Sure, if you want to relieve someone of a sense of indebtedness, it’s appropriate. When a houseguest accidentally breaks one of your glasses, for example, there is a problem, but you relieve the guest of the duty to repay you.
But if you want to tell a person you’re pleased to know they’re grateful, what you’re actually implying is that that person incurred a debt for causing a problem but that you forgive them. You’re puffing yourself up for your good deed. The friend whose tire you helped change in the rain, for example, didn’t incur a debt that needed to be either forgiven or paid off. It’s just that you gave them a gift.
And if the good deed you did wasn’t even a gift, but was rather done in exchange for the other person’s own good deed, “no problem” belies that fact. Selling that donut of yours to one of your customers does not amount to going above and beyond the terms of the exchange.
That’s my opinion, and if you thank me for giving it, I’ll forgive you. No problem.
One is less than zero
When one drink is one too many.
So I want to be nonalcoholic.
Like a beer who's had enough.
"Can economics approach the Truth?”
You asked.
So stagnant my mind was,
So muddled,
I could not tell you my take.
No,
You took nothing but gibberish.
Really, though,
I'd have liked to tell you my truth,
If you’d have just expunged the liquor from my brain.
Sponged it up.
Then I’d have told you:
When they see macro as micro writ large,
With social order one big marching band
Of clones,
The econs just don't get it.
And what a pity.
But when their macro emerges from micro,
Talking ‘bout a giant jazz band
Formed by weirdos,
The econs have something to say.
Something insightful.
And oh,
What joy.
But no.
I did not say that.
Tonight was meant to be
Lubrication by libation.
Instead my thoughts were slippery.
Elusive.
Not easy.
And —
Not for social consumption.
As for you,
Bartender,
I've no job for you just yet.
For I've got answers to give
And questions to take.
And sorry,
What you have
Just can’t help me.
No, I'm not principled.
Not principally.
And I couldn't care less for
Oh liver of mine.
But Catatonia
Just isn't for me.
Don’t wanna live there no more.
Don't worry, though.
I'll take an amaretto sour one day.
Maybe tomorrow.
Maybe later today.
Just don't bet on me,
And what’s mine
May yet be yours.
But hey
Now, though:
Does your grape juice
Smell like wine?
Does your malted milk
Look like beer?
Then I'm your man.
Gotta keep up appearances.
You understand.
Economists are so well noted for their optimism about economic progress that one, Bryan Caplan, faults non-economists for typically suffering from "pessimistic bias." Alas, while Caplan has the facts on his side on that count, progress in the realm of ideas is much more uncertain.
Jean-Baptiste Say in 1826 asserted the status of economics as a science, a proposition that the public has begun to doubt :
Leibniz and Newton, Linnaeus and Jussieu, Priestley and Lavoisier, Desaussure and Dolomieu, were all men of uncommon genius, who, however, did not agree in their philosophical systems. But have not the sciences they taught an existence, notwithstanding these disagreements?
Robert Torrens in 1821 anticipated that economics would reach consensus shortly. But while even macroeconomics came to agreement at least on the simplemindedness of crude Keynesianism, now that system is back in vogue, alongside diametrically opposed doctrines. And the prospect of rehabilitating the public's esteem for economics is dim.
With respect to political economy, the period of controversy is passing away, and that of unanimity rapidly approaching. Twenty years hence there will scarcely exist a doubt respecting any of its fundamental principles.
Macroeconomist Axel Leijonhufvud made a comment that suggests that the public may be right about the inconsistent "cosmologies" in the academy:
Not only are these differences at the “cosmological” level not accurately represented by the models used, but they will also lead to divergent interpretations of empirical results
Leijonhufvud provided more detail in his satire "Life among the Econs," which wraps up with a sense of gloom:
Having lost their past, the Econ are without confidence in the present and without purpose and direction for the future.
Perhaps I suffer from pessimistic bias — and the cosmologies will be reconciled. Perhaps the Econ have a future. I certainly hope so.
Gordon Tullock stood transfixed by an anthill outside the Center for Public Choice. When another scholar asked him what he was doing, Tullock replied brusquely: “Research.”
Indeed, it must have been research, because Tullock would go on to publish The Economics of Non-Human Societies shortly thereafter. It was an answer to the problem he saw in the anthill: how do autonomous creatures with highly limited intelligence divide labor among themselves and coordinate without command? Bee queens, for one thing he observed, change their environment by releasing pheromones and laying eggs; the other bees just respond based on their preferences.
BIOGRAPHICAL SKETCH
Born February 13, 1922, Tullock received his JD from the University of Chicago in 1947 and then became an officer in the Foreign Service. There, he read Ludwig von Mises’s treatise Human Action. It helped inspire him to pursue a broad research agenda with the individual as the unit of analysis (methodological individualism) and the individual’s understanding of her social context as the analyst’s data (methodological subjectivism).
In 1956, Tullock left for the Hoover Institution. In 1958, with the help of now-Nobel laureate James Buchanan, Tullock secured a postdoctoral fellowship at the University of Virginia’s Thomas Jefferson Center, which Buchanan had co-founded to promote a rebirth of classical political economy.
