Random Thoughts on Faith and Reason
* If nothing else, people who go to church once a week are reminded 4 times a month that there exists Truth with a capital T. That fact alone gives otherwise “simple” people a tremendous advantageous over much more clever atheists who subscribe to modern doctrines that deny this.
* The most important question about reality is whether God exists. People often say things like, “Let’s put aside our religious differences, and discuss issue X on its own merits.” But that’s actually very difficult to do in practice, because people’s differing assumptions on that fundamental axiom (if you will) have huge consequences. It’s sort of like developing Euclidean versus non-Euclidean geometry. Things that are rational and true in a world without any God, are irrational and false in a world with Him. And the reverse holds as well: Atheists consider Christian doctrines one at a time, and each seems not only physically impossible, but also palpably absurd. Yet viewed in the context of the entire Christian worldview, each doctrine fits snugly with all the rest.
* Atheists will sometimes say, “People can’t walk on water / come back from the dead / give birth as a virgin…it’s against the laws of physics.” No they are not! People come back from the dead, all the time. There are shows on The Learning Channel about this. (A kid is ice skating and falls into the lake, he’s legally dead for 30 minutes, blah blah blah.) There is absolutely nothing in “the laws of physics” that says it’s impossible for a guy to walk on water. For one thing, what if it’s frozen? Duh, okay, what if it’s not frozen? Well people at Sea World seem to walk on the water all the time; they trained dolphins. Duh, okay, well what about if it’s warm and there aren’t trained dolphins? Then the laws of physics say… My point is, atheists flippantly overstate the certainty of their position. Another example is when (many of them) say (falsely) that the entire field of biology stands or falls on the theory of common descent.
* When I first read Mises’ magnum opus, I thought it was very odd that he titled it Human Action. I thought “Economics” or “The Market” would have made more sense. Yet the older I get, the more I understand why he did it the way he did. (And say what you will about him–I know there are many non-fans who probably read this blog–but the importance of the action axiom never really struck me until I read this Hoppe essay.) Well, one way of viewing the difference between atheists and believers in the LORD of the Bible, is that atheists see behavior of the physical world, whereas believers see God’s actions. The Christian’s interpretative stance involves “faith” and does not follow from pure reason. Yet by the same token, I will never be able to really prove that other people have consciousnesses the way I experience it. But I sure think the world makes a lot more sense, and I can sure achieve a lot more of my goals, if I interpret bodily motions as human action. (And Christians be careful how you deal with these issues: Yes you do think that a thunderbolt illustrates the will of God, but it doesn’t necessarily mean He’s angry.)
Franklin Sanders, the "most dangerous man in the mid-South"
Betsy Hansen, a summer fellow at the Mises Institute, has a good article today at LRC describing the fate of a guy who fought the fiat money system:
Mr. Sanders fought gallantly given the impossible circumstances in which he found himself. He ran a gold and silver bank for more than a decade, serving customers in Mississippi, Arkansas and Tennessee. His hope was to run his business as a truly free bank, such that he would exchange Federal Reserve notes for gold and silver – and here is the kicker – he tried to do that without charging sales tax on the exchanges. It is true, what Mr. Sanders was doing was entrepreneurial suicide, but you have to give him credit for showing courage and tenacity.
Last year I met a fairly wealthy personal investor, and one of the handful of people he read religiously was Franklin Sanders aka The Money Changer.
Restitution versus Retribution
One of the areas where I am more advanced–or misguided, depending on your viewpoint–than most of my conventional libertarian colleagues regards prison. Simply put, I think the institution of prison itself is a barbaric, counterproductive relic of State involvement in law enforcement. The typical libertarian thinks that in a just society, only actual aggressors would be imprisoned; no locking up pot smokers or prostitutes.
But I think if you really had a completely privatized world as envisioned by Murray Rothbard, that the very institution of prison would virtually disappear, because imprisoning an aggressor per se is pointless. (And in actual practice, as conducted by States, prisons are great places to turn novice lawbreakers into professional criminals.) If a guy kills somebody, the best way for him to make up for it is to financially compensate the victim’s estate. (In the usual case, I imagine insurance companies would do that right off the bat, and so technically the criminal would be paying back the insurers.) Not only is this more useful than having him rot in prison–or doing something dumb like pick up highway litter or make license plates–but psychologically it would also help him atone for his crime and forgive himself.
What’s ironic is that even some Rothbardians don’t go with me fully on this route. For example, I believe Walter Block has written (and I don’t have the cite handy) that if you murder somebody in cold blood, then under libertarian law you have just forfeited your right to life and anybody else can take you out. (I think the train of thought was coming out of his view that it’s not theft if you steal from a thief.)
But I think that’s totally wrong, and in fact makes the same collectivistic mistake that State “justice” systems make: If you murder someone, then the victim’s heirs inherit whatever legal powers accrue from such a crime. And if the victim happened to be a pacifist, he could have clearly spelled out in his will that none of his heirs would be allowed to exact retribution, even if that were the default. For example, even if the prevailing legal code says that if a guy cuts your arm off, you get to cut his arm off in return, then a pacifist could still specify in his will that nobody is allowed to touch his murderer. That “right” belongs to the guy who was murdered, and he gets the most satisfaction out of his property by making a public display of mercy.
