The Disputatious Science

Why don't economists agree? Does persistent disagreement among economists render all their advice meaningless? If both sides of an economics argument claim to possess empirical evidence for their position, how can a layman tell who's wrong?

Russ Roberts, an economist, takes a hard look at the disputatious science of economics in this podcast from Econtalk. Some of his conclusions:

First, it is extremely difficult to tease out one or two effects from a complex network of interactions. Yet, economists often charge ahead with the alarming phrase, "controlling for everything else."

Second, bad studies often overcome sound logic, especially when the studies confirm an established bias.

Finally, much of what is presented as empirical evidence is really sophisticated statistical analysis. In other words, economists sometimes mistake their math for the real world.

The counterpoint of the discussion is taken by Robin Hanson, another economist. Hanson says economics does offer a body of widely accepted knowledge that qualifies as science. He offers three possible explanations for the public squabbles:

1. What economists know might not be very useful in the real world
2. Economists like to focus their attention on the areas where they don't agree
3. Incentives distort the public dissemination of economic ideas

"No He Can't"

Anne Wortham, a self-described "individualist liberal who happens to be black," says she cannot join the celebration of the election of Barack Obama. To do so, she says:

"I would have to believe that "fairness" is equivalent of justice. I would have to believe that man who asks me to "go forward in a new spirit of service, in a new service of sacrifice" is speaking in my interest. I would have to accept the premise of a man that economic prosperity comes from the "bottom up," and who arrogantly believes that he can will it into existence by the use of government force. I would have to admire a man who thinks the standard of living of the masses can be improved by destroying the most productive and the generators of wealth."

Read the rest of "No He Can't" here.

The Mercurius Society

The Mercurius Society is a London-based group with goals very similar to the Bastiat Society.  Its web site describes the Mercurius Society as follows:

"The Society was launched in London in September 2007. Since its establishment, the Society has brought together young business leaders and entrepreneurs for topical discussions with high-profile guest speakers. Mercurius Societies have been formed in other cities in Europe. The Society seeks to link those in the private sector who share the concepts of limited government and individual liberty with their counterparts in think-tanks, politics, academia and the media. The mission of the Mercurius Society is to strengthen support for free enterprise; enlist business leaders into the free market community; and encourage them to take pride in their role as the creators of prosperity."

I've added a link to the Society under "Free Market Links."

A Stimulus We Can Believe In

Animal Spirits

What is the best way to improve the lives of the poor?

Give them a chance to make some money. But how?

Mary Anastasia O'Grady writes, "the evidence is piling up that neither government nor multilateral spending on education and infrastructure are key to development. To move out of poverty, countries instead need fast growth; and to get that they need to unleash the animal spirits of entrepreneurs."

Of course, the dilemma we face is that you can't plan animal spirits. You can't control them with a committee. You can't count on their methods or their results. No wonder governments prefer to stick with development plans that consist of conspicuous spending. It's too hard to claim political credit for something that happens out of sight, even if it works.

In other words, most of what is presented as economic development is really political development, and most of what is really economic development has nothing to do with politicians.

Caveat Emptor

Writing in Forbes, Kathy Kristof reveals "an unfolding education hoax on the middle class that's just as insidious, and nearly as sweeping, as the housing debacle. The ingredients are strikingly similar, too: Misguided easy-money policies that are encouraging the masses to go into debt; a self-serving establishment trading in half-truths that exaggerate the value of its product; plus a Wall Street money machine dabbling in outright fraud as it foists unaffordable debt on the most vulnerable marks."

The hoax? College.

Perhaps we should require every college to adopt a new motto: "Caveat emptor."

A Shot of Confidence

The Colbert ReportMon - Thurs 11:30pm / 10:30c

The Word - Sweet Smell of Success

Colbert at Christmas
Colbert Christmas DVD

Green Screen
Bill O'Reilly Interview

Murder, Music, and Shopping

The Economist links murder, music and shopping to the eternal human quest to "propel the genes of the successful into future generations."

An excerpt:

"Shopping, that most urgent and tiresome activity at this time of the year, may seem to have little to do with either music or murder, beyond the mindless jingles in every store that provoke a desire to dispose of the manager who chose the playlist. But it, too, helps propel the genes of the successful into future generations. As surely as the tasty morsel that the male robber-fly offers up to his chosen mate, the jewels, champagne and scent that a man showers on a woman speak of his prowess as well as her desires. The Jaguar in his driveway, meanwhile, serves to emphasise his status to other men. A Fiat would get him there as fast, but only to physical destinations, not sexual ones."

Wealth in America

Radley Balko points out a disturbing trend: the wealthiest counties in America are increasingly found around Washington, DC.

"America's wealthiest counties ring a city where the chief industry is government — and the entire region's only getting richer. That doesn't seem like a trend that bodes well for the health of a market-based economy."

Read more here.

Not the Stimulus We're Looking For

In another excellent video from the Center for Freedom and Prosperity, Dan Mitchell explains why government spending is not the stimulus we're looking for:

More Fact Than Fiction

Stephen Moore, writing in the Wall Street Journal, notes that Atlas Shrugged reads more like fact than fiction...

"Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism."

New Links to Shake the Status Quo

Shaking up the status quo is a risky business. Entrenched political interests -- read Democrats and Republicans -- have erected a complex set of tripwires and booby traps to discourage any political activity outside of their control.

