Let me open by saying I am an “old” (52) white guy, and if you live in a state that rigidly enforces age discrimination laws you probably think twice about hiring my ilk, and I don’t blame you. Thanks to the legislation put in place the incentives are stacked against me.
One of the essential worldview disconnects that economist Sowell cites in A Conflict of Visions is how one camp believes that motives and internal dispositions matter most, while the other believes incentives are what’s key.
“While the constrained vision takes people’s motives and predispositions as given, and emphasizes incentives to lead to socially desired behavior, the unconstrained vision attempts to change people’s motives and predispositions so that incentives in general are less important, whether in the economic marketplace or in the law. The unconstrained vision seeks a solution — in Condorcet’s words, ‘the reconciliation, the identification of the interests of each with the interests of all,’ so that the path of virtue is no longer arduous.”
What Sowell refers to as “internal dispositions” being primary to one group and “external incentives” to the other.
I believe a litmus test to discern those of the “internal dispositions” school is when you hear phrases like we should “draft our leaders” (so the “virtuous” people are put in charge,) or refer to swaths of politicians (usually members of the opposing camp…) as being “crooks”. The evidence is clear that men of high virtue put in power are presented with powerful incentives to bad things, and a significant percentage (most…) do so. How else do you describe the perpetual desire we have for “change” and the results described here? Gee, just an abnormally large set of “bad eggs” over generations?
Look at Charlie’s Rangel’s history. He’s a good guy. Regrettably, he was presented with a plethora of incentives over decades and those with the Tragic Vision are not surprised by what eventually resulted.
Recent research by Joanna N. Lahey of Boston College backs me up. To the unconstrained thinker, there is a problem: Age discrimination. There is also an obvious solution — make age discrimination illegal. Alert all the pure people of the world that this is a no-no, and they will understand and conform. To the constrained thinker (especially one who understands how real-world hiring goes) they know a reasonable person will act in their self interest, and think twice about hiring someone they can’t fire without probably ending up in a lawsuit:
(emphasis mine)
“Another study I conducted compares labor market outcomes of older people in states where it is easier to sue under age discrimination laws (those with local laws) to older people in states where it is not as easy (those without such laws).
White older men in states where it is easier to sue are less likely to be hired than such men in states where it is more difficult.
Overall, in states where it is easier to sue, older white men work fewer weeks per year than those in states where it is harder to sue. These findings suggest a story in which firms that are in states where it is easier to sue do not wish to hire older men, are afraid to fire older men, and remove older men through strong incentives to retire.”
If you read the whole report, you will see that Lahey qualifies this and says that enforcement is likely not the entire reason behind the difference in the data, just a factor.
Not the first example of the well-intentioned fostering a situation where they get the opposite of what they desired…
Most of my friends have patiently endured through my ongoing diatribes where I express dissent with the local politicians and misc. authoritarians who cheerfully embrace fees, taxes, and polices that all conspire to force the less financially fortunate from their cars. “Mobility Apartheid” has been my catch-phrase in these dialogs.
I didn’t realize how the Duke of Wellington aligned with the thoughts of local politicos until today. This from Harvard Design Magazine here.:
“In Great Britain, for instance, no less a personage than the Duke of Wellington, the victor over Napoleon at Waterloo, thought it a mistake to build railroads because they would ‘only encourage the common people to move about needlessly.’“
Sounds a lot to me like this from the Seattle Times:
“In a letter released this morning, the Federal Highway Administration told the state Department of Transportation that both bridges could be tolled…Tolls would rise and fall based on congestion or the time of day, with the goals of encouraging transit and reducing unnecessary trips.”
“The paradigm has to shift at some point,” said Bryan Stevens, spokesman for the Department of Planning and Development. ‘People will change their patterns as it becomes more difficult to drive and park. Then there’s a tipping point as transportation becomes easier to (access).'”
I find the following description of Wellington germane. This passage from the PBS special Napoleon at War describes him: “Tall, aristocratic, rather arrogant, disdainful, not an enormous amount of imagination, but totally unflinching…”
I know a real, live, person who used to enthusiastically offer up this jaw-dropping statement. (Really.) It came to mind immediately when I watched this high-I.Q., Harvard-educated scribbler essentially make the same (tearful) assertion in the clip below. Scroll to about 15 seconds from the end to see what I mean.
While I believe that funding Planned Parenthood is the right move, being moved to tears over the prospect of it losing a minority of its funding indicates a clear ignorance (or more likely — disregard) of what our founding fathers had in mind as the role of our government. I suspect it’s this disconnect that causes so much political rancor today.
Charity is no part of the legislative duty of the government. – James Madison
I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents. – James Madison
If we can prevent the government from wasting the labors of the people, under the pretense of taking care of them, they must become happy. – Thomas Jefferson
Heartless? Not at all (and not the point.) Charitable action by Government crowds out private charitable activity. It’s not like good stuff can’t happen if a government monopoly doesn’t take it over.
