Thanks for GPS

Yesterday morning, as I was running a 5k race with my handy Garmin Forerunner strapped to my wrist, I thought it was very nice that those global positioning system satellites are up in space orbiting our planet and enterprising people folks made things like the Forerunner to be able to read the signals put out by those satellites to be able to tell me something as trivial as my minutes per mile pace in a fall festival 5k.

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Potpourri Saturday

This morning while chatting after a 5k race, my father-in-law told me a story about a guy he knows who came to the U.S. from Cuba years ago.  During this gentleman’s first Christmas get-together in the states he cried when he saw all the food on the table because he knew his mother was back in Cuba eating measly rations.

While listening to Dennis Miller interview podcasts from this week a few gems brought a smile to my face.  First, Carly Fiorini said of Barbara Boxer:

Let me tell you after having debated Barbara Boxer, this is a woman unencumbered by the facts. She is unencumbered by the facts of her own record.  She is unencumbered by the devastating unemployment that is in California today.

Second, Ken Blackwell said:

We have become a culture where earning money doesn’t entitle you to it, but wanting it does.

Blackwell also said:

Our [Republicans] problem in the 90s, once we got the brilliant opportunity to be the dominant and governing party, we campaigned like Ronald Reagan and we governed like Jimmy Carter.

On leadership, if you aren’t spending a good amount of time surrounding yourself with honest and sharp people and doing your best to take care of them, it will very likely backfire on you someday.

Stagnant Wages! Really?

A commenter on Cafe Hayek this week lamented about stagnant wages.  While it’s unclear whether the comment was based on fact or the commenter’s gut feel, it did remind me of this passage from Steven Landsburg’s book More Sex is Safer Sex (p. 29).

In the 1930s, we had a Great Depression, when income levels fell back to where they’d been about twenty years earlier.  For a few years, people had to live the way their parents had always lived–and they considered it almost intolerable.  The underlying expectation–that the present is supposed to be better than the past–is a new phenomenon in history.  No eighteenth-century politician would have dreamed of asking “Are you better off than you were four years ago?” because it never would have occurred to anyone that they ought to be better off than they were four years ago.

Rising income is only part of the story.  Not only are we richer than ever before, we also work less and have better-quality products.  One hundred years ago, the average American workweek was over sixty hours, today it’s thirty-five.  One hundred years ago, only 6 percent of manufacturing workers took vacation; today it’s 90 percent.  One hundred years ago, men entered the full-time labor-force in the early teens; today labor-force participation by young teenagers is essentially zero.  One hundred years ago, only 26 percent of male workers retire by age 65; today over 80 percent of 65-year-old males have retired.  One hundred years ago, the average housekeeper spent twelve hours a day on laundry, cooking, cleaning, and sewing; today it’s about three hours.

If wages are stagnant for a little bit, so what?

Don’t get me wrong, I like standard of living improvements as much as the next guy, but I also recognize and am thankful for how good we have it.  Now that we’ve set the bar high for improvements because they have come so consistently during our lifetimes, we’re disappointed when those high expectations are not met.

Oh no! Stagnant wages!  That means we have to live approximately like we lived last year, which happens to be the best standard of living that humans have ever experienced?

Landsburg continues by giving us more specifics about the daily life a hundred years ago.

Here’s a typical laundry day for a housewife in 1900: First she ports the water to the stove, and heats it by burning wood or coal. Then she cleans the clothes by hand, rinses them, wrings them out (either by hand or with a mechanical wringer), then hangs them out to dry and moves on to the oppressive task of ironing, using heavy flatirons that are heated continuously on the stove. The whole process takes about eight-and-a-half hours and she walks over a mile in the process.  We know all of this because the United State government use to hire researchers to follow housewives and record every step they took.

Very well written.  For some reason, I imagine Louis CK’s voice as I read that.

