I also find conservative anti-intellectualism troubling, and I think it’s important to separate it into three separate points:1. Left-wing intellectuals are wrong substantively.
2. Many people who claim to be intellectuals are actually not intellectuals at all, but activists.
3. Central planning is not the best way to run a government or economy, so intellectuals do not need to be running things.
Still, to understand why central planning is a bad idea, and what we should have instead, and to get at the answers to numerous substantive policy issues, intellectuals are crucially important.
Showing posts with label Placeholder. Show all posts
Showing posts with label Placeholder. Show all posts
Monday, April 04, 2011
I Like to Be an Intellectual of This and That, and So It's Good.
From Hannah Volokh, via Instapundit:
Drum and Dumber
/B/r/i/t/n/e/y/ /S/p/e/a/r/s/ Kevin Drum at Mother Jones magazine claims that
I couldn't agree more. Kevin, on whether you're less-intelligent than President Obama, I trust *your* expert judgement!
I voted for Obama in 2008 is because I trust his judgment. And not in any merely abstract way, either: I mean that if he and I were in a room and disagreed about some issue on which I had any doubt at all, I'd literally trust his judgment over my own. I think he's smarter than me, better informed, better able to understand the consequences of his actions, and more farsighted.
I couldn't agree more. Kevin, on whether you're less-intelligent than President Obama, I trust *your* expert judgement!
Thursday, March 31, 2011
Comment on "Progressive Nudges for Household Savings"
"If I were a card-carrying progressive" I would start by cutting (preferably eliminating) all corporate welfare, "community development grants" (which go to big construction firms and real estate speculators) and other government programs that primarily benefit the rich. I'd put an income limit on who was allowed to receive agricultural subsidies.
Remember, all income tax *deductions* (as opposed to credits) are perverse because they benefit the rich more than the poor, because a poor man getting a $1000 deduction only gets 15% of it, while a rich guy gets 30% or more. So I'd change all income tax deductions (primarily mortgages and health insurance) to tax credits.
For the record I *am* a card-carrying progressive, or at least a bleeding-heart libertarian. Which means I care more about the poor than Obama, Rahm, and the rest of the "let's bail out the rich and ignore the poor" gang in both parties. And I also know which policies actually work, as opposed to the "let's have rallies and riots" all-mouth no-brain crowd.
Remember, all income tax *deductions* (as opposed to credits) are perverse because they benefit the rich more than the poor, because a poor man getting a $1000 deduction only gets 15% of it, while a rich guy gets 30% or more. So I'd change all income tax deductions (primarily mortgages and health insurance) to tax credits.
For the record I *am* a card-carrying progressive, or at least a bleeding-heart libertarian. Which means I care more about the poor than Obama, Rahm, and the rest of the "let's bail out the rich and ignore the poor" gang in both parties. And I also know which policies actually work, as opposed to the "let's have rallies and riots" all-mouth no-brain crowd.
Sunday, March 27, 2011
The Task Set Before Us
First, I believe that the president's power as commander-in-chief of the military is very simple to understand. He has the power to give any (lawful) order to anyone in the military, and it must be obeyed. That includes things like ordering the military to blockade, bomb, or even invade Afghanistan, Iraq, Libya, Syria, and Iran.
However, the definition of a lawful order is limited by both international law -- which means treaties that the U.S. has signed, and more importantly the "law of war" that says things like you're not allowed to harm, and in fact have a duty to protect, civilians, prisoners, and anyone else who doesn't try to harm you or disobey your orders.
Furthermore, lawful orders are restricted by the specific rules that the U.S. military follows, such as the Uniform Code of Military Justice, and that's set by Congress, as specified in the U.S. Constitution, Article I, Section 8, Paragraphs 10-16 and especially Paragraph 14, "To make Rules for the Government and Regulation of the land and naval Forces."
That means if Congress wants to specify that "No member of the armed forces of the United States shall enter Libya," they can do it. And they can certainly specify the various conditions listed in the War Powers Resolution.
That being said, I am all in favor of intervening in Libya as long as we do it good and hard. In fact, I'm in favor of intervening in Syria even better and harder, since Assad is worse than Qadaffi. And if Iranian Revolutionary Guard units are in Syria, that gives us a really good excuse to attack those units.
On the other hand, I will also repeat what I warned about before we went into Afghanistan and Iraq, which is that we need to have a clear plan, including a clear objective. Glenn Reynolds is right: "Waging war halfheartedly, on the cheap, and by committee is not a formula for success."
However, the definition of a lawful order is limited by both international law -- which means treaties that the U.S. has signed, and more importantly the "law of war" that says things like you're not allowed to harm, and in fact have a duty to protect, civilians, prisoners, and anyone else who doesn't try to harm you or disobey your orders.
