19 Jul 2009

"Honey, Scott Sumner’s Coming Over; Hide the China!"

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Yesterday I sent Scott Sumner a goofy email, to the effect that he needed to blog more because he didn’t realize how much angst it caused me when he skipped a day. He warned me that I wouldn’t like his latest post. This is true:

I used to think that people deserved what they earned, but no longer. Now I think rich people should keep what they earn if and only if trying to take it away from them it will do more harm than good. In other words, I’ve gone from being a dogmatic libertarian who thought the Nordic model was bad, to being a pragmatic libertarian who thinks it’s worth considering. I lean towards Singapore’s slightly less egalitarian forced saving regime for many different pragmatic reasons. But if someone can convince me that Denmark’s undeniably successful social welfare system is better, I’d jump ship in a moment. As far as I am concerned the fact that “millions of individuals” have “chosen” to spend their money on Nicole Kidman films has no more normative implications than if a bag of Federal Reserve notes had fallen from an airplane into her front yard.

Seriously, does Scott really believe this? If so, then don’t let him into your house or watch your kids (he might sell them into slavery if his calculation comes out that way). And what’ with putting “chosen” in quotations marks, Scott? OK you don’t believe people really choose; they can’t help but throw money at the pretty girl, fine.

But more important, what’s with putting “millions of individuals” in quotation marks?! Presumably you still believe in numbers, so I take it that you now question whether individuals really exist?

19 Jul 2009

My Solution to the Mind-Body Problem, and the Reconciliation of God’s Sovereignty With Free Will

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Say what you will about Free Advice, but we tackle deep issues on this blog. No chatter about Joe the Plumber here (except when it’s important).

In a previous post, I listed some of the major problems with materialism, which is the view that the only “real” things are atoms and energy, and everything else is subordinate to them. So for example, the materialist says that disembodied thoughts are “really” just patterns of electrical and chemical reactions in your nervous system, and one commenter (Tokyo Tom) went so far as to say that “2+2=4″ is just a model we have of the physical universe, which has been falsified by the discoveries of relativity and quantum mechanics.

In the present post, I want to lay out my working hypothesis for how to reconcile the apparently objective laws of physics governing the physical universe, with the equally apparently objective fact that human subjective desires influence events in this physical universe. (In other words, it seems that minds exist and affect inanimate matter, even though staring at the molecular level there doesn’t seem to be mind power coming in from an alternate dimension.) At the same time, my theory will explain how God can be the ultimate Designer of the universe, in which every event happens with His permission, and yet we humans still have free will and can choose to sin or to obey Him.


Imagine a computer programmer who makes a program that simulates a ball moving around the monitor. The program is entirely deterministic; the programmer could tell you beforehand what the exact position of the ball will be on the monitor, at any future time. The ball’s entire life cycle of movements are already embedded at t=0 in the software.

The programmer asks his buddy to sit down in front of the computer and watch the ball. Now here’s the freaky thing: Wherever the guy moves his eyes, that’s where the ball goes to on the monitor. So if the guy stares at the ball, it’s motionless. But then if he slowly starts looking to the left, the ball follows his gaze. He can try to “trick” the ball and suddenly dart his eyes to the opposite corner of the monitor, and BAM the ball instantly responds to his eye movement.

The guy keeps this up for a good 10 minutes, and it never fails. So he is obviously perfectly certain that he is controlling the ball. He hypothesizes that there must be a camera in the computer that notes his eye movements and then translates them into the appropriate pixels to light up on the monitor.

But actually, the programmer tells him that’s not what’s going on at all. The ball’s movements are completely pre-determined by the software. The trick is, the programmer predicted perfectly what his buddy’s eye movements would be. This is inconceivable to the buddy, because how could the programmer have known that RIGHT NOW he would zoom his eyes to the top left of the monitor? And yet, he can call in computer experts who can look over the machine, and they assure him that there is no way his eye movements are transmitting information into the computer. The ball’s movements “originate” entirely from within the hardware and software; there is no mechanism for the guy’s eye movements to influence the state of the machine (in any relevant sense–of course in reality if he flicks his eyes around a lot, the room gets hotter and this influences the computer etc.).

