Who are the bad guys?

I watched Star Wars Episode III: Return of the Sith with my son over this holiday break, again.  It’s been awhile since he’s seen this episode.  It’s interesting to see what new things he notices when he sees it again.

In this episode, Chancellor Palpatine announces in the Senate chambers that he is dissolving the (democratic) Republic to form the (tyrannical) Empire and everyone applauds.

Padme Amidala (mother to Luke and Leia Skywalker, and naive pawn in Palpatine’s rise to power) says:

So this is how liberty dies…with thunderous applause.

My son asked, “Why are they clapping for the Empire?  Isn’t the Empire bad?

I told my son that they don’t yet realize how bad the Empire is.  And, I also mentioned that’s exactly what frustrates me about politics:  People clap for the bad guys and never realize it.


The value of a college education

Here’s an interesting excerpt from a highly recommended EconTalk podcast with Alex Tabarrok on Alex’s book, Launching the Innovation Renaissance.

Russ Roberts (after 42 minutes into the podcast, emphasis added):  Bryan Caplan, on our sister site EconLog often writes that there’s very little value-added at all to education: it’s all signaling; I don’t care what you majored in so long as you got through, you showed the persistence; the only thing I’m paying for is either you got into the school, which is a filter for quality, and then you got out, because that meant you could do that weird thing called sit at the desk and write papers and take the tests, and that’s got some value. Persistence and discipline.

This made me think that perhaps those who complete a college education have demonstrated that they have just enough initiative to play by the rules, do what they’re told to do and follow a predefined path — which makes for a good employee — but not quite enough initiative to make their own path.

When is a tax cut not really a tax cut?

When it has the same incentives as a handout or ransom note.

One of the problems with American politics, or politics anywhere, is the politicians tendency to ingratiate their status with voters by appearing to give folks gifts of the voters own money.  Such things sound great on the campaign trail.  They all essentially boil down to:

I put more money in your wallet.  If you would like me to keep doing that, vote for me.

That’s what I thought when I heard about the ridiculous two-month extension of the payroll tax cut.  What politicians are really saying when they extend a tax cut for two months at a time is:

I will continue holding your wallet hostage.  The ransom is your vote for me.


I want you to feel dependent on me, vote for me.

While I’m usually for tax cuts, I don’t care much for tax cuts designed intently to increase politicians’ (real or perceived) power.

“Energetic Government”

In the American Enterprise Institute’s Debate, How Much Government is Good Government?, David Brooks makes a case for an “energetic government” that “builds character.”

I believe the following passage from Brooks provides the key assumption for his energetic government stance:

…the reason that America got rich in the nineteenth century was because we were the most educated country on earth, and we could count on a certain level of social capital we no longer can.

I don’t believe that’s why America “got rich”.

To me, that’s like saying, I got rich by saving for retirement.  That’s not accurate.  You were able to save for retirement, and become rich, by creating enough value for others to generate an income for yourself.

Similarly, I believe the cause and effect flows the other way from how Brooks describes it.  America became the most educated country on earth, with a certain level of social capital [i.e. things like public education, social security, unemployment, etc.], because America “got rich”.

America got rich through bottoms-up innovations enabled by the most democratic, fair and socially mobile system the world has ever witnessed, capitalism.

If Brooks were to consider that he is wrong about how America got rich and wanted to learn other possible explanations, I’d recommend that he start with Matt Ridley’s book The Rational OptimistThis post and this one discuss some of Ridley’s, and my own, insights on the matter.

Of course, Matt and I could be wrong, but I have not found convincing evidence of that yet.  But, would love to hear some.

Don Boudreaux asks some good questions

Don Boudreaux, of Cafe Hayek and George Mason University, asks some great questions in his column, And the answer is?, in today’s Pittsburgh Tribune.

Here are a few:

Why do so many conservatives distrust Uncle Sam when it meddles at home, but trust it when it meddles abroad?

Why do so many “progressives” who preen publicly about their magnanimity toward the poor want to prevent foreign workers — most of whom are farpoorer than is any American — from bettering their lots by competing freely against relatively rich American workers?

Why are “progressives” madly obsessed with inequality of incomes but not with inequality of work effort, risk taking, prudence, courage, honesty, integrity, ambition and dedication? Monetary incomes, after all, are largely a result of the application of these qualities: Those who apply more of these qualities to their lives and careers generally earn higher incomes than are earned by those who apply fewer of these qualities to their lives and careers.

Why is it considered bad form today to point out that personal character plays a large role in determining one’s fate in life — including one’s income?

If the current American model for supplying K-12 education is desirable, why do we not also supply college and post-graduate education in the same way? That is, why not fund state colleges with tax dollars, charge zero tuition and assign each post-secondary student to that college in his or her geographic district? Going to a public college outside of the district would be prohibited. Does anyone believe that implementing this model of supplying college education would improve post-secondary education?

Jacob Marley is a good salesman

So was Charles Dickens.

Ebenezer Scrooge's gravestone, Shrewsbury

The thought of being forgotten sealed the deal

I agree with Charles Rowley that Jacob Marley simply re-framed generosity for Ebenezer so that it appealed to his self-interest.  And it seems that Dickens’ story has lived for over 150 years, retold in many different variations, with very few people recognizing that.

Here’s another interesting piece on A Christmas Carol from Steven Landsburg.




More debates like this, please

My family and friends are surprised to find out that I’m not a fan of TV-based political debates.   They figure that since I have an above average interest in politics, television debates must be like my Super Bowl, or something.

I prefer debates like How Much Government is Good Government? between New York Times columnist David Brooks and Representative Paul Ryan.   It’s written.  You can download it and read it on your iPad, Kindle or any device that supports .pdf.

I think TV debates don’t give a true picture of the candidate.  Its like trying to pick a wife while watching ladies perform in a roller derby.