Furthermore, lawful orders are restricted by the specific rules that the U.S. military follows, such as the Uniform Code of Military Justice, and that's set by Congress, as specified in the U.S. Constitution, Article I, Section 8, Paragraphs 10-16 and especially Paragraph 14, "To make Rules for the Government and Regulation of the land and naval Forces."
That means if Congress wants to specify that "No member of the armed forces of the United States shall enter Libya," they can do it. And they can certainly specify the various conditions listed in the War Powers Resolution.
That being said, I am all in favor of intervening in Libya as long as we do it good and hard. In fact, I'm in favor of intervening in Syria even better and harder, since Assad is worse than Qadaffi. And if Iranian Revolutionary Guard units are in Syria, that gives us a really good excuse to attack those units.
On the other hand, I will also repeat what I warned about before we went into Afghanistan and Iraq, which is that we need to have a clear plan, including a clear objective. Glenn Reynolds is right: "Waging war halfheartedly, on the cheap, and by committee is not a formula for success."
Sunday, March 13, 2011
Good Question!
BRIAN LEITER ON BUDGET CUTS: “At some point these acts of brazen viciousness are going to lead to a renewed philosophical interest in the question of when acts of political violence are morally justified.”
I'll tell you when they're justified: when they're against rich white establishment law professors like that guy. How much do you make a year, Brian Leiter? More than the working stiffs in the unions, I'll bet. A lot more!
Well, it's time for *you* to take a pay cut and distribute to the rest of us whatever you make above the national average. Power to the people.
We know where you live.
Up against the wall, m**********r!
(It's okay for me to attack his ethnic group, since it's my ethnic group as well -- although I'm a graduate student in economics, rather than a law professor. See 0:56 in the court scene in Woody Allen's Bananas.)
I'll tell you when they're justified: when they're against rich white establishment law professors like that guy. How much do you make a year, Brian Leiter? More than the working stiffs in the unions, I'll bet. A lot more!
Well, it's time for *you* to take a pay cut and distribute to the rest of us whatever you make above the national average. Power to the people.
We know where you live.
Up against the wall, m**********r!
(It's okay for me to attack his ethnic group, since it's my ethnic group as well -- although I'm a graduate student in economics, rather than a law professor. See 0:56 in the court scene in Woody Allen's Bananas.)
Saturday, February 12, 2011
The Task Set Before Us
This is the task before us: to accept that we are dissidents and opponents. To accept that it is our duty to resist. To use art to express that resistance, the win intellectuals and people of ability to our side. To forge contacts with supporters in the outside world. To slowly expand our influence and never, ever stop laughing at the State.
And when it comes crashing, and I believe it will, we will be there, smiling and laughing.
[End of piece by anonymous author Albert, who identifies as a State Dept. employee in Europe].
Sunday, January 09, 2011
Which Parents, When Their Child Asks for Bread, Give a Stone Instead? Amy Chua!
@cp puts it perfectly:
Matthew 7:9
Luke 11:11
How many Yale law professors would want to allow terror suspects to be denied access to food and water?I'm sorry, I consider Amy Chua's parenting methods to be dead to me. I strongly recommend the methods suggested by The One-Minute Mother and The One-Minute Father.
Matthew 7:9
Luke 11:11
Saturday, January 01, 2011
Cloward-Piven: Bring It On
Maybe I'm overlooking something here; if so, please let me know!
The Cloward-Piven strategy was to overwhelm the system with a massive amount of both protests (possibly violent) and also welfare recipients; this was supposed to cause a breakdown of both public discourse and also of public finance.
The idea was that the status quo in both politics and public programs would not be able to handle the new situation and would have to be replaced by something else.
According to Piven, the activism of the 1960s and 1970s was this strategy in action.
As I understand it, those are her claims -- and I completely agree with them so far. Her mistake is believing that the response of the system would be to give in to the demands of the activists and welfare applicants, and replace capitalism with democratic socialism.
Instead, in the 1980s and 1990s the system -- I hesitate to say "Silent Majority" -- responded by voting for right-wing Republicans and moderate Democrats, and by pushing for welfare reform.
The reasons why her strategy failed are that the number of producers must be greater than the number of parasites (or else the entire society collapses into chaos) and also that the producers tend to vote and otherwise participate in politics more than the average parasite. (There are other reasons as well, such as the fact that free-market capitalism allows upward mobility for those who are willing to work, so a temporarily-unemployed producer is on the side of the producers, rather than the parasites.)
As a hard-core political activist I'd like to encourage Ms Piven to agitate as much as possible, because I look forward to the results of her tactics. Bring it on, baby! As Lenin said, "The worse, the better."
