09 Jan 2010

Bob Murphy, Neo-Confederate?

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Steve Landsburg has the distinction of (possibly) being a more narcissistic economics blogger than me. (As Vader would say, “Impressive.”) Not only did Steve decide his readers should see his personal list of heroes, but he broke it up over three posts, making them guess at the identity of the people who were pictured.

Anyway, one of the people on Landsburg’s list was Abraham Lincoln. (Everyone identified that portrait in round one.) During the post-game show, one of the commenters was horrified at the inclusion of “The Great Murderer” but I tried a friendlier approach:


If you’re still reading, I would love to hear your reasons for including Lincoln. I have the same misgivings as the other commenter above, though I was going to introduce them with levity. (E.g. “I know you like math, Steve, so is that why you included the guy who maximized the wartime deaths of Americans?”)

Don’t get me wrong, I grew up thinking Lincoln was great, just as I thought FDR was great. But when I actually started thinking about things (a la your bathtub drain), I realized: “Wait a second, doesn’t ‘he saved the Union’ describe the same behavior that King George engaged in when the colonists decided to split?”

I’m being dead serious here. If you’re new to my blog, and had never really thought much about it, I’m curious to know: Do you think Abraham Lincoln is great, and if so, why? Isn’t the whole point of our “way of life” that we allow people to choose their own forms of government?

Let me deal with the obvious rejoinder: The U.S. colonies had slavery when they seceded from Great Britain. If King George had promised to free the American slaves, would you have rooted for the colonists to lose the American Revolution?

08 Jan 2010

Ludwig von Mises On the Health Insurance Bill

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[UPDATE below.]

Ever since I finished the Study Guide to Mises’ magnus opus, he has been communicating with me from beyond the grave. I asked him what he thought of the pending health insurance legislation, and he reminded me of his general principles of the dynamics of interventionism. Once the government interferes with one aspect of the market, it can’t stop there. Things would be even worse than before the initial intervention. So the government has to do a second, third, fourth…interventions, until you either stop–amidst a completely muddled system that everyone recognizes is awful–or go full-bore until you hit socialism.

I understood the general principle, but I asked Dr. Mises to apply it to this particular case. So he said:

Start with the proposition that we don’t want our fellow citizens denied coverage because of preexisting conditions — which is a very popular position, so much so that even conservatives generally share it, or at least pretend to.

So why not just impose community rating — no discrimination based on medical history?

Well, the answer, backed up by lots of real-world experience, is that this leads to an adverse-selection death spiral: healthy people choose to go uninsured until they get sick, leading to a poor risk pool, leading to high premiums, leading even more healthy people dropping out.

So you have to back community rating up with an individual mandate: people must be required to purchase insurance even if they don’t currently think they need it.

But what if they can’t afford insurance? Well, you have to have subsidies that cover part of premiums for lower-income Americans.

In short, you end up with the health care bill that’s about to get enacted. There’s hardly anything arbitrary about the structure: once the decision was made to rely on private insurers rather than a single-payer system — and look, single-payer wasn’t going to happen — it had to be more or less what we’re getting. It wasn’t about ideology, or greediness, it was about making the thing work.

I see that in the afterlife Mises is following Hayek’s example and trying to convert socialists.

UPDATE: Lew Rockwell emails with an actual quote from Mises’ Socialism:

“To the intellectual champions of social insurance, and to the politicians and statesmen who enacted it, illness and health appeared as two conditions of the human body sharply separated from each other and always recognizable without difficulty or doubt. Any doctor could diagnose the characteristics of ‘health.’ ‘Illness’ was a bodily phenomenon which showed itself independently of human will, and was not susceptible to influence by will. There were people who for some reason or other simulated illness, but a doctor could expose the pretense. Only the healthy person was fully efficient. The efficiency of the sick person was lowered according to the gravity and nature of his illness, and the doctor was able, by means of objectively ascertainable physiological tests, to indicate the degree of the reduction of efficiency.

“Now every statement in this theory is false. There is no clearly defined frontier between health and illness. Being ill is not a phenomenon independent of conscious will and of psychic forces working in the subconscious. A man’s efficiency is not merely the result of his physical condition; it depends largely on his mind and will. Thus the whole idea of being able to separate, by medical examination, the unfit from the fit and from the malingerers, and those able to work from those unable to work, proves to be untenable. Those who believed that accident and medical insurance could be based on completely effective means of ascertaining illnesses and injuries and their consequences were very much mistaken. The destructionist aspect of accident and health insurance lies above all in the fact that such institutions promote accidents and illness, hinder recovery, and very often create, or at any rate intensify and lengthen, the functional disorders which follow illness or accident.

