17 Nov 2009

CNBC: "3.7% Annualized Inflation Rate Is Tame"

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On its main page CNBC linked to this article with the headline “Inflation at Bay as Wholesale Prices Remain Tame.” As with just about every blurb of this nature, I have to ask: What is the cutoff point at which inflation is not at bay? From the article:

U.S. producer prices rose more slowly than expected in October despite a rebound in food and energy costs, according to a government report on Tuesday that pointed to tame inflation pressures.

The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate rose 0.3 percent following a 0.6 percent drop in September.

So let’s see… If you take 1.003 and raise it to the twelfth* power, you get a 3.7% increase (with rounding). Is everyone comfortable knowing that a 3.7% annual inflation rate is considered tame?

As always, I know I know, you can’t freak out about a single month’s blip. But these news stories are always couched in reaction to the single month’s blip. And as far as the year/year comparison, I’ve been saying all year how nonsensical that is, since prices fell like a stone last year up to December, and have been rising steadily ever since. From Dec 08 through October 09, the Producer Price Index is up 2.6%, and when you adjust it for only being 10 months, that works out to an annualized rate (in 2009) of 3.1%. Not the Weimar Republic, to be sure, but hardly evidence of “tame inflation.”

Here’s what I want to know: In January, when they are reporting the PPI and CPI numbers for December 2009, is everyone going to freak out when all of a sudden the year/year numbers go through the roof? Nah, I’m sure at that point somebody at CNBC or Bloomberg say, “You know, I wonder if the year/year figures have been screwy all this time? Don’t worry folks, inflation is still at bay!”

By the way, in case you are skeptical of my rhetoric: I am not flipping back to my worries of imminent explosions in the CPI. The big spurt in M1 and M2 back in late 2008 have been moderated by the lack of growth starting in about March of 2009.

Even so, I still maintain that the press is constantly pushing this “deflation trap” idea, when the actual numbers (as doctored as they are) illustrate the exact opposite story.

* It took me three or four tries before Blogger liked my spelling of twelfth.

16 Nov 2009

Jeffrey Tucker Continues His Assault on IP

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I admit there are still some areas that make me uneasy, but ever since reading Stephan Kinsella’s “Against Intellectual Property” [.pdf] I have thought IP cannot stand. At Mises.org Jeff Tucker goes over one of the latest absurdities flowing from the principle of owning ideas:

Some Harvard professors are taking very seriously their “intellectual property rights” and have claimed copyright to the ideas that they spread in their classrooms. What prompted this was a website in which students posted their notes to help other students.

The professors have cracked down. It might have been enough to legislate against this behavior in particular. Instead, they wrapped their objection in the great fallacy of our age: the professor owns his ideas and they may not be spread without his permission.

This action has opened up a can of worms, and now other universities have taken up the puzzling question: how do you at once enforce intellectual property and uphold the ideal of a university, which is, after all, about teaching and spreading ideas to others?

If I’m understanding Jeff correctly, students at some schools are actually having to (or may soon have to?) sign contracts like this before taking a class:

My lectures are protected by state common law and federal copyright law. They are my own original expression and I record them at the same time that I deliver them in order to secure protection. Whereas you are authorized to take notes in class thereby creating a derivative work from my lecture, the authorization extends only to making one set of notes for your own personal use and no other use. You are not authorized to record my lectures, to provide your notes to anyone else or to make any commercial use of them without express prior permission from me.

Of course we can come up with “obvious” cases where it seems as if someone is stealing from somebody else. E.g. if someone bought a copy of one of my books, slapped his name on it, and mass produced it as “his” book, I’d be furious.

However, given my present views, I would have to say that technically he didn’t steal “my book.” If he committed a true crime at all, it was that we had an implicit contract that he wouldn’t engage in such behavior when he bought the physical item containing the arrangement of words that I (and the editors) had discovered / created.

If you say people can own an idea, you run into all sorts of problems really fast. E.g. let’s say a mathematician proves some new and important result (like the Riemann hypothesis). Can subsequent mathematicians rely on the result in their own proofs, or do they need to pay him to get a license to use it?

If you can imagine the absurdity and material poverty the above system would cause (relative to one where there are no property rights in theorems), then you can imagine how much more sensible and richer we just might be if States didn’t enforce IP laws.

16 Nov 2009

The Economic Consensus on Climate Change Legislation?

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Agnostic readers will be relieved to see that I have an IER post that does not mention the Holy Spirit:

The Institute for Policy Integrity (IPI) recently released a survey [.pdf] of 144 leading economists who have published peer-reviewed articles on climate change. In the media blitz accompanying the release of the study, IPI spokespeople sold its results as a “consensus” among expert economists comparable to that of the climate scientists. They gave the average person the impression that only a fool or a tool of big business could possibly oppose the Waxman-Markey or Kerry-Boxer bills.

This is completely misleading. It is true that the vast majority of the surveyed economists believe that climate change poses a threat to the economy. However, this alone doesn’t mean that their work endorses the pending legislation. In fact, we will show that many of the responses in the survey underscore that Congress’ proposed “solutions” to climate change violate the recommendations of even those economists who are very concerned about climate change.

