VIP (Very Important Post) from Scott Sumner on capitalism

The VIP was written by Scott Sumner on Econlog. It’s titled, Capitalism has a PR Problem. Here’s Scott:

My image of capitalism is the rich and happy bourgeoisie of Zurich, Switzerland, and my image of socialism is the tens of millions who starved in famines in China, Russia, the Ukraine, Cambodia, North Korea and elsewhere. But that’s not the image of Pope Francis, it’s not the image of Bernie Sanders supporters, and it’s not the image of most intellectuals.

There’s an interesting discussion in the comments following that post.

One commenter said his image of communism is Starship Enterprise.

Another commenter noted that image of communism was produced in California on a soundstage by actors who were working under capitalism, where they only get fired if they don’t do their job, instead of being sent to the prison or worse.

For those with Starship Enterprise view of communism, it would be good for them to know that Communism leaves a major problem unsolved in a world with scarcity — the knowledge problem.




A grasshopper explains why the ants voted for Trump

The latest Harvard Business Review Ideacast (i.e. podcast) features a college professor explaining why she thinks Trump won.

Here’s here take (emphasis added):

The fact is the Democrats almost won. That’s important to keep in mind. But, one of the key reasons they lost is what I call class cluelessness. That among American progressives there has been a very, very insistent focus on the poor, on gender, on race but there has not been a focus on the white working class. That’s the group that in some ways, by some analyses, delivered this election to Trump.

The white working class, it’s very well documented, over decades of studies resents professionals but admires the rich. They feel the people who are more educated are often looking down on them, feel superior to them and I must say, that Hillary’s “deplorables” comment seemed to confirm their worst fears as did Obama’s early comment about some people clinging to their religion and guns.

I don’t really fault these two candidates. I fault the environment that both of them grew out of, which while it has been exquisitely attuned to racial and gender disadvantage, sometime has really been tone deaf to class disadvantage.

This kindles an image in my head of couple old fuddy-duddies trying to explain how kids act these days through the filter of what things were like when they were kids.

Of course she doesn’t fault Clinton and Obama for looking down on the working class, because she interprets the election through the filter of the same ‘environment’ that she says ‘they grew out of’.

As I listened to the podcast, I got the sense that she looks down on them, too.

She thinks in terms of ‘advantages’ and ‘disadvantages’ to classes of people and how the government can balance those out.

The “working class”doesn’t think her way.

The working class judge people on their character, work ethic and spunk, not on their class identifiers.

They understand life isn’t fair. They also understand that government attempts to fix that unfairness don’t actually fix it, rather it shifts the unfairness or causes more.

They know excuses make it too easy to stop trying and fosters victim mentality for people who are capable. They believe the individual is best capable of fighting and overcoming the fairness they each face.

They know people from all walks for life who have made it. They know the best way to become successful is to encourage the values above and avoid excuses. They know how empowering that is.

They resent professionals because professionals LOOK DOWN ON THEM, like the grasshoppers looked down on the ants in Aesop’s classic fable. They thought the ants were silly for working hard and to prepare for the unfairness of the impending winter.

But, then wanted the ants to bail them out.

They also feel many professionals simply haven’t earned the right to be so judgemental of others and to opine so arrogantly on things they have so little stake in.

The ants don’t so much admire the rich in way grasshoppers think. They admire that many earned their wealth with the above values and by taking some gut wrenching risk-taking along the way.

They realize that many are wealthy because they have created things that have made all of us better off. And, they think it’s prudent to keep the incentives in place to encourage people to take those risks so we can keep getting more stuff.

That’s one reason they admire (or maybe tolerate?) Trump. They see him as self-made. Did he have a big loan from Pops? Sure. Despite the grasshoppers’ attempts to use that to discredit the self-made story, the ants didn’t buy it. Why? Because lots of people get loans from pops and blow it. Trump didn’t.

One thing I agreed with this college professor about is Hillary’s ‘deplorables’ comment. That was a glass-shattering moment (How I Met Your Mother TV show reference).

Before that the ants were paying about the same attention to this election as any other.

At that moment they realized — Oh. I see. They think we’re idiots. Sound of glass shattering.

