• Economics

    by Published on 09-19-2010 06:03 PM
    1. Society
    2. Economics
    3. Politics

    Since this has a distinctly Chicago-slant, can we keep it here in this forum?

    I was pretty interested in the article from the latest edition of CSM that features Arne Duncan, and how he sees basketball and education reform. Also, a nice shot of the Prez playing with Arne and trying to defend a MUCH bigger gentleman as he goes to the basket.

    I seem to recall Scott May saying that he played basketball with Mr. Duncan back in his Maroon days.

    Here's a quote from him

    In a neighborhood where everything else pointed to Duncan's differences, basketball became a point of connection. And it was one of the few arenas where the scrawny white teen, who soared to the height of 6 ft., 5 in. much later, didn't have an advantage. But he began wandering Chicago's South Side and the west in search of games, crossing gang territory and playing near crack houses.

    "If you want to get better, you have to find the best people to play with," Duncan says during a recent trip to Chicago to play in a charity basketball tournament. "It was pretty simple for me."
    The issue of tying student performance and teacher salary seems to be putting the cart before the horse (how do you know your measure of student performance is what counts, and that the performance is tied with the teacher's ability?)

    Anyway, thoughts?

    by Published on 07-30-2010 06:03 AM  Number of Views: 7503 
    1. Economics

    I think there's some real truth to the idea that there's an increasing divide between the folks who have jobs and security ...
    by Published on 07-19-2010 07:15 AM
    1. Economics
    2. Politics

    The Conservative Missionary
    Why Libertarians Should Be Conservatives

    Liberty is an extremely important value. Unfortunately, most libertarians act like it's the only value that really counts. There's a lot more to life than liberty: Happiness, prosperity, equality, virtue, culture, common decency, and even survival. Sophisticated libertarians will naturally object that liberty is great for all of these other values, too. Often, they're right. But not always. Liberty and these other values sometimes conflict, and there's no reason why liberty should always prevail.

    Let's start with the area where libertarians and conservatives have the most common ground: economic policy. Libertarians have convincingly shown that free markets are underrated. So far, we agree. But there's more than a kernel of truth to liberal complaints about the conflict between markets on the one hand, and prosperity, equality, and common decency on the other. We have a lot more government intervention than we should. But just as liberals exaggerate the benefits of government, libertarians exaggerate its defects. Judiciously halving government's role in the economy is reasonable. Laissez-faire in the face of monopoly, imperfect information, irrationality, externalities and other textbook market failures is not.

    Outside of economics, libertarians make the same basic mistake. But here, they're not alone. Many liberals also downplay the conflict between personal freedom and other values - and libertarians compound their error by being even more absolutist. Restrictions on drug use are a clear violation of individual freedom, but they also protect families from seeing their children turn into junkies. Would I ban alcohol? No - there are plenty of responsible users. But I do favor many existing government policies that try to limit the collateral damage of alcohol - age limits, sin taxes, licensing, and maybe even rehab programs. I'm open to the argument that marijuana deserves comparable treatment, but unlike libertarians and many liberals, I think we should cautiously modify existing laws instead of abolishing them willy-nilly. If marijuana legalization proves a resounding success, we can talk about harder drugs in two or three decades.

    I see the same problem with immigration policy. A few liberals - and many libertarians - literally advocate open borders. I recognize that immigration is the greatest foreign aid program in human history, and I sympathize with the plight of would-be immigrants in the Third World. Most immigrants - legal or not - are nice people. But open borders is crazy. It seriously risks killing the goose that lays the golden eggs. I'm very open to more cost-effective and humane ways to deal with the negative effects of immigration. But as long as immigrants are eligible for government benefits, hurt low-skilled native workers, and vote, the only people we should readily admit are the highly-educated and clear-cut humanitarian cases. I'd put Haitians in the latter category. Asking Mexicans to live on a $10,000 a year in Mexico is reasonable, but asking Haitians to starve in post-earthquake Haiti is a disgrace.

