Violence Will Only Make Things Worse, At Bundy Ranch and Elsewhere
I’m really glad to see Lew Rockwell, Gary North, and Robert Wenzel come out quite clearly in opposing the use of violence in the Bundy standoff. I’m singling these three out because they obviously appeal more to the “tough guy” libertarians and so it’s braver for them to come out and say liberty-folk bringing guns to Nevada is a bad idea.
(I realize a lot of times I’m a smart aleck and it’s not obvious what I’m “really” saying. The above is frank; I totally agree with them and I’m glad they have the courage to say it, because there are a lot of libertarian Internet warriors who will call you various names for voicing such an opinion.)
Another Element in the “Border Walls Keep You In” Argument
Let’s not forget the thoroughly distasteful Chuck Schumer, senator from New York:
Are Climate Change Mitigation Policies Like a Form of Insurance?
I argue no. Or at least, if they are, they’re really expensive and very few people would buy them voluntarily. I walk through the numbers here, but a quick sampling:
Now ask yourself: Suppose someone from an insurance company came to you in the year 2050 and said, “We’ve run computer models many thousands of times using all kinds of different assumptions. In the worst-case scenario, a very small fraction of the computer runs—about 1 in 500—has you losing 20% of your income in the year 2100. In order to insure you against this extremely unlikely outcome that will occur in half a century, we want to charge you 3.4% of your income this year.”
Would you want to take that deal? Of course not. The premium is way too high in light of the very low probability and the relative modesty of the “catastrophe.” When someone’s house burns down, that’s a much bigger hit than 20% of annual income. And yet, the premiums for fire insurance are quite reasonable; they’re nowhere near 3.4% of income for most households. Moreover, the threat of your house burning down is immediate: It could happen tomorrow, not just fifty years from now. That’s why people have no problem buying fire insurance for their homes. Yet the situation and numbers aren’t anywhere close to analogous when it comes to climate change policies.
Austrian Business Cycle Theory Surprisingly Useful Even Among Its Critics
The theory of business cycles advanced by Ludwig von Mises (and refined by Friedrich Hayek, who won the Nobel partially for this work) explains the typical recession as the inevitable result from a preceding, and unsustainable, boom period. The cause of the boom is artificially low interest rates, which in turn are caused by the expansion of bank credit made possible by “fractional reserve banking.” When the banks cease (or at least slow down) their credit expansion and interest rates rise, businesses realize their operations are no longer profitable and the bust ensues. (For more on Austrian business cycle theory, and specifically how it relates to the recent housing boom-bust, see my article here.)
Naturally, most respectable economists do not endorse the Misesian theory. Yet two recent episodes show that it is still quite relevant for an understanding of the modern economy:
==> In a post entitled “Austrian business cycle theory refuses to die,” Tyler Cowen (a sharp critic of the internal logic of ABCT) relates the preliminary findings of a new paper by Princeton economists:
This paper examines financial instability associated with bank credit expansion in a set of 23 developed countries over the years 1920-2012. We find that credit expansion, measured by the three-year change in bank credit to GDP ratio, predicts a significantly increased crash risk in the returns of the bank equity index and equity market index in the subsequent one to eight quarters. Despite the increased crash risk, credit expansion predicts both lower mean and median returns of these indices in the subsequent quarters, even after controlling for a host of variables known to predict the equity premium.
==> A recent Bloomberg article relates the concern among Fed officials that slowing asset purchases will cause a crash:
Federal Reserve Governor Jeremy Stein endorsed a warning by economists that raising the main interest rate may cause a financial-market convulsion similar to the “tantrum” that occurred last year after the Fed said it was considering trimming its bond purchase program.
“Whenever the decision to tighten policy is made, then the instability seen in summer of 2013 is likely to reappear,” economists including Michael Feroli, the chief U.S. economist for JPMorgan Chase & Co. in New York and a former Fed economist, said in a paper released today. “Risks of instability have not been eliminated.”
Stein lined up behind Feroli’s argument in comments on the paper during a conference in New York, saying “monetary policy makers cannot wash their hands of what happens” in financial markets when they begin withdrawing stimulus.
Of course, few mainstream economists are going to say, “Maybe that Ron Paul guy was on to something?” but we are seeing the familiar playing out of unintended consequences that free-marketeers admit occur in most other areas of government “helping.” Why central planners should suddenly have an advantage in the production of money and setting of interest rates has never been adequately explained.
Some More Touchy-Feely Thoughts on Immigration
In the comments of my previous post, Matt M. wrote:
Bob,
Even if you’re a libertarian who is in favor of open borders, is there not some legitimacy towards pointing out the fact that someone like Harry Reid is arguing that the Bundy Ranch situation must be dealt with harshly because “everyone has to follow the law” is just fine with illegal immigrants not following the law?
