Monday, December 20, 2010

Assault of Thoughts - 12/holys$%^isitreallythe20thalready????/2010

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

- Brad DeLong on the Constitution and classical liberalism. It's a really great post - the bottom line he makes is that the founders were not classical liberals, they were mercantilists. I would phrase it slightly differently. The founders were nothing if not classical liberals - they were not the libertarian strain of classical liberalism which, as Brad points out, largely emerged in the mid-nineteenth century. The founders were the earlier vintage of classical liberal that valued each of the major philosophical components of liberty, equality, and representative self-government. They also had a largely mercantilist background, which as I point out in this post had more to do with early monetary disequilibrium theorizing than the rabid protectionism it is associated with today. So I would take issue with Brad on that - he's unnecessarily ceding the term "classical liberal" to the libertarians (who do fall under the broader "classical liberal" umbrella, I would certainly agree). I would also disagree with him on the interpretation of the interstate commerce clause. I do agree with Brad that Congress has what could be called "plenary power" to regulate the economy, but I think the commerce clause pretty clearly refers to interstate activities only. I would justify the plenary power on the basis of the very first enumerated power, to provide for the general welfare, combined with the necessary and proper clause. Congress clearly has the power (if it wishes to exercise it) to provide for the general welfare by subsidizing and providing certain health insurance. That is without question. To make that provision efficacious, it's necessary and proper to regulate the private health care industry as well. That's where I would say the plenary power comes from. The legislature and the courts will - appropriately - hash out exactly what is "necessary and proper" and what constitutes the "general welfare". It's not a blank check as so many people claim, but it is a vague and flexible check that reasonable people can disagree on. If anyone asks in the comment section "well if they can regulate what health care we buy what can't they regulate". My response is "they absolutely do not have the authority to regulate things that do not provide public benefit, and they do not have the authority to impose unnecessary or improper regulations. That means they do not have a blank check - there are a lot of things they can't do."

- The New York Times has a discussion of the "do it yourself macroeconomics" trend in the blogosphere. This is very akin to the "macro is hard" discussion kicked off by Kartik Athreya. I am now, as I was then, of two minds on this. Part of me is an amateur, largely macro blogger with most of my academic and professional experience in labor economics and econometrics who likes the DIY macro idea. Part of me is an aspiring doctoral candidate who wants to have academic and professional experience in macroeconomics and would caution against this arm-chair theorizing. A third part of me recognizes that there are a lot of professional and academic economists out there who sound like they're just spouting off arm-chair theorizing anyway, so what difference does it make? The point, I think, is that of course this is a good thing, its always good to have more people talking about it, but we do need to guard against bad analysis that gets reinforced by internet echo-chambers.

- Razib Khan discusses international comparisons of time preference.

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