Tullock went on to found the Journal of Non-Market Decision Making (later to become Public Choice) and to cofound the Center for Studies in Public Choice. Along with Buchanan, he was the epicenter of the Virginia school of political economy, so-called for its prominence at UVA, first, followed by Virginia Polytechnic Institute and George Mason University.
INTELLECTUAL LIFE
Tullock’s contributions have been so influential that many have put forward his name as a Nobel contender — and yet he took just one economics course in his life.
Constitutional Choice
His first revolutionary contribution was the 1962 foundational work in constitutional political economy, co-authored with Buchanan, titled The Calculus of Consent. The two authors explored the rules within which the game of politics takes place.
What rules allow all parties to improve their welfare? Whereas in markets, voluntary transactions make all parties better off, in politics, the same is true only when the rules require unanimity. Under such an institution, individuals exchange consent for one another’s favored projects and all benefit.
In thus treating politics as a form of exchange, Buchanan and Tullock developed the concept of logrolling. They showed that despite its unsavory connotations, logrolling is only a symptom of pork-barrel politics. It is only harmful when a simple-majority rule allows the interests of some to override the interests of others.
But the absence of unanimity in ordinary politics doesn’t in itself suggest majoritarian democracy. Individuals acting in their self-interest recognize that the harms that come from majority rule should be considered side by side with the difficulty of reaching consensus under a unanimity rule. A qualified-majority rule and a bicameral legislature are two ways polities can strike a balance.
Bureaucracy
A second penetrating work is Tullock’s Bureaucracy (1965). Here he explored how higher-ups and subordinates face insuperable problems in coordinating their disparate bits of knowledge. In markets, profit-and-loss signals allow independent individuals to adjust their actions to the needs of others, even though each knows only a small piece of the whole. But individuals don’t have signals like that in politics.
Rent-Seeking
A third revolutionary work came in 1967. Arnold Harberger had inspired Tullock indirectly by finding the harm from monopoly to be less than one-tenth of 1 percent of GNP in the ‘20s. How could it be so low?
Tullock believed Harberger had overlooked a critical cost. Whereas Harberger only saw that monopolies allocate resources inefficiently, Tullock saw that individuals also waste resources to get the privilege to allocate resources inefficiently. More generally, people use up goods and services in competing to win prizes of all sorts. Privilege is one such prize, as are plunder and tariffs. Anne Kreuger later termed Tullock’s insight rent-seeking.
CONCLUSION
Through all this research, Tullock spawned a whole generation of scholars of political economy. His insights have so revolutionized the way we think that they sound unremarkable today. You can honor his contributions by thinking of him when you hear about vote trading or lobbying for political favors — or even the next time you marvel while gazing at an anthill.
Law is tacit; law is articulable. Law is discovered; law is created. Law is without reason; law is based in reason. Law is uniform; law is heterogeneous. These are antinomies of which both parts are true in different realms of the Jewish tradition.
The 613 mitzvoth, derived from the Torah, purport positively to bond believers with the divine in love and negatively to prevent their bonds from being severed. But to say that they “purport” is to prejudge the issue of whether these laws represent jurists’ deliberate plans to improve the social order or whether they reflect the melding and clashing of litigants with disparate interests.
This is just one of several themes that economics explores time and again. This essay draws attention to these themes as they bear on the history of Jewish law.
The Tacit and the Articulable
Friedrich Hayek (1973) explored one such theme when he distinguished between “knowledge that” — the things we understand in the sense that we say they are true — and “knowledge how” — the things we understand because we are able to do them. Jewish law has some of both the former, the tacit, and the latter, the articulable.
At an intuitive level, it may be worth considering that 613 is a large number. It takes several minutes just to count that many seeds in a pomegranate. It would, one would think, take a lifetime of study simply to “know that” each of the 613 mitzvoth is true, let alone to “know how” to abide by them. This would seem to suggest that a devout individual absorbs the rules through immersion in the community of believers and senses the appropriateness to her varying circumstances of any combination of those rules via tacit learning.
This may be the place to note the distinction between the six mitzvoth that are applicable in all times and places — the “constant mitzvoth” — and the remainder, which vary by the circumstances of the individual. It is easy to articulate and educate oneself on the maxim that thou shalt not have any rival gods before God, and mandates about such things as when one should perform a ritual washing of the hands more likely to be learned through trial and error and case by case.
Taxis and Nomos
Whether or not one can and does articulate a law, as Hayek (1973) also explained, one can describe social patterns, or orders, such as the law, as either having emerged from the decentralized interaction of many individuals, or what he called (after the Romans) nomos, or as having been designed by groups of individuals deliberately. The constellation of prices that guide production and exchange among the multitudes; the systems of grammar and syntax we call language; and the unwritten codes of norms of behavior (ethics) — these are all instances of nomos. The code of conduct governing how a university responds to student misbehavior; the statutes passed by Congress — these are examples of taxis.
Put differently, some order is made and some is grown. It is not immediately obvious how to characterize the body of Jewish law. Surely, one might think, laws adopted under the illusion or reality that God gave them constitute made law. Surely, the existence of a single source of legislation and judicial review — the Sanhedrin, early in the first millennium AD — speaks to this conjecture.