First, I don’t describe my position as “open borders.” That would be like saying I’m “closed schools” if I’m against government funding of education.
Second, the poster that got 18,000+ shares on Facebook wasn’t merely saying, “Look at the hypocrisy here.” No, it actually said, “I wish my Federal Government would put this many resources on our Southern Border instead of on Cliven Bundy’s cattle ranch.”
So the poster was calling for the federal government to enforce the border. If you don’t see that, suppose instead it had said, “I wish my Federal Government would put this many resources into enforcing gun laws on the books, instead of on Cliven Bundy’s cattle ranch.” Such a poster would NOT have gotten 18,000+ shares.
Furthermore, if you go look at the Facebook comments that I posted underneath in my original post on this, people were routinely using the term “illegals.” Now in this context, what does that term mean?
(A) Rich people who don’t pay as much income tax as the IRS says they owe, even though this is illegal?
(B) People who drive faster than the speed limit, even though this is illegal?
(C) People who keep a gun in their house for defense, even though this is illegal in their area?
(D) Cliven Bundy who refuses to pay what the BLM says he owes, even though this is illegal?
(E) Cocaine dealers, even though this illegal?
(F) White Canadians who are working in the United States even though they do not have the right authorization to do so?
Of course not. It would be grammatically incorrect to refer to any of these people as “illegals.”
No, to be an “illegal,” you have to be a Mexican and the specific law that you are violating has to be immigration law. Even someone named Mohammed who is trying to blow up a plane isn’t an “illegal,” he’s a terrorist.
Paul Krugman’s Compensation Package: Liiiiiitle Bit Awkward
As you can imagine, many of my colleagues in the geeconosphere and on social media thought this Gawker piece on Krugman was absolutely hilarious:
In late February, the City University of New York announced that it had tapped Princeton economist and New York Times blogger Paul Krugman for a distinguished professorship at CUNY’s Graduate Center and its Luxembourg Income Study Center, a research arm devoted to studying income patterns and their effect on inequality.
About that. According to a formal offer letter obtained under New York’s Freedom of Information Law, CUNY intends to pay Krugman $225,000, or $25,000 per month (over two semesters), to “play a modest role in our public events” and “contribute to the build-up” of a new “inequality initiative.” It is not clear, and neither CUNY nor Krugman was able to explain, what “contribute to the build-up” entails.
It’s certainly not teaching. “You will not be expected to teach or supervise students,” the letter informs Professor Krugman, who replies: “I admit that I had to read it several times to be clear … it’s remarkably generous.” (After his first year, Krugman will be required to host a single seminar.)
Don’t get me wrong, I can see why people are loving this, but strictly speaking, is this hypocritical?
Let me pose it this way: Progressive bloggers were having a comparable bout of glee when it came to light that in the early 1970s one member of a famous brother-duo explained to Hayek that he could collect Social Security if he came to the United States. I remember at the time (when the story broke, not back in the early 1970s) thinking that yes, I could obviously see why they would be laughing about it, but that strictly speaking that didn’t make any of the people involved hypocrites.
Discuss.
(Also, Virginia Postrel has a good post explaining that CUNY is using Krugman for branding purposes; he is the Scarlett Johannson of income inequality.)
Potpourri
==> Dan Sanchez has a great review of the new Captain America movie. However, MAJOR SPOILERS. If you are borderline, I would strongly nudge you to go watch it; it was a lot better than I had hoped. Then after you watch it, read Dan’s review.
==> I was on the Power Trading Radio show recently. In the beginning we discuss my upcoming Mises Academy class, titled, “How Government Wrecks the Economy.” (Class starts next week!)
==> Jimmy Carter thinks the NSA is spying on him, but I’d have to guess his emails would be pretty boring.
==> The PhotoShop botch on this Jay Carney puff piece is hilarious. Make sure you see what happened with his kid’s pinky. (BTW, I don’t think the issue is that the Carney’s don’t actually own books. Rather, I think it’s that they wanted to have some “safe” books to cover up everything. I run into the same issue when I’m doing videos from my office with the bookshelf behind me. I have to glance over the titles to make sure there’s not something awkward there, to be discovered when I finally receive the recognition and scrutiny that I deserve in my head. Fortunately, the most radical things on my bookshelf were written by Robert P. Murphy.)
==> Matt Taibbi has some good anecdotes about the two-tiered justice system. But remember kids, we need the State to ensure that the rich don’t just buy verdicts.
==> I have stunned crowds before by explaining that leading macro models that (supposedly) guide the Fed don’t have banks in them, and now Nick Rowe points out that they don’t have land either. I never even thought of that. (Nick says this has relevance to negative real interest rates.)
==> Larken Rose has some really snappy answers for Tom Woods on a stateless society.
==> Gene Callahan offers up a defense of modest State immigration control that I will soon obliterate. But go ahead and read it now.
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