Spanx Founder Sara Blakely Sounds Like the American Dream
I’m sure naysayers will find some reasons to poke holes in the story being presented, but this is how free enterprise is supposed to work:
Blimey Cow on YouTube Comments
These guys live in Nashville; Tom Woods introduced me to them (over email). For some reason this one cracked me up:
Deep Thoughts, by Bob Murphy
A lot of people are angry and depressed because they haven’t made it, even though they’re more talented than many of the people who have made it.
A lot of people are angry and depressed because they’ve made it, and yet it didn’t make them happy.
Malcolm Gladwell on the Power of Faith
An interesting interview. He apparently was renewed in his (Christian) faith while writing his latest book, David and Goliath: Underdogs, Misfits, and the Art of Battling Giants. Some excerpts:
Q: You use the biblical story of David and Goliath in the title and the setup to your book. Do you think we’ve been retelling the story poorly?
A: I think there has been an overemphasis of the idea that David’s victory was improbable. When you look closer to that story and you understand the full historical context, you see it from a different perspective. Here was a guy who brilliantly changed the rules of combat. He was equipped with a sling that was routinely used by armies to defeat the sort that Goliath was. David was very skilled at using the weapon and he was filled with the spirit of the Lord. Put those things together, why is he an underdog? He’s smarter than his opponent, better armed and he had this extraordinary force in his heart. When you understand that perspective, you understand that sometimes our instinct about where power comes from is wrong.
Q: What are some other examples of faith influencing power?
A: The final two chapters of the book also deal with faith: one about a woman who forgives her daughter’s murderer and one about the Huguenots in France who defy the Nazis in World War II. In both cases, people were able to do extraordinary things because they were armed with faith. They were able to perform acts of courage because they came from godly traditions. In both cases, there are people who had been through enormous adversity and had survived — more than survived, thrived.
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Q: Would you call yourself a Christian, or are you figuring that out?A: I would. On my website, for years, I’ve had this statement of what I believe so readers can know where I’m coming from. “I believe in God.” I put that on years ago because I felt it was important that people who read my work knew the perspective that I came from. It changes how people read you if you believe in God. It gives insight into your motivation, how you look at problems and how you deal with people.
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Q: This seems like the most religious of all of your books.A: You’re right. That’s why I titled it after one of the most famous of all Bible stories. The choice of how to end the book is really important because it frames the whole experience. The theme of the book is that much of what is beautiful and powerful in the world comes from adversity and struggle. The other theme is that people who appear to have no material advantage are much more powerful than they appear.
Q: David and Goliath is quite famous, yes. What about Jesus? Where might he fit in in your narrative?
A: He does fit. Here is one of the most revolutionary figures in history. He comes from the humblest of beginnings. He never held elected office. He never had an army at his disposal. He never got rich; he had nothing that we would associate with power and advantage. Nonetheless, what does he accomplish? An unfathomable amount. He is almost the perfect illustration of this idea that you have to look in the heart to know what someone’s capable of.
Mises’ Momma Didn’t Raise No Fool on Banking Regulations
For some reason this passage from pages 443-444 of Human Action cracked me up:
People may uphold the opinion that banknotes are more handy than coins and that considerations of convenience recommend their use….But all this has no reference whatever to the problem in question. It does not provide a justification for the policies urging the public to resort to the use of banknotes. Governments did not foster the use of banknotes in order to avoid inconvenience to ladies shopping. Their idea was to lower the rate of interest and to open a source of cheap credit to their treasuries.
“The Biggest Scam in the History of Mankind”
This video is pretty neat; it’s racking up views very quickly. It’s very well done, but unfortunately there are a few things that I think they get wrong.
Some of my objections:
==> The guy a few times says “I” when he should say “me.”
==> I understand where he’s coming from, but I don’t think it works to say that the fiat dollar is just currency, not really money. That certainly won’t line up with the Misesian approach to monetary theory; fiat money really is money. It’s fiat, of course, but it’s money, hence the name: fiat money.
==> I really don’t like the stuff about the government needs to create more money in order to pay interest on existing debt. I walk through the problems with that kind of approach here. More generally, in the book I co-authored with Carlos Lara, I acknowledge the truth that yes, there is a sense in which our modern monetary system is intricately tied to debt, but it doesn’t mean quite what a lot of the people pushing this line think it means.
==> Finally, at one point in the video they imply that the U.S. Constitution forbids the government from issuing anything other than gold and silver coin. However, the clause is from Section 10 of Article I, which are prohibitions on the State governments. Don’t get me wrong, I’m not saying the Constitution gives the federal government the authority to issue fiat money, but my point is that it’s not quite right to point to the prohibitions on State governments as the smoking gun for what the federal government is allowed to do, regarding money. (For my views on this stuff, again I point you to my book with Carlos Lara.)