Landsburg didn’t mention that this process wasn’t done very frequently since it was laborious, expensive and there was much other laborious work to get done.  The idea of wearing clothes once and washing would seem insane to those living around 1900.  So now, since it’s much easier and cheaper to wash clothes, we do it more often and that improves our lives by spreading fewer germs and being less smelly.  Such mundane, yet exponential, leaps in quality of our lives are nearly invisible to us.

Update: Another thought occurred to me.  I imagined the folks who recognized how laborious doing laundry was and invented ways to make it easier.  That’s innovation.  With less innovation our standard of living doesn’t advance as quickly.  I wonder if the commenter complaining about stagnant wages realizes that the cause of that, if true, could be stagnant innovation.

Megan McArdle is “Very Sorry”

In this blog post about Small Business and Income Tax, Megan McArdle explains that ‘we’ [presumably meaning the government] need to raise taxes:

So I end up thinking that it [tax increases] will effect small business, that I’m very sorry about that, but that we need to go ahead and raise the taxes anyway.  I feel the same about taxes on the middle class.

…we need money to cover promises we shouldn’t have made decades ago.  The current structure of our federal budget isn’t sustainable, which means we’ll all have to learn to get by on a little less–including small business owners, and the people they employ.

Two questions for Megan:

  1. What if raising taxes on small business and the middle class reduces the net present value of the value of the money needed to “cover promises we [again with the we?] shouldn’t have made decades ago”?
  2. Have you considered lowering government spending?

Earlier in the blog post, Megan expresses doubt that small business is the job growth engine Republicans claim it to be:

…Republicans… have been…exaggerating the extent to which the average small business creates jobs (job growth is mostly concentrated in a handful of fast-growing ones that don’t stay small).

While it’s not entirely clear why Megan included that remark, the only reason I can think to include it is that she thinks this concentration, if it exists, matters.

Is she reasoning that not all small businesses matter that much for job growth, just those that are growing fast?

If so, I disagree.  It’s hard to predict which small businesses will not “stay small.”  Read The Black Swan.  We wouldn’t do ourselves any favors by hampering small businesses.  We should be happy with as many small business experiments as we can get.  Only a small percentage will grow big.  Reduce the number of small business experiments and you may reduce the number of those that grow big.

Even without the “grow big” argument, I see no reason to hamper small business.  Small businesses employ significant numbers of people and they make our lives better through the products and services they offer us.

It is a bit frustrating when I see someone like Megan, who admitted on an EconTalk podcast about her struggles to manage her personal finances (i.e. make tough choices), who wants to force tough choices on others because she thinks its the right thing to do.

It’s even more frustrating when someone like her makes such suggestions without considering that she might not have thought it through well enough and thought through other options, like cutting government spending.

UPDATE: At least in this post, Megan thinks that small businesses that don’t grow large have value.

Here’s the new thing I learned today

On this blog, The Big Questions, Steven Landsburg explains how we incorrectly view taxes on capital gains and interest in today’s post, Getting it Right.

We normally view income from capital gains and interest the same as income from wages.  But, it’s not the same.  We forget that we already paid taxes on the capital when we initially earned it as income.

He explains it much better than I.  Read his post.

Letter to David Brooks

David Brooks’ New York Times column, The Day After Tomorrow elicited this response from economist Arnold Kling and this response from economist Russ Roberts.

This is the Brooks paragraph Kling and Roberts responded to:

The social fabric is fraying. Human capital is being squandered. Society is segmenting. The labor markets are ill. Wages are lagging. Inequality is increasing. The nation is overconsuming and underinnovating. China and India are surging. Not all of these challenges can be addressed by the spontaneous healing powers of the market.

Kling and Roberts disagree with Brooks last sentence.

I’m much more selective about the columns I read anymore.  I find reading columns to be much like having one-sided conversations with arrogant, know-it-alls who are more interested in demonstrating their unique, and often absurd, insights to attract ego stroking.

