I'm a libertarian sort, but I'm an economist and a policy analyst, so I can go along with this.
Of course, Mike Farmer also has a point, who gets to decide what counts as a market failure? Too many people seem to use to word to mean "outcome I dislike", rather than the more technical definition used by economists.
I would also raise the concept of government failure, the counterpart to market failure. There are some things governments (or at least the kinds of governments we have) just can't do very well. In some cases this leads to government action aggravating problems with the market rather than ameliorating them. Would you agree in principle to using constitutional restraints to prevent governments from engaging in activities that lead to the more egregious government failures?
Why do so many businesspeople try to smooth out all of the edges that make their product unique? Does the watered-down version ever sell more?
I suspect they remember hearing during their MBA programme that the number and size of niches a market can sustain depends on the market's size (all things being equal). They thus conclude that if the market is shrinking a magazine has to head toward the mainstream to survive.
The problem is that all things aren't equal. What the internet has done is evaporate demand for magazine that hold mild interest for people. If you're only slightly interested in something, you can find stuff on the internet. To get people to actually part with money for content these days, it has to be content you can't get free, or content that really interests you. That means if you're going to change your magazine's content, it should be away from generic stuff they can get anywhere, and toward highly specialised or premium content that you're sure your subscribers will like.
And what would have happened if the US hadn't entered WWI? Sure Britiain would probably have lost the war, but why is that so terrible? Britain wasn't in the right in that war, no one was. It was a stupid war without even hypothetical merits, and the US prolonged the stupidity by joining in.
And I say this as someone whose country was still part of the British Empire at the time. Hell, if the war had ended sooner it would have given English officers less of a chance to kill my countrymen with their incompetence.
Oddly enough, when I first read about the Wikileaks dump the first Omar quote jumped to mind pretty quickly.
I agree with your general sentiment for a couple of reasons:
1) In The Myth of the Rational Voter, Bryan Caplan made what I thought was a pretty convincing case that deception is a fundamental part of democratic politics. Basically voters want certain policies and certain outcomes, but the policies they want won't lead to the outcomes they want. So a politician either has to A) tell voters they won't implement the desired policies (in which case they won't get in), B) give voters the desired policies at the expense of the desired outcomes (they get voted out), or C) tell voter's they'll implement the desired polices but actually implement as few of them as possible. I know this model to be true in economics, and I suspect it may be true in diplomacy as well. Deception requires secrecy, so yes you need to be able to hide some things from the public. The tricky part is working out what the government should be able to hide.
2) There's a huge difference between information and data. Information is data given context, by providing structure and filtering out irrelevant details. Raw data is useless to people without the specialist skills needed to interpret it. To switch TV shows for a moment, in Yes Minister when Sir Humphrey wanted to keep hacker in the dark, he'd give him as few papers as possible. When Hacker complained, Humphrey would respond by giving Hacker as many papers as possible. With so much raw data at his disposal, Hacker couldn't figure out what was going on. By releasing all the cables without offering context, Wikileaks didn't inform the public, they just data dumped. Now perhaps Wikileaks was counting on the MSM to the the interpretation work for them, but I thought the idea behind Wikileaks was that the MSM couldn't be relied on for this work.
Ah, that's quite different to what I was thinking you meant. Perhaps I'm just overly cynical, but when you mentioned community action I assumed you mean the community should "do something" about poor schooling, not actually do somethingabout it. What you're describing is just the sort of experimentation we need more of.
I agree that merely letting different people own traditional schools isn't enough. People need to be free to try all sorts of things, the only way to figure out what works is to try it and see. Theory can help identify promising targets, but there's no substitute for collecting real data.
I do think that "the parents matter" is, while true, a bit of a cop out. It's true that the current educational model produces good outcomes in favourable conditions, but that's not saying much. The real trick is to work out how to produce good, or at least adequate, education under unfavourable conditions. That's hopefully what we'll find out by having people try out new educational models.
But these problems aren't being solved by community action now. How does chaining people to their school district help?
And furthermore, why would you expect community action to solve the problem of improving malfunctioning schools? Democracy isn't a problem-solving tool, if you want to solve a complex problem (and any human problem is complex) you experiment, try some new solutions and see if they work. Then you can replicate and try to generalise the results.
The best thing a school choice regime could do would be to allow schools to try different techniques and see how you take poorly performing schools and make them work. Because right now we don't know how to do that.
While how much of the debt is foreign doubtless matters, I think debt to income matters most of all. I can only see this ratio increasing for the US, and that will ultimately result in higher interest rates, leading to extreme fiscal stress.