As William F. Buckley, Jr., remarked, there may be a million violent rioters; there are a million and one lampposts.
The Cloward-Piven strategy was to overwhelm the system with a massive amount of both protests (possibly violent) and also welfare recipients; this was supposed to cause a breakdown of both public discourse and also of public finance.
The idea was that the status quo in both politics and public programs would not be able to handle the new situation and would have to be replaced by something else.
According to Piven, the activism of the 1960s and 1970s was this strategy in action.
As I understand it, those are her claims -- and I completely agree with them so far. Her mistake is believing that the response of the system would be to give in to the demands of the activists and welfare applicants, and replace capitalism with democratic socialism.
Instead, in the 1980s and 1990s the system -- I hesitate to say "Silent Majority" -- responded by voting for right-wing Republicans and moderate Democrats, and by pushing for welfare reform.
The reasons why her strategy failed are that the number of producers must be greater than the number of parasites (or else the entire society collapses into chaos) and also that the producers tend to vote and otherwise participate in politics more than the average parasite. (There are other reasons as well, such as the fact that free-market capitalism allows upward mobility for those who are willing to work, so a temporarily-unemployed producer is on the side of the producers, rather than the parasites.)
As a hard-core political activist I'd like to encourage Ms Piven to agitate as much as possible, because I look forward to the results of her tactics. Bring it on, baby! As Lenin said, "The worse, the better."
As William F. Buckley, Jr., remarked, there may be a million violent rioters; there are a million and one lampposts.
Sunday, November 07, 2010
Modest Proposals: Agenda for the 112th Congress
Social Security, Medicare, Defense, Interest, Welfare, Education, Other.
Useful links:
"A Modest Agenda for a New GOP Congress" by David H. Horwich
"How the New Congress Can Roll Back Obama’s Agenda"
"Republicans won the midterm elections. Now can they survive?"
"Top 10 challenges John Boehner will face as Speaker of the House"
By Bob Cusack
Thousands of Democrats to be jobless in Washington
By Al Kamen
"The Six Arguments You Meet in Political Hell"
"How to Cut $343 Billion from the Federal Budget"
"What Republicans Need to Do Now"
"Conservatives Treat a Foe Like a Foe"
"The Globe discovers that Massachusetts has shot itself in the foot…AGAIN"
http://datechguy.wordpress.com/2010/11/12/the-globe-discovers-that-massachusetts-has-shot-itself-in-the-foot-again/
1. Replace the current tax system with either a flat-rate income tax or a national sales tax, or some combination. This should replace both individual and corporate income tax, capital gains tax, and the Alternative Minimum Tax. A possible tax rate would be 20% or 25%.
It's not necessary to make this revenue-neutral because "starving the beast" doesn't work, and apparently raising taxes makes people more opposed to government spending!
2. Eliminate all earmarks, and all discretionary spending. The first targets should be corporate welfare and the very next targets should be all spending in "blue" areas, i.e. those which voted Democrat. Once that happens, we can expect bipartisan support for eliminating all spending in "red" areas.
Perhaps we can start by using "reverse earmarking": bills will specify that no funds for their programs can be spent in certain areas. When Democrats are faced with a choice between eliminating a program, or keeping it but having it only go to Republican areas, I expect they will see the light.
We can certainly keep government programs such as interstate highways and other transportation, national parks, the United States Postal Service, PBS and anything else, simply by making them self-supporting. Highways will have to be funded by tolls, license fees, and gasoline taxes; parks will be funded by ticket sales and donations; the USPS and PBS will simply have their subsidies eliminated.
3. Replace all current welfare and other social programs (other than Social Security, Medicare, and Medicaid) with a flat-rate demogrant of, say, $10,000 per person per year.
4. Replace Medicare and Medicaid with a comprehensive universal system that gives each person a voucher for whatever it would cost the government to give them basic health care plus catastrophic health insurance from Medicare/Medicaid, but allow people to use the voucher for private insurance, including HSAs that can roll over instead of being literally stolen at the end of each year. To clarify, people with preexisting conditions or other issues which cost more will get bigger vouchers, because the amount of the voucher will be whatever it would cost the government to provide Medicare/Medicaid for that particular person.
This could be funded out of the $10,000 per person demogrant.
5. Replace
http://www.johntreed.com/growth.html
http://www.johntreed.com/Reedhealthcare.html
Useful links:
"A Modest Agenda for a New GOP Congress" by David H. Horwich
"How the New Congress Can Roll Back Obama’s Agenda"
"Republicans won the midterm elections. Now can they survive?"