My friend Steve finds a good quote from Einstein. I’ve been cataloging many of the professor’s statements over the years, as they are useful when illustrating the profound limitations of “book smarts” — but had not run across this one. It’s a keeper:
“Common sense is the collection of prejudices acquired by age eighteen.”
My specific response is — “it’s true, many don’t outgrow the authoritarian collectivist visions of the freshman reading room” — But most do. This data from blog.okcupid.com:
How peoples attiudes evolve over time:
How that maps to party affiliation:
Bottom line, despite the tendency of many (a few of them are good friends of mine) to stay firmly rooted in the youthful utopian beliefs that characterize many left-leaning policies, most people get “mugged by reality” and migrate to what Sowell and Pinker call the “Tragic Vision.” Others just call these positions “realism.”
I feel fortunate that my professors helped me migrate early.
There’s a lot of discussion in the blogsphere regarding how Keynesian stimulus is proving to be politically impossible. They assertion is Keynesianism would work great, if only we had enough political courage to do it right. (“right” meaning spend WAY more than a measly 2.8 trillion.)
Krugman says (and Christina Romer agrees) that we just didn’t spend enough during the depression to fix the problem, and many feel the latest Obama stimulus program suffered from the same problem. The bottom line is punctuated by Alex Tabarrok who says:
So we have had two major cases that massively favored Keynesian economics but Keynesian politics failed both times. Not that this should be surprising, Keynes himself told us that his theory was more suitable to totalitarian regimes…
What I have not seen posted yet is anything about the Reagan tax cuts and the expansion of military spending during his administration. Since when are tax cuts not Keynesian? This from Edward Harrison at roubini.com:
So, was Ronald Reagan a libertarian who also appealed to populist anti-intellectuals and was pragmatic in economic decision-making and taxation? Or was he a closet Keynesian who presided over a large increase in government spending and used fiscal policy to steer the economy?
Sorry, but fiscal policy (tax cuts) and big spending (military) sure sound Keynesian to me. And America tends to embrace them. I think in the case of redistributionist Keynesianism, it’s inherently a harder sell. Defense is spending for the common good. Wall Street bailouts, “spreading the wealth around,” and cash for clunkers is not.
Oh, and just in case you weren’t around in the 80’s (or weren’t looking for work like I was), the positive effects of the Reagan stimulus were profound.
From the Economist:
“No one expects, say, a repeat of the blazing recovery of Reagan’s re-election year, when GDP rose by 7.2%.”
“But unlike the mild downturn of 2001, the 1981 version was severe, with soaring unemployment and plummeting output. The recovery, however, was quicker and more dramatic. Helped by big tax cuts, America boomed. In 1982-84, American domestic demand grew almost 15%, against less than 3% in Europe and 5% in Japan.”
The problem with Keynesian stimulus? It ‘aint cheap even when done right. You end up with deficits. Although these charts from an old post of mine makes the case for the Reagan approach as being more cost-effective.
Can anyone help me? I have been feeling bad about how people who defined themselves as “Progressive” and how they did so poorly on this test of “economic enlightenment.” Questions and results from the related survey are presented below.
I would assert that the survey was unfair as it tested what most would call “mainstream” economic thought. Should one who is on the vanguard of the latest in modern redistributive thinking really be compared to anything “mainstream”? I think not.
This problem is easily solved by the creation of a custom, formal, “Heterodox” school of economic thought. To the uninitiated, “Heterodox economics refers to approaches or to schools of economic thought that are considered outside of mainstream economics.” The cool thing is that you can adhere to just about any belief you want. For example, remember how during the first lecture of Econ 101 they punctuated how scarcity is a fundamental concept of economic thinking? Forget it! You can just adhere to the “Post scarcity” school and just wish it all away. Even Marxism is considered Heterodox! Imagine the legislation that could result if (even more of) our politicians saw our new school as accepted doctrine.
OK, so to change the “incorrect” answers listed below to “correct” ones we simply need to promote the following beliefs as being core to our “Progressives es non Bardus” School:
Restrictions on housing development make housing more affordable.
Mandatory licensing of professional services decreases the prices of those services.
Overall, the standard of living is lower today than it was 30 years ago.
Rent control leads to housing surpluses.
Third-world workers working for American companies overseas are being exploited.
Free trade leads to unemployment.
Minimum wage laws decrease unemployment.
To make it stick, we should find at least one study (preferably academic) that reinforces these positions. Frankly only one for each point is really needed. If we get into a “preponderance of evidence” trap, we’re hosed. I’ll get the ball rolling by solving number 7 for us.
Please get Googling and submit your solutions to 1-6 in the comments below. FYI, Krugman won’t be much help on #4, but he has a lot on #3 as I recall. 5 should be super-simple, just head over to dailykos.com.
