Potpourri
==> This debate (hosted by Russ Roberts) on climate change is at once wonderful and infuriating. Christy and Emanuel can’t even agree on Christy’s statements about the performance of the climate models. Now I know how the public feels when one economist says, “The literature says that the minimum wage has little impact on unemployment” and another economist says, “No it doesn’t.”
==> Lew Rockwell states what libertarianism is, and isn’t, in order to anchor the recent controversies.
==> At the end of this post, in a sort of throwaway line, Scott Sumner says that the economy under Obama won’t be judged that terribly in the grand scheme of things, whereas he picks FDR and Nixon as the examples of presidents who had truly awful economies on their watches. It’s kind of ironic, that when discussing monetary policy, the two worst presidents Scott picks both had fairly decisive actions on that front.
==> I can’t tell what disturbs me more in this post by Daniel Kuehn: that he lectures me on the socialist calculation debate, or his suggestion that the Firefly crew “were federalist liberals like me.”
April Fool’s at the Airport
My Facebook status is worthy of reposting here (I only repeat the best of the best):
Thought of a great April Fool’s joke: Anyone who is flying tomorrow, take a little packet of microwave popcorn. Strike up a conversation with the person behind you in line as you approach the scanner, and say, “Oh shoot, you think I’ll be able to sneak this through?” Then put it in your pocket, where you have secretly hidden a ziplock bag full of popped corn. Then when you’re in the machine with your hands up in the air, start shaking violently so that the popcorn comes shooting out of your pocket.
Aquinas Shows How God Keeps It Real
Gene Callahan linked to a very interesting post by Ed Feser. It begins in this way, and note that I’m going to abandon my normal formatting style and keep the italics the way Feser wrote it:
[FESER:] For the Thomist, to say that God is the First Cause of things is, first and foremost, to say that He is the cause of their existence at every moment at which they do exist. God creates things out of nothing precisely in the act of conserving them in being, and apart from His continual causal action they would instantly be annihilated. You, the computer you are using right now, the floor under your feet, the coffee cup in your hand – for each and every one of these things, God is, you might say, “keeping it real” at every instant. Nor is this causal activity something anything else could either carry out or even play a role in. Creation – which for Aquinas means creation out of nothing – can be the act of God alone.Where creation is concerned, then, God is “first” cause not in the sense of coming before the second, third, and fourth causes, but rather in the sense of being absolutely fundamental, that apart from which nothing could cause (because nothing could exist) at all. As serious students of the Five Ways know, the sorts of causal series Aquinas traces to God as First Cause are causal series ordered per se, not causal series ordered per accidens. In the former sort of series, every cause other than the first is instrumental, its causal power derived from the first. (See this post for more on the subject.) But where creation is concerned, Aquinas’s talk of intermediate or instrumental causes is only “for the sake of argument”; his point is that even if there were intermediate causes of the being of things, the series would have to terminate in a First Cause. In fact there is and can be only one Creator and He cannot in principle create through intermediaries. (That is not to say that God does not work through intermediaries in other respects. We’re only talking here about His act of causing the sheer existence of a thing or creating it out of nothing.)Why not? Aquinas addresses the question at some length in the Summa Theologiae, the Summa Contra Gentiles, and De Potentia Dei. The arguments are difficult for someone not versed in the metaphysical presuppositions of Aquinas’s philosophical theology – indeed, some of them are difficult even for someone who is versed in the relevant metaphysics.
Leadership in the Autobots vs. the Decepticons
I can’t remember what prompted it, but for some reason my son asked if we could watch the Transformers movie. And to be clear, I am talking about the Transformers movie, the animated one with Unicron, not the abomination with Shia LeBeowulf. (It should go without saying that if you weren’t into the cartoon Transformers, you should go ahead and skip this post.)
I paused the movie to point out to my son some of the key messages the writers were sending, and I actually had noticed things on this viewing that had escaped me before. First though let me jog your memory with the following clip–one of my all-time favorites from movie history–by the end of which, Optimus Prime and Megatron are both critically wounded:
After this battle, the Autobots and Decepticons both need new leaders. Note the contrasts:
==> The Autobots try everything they can to save Prime. They are heartbroken that they can’t. In total contrast, were it not for the loyal Soundwave, the Decepticons would’ve left Megatron for dead on Earth. Later, when Astrotrain says they need to reduce weight, the stronger Decepticons gleefully jettison their injured comrades, including Megatron.