    Finally, let me turn to foreign policy. Here again, liberals engage in much wishful thinking, and libertarians compound their errors. Modern warfare is terrible. Most of the people the United States kills in places like Iraq and Afghanistan are innocents. If there were some way to spare them and successfully fight our mortal enemies at the same time, I'd strongly advocate it. Unfortunately, there doesn't seem to be any way to do so. Muslim terrorists really do want to wipe us off the face of the earth, and they're happy to use fellow Muslims as human shields to do it.

    I know, they "only" murdered 3000 people on 9/11, but the distribution of terror has a long right tale. Slightly better planning by the terrorists could have multiplied the deaths by a factor of 10. The next big attack could easily be bigger by a factor of 100. And if you think Americans "overreacted" the first time, wait and see what they'll support the next time around. Liberals and libertarians who impede decisive action now are probably paving the way for worse things to come - a downward spiral that makes World War I look benign by comparison. I wish it weren't so, but that's the sad world we live in.

    Don't get me wrong. I treasure the libertarian contribution to modern political thought. Where would conservatives be without libertarian economists to expose the defects of government intervention? Libertarians are a valuable conscience on the conservative shoulder, asking us, "Why not freedom?" But in the real world, there are often good reasons to respond, "Here's why not." Sometimes in all good conscience, we must admit that the effect of liberty on other important values is too costly to pay.
    The Libertarian Missionary
    Why Conservatives Should Be Libertarians

    I agree with my conservative opponent that there are many important values. I'll accept his whole list - happiness, prosperity, equality, virtue, culture, common decency, and survival. And I agree that all of these values conceivably conflict with liberty. But like other conservatives, my opponent is too quick to deny priority for liberty - and much too quick to confidently announce that serious conflicts exist.

    Liberty is not just another important value. It is a moral constraint on the pursuit of other values. Consider the classic thought experiment where five people require organ transplants to survive. Almost everyone grants that it would be wrong for a doctor to murder a stranger to save his patients' lives. It might be noble for the stranger to volunteer, but taking his organs without his consent is wrong, even if it leads to a better overall outcome.

    The standard response to this experiment is to raise the stakes: What if the doctor could save a million lives instead of five? This is a good objection to absolutism. But the weaker conclusion - you shouldn't violate liberty unless you can reasonably expect a much better outcome - still stands.

    In any case, conservatives are too quick to accept alleged conflicts between liberty and other values. My opponent mentions standard market failure arguments against laissez-faire, but the connection between these arguments and major government programs is tenuous at best.

    Take Social Security, the biggest program in the U.S. budget. Conservatives want to curtail this program, but why won't they go further? My challenge: Name the market failure that leads people to neglect their own retirement. Irrationality is the only credible candidate, but this would at most justify forced savings for the irresponsible minority, nothing like the universal program we have.

    Still, when faced with an alleged conflict between economic liberty and other values, conservatives often show a healthy skepticism. Outside of economic policy, unfortunately, they leave their healthy skepticism behind. Take drug prohibition. Alcohol ruins far more lives, destroys more families, and kills more bystanders than all illegal drugs put together. Conservatives barely think about this problem, but they're confident that we should keep fighting the Drug War for the foreseeable future.

    Unlike some libertarians, I agree that prohibition reduces consumption. But probably not by much - see the Netherlands or Portugal. And after the American experiment in alcohol prohibition - or Econ 101 - conservatives can't reasonably deny that violent crime and adulterated products are largely side effects not of drugs, but of drug prohibition. Liberty will save lives - and when it does, conservatives should support it even if it isn't popular.

    Conservative opposition to immigration is even more disturbing. Immigration promotes almost every value my opponent mentions - especially for the low-skilled workers he wants to exclude. Life in the Third World ranges from hard to hellish. Just letting an immigrant move here to work at Walmart spreads happiness, prosperity, equality, common decency, and yes, survival. The economically illiterate assume, of course, that immigrants' gains come at the expense of the native population. But conservatives know better: International trade enriches the people of both countries, even if they're trading labor.

    Yes, some American sub-groups lose. But Borjas himself, the most prominent detractor of immigration in economics, estimates that decades of immigration have cut high school drop-outs' long-run wages by a mere 4.8%. And before you worry about the effect of immigration on the welfare state, remember that the American welfare state focuses on the old and the sick - and immigrants tend to be young and healthy.