These musings were prompted by David Henderson’s discussion of the Dante Stallworth case:
On Thursday night’s The O’Reilly Factor, Megan Kelly…expressed outrage at the lenient sentence given to NFL player Dante Stallworth. Stallworth had gotten drunk and killed a pedestrian. He was sentenced to only 30 days in prison, two years of home confinement, eight years of probation, and a lifetime prohibition on driving. Kelly was outraged that he wasn’t given more prison time. But she herself pointed out that the family of the man killed favored this sentence because Stallworth had made an undisclosed cash settlement with them. She found the sentence unjust. I think it was profoundly just. Stallworth didn’t hurt “society.” He killed a particular man and he compensated the man’s survivors enough that they favored the leniency. Justice is a matter of making it up to the people you hurt. No amount of money can bring this man back to life. But no amount of prison time can either. How would it be more just to make him go to prison when the survivors of the man he killed don’t want that? Far too many people…think justice in the case of such a death necessarily involves prison.
Incidentally, I’m not going to get into it here, but please don’t assume in the comments that I’m unfamiliar with the principle of deterrence. All I will say is that you can’t simply assume that putting murderers in a big building with other murderers necessarily leads to less murder. I’m not sure that it does. There are other, much more civilized, ways of deterring antisocial behavior than use of dungeons.
Roosevelt the Free Marketeer
In a Washington Post article Ezra Klein rips John Tamny for giving a (very dumbed down) Austrian spin on the social function of recessions (HT2PK). Klein concludes:
At this moment, federal spending does not exist in competition with household spending. It’s one of the last forces sustaining it. Indeed, the idea that the economy will heal itself if the government only steps out of the way is exactly the thinking that led to the deep recession of 1937. What a pity those lessons haven’t been better learned.
Look, I understand why Christina Romer can argue with a straight face that declining deficits are bad news in a depression. But Klein has upped the ante here. Now Roosevelt wasn’t merely trying to rein in deficits (which after all was his 1932 campaign pledge), but we’re saying it was because he believed in laissez-faire?! I guess he learned his lesson when the Supreme Court overturned his unconstitutional attempts to centrally plan the economy, eh? It’s funny the different paths some of us take to our free market views.
Being Tough But Fair With My Buddy Krugman
During my three-year stint as a professor, I strove to be “tough but fair.” (I think I got that description from the drill instructor from Full Metal Jacket, which in retrospect may not have been the ideal model.)
Anyway, since I have been waterboarding Krugman’s articles recently, I feel compelled to pass this one along from August 2005. Whatever else we may think of him, we must admit that Krugman “called” the housing bubble before many commentators (including me).
At this point I really don’t know what to think. My inclination is to say that Krugman called for any measures to boost spending, and then realized to his horror that they had unintended consequences, or that he had created a monster. After all, it sure seems as if Krugman advocated a Goldilocks stimulus plan, in which Greenspan cut interest rates just enough to fill the “output gap,” but then jacked them up at precisely the right time to avoid an unsustainable boom.
But since I don’t subscribe to Keynesian theory, maybe I’m misreading him.
Final note: I learned of this 2005 article from, you guessed it, Bob Roddis. For those who may be discouraged because I apparently post everything Roddis emails me, whereas I have been ignoring you: Don’t fret. I mention about 10% of what BR sends me. Sometimes I wonder if he is actually a computer program.
Yet More on Cost/Benefits of Waxman-Markey
This MasterResource blog post repeats much of what I’ve written elsewhere, but here’s a new point I made in response to Silas Barta’s criticism on my Mises Daily piece:
In conclusion, the above arguments do not show that the government should “do nothing.” If one accepted the premises of manmade climate change, and the property rights of certain people to be protected from emissions of others, then advocates could still plausibly argue that greenhouse gas emitters should be forced to pay a certain fine per ton of emissions, which would then be funneled into the hands of the aggrieved parties.
However, under no circumstances would the correct outcome be to cap emissions at the level proposed by Waxman-Markey. That would be akin to banning automobile usage, on the grounds that sometimes pedestrians get hit by drivers.
One final point: If the proponents of carbon legislation took the IPCC models (including the economic ones) seriously, and wanted to start penalizing emitters to compensate those damaged by the emissions, then the obvious thing to do would be WAIT and STUDY THE PROBLEM MORE. Even on their own terms, the damages to poor nations will not really kick in until many decades from now. To refine the analogy above, Waxman-Markey seeks to seriously restrict automobile usage now, on the grounds that some pedestrians might be killed by drivers in the year 2100.
What Did Krugman Know About the Housing Bubble, and When Did He Know It?
The plot thickens. If you need to get up to speed regarding Krugman’s alleged advocacy of a housing bubble in 2002, see here.
