This Will Not End Well
Bryan Caplan (a fellow pacifist) lays down the gauntlet:
If Mark [Krikorian] brought me to lunch with an unemployed low-skilled native, I really would tell him, “Sorry you lost your job, but foreigners have as much a right to work as you do.” It needs to be said.
Potpourri
==> Lew Rockwell has a forthcoming manifesto on anarcho-capitalism.
==> Hmm, this is one case where fiat money may have been preferable.
==> Responding (on Twitter) to my Mises Canada post about TARP, John Taylor reminds us of some of the details of Paulson’s offer that banksters couldn’t refuse.
==> Arnold Kling on Solow on Piketty (HT2 MR). Money line: “Piketty’s nightmare scenario, in which capital accumulates and has a high return, is a terrific scenario for wages in absolute terms.” As someone who wrote a dissertation on capital & interest theory and heard crickets for years, I’m excited that people actually care about this stuff. In retrospect, I should have been a Marxist.
==> Wait, do I sound cynical? Let me quote from this Slate article:
It sounds like a bad joke: America’s liberals have fallen for a Marx-referencing, Balzac-loving French intellectual who has proposed a worldwide tax on wealth. If Thomas Piketty (pronounced “Tome-AH PEEK-et-ee”) were not traveling around the United States on a triumphant book tour, you might think Rush Limbaugh had made the man up in one of his more blustery rants.
But no, he is quite real. Capital in the Twenty-First Century, Piketty’s 685-page tome about the history and future of inequality, has improbably climbed to No. 1 on Amazon’s best-seller list.
==> A reader of Free Advice sends an appropriate YouTube he created. And Steve Miller-Miller (a comedian in the libertarian world who wrote the sketch “Everybody’s a Little Statist Sometimes”) calls in to the Mike Salvi show to explain why being a fry cook is better than being a libertarian activist. (WARNING: The young kids these days have potty mouths.)
Free Advice for Cliven Bundy
I’m not trying to centrally plan the libertarian movement, and I generally think focusing too much on marketing is a self-defeating enterprise, but regarding this…
Bryan Caplan on Immigration
Caplan recently had a debate over immigration. He has posted his opening statement which is really good. Here are two excerpts:
Let’s start with our [immigration] laws’ injustice. Imagine the U.S. made it illegal for blacks, women, or Jews to take certain jobs or live in certain neighborhoods. You wouldn’t merely object. You’d be appalled. Whatever your specific moral views, you know it’s wrong to prohibit a black, woman, or Jew from accepting a job or renting a home.
My question: How is mandatory discrimination against foreigners against less wrong than mandatory discrimination against blacks, women, or Jews? The leading rationale is that “we should take care of our own first.” That might be a good argument against sending foreigners welfare checks. But it’s an Orwellian argument for stopping immigrants from working or renting here. Minding your own business when two strangers trade with each other is not a form of charity.
This is not a weird libertarian point. The fact that I never put Krazy Glue in the locks of the Center for Immigration Studies does not make me one of its donors.
Make sure you get what he’s saying in the above: When the federal government intervenes in the name of immigration control, it is (often) grabbing a foreign-born person who was going to have a voluntary, win-win relationship with a domestic-born person and blocking that deal. Thus, that would be like the government putting crazy glue in the locks of a building (that it didn’t own). Now, if for some reason the government decides to NOT do either activity, this shouldn’t be construed as a form of charity.
In other words, Caplan is objecting to the typical framing of the debate, where the US government is doing immigrants a favor by letting them in. No, Caplan is saying the US government is actively hurting potential immigrants by keeping them out.
Back to Caplan:
Friends of immigration restrictions often compare nations to families. I’ll accept their analogy. I love my children more than I love the rest of you put together. This is a good reason to worry that I’ll treat you unjustly if there’s ever a conflict of interest. But it’s no excuse for me to treat you unjustly. “I want my beloved son to get this job” does not justify slashing rival candidates’ tires the morning of the final interview. The same goes for immigration policy. Your love for Americans may tempt you to treat foreigners unjustly, but it’s no excuse for treating them unjustly.
Quick Observations on Inflation in the 1970s
“Gold bugs” take it for granted that it was no coincidence that the US got hit with stagflation in the 1970s, because Richard Nixon infamously severed the dollar’s last tie to gold in 1971. Others, however, dispute this connection. So I thought it worthwhile to make a simple case in defense of the gold bugs:
In the above chart, the blue line is year/year percentage increase in the Consumer Price Index (CPI); it’s what most people nowadays mean when they ask, “How high is inflation running?” The red line shows yr/yr percentage increases in M2, which is a particular measure of the quantity of money which includes currency but also commercial checking account balances. It is a popular measure of how much money “the public is holding.”