Just when you’ve digested, picked apart and incorporated last week’s column, the columnist puts out another one on another topic.  It never seems the criticisms of the previous columns are addressed.  It never seems like the conversation advances.

Forbes magazine requires its investment columnists to write once a year about the performance of the stocks they picked versus an appropriate investment benchmark.  I would read more opinion columns if writers did something similar like writing about the criticisms their columns have received, what they have found out to be wrong and what caused them to change their mind.

In other words, I’d be interested if they wrote in a way where they seemed genuinely interested in advancing the conversation to the best answer, rather than just shoving their opinion out there as if it were the best.

I would be very interested to see how David Brooks would respond to Russ Roberts criticism.

Specifically, I would like David Brooks to answer these questions:

  1. Does he believe that government contributed to the problems he writes about (e.g. “labor markets are ill”)?
  2. Why or why not?
  3. What makes him believe that not all of these challenges can be “addressed by the spontaneous healing powers of the market”?
  4. Which ones specifically cannot and why?

Two Wrongs Don’t Make a Right

President Obama missed a chance to lead this week, as did many others who issued unilateral rebuking of Pastor Terry Jones highly publicized (thank you Main Stream Media) plans to burn a copy of the Quran.  All, including Obama buckled to threats against troops.  For example, Obama said this:

And as a very practical matter, I just want him [Pastor Terry Jones] to understand that this stunt that he is talking about pulling could greatly endanger our young men and women who are in uniform.

The problem, as I see it, is that the condemnation was one-sided.  Obama, and everyone else, was correct in condemning the plans to burn the Quran.  There’s no doubt about that.  Any attempt to spin this blog post into some sort of support for Jones’ plan would be a lie.

However, as a leader, Obama missed a prime opportunity to condemn the other wrong here.

While everybody agreed that Jones was a “nutcase”, including me, only two people I know of expressed any concern about the other wrong here: about a group of people threatening violence against U.S. troops in retaliation for Jones’ actions.  That would be myself and Tawfik Hamid writing in yesterday’s Wall Street Opinion Journal, A Muslim Response to Quran Burning and referring to the Quran.  Hamid’s first two paragraphs:

It’s unclear whether or not the Rev. Terry Jones will go ahead with his highly publicized Quran burning this evening in Florida. But Muslims can play a major role in preventing a violent response to any burnings of their holy book.

Islamic scholars can emphasize that the Quran clearly teaches that no one can be punished on account of the actions of others (surra 6, verse 164). In other words, it is against the value system of the Quran to punish Americans or Christians because of the acts of a small minority.

If I were President, I might have been inclined to say something like:

I, along with most Americans, condemn what one pastor in Florida plans to do.  It’s disgraceful.  However, we will hold the appropriate parties accountable for acts of violence against our troops or citizens.  To be clear, the appropriate parties will be those who commit such violence.  We encourage you to protest the pastor’s actions peacefully.

Instead, Obama continued his enlightened rationalization (from the same news story as the first Obama quote):

Look, this is a recruitment bonanza for Al Qaida. You could have serious violence in places like Pakistan and Afghanistan.” The president also said Jones’ plan, if carried out, could serve as an incentive for terrorist-minded individuals “to blow themselves up” to kill others.

For those threatening violence, this is a victory.  They pushed and we folded.  Lesson learned.  Already the tactic is being employed to justify keeping the plans to build the mosque near Ground Zero.  From this story, three days ago:

The imam behind a proposed Islamic community center and mosque near ground zero cautioned Wednesday that moving the facility could cause a violent backlash from Muslim extremists and endanger national security.

Imam Feisal Abdul Rauf told CNN that the discourse surrounding the center has become so politicized that moving it could strengthen the ability of extremists abroad to recruit and wage attacks against Americans, including troops fighting in the Middle East.

I find the similarities between Obama’s second quote and Imam Rauf’s message striking.  It’s as if Imam Rauf had just read Obama’s remarks and they were still fresh in his mind.