And yet, continue in the history a bit further and you may reconsider. After the Sanhedrin dissolved around 200 or 300 AD, law continued to have a consensus despite it coming now from many sources. This was the Babylonian period.
And with the Mishnah and the Talmud, in the centuries around the turn of the millennium, came a layer of interpretations of Talmudic law (i.e., from the Torah) and a layer of interpretations of those interpretations. Surely if there was any consistency and predictability in the law at any point in space and time, it cannot be attributed to human design. Law, thus, was in large measure “the product of human action, but not of human design,” in the words of a leading light of the Scottish Enlightenment, Adam Ferguson.
When one continues from Torah law, as interpreted and refined in the Mishnah and Talmud, to rabbinic law, we continue on the spectrum toward grown law. The interaction between the two complicates things further. Rabbinic law yields to Torah law when there is a conflict, as when the duty to enjoy the Sabbath with food and drink meets the duty of Yom Kippur to focus on atonement by fasting.
Uniformity and Heterogeneity
The spontaneous emergence of a fairly uniform body of law leads to the question of how individuals interacting among a diverse set of communities with, nonetheless, a somewhat diverse set of interpretations of the law were to coordinate their actions. If a Jew in Iraq wants to contract with another Jew in Poland, they both rely on the rule of law — predictable, nondiscriminatory, and fixed — to guide their expectations and adjudicate disputes. But what law binds the two — the Polish community’s or the Iraqi community’s?
One example of variation is the difference between the law prohibiting polygyny among the Ashkenazim and the law permitting it among the Sephardim. Is a marriage contract binding in another jurisdiction?
The issue may be trivial, though, if the halakha did not vary much across communities. Certainly, communities at least reached the definitive consensus that there are in fact 613 mitzvoth.
Specific Rules
General considerations aside, it would be fruitful to analyze specific mitzvoth to see their origins, rationales, and consequences for human welfare. Consider the rule to not eat the flesh of unclean beasts, such as, as the rule came to be interpreted, pigs. Does the rule restrict modern Jews’ dietary choices without any offsetting benefit, now that pigs can be raised in sanitary conditions, [1] or does the tradition have social value arising from the its increasing the cost to noncontributing outsiders of joining the group?[2] How did the interpretation holding pigs to be unclean emerge?
Or take the prohibition on lending to Jews on interest. Did this ever serve a social purpose? Surely overwhelming economic research has convinced us that the credit market depends critically on interest and that borrowers benefit no less than lenders. Who codified the rule in the Torah, or how did it get there? Note that throughout history, rabbis, priests, and imams have, to lesser or greater extent, made lending on interest possible by other names. How much did these interpretations vary across communities, and how did they come into consensus, and how did contracting parties reach resolution when two communities’ interpretations conflicted?
Conclusion
Economics starts from the premise that humans pursue plans by selecting the most appropriate means to attain their ends. It ends by showing how the intermeshing of plans leads to institutions unknown by any individual planner. The mitzvoth are institutions that emerged through many centuries of many Jews’ plans. Jews designed them in some form, and they grew. Jews learned them explicitly and tacitly. Jewish communities’ laws clashed and converged. Laws on such subjects as lending and diet served their originators’ purposes and their descendants’ purposes as they evolved and as Jews passed them on from one generation to the next.
[1] If, in fact, they were ever unsanitary. Nicholas Snow, in a working paper, argues that the prohibition emerged in ancient Egypt as a means of protecting the cattle rancher.
[2] Iannaccone (1992) developed the economic theory of religion known as “sacrifice and stigma,” phenomena that reduce free-riding behavior.
[This is the icebreaker speech I gave tonight to the UAB Toastmasters.]
Economics is a way of making sense of life. It’s how I make sense of my life, anyway. Mine, and that of everyone I meet and think about and read about. It’s the story of my life.
The journey started with such unsavory things as politics and the Republican Party. First came the long walks with my dad. I learned about taxes, drug policy, Social Security, and foreign interventionism.
And I studied on my own. I learned the history of the debate about whether socialism can work in principle and in practice. I learned how people make decisions on the margin. I learned from the Mises Institute, among other sources.
I returned to school — Auburn University —after a long hiatus. And I thought I’d try psychology. Why psychology? Why not economics?
Because people’s subjective understanding of the context in which they make their decisions is guided by principles of which they might not be aware, and if you can understand what they understand, as well as those principles, you can make sense of the bigger social patterns — price formation, norms, rules.
To illustrate: Julian Simon wrote a wonderful book Good Mood many years ago. He had suffered from debilitating depression for decades and conducted an independent and brave and relentless search for a way out. What he came upon was an economic approach to therapy, a form of cognitive-behavioral therapy.
He said: Depressives value their way of living more than their alternatives. They reason that the benefits — including a comfortable pattern of thinking and living — outweigh the costs, in case after case. And they can help themselves by comparing their false expectations to a more considered alternative.
That’s an example of the connection between psychology and economics. But it wasn’t right for me. So I switched to what I loved: economics.