Yes, size of government is not a one-dimensional variables. Will Wilkinson noted that if you take government spending out of the Heritage Foundation's index of economic freedom, Denmark has the freest economy on Earth.
Personally I consider central economic planning to be the defining characteristic of socialism. A country that partially directs its economy by balancing the demands of interest groups but doesn't centrally plan, should more properly be referred to as corporatist, not socialist.
I'm OK with the government taking 12 months or so to get over the recession before starting austerity, and I don't mind them taking it slow to begin with either. So I think we're in agreement there.
Where we disagree is:
1) I don't see any reason to be optimistic about your government's behaviour. HCR in its current form won't help and may actually do fiscal harm. I'll believe austerity when I see it.
2) While the US is the bank of the world to all those export driven countries (and just for the record I don't think they're all that awesome, trade is good no matter whether you're a net exporter or a net importer), my contention is that status relies on a reputation for stability that the US will lose if its fiscal position continues to deteriorate. When that happens, interest rates will rise sharply, and then bad things start happening.
Unfortunately, I'm not very familiar with American data sources. It's one of those things I read a while back and I'm having difficulty finding it now.
As to the first point, my understanding is that healthcare costs and other benefits square the circle, wages aren't rising because the non-wage parts of the benefits package are becoming more expensive.
As to the second point, it depends on what you mean by fair. If you define fairness by outcomes, then there are an infinite number of possible definitions of fair, and the market can satisfy one of them at most. However, I would suggest that if you want to change the market's allocation it would be better to use direct transfers rather than meddle with the market directly by imposing price or wage controls.
If you're talking about procedural equity, I'm willing to defend the market, subject to qualifications. In the absence of market failures the market will deliver allocatively efficient results, and that means the best outcomes. If there are market failures, I'm willing to consider market interventions, provided they are run through a robust policy process.
Disentangling all the transfer effects is really quite difficult. Income tax is progressive but excise taxes on alcohol and tobacco are regressive, as is the Social Security tax and most tariffs. Plus, the mortgage income tax credit benefits home owners, who are wealthier than the average person, and Medicare benefits old people, who are richer than the average person too (though their wealth is disproportionally higher than their income). Then you have welfare which pushes back in the other direction. I wouldn't care to speculate as to the effects of corporate tax breaks on income distribution.
Since Friedman knew your system better than I do, I'll go with him and say the middle class are net beneficiaries. This is not a good idea since the middle class are your revenue base, so you can't make them net beneficiaries and balance the budget (at least not without great difficulty).
If that were true then all workers would be paid the minimum wage, which they aren't. If there's someone out there who can do your job and is willing to do it for half the pay, then you have no right to be paid more than that. Everything is worth what it's purchaser will pay for it (just so long as someone is willing to sell it at that price), its true of commodities, and consumer goods, and labour.
From what I've read, wage and salaries for middle and lower income people in the US may be static, but total compensation isn't. In other words, what's happening is that all of the salary gains accruing are being consumed by rising health care costs. If you want to see a return to rising wages in the US, I would recommend having someone in charge fix your healthcare system, and by fix I don't mean "take all the problems and make them worse" like Obama just finished doing.
But the more debt you have, the less control you have over your currency. The thing is that the scenario you outline only holds while the US is looked upon as the safe option for debt. But if your debt level gets high enough then sovereign default will start to look like a possibility, and once you get there the international response to a recession will be to flee away from the US, not flee toward it. It can happen very quickly, one moment everything looks fine, then suddenly you're trying to find enough ice flows to put your old people out on, and working out if you can get your soldiers abroad home before you run out of fuel for the transport ships.
At some point you run out of money to borrow, either because no one will lend it to you or because you can't afford the interest. That day is coming, and within our lifetimes unless your government starts reforms.
Ultimately it's a matter of mathematics. Your government can't go on spending like it is, so barring something miraculous happening it will have to stop. It can cut back now and spread the pain across a many people and a long time, so it it felt left, or sometime in the 2030s it can engage in emergency austerity and hurt a lot of people. Furthermore when the crunch comes it will most likely happen in a recession because that's when government revenues are under the most stress.
On “What Can’t Congress Do Now?”
I'm a libertarian sort, but I'm an economist and a policy analyst, so I can go along with this.
Of course, Mike Farmer also has a point, who gets to decide what counts as a market failure? Too many people seem to use to word to mean "outcome I dislike", rather than the more technical definition used by economists.