Suggestion: in cases of price ceilings and floors, proof that supply and/or demand curves have zero or infinite elasticity can be really helpful.
One of my most favorite — and little-known — services for staying on top of the what’s being tweeted is cloud.li. It’s great for discovering prominent hashtags and emerging trends related to any topic. Just type in a phrase, and it provides a list of keywords and terms commonly used in conjunction with that phrase. It is only looking at the latest tweets, so for a hot topic it provides an ever-changing cloud.
As you can see in the screen shot below, I am currently trying to stay on top of what’s being said about the SXSW festival, and I’ve discovered that Robert Scoble is getting a lot of attention for his coverage of the service “hashable”. Also that the film “Square Grouper: will be featured at SXSW.
Not that the “What Me Worry” politicians will notice, but the march toward the inevitable, responsible, inexpensive rebuild-in-place scenario advocated by many (the one idea perpetually ignored by the politicians) seems to continue its progress.
Over the last few years, these forecasts had shown revenue was far less than previously thought; particularly in the area of gas tax collections, which greatly impacted the Nickel and TPA gas tax projects.
The board that has set the price of road and bridge tolls and ferry fares no longer has the authority to set them, Attorney General Rob McKenna’s office says, siding with Tim Eyman.
Under the voter-approved, Eyman-backed Initiative 1053, those fees have to go through the Legislature, according to an informal opinion the Republican attorney general’s office issued Monday.
Investors are panicky about losing their money in municipal bonds and have been calling their financial advisers for assurances since a recent “60 Minutes” TV show predicted massive bond defaults by local governments over the next 12 months.
At 705 days in office, Obama’s approval rating (Gallup — national adults) runs at 47% (and rising!) Reagan at the same point in time was at 37% (and dropping.) Given Obama’s ten point “head start”, who wants to bet against me? I’ve got $100 that says Reagan ends up ahead of Obama at the end of his/their respective first term. Let’s call the finish line day 1384.
To sweeten the pot, how about this easy bet. I bet that whatever Republican finalist runs in the next general presidential election carries at least twice the number of electoral states against Obama that Reagan’s opponent did against him in the 1984 election. (do your research here…)
FYI. If Obama is not the democratic nominee, I win.
Sat next to a very nice and talented artiste/wordsmith at dinner tonight. In addition, this person was also a big fan of Michael Moore. As one could expect, the usual paradoxical inverse relationship between hours spent in academic/formal study of Macroeconomic theory and strength/rigidity of position on optimal resource allocation shone brightly.
As one could anticipate, we discussed the compelling urgency to heavily tax owners (and heirs of owners) of McDonald’s franchises because of the indiscretions of Wall Street Bankers. Along with this came the utter denial that market actions are significantly driven by financial incentives.
One priceless assertion intended to prove this was that in (highly successful) China, “the compensation is limited” — you can’t become a billionaire like you can in the U.S. This was supposed to serve as proof that very high pay there creates the same level of economic incentives as astronomical pay does here. The implication was that the resulting “surplus” money can go to proper things that fall under the heading of “cosmic justice” — like a strong social safety net.
The problem? In the real world, China is second only to the U.S. in number of billionaires. While it may be true somewhere in Bizarro world where all other things being equal compensation is irrelevant to decision-making, apparently we don’t have that real-world test case yet in Beijing.
“According to Eswar Prasad, an economist at Cornell University, the saving rate of urban households has jumped from 20% to 28% of their disposable income over the past decade. After exploring all the possible causes, he concludes that uncertainty about the private burden of health care and education is indeed the main culprit.”
Social Security?
“….the total amount remains low at only 6% of GDP, compared with an average of around 25% in OECD countries.”
Not to mention “alarming” wealth inequality. Amazingly, that hasn’t held them back from staggering economic growth. Based on this, some might take the irresponsible and fantastical leap to infer that a lighter governmental load could be beneficial to productivity, or that crowding out actually exists.
Note that government spending by China occupies only 20% of GDP, while the economically stagnant OECD averages more than double that.
To cap it off, I was rigorously contested when tried to counter the myth that Dr. Pepper contains prune juice (it doesn’t).
Most of my friends have patiently endured through my ongoing diatribes where I express dissent with the local politicians and misc. 
Not that the “What Me Worry” politicians will notice, but the march toward the inevitable, responsible, inexpensive rebuild-in-place scenario advocated by many (the one idea perpetually ignored by the politicians) seems to continue its progress. 
At 705 days in office, Obama’s 
Sat next to a very nice and talented artiste/wordsmith at dinner tonight. In addition, this person was also a big fan of Michael Moore. As one could expect, the usual paradoxical inverse relationship between hours spent in academic/formal study of Macroeconomic theory and strength/rigidity of position on optimal resource allocation shone brightly.