When I started studying economics formally in school, I took to it readily, even though it was not “Austrian” economics that I learned. I had been familiar through my independent studies with economics as it had developed in Vienna. In school, we didn’t emphasize the entrepreneur as the agent of change, as they did in Vienna. But good economics is good, whether or not it comes from Vienna. And I learned more of it in school.
On graduating Auburn, I had no clear idea what I wanted to do with my life, nor what my training in economics had prepared me for. I took the easy route — it meant I didn’t have to do much soul searching — and prepared for grad school. George Mason University was on my map because I knew many fascinating students with connections to it.
Grad school was exciting. I explored fiscal institutions, monetary politics, political entrepreneurship. It was fun. I met brilliant scholars and passionate students. But, again, it wasn’t for me. I had to do something where I would make some progress and feel more at home, regardless of whether in some other life academic research would have been for me.
My next step was to try ways of doing economic research outside of academia. I interned at the Tax Foundation. I studied film-production tax incentives. I interned at the Institute for Humane Studies, where I wrote lots and lots of little summaries of scholars’ research.
Still, while research and writing was satisfying, I dragged my feet in looking for opportunities to do more of it. I got in touch with contacts from when I did indexing and proofreading as an undergrad.
It’s always been so much easier working with others’ writing than with making my own. They set the boundaries of what they want to say; and all I have to do is make sure they say what they want to say.
So now here I am. I’m working with several clients and always looking for more opportunities in publishing services. I’ve indexed, proofread, transcribed, copy edited, written, and researched.
I love economics, and I love editing, and I hope to do both in the years ahead. It just makes sense.
Thank you all for listening, and thank you, Mr. Toastmaster.
Joseph Stiglitz and Bruce Greenwald tantalize and frustrate this reader coming from an Austrian background, in the first chapter of their new book.
The pair observe numerous aspects of economic theory that suggest that the Hayekian knowledge problem is fundamental to economic analysis as it should be, though not as it is commonly practiced. Knowledge is tacit. Knowledge is specialized. Learning is a flow. Institutions shape the knowledge-building attributes of the economy. The market is a process. Allocation of resources and the intensity of capital investment are not fundamental to economic development.
Does this sound like Hayek? I think so. But don't stop there, for our authors go on, just as a true Hayekian would, to consider what comes next. Unlike the Hayekian, though, who would see the solution to knowledge imperfections and the path to Pareto optimality in the market itself, Stiglitz and Greenwald insist (though they only hint at the specifics) that an interventionist public policy is how we get from market failure to more-perfect markets.
Financial markets must be restrained, for one mentioned example — a claim that might be reinterpreted and acknowledged by a skeptic of government activism, while the skeptic notes that the restraints that work best are those that emerge from the free interplay of individuals competing within an institutional framework of private property and the rule of law, that is, the market.
How, for example, does society cope with an absence of elasticity in the supply of money at times of high seasonal demand and incipient bank panics? One historical case, that of the pre–Federal Reserve United States, shows both the power of market institutions and the limits of state power.
Banks set up clearinghouse associations, issued clearinghouse certificates as a form of interbank currency, loaned them from bank to bank, and thereby made it possible for illiquid banks to be ready to pay out to depositors on demand, if needed.
But this solution was limited by the constraint that the banks were, by law, not allowed to issue notes not subject to taxation if they exceeded an amount proportional to their holdings of US government bonds. Banking panics were of mitigated harm only to the extent that the government looked the other way.
More financial regulation, at least in this case, did not promote the development of the sorts of institutions that are key to facilitating the generation and transmission of knowledge; self-enforcing institutions emergent from the private sector did do so.
Such a shame that the best minds in economics, such as our authors Stiglitz and Greenwald, too often fail to see the solution to the problem that economists only too rarely even see in the first place.
(I should stress here that my take is based on just a part of their book and acknowledge that I skimmed it. Apologies if that destroys any value of this post.)
The tenor’s makeup gave him a close resemblance to Mr. Roosevelt, which was most annoying; Mignon is hard enough to sit through without anything like that
A hard run of jaundice would save them much money and time; yet if that look were imposed by jaundice rather than by art, I suppose they would think it very ugly
I woke up this morning with a curious fragment of a dream in mind. I thought I heard Lincoln Steffens* say, “Life is just as interesting as it was in my first day, now that I am in my last day, or almost my last.”
The matter is actually of small interest, however, for driving jobholders out of office is like the old discredited policy of driving prostitutes out of town. Their places are immediately taken by others who are precisely like them
I hear ten million people have visited it already, so probably I shall not be missed if I don’t get around to go
The truth is that literacy is valuable only as intelligence keeps pace with it; in itself, literacy is no mark or evidence of intelligence, nor is it any sign whatever of an inclination to any purposes that intelligence would suggest.
Arthur Goodrich was saying the other day that the best theatre town, music town, general-amusement town in the United States, is Washington. From the box-office point of view it has displaced New York. Ever since he spoke of it I have been noticing indications that he is right. The thing simply means that the only people who have any money that they feel they can count on are the State’s jobholders. The payroll in the city of Washington comes to more than three million dollars a month.
I do not hope to persuade Mr. Wise to go back to Hume and Bentham. But may I appeal to him as a good internationalist forthwith to return to Karl Marx?