    I know I'm not going to convince conservatives to join me in calling for open borders. But it's crazy to call open borders "crazy." The U.S. had virtually open borders for over a century - and it was a tremendous success. Mass migration didn't kill the goose that lay the golden eggs; instead, the golden geese multiplied like rabbits. It's possible that immigrants will vote to destroy the system that attracted them, but unlikely. Immigrants come here because they prefer life here to life at home. It wouldn't take a marketing genius to win them over to the cause of American liberty.

    Finally, let's turn to foreign policy. I don't know whether respecting the rights of innocents conflicts with our survival. Neither do you. The War on Terror might deter future attacks by putting the fear of God into our enemies. It might inspire future attacks by enraging otherwise harmless people who see their families die by American hands. It could go either way. This isn't wishful thinking; it's honest ignorance. (If you disagree, I will bet you; but since you claim knowledge, and I claim ignorance, I want odds). And honest ignorance isn't worth killing for - especially when the victims are innocents.

    Conservatives' greatest strength is their skepticism of government. But they aren't nearly skeptical enough. When government "solves" dubious problems by dubious means, abolition - not moderation - is the sober solution. And the burden of proof shouldn't fall on those who oppose the status quo, but on those who deprive their fellow human beings of their liberty.
    by Published on 06-14-2010 09:52 AM
    1. Economics
    2. Politics

    OK, I've been on my back for a few weeks, but I'm a little surprised that I'm back and no one is talking about this. I guess we, here at S2, are like the nation's other celebrities, only find massive problems in the Gulf Coast and oil spills to be cause for outcry when it's the other guys in charge.

    Anyway, Rolling Stone has a truly great expose on the spill and how it happened:
    the application that BP submitted for its Deepwater Horizon well only two months after Obama took office. BP claims that a spill is "unlikely" and states that it anticipates "no adverse impacts" to endangered wildlife or fisheries. Should a spill occur, it says, "no significant adverse impacts are expected" for the region's beaches, wetlands and coastal nesting birds. The company, noting that such elements are "not required" as part of the application, contains no scenario for a potential blowout, and no site-specific plan to respond to a spill. Instead, it cites an Oil Spill Response Plan that it had prepared for the entire Gulf region. Among the sensitive species BP anticipates protecting in the semitropical Gulf? "Walruses" and other cold-water mammals, including sea otters and sea lions. The mistake appears to be the result of a sloppy cut-and-paste job from BP's drilling plans for the Arctic. Even worse: Among the "primary equipment providers" for "rapid deployment of spill response resources," BP inexplicably provides the Web address of a Japanese home-shopping network. Such glaring errors expose the 582-page response "plan" as nothing more than a paperwork exercise. "It was clear that nobody read it," says Ruch, who represents government scientists.
    by Published on 05-10-2010 10:16 PM
    1. Economics
    2. Politics

    Tyler Cowen writes:
    I view the entire bailout announcement, and its scope, as a signaling issue. The Germans loathe such semi-inflationary commitments and basically they just signaled that their banks are a good deal more precarious than the rest of us would like to believe.

    So there you have it. Europe is stuck and in response to a crisis they basically raised the stakes. Arguably they had no choice, but they haven't actually eliminated the potential negative outcomes from the gamble.
    Essentially, as far as I can tell, the Eurozone just created TARP for whole countries.

    Meanwhile, the Greeks themselves seem fairly unwilling to stop borrowing so much money
    A nationwide general strike paralyzed Greece on Wednesday as protests against the government's recently announced austerity measures turned violent, with an apparent firebomb attack on a central Athens bank killing three people.

    Wednesday's 24-hour strike is seen as a key test of the government's ability to shepherd through tough austerity measures in exchange for a €110 billion ($143 billion) bailout loan from the European Union and the International Monetary Fund.

    The strike coincided with protests that brought out tens of thousands of Greeks, one of the country's largest protests in years. Angry youths rampaged through the center of Athens, torching several businesses and smashing shop windows.
    This seems, basically, like a homeowner who can't possibly hope to repay his mortgage shooting up a bank because it won't give him a second mortgage
    by Published on 04-28-2010 01:50 PM
    1. Economics
    2. Politics
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