“Feeling healthy is quite different from being healthy in the medical sense, and a man’s ability to work is largely independent of the physiologically ascertainable and measurable performances of his individual organs. The man who does not want to be healthy is not merely a malingerer. He is a sick person. If the will to be well and efficient is weakened, illness and inability to work is caused. By weakening or completely destroying the will to be well and able to work, social insurance creates illness and inability to work; it produces the habit of complaining – which is in itself a neurosis – and neuroses of other kinds. In short, it is an institution which tends to encourage disease, not to say accidents, and to intensify considerably the physical and psychic results of accidents and illnesses. As a social institution it makes a people sick bodily and mentally or at least helps to multiply, lengthen, and intensify disease.”

I’m going to go out on a limb and say that Mises would not endorse the present bill.

08 Jan 2010

For Road Trips of Moderate Length…

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…why not listen to a guy with a sweet English accent read my Chaos Theory? Intro here, audio recording here.

08 Jan 2010

The Connection Between Drug Prohibition and Violence

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If you read a standard economic treatment of drug prohibition, it will probably say that drug dealers become more violent since they can’t use the police and courts to protect their property.

At first that sounds fine, but if you are suspicious of government “services” then you start to wonder. In fact, I think the argument is totally wrong. There are all sorts of commercial transactions that aren’t really backed up by the government; people spend lots of money every day buying things on eBay or Amazon from perfect strangers who live on the other side of the country. In principle you could sue them if they didn’t ship you the jewelry or the rare book or the signed photo of Paul Reubens, but in practice these transactions rely on reputation and the private-sector hosts’ incentives to make sure their customers have enjoyable experiences.

So anyway I’m working on a project for high school kids, and I’m making this general point. A new aspect of this occurred to me and I put it in a footnote, but only Free Advice readers can see it. The rest of the riffraff out there will have to wait until the summer when the book comes out.

Here’s the footnote:

Indeed, if drug dealers could conduct major transactions using electronic payments routed through a universally respected third party, the number of violent drug deals “gone bad” would plummet. Rather than bringing suitcases of cash (along with heavily armed bodyguards) to parking garages in the dead of night, a cocaine retailer could deposit $1 million with a reputable financial institution, which would agree to transfer the funds to a Colombian wholesaler once the retailer had received his goods. (The process could unfold in stages if the Colombians wanted to make sure they weren’t double-crossed.) The reason drug dealers currently can’t operate in this fashion isn’t that they fear a bank will steal their money and then the drug dealers won’t be able to call the police. The first time that happened, nobody—even people unconnected with the drug trade—would use that bank again. In reality drug dealers can’t use the simple mechanism we’ve described because of the risk that the government would seize their funds as “drug money.” So we see that it is not government neglect, but government enforcement of drug laws, that makes violence more appealing in the drug trade.

07 Jan 2010

Glenn Greenwald Explains: "Why Do They Hate Us?"

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Sometimes I just have to marvel at how succinctly Glenn Greenwald crystallizes things that have been bothering me. He has the extra benefit of actually being knowledgeable on issues of terrorism and the law, which is nice. Here’s a great passage from today, but you should read the whole post:

[I]t’s impossible to grow accustomed to the extreme fantasy atmosphere and self-absorbed blindness that pervades American discussions over Terrorism, especially in the wake of a new scare. The Right, seeking as always to exploit Terrorism fears, falsely accuses Obama of not displaying “war” language and a “war” mentality, in response to which he and his aides step forward to affirm — yet again — that WE ARE AT WAR!, and to point to all of the times Obama decreed this to be so and all of the war actions he has ordered. So we’ve spent the last decade screaming to the world that WE ARE AT WAR!, that we’re a War Nation, that we’re led by a War President. That we are “at war”…is an absolute bipartisan orthodoxy that must be affirmed by all Serious people. And we are currently waging some form of actual war in no fewer than five predominantly Muslim countries (Afghanistan, Pakistan, Iraq, Yemen and Somalia); are threatening Iran with “crippling” sanctions and — from our more deranged quarters — war; and continuing our unbroken devotion to Israel’s causes.

Yet even in the face of all of that, it is bewilderment and confusion that reign when our media stars and political figures talk about attempts to attack Americans. Why would they possibly want to do this? They must be crazy, or drunk with religious fervor, or consumed by blinding, inhumane hatred. Much of that is probably true for individuals willing to blow themselves up in order to slaughter as many innocent civilians as possible. But it’s equally irrational to think that you’re going to spend a full decade bellowing WE ARE AT WAR! to the world, send bombs and troops and all forms of death to multiple Muslim countries (both directly and through Israel), and not have that directed back at us. That’s what happens when a country is “at war” — it doesn’t just get to blow up things and people in other countries, but its own things and people sometimes get blown up as well. That’s how “war” works.