So that’s my theory of how God designed the physical universe to interact with our souls. (As C.S. Lewis said, you don’t have a soul, you are a soul–you have a body.) The physical universe is completely distinct from the spirit world (I’m sorry secularists but that’s an accurate term for what I’m talking about), and the quarks or other elementary particles in it, obey the laws of physics. Maybe our scientists are wrong in the exact nature of those laws, but the point is, there is a body of very economical laws governing physical matter and its behavior.

However, God designed these laws (and the initial state of the physical universe) such that it appears to us that we exercise (limited) control over the material universe. That’s why I can apparently control my fingers as I now type. It’s true, scientists can bore ever deeper into the processes governing the cells in my fingers, and they are never going to see injections of commands coming from my soul. But it sure seems as if my mind controls my fingers, and by the positivist’s own criterion of predictive power, it is a very strong hypothesis indeed.

As far as free will goes, God designed our souls such that we really do have free choice. In principle, our wills are independent of His. Yet God is also omniscient, and so He knew beforehand what we would choose to do when we (somewhat simplistically) think we are influencing the physical universe.

In other words, God had to solve an unimaginably complex problem when designing the universe. It is akin to solving a huge economics model to find the equilibrium. God had to choose the initial state of the universe, and dictate the laws governing those physical particles, such that every human who would ever live, would be fooled into thinking his or her subjective desires influenced the unfolding events, and that things could go one way or the other, depending on the person’s choice. Even though that belief was mistaken, in a sense it would still be true, since the laws of the universe (and its state at any moment) were originally designed with those choices in mind.

As a final point, “miracles” do not occur, in the sense of a violation of the laws of physics. The laws of physics are simply patterns describing how the atoms operate. If Jesus walks on water and thus violates the “laws” of physics, then they weren’t really laws, were they? In my interpretation, Jesus really did walk on water, raise the dead, etc., but nothing miraculous happened at the subatomic level. Rather, God had designed the universe such that these “impossible” (from a normal everyday human viewpoint) events were the necessary unfolding of the laws of physics, preordained from the first moment of creation.


18 Jul 2009

Is "Identity Theft" Really Theft?

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I am 95% persuaded by Stephan Kinsella’s classic article “Against Intellectual Property” [.pdf]. However, I think if we take Kinsella’s views seriously, it means that “identity theft” isn’t really theft. Let’s say someone fills out a credit card application claiming to be Robert Murphy, and has my date of birth, my address, my (anti)Social (in)Security number, etc. He runs up a huge tab, which ruins my credit score and prevents me from being able to charge anything again.

So long as I’m not forced to actually pay the bill for his charges, but merely have my credit score ruined, I don’t think this counts as a violation of my property rights. After all, I don’t have a right to borrow money from people; they are always free to refrain from lending to me. And it is standard in Rothbardian libertarian theory that blackmail defamation isn’t a crime, because you don’t have a right to your reputation. (How can you have a property right in what other people think of you?)

At best, I think you could only claim that the “identity thief” violated the property rights of the creditor, by extracting a loan from him/her under fraudulent pretenses. But the “thief” didn’t steal anything from you.

Is that right? If so, does it pose a problem for Kinsella’s approach to IP?

18 Jul 2009

Ezra Klein Apparently Doesn’t Think Immigrants Are Part of the Universe

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I don’t know what the timelines are, so maybe he didn’t have access to this information when he wrote his short post. But here Ezra Klein points to how encouraging the fate of Massachusetts is for health care reform (HT2MR). Nowhere does Klein mention this:

As lawmakers on Capitol Hill battle to create a nationwide health care system to cover all, Massachusetts is struggling to keep the state’s groundbreaking universal coverage program up and running.

Facing a massive budget shortfall, lawmakers are cutting roughly 30 thousand legal, taxpaying immigrants out of the state subsidized Commonwealth Care program.