After that, every smug  commentary, unbalanced, hyped news report, crying wolf, condescension from the media, Hollywood and the political class — both left and right — was seen in the newly cleared up world where the ants were no longer oblivious to what the grasshoppers really thought of them.

Make no mistake. They really do think we’re idiots. How about that. 

In my oversimplified explanation of the election results, what I saw wasn’t so much a vote for Trump.

Rather a message sent to both Republicans and Democrats of a desire to return to some basic principles of hard work and taking pride in earning it.


You can’t regulate affordability

The parts of the economy with the least affordability also happen to be the parts of the economy that have the most government involvement.

There are 3 sectors of the economy where prices have consistently outpaced inflation:

  • Health care/health insurance/prescription drugs
  • Housing
  • Education

Check it out.

In other sectors, prices have kept pace or lagged inflation.

Is this correlation or causation? Causation.

The idea that these things are so important that we can’t leave them to the whims of the market is what gets the government involved to begin with.

That causes distortions in the market, which causes problems.

Few recognize those problems were caused by government distortions, so they call for more government involvement, which causes more problems.

The cycle continues. Very rarely, if ever, do we ever revisit the initial root causes of the problems — the initial government involvement — and try to correct those.


Views on News

Gigi Haddad’s impersonation of Melania Trump, maybe tacky and dumb, but racist? Maybe we need to revisit the definition of the word. Maybe also the definition of impressions.

Nation is most divided ever? It seems most elections are close to 50/50 splits. I remember just as much angst from celebrities and academics when other media anti-darlings were elected, including Reagan, Bush I, W and now Trump.

Re: Mike Pence being lectured by Hamilton actors from the stage of their show. Hey it’s a free country, but I hope they gave him a refund and I hope most people saw it for the publicity stunt that it was. It worked.


“Don’t let the facts get in the way of a good story”

I heard news reports about the fake news sites that come up in Facebook feeds. That seems a bit ironic, coming from the mainstream news outlets who don’t seem that far from it.

Crying wolf has consequences

First, hats off to Caitlin McGill, Vox, for having a “Scary, Awkward” conversation with her Dad about his vote for Trump.

Political discussion shouldn’t be scary or awkward, though.

But we have made it so. One reason it is is that both sides have overused identity politics for so long.

“Our side is good and great. The other side is bad. You don’t want to be bad, do you? Stick with us.”

I wanted to take the opportunity to address some of Caitlyn’s conversation. My responses below aren’t necessarily what I think, but what I imagine her Dad might think and just point out areas where I don’t believe what she says and he says are on the same spectrum of political speech.

Caitlyn:  I voted for Clinton because she seemed to represent equality for women and people of color, but more so because she did not represent the Islamophobic, homophobic, sexist, and racist thinking that Trump does.

This is a great example of the ‘my side good, other side bad’ politics. It keeps you from having to do the harder work of actually thinking.

I Googled the things that caused people to think Trump is the names she calls him. There are articles dedicated to each of the names she calls him.

I didn’t find them convincing. This Huffington Post piece is the top result when you Google “why is Trump a racist”. Its author, Lydia Cooper, provides “13 examples” of his racism.

First, some of the examples seem to have nothing to do with racism, like the first example. Lydia doesn’t even attempt to connect it to racism and left me scratching my head right off the bat.

This piece by Scott Alexander sums up well how I feel after reading stuff like Cooper’s piece. It also provides counter evidence to one of Cooper’s examples, “He refused to condemn the white supremacists who are campaigning for him,” which shows that she has her facts wrong, but is willing to put her head in the sand about that. And, if she’s willing to do that for that example, her credibility for the rest of her writing is in question.

Not only that, but Cooper herself, just a few paragraphs later says that Trump did disavow them. What she didn’t include, and what Alexander covers, is that no white supremacists campaigned for him or even officially endorsed him. That meme is a fiction meant to paint a specific picture in your head.

Caitlyn and Lydia should both read up on the story about the Boy who cried wolf.

The other thought I had, that is different from Alexander’s, is that if those examples were considered reasonable proof of Trump’s racism, then anyone could be painted as a racist, or any of the other things they called Trump.

I believe the election results show that, for some people, those on the left have already cried wolf a bit too much. Now might be a good time to bone up on forming better arguments, instead of faking it.

