Olympic Games And Venture Capitalists

Steven Landsburg is making a sharp observation, as he often does:

By contrast, as a venture capitalist, Romney was in the business of creating wealth, not just redistributing it. You create wealth when you nurture firms that survive by fulfilling consumer demand in ordinary (non-tournament) competitive markets. You create wealth when you shut down firms that are swallowing more resources than their output is worth. You especially create wealth when you innovate — whether that innovation takes the form of new technologies or new patterns of trade. You create wealth for consumers when you outsource jobs to more efficient producers.

It’s sadly ironic, then, that Romney is being touted as a hero for his socially wasteful years at the Olympics and a villain for his socially productive years as a capitalist. Should we blame the schools?

Read the full text for a fleshed out argument.

Oversized as it is likely to be, I will certainly enjoy the coming Olympic overdose.

Andra intressanta bloggar om: politik, os, usa, mitt romney, ekonomi

Sharing The Tax Burden

Steven Landsburg has written an excellent post, in which he explains why it’s difficult to honestly describe Mitt Romney’s tax plan as redistributing money from the poor to the rich. In fact, both his and President Obama’s plans are highly progressive.

I found this particular bit worth pondering:

Note, for example, that, contrary to the impression you might have gotten from Klein’s and Krugman’s posts, both plans place the highest percentage burden on the top 1%, and both plans place a negative burden on the middle quintile — though Obama’s does both of these things to an ever-so-slightly greater extent than Romney’s does. There’s room for disagreement about which plan is fairer, but no room, I think, for disagreement about which chart is relevant.

What I find interesting is the bit about the middle quintile. What it says is that the median income earner is receiving more in transfers than she pays in taxes. I find this problematic, as it increases the risk of making the state a tool for extracting resources from those that have earned them, rather than a vehicle for solving collective problems. Obviously, in practice, I am skeptical about the state’s ability to do the latter well, but it is important that such a thing remains the ambition, as it is otherwise difficult to justify giving up such tremendous power.

I fear that a government that is paid for by ever fewer will become more dysfunctional, as well as more tyrannical. It will narrow its focus to how the pie should be divided, encouraging voters to fight for a bigger slice, while ignoring the bakers. It is difficult to say whether it is currently a reason for why the U.S. government is functioning less well than usual, but I predict that it will be of growing importance.

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A Beautiful Defense

Russ Roberts, of EconTalk fame, has written a wonderful defense of small governent, resting on the respect of others and humility in light of the difficulty of knowing the desires and dreams that they hold dear. I urge you to read it in its entirety.

The first few paragraphs:

A fan of liberty writes me of her struggle of being surrounded by people with a different world-view–people who make her feel that in defending liberty, she is greedy, selfish, and uncaring. I wrote a novel on this issue–here’s a shorter answer…

Are you greedy, selfish, and uncaring? A little. We all are. Even people who oppose liberty. But I don’t think self-interest explains your view of the proper role of government intervention.

But it’s not surprising that you worry about your motives. In our daily interactions, motives are nearly everything. I want friends and family that care about me and whose motives count me in, alongside their own concerns.

So we pay a lot of attention to motives because they’re important. But the motives of strangers are much less important. For starters, by definition, it is hard to know strangers as well as my friends and family. So their motives will be much harder to read. But there is a much worse problem which is that by definition, strangers don’t have much information or knowledge of my needs, desires, and dreams. They can’t. They’re strangers. It’s hard enough for my friends and family to know me well. But strangers can’t know me well. So even with the best of motives, they may not be able to help me. In fact, they may end up hurting me despite their motives. We know that we sometimes hurt our friends and family even with the best of motives because of our imperfect knowledge of who they are.

This suggests a humility for intervening in the lives of strangers.

It is out of a fundamental respect of the humanity of others that we must let them make their own decisions, even if we disagree with them or believe they will come to regret them. Indeed, even if, in fact, they will come to regret them.

Yes, there are exceptions. But we must try to keep the insight of Roberts’s text at the front of our minds, while discussing how to handle them.