"Top 10 challenges John Boehner will face as Speaker of the House"
By Bob Cusack
Thousands of Democrats to be jobless in Washington
By Al Kamen
"The Six Arguments You Meet in Political Hell"
"How to Cut $343 Billion from the Federal Budget"
"What Republicans Need to Do Now"
"Conservatives Treat a Foe Like a Foe"
"The Globe discovers that Massachusetts has shot itself in the foot…AGAIN"
http://datechguy.wordpress.com/2010/11/12/the-globe-discovers-that-massachusetts-has-shot-itself-in-the-foot-again/
1. Replace the current tax system with either a flat-rate income tax or a national sales tax, or some combination. This should replace both individual and corporate income tax, capital gains tax, and the Alternative Minimum Tax. A possible tax rate would be 20% or 25%.
It's not necessary to make this revenue-neutral because "starving the beast" doesn't work, and apparently raising taxes makes people more opposed to government spending!
2. Eliminate all earmarks, and all discretionary spending. The first targets should be corporate welfare and the very next targets should be all spending in "blue" areas, i.e. those which voted Democrat. Once that happens, we can expect bipartisan support for eliminating all spending in "red" areas.
Perhaps we can start by using "reverse earmarking": bills will specify that no funds for their programs can be spent in certain areas. When Democrats are faced with a choice between eliminating a program, or keeping it but having it only go to Republican areas, I expect they will see the light.
We can certainly keep government programs such as interstate highways and other transportation, national parks, the United States Postal Service, PBS and anything else, simply by making them self-supporting. Highways will have to be funded by tolls, license fees, and gasoline taxes; parks will be funded by ticket sales and donations; the USPS and PBS will simply have their subsidies eliminated.
3. Replace all current welfare and other social programs (other than Social Security, Medicare, and Medicaid) with a flat-rate demogrant of, say, $10,000 per person per year.
4. Replace Medicare and Medicaid with a comprehensive universal system that gives each person a voucher for whatever it would cost the government to give them basic health care plus catastrophic health insurance from Medicare/Medicaid, but allow people to use the voucher for private insurance, including HSAs that can roll over instead of being literally stolen at the end of each year. To clarify, people with preexisting conditions or other issues which cost more will get bigger vouchers, because the amount of the voucher will be whatever it would cost the government to provide Medicare/Medicaid for that particular person.
This could be funded out of the $10,000 per person demogrant.
5. Replace
http://www.johntreed.com/growth.html
http://www.johntreed.com/Reedhealthcare.html
Saturday, November 06, 2010
Nothing But Class
I just filled out a survey on NBC.com. When asked what I disliked about their website, I replied, truthfully, that
It is very difficult to find a specific clip or episode. Your "filing system" is a horrible mess. Many times I have clicked on a link for a clip or episode, or something else related to a show (such as cast biography), and gotten something completely different. Sometimes I clicked on the link for a show and been taken to a completely different show. This happened so frequently that I COMPLETELY QUIT USING YOUR WEBSITE EXCEPT WHEN I WAS DIRECTED TO IT FROM AN OUTSIDE LINK. THIS IS A BAD THING FOR NBC. BAD JOB! I never go to your website except on the rare occasions when there is a link to it within an article that I read -- and even when there is a link to your site, I usually don't bother to click on it if I see it goes to NBC.com. By the way, since I no longer use a regular television set, this means the only time I ever see any of your shows is on Hulu. Congratulations: from my perspective it would be hard to do a worse job if you were actually trying to do badly. In fact, it seems to be happening right now with the clip that I want to see, which is the link to "Saturday Night Live - Countdown with Keith Olbermann" on http://www.mediaite.com/tv/the-two-underlying-reasons-keith-olbermann-was-suspended-now/
Sunday, October 24, 2010
"Morals" Laws are Immoral
I mean laws against *vices* (a/k/a victimless crimes, a/k/a “morals laws”) such as intoxication (alcohol and/or drugs), masturbation, fornication, sodomy, and gluttony.
Murder, theft, assault and trespass are all examples of real crimes. They are not examples of *subjective* or “personal” morality because literally no one wants to be the victim of such acts — even those criminals who want to commit them on others. Therefore, enforcing those laws is legitimate.
Murder, theft, assault and trespass are all examples of real crimes. They are not examples of *subjective* or “personal” morality because literally no one wants to be the victim of such acts — even those criminals who want to commit them on others. Therefore, enforcing those laws is legitimate.
Sunday, October 17, 2010
Meet the New Boss, Same as the Old Boss?
"The Risk of Post-Election Republican Betrayal and What We Should Do about It."
I am a "public choice" economist, i.e. someone who analyzes politics using the theories and techniques of economics.
Bottom line: I believe that we get whatever policies the average voter wants, or rather whatever policies that special interests want and the average voter is willing to put up with.
