Life would be better if more people understood this

Here’s a great post from Don Boudreaux at Cafe Hayek on the nature of wealth and politics.

In it, he criticizes the all too typical, and wrong, view that wealth is a fixed pie and why the concern that the wealthy use their wealth for political influence is a good marker for someone who seems oblivious to root cause thinking.

Here’s a snippet on the second point:

…Mr. Reich fails to connect the dots by complaining that the rich spend more and more of their wealth in the political arena.  What else to expect when that arena becomes ever more central to Americans’ daily lives and, simultaneously, becomes ever more crowded with redistribution-mongers (such as Mr. Reich) whose squeals to soak the rich grow louder and harsher?

Folks like Mr. Reich think that the solution to their perceived problem of politically powerful wealthy is a more powerful government. But, a more powerful government just raises the stakes for the wealthy to use that power to their advantage.

In other words, without a powerful government, the wealthy could not be politically powerful. The problem is not the wealthy gaining political influence. The problem is that with a powerful government there will always be unsavory characters seeking to gain that power for their own good.

Think about the plot line of every movie where that has an object with immense powers. There’s always a fight between multiple groups, good and bad, to get the object so they can use its power to their advantage.

The problem in Reich’s thinking is that he cannot fathom a limited power government. He wants a powerful government, but he just wants to somehow (through even more power for the government) restrict the holders of its powers to people who think like him.

He doesn’t realize that’s a self-fulfilling prophecy. The more power we bestow on the government, the more likely there will be unsavory people seeking to control that power.

“Government employees produce nothing”

Kansas Congressman, Ray Merrick, is catching some flak for saying those words. He also said “They are a net consumer.”

Salon.com typifies the criticism of Merrick’s comments in the subtitle of its piece:

Kansas Republican Ray Merrick shows off his breathtaking ignorance.

Brandon O’Dell, commenting on this Merrick piece in Kansas City’s alternative newspaper, The KC Pitch, gets it. He wrote:

You don’t have [to have] the most basic understanding of economics to even comprehend that what Merrick said is factually accurate. The government does not “produce” anything, unless we all woke up this morning to a communist takeover whereas the government now owns the means of production? What he said is 100% true. The government does not take raw materials and labor and combine them to create goods or services that have a net value greater than the cost of making them. That is “production”. Unless you are in the business of making goods or services that can be sold for a profit, you are not a “producer”. Not a tough concept.

What he DIDN’T say is anything derogatory about government employees. It wasn’t a criticism, it was a statement of a basic economic fact, that government consumes. It doesn’t produce. Some government services are absolutely necessary. That doesn’t change the fact that they are expenses though, and should be managed Ina responsible manner, and yes, even cut when possible. Not something government is good at.

I agree. Merrick’s comments reminded me of posts I wrote in 2011, Government is Overhead and Government is overhead’ follow-up.

Criticism I’ve heard of Merrick’s comments falls mostly into two categories “Merrick is a jerk or idiot” which is then coupled with “but government workers are valuable” or “Merrick is a hypocrite since he’s a government employee.”

I take this as another example of the sad state of discourse in our country. These critics don’t have the capability or desire to try to understand what Merrick said. They will just shame him for saying what they thought he said. He is a politician, so he will roll over and apologize instead of taking the opportunity to educate his critics.

Yes. Some government employees do valuable work. Government workers are paid for by taxes. Where do taxes come from?

Just as in my burritos company example in the Government is Overhead post, the burritos company’s accounting department does valuable work for the burritos company, but they aren’t producers. Take away the burritos operations and what happens to the accountants? They lose their jobs. Their jobs are paid for by the production and selling of burritos.

The source of emergent order

Robert Solow from this EconTalk podcast on Growth and the State of Economics:

We all know that a lot of the innovation occurs as a business process. I keep telling myself we also all know that a lot of innovation comes as a matter of dumb luck. You set out to solve problem A, and you fail totally to solve problem A, but you solve problem B that wasn’t in your head at all.

I’m not sure we ALL know that.

But, I do think that growth, innovation, improvement in the standard of living — whatever you call it — depends on how good we are at recognizing that we solved problem B.

I’ve been a part of many organizations that end up solving problem B, but ignore it because they are fixated on solving problem A.

I think this happens with R&D efforts in government and other bureaucratic organizations. They get so hung up on their preferred solution (e.g. solar power or wind power) that they ignore discoveries that don’t fall into their pre-selected, politically-correct categories.

How well a system allows the solution to problem B to propagate, I believe, is related to that system’s long-term viability.