Now then, Bob Roddis (drawing from the Mises.org blog I believe) sent me a Krugman blog post from Oct. 2006. In the post, Krugman is responding to reader questions regarding his NYT column. Check out this exchange:
Neeraj Mehra, Amritsar, India: Mr. Greenspan has done a disservice to the nation by creating the housing boom. As a layman-observer, that’s the lingering thought I’ve had. Your article reaffirms it.
The question I have is this: Did he do the right thing — acting morally by engineering a housing boom, more as a bridge loan, until something else showed up at the horizon to shore up the economy — because he didn’t have a choice, or did he undertake a path of mere political expediency? And, that’s a question that’s nagging me for a while.
Would appreciate it if you could shed some light.
Paul Krugman: As Paul McCulley of PIMCO remarked when the tech boom crashed, Greenspan needed to create a housing bubble to replace the technology bubble. So within limits he may have done the right thing. But by late 2004 he should have seen the danger signs and warned against what was happening; such a warning could have taken the place of rising interest rates. He didn’t, and he left a terrible mess for Ben Bernanke.
OK, so (as Roddis pointed out in his email to me) the very best Krugman can now say is that YES he thought Greenspan should engineer a housing bubble, but he shouldn’t have let it go on as long as he did.
Already, Krugman is dead in the water. In his most recent denial, he said the Pimco quote wasn’t a recommendation, but merely positive analysis. Well, that’s not what he said in 2006.
But then the larger question is, did Krugman issue warnings about the housing bubble in, say, 2004? He very well might have, since Krugman has never been a fan of people getting rich from market activities. (I.e. rising asset values would be a prima facie red flag for Krugman, so it wouldn’t surprise me if he wrote that “there oughta be a law against this” between 2002 and 2006.)
At the very very least, Krugman should point out where he told Greenspan to pop the housing bubble that he (Krugman) had recommended Greenspan create. (And no cheating–he had to write that advice before everyone else realized it too.)
Krugman Digging Himself Deeper
Wow this is getting hilarious. A Krugman quote from 2002 has been flying around the Internet, in which he seemed to advocate that Greenspan replace the Nasdaq bubble with a housing bubble.
Now Krugman outdoes himself and posts this (HT2 von Pepe):
One of the funny aspects of being a somewhat, um, forceful writer is that I’m regularly accused of all sorts of villainy. I was personally responsible for the demise of Enron; my nonexistent son worked for Hillary; etc.. The latest seems to be that I called for the creation of a housing bubble — in fact, the bubble is my fault! The claim seems to be based on this piece.
Guys, read it again. It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened.
Look closely at the parts I’ve put in bold. In the first one, he is acting like the claim is so absurd, that he has difficulty even understanding how his nutjob critics could come up with it. The very idea, that Krugman would be recommending a housing bubble?! Ha!
Then the second part in bold shows that I know how Krugman thinks. When I blogged about this yesterday, I said that Krugman seems to be predicting a housing bubble, but not really. Some of you doubted my interpretation, but look, that’s exactly how he tried to spin it. (And right, Krugman didn’t actually predict the housing bubble, but that’s why I ended with “but not really.”)
If all we had to work with were the 2002 article in question, we wouldn’t have enough evidence to convict Krugman. After the money quote about Greenspan needing to cause a housing bubble, Krugman wonders whether Greenspan “can do this.” (Actually, this is the worst of all worlds: It seems that Krugman really was saying, ‘Yes Greenspan ought to cause a housing bubble to fix the economy, but I don’t think he can.’ !!)
Fortunately, we have a lot more evidence. Assuming the below quotes and links are legit, Krugman really ought to have a short blog post saying, “OK I screwed up.” (I may have to show him the way in a few days when my summer gold call doesn’t pan out.)
Von Pepe originally alerted me to this follow up material, and as best as I can trace it back, it first appeared on Reason, posted by “Ben.” Here it is in all its glory:
If you think what he wrote in 2002 was offensive, then you’ll really get annoyed reading what he wrote in 2001.
German Interview, undated
http://www.pkarchive.org/global/welt.html
“During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?”
July 18, 2001
http://www.pkarchive.org/economy/ML071801.html
“KRUGMAN: I think frankly it’s got to be — business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).
DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she — or I should say he and she, can they bring back this economy?
KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don’t know.
“
August 8th 2001
http://www.pkarchive.org/economy/ML082201.html
“KRUGMAN: I’m a little depressed. You know, inventories, probably that’s over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven’t fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It’s not a happy picture.”
August 14, 2001
http://www.pkarchive.org/column/81401.html
“Consumers, who already have low savings and high debt, probably can’t contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery…. But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates — and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1…. Sooner or later, of course, investors will realize that 2001 isn’t 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.
October 7, 2001
http://www.pkarchive.org/economy/ML071801.html
“Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.
In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package.
“
Dec 28, 2001
http://www.pkarchive.org/column/122801.html
“The good news about the U.S. economy is that it fell into recession, but it didn’t fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed’s dramatic interest rate cuts helped keep housing strong even as business investment plunged.”
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