==> Prime picks his successor, and everybody respects his decision. The Decepticons “decide” their next leader based on physical might. At first it’s Starscream, but then when he gets blown away by Galvatron, they fall into line behind him.
==> Prime picks Ultra Magnus as his successor. Magnus actually declines, saying he is not worthy. But Prime insists, yet says an Autobot will rise from the ranks. Thus Prime is admitting that Ultra Magnus might not be the long-term leader, he’s just saying take the job for now until it becomes apparent who the new leader should be. As for the Decepticons, the entire group inside Astrotrain vies to replace Megatron, even the normally humble Soundwave.
==> The Autobot leader at any given time holds the Matrix of Leadership, which contains the accumulated wisdom of the previous Autobot commanders. (There is obviously nothing analogous for the Decepticons, who rule by force and not wisdom.) Notice though that when Prime goes to give it to Ultra Magnus, he actually drops it and it’s Hot Rod who catches it. This is of course very symbolic, because of what happens later in the movie (in yet another of my all-time favorite movie scenes–and note the YouTube commenters share my judgment).
==> Throughout the movie, they give hints that Ultra Magnus isn’t really up to the challenge of leading the Autobots. At one point Springer says, “It looks like Hot Rod and Kup just bought it!” (might not be exact quote) but Ultra Magnus says, “I can’t deal with that now!” Then Magnus swears when he can’t get the Matrix of Leadership to open (erroneously thinking he is facing the Autobots’ darkest hour). Can you possibly imagine Optimus Prime swearing or saying, “I can’t deal with that now” when someone reports that two Autobots are in serious trouble?
==> Finally, the most obvious theme: Hot Rod starts out as a cocky punk, whose recklessness gets Prime killed. (Even here, let’s pause to note that Prime only died because Megatron took a hostage; the obvious message is that Prime could take Megatron in a one-on-one fight, or even with Hot Rod’s bungling Prime could’ve won if he’d been willing to shoot Hot Rod too.) Yet by the end of the movie, Hot Rod matures into Rodimus Prime, the new Autobot leader. Knowing that that is coming, you can see several places between these two extremes when Hot Rod exhibits extreme courage and faith that good will win–even when everyone else doubts it. That’s why he is the one to replace Optimus, once he matures.
Privatize Outer Space!
Such is my rallying cry at Mises Canada. An excerpt:
Notice too that the tradeoff doesn’t have to be between something cool and exotic on the one hand (like exploring Europa), versus something lame and boring on the other hand (like giving everybody an extra pair of dress socks). The oceans on Earth are hardly explored, after all; maybe it makes more sense to pour billions of dollars of research into colonizing them, before we try leapfrogging to a planet which is about 780 million kilometers away.
Tax Treatment Bask
People are getting riled up over the IRS ruling on Bitcoin; this analysis claims that now BTC has no chance as a currency (as opposed to a mere asset that might be useful for many reasons).
Here’s my question: Right now, suppose I convinced a bunch of gold bugs to start using gold coins in our little network, whenever possible, as the basis of our transactions. How would the IRS deal with it, assuming we kept records and wanted to do everything in compliance with them? E.g. would the gold coins be fungible, or would I technically have to keep track of when I bought and sold each one, for purposes of calculating the capital gain?
Also, how does this work with regard to foreign currencies right now?
Krugman on Tax Theory
[UPDATE below.]
It’s one thing for Krugman to tell us what the Republicans or people at the Heritage Foundation are “really” after, etc., but it’s quite another when he just makes stuff up about objective economics literature. In a recent post lambasting Greg Mankiw (who won’t just admit he’s a moral monster like a man), Krugman writes:
[T]he case for zero or low taxation of capital income rests on very strong, very unrealistic assumptions — basically perfectly rational intertemporally optimizing agents, with dynasties behaving as if they were infinitely lived individuals. Question those assumptions, and the whole case falls apart.