I would also raise the concept of government failure, the counterpart to market failure. There are some things governments (or at least the kinds of governments we have) just can't do very well. In some cases this leads to government action aggravating problems with the market rather than ameliorating them. Would you agree in principle to using constitutional restraints to prevent governments from engaging in activities that lead to the more egregious government failures?
"
No, Nixon discontinued it because Friedman convinced him it was a bad idea.
On “Pushing through the market square, so many mothers sighing…”
On “Links from the Blogroll”
Bieber!?
I never believed it before, but now I'm compelled to, drug lords really are evil.
On “Wednesday’s Words of Wisdom”
And what would have happened if the US hadn't entered WWI? Sure Britiain would probably have lost the war, but why is that so terrible? Britain wasn't in the right in that war, no one was. It was a stupid war without even hypothetical merits, and the US prolonged the stupidity by joining in.
And I say this as someone whose country was still part of the British Empire at the time. Hell, if the war had ended sooner it would have given English officers less of a chance to kill my countrymen with their incompetence.
On “No, You Can’t Call Your Strip Club the NY Pubic Library”
Damn, not only beaten to the punch, but yours is better too.
"
A martial arts or boxing club called the School of Hard Knocks (do Americans use that expression?).
I also have a real-world example, there's a bar in Wellington called The Library.
On “Wikileaks on The Wire”
Oddly enough, when I first read about the Wikileaks dump the first Omar quote jumped to mind pretty quickly.
I agree with your general sentiment for a couple of reasons:
1) In The Myth of the Rational Voter, Bryan Caplan made what I thought was a pretty convincing case that deception is a fundamental part of democratic politics. Basically voters want certain policies and certain outcomes, but the policies they want won't lead to the outcomes they want. So a politician either has to A) tell voters they won't implement the desired policies (in which case they won't get in), B) give voters the desired policies at the expense of the desired outcomes (they get voted out), or C) tell voter's they'll implement the desired polices but actually implement as few of them as possible. I know this model to be true in economics, and I suspect it may be true in diplomacy as well. Deception requires secrecy, so yes you need to be able to hide some things from the public. The tricky part is working out what the government should be able to hide.
2) There's a huge difference between information and data. Information is data given context, by providing structure and filtering out irrelevant details. Raw data is useless to people without the specialist skills needed to interpret it. To switch TV shows for a moment, in Yes Minister when Sir Humphrey wanted to keep hacker in the dark, he'd give him as few papers as possible. When Hacker complained, Humphrey would respond by giving Hacker as many papers as possible. With so much raw data at his disposal, Hacker couldn't figure out what was going on. By releasing all the cables without offering context, Wikileaks didn't inform the public, they just data dumped. Now perhaps Wikileaks was counting on the MSM to the the interpretation work for them, but I thought the idea behind Wikileaks was that the MSM couldn't be relied on for this work.
On “The War on the Poor”
Ah, that's quite different to what I was thinking you meant. Perhaps I'm just overly cynical, but when you mentioned community action I assumed you mean the community should "do something" about poor schooling, not actually do somethingabout it. What you're describing is just the sort of experimentation we need more of.
I agree that merely letting different people own traditional schools isn't enough. People need to be free to try all sorts of things, the only way to figure out what works is to try it and see. Theory can help identify promising targets, but there's no substitute for collecting real data.
I do think that "the parents matter" is, while true, a bit of a cop out. It's true that the current educational model produces good outcomes in favourable conditions, but that's not saying much. The real trick is to work out how to produce good, or at least adequate, education under unfavourable conditions. That's hopefully what we'll find out by having people try out new educational models.
"
But these problems aren't being solved by community action now. How does chaining people to their school district help?
And furthermore, why would you expect community action to solve the problem of improving malfunctioning schools? Democracy isn't a problem-solving tool, if you want to solve a complex problem (and any human problem is complex) you experiment, try some new solutions and see if they work. Then you can replicate and try to generalise the results.
The best thing a school choice regime could do would be to allow schools to try different techniques and see how you take poorly performing schools and make them work. Because right now we don't know how to do that.
"
I suspect Ed meant the US locks up more people per capita than any other country.
On “Anonymous preparing for new Wikileaks effort”
Time to play whack-a-mole.
On “Does Obama Lack a Sense of Irony?”
It's been done.
On “The People Have Spoken: We Need to Spend More on Foreign Aid”
While how much of the debt is foreign doubtless matters, I think debt to income matters most of all. I can only see this ratio increasing for the US, and that will ultimately result in higher interest rates, leading to extreme fiscal stress.