Partly I’m listing the above objections just because I want to balance my main message, which is that this is a very cool video, and I’m glad to see it gaining so much attention so quickly.
Oh, one last tidbit: Based off of a quote from the video, I realize that Thomas Jefferson was walking through the issue of government debt burdening future generations even before Nick Rowe had his PhD. It’s pretty sophisticated; check it out.
Without Government, Who Would Give Us Traffic Jams?
In a previous post, I noted with irony that Eugene Fama listed roads matter-of-factly as an example of where government spending could be quite productive. In case some readers don’t understand, this is funny to Internet anarcho-capitalists, since a popular meme for us is, “Who Will Build the Roads?” I had asked if anybody knew whether Fama really thought government did a good job with roads (compared to the outcome in the private sector), or if perhaps he was just giving a standard example to show that he wasn’t preaching anarchy in his opposition to the Obama stimulus package.
Anyway, in the comments I was surprised to see some of the regulars here taken aback by most post. I thought the prima facie case against government ownership of roads was obvious, but OK:
One of the obvious flaws in government roads is that they don’t charge enough. That’s what causes traffic jams during rush hour. This isn’t a rare thing that happens on the day before Thanksgiving; it happens twice every workday. There are several hours when you just know “don’t try to drive if you can avoid it” if you live in a crowded area.
Whatever inefficiency Fama sees in the form of collecting payment on privately-produced roads, I have to imagine the lost productivity just due to New York City rush hour would dwarf it. I bet there are easily a million professionals who spend an extra two hours in traffic per workday, than they would have to in a private road system. Let’s say they generate an average of $50 per hour. So that’s easily $100 million per workday just in New York City alone.
Walter Block has written extensively on this topic. He likes to stress the large number of traffic fatalities that would undoubtedly be lower in a market road network. In other words, it’s not a fact of nature that such-and-such people die each year in traffic accidents. There are certain intersections and other areas that are notorious for accidents, and the political rulers aren’t nearly as concerned about fixing the problem as private owners would be.
Accounting Identities Versus Economic Theories
OK I’m going to crowdsource this one, because I’m guessing in the comments there will be two camps who will eventually reach the truth (at least in my mind). In a previous post I alluded to Brad DeLong bringing up a 2009 Fama essay on the impotence of stimulus spending. Upon seeing DeLong’s post, Krugman reminded everyone that it was precisely this essay from Fama (and a similar one from John Cochrane) that had made Krugman announce we were once again in a Dark Age of Macro.
Here we can summarize the offending passages from Fama, in the eyes of our intrepid Keynesian bloggers:
There is an identity in macroeconomics. It says that in any given year private investment must equal the sum of private savings, corporate savings (retained earnings), and government savings (the government surplus, which is more likely negative, that is, a deficit),
PI = PS + CS + GS
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Even when there are lots of idle workers, government bailouts and stimulus plans are not likely to add to employment. The reason is that bailouts and stimulus plans must be financed. The additional government debt means that existing current resources just move from one use to another, from private investment to government investment or from investment to consumption, with no effect on total current resources in the system or on total employment.
So I think most libertarian Austrians will recognize such an argument; I’m sure I made it myself on the radio when the stimulus package was big news. I definitely remember using the line–which I don’t think is in Fama’s piece, but it’s in Cochrane’s–that “If the government spends $1 billion on infrastructure, that money has to come from somewhere.”
So, DeLong and Krugman hate this. Specifically, Krugman argues that it fallaciously relies on an accounting identity to derive causality, which you actually need an economic theory to do. As a general rule, Krugman is right: I used the same approach to critique the MMT camp, as well as Krugman himself (on international trade, believe it or not).
Back to Fama: I’m tempted to resurrect his position by saying, “OK sure, you need one more element than just the accounting tautology. You need to assume that saving must precede investment, which strictly speaking you wouldn’t know just from the identities. But give me a break, of course saving must precede investment. Thinking otherwise is precisely why the MMT guys and the Keynesians get into trouble.”
OK so now my question: Is that really the way to handle this, and can I sleep comfortably at night? I wonder, is this still actually a fallacy, which would be apparent if we switched contexts? For example, suppose someone named Gene Famished were to argue, “We’re stuck in a deep recession and we will never get out of it. Sure, investors might spend money opening a new store and hiring 1,000 people, but every dollar they spend on the store just means there’s one less dollar spent elsewhere. It won’t create jobs on net, just move jobs around.”
See what I’m saying? I think “our side” is fine, and just needs to be a little less sloppy in our arguments, but I’m obviously biased.
Discuss.
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