Andra intressanta bloggar om: politik, ideologi, liberalism

Not Taking It Slowly

Via Tyler Cowen, I stumbled upon this rather sad story:

In the United States, many lament that it takes students too long to graduate. In Germany, the School of Economics and Management in Essen is suing Marcel Pohl, for $3,772 that the institution lost in tuition revenue when he finished a bachelor’s degree and a master’s degree in 3 semesters, not the 11 that would have been expected, UPI reported. The university declined to comment. Pohl said, “When I got the lawsuit, I thought it couldn’t be true. Performance is supposed to be worth something.”

Most countries in the Western world are burdened with demographic changes that will put pressure on public retirement funds, as the population ages. Simply put, in the absence of a growth miracle, we will need to work more in order to cover our collective promises.The standard solution, unpopular but necessary, is gradually raising the retirement age. The quoted story suggests another option: having people graduate faster.

Not everyone can earn a master’s degree in three semesters, but surely Mr Pohl’s example reveals that very few should need eleven?

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The ACA Decision

Since my grasp of U.S. constitutional law is limited, to say the least, I will refrain from offering any particular opinion on the legal reasoning. Outside of that, I mostly agree with Tyler Cowen’s post on the subject. In particular, I think one has to recognize the truth in the quote below, unfortunate as it may be.

I think that plenty of what our government does is unconstitutional; just remember back to when an amendment was considered necessary for “The War against Alcohol”.  But I’ve also long considered health care policy a matter to be settled by the legislature not the courts.  Those are the modern rules of the game, for better or worse, and all along I have thought that trying to live outside those rules was a fool’s errand of sorts.

Andra intressanta bloggar om: politik, usa, juridik, sjukvård, aca

A Reason For Pessimism

Tim Black:

No, the pursuit of tax avoiders is not motivated by economic insight, but moralising ire. And as such it is indicative, not to mention an indictment, of the pre-political impulse which has prevailed throughout the response to the economic crisis. There has not been an attempt to get to grips with the systemic reasons why the economy is in the grip of a seemingly interminable malaise. Instead, there has been an eagerness to find individuals to blame, motives to single out, behaviour to condemn. It’s the bankers, it’s greed, it’s risk-taking… the litany of blame is so familiar now that some even think it’s true. As Brendan O’Neill has argued, this tendency to blame individual behaviour for social and political crises has a long history, from Nero’s fiddling and grape-eating self-indulgence as Rome burned to Marie Antoinette’s cake-eating as absolutist France collapsed.

The hunt for a scape goat, while human, is not helpful in finding a good path to travel, and will create frustration and anger amongst disoriented people across the continent. The long-term way out of mountains of public debt must surely lie in wealth-creating reforms; finding ways to improve economic growth is paramount. And yet, we hear very few of those claiming to be fit for leadership talking in those terms. Instead, they rail against greedy banks, corrupted and lazy southern Europeans, or insensitive and heartless Germans.

That truly is a reason to be pessimistic.

Andra intressanta bloggar om: politik, ekonomi, eu, skuldkrisen, ledarskap

The Essense Of Blogging

According to Felix Salmon, it is not about creating new ideas. Rather, it is about sharing intersting things with your readers, and hoping perhaps that that in turn will be the spark for new ideas.

Firstly, think of it as reading, rather than writing. Lehrer is a wide-ranging polymath: he is sent, and stumbles across, all manner of interesting things every day. Right now, I suspect, he files those things away somewhere and wonders whether one day he might be able to use them for another Big Idea piece. Make the blog the place where you file them away. Those posts can be much shorter than the things Lehrer’s writing right now: basically, just an excited “hey look at this”, with maybe a short description of why it’s interesting. It’s OK if the meat of what you’re blogging is elsewhere, rather than on your own blog. In fact, that’s kind of the whole point.

Secondly, use links as shorthand. Kouwe and Lehrer were both brought down by the fact that they felt the need to re-write what had already been written elsewhere. On the web, you never need to do that. If you or someone else has already written something well, just link to that, rather than feeling the need to repeat it.