I am a "public choice" economist, i.e. someone who analyzes politics using the theories and techniques of economics.
Bottom line: I believe that we get whatever policies the average voter wants, or rather whatever policies that special interests want and the average voter is willing to put up with.
Sunday, July 04, 2010
Modest Proposals: A Gentlemen's Agreement on the Supreme Court
[Dogbert has been nominated to the Supreme Court:]
Senator: Do you have any opinions on the right to privacy?
Dogbert: No. In fact, I never formed an important opinion in my entire life.
Senator: You must think we're idiots!
Dogbert: Okay, I've formed one opinion, but that's all.
I personally would refuse to confirm a nominee who didn't give clear answers on how they would rule in various hypothetical cases. Furthermore, I would specifically point out their evasive answers meant they were either dishonest or incompetent, probably the former, and that's why I didn't consider them qualified.
On the other hand, I would not have any problem confirming a nominee whose opinions I disagreed with. Like many of the posters on The Volokh Conspiracy I believe that the Senate should give deference to the President's nominees.
One way of handling this would be to have a rule -- not a law but a "gentlemen's agreement" -- that each President is entitled to nominate one new justice to the Supreme Court. In other words, rather than a lifetime appointment, being a justice of the Supreme Court should be the equivalent of a 36-year term.
Like other "constitutional bargains" -- this is something we study in economics, specifically in my favorite field, public choice -- the idea behind it is that it treats both sides equally and neither of them knows whether they will be benefited or harmed by it.
If this were the case, i.e. if each of the last nine presidents had appointed one justice, it would be:
Obama (D)
Bush (R)
Bush (R)
Clinton (D)
Clinton (D)
Bush (R)
Reagan (R)
Reagan (R)
Carter (D)
In other words, the court would be divided between five Republican justices and four Democratic ones.
Senator: Do you have any opinions on the right to privacy?
Dogbert: No. In fact, I never formed an important opinion in my entire life.
Senator: You must think we're idiots!
Dogbert: Okay, I've formed one opinion, but that's all.
I personally would refuse to confirm a nominee who didn't give clear answers on how they would rule in various hypothetical cases. Furthermore, I would specifically point out their evasive answers meant they were either dishonest or incompetent, probably the former, and that's why I didn't consider them qualified.
On the other hand, I would not have any problem confirming a nominee whose opinions I disagreed with. Like many of the posters on The Volokh Conspiracy I believe that the Senate should give deference to the President's nominees.
One way of handling this would be to have a rule -- not a law but a "gentlemen's agreement" -- that each President is entitled to nominate one new justice to the Supreme Court. In other words, rather than a lifetime appointment, being a justice of the Supreme Court should be the equivalent of a 36-year term.
Like other "constitutional bargains" -- this is something we study in economics, specifically in my favorite field, public choice -- the idea behind it is that it treats both sides equally and neither of them knows whether they will be benefited or harmed by it.
If this were the case, i.e. if each of the last nine presidents had appointed one justice, it would be:
Obama (D)
Bush (R)
Bush (R)
Clinton (D)
Clinton (D)
Bush (R)
Reagan (R)
Reagan (R)
Carter (D)
In other words, the court would be divided between five Republican justices and four Democratic ones.
Friday, April 09, 2010
How To Solve The Financial Crisis
Someone asked me to recommend him some academic economics journal articles about the causes of the Financial Crisis. I demurred, and explained why:
Mainstream economics, and at least 80% of all economics, is "free-market" in the sense that it understands and approves of the free market, and only wants to interfere with it when it will actually do some good for society as a whole, and wants the intervention to be as small and as market-based as possible.
So it would only support things like a Negative Income Tax (which Milton Friedman invented), or school vouchers (which Friedman also supported), and other sorts of vouchers.
To clarify even more: The overwhelming majority of economists dislike the vast majority of current government programs, even though they are moderate-liberal Democrats themselves. (For the question of why they still support the Democrats even though they oppose their programs, I refer you to Professor Klein, whose class I'm typing this in, and also Arnold Kling. Kling says it's "culture" or "psychological identification" -- they're more comfortable with fellow-intellectuals that they disagree with, rather than rednecks that they despise. They'd rather belong to the party of Soft Heads than the party of Hard Hearts.)
So just about *any* economics journal article would be acceptable.
Second, to quote Nobel Prize-winner George Stigler, "The typical article in a professional journal is unrelated to public policy -- and often apparently unrelated to anything in reality." So from that point of view *no* journal article would be acceptable. Use blogs, or articles in "popular journals," e.g. Atlantic or The Economist, instead.
Third, people -- even experts who are generally within the same economic doctrine -- are still arguing about what went wrong, never mind how to fix it.
