.
I don't follow the Reason blog, but I really should. I want to share something I really like about the group and something I don't like as much:
1. I like how positive the Reason pieces are for the most part. They do not denounce people the way a lot of libertarian outlets do. They do not have a negative view of their own libertarianism (i.e. - what libertarianism is not) - they have a very positive view of their libertarianism (what libertarianism is or could accomplish). That's extremely refreshing. It is a very creative group of people and a group of people with a constructive vision. That's all anyone can ask for, but it can be a rare thing in this world.
2. One thing I don't like, though, is how they manage to idolize libertarians, almost as some sort of "higher man". For example, this interview with James Fallon where he treats the claim that libertarians are more logical than non-libertarians as an actual working hypothesis. The interviewee here says this sort of thing too at 4:33 in this video. She talks about how much sense libertarianism makes the more you talk to people and "how it's really hard to deny" it after a while. Now, this is her opinion and everyone is entitled to their opinion, but my reaction to this is "No it's not - it's really easy to deny libertarianism! Libertarianism is better than a lot of other philosophies, but the problems with it are glaringly obvious!". I guess what bugs me about the Reason.com material is that these sort of self-congratulations seem to be in there a lot. Somewhat obnoxious and somewhat naive.
Friday, February 18, 2011
2. Instead of calling the sides "economic freedom" and "personal freedom" call it "economic individualism vs. economic communitarianism" and "personal individualism vs. personal communitarianism", for the same reasons I've discussed ad infinitum on here: you are very transparently coming from a libertarian perspective when "freedom" converges right on the libertarian corner. You really don't seem to realize how silly and self-serving it looks.
3. Now, pop it out into a cube by adding a third dimension - an idealism/pragmatism dimension.
I consistently fall on the corner between "centrist", "left", and "libertarian" on these things, and I imagine in this formulation of it, I would fall way up at the "pragmatist" end of the third dimension.
Adding the idealism/pragmatism dimension explains why Sumner often seems to get along better with Krugman than with Murphy. Sumner's schema explains how Sumner is close to Murphy and how Sumner is close to Krugman, but it doesn't explain how these are true at the same time that it is true that Murphy and Krugman are very far apart. Mine does explain that.
I started as positively pre-disposed to it myself. I have a few questions about it though. I feel most at home in the upper-right orange, between pragmatic libertarian and idealistic progressive. But there’s something weird about being there, because I don’t feel like I’m especially an idealist. I feel a lesser identification with the dark red group (see my caveat on the narrowness of this idea of a “corrupt progressive” below) and the yellow “minimal state” group, each of which emerges more on some points than others. There’s something very odd about this arrangement, though. Notice there is no:
1. Pragmatic progressive
2. Pragmatic conservative
3. Dogmatic progressive
4. Dogmatic conservative
5. Corrupt libertarian, or
6. Idealistic libertarian
Why? Sumner suggests that by “corrupt” he doesn’t mean “taking bribes”, he just means abandoning principles to please people. But that’s an extremely narrow way of thinking about the reasons for flexibility in an ideological perspective. Sumner allows for pragmatic libertarians and considers himself one. Why? Presumably because he doesn’t think he’s “abandoning principles” for someone – he’s simply pragmatically recognizing where principles are good guides and where they are less good guides. He sees principles as broad sketches or frameworks for approaching problems not divine laws. He is, in short, a pragmatic libertarian.
But don’t progressives and conservatives act flexibly for precisely this reason as well? Most progressives and most conservatives aren’t in power and aren’t seeking votes, so they’re clearly not maintaining a flexible outlook to “please special interest groups”. Even many progressives and conservatives in power aren’t doing this to “please special interest groups”. There is a good reason to push for tort reform – the Republicans aren’t just kowtowing to the doctors. Clinton didn’t work on welfare reform to cater to a segment of the political spectrum, he largely did it because it needed to be done! This complete lack of pragmatism on the progressive/conservative side of Sumner's schema and complete lack of a “corruption” group on the libertarian side says a lot about Sumner.