Moreover, Marx
realized equally with the great liberal philosophers that the economic system of our day is a world system, that it demands world peace for its successful functioning, and that attempts to hem it in within national frontiers, to make it dependent on national states, only diminish productivity and increase the chances of war.
Interestingly, in light of the current debate in the blogosphere over Hayek's role in advising the Pinochet regime in Chile, Friedman -- who played a similar role -- echoes an opinion recently voiced by an opponent of those who argue that Hayek's support for the regime speaks poorly about his ideas being friendly to liberty in actuality. This opponent (I can't remember who said it) noted that the critics might be hypocritical, and Friedman in the same vein writes: "I have just returned from a 12-day stay in Communist China…. Under the circumstances, should I prepare myself for an avalanche of protests for having been willing to give advice to so evil a government? If not, why not?"
***
On the reception by the public intellectuals of Friedman's receiving the Nobel Prize, the Nation voiced skepticism that Friedman had accomplished anything that had not been repeated for 200 years of economics: "Is a modern restatement of the 1776 thesis of Adam Smith worthy of a Nobel Prize in economics?" (192). But while it's true, as Friedman has said, that most of what is new in social science is not good, and most of what is good is not new; and as Pete Boettke (?) says, it's worth considering whether we have truly learned much since Adam Smith, still, it may be that some of what is presented as new is in fact a contribution of old and good ideas presented in a new intellectual climate in a new language. A scholar who does this follows Kenneth Boulding in his suggestion that social science often loses much of the good: in jest, he titles his argument, "After Samuelson, Who Needs Smith?"
On the general point about the history of thought, consider that the quantity theory of money is not new, to be sure. Friedman's aphorism that "inflation is always and everywhere a monetary phenomenon" echoes pre-Keynesians such as Fisher and many others. But Keynesianism happened, and that changed the debate. Ebenstein cites scholar Robert Leeson on the importance of language, and his point can be extended to support the claim that even a restatement of Smith (were that all the Friedman had done, contrary to fact) would have been worthy of a Nobel: "One of the reasons for Friedman's successful assault on orthodoxy was his determination to construct his arguments in the language of his opponents" (108). "It takes varied iterations," James Buchanan said in a reiteration of Frank Knight, "to force alien concepts on reluctant minds."
***
Ebenstein collects many memorable bon mots, of which I will cite just a couple for illustration. Did Friedman smoke pot, and this may be why he favors legalization? "Not during my first eighty-seven years, but I make no guarantees as to the future." How does one change minds? "Anyone who is converted in an evening isn't worth converting. The next person of opposite views… will unconvert him." And what is the test of true understanding? "If you cannot state a proposition clearly and unambiguously, you do not understand it" (85).
***
Friedman made several propositions about the political process -- not just (as some might think?) public policy and economic theory. He postulated, interestingly though perhaps not correctly, that policymakers' views of the empirical relationship between money and prices -- Keynesian or monetarist -- influence their demand for discretionary government (176).
And if taxes are raised to plug budget deficits, the result will be a "higher norm for government spending" (176).
Third, Ebenstein presents what appears to be Friedman's (but may perhaps be his own) view on the political demand for monetary expansion: with indexation of tax brackets comes the removal of the source of that demand (175).
More troublesome is Friedman's suggestion, perhaps based on a notion of the legitimacy of democratic mandates, that, on price controls and Nixon, "as a leader, that was a proper thing for him to do, even though he felt it was the wrong solution… One man's opportunism is another's statesmanship" (188).
***
Ebenstein draws the reader's attention to the Reverend Billy Sunday's famous proclamation that, with Prohibition, "we will turn our prisons into factories and our jails into storehouses" (227). It is an unfortunate irony that that policy regime had the exact opposite effect, a relationship that Friedman among others noted.
***
Friedman commented on what I see as the hazards of thinking that common sense gives straightforward and accurate indications about the state of the world: "One of our favorite family pursuits… is to try to find the opposites of aphorisms… [I]n the real economic world, there is a free lunch, an extraordinary free lunch, and that free lunch is free markets and private property" (236).
***
I wish I could comment on Ebenstein's extensive discussion of Friedman's methodology, both in principle and in practice; but it would take too long for me to sort it all out. One question I wish I had an answer to is whether Peter Boettke is correct in supposing that Friedman's practice belied his methodological principles. What he calls for in "Positive Economics" may contrast sharply with what he does in A Monetary History of the United States. Friedman's hypotheses are in fact grounded in realism -- "dirty" empirics, i.e., institutions, included -- and his success may be better understood as a vindication of a certain historical understanding rather than as a successful prediction; a vindication of something with a family resemblance to Austrian methodology, not his own.
***
Ebenstein provides plenty of anecdotal evidence that Friedman garnered the admiration of many esteemed professional critics of his scholarly views -- a point that should, perhaps, go without saying, but which goes unappreciated in the popular perception among many that Friedman was an ideologue. Consider Paul Samuelson's touching note on Friedman's value in academia: "Although one may, on reflection, agree with many or few of the positions advocated, it has been well said: 'If Milton Friedman had never existed, it would have been necessary to invent him'" (156).