Bottom line: Google "financial" and "crisis" at site:econlog.econlib.org
Here's my take on what happened:
1. For a variety of reasons, some due to human miscalculation and some due to government intervention, we had a housing bubble: prices rose above a reasonable level, people kept buying anyway, and people overextended themselves buying housing on credit (zero-down mortgages).
Clear definition of a reasonable level: If bonds are paying 3% per year (33 x earnings) it's not reasonable to pay 50 x (expected) earnings for stocks. It makes no sense! It might make sense for a specific stock if you thought its expected earnings were going to skyrocket, or if you thought everyone else was about to mistakenly think its expected earnings were going to skyrocket, but not to do it across the board.
2. Eventually the bubble burst and housing prices dropped drastically. Therefore some people started defaulting on their mortgages (because they weren't worth keeping -- the debt was higher than the new value of the house) and even the mortgages that didn't default (yet) had to be re-valued and banks suddenly found their collateral for loans had disappeared and their balance sheets were horrible. For a variety of reasons, partly because the housing bubble had so many participants and partly because the risk was "spread around" by "bundling" mortgages, this meant a *lot* of banks and other financial houses were hit.
3. When the housing bubble burst, it also affected people who were relatively solvent, by dropping the value of their houses; and this affected the stock market. People *were* buying stocks by using the equity in their homes, and felt fine about it; now the equity disappeared -- it was just as if they found out their rich uncle who previously said he would leave all his wealth to them had suddenly decided to disinherit them -- started selling off stocks because they wanted cash in hand. This drove the value of stocks down, which caused even more panic selling.
4. Therefore, not only were people defaulting on mortgages but there were also people whose lives were unaffected by anything physical, anything that could be seen by watching a silent videotape of Before versus After, who felt poor and/or panicked. People who still had jobs and could meet their mortgage payments (same as before) and pay their groceries and utility bills (same as before) because all their paper wealth (the equity of their houses, and the value of their stock portfolios) had evaporated. (By the way, one extremely important thing to understand is that my vampire RPG character, Mr Grey a/k/a Caliban, lost 3/4 of his wealth in the crisis, because almost all of his wealth was in stocks and real estate -- I had established the basics of his investments when I created him back in 2002!)
5. Also, businesses were affected because capital dried up. People saved/invested less because they didn't have paper wealth, so they didn't have as much money to put into banks. (Previously, they had been getting cash by refinancing their houses, or by selling them, at inflated prices, or from the stock market, and then putting it into banks or stocks or more real estate.) And so banks didn't have as much cash on hand *and* they couldn't make any new loans anyway, because they were overextended because the value of the collateral on all their previous loans was gone. It was exactly as if tornadoes had devastated all the houses so there wasn't any collateral value left.
6. Banks reacted by drastically reducing the amount of new loans they made. Partly they raised their interest rates but mostly they just became very, very cautious; they wanted to see huge amounts of collateral before they would make a loan for anything, either homes or business loans or automobile loans or anything else. This helped cause a *real* recession (decline in employment and production and incomes, which then causes more decline, etc.) in addition to the crash of *paper* wealth (loss of value of real estate and stocks).
7. IMO the proper response by government would have been to say "Nobody is too big to fail; when you play with fire, you gonna get burn'; when you take the profits you gotta take the losses as well. We have guaranteed people's bank accounts up to $100,000 per person if they failed; we will make a special temporary increase up to $250,000 or $500,000 for the next year or two to cushion the blow so people aren't hurt *too* badly. We will also increase unemployment benefits to help those who have temporarily lost their jobs due to the recession. We will also reform the welfare system" -- hey, I'm like Rahm Emmanuel, I never want to let a good crisis go to waste, and reforming welfare to be more like a Negative Income Tax / Guaranteed Income system is something we should have done 40 years ago -- "and eliminate corporate welfare and other subsidies" -- as I always say, I don't know if we need more spending the less-fortunate but we definitely need less spending on the more-fortunate -- "and use all those savings to cut the deficit, which will boost the economy while bringing us *out* of debt instead of further into it."
8. Unfortunately, the government decided, by the most amazing coincidence, to do something to help out the people and groups who were politically powerful and well-connected. So they decided to bail out Wall Street bankers and brokers, and also the people who defaulted on their mortgages that they should never have gotten in the first place, and the non-Wall Street bankers who should never have given those mortgages in the first place -- in other words, gangs of criminals who ripped off hard-working taxpayers. I have some sympathy for poor, uneducated people who lied on their mortgage documents, but no sympathy for white-collar criminal "banksters" who told them to do it.