Capitalism? Nah

Bryan Caplan’s EconLog post, Diseases of Poverty: Neglecting the Obvious is worth a read. He points out that solutions proposed on the Wikipedia entry for diseases of poverty focus on redistribution, rather than best proven solution:

It’s almost like the last two centuries never happened.  Quick recap: During the last two hundred years, living standards exploded even though the distribution of income remained quite unequal.  How is such a thing possible?  Because total production per person drastically increased.  During this era, no country escaped dire poverty via redistribution, but many escaped dire poverty via increased production.  And while the effect of moderate redistributive policies on growth is unclear, there is no doubt that populist and socialist movements determined to “tackle the inequitable distribution of money, power and resources” and “change the way that society is organized” sharply retard growth.

Why is football so popular?

From Marginal Revolution blog: Why is football more popular than ever?

I’ve wondered this myself. Lots of interesting theories on that post. I love a good cause-and-effect discussion.

I think there’s something to the fantasy football-scarcity-timing explanation.

Fantasy Football and football pools draw people together and cause people to be more interested in the results of not just their home team but of their team. I know personally when I’ve been involved in this way, I paid more attention. But, that can’t be all of it. As some pointed out at Marginal Revolution, other sports have fantasy leagues and pools, as well.

Scarcity: With fewer games and a more regular schedule than other sports, it’s easier to plan social events around games. Each game also carries more weight.

Timing: Football has timed itself well to have little competition. Sunday afternoons in the fall and early winter aren’t usually that busy. Not like Sunday afternoons in summer that can be filled with vacations, lawn work and home improvement projects.

I think these things, at least, don’t hurt football’s popularity.

But, I think there’s only one real explanation. Just cuz. Why was Angry Birds popular? Why were baggy clothes replaced with more form fitting clothes? Why do we say, “hashtag”?

Trends.

Speaking of Politically Correct Brainwashing

The last two videos in this Video Saturday post on Mark Perry’s Carpe Diem blog are good examples of people correctly going against the politically correct brainwashing and are worth a watch.

Getting Old Sucks

I wasn’t impressed with Ezekial Emanual’s article, Why I Hope to Die at 75.

Arnold Kling calls it “excellent and important” and asks commenters to spare him the “snark about Emanuel, Obamacare, and death panels.”

I’m not sure what annoyed me more, Emanual’s article or Kling asking to be spared the blindingly obvious, and in my opinion, wholly deserving snark.

I’m assuming the snark Kling doesn’t want is something like:

Since, Emanual is an architect of Obamacare, you see, and now he’s writing that he doesn’t want to live past 75 because life just isn’t worth living past that point (according to him), you see, and there was this whole (we were politically-correctly brainwashed to believe) stupid political meme about Obamacare leading to government “death panels” deciding who is worthy of being allocated precious medical resources and who is not and should just die so as to not be a burden on “society”, you see, it kind of seems like…uh…there may have been something that stupid meme, but we are still too brainwashed want to admit that?

The resistance to snark reminds me of the resistance people like Elie Wiesel’s family and friends had to the warning signs that their lives were changing in early 1940s in Transylvania as German troops approached and occupied their enclave.

The secondary title of Kling’s blog is “taking the most charitable view of those who disagree.” Wiesel’s enclave took a too charitable view with those approaching troops and Hitler’s intentions and they suffered mightily for it.

David Henderson is less charitable on Emanual’s article. He found the article and Emanual “troubling”. Thank you! He describes Emanuel’s attitude as:

“Sometimes wrong; never in doubt.” The man (Emanuel) really does seem to think he knows how everyone should live.

In his article, Emanual tries to convince the reader that this whole dying at 75 thing is just his personal opinion and he’s not suggesting anything by it. Henderson says to that, “Basically, I just don’t believe him.”

My opinion on Emanual’s article: It’s dumb.

I think it’s a good example of personal preference bias. At age 57, Emanual holds a personal preference for his life to end at 75 because of some stats that says he has a 50/50 shot have reduced faculties after 80.

While he assures us he’s properly taken his current age and state of mind into account and will not change his mind as he approaches 75 (though he doesn’t plan suicide), talk is cheap.

The rationale he provides in the article affirms for me that he is a dangerous idiot. His view on what constitutes a life worth living at a different age is unimaginative and narrow, and reminiscent of all of us proclaiming at 18 that if life can’t be like it is when we’re 18, it ain’t worth living.

Tyler Cowen is more imaginative in thinking about how life could be worth living at an old age with reduced faculties:

And to sound petty for a moment, I don’t want to pass away during the opening moments of a Carlsen-Caruana match, or before an NBA season has finished (well, it depends on the season), or before the final volumes of Knausgaard are translated into English.  And this is a never-ending supply.  The world is a fascinating place and I fully expect to appreciate it at the age of eighty, albeit with some faculties less sharp.  What if the Fermi Paradox is resolved, or a good theory of quantum gravity developed?  What else might be worth waiting for?

For those who make it another 23 years, look forward to Emanual’s follow-up: Life after 75: I was wrong! Why I was still thinking like a teenager when I was 57.