There’s more opportunity in the written format to filter out the shenanigans and articulate a more complete representation of your positions and your criticisms of your opponents’ positions.

I downloaded the Brooks/Ryan debate for my Kindle iPhone app and read about 60% so far.  I’ll have more to say about it soon.

I do recommend it.   If you’re the least bit interested in politics, you will find it easy reading and interesting.

The Yellowstone Effect

In yesterday’s Wall Street Journal, Mark Spitznagel draws an interesting parallel between forest management and economic management.

English: A fire in Yellowstone, Wyoming, Unite...

We learned that putting out small fires can lead to huge fires.

Suppressing fire, creating the illusion of fire protection, leads to the wrong kind of [forest] growth, which then invites greater destruction. About 100 years ago, the U.S. Forest Service took a zero-tolerance approach to forest fires, stamping them out at the first blaze. Fast forward to 1988 when a massive wildfire at Yellowstone National Park wiped out more than 30 times the acreage of any previously recorded fire.

What obviously occurred was that the most fire-susceptible plants had been given repeated reprieves (bailouts, in a sense), and they naturally accumulated, along with the old, deadwood of the forests. This made for a highly flammable fuel load because when fires are suppressed the density of foliage is raised, particularly the most fire-prone foliage. The way this foliage connects the grid of the forest, as it were, has come to be known as the “Yellowstone Effect.”

A far better way to prevent massively destructive fires is by letting the fires burn. Human intervention in nature’s cycles by suppressing fires destroys the system’s natural homeostatic forces.

Strangely parallel to the Yellowstone catastrophe was the start of the federal government’s other fire-suppression policy with the 1984 Continental Illinois “too big to fail” bank bailout. This was followed by Alan Greenspan’s pronouncement immediately after the 1987 stock market crash that the Federal Reserve stood by with “readiness to serve as a source of liquidity to support the economy and financial system,” which heralded the birth of the “Greenspan put.” The Fed would no longer tolerate fires of any size.

I remember looking up in the night sky and seeing the haze from the smoke of that big Yellowstone fire.

Why do you stop at red lights?

I recently asked a co-worker this question when we were talking about law.  It went something like:

Me:  Why do you stop at red lights?

Her:  Because it’s the law.

Me:  You mean the law as in the rules on the books?

Her:  Of course.

Me:  Do you drive the speed limit?

Her:  Well close to it.

Me: But over it, right?

Her:  Well, yeah, doesn’t everybody?

Me:  Okay. Are you still sure that you stop at red lights because it’s a rule that’s written down?  You just admitted that you don’t follow another written down rule.

Her:  Not really.  So, why do I stop at red lights?

Me:  I’m going to give you a choice.  I can give you the answer and the way you look at the world may change.  Or, I will not give you the answer and you can go on believing the world around you behaves in a way that it does not.

Her:  Okay, quit the Matrix b.s. and tell me for crying out loud.

Me:  Well.  There’s a couple reasons you stop at a red light.  One is your own safety.  You know that you don’t stop at green lights.  And you know that nobody else does either.  So, if you ran red lights, the direct consequences could be great and you could do you and others serious harm.  The main reason you stop at red lights is because it pays off well for you to do so.

Her:  Okay.

Me:  Another reason is that at some point in time, the color red became associated with stopping in traffic.  No central body sat around and said red lights will be the standard for that.  It emerged somewhere as a practice and stuck.  As far as I know, most traffic laws are passed by city and state governments.  Yet, somehow, without a centralized standards committee on traffic signaling, red emerged as the signal for stopping and green for go.  And it’s just not in the U.S.  It’s pretty much everywhere there’s traffic — other countries, railroads, airport runways, boats and so forth.  So, that’s why you stop at the color red.  (This website claims that the traffic signal was adapted from the railroad by an innovative officer in Michigan).

Her: Okay.  So what’s your point?

Me:  My point is that you, like most people, think you stop at red lights because “it’s the law”.  It is in a sense, but not the sense you are thinking.  You are thinking of legislation, or the law that some governing body has written down on paper.

However, if we investigated all legislation, we’d probably find many “laws” that we break.

You stop at red lights because “it’s the law” in the sense that it’s an evolved social norm.  This norm evolved to help keep us safe.  And it works.  Do you know how I know it works?

Her: I bet you’re going to tell me.

Me: Because we still practice it and it more or less keeps hundreds of millions, if not billions of people safe.  I’m guessing if we looked into history, we might find that there were other things tried, but they didn’t work as effectively.

Roundabouts and cloverleafs, for example, also seem to be effective ways to handle intersections in traffic, the real estate and additional construction cost probably doesn’t make them as cost effective as traffic signals.

Laws are really developed in the crucibles of human interactions and emerge as social norms, customs and practices.

They rarely emerge from legislators or judges, even though most people think that’s exactly where they come from.

Her:  Gee.

This conversation was inspired by this lecture from Don Boudreaux:

The video is worth your time.  If you don’t have that kind of time to sit at the computer, then you can also download an EconTalk podcast from 2006 that’s essentially the same material.

Listen to it if you want to escape the Matrix.

It’s people

Here I wrote about these two observations:

1. Markets fail. Use government.

2. Markets fail. Use markets.

Whether you agree with the first or the second, there’s something that is important to recognize about these words.

The words markets and government describe the interactions of groups of human beings, usually the very same human beings.

We all buy stuff and sell stuff (even the most anti-capitalist of those out there). That’s when you interact with others through markets.

We all get a chance to vote on a number of things at many different levels — Federal, state, county, city, school board, homeowners associations, churches, corporations, clubs and so forth.  That’s when we interact with each other through government.

What people don’t seem to think about often is what makes one preferable to the other in some situations and why.