Tuesday, September 29, 2009

If Bastiat Could Do It...

If Bastiat could make economics intuitive, so can we. So says economist Bryan Caplan.

He offers a few examples of intuitive logic designed to overcome counterintuitive arguments:

1.Counterintuitive claim: Free trade makes countries richer, even if the other countries have big advantages like cheaper labor or more advanced technology.

Intuitive version: We'd be better off if other countries gave us stuff for free. Isn't "really cheap" the next-best thing?

2.Counterintuitive claim: Strict labor market regulation is bad for workers.

Intuitive version: Employers don't like hiring people if it's hard to get rid of them. Suppose you had to marry anyone you asked out on a date!

3. Counterintuitive claim: Egalitarian socialism creates poverty... even starvation.

Intuitive version: If everyone gets the same share whether or not they work, you're asking people to work for free. People don't like working for free, especially when the work isn't very fun. (This is my response to Sumner's Great Leap Forward Challenge: "But how do we explain to school children that millions had to starve because of a policy that encouraged people to share?")

4. Counterintuitive claim: Prices are determined by supply and demand.

Intuitive version: If the good were free, consumers would want a lot, but producers wouldn't feel like making much. If the good cost trillions of dollars, producers would want to make a lot, but consumers wouldn't want to buy any. In between there's got to be a price where consumers want to buy as much as producers want to make.

Read the rest, and Caplan's challenge to his readers, here.

Sunday, September 20, 2009

Seeing Business Straight

The Economist has launched a new column on business and management. It's called "Schumpeter," named after the great economist Joseph Schumpeter.

An extract:

"Joseph Schumpeter was one of the few intellectuals who saw business straight. He regarded business people as unsung heroes: men and women who create new enterprises through the sheer force of their wills and imaginations, and, in so doing, are responsible for the most benign development in human history, the spread of mass affluence. “Queen Elizabeth [I] owned silk stockings,” he once observed. “The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort…The capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.” But Schumpeter knew far too much about the history of business to be a cheerleader. He recognised that business people are often ruthless monomaniacs, obsessed by their dreams of building “private kingdoms” and willing to do anything to crush their rivals."

Read the whole thing here.

Saturday, September 19, 2009

The Quotable Bastiat

Lorsque la Spoliation est devenue le moyen d'existence d'une agglomération d'hommes unis entre eux par le lien social, ils se font bientôt une loi qui la sanctionne, une morale qui la glorifie.

Chapitre I de la seconde série des Sophismes Économiques

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."

Economic Sophisms, Second Series, Chapter I

Wednesday, September 16, 2009

The Last Refuge

In 1775, the Englishman Samuel Johnson made the famous pronouncement, "Patriotism is the last refuge of a scoundrel."

Today, scoundrels can't rely on patriotism. It is too out of favor to provide much of a refuge.

Were the good Dr. Johnson alive today, he would most likely say "A charge of racism is the last refuge of a scoundrel."

Tuesday, September 15, 2009

Hiding Behind Racism

I just watched a network news report that made the astounding claim that any opposition to the agenda of President Obama is motivated by racism.

No less an authority than former President Carter confirmed the claim.

Nothing gets people on the defensive faster than the charge of racism. But the charge of racism doesn't stick this time around. People who oppose President Obama's agenda are not upset about his race. They are upset about his ideas.

Ideas deserve a full and serious debate. Bad ideas deserve the criticism heaped upon them. Really bad ideas try to hide behind something else.

Monday, September 14, 2009

The Lofty Legislature

"Government is not reason. It is not eloquence. It is force." George Washington

And, as this video of lofty legislative deliberation in Taiwan reveals, sometimes force doesn't have the patience to wait for reason or eloquence to finish.

Taken from a delightful tour of lofty legislative bodies around the world, found at "Hit and Run."

Sunday, September 13, 2009

Tire Threat

Pardon my ignorance, but I didn't go to Harvard.

Then again, you probably didn't, either.

So let's ask this question together: "What, exactly, is the threat to the country presented by Joe Sixpack buying cheap tires from China?"

Are we trying to make the United States tire-independent? Do we rely on too many foreign tires? Are we trying to close a tire-gap vital to national security?

The answers all point to one conclusion. The United States is imposing a 35% tax on Chinese tires for one reason and one reason only: to discourage Americans from buying cheap Chinese tires.

The Chinese are understandably miffed. They complain. So once again, we must witness the absurd comedy of Chinese communists lecturing the government of the United States on the importance of free trade.

Critics of the Chinese will no doubt argue that the Chinese aren't true believers in free trade, just political opportunists who want to use the rhetoric of free trade to sell their cheap products in our market.

To these critics any thinking man must respond, "Of course." Or, less politely, "Duh!" The beauty of free trade is that it turns self-interested human beings into other-interested human beings by appealing to their nearly ineradicable self-interest. How else could you possibly convince all those Chinese to make cheap tires for Joe Sixpack, a guy they will never meet and who lives in a place they will never visit?

The world only works as well as it does because so many people aim to satisfy themselves by satisfying the needs of others. When governments start trying to dam up and redirect the flow of mutually satisfying trade, they inject politics into private transactions, making trade policy a department of government located dangerously close to the department of defense.