He has some strange points here too. Dogmatic libertarians and idealistic conservatives revere the original intent of the Constitution? That this sentence was written by a libertarian is blatantly obvious. A progressive would say that it’s the dogmatic libertarians and idealistic conservatives that are putting their own modern spin on the Constitution. But of course the very idea that this is even a contested point is foreign to many libertarians and conservatives. They simply assume that progressives have knowingly and proudly written off the founders!
There’s also something very odd going on when Scott Sumner and Will Wilkinson both put themselves pretty darn close on this mapping to where I put myself (we seem to just be on different halves of the same segment). I imagine a lot of progressives and a lot of libertarians are all putting themselves in that segment. What good is this schema if that’s where everybody in the discussion puts themselves? I imagine anarcho-capitalists are going to put themselves in the yellow area rather than the very light purple area. When a centrist Keynesian and an anarcho-capitalist are adjacent to each other something’s a little off, I think.
I don’t like that old diamond model much, personally – but even over the course of writing this post I’m starting to think that is better than this.
To block the measures, a bunch of Democrats in the legislature have skipped town in an effort to deny Republicans a quorum. This sort of thing has precedent, of course. Texas Democrats did it as recently as 2003 to stymie a Republican redistricting effort that they considered grossly unfair. Tom DeLay tried to sic the FBI on them (they politely declined the request), while Willie Nelson brought them whiskey in solidarity. It does back farther than that too - the Pennsylvania Anti-Federalists ditched their legislature to try to block ratification of the Constitution. I like to think of this sort of thing as creative filibustering. I hate that the filibuster has just turned into a super-majority requirement. If a Senator is willing to stand up and read from the phone-book for hours, that's fine. If a Senator wants to hole up in a cheap motel across state lines, that's fine. They exerted some effort. Now its just a pro-forma way of circumventing democracy.
Federalism issues came up in Alex Tabarrok's discussion of "Keynesian politics" yesterday, too. I didn't elaborate too much at the time, but I oughta here. One of the policies he suggests was the somewhat amorphous "funding for states". I've come out against using federal funds to shore up state budgets in the past, and I did in the comment section of this post too. I wrote:
"The real failure of Keynesian politics, we should remember, is at the state level. The reason why government spending was fairly flat despite a huge increase in federal spending is because the feds were essentially filling a hole that the states were digging. How do [we] keep on pushing Keynesian politics AND prepare for the next crisis? Loosen state balanced budget requirements. Then federal fiscal policy will have some traction and states won't be hamstrung."
When the federal government starts solving state problems, states stop solving their own problems, and they don't implement the reforms that would help them do better. Don't get me wrong, I think we're better off since the federal government was able to fill the gap in this particular case than we would have been, but a federal rescue means more federal control, and it means that they can't focus on demand management because they're spending all their money on keeping states afloat.
Tyler Cowen notes a trend in states rejecting federal money as well, and suggests that this represents a new chapter in American federalism. Maybe - we'll have to see. I have always said that health reform needed to look more like welfare reform in the 1990s, with a lot more flexibility at the state level. I'd rather not have it as ad hoc as Cowen is describing here (Arizona getting a waiver to tighten certain requirements), and I'd rather see states bringing new innovative ideas to the table rather than just tightening up old ways of doing things - but we'll see how it goes.
Thursday, February 17, 2011
Anyway, I've seen a couple hints of Kuhn on blogs ever since I started reading it. I think that's always a good sign - when you read something, and applications of what you read seem to pop up places.