Health Care for All, a Boston based advocacy group, is taking hundreds of calls on their help line from people like El Salvador native Eugenio Hernandez who is battling prostate cancer and will be among those losing coverage.

So apparently it’s still “universal” coverage even when you kick out a bunch of legal immigrants who are paying the government premiums just like they’re supposed to. But surely when they do it at the federal level, costs will go down (as they are wont to do with other government programs) and there will be no temptation to ration care to politically weak groups.

Besides Klein failing to mention the 30,000 immigrants getting dropped (which might not have been in the news when he posted, I don’t know), his excitement over the fate of Massachusetts baffles me. As I said on MR in the comments, Is Klein even making an argument here? It sounds like he’s saying, “This has to work, because otherwise it will fail.” Seriously, look at his post. I really think that’s a fair summary of his argument.

18 Jul 2009

They Tried Easy Money Back in the 1930s

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Bill R. sent me a link to this amazing site where they excerpt the news from WSJ from the corresponding day in 1930. For July 18, 1930:

Editorial: Constantly increasing taxation is a burden on “every form of enterprise”. It diverts money from productive uses to government functions which “though mostly indispensable, do not always require the scale of expenditure to which our public servants have become accustomed.” Total taxation (including local) has risen from under $3B in 1913 to about $9B now; recently rising about $500M/year. This aggravates the current depression.

Federal Reserve faces tough problem in how long to continue easy money policy, since in time “this has always stimulated speculation to dangerous proportions.”

Credit likely to remain easy for some time, but extremely low current rates seen unlikely to last (call money at 1.5%-2.5%). Rates for credit in the 3-6-month range have already begun to move up. This month seen as a low point for industrial activity; demand for credit anticipated to increase seasonally in August.

Now in fairness, someone like Scott Sumner would say, “Yes, those fools thought the Fed was engaging in ‘easy’ money, but it wasn’t!”

But let me point it out again: During the 1920-21 depression, the New York Fed jacked up its discount rate to a (then) record high, while in the aftermath of the 1929 crash, the NY Fed cut its discount rate to a (then) record low. Price deflation was more severe during the 1920-21 depression than during any comparable time period in the early 1930s. And I think it’s safe to say that the 1920s were a better economic experience than the 1930s.

We are truly repeating the mistakes of the 1930s. Scott Sumner’s has drawn the wrong lesson, and thinks that if only we did what they did times a hundred, then things will be rosy. Just as the Keynesians think Hoover and FDR didn’t run high enough deficits, the Friedmanites think that the Fed didn’t print enough green pieces of paper. Even though the deficits and money printing (as far as monetary base) were much more aggressive than in previous U.S. depressions, still for some reason a moderate dose of the “right medicine” (from Krugman and Sumner’s different viewpoints) led to the worst economic calamity in U.S. history.

18 Jul 2009


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* Here’s Bryan Caplan’s reply to Krugman and Drum.

* An interesting analysis of a paper (on boundary layer clouds and the effect on global warming) that clearly went into the IPCC summary, and yet had key words changed to match with the spirit of the IPCC report. (HT2 Rob Bradley)

* I have gotten a lot of negative feedback about my Mish article. Folks, before you confidently tell me that “in our system, money is debt and that’s why the money supply is shrinking,” please look at the below graph. M1 consists of checkable deposits, travelers checks, and currency in circulation; it is the money supply “held by the public.” I don’t see it crashing because of losses by lenders. That’s why, in my Mish article, I dealt with credit cards; I thought people couldn’t be talking about the money supply fostered by the fractional reserve banking system, since that clearly started exploding in late 2008.

17 Jul 2009

DeLong on the State of Macroeconomics

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A rare post in which I agree wholeheartedly with Brad DeLong (HT2 Bob Roddis):

The Economist gives us economists too much credit…

I would like to draw a distinction between economics as a way of thinking–the way good economists think, at least–and academic economics as a profession. Economics as a way of thinking is, I believe, still very valuable. But academic economics as a profession has proven itself to be not valuable at all in this financial crisis.

Yep. It would be hard to imagine a worse performance by professional economists during the last few years. Follow the link to the Economist pieces to see some examples of how badly the profession botched things.