Protected from the outside, rule number one on the inside is "Don't shake things up." Expecting those who benefit from the status quo to change things is like expecting North Korea to hold free elections.

I've added three new links for those who are willing to take a risk.

The first is to the South Carolina Policy Council. Its president, Ashley Landess, spoke at the January 2009 monthly meeting about the Council's efforts to make the case for increased state government transparency. The Policy Council is a 501(c)3 engaged in education and research.

You'll find the link to the Policy Council under "Free Market Links" down the left-hand side your screen.

You'll also find a new link for the South Carolina Club for Growth. The Club is a 501(c)4, which means it can engage directly in political campaigns. The Club promotes state candidates who can reliably carry the message of limited government.

The third link is under "Related Events." There you'll find a link to the BB&T Speaker Series at the Initiative for Public Choice and Market Process at the College of Charleston. The Initiative is bringing in Mike Munger, Chair of the Political Science Department at Duke University.

Enjoy!

TV Worth Watching

Mark your calendar!

The Fox Business Channel is featuring The Call of the Entrepreneur at the following times:

Saturday, January 10, from 5 p.m. to 6 p.m. EST

To find your local station visit the FOX channel finder. To find out more about the movie, discover related materials, and learn how to host your own screening, visit The Call of the Entrepreneur website.

Designer Goods

Business people can achieve fabulous success without ever thinking about the larger economic process at work. Indeed, that process is so large and so complex that no one can  completely understand it. The best we can do is work to understand a small part of it, and then trade that understanding to make a living.

Anti-capitalists argue that such bottom-up, piecemeal improvement is too slow. They believe that we can make the world a better place by designing society from the top down, according to a master plan of virtue, goodness, and harmony. Such sentiments sound virtuous. In reality, they make impossible demands on human nature and human knowledge.

First, social master plans require individuals to deny their most powerful motivation: self-interest. Asking people who can't stick to a diet to stick to a social master plan makes as much sense as asking them not to go to the bathroom.

Second, social master plans require somebody, somewhere to know everything that is going on, and to know what is going to happen next. Even Al Gore can't do that. 

Rather than spend precious time, energy and money trying to run perfect plans with perfect people equipped with perfect knowledge, shouldn't we spend that time, energy and money trying to get the best results out of imperfect people who actually know very little, who face an uncertain future, and who are motivated primarily by self-interest?

Dead, But Still Dangerous

Ariannna Huffington declares laissez-faire capitalism dead, but still dangerous:

She writes, "It's time to drive the final nail into the coffin of laissez-faire capitalism by treating it like the discredited ideology it inarguably is. If not, the Dr. Frankensteins of the right will surely try to revive the monster and send it marauding through our economy once again."

Ideas are easier to deal with when they are sorted with Manichean clarity. Unfortunately, such dualism obliterates important details. Laissez-faire capitalism does not call for the elimination of all rules, nor does deregulation automatically equal laissez-faire capitalism.

Conflating both laissez-faire and deregulation with gangster anarchy is intellectually irresponsible. Furthermore, it is politically dangerous. If we "drive the final nail into the coffin of laissez-faire," what is left? Severed from the Western tradition of natural rights and limited government, public policy would drift according to populist whims. Good news for ambitious demagogues like Juan Peron. Bad news for everyone else. That is hardly a reassuring vision.

Rather than declare laissez-faire dead or dangerous, we should recognize what is really happening: it is slowly choking on the 80,700 pages of the Federal Register, a daily publication.

Work Study

Charles Murray, writing in the New York Times, says the typical undergraduate degree is meaningless as a career starter.  He says we should discourage the B.A. in favor of professional certification, which would tie education directly to employable skills. Why demand students get a degree they neither need nor want, when most of them just want a job?

Read it here.

Not A Better World

January 1, 2009 is the 50th anniversary of the Cuban Revolution. You've heard of eco-tourism, but are you ready for Marxo-tourism?

This would be funny if it weren't so sad. Notice how little difference there is between political propaganda and a press release from the chamber of commerce.

"Celebrate five decades of resilience, progress, allegiance to peace and social equality with the people of Cuba

Witness the stellar achievements of the Revolution first hand

Saturday 27 December 2008 through Saturday 3 January 2009

Five days in Havana and three days in Trinidad for the best of island dance, music, culture, art, nature and history

Truly a once-in-a-lifetime experience – a moment in history for reflection, rejuvenation, enjoyment and new friendships

Today millions optimistically follow the course of the Cuban Revolution, which despite hardships resulting from sanctions and blockade, is as dynamic as ever. This tour is for those who believe a green, healthy, educated, people-first way of life is the hallmark of civilization. It is for people who think as Cubans do, and say: Yes, we can make a better world and have a good time doing so!"

Gerald Warner, writing in the Telegraph, has a less enthusiastic view of 50 years of revolution:

"During his "five decades of resilience, progress, allegiance to peace and social equality", Castro has executed 16,000 people and imprisoned more than 100,000 in labour camps. The Western media are greatly exercised about Guantanamo; but few have heard of Kilo 5.5, Pinar del Rio, Kilo 7, the Capitiolo (for children up to age 10) and the other camps that compose Castro's gulag. Two million Cubans have by now rejected the resilience and progress of Castro's revolution and more than 30,000 have died trying to escape."