Orison Swett Marden wrote some vivid and insightful advice in his aptly named book The Joys of Living. At risk of portraying the book as a collection of adages, and worse, trite adages, here is a sample of some of the more poetic passages, shorn of most context.
On living today:
We are like children chasing a rainbow. If we could only reach it, what delight! We spend our lives trading in “futures,” building air castles. […] You are disappointed, discontented and unhappy, because you did not find the fabled bag of gold at the foot of the rainbow, while you go on squandering, in useless repining, the time that, properly used, would convert your present seeming desert into the paradise of your early dreams.
On being a professional at living:
I once saw a child in a perfect rage of passion taken before a mirror and he was so ashamed and chagrined at the awful spectacle that he stopped crying. If adults could only see themselves when they are burning up with passion, when the conflagration is raging through their brain, and tearing their nervous system to tatters, when the beast looks out of the eyes, it would seem as though they could never again be induced to make such spectacles of themselves.
On training the young toward sunshine:
An eminent writer says, “Children without hilarity will never amount to much. Trees without blossoms will never bear fruit.” […] Can anything be more incongruous on this glorious, glad earth, than the picture of a worrying child, a child with a sad face, a human rosebud blighted before it has a chance to open up its petals, and fling out its beauty and fragrance?
On riches and happiness:
Robert Louis Stevenson appreciated the great impediment of material things to man’s soul flight heavenward. He once telegraphed his congratulations to a friend whose house was burned down, because the wife of his friend had been driven to distraction with an army of servants and with the management of the great establishment.
On enjoying without owning:
How foolish to envy others the things which we do not happen to have or cannot afford! Always learn to enjoy what you cannot own. Be like the birds, who do not care who holds the title deed to the lands where, in their migrations, they joyously build their little homes.
On the joys of imagination:
Many invalids have acquired this art of refreshment through mental tours, taking trips to beautiful lands that have never been seen by material eyes.
On taking life too seriously, Marden cites one A. Merryman:
What right has anyone to go about the community lachrymose, woe begone, with ‘tears in’s eye, distraction in’s aspect’? What right has he to distribute the bacilli of depression, gloom, dumpishness, and general ‘forlornity’?
On how happiness can be cultivated, he quotes:
Most sorrows are gold bricks that will not pan out genuine grief in the assay, and not one person in a hundred has a right to indulge in melancholy. Of nothing else in the world is there such a sinful waste as there is of tears, and we should be just as much ashamed of being unhappy as of being unwashed. Both states indicate a slovenly submitting to the grime of life, instead of an energetic ridding ourselves of its unpleasantness.
On the tragedy of postponed enjoyment, he writes of an acquaintance who directed the early years of his life to work without play:
When he began to travel, he was surprised to find that the great masterpieces of architecture, painting, and sculpture, which he had dreamed would give him such pleasure, were closed books to his mind, because his esthetic faculties had become so atrophied that they no longer responded to stimulus.
On intellectual and aesthetic joys, he quotes:
Milton in his blindness saw more beautiful visions, and Beethoven in his deafness heard more heavenly music, than most of us can ever hope to enjoy.
I recommend reading all of it. You may find yourself enjoying living, a bit more than before.
Madmen, Intellectuals, and Academic Scribblers – The Book Forum
“Ideas, unless outward circumstances conspire with them, have in general no very rapid or immediate efficacy in human affairs; and the most favorable outward circumstances may pass by, or remain inoperative, for want of ideas suitable to the conjuncture. But when the right circumstances and the right ideas meet, the effect is seldom slow in manifesting itself” — J.S. Mill
Lopez established the background against which Leighton then presented the pair’s analytical framework. The proverbial civics class portrays government as a benevolent despot. But with the image of politics without romance that the late James M. Buchanan depicted, constitutionally unbounded government is a tool of privilege, as, for instance, for producers who protect themselves from competition when consumers find it too costly to lobby against them. When the US sugar-growing industry employs just 61,000 people, while 988,000 workers in industries that use sugar and hundreds of millions of sugar consumers share the burden, the sugar industry wins.
What’s worse, as Gordon Tullock showed, economic protection persists. Only the first beneficiaries of the protection enjoy the boon, while, since those who follow pay real money for the privilege and get just a normal return on their investment, they fight tooth-and-nail to keep the privilege or else lose the value of the assets that embody that privilege. For instance, since people are barred from practicing law unless they graduate from an accredited law school, lawyers earn more than otherwise; and yet, each lawyer must pay top dollar for his schooling to get those high earnings.
And yet, restrictions do get removed sometimes. Less than half as much of the economy was fully regulated (in some sense that this reviewer can’t recall) in 1997 as in 1977. Hayek argued that protections will fall away without the public’s support – but how?
Leighton picked up where Lopez left off. Political entrepreneurs look for opportunities to sell their ideas. Politicians market ideas to their constituents, as when FDR created the New Deal. Public intellectuals market ideas in policy papers and popular books; and scholars market their ideas to public intellectuals. Keynes, a public intellectual and a scholar, sold the idea of fiscal stimulus to policy wonks and politicians and made the old-time fiscal religion obsolete. But it’s not just statist ideas that sell. Against a backdrop where academic economists had reached the consensus that airline regulation was stifling innovation and harming fliers, Alfred Kahn, chairman of the Civil Aeronautics Board in 1978, paired with Teddy Kennedy and successfully sold the idea of deregulating the airline industry.