As the chart shows, yes indeed there was a sharp jump in the rate of money growth after Nixon cut the link to gold. More generally, there were two long periods where the rate of money growth in the 1970s was head-and-shoulders higher than it had been in the 1960s. The only time money growth crashed in the 1970s appears to be an effort to get price inflation (the blue line) to come back down. This accords with commonsense stories about the printing press and the business cycle: The authorities can print money and goose the economy, but as price inflation gets out of control they have to slam the brakes and cause a bad recession to get it back under control.
But notice something else: Year/year CPI inflation didn’t break the 10% mark until February 1974, several years after Nixon severed the tie to gold. Consumer prices didn’t instantly respond to the new monetary policy. Also, the chart clearly shows that price inflation rates bounced all over the place during the 1970s; it wasn’t a continuous upswing throughout the decade.
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If you sign up for my online class on government intervention (which covers the last third of my textbook, Lessons for the Young Economist) before the first class begins–which is Thursday, April 24, 5:30pm Eastern–then you get FREE access to the first two classes in the series. (Those classes cover the first 2/3 of the textbook.)
Yet More Krugman Klarifications on the 1% Stuff
This is more for posterity than anything else, but check this out. In today’s post Krugman writes:
I happened to notice Greg Mankiw citing some bogus claims that the one percent is an ever-changing group, not a persistent elite, and I thought “Wait — didn’t we deal with that one long ago?” And that brought to mind the piece I wrote for the American Prospect 22 years ago, “The rich, the right, and the facts.” (It doesn’t say this on the Prospect site, but it was indeed published in 1992). See the section on income mobility.
The truth is that inequality denial is largely a crusade of cockroaches — the same bad arguments just keep coming back.
Oh, and I do think that my old piece looks surprisingly contemporary. In particular, I was focused on the one percent even then.
This is fascinating for several reasons:
1) Krugman makes it crystal clear that he is talking about the 1% (not the 0.01% as his defenders tried to say, when the awkward $225,000 CUNY post to study income inequality story broke), and that he’s talking about annual income, not wealth. Incidentally, I should point out that I believe Krugman’s defender in Slate, who wrote, “As Krugman has made clear on more than one occasion, his quarrel is not with members of the top 5 percent or even with members of the top 1 percent. The real problem, in his view, lies with the top 0.01 percent.” Just as I believe Krugman now, when he tells us, “I was focused on the one percent even then.” Now you guys know why I coined the term Krugman Kontradiction.
2) This raises the very ironic fact that back in 1992, Krugman was probably not in the 1%, whereas today he almost certainly is, at least depending on the payment of his book advances. (In addition to his $225,000 salary for raising awareness of income inequality, Krugman can command a high speaking fee if he wants, he gets royalties on his books, he probably has a lot of financial assets since he never had kids, and–something I had forgotten before–he runs a hugely popular blog, for which the NYT might pay him a lot. Although I don’t know, since it’s a great perch for him so maybe he doesn’t need to get paid much.) So I don’t know, I just think it’s really really weird that Krugman quite specifically blasts the 1% of income earners, and says there’s not much mobility in the US, without ever mentioning to his readers the fact that he climbed up and now resides in the 1%. (I actually have never read the biographical pieces on Krugman in detail; I am assuming he comes from a middle class background, since he has written several articles and given speeches bemoaning the loss of Middle Class America. If he came from a rich family, then that’s even weirder.)
3) Regular readers of Krugman know that he often explains the wonderful fact-checking of the New York Times, in contrast to conservative-leaning newspapers. Well, the article that Greg Mankiw cited–which Krugman says contains “bogus claims”–ran in the NYT.
4) The “bogus claims” about the 1% from the NYT piece that Mankiw linked include this: “Although 12 percent of the population will experience a year in which they find themselves in the top 1 percent of the income distribution, a mere 0.6 percent will do so in 10 consecutive years.” So think about what that means: If you’re looking at “the 1%,” fully 40 percent of them will not be a part of that group for the next decade. (In contrast, if “the 1%” were a stable group, then 1% of the US population would be in the top 1 percent of income earners for 10 consecutive years–not the actual figure of 0.6% of the US population.) So that’s a pretty good indication of how stable (or not) the elite 1% are. Is Krugman saying that these data are faked?
5) No, as far as I can tell, Krugman is simply throwing some other stats around. He doesn’t offer a single stat (in the section he tells us to examine, on income mobility–I didn’t read the rest of the 1992 article) concerning the 1% directly. The best thing in his defense is where he cites two studies that find “about half of the families who start in either the top or the bottom quintile of the income distribution are still there after a decade, and that only 3 to 6 percent rise from bottom to top or fall from top to bottom.” Thus, to show how bogus the claims about the 1% are, Krugman gives claims about quintiles.
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