"
Yes, size of government is not a one-dimensional variables. Will Wilkinson noted that if you take government spending out of the Heritage Foundation's index of economic freedom, Denmark has the freest economy on Earth.
Personally I consider central economic planning to be the defining characteristic of socialism. A country that partially directs its economy by balancing the demands of interest groups but doesn't centrally plan, should more properly be referred to as corporatist, not socialist.
"
I'm OK with the government taking 12 months or so to get over the recession before starting austerity, and I don't mind them taking it slow to begin with either. So I think we're in agreement there.
Where we disagree is:
1) I don't see any reason to be optimistic about your government's behaviour. HCR in its current form won't help and may actually do fiscal harm. I'll believe austerity when I see it.
2) While the US is the bank of the world to all those export driven countries (and just for the record I don't think they're all that awesome, trade is good no matter whether you're a net exporter or a net importer), my contention is that status relies on a reputation for stability that the US will lose if its fiscal position continues to deteriorate. When that happens, interest rates will rise sharply, and then bad things start happening.
On “FBI informant promoted terrorism at mosque”
Yes, and no.
On “The People Have Spoken: We Need to Spend More on Foreign Aid”
Unfortunately, I'm not very familiar with American data sources. It's one of those things I read a while back and I'm having difficulty finding it now.
"
As to the first point, my understanding is that healthcare costs and other benefits square the circle, wages aren't rising because the non-wage parts of the benefits package are becoming more expensive.
As to the second point, it depends on what you mean by fair. If you define fairness by outcomes, then there are an infinite number of possible definitions of fair, and the market can satisfy one of them at most. However, I would suggest that if you want to change the market's allocation it would be better to use direct transfers rather than meddle with the market directly by imposing price or wage controls.
If you're talking about procedural equity, I'm willing to defend the market, subject to qualifications. In the absence of market failures the market will deliver allocatively efficient results, and that means the best outcomes. If there are market failures, I'm willing to consider market interventions, provided they are run through a robust policy process.
"
Disentangling all the transfer effects is really quite difficult. Income tax is progressive but excise taxes on alcohol and tobacco are regressive, as is the Social Security tax and most tariffs. Plus, the mortgage income tax credit benefits home owners, who are wealthier than the average person, and Medicare benefits old people, who are richer than the average person too (though their wealth is disproportionally higher than their income). Then you have welfare which pushes back in the other direction. I wouldn't care to speculate as to the effects of corporate tax breaks on income distribution.
Since Friedman knew your system better than I do, I'll go with him and say the middle class are net beneficiaries. This is not a good idea since the middle class are your revenue base, so you can't make them net beneficiaries and balance the budget (at least not without great difficulty).
"
I'm pleasantly surprised by European austerity, I figured they wouldn't do anything until their fiscal situation was totally untenable.
"
If that were true then all workers would be paid the minimum wage, which they aren't. If there's someone out there who can do your job and is willing to do it for half the pay, then you have no right to be paid more than that. Everything is worth what it's purchaser will pay for it (just so long as someone is willing to sell it at that price), its true of commodities, and consumer goods, and labour.
From what I've read, wage and salaries for middle and lower income people in the US may be static, but total compensation isn't. In other words, what's happening is that all of the salary gains accruing are being consumed by rising health care costs. If you want to see a return to rising wages in the US, I would recommend having someone in charge fix your healthcare system, and by fix I don't mean "take all the problems and make them worse" like Obama just finished doing.
"
But the more debt you have, the less control you have over your currency. The thing is that the scenario you outline only holds while the US is looked upon as the safe option for debt. But if your debt level gets high enough then sovereign default will start to look like a possibility, and once you get there the international response to a recession will be to flee away from the US, not flee toward it. It can happen very quickly, one moment everything looks fine, then suddenly you're trying to find enough ice flows to put your old people out on, and working out if you can get your soldiers abroad home before you run out of fuel for the transport ships.
At some point you run out of money to borrow, either because no one will lend it to you or because you can't afford the interest. That day is coming, and within our lifetimes unless your government starts reforms.
"
Ultimately it's a matter of mathematics. Your government can't go on spending like it is, so barring something miraculous happening it will have to stop. It can cut back now and spread the pain across a many people and a long time, so it it felt left, or sometime in the 2030s it can engage in emergency austerity and hurt a lot of people. Furthermore when the crunch comes it will most likely happen in a recession because that's when government revenues are under the most stress.
On “The Future of Screen Technology”
Or maybe by then we'll have sped up our brains to match our tech. Then we can be fast and relaxed.
*Comment archive for non-registered commenters assembled by email address as provided.