- First, a couple days ago Jonathan Catalan asked the question "what the heck does an economist study?". This is not a new question - it's been the subject of several presidential addresses to the AEA, books, commentary, etc. Answers range from "economics is whatever economists want to talk about" to more specific responses. One of the things that Jonathan notes is that economists really don't do deep epistemological work anymore. Jonathan writes:
"The book has gotten me thinking, however, about how the important epistemological questions of economics have been slowly pushed aside, in favor of more empirical, mostly historical questions. Perhaps it is a sign that most economists seem to be content with whatever foundations they base their own research on and instead trudge forward — these elementary, basic metaphysical questions seem redundant. This, however, does not satisfy me, because these questions are still relevant, especially given the fact that there is no widespread consensus on what an economist studies, and what is the best method by which to study whatever is being studied — one could go as far as to claim that these questions have not been completely answered within the Austrian School, even!"
This has never bothered me that much for the reason that Jonathan points out - we already answered that question. The question hasn't been "pushed aside" it has been answered! Kuhn talks about this process in the emergence of a "mature" science, and he notes that epistemological and metaphysical discussions are a hallmark of pre-scientific thought, or at least immature science. I think this is an important component of the case for economics as a science - that we have settled are epistemological and methodological questions fairly conclusively. It also addresses why so many people who are not satisfid with that answer are also less likely to see economics as a science.
- Second, many people have remarked on Bryan Caplan's explanation of why so many GMU professors blog. In it, he recognizes another Kuhnian concept - "normal science". Normal science, for Kuhn, is puzzle-solving. The scientific paradigm sets up a series of puzzles that are relevant for the scientist to solve: cataloguing new elements, tracking new orbits, and also just generally fitting observational data to an existing paradigm. Caplan argues that most economists are puzzle-solvers, and that apparently this is in contrast to bigger-picture thinkers that are more likely to blog. I'm noting the Kuhnian reference here, but I'm not buying the argument. Austrians and libertarians are puzzle-solvers too, they just work on slightly different puzzles than the rest of the discipline. It doesn't seem like much of an explanation for blogging behavior. Caplan also talks about GMU professors' relationship with "the life of the mind" and a deeper appreciation for the issues than you get from a typical economics class. I also don't quite buy this argument, again because I don't think GMU professors are unique in this. I attribute GMU blogging to some path depenence (early successes by a few bloggers encouraging others), and the entrepreneurial nature of the GMU department (they are well known for head-hunting big names and cultivating niche sub-fields).
- Finally, Brad DeLong had a post where he described relativity as easier to understand than essentially all other modern physics (this was in a response to a guy who said he understood evolution but had to take relativity on faith). Sean Carroll, a blogger at Cosmic Variance, agreed with Brad that relativity isn't that tough to grasp. What caught my attention was this line:
"He’s completely right, of course. While relativity has a reputation for being intimidatingly difficult, it’s a peculiar kind of difficulty. Coming at the subject without any preparation, you hear all kinds of crazy things about time dilating and space stretching, and it seems all very recondite and baffling. But anyone who studies the subject appreciates that it’s a series of epiphanies: once you get it, you can’t help but wonder what was supposed to be so all-fired difficult about this stuff."
The idea of a "series of epiphanies" is very Kuhnian. We resist understandings because we don't have an underlying paradigm that allows us to see facts in a way that is relevant to a scientific theory. One of the episodes that Kuhn talks about a lot is the development of theories of electricity in the mid 18th century. There was a time when electricity was actually thought of as a fluid. That was the dominant paradigm. Static and charges in things that had not directly touched an electrical current were simply ignored as "leaks" from the electrical fluid - complete side-shows. Not important. By changing how one understood electricity and abandoning the idea that electricity was a fluid, that which was peripheral and an oddity made perfect sense. The important thing about paradigm shifts is that they change the way you see the world. Theories that were once inconceivable then become obvious, and those that were once obvious start to look silly. The nature of time is a great example - our senses cause us to rebel against the idea of time as a dimension, but when you accept that a lot of new intuitions follow naturally. Our senses cause us to rebel against the idea that we are just like other animals, but when you accept that, a lot of new intuitions follow.
Wednesday, February 16, 2011
So far it's just been a lot of Yale, Rice, and American (I got my admission to American).