I’ll go even further, and say that I totally understand why DeLong (and Krugman) think Fama et al. are being crazy in their opposition to fiscal stimulus. They are trying to use accounting tautologies to “prove” that deficit spending can’t reduce unemployment. But that doesn’t work; it’s not necessarily true that “every dollar the government borrows means one fewer dollar spent by the private sector.”

Naturally, I oppose DeLong (and Krugman) in their call for greater fiscal stimulus; I think their recommendations are awful. But as I argued in this article, the real problem is that even if deficit spending (temporarily) reduced unemployment, it would simply delay the sectoral adjustments needed to restore the economy to a sustainable growth path.

Note that I’m not saying deficit spending will always reduce unemployment; I am rather saying that Fama et al. are wrong for claiming that it will necessarily have zero effect on it. In fact, some of the opponents of “stimulus” are trying to have it both ways. Before the plan passed, it seemed (many of them) were saying that government spending would be perfectly counterbalanced by private sector losses, and so the effect on employment should have been nil. And yet now that the stimulus passed and unemployment jumped higher than most were predicting, the critics are saying, “See? We told you this would destroy jobs!” (Of course, there was not a unified voice of criticism of the stimulus package; some people made arguments at the time saying it would “destroy jobs on net.” So those critics could claim justification.)

A lot of people ask me if I think Krugman (and DeLong) are liars or just stupid. They’re certainly not stupid, and I don’t even think they’re necessarily dishonest. After all, they each have thousands of fans who leave comments on their blogs, so presumably it’s not a giant Keynesian conspiracy. Yes they will often make (in my opinion) unfair attacks on their opponents, or will conveniently overlook certain facts that hurt their cases, but there are people on “my” side who do the same thing from time to time.

The one thing that does bother me about these two guys is the ease with which they accuse their intellectual opponents of being stupid and/or evil. Ah well.

17 Jul 2009

Hillary Clinton, Pod Person?

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Once you start entertaining the notion that there are secret groups running world governments, you see evidence all over the place. What’s really funny is that, if you want to debate a conspiracy theorist, you can’t say, “You have no proof of that plan.” Because the conspiracy theorist will give you actual quotes from people like David Rockefeller and other big guns saying literally what the conspiracy theorist claims is their plan for worldwide domination. So the skeptic has to fall back on, “Oh come on, you’re reading too much into that,” or, “Surely that must be a joke.”

Case in point, take Hillary Clinton’s recent speech to the Council on Foreign Relations. (HT2 David Kramer for all of this.) Her opening remarks:

Thank you very much, Richard, and I am delighted to be here in these new headquarters. I have been often to, I guess, the mother ship in New York City, but it’s good to have an outpost of the Council right here down the street from the State Department. We get a lot of advice from the Council, so this will mean I won’t have as far to go to be told what we should be doing and how we should think about the future.

Richard just gave what could be described as a mini-version of my remarks in talking about the issues that confront us. But I look out at this audience filled with not only many friends and colleagues, but people who have served in prior administrations. And so there is never a time when the in-box is not full.

Now I’m sure people were laughing, and that these remarks were supposed to be the opening joke before she got into the meat of her speech. You could say that just because the CFR tells her what the State Department “should do,” doesn’t mean Clinton will obey those instructions. And of course, I don’t think she was literally saying the CFR headquarters was an alien spacecraft.

But at the same time, the part I put in bold is exactly what the conspiracy theorists say about the CFR (and other groups like the Trilateral Commission, Bilderberg Group, etc.). So if you challenge them to prove their “crazy” claims, all they need to do is point at Hillary Clinton’s latest speech as an example.

I was curious to see the actual delivery of these remarks, to see just how ha-ha Clinton’s tone was when she said it. Aww too bad, this MSNBC video leaves out the above two paragraphs, and starts at the third paragraph of the transcript linked above. No need to waste the viewers’ time with silly jokes about the CFR running the government! We’ve got to leave time for the story about Michael Jackson’s kids.