Thirdly, use the blog to interact with your peers, rather than just primary sources. There are hundreds of great science and ideas blogs out there already; start reading them, and be generous about linking to them. Your readers will thank you. When you see an article you wish you’d written, link to it and say so. When someone finds a fantastic paper and writes it up in a slightly incomplete way, credit them with the great find, and then fill in the blanks. When two or three people are all talking about the same thing, sum up what the debate is, and explain where you stand.

Fourthly, iterate. Lehrer is a big-name journalist at a major publication: when he writes stuff, people respond, often on their own blogs, and often with very keen intelligence. Link to those people, learn from them, converse with them via the medium of blog, and use that collaboration and conversation to hone and further develop your own ideas. Treat every blog post as the beginning of a process, rather than as the end of one.

There is wisdom there. I find that a good blog post can often fire up the mind, perhaps because the texts are often not long enough to dig deep, yet sufficiently detailed to send you off in some direction or another.

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Recommended Reading: McCloskey On Government And Markets

Via Alex Tabarrok, today’s must read is Deirdre McCloskeys marvellous text about a false belief that has become standard fare. A small excerpt:

The importation of socialism into the Third World, even in the relatively non-violent form of Congress-Party Fabian-Gandhism, unintentionally stifled growth, enriched large industrialists, and kept the people poor.  Malthusian theories hatched in the West were put into practice by India and especially China, resulting in millions of missing girls.  The capitalist-sponsored Green Revolution of dwarf hybrids was opposed by green politicians the world around, but has made places like India self-sufficient in grains.  State power in many parts of sub-Saharan Africa has been used to tax the majority of farmers in aid of the president’s cousins and a minority of urban bureaucrats.  State power in many parts of Latin America has prevented land reform and sponsored disappearances.  State ownership of oil in Nigeria and Mexico and Iraq was used to support the party in power, benefiting the people not at all.  Arab men have been kept poor, not bettered, by using state power to deny education and driver’s licenses to Arab women.  The seizure of governments by the clergy has corrupted religions and ruined economies.  The seizure of governments by the military has corrupted armies and ruined economies.

I urge you to read the text in its glorious entirety.

Markets fail, it is true. Relatively often even, against the standard of full efficiency. But so do governments, not seldom with severe consequences; often by stifling innovation which means that we cannot know what we have lost, sometimes, catastrophically, with mistakes leading to the oppression — and even deaths — of many.

Again, read the whole thing.

Andra intressanta bloggar om: politik, ekonomi, utveckling

More On Bloomberg’s Soda Ban

Paternalism of the Bloomberg soda ban kind gets my blood boiling like few other things — perhaps because of its combination of pettiness and arrogance — and I wrote about it a little while ago. In part, the NYC mayor, has rested his arguments on studies conducted by Brian Wansink and David Just. They are not at all pleased:

On June 1 — National Donut Day — New York City’s mayor proposed a restaurant ban for any soft drink over 16-ounces. The hope is that by banning big drinks people will drink less and weigh less. He and others cited our research as the science behind the policy. Indeed, a dozen of our studies show when you randomly give people large sizes of food like popcorn and French fries, they overeat. Another of our cited studies showed that people ate 73 percent more soup when eating from a soup bowl that secretly refilled itself.

There’s a critical difference between the lab and Lexington Avenue that the mayor’s office didn’t account for: when Joe the Plumber and Bob the Banker buy soft drinks, they buy the size they want. They aren’t randomly forced to take a 44-ouncer when they really wanted a 12-ouncer. Moreover, their Coke or Pepsi doesn’t magically refill itself. If that happened, they’d overdrink. Instead, most restaurants give us a choice of a small or large drink — just as nearly every fast food outlet gives us a choice of small, medium, or large fries, and every movie theatre gives us a choice of small, medium, or large popcorn. People who want a little buy a little, and people who want a lot figure a way to get it.

Yes, we have found that when people are given larger portions, they do drink or eat substantially more. But to claim that these results imply that the ban will be effective is to ignore our larger body of work. In our experiments, subjects were given larger or smaller portions of food in a dining or party setting, where they were unlikely to notice portion size. It is exactly because participants weren’t paying attention that we got the results we did.

Not only is the ban an unjust restriction of liberty, and unvirtuous attack on low-status people. It is also highly unlikely to be effective at achieving its stated aims.

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