Following Leighton, Fred Smith of the Competitive Enterprise Institute argued for pessimism. Even when policy takes one step forward, as with airline deregulation, it takes a step back, as when the air traffic controllers strengthened their labor union at that time.
After the panelists, the audience asked questions.
One questioner noted that Jane Jacobs sold the idea that public housing breeds crime and social conflict, so successfully that it became the conventional wisdom. What explains her success? Lopez noted that although Jacobs was persuasive, the circumstances also were favorable for her case. When the mayor of New Haven was asked if his city could be held up as a model of the success of public housing projects, the failure was too evident to deny the power of new ways of thinking about it: “A model? No; God help us.”
An open-ended question about ideas and interests in contemporary Latin America led Lopez to comment that the Drug War will only end when good ideas beat out entrenched interests.
A question about the controversy surrounding the portrayal of torture in the move Zero Dark Thirty led Leighton to note that the controversy can be explained in part by the fact that movies have the power to shape viewers’ ideologies.
When a questioner suggested that the state will continue to grow if statism is human nature, Lopez noted that with the late 20th century’s re-discovery of the Scottish Enlightenment, students of society have learned that human nature is two-sided. This reviewer was reminded of Peter J. Boettke’s frequent iteration that humans have both a tendency to rape, pillage, and plunder, and a tendency to truck, barter, and exchange; which prevails is a matter of how the art of governance is practiced.
Finally, this reviewer suggested that whether madmen, intellectuals, and scribblers will have any influence depends on whether the public is unwilling to entertain challenges to their worldview. Prohibition of alcohol would not have had the support that it did if women like Pauline Sabin and her Women’s Organization for National Prohibition Reform had not been willing to see the rise in crime and corruption as signs of the law’s failure. Lopez noted that people do have a bias to preserve the status quo, but they are willing to be persuaded by a good argument. (This paper, for example, explains how Sabin’s case demonstrates the limits to the irrationality that rational voters are willing to express at the ballot box.) Buchanan, for one, argued that classical liberalism might prosper if its proponents were to portray an emotionally compelling vision.
All in all, it was a good day to discuss ideas, and a good day to think that that matters.
What we think of as behavioral disabilities can be seen as part of a cognitive profile of strengths and weaknesses that make individuals sometimes more, sometimes less well-adapted to the social world than individuals with a “normal” cognitive profile (if such a thing exists at all).
These individuals, Hayek says, are blessed and cursed with an inability to recite arguments from memory. The curse is obvious; the blessing, less so. For some, their inability to recite from memory calls forth the resolve to question whether an assumption, gone unnoticed by the other type of mind, has been illicitly smuggled into an argument. They reconstruct the statements they come across from their most basic elements, painstakingly, every time they encounter them:
Their constant difficulties, which in rare instances may be rewarded by a new insight, are due to the fact that they cannot avail themselves of the established verbal formulae or arguments which lead others smoothly and quickly to the result. But being forced to find their own way of expressing an accepted idea, they sometimes discover that the conventional formula conceals gaps or unjustified tacit presuppositions. They will be forced explicitly to answer questions which had been long effectively evaded by a plausible but ambiguous turn of phrase of an implicit but illegitimate assumption. (“Two Types of Mind”)
To illustrate, think about how Hayek came to call into question the paradigm of economics that views the fundamental problem of the social scientist as how to allocate scarce resources. As he tells it, he was struck by the verbal puzzle that his peers spoke of given data, but that data is Latin for given. In writing up the fruits of the line of thought that began there in an essay that became among the most influential in all of economics, Hayek argued:
The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” … it is a problem of the utilization of knowledge which is not given to anyone in its totality. (“The Use of Knowledge in Society”)
It’s a marvel, and cause for solace and optimism, that we live in a world in which people whose minds work differently can not only survive, but thrive, and sometimes even earn themselves a Nobel Prize. So, here’s to neurodiversity, and to the market system that brings diverse minds together to the benefit of all.
Henry didn't think it was a big deal but Al and Ivan insisted it was. "Who thinks of putting chocolate sauce, peanut-butter-coated sprinkles, Sriracha sauce, and marshmallow sauce on a tortilla and creating a delicious, 'traditional,' American-Mexican dessert?" Ivan wanted to know. "Not just anyone."
"And remember that time Henry was running for class president, and instead of giving a speech he showed off by swallowing the mouthpiece of his tuba at the podium?", Al chimed in. "Not just anyone thinks of doing that."
Ivan and Al were full of stories, and Henry was a good sport, living them with his two, old-school, close friends, but sometimes he wished he could tell some stories of his own about his life. It sounded crazy, he thought, but sometimes he thought his past was just a construct created through an oral tradition kept alive most prominently by Ivan and Al.
Tim Jackson is wrong. Jackson, professor of sustainable development, wrote an article in the NYT calling for people to be less productive: we can get more of the things in the unproductive sectors, like teaching and healthcare; we can avoid unemployment; and we can feel satisfied doing meaningful work. Unfortunately, Jackson's logic is pretty bad. Here's why.