The Yale rejections have been interesting... I've seen one obnoxious one and one funny one. First, one guy wrote of his Yale rejection: "sad, the backup uni of my applications". Look, dude - if Yale is your backup then, (1.) you're probably a dumbass for having Yale as your backup, and (2.) you're definitely a jackass for feeling the need to tell everyone that was just your backup, and (3.) you're definitely a dumbass for telling us that after receiving a rejection from them.
Later, there was a funnier Yale rejection that took the self-absorption down a notch. He wrote "I did not want their 37k stipend anyway - too much for me" :)
Why in the world does Yale have that kind of stipend anyway?
I offered a comment that critiqued his initial premise about Keynesian politics. I wrote:
"This is sort of an odd view. If we accept, as you suggest we could at least theoretically, Keynesian economic analysis, then wouldn't a "failed" (what would we call this - 25% of the way? 30% of the way?) Keynesian policy still be better than a failure to attempt any Keynesian policy?
If we accept Keynesian analysis, shouldn't the policy be "do as much Keynesianism as you can get through a democratic republic and just understand you probably won't reach any kind of ideal"?
Not that your other options are bad ideas, I just don't see how the "failure" of the politics means that in politics we should abandon the analysis.
It's also worth noting that not everyone is so down on policy as Krugman. Many have pointed out that while fiscal authorities have not behaved in an especially Keynesian way, monetary authorities have done OK at least. That's something, right?
This is also just a failure of "Keynesian politics" in depressions. Presumably in periods outside the 1930s-1940s and post-2008 we have had successful demand management through both fiscal and monetary policy, and a decent re-evaluation and re-formulation of crude Keynesianism after the 1970s. You pick out the two depressions, but the whole post-war period can be broadly understood as "Keynesian politics".
If you are saying "we can't expect perfection", then of course that's true. But who ever did?"
Of course, there's absolutely nothing wrong with the sorts of things Tabbarok does propose (although I probably differ with him on the aid to states, for reasons I've noted here in the past about how that atrophies a robust federalism). He offers:
"What are the alternatives to Keynesian politics? Greater regulation to prevent crises from occuring is a legitimate response, although one that I wouldn't necessarily buy into in all particulars. Along the same lines, increasing wage, price and real flexibilities (e.g. relocation flexibility and public and private savings flexibility) would benefit us in future recessions. Automatic stabilizers such as unemployment insurance are one area that has worked quite well. What other areas can be automatized? Funding for states? How about an automatic payroll tax cut tied to the unemployment rate?"
Tuesday, February 15, 2011
2. If this newly discovered bane of my sanity is to be trusted from last year, I may be hearing from the University of Maryland very, very, very soon. A bunch of acceptances went out February 16th and 17th last year, then apparent silence till mid-March when a few more acceptances and wait-lists, and a ton of rejections were passed out. If this one pulls through I will be a happy camper.
Monday, February 14, 2011
2. I always forget that in the end, you all are just a bunch of smelly hippies.
So no, I don’t buy into the idea of soul-mates. As I said, the math simply doesn’t work out. Romantic love seems to be a function of access and convenience. And yet that doesn’t make sense either. Anyone who’s married or has been married knows there’s nothing really “convenient” about it. “Convenient” would be no need for compromising, no need for spending two hours picking out curtains, no need for keeping a predictable schedule. That’s not marriage or in a committed relationship knows that that is not what we’re talking about.
So what is it? A dependable availability of sex? Perhaps, but there’s nothing especially challenging about getting that either if you want it.
All of these seem to miss something fundamental. “Love”, really, but what is that? It’s a feeling. It’s a commitment you make. It’s frustratingly slippery, though. We shove a lot under that word “love” and don’t spend too much time worrying about understanding exactly what the hell it is. But it clearly is something. It is a real thing.