It’s truly astounding to watch us — for a full decade — send fighter jets and drones and bombs and invading forces and teams of torturers and kidnappers to that part of the world, or, as we were doing long before 9/11, to overthrow their governments, prop up their dictators, occupy what they perceive as holy land with our foreign troops, and arm Israel to the teeth, and then act surprised and confused when some of them want to attack us. In general, the U.S. only attacks countries with no capabilities to attack us back in the “homeland” — at least not with conventional forces. As a result, we have come to believe that any forms of violence we perpetrate on them over there is justifiable and natural, but the Laws of Humanity are instantly breached in the most egregious ways whenever they bring violence back to the U.S., aimed at Americans. It’s just impossible to listen to discussions grounded in this warped mentality without being astounded at how irrational it is. What do Americans think is going to happen if we continue to engage in this conduct, in this always-widening “war”?

07 Jan 2010

Economic Blogger Ranking, By Scholarly Impact

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Check out this article (HT2 Greg Mankiw). It has a table ranking econ bloggers by scholarly impact. I don’t mind being beaten by Paul Samuelson, or Nouriel Roubini, or even Tyler Cowen or Bryan Caplan for that matter. But Stephan Kinsella?! What the heck?! (Incidentally we have surpassed our weekly quota of I-hate-GMU / no-I-hate-Auburn so please let’s not start it up on this post too.)

07 Jan 2010

If the Mises Institute Did Not Exist, We Would Have to Invent It

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Arnold Kling is frustrated with the prospects for libertarians. He writes:

One idea, promoted at Cato by Brink Lindsey and Will Wilkinson, is liberaltarianism [sic]. The idea is to approach liberals and say, “we’re with you on social issues and we’re also dovish on foreign policy. Let us persuade you that markets are good for the economy.”

The problem is that liberals tend to affiliate themselves with Harvard types, and Harvard types believe that they are smarter than markets.

But Kling has a solution, libertarians should court the rank of file Tea Party protesters: “I think it might be good to have some TeaPartarians, meaning intellectual supporters of free markets who are comfortable working with the Tea Party folks.”

In the comments I left the following enigmatic declaration:

Arnold Kling wrote:

I think it might be good to have some TeaPartarians, meaning intellectual supporters of free markets who are comfortable working with the Tea Party folks.

Recalculation Argument : Austrian business cycle theory :: TeaPartarians : Ludwig von Mises Institute

07 Jan 2010

Glenn Greenwald Points Out (Some) Progressives’ Hypocrisy on Obama vs. Bush

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Another great post by GG, this time on Obama’s apologists explaining that there will be a trial for the underwear bomber because “we live under the rule of law.” Here’s GG:

So in order to justify giving a civilian trial to AbdulMutallab, [Obama terrorism advisor] John Brennan cites the fact that we are “a nation of laws.” Progressives defending the decision to treat AbdulMutallab as a civilian criminal are similarly invoking “the rule of law.” The Washington Monthly’s Steve Benen, for instance, cites The American Prospect’s Adam Serwer to argue that “‘it’s really remarkable that we’ve gotten to a point in American history where the Republican Party has managed to make fair trials for people who commit crimes ‘controversial’” and adds: “that Brennan has to mount a ‘defense’ for following the rule of law, the same exact way the Bush administration did, suggests just how far the discourse has strayed from reality.”

Benen is right that the Obama administration is essentially doing what the Bush administration did with regard to terrorism suspects, but what does that have to do with “the rule of law”? How can anyone possibly argue simultaneously that (a) the “rule of law” requires civilian trials and (b) the Obama administration is following the “rule of law,” when: (c) the Obama administration is explicitly denying civilian trials to numerous terrorism suspects whenever it feels like doing so? If someone actually believes that “the rule of law” requires civilian trials for terrorism suspects, then it cannot be rationally argued that the Obama administration is upholding the “rule of law,” since providing civilian trials — which the “rule of law” supposedly requires — is a policy they are explicitly rejecting.

If the “rule of law” only requires a trial when the State is absolutely certain it can convict someone because it has “plenty of evidence against them” — and then allows the use of military commissions or indefinite detention when the evidence is weak — then “the rule of law” is a ludicrous joke. Criminally charging people only when you know in advance you can win — and imprisoning the rest without the benefit of criminal charges — is a sham system of show trials that is the opposite of “the rule of law.”

It is perfectly fair and accurate to point out that Cheneyite Republicans are being partisan hypocrites for attacking the Obama DOJ for doing exactly that which the Bush administration did: namely, trying some terrorism suspects in civilian courts and holding the rest without trials. But what about progressives who spent eight years accusing the Bush administration of “shredding the Constitution” and gravely assaulting our political system as a result of its detention policy, yet who are now venerating the Obama administration as “upholding the rule of law” even as they deny trials to scores of detainees?