16 Nov 2009

Another Bailout on FDIC’s Plate?

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(HT2 Peter Klein)

16 Nov 2009

The Hope of Victory

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Inspired by true events, I wrote up this article for LRC. Lots of love/hate mail on this one so far. An excerpt:

[T]his clever answer doesn’t really solve the problem of evil. Is it really true that a secular humanist, armed with all the knowledge of economics, could convince a David Rockefeller or a Henry Paulson that his standard of living would be improved by abiding by the tenets of classical liberalism? If those examples leave the reader unsure, what about Kim Jong-il? If Ayn Rand were locked in a room with the North Korean leader, could she really convince him that the value of his own life would be enhanced by refraining from looting others?

16 Nov 2009


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* Is gold going to crash? EPJ says that Goldman was short gold mining stocks when outsiders last peeked. So do they know something we don’t, or were they just helping the Plunge Protection Team to slow down gold’s meteoric ascent? (And don’t meteors crash into the ground? Shouldn’t we call it gold’s carbon dioxidic ascent?)

* Dick Clark points out to me that there could be trouble with gold mines, even though gold itself continues to rise. I obviously know nothing about gold mining. However, my Julian Simonesque worldview (as well as some articles by Michael Lynch) led me to reject the peak oil theory, so I guess my instinct is to reject peak gold as well.

* A Christian (vs. Freudian…) slip by Landsburg’s copy editor.

* I met Taylor Conant at the Mises Circle this weekend. He mentioned his take on the usual dismissal of conspiracy theories, and I thought it was pretty neat.

* Bob Roddis alerts us to this Bruce Bartlett critique of Hayek. I couldn’t really find anything too objectionable in Bartlett’s piece except this weird argument: “At a minimum, I think it’s safe to say that Hayek was wrong about the inevitability of totalitarianism arising from growth in the size of government. The collapse of communism is proof enough of that.” Wow, I’ve gotten frustrated with eager Austrians who say the collapse of communism vindicated Mises’ calculation argument. But it never occurred to me that it refuted Hayek’s serfdom claim. How so, Bruce? Hayek didn’t call it The Road to Perpetual Serfdom. And I’m pretty sure Hayek was aware of the fall of the Roman Empire and other brutal governments. He must have been a serious idiot then to have thought that serfdom could never end!

* Oh boy. Steve Landsburg–a staunch believer in modern evolutionary theory–points out another absolutely ridiculous claim by Richard Dawkins. And instead of saying, “OK yeah, Dawkins and other evolutionists should stop claiming it is the most solid result in all of science, because it’s clearly not,” most of the commentators argue with Landsburg. (And yes yes, many Bible thumpers are just as over-the-top in their claims as Dawkins. Waaaa.)

* While at Landsburg’s blog, I followed his link to this neat brain teaser. Free Advice: If you click through and read it, I strongly urge you to try to figure it out first before reading the suggested solution. I was in an airport with time to kill and did just that, and really enjoyed it a lot more. It’s the kind of thing where it seems at first you can “prove” in 15 seconds that the answer goes one way, but if you think about it you realize you overlooked something crucial. Discuss.

15 Nov 2009

Is the Christian God a Tyrant?

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In last week’s post someone remarked:

Ultimately, I am anti-totalitarian. For various reasons, I view both the Judeo-Christian God and the State as ultimately striving for totalitarianism. Therefore, I am both anti-theist and anti-statist. And I feel that those who are one and not the other to be fundamentally saying, “there is no good case for an all-powerful state/god, but there is a good case for an all-powerful god/state.”

I have two quick responses:

(1) Supposing the Genesis account is true, then standard libertarian theory says God owns everything in the universe, including your body. You are his slave, but justly so. God is no more a tyrant than a magazine owner is a censor for refusing to publish your article submission.

(2) This has nothing to do with there being a “good case for” or against an all-powerful God. The God as described by the Christian Bible either exists or does not. If He does, and your political beliefs say you don’t like it, then tough. That has nothing to do with whether you should be an atheist or a theist. You can say you are an atheist and oppose the totalitarian motivations of (lying and/or insane) priests, but you can’t say, “I don’t believe in God because I don’t agree with totalitarianism.”

13 Nov 2009

Economists Say the Darndest Things

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I am reviewing this Institute for Policy Integrity survey [.pdf] of economists on climate change because we at IER are preparing a response. (They are all over the media saying, “Economists and scientists both have consensus: the government needs to act now.”) One of the survey questions asked the economists their estimate of the “social cost of carbon” (i.e. the external damage from emitting an extra ton of carbon). I found this analysis on page 18 funny:

The average estimated social cost of carbon was over $120,000, but that is highly sensitive to two outlier responses. One respondent answered $10,000, and another submitted $10,000,000. Those values are more than twenty times higher than the next highest estimates. It is possible that the respondents mistyped their entries, that they misunderstood the question, or that these answers represent protest responses….Perhaps the response that best captures the uncertainty regarding the damages generated by greenhouse gas emission was: “No one knows, including me.”