Mainstream economics, and at least 80% of all economics, is "free-market" in the sense that it understands and approves of the free market, and only wants to interfere with it when it will actually do some good for society as a whole, and wants the intervention to be as small and as market-based as possible.
So it would only support things like a Negative Income Tax (which Milton Friedman invented), or school vouchers (which Friedman also supported), and other sorts of vouchers.
To clarify even more: The overwhelming majority of economists dislike the vast majority of current government programs, even though they are moderate-liberal Democrats themselves. (For the question of why they still support the Democrats even though they oppose their programs, I refer you to Professor Klein, whose class I'm typing this in, and also Arnold Kling. Kling says it's "culture" or "psychological identification" -- they're more comfortable with fellow-intellectuals that they disagree with, rather than rednecks that they despise. They'd rather belong to the party of Soft Heads than the party of Hard Hearts.)
So just about *any* economics journal article would be acceptable.
Second, to quote Nobel Prize-winner George Stigler, "The typical article in a professional journal is unrelated to public policy -- and often apparently unrelated to anything in reality." So from that point of view *no* journal article would be acceptable. Use blogs, or articles in "popular journals," e.g. Atlantic or The Economist, instead.
Third, people -- even experts who are generally within the same economic doctrine -- are still arguing about what went wrong, never mind how to fix it.
Bottom line: Google "financial" and "crisis" at site:econlog.econlib.org
Here's my take on what happened:
1. For a variety of reasons, some due to human miscalculation and some due to government intervention, we had a housing bubble: prices rose above a reasonable level, people kept buying anyway, and people overextended themselves buying housing on credit (zero-down mortgages).
Clear definition of a reasonable level: If bonds are paying 3% per year (33 x earnings) it's not reasonable to pay 50 x (expected) earnings for stocks. It makes no sense! It might make sense for a specific stock if you thought its expected earnings were going to skyrocket, or if you thought everyone else was about to mistakenly think its expected earnings were going to skyrocket, but not to do it across the board.
2. Eventually the bubble burst and housing prices dropped drastically. Therefore some people started defaulting on their mortgages (because they weren't worth keeping -- the debt was higher than the new value of the house) and even the mortgages that didn't default (yet) had to be re-valued and banks suddenly found their collateral for loans had disappeared and their balance sheets were horrible. For a variety of reasons, partly because the housing bubble had so many participants and partly because the risk was "spread around" by "bundling" mortgages, this meant a *lot* of banks and other financial houses were hit.
3. When the housing bubble burst, it also affected people who were relatively solvent, by dropping the value of their houses; and this affected the stock market. People *were* buying stocks by using the equity in their homes, and felt fine about it; now the equity disappeared -- it was just as if they found out their rich uncle who previously said he would leave all his wealth to them had suddenly decided to disinherit them -- started selling off stocks because they wanted cash in hand. This drove the value of stocks down, which caused even more panic selling.
4. Therefore, not only were people defaulting on mortgages but there were also people whose lives were unaffected by anything physical, anything that could be seen by watching a silent videotape of Before versus After, who felt poor and/or panicked. People who still had jobs and could meet their mortgage payments (same as before) and pay their groceries and utility bills (same as before) because all their paper wealth (the equity of their houses, and the value of their stock portfolios) had evaporated. (By the way, one extremely important thing to understand is that my vampire RPG character, Mr Grey a/k/a Caliban, lost 3/4 of his wealth in the crisis, because almost all of his wealth was in stocks and real estate -- I had established the basics of his investments when I created him back in 2002!)
5. Also, businesses were affected because capital dried up. People saved/invested less because they didn't have paper wealth, so they didn't have as much money to put into banks. (Previously, they had been getting cash by refinancing their houses, or by selling them, at inflated prices, or from the stock market, and then putting it into banks or stocks or more real estate.) And so banks didn't have as much cash on hand *and* they couldn't make any new loans anyway, because they were overextended because the value of the collateral on all their previous loans was gone. It was exactly as if tornadoes had devastated all the houses so there wasn't any collateral value left.
6. Banks reacted by drastically reducing the amount of new loans they made. Partly they raised their interest rates but mostly they just became very, very cautious; they wanted to see huge amounts of collateral before they would make a loan for anything, either homes or business loans or automobile loans or anything else. This helped cause a *real* recession (decline in employment and production and incomes, which then causes more decline, etc.) in addition to the crash of *paper* wealth (loss of value of real estate and stocks).