I end up seeing lots of beautiful women over the course of the day. It’s not hard to see a woman and acknowledge if she’s beautiful or not. It’s subjective, of course, but it’s not something that takes careful study to ascertain. You can determine that quality walking by someone on the sidewalk. But I never get enraptured looking at a beautiful woman on the sidewalk. Nobody does! If I passed a group of super-models walking down the sidewalk I would certainly turn my head, but nobody would walk into a lamp-post or anything ridiculous like that like they do in cartoons. And super-models are supposedly the cream of the crop! And yet despite that, I genuinely get enraptured by Kate’s beauty. Sometimes the sunlight catches her the right way and I can literally lose my train of thought. I’ve been married to this woman for three years, I’ve dated her for almost seven years, and I’ve known her for eight and a half years and yet this can still catch me off guard. Why? It doesn’t make sense at all. Romantic love seems to me to be a violation of a social second law of thermodynamics. Even when we put aside nonsense about soul-mates and even if we come to grips with the things that make pairing efficient (division of labor, resource pooling, etc.) there’s still this very mysterious residual of romantic love, and the more you think about it the weirder is. It’s just very hard to account for – but I’m glad it’s out there.
2. Matt Yglesias points out how surreal the media's reaction to Congressional math is. In 2009-2010, Democratic bills in the House that couldn't get past a Republican filibuster weren't considered important news. Democratic relevance was measured by the stark reality of the Republican minority in the Senate. Today, however, House Republicans are lauded as a force to be reckoned with and a new reality in Washington. Is there position any stronger or more mandate-backed than the Democrats in 2009-2010? No. In fact, they're in a weaker, and less popularly backed position with a much smaller chance of doing much of anything. But the media lionizes them. I try not to be too plugged into the political world in this city, but sometimes if you didn't live here I think you'd start to mix up who is in power and who has what mandate, the way the media reports it.
3. Finally, whenever anyone in this town breathes a word about the budget, really the only discussion at hand is a discussion about Medicare and Social Security. That's what "the budget" means in Washington. Politicians may not want to do anything about it, but that's what the policy people talk about when they talk about the budget. I think in a lot of the country "federal entitlements" sound like welfare-queen doles. But in Washington "entitlement" has a very specific meaning - it's the collection of guaranteed social insurance programs but essentially "entitlement" means Medicare and Social Security. Matt Yglesias reports, however, that 44.1% of Social Security recipients and 39.8% of Medicare recipients say they haven't received any government social programs!!!! Unbelievable! If you keep the share of recipients who've received nothing but Social Security and Medicare (i.e. - take out the people that have received food stamps and Social Security and are only thinking of their food stamps when they respond that they've participated in a government program), I wouldn't be surprised if that constitutes a majority. This thing that is the centerpiece of worries in Washington isn't even directly associated with government social policy by many recipients!
Saturday, February 12, 2011
Gary has this thought on my post on the new Atlas Shrugged movie: "It just illustrates how libertarian the world has become. When Rand was writing her major works they were a slap in the face to the dominant paradigm. It was a bit like being an atheist in the 18th century. Now Rand pervades the culture so much that this movie doesn't seem so radical", and seems to have largely missed my point about "ideological orthogonality" (and maybe I'm not communicating the idea clearly). It strikes me as weird to say we are more libertarian today because we like markets more - because Americans generally don't flirt with socialism the way they did in the 20s, 30s, 40s, and even into the 50s. If we replaced that America with a libertarian America, then Gary would have justification in saying the world has become more libertarian. But that's not the case. In America and in most of the rest of the world we replaced a brief flirtation with socialism with a solid and stable commitment to social democracy. I hate to break it to my readers, but Randians and libertarians aren't the only ones that like markets. I don't think this trailer struck me as banal because we are more libertarian - I think it struck me as banal because in this world of market-oriented social democracy that we live in Atlas Shrugged seems pretty pedestrian. Gary views a continuum of sorts between collectivism and libertarianism, so from his view it seems like we've moved towards libertarianism. Yes, we embrace markets a lot more now than we did earlier in this century. But it seems odd to pick out one relatively small ideological perspective that embraces markets and say we've move closer towards it just for that! Wouldn't it make more sense to say "we've moved more towards market-oriented social democracy" than "we've moved more towards libertarianism"?