The thing here is that the standard case for, say, a flat tax on consumption–meaning zero taxes on income, including dividends and capital gains–pops out of a simple two-period model. You don’t need a perfectly rational agent who lives forever, you need an agent who can look ahead one period and who realizes “If the government taxes my interest income, that makes future consumption less attractive on the margin than sheer considerations of time preference would suggest.”
I’m not being coy here. I actually had to alter my discussion in a Flat (Income) Tax report (before it had been released–it was still in the review stage) I did for Pacific Research Institute because I realized I wasn’t handling this issue properly, after I got feedback from a mainstream tax economist. So if consideration of a simple two-period model made me “get” the standard mainstream economist’s case for a flat consumption tax, such that I actually told the graphics people I needed to tweak a few sentences, then you should get a sense of how I feel about Krugman’s claim above.
In a post the next day, Krugman goes on to claim: “[W]e don’t actually know much about how to produce rapid economic growth — conservatives may think they know (low taxes and all that), but there is no evidence to back up their certainty.”
Hmm I guess Krugman missed this empirical paper (in which the authors, to my knowledge, do NOT use a model relying on hyperrational agents with infinite time horizons), which concluded:
Our baseline specification suggests that an exogenous tax increase of one percent of GDP lowers real GDP by roughly three percent. Third, investment falls sharply in response to exogenous tax increases. Indeed, the strong response of investment helps to explain why the output consequences of tax changes are so large. Fourth, the output effects of tax changes are highly persistent.
That paragraph comes from a 2010 publication in the top-ranked journal, the American Economic Review. The authors were David and Christina Romer.
If there’s zero evidence that cutting taxes leads to economic growth, it’s amazing I was able to generate such a long essay at EconLib listing it.
Last thing: I am sure someone will defend Krugman by saying, “He said there’s no evidence to back up their certainty, not that there’s no evidence for their conclusion.” But again, if that’s the route you wish to take, then please give Krugman yet another award for breaking his own record of Most Misleading Blog Post of All Time. Krugman certainly didn’t produce quotations from conservatives saying, “I would bet my firstborn son that cutting tax rates produces faster real GDP growth,” rather he just invented a generic position and then said there is “no evidence” to back up what conservatives think they know.
UPDATE: Ken B. in the comments was pushing back on my claim that Krugman just “makes stuff up” about the optimal tax literature. It may interest some of you to see what I wrote in reply:
Ken B. I am not going to get into a discussion with you about this. If you follow Krugman’s link you will see where he is coming from, but I think those authors are being obtuse. Look, I am perfectly confident in saying, “The optimal tax literature says it would be insane to levy a sales tax on bananas at 90% but on apples of 2%.” Yet, every single model in the literature would rely on unrealistic assumptions that were violated empirically as documented by the behavioral econ guys. And I could come up with another model in which aliens said, “We will blow up Earth unless you all tax bananas at 90% but apples at 2%.” Then lo and behold, I would have completely blown apart the result, since in my new model–which doesn’t stick to all of the rigid and unrealistic assumptions in the conventional literature–the social planner does indeed set optimal tax rates that way.
If you think I’m suffering from Krugman derangement syndrome, look at the PPS in Sumner’s blog post. He goes nuts on Krugman too. So if you want to argue with somebody and defend Krugman, see if Sumner has the stamina.
Potpourri
==> Gene Callahan tells me that this post from years ago is consistently the most heavily trafficked of his blog. I guess you know who was Daryl Hall and who was John Oates in this particular breakup.
==> My first college roommate and I built a “cardboard cathedral” (actual term we used) on the floor of our dorm room. (The sleepy town of Hillsdale didn’t even have a movie theater, so cut us some slack.) You can imagine the shock with which he emailed me this story.
==> I am told my Texas Bitcoin talk is featured on this show.
==> This story on elephant dung coffee proves the cost theory of value.
==> A new commodity money?
==> Tom Woods and I have (if I do say so) a great episode on his show, discussing climate change and my argument about slavery not being able to last in an otherwise free market.
==> Anthony Gregory tries to give some “movement history” on the Crimea question.
==> A cute video featuring a “compliment contest” between two rising Internet libertarians.
==> Nate Silver playfully swipes at Krugman.
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