Let's laugh about protecting America from cheap tires, and use ridicule to expose the nonsense of protectionism. We should also pray that this comedy does not turn into a tragedy. Trade wars have been known to start real ones.

Thursday, September 10, 2009

Serving the Needs of Others

You won't find the best video on your television anymore. It's on the web now, and among the best of the best is reason.tv.

Check out this video with Paul Zack of Claremont University. He says that trading is a fundamental human activity, and the act of trading is inherently social and inherently virtuous. Markets serve the needs of others.

Wednesday, September 9, 2009

Provincial Amateurism

"An example of the provincial amateurism of current White House operations was the way the president's innocuous back-to-school pep talk got sandbagged by imbecilic support materials soliciting students to write fantasy letters to "help" the president (a coercive directive quickly withdrawn under pressure). Even worse, the entire project was stupidly scheduled to conflict with the busy opening days of class this week, when harried teachers already have their hands full. Comically, some major school districts, including New York City, were not even open yet. And this is the gang who wants to revamp national healthcare?"

Camille Paglia writing in Salon

Monday, September 7, 2009

The Consequences of Destroying Wealth

A new study says the United States risks becoming another Argentina, a country that falls from first world to third world status through a series of self-inflicted, wealth destroying government policy mistakes.

Nobel prize winning economist James Buchanan has endorsed the study, saying "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work."

After a scathing review of US economic policy, the study concludes with the anticipation that "a return to the kind of laissez-faire capitalism that evolved so successfully throughout the last two decades of the twentieth century once again will enjoy majority support in the not-too-far-distant future once the electorate begins to suffer the severe economic downside of the Bush and the Obama administrations’ anti-capitalist policies."

Entitled "Economic Contractions in the United States: A Failure of Government," the study was prepared by Charles K. Rowley and Nathanael Smith, and is a joint publication of the Locke Institute in the US and the Institute of Economic Affairs in the UK.

You can download a pdf version of the complete study here.

Sunday, September 6, 2009

Bastiat and South Carolina

What is the connection between Bastiat, who I admire, and South Carolina, where I live?

Louisa S. McCord. She was one of the first American translators of Bastiat into English. She was also a South Carolinian.

Born in 1810 into a wealthy and politically powerful family in Charleston, Louisa received an extraordinary education for anyone of her time, male or female. At age ten, her father discovered her hiding behind a curtain during her two brothers' math lessons, where she had been taking notes and working out the problems herself. Impressed, her father resolved to educate her along with the boys. She eventually attended a girl's school in Philadelphia, and returned to South Carolina to pursue a life as a translator, writer, plantation manger, wife, and mother.

While living on Lang Syne, the family cotton plantation near Fort Motte, she translated Bastiat's Sophismes économiques into English. Her translation appeared in 1848 as Sophisms of the Protective Policy.

Her work included an introduction by her husband, who had encouraged her to undertake the translation, and a letter from Francis Lieber, Professor of Political Philosophy and Economy at South Carolina College in Columbia (now the University of South Carolina).

In 1849, the McCords built a house in Columbia. It still stands today at the same address, 1431 Pendleton Street, directly across the street from the campus of the old South Carolina College. During the Civil War, the College became an army hospital, and Louisa used her house as a kitchen to prepare meals for the patients.

Louisa was one of those curious ante-bellum Southern intellectuals who could argue for free trade and liberty on the one hand, and for the institution of slavery on the other. She was a fierce and unapologetic Southern patriot, even refusing to take the loyalty oath that the Federal government required at the end of the war.

She died in Charleston in 1879.

Louisa McCord's life is an example of the truth that remarkably good cultural memes travel remarkably strange and even paradoxical paths.

Saturday, September 5, 2009

The First Politicians

Politicians often sound more like prophets and messiahs than mere mortals.

This religious mimicry is no accident. The earliest politicians may have been the tribal shamans who promised their less gifted fellows some control over the mysterious and sometimes malevolent spirits that animated their world.

In The Evolution of God, Robert Wright says, "There is evidence that in shamanism lie the origins of formal politics. The Buryat of Asia told ethnographers that their first political leaders were shamans. And the Inuit words for 'shaman' and 'leader' are almost identical -- angakok and angajkok. Further, though there have been societies with shamans but no acknowledged political leader, there have been few if any societies with a political leader but no religious experts. And in some societies, the shaman and the political leader have been one and the same."

What does a good shaman do when his methods don't work? Sometimes his fellows murder him in their disappointment. Sometimes he is simply demoted. Sometimes he runs. Sometimes he hides. But most often, he blames his failure on another shaman, "like a modern politician who diverts attention from domestic failures by rattling the saber."

Thus, the Klamath shaman blamed the Modoc shaman,the Jivaro shaman in one village blamed the Jivaro shaman in a neighboring village, and the Democrats blamed the Republicans.

Friday, September 4, 2009

No Trouble Before Its Time

Entrepreneurs are born trouble makers. Sometimes the trouble they make is legal. Sometimes it's not. As they say in the American South, God bless 'em, they can't help it.

One thing is for sure. Like wine, they will make no trouble before its time.

Wednesday, September 2, 2009

Minimum Wage = Minimum Jobs

John Stossel explains the economic ignorance of the minimum wage.

New Video: Minimum Wage Brings Minimum Jobs - John Stossel's Take

Shared via AddThis