Gary seems to think that in the debate over markets, there's the libertarian side and the non-libertarian side, so if you're not on the non-libertarian side you must be "more libertarian". That's like saying in the debate over progressive income taxes there's a Communist side and a non-Communist side and if you're not on the non-Communist side you must be "more Communist". Sorry - I like my progressive income tax and my profit seekers in a free market, and I haven't moved to be "more Communist" or "more libertarian" - I am "more market-oriented social democrat". But I am glad to see that Gary at least embraces a portion of the market-oriented social democrat platform. It's good to see that he's "more market-oriented social democrat" than some others are.
Prateek Sanjay, Keynes, Evolution, and Classical Economics
In my post on Darwin, Prateek responds to the selection from The End of Laissez Faire with: "I have never, ever, never, ever heard any single free market economist, whose book I have read, trace his views down to Darwin. Even economics books by pro-market progressives or other political affiliations never do that Darwin analogy." I whole-heartedly agree with him and assured him I'd clarify what I think Keynes was trying to say. So I never read where Keynes suggested that economists "traced his views down to Darwin". I could be wrong, but what I thought Keynes was trying to say was that there was a powerful confluence of ideas in the second half of the 19th century that fit together very easily. Classical economics (indeed almost all the economists Keynes cited) was already well established by the time Darwin came along, so clearly he's not arguing they trace their ideas to him. In fact, Darwin traced some of his ideas to the Classical economists, particularly Malthus (who was the most Keynesian of the bunch!). I like to frame The End of Laissez Faire as Keynes's genealogy of classical liberalism. Keynes is describing and lamenting the bifurcation of liberalism into two camps: communitarianism and individualism. The bifurcation itself isn't especially problematic for Keynes. These two strains have always been in tension and it has been a creative tension. Keynes's concern is that they have separated, stopped engaging each other, and thereby degenerated into two very impoverished orthodoxies: laissez-faire and socialism. Real liberalism, for Keynes, is the primary victim of this bifurcation. So that is the context of the book.
What I think Keynes was trying to say about Darwin was that a major spur to the evolution of laissez faire is that you had this more individualist orientation of classical economics and Victorian laissez faire bolstered by Darwinism, which seemed to provide license to Social Darwinism and a ruthless individualism. I don't think Keynes ever argues that that's what gave birth to Classical Economics. I don't think Keynes ever argued that that was what Darwinism implied. But the coalescence of all these ideas in the second half of the 19th century made a degeneration of classical liberalism into laissez faire possible. It has been perhaps a year since I last read The End of Laissez Faire, but I think this is what he is saying in this passage.
Now, that having been said I don't think Prateek should be so pessimistic about bringing Darwin into a market-oriented perspective on economics! Darwin does not give license to Social Darwinism. But Darwin does provide us with a very powerful mechanism for emergent order in complex systems. When you have variation, the prospect of failure, and time you have the possibility for evolutionary selection. "Natural selection" for Darwinism, but we can think of this as social selection or market selection. Firms that fail the market test will die. People who assemble the wrong combination of human capital will not do well in the labor market. Thankfully, we don't have to rely on random variation for this to produce a better and stronger economy over time. We can add learning and anticipation to the mix. Unlike the ape in the jungle who is born with the equipment to survive or not survive, humans and firms can acquire the means for survival. We talk about "the rough edges of capitalism", and indeed there are a few. But our ability to learn and anticipate actually means that capitalism does away with "the rough edges of the law of the jungle", which confine organisms to the traits they were born with! So I agree with Prateek, market economics isn't some base, objectionable, twisted Social Darwinism. That gives market economics too little credit and Social Darwinism too much. But there is an important role for evolutionary thought in economics.