An unproductive exchange about health care

Here’s a video of Maria Bartiromo going at it with Obamacare architect, Jonathan Gruber:

I think this is a good example of an unproductive exchange, and Bartiromo is mostly the guilty party.

She’s taking him to task on ill effects of Obamacare.

His first defense against her claim that premiums are rising is that “people are paying less now than they were projected to pay had Obamacare not become law.

Bartiromo missed an opportunity. As the election night results illustrated, projections aren’t always to be trusted. So, comparing what people are really paying to what someone projected they would pay without it isn’t very credible. That assumes someone got that projection correct, and that can never be proven.

Bartiromo also states that economic growth is slow and Obamacare is a factor.

Gruber says there is not a single data point that implies that.

Bartiromo should have asked how could there be? There is nothing to compare it to. Obamacare exists everywhere. There is no control or holdout group where it doesn’t exist that we could compare to and see if there’s a differential in economic growth. So, how could there be a data point, of the type he’s referring to, to support it?

Gruber moves on and says at the 9 minute mark that in the 5 years since Obamacare was passed, the growth in employer provided insurance premiums was the slowest in measured history.

I went there. Here’s the chart. Here’s a snapshot:


Eye-balling the trend, it looks like, at best, Obamacare has had no impact in the trajectory of insurance premiums or worker contributions.

As for Gruber’s statement about the ‘slowest rate of growth,’ that’s more of a result of the cost base growing so much than anything having to do with Obamacare. Here’s an example:

If insurance cost you $1,000 a year ago and $1,500 this year, it increased by $500, or 50%.

Next year, if the cost goes up another $500, Gruber can claim it only increased by 33% this time — a slower rate of growth than last year (33% vs. 50%), but in both years it still went up by $500.

President Who?

A good read from Kevin Williamson, in The National Review“I won.”: The Left Will Not Enjoy Living With Its Own Precedents.

It’s along similar lines what I wrote in this post about respecting the separation of powers in government because ‘your guy’ may not always be in charge.

From Williamson’s column:

For eight years, Democrats celebrated the aggrandizement of the already inflated presidency left to Barack Obama by George W. Bush. You remember the greatest hits: “If Congress won’t act, I will.” “I have a pen and a phone.” “Elections have consequences.” And, my personal favorite: “I won.” Somebody else won this time around.
The pretensions of the imperial presidency are going to haunt Democrats for the immediate future, but they’ll quickly rediscover their belief in limits on the executive. While they’re rediscovering old virtues, they might take a moment to lament Senator Harry Reid’s weakening of the filibuster, an ancient protection of minority interests in the less democratic house of our national legislature. They might also lament Senator Reid’s attempt to gut the First Amendment in order to permit the federal government — which in January will be under the management of Paul Ryan, Mitch McConnell, and — incredibly enough — President Donald Trump — to regulate political speech, deciding who can speak, about what and when, and on what terms.

There are other ways of living. The enviable Swiss have such a wonderfully limited and distributed federal system that many of them could not tell you who the president is on any given day.

But those of you who are shaking in your Birkenstocks over the election of Donald Trump should consider the possibility that if the office of the presidency is that important to you, then perhaps the most intelligent course of action is not to pin your hopes on controlling it always and forever (something unlikely to happen under truly democratic processes) but to work toward making it less important — to you, and to everybody else, too.
You’ll find a great many conservatives ready to join you in that project.
I like the part about the Swiss government. That’s the same way most folks feel about their city mayors or governors.

Pro/Rel vs. Solidarity Payments: What’s Holding Soccer Back in the US?

Switching gears away from politics, here’s another hot button issue to discuss following the US Men’s National Soccer Team’s 2-1 loss to Mexico on Friday evening.

These guys think the lack of promotion/relegation at the top level (MLS) is the one thing holding soccer back in the U.S.

This guy thinks the lack of solidarity payments is the reason.

Promotion/relegation is how pro and amateur soccer works nearly everywhere, except in US pro soccer. That is, the bottom teams in a league are relegated to the next lowest league and the best teams from that league are promoted up to the best league.

Even the indoor soccer facility I play at uses pro/rel. The best teams from my ‘rec’ division are promoted to the ‘competitive’ division each session, while the worst teams from that division are relegated to my division.