But it's a tautology that if more output comes from a given amount of input, and there's less output, we must be using less inputs. If we assume no growth and increased productivity then we're assuming less employment. But if we instead assume that people can work as many hours of the day as they like, then the better they are at getting good stuff done, the more good stuff gets done.
Second, Jackson gives examples for his argument that incorrectly suggest that high productivity means production of more products that we don't need and that are of inferior quality. If we cram more kids in a classroom, we get worse education. Better is to put more of our efforts into the low-productivity, high "caring" sectors, including education or health care, without increasing our productivity.
But output -- and therefore also productivity and economic growth -- can most usefully be understood subjectively. If people value quality or caring, and they're more productive, that means they're getting more high-quality goods and more caring. High productivity doesn't mean giving many kids a crappy education; it means giving either more kids the same education, the same kids better education, or more of something we value other than education, like Beethoven concerts or health care or clean water for developing nations, without giving up anything to get that additional value.
Third, the author's bio notes that Jackson has a book out, the title of which contradicts his argument. The title: Prosperity Without Growth: Economics for a Finite Planet. But why would someone who made that argument want less growth? His argument here is that the problem of being too productive arises when there is less growth; so logically, if we're able to grow then we have no problem.
Get more stuff done and make the world a better place! Well, maybe except for Jackson; the more he gets done, the worse off we are.
Can central banks be simultaneously empowered in an effort to control monetary and financial crises and constrained against abusing its powers?
A common answer is that it can be if subjected to constitutional checks and balances: e.g., the gold standard, in various forms, as a device to limit the central bank's ability to expand the money supply; legislated mandates on the central bank's goals and policy instruments, such as a mandate to stabilize nominal GDP; legislated restrictions, such as a prohibition on the central bank's authority to purchase bonds directly from the fiscal authority.
But although we have seen these constitutional constraints in place in numerous times and places, a tamed or tethered* central bank has always been an elusive creature.
Political economy has pointed sporadically and sometimes persuasively to mechanisms to explain why these constraints fail. These mechanisms attempt to explain the emergence of political, centralized, expansionary central banking.
But these mechanisms do not seem to fully explain why the constraints did not fail at the start, or how political agents succeeded in evading the constraints.
Although many of these theories seem to have merit, we might need some other mechanism to complement bureaucratic theories. Were the Federal Reserve's incentives especially strong at the times when its formal powers expanded, such as in 1935? This was when the regional banks consolidated de facto under a central authority, among other changes. My conjecture is that the bureaucracy did not have especially great influence at this time.
Regardless of whether bureaucratic theories tell an incomplete part of the story, these theories would be much improved if applied more to historical cases.
Another family of explanations refers to the interest of the central bank as an agent to an outside principal; yet, again, these explanations would seem to explain too much; i.e., why did the constitutional constraints not fail earlier? For example, Timberlake, Brennan and Buchanan, and Rothbard each take a particular variant of agency theory**: because the central bank's existence depends on its ability to satisfy the interests of the fiscal authority, it has a bias toward expansionary monetary policy and an incentive to evade its formal constraints.
This might explain why it is in times of war that many central banks have been granted new powers, de facto and de jure: to monetize the fiscal authority's debt. In Canada, e.g., in WWI, before the emergence of the central bank, the de jure requirement that chartered banks redeem banknotes for gold was scrapped so that, concurrent with certain other changes, the banks could monetize the government's debt.
Although the interests of the fiscal authority may be obvious, a puzzle arises when we decompose the fiscal authority into a multitude of agencies, some rivalrous and some cooperative with each other: why and how does a multitude of interests seem to always have the net effect of eroding constitutional constraints?
To be sure, politicians with an interest in spending will wish to raise revenue in a way least burdensome on their constituencies, viz., seigniorage.
But other agencies may come into conflict with the big-spenders. If the Treasury, e.g., wishes to maintain its creditworthiness -- to keep its foreign creditors interested in financing it -- it will favor a relatively limited monetary expansion so as to keep the dollar from depreciating. Likewise if the Treasury wishes to prevent existing bondholders from taking a loss.
The conjunction of these interests does not lead the central bank ineluctably to take on any particular organizational form or policy orientation, viz., centralized, politicized, and expansionary. If we assume that central banking will trend in this direction, It is not obvious, e.g., why a class of bureaucratically interested or fiscally interested central bankers and other similar political agents would fail so badly at preventing the money supply from collapsing in 1929-1933 and 1936-1937; but it might be more intelligible if we consider the conflicts within the political system.
So, it would be useful to know how various political agents' interests are mediated by the prevailing ideology and prevailing democratic institutions to the emergence of one form or another of central banking. Shifts in ideas and crises in politics might explain part of the history, and these shifts are amenable to economic analysis.
In short, central banking is a black box that needs to be busted open. Why and how it emerges and evolves are open and important questions.
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* From a metaphor used by George Selgin
** Other variants point to particular principals in the federal government to which the Fed (in particular) is the agent: the Administration or Congress, in particular.
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