7. IMO the proper response by government would have been to say "Nobody is too big to fail; when you play with fire, you gonna get burn'; when you take the profits you gotta take the losses as well. We have guaranteed people's bank accounts up to $100,000 per person if they failed; we will make a special temporary increase up to $250,000 or $500,000 for the next year or two to cushion the blow so people aren't hurt *too* badly. We will also increase unemployment benefits to help those who have temporarily lost their jobs due to the recession. We will also reform the welfare system" -- hey, I'm like Rahm Emmanuel, I never want to let a good crisis go to waste, and reforming welfare to be more like a Negative Income Tax / Guaranteed Income system is something we should have done 40 years ago -- "and eliminate corporate welfare and other subsidies" -- as I always say, I don't know if we need more spending the less-fortunate but we definitely need less spending on the more-fortunate -- "and use all those savings to cut the deficit, which will boost the economy while bringing us *out* of debt instead of further into it."
8. Unfortunately, the government decided, by the most amazing coincidence, to do something to help out the people and groups who were politically powerful and well-connected. So they decided to bail out Wall Street bankers and brokers, and also the people who defaulted on their mortgages that they should never have gotten in the first place, and the non-Wall Street bankers who should never have given those mortgages in the first place -- in other words, gangs of criminals who ripped off hard-working taxpayers. I have some sympathy for poor, uneducated people who lied on their mortgage documents, but no sympathy for white-collar criminal "banksters" who told them to do it.
Saturday, January 23, 2010
Just Posted on Vanity Fair
If the Supremes had made the decision Mr Rollins wanted, it means (as Ilya Somin points out) that *unions* would have been banned from making political contributions, and (as Matt Welch points out) *nonprofit* corporations would have been banned from making political statements.
Would Mr Rollins have approved if MoveOn.org’s Campaign to Defend America had been blocked by George W. Bush’s Federal Elections Commission from broadcasting a documentary called “McCain: The Movie” during the 2008 election?
Because that's exactly what the FCC tried to do with Citizens United, and apparently he supports that decision.
Or does he only want free speech rights for those who agree with him? Is he a fool or a hypocrite?
[Update:] I apologize for calling Mr Rollins a fool or a hypocrite; I do think his *opinion* is either foolish or unjust. If organized groups are banned from politics then only individuals will be able to make political statements and contributions -- and that gives a big advantage to rich individuals. It's easier and simpler to get $1 million from one donor than to get $1000 from a thousand or $10 from ten thousand. Organized groups like PACs and unions help coordinate the contributions of the middle- and working-classes so they can help balance those of the rich. And I repeat that if we allow this for progressive organizations it is unfair to deny equal rights to reactionary ones.
Would Mr Rollins have approved if MoveOn.org’s Campaign to Defend America had been blocked by George W. Bush’s Federal Elections Commission from broadcasting a documentary called “McCain: The Movie” during the 2008 election?
Because that's exactly what the FCC tried to do with Citizens United, and apparently he supports that decision.
Or does he only want free speech rights for those who agree with him? Is he a fool or a hypocrite?
[Update:] I apologize for calling Mr Rollins a fool or a hypocrite; I do think his *opinion* is either foolish or unjust. If organized groups are banned from politics then only individuals will be able to make political statements and contributions -- and that gives a big advantage to rich individuals. It's easier and simpler to get $1 million from one donor than to get $1000 from a thousand or $10 from ten thousand. Organized groups like PACs and unions help coordinate the contributions of the middle- and working-classes so they can help balance those of the rich. And I repeat that if we allow this for progressive organizations it is unfair to deny equal rights to reactionary ones.
Wednesday, October 21, 2009
Too Skinny Even For Me
I enjoy Ralph Lauren's fashion sense -- it reminds me of the Reagan era -- you know, "morning in America" -- but this time I'm on the other side, along with Xeni, Cory Doctorow, Instapundit, Popehat, and the American Bar Association:
Sunday, July 05, 2009
Saturday, July 04, 2009
Hear, Hear
"The party's over. Neither I nor anyone else in government has a right to anything you earn or own. And you have no right to anything that I or anyone else earns or owns.
"It's okay to love your neighbor, but I have no right to force you to take care of his medical needs ... or support him money if he loses his job ... or hire him at a wage that I deem to be fair ... or help him financially, or otherwise, in any other way.
"From octomoms in California to welfare bums in Massachusetts ... from environmen-talists in Oregon to heroine addicts in New York City ... I have no right to force you to accommodate their desires just because they call them needs. And by no stretch of the imagination are anyone's "needs" rights. The only rights an individual possesses are those given to him by God."
Wednesday, June 10, 2009
"Reporters tend to treat public policy issues with all the depth of, well, movie directors: See problem. Talk about problem. WHY ISN'T PROBLEM BEING FIXED!" -----Matt Welch, "Ink-Stained Retch"
Never Again
"The fact that the Holocaust Museum
needs armed guards
is why we need a Holocaust Museum." -----James Lileks
needs armed guards
is why we need a Holocaust Museum." -----James Lileks
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