In England, for example, the pro/rel structure for soccer goes at least 9 leagues deep, the top 4 leagues are what most people look at it.

They believe this structure, like free market capitalism, allows the best to rise to the top. Without it, there’s just too many biases holding them back.

Solidarity payments are payments made to clubs from pro teams when they sign contracts with players the clubs have trained.

In other parts of the world, many clubs have formed their business model around training future soccer stars and they get paid when one of their stars makes it big.

This changes the incentives for clubs quite a bit.

US clubs operate on the ‘pay-for-play’ model. That is, their profits come from the pockets of parents paying fees for their kids to get professionally trained.

Clubs in other countries, that can be rewarded handsomely when their players go pro, organize leagues and training that is often free to players. Their incentive is to get as many players as possible playing the game, so they can find the diamonds in the rough that can be turned into pro prospects.

The result in the U.S. is that suburban, ‘pay-for-play’ 12-year-old club soccer players have about the same level of technical ability as a 6-year-old from soccer-culture communities in the U.S. who grow up playing unorganized soccer with friends and family, because they can’t afford to pay the club fees or are not interested in playing against kids who can barely control the ball. That’s no fun for them.

Personally, I think both of these contribute. I put more weight in the latter argument, though. If clubs could earn solidarity payments, I think they would be more focused on getting more kids playing, instead of just finding the kids who have parents with deep enough wallets to pay their fees.

Both viewpoints believe there are enough people who are in love with soccer in the U.S., it’s just the system isn’t kind to them.

I disagree with that. I agree there are a lot of people involved in soccer.

But, until I see just as many kids playing soccer in their driveways, yards, schoolyards and parks without adults leading the activity, as I do other sports, I don’t think we are there yet.

Until I see American kids, on a widespread scale, become obsessed with learning to juggle a soccer ball or adopt good soccer technique of their favorite pro players, I don’t think we are there yet.

With popular sports in the U.S., kids learn a good deal of good technique outside of organized teams simply through basic games that build lots of repetition, like playing catch or driveway basketball.

With soccer, an inordinate amount of time in practice is dedicated to teaching the basics, because they haven’t learned them elsewhere.

Fallacies in the media

As I was re-reading my Discussion Tips page, which I wrote years ago, I realized that I have not been pointing out fallacies near as much as I used to.

There were two good examples of straw man fallacies propagated by the media in the run-up to the election.

A Straw Man fallacy is a false representation of an opponent’s argument that’s easy to defeat. It is very common among 6th graders, but unfortunately, it is all too common among adults and too often passes for quality journalism, especially when the straw man is used against those we dislike.

Straw man #1: ‘Trump says voting is rigged. How dumb is that?’

Trump actually said the  political system is rigged against outsiders. Which means political insiders, like the Clintons, had the media and political parties helping them to the detriment of the outsiders (e.g. him and Bernie). He overcame. Bernie did not.

But, the media twisted this into the sound bite that Trump’s key concern was fraudulent or hacked voting and dismissed Trump as absurd for thinking that.

Matt Lauer continued this fallacy on the morning after the election with Trump’s campaign manager, Kellyanne Conway. She did good by explaining that Matt was misrepresenting the complaint and pointing out that there was evidence to support Trump’s position from the Wikileak emails showing Donna Brazile forwarding advance notice of debate questions to Clinton’s team in the debates against Sanders.

Straw man #2: “Trump says he will not accept the results of the election and does not respect the peaceful transfer of power.”

Trump actually said that he will have to wait and see if he will not challenge the results. He also said, I’ll keep you in suspense. He didn’t mention violence.

This seemed like a reasonable response. Wouldn’t anyone challenge the result if it appeared there was something nefarious going on? Shouldn’t they? Would you rather they sit back and let corrupt groups subjugate the will of the people?

The media then turned this into the straw man above and kept plugging away at it.

Personally, I think this was meant to distract attention from the FBI Director reopening the investigation into Hillary’s emails — and that’s about all they had that was new at that point.

But, in addition to this being a straw man, I think many people saw this charge as disingenuous and hyopcritical coming from the side that actually did contest the 2000 election, taking it all the way to the Supreme Court.

When I see such blatant fallacies, I figure those who perpetrate them are either not very smart or dishonest, neither of which helps them make their argument.