Category Archives: Philosophy

Economics, Philosophy, Political Commentary, Science And Society

The Economy Is Not A Machine

9 Comments

I don’t understand why people don’t understand this. An ecosystem is a much more accurate (and more useful) analogy. And I’ve always found this amusing/frustrating:

Keynesians on the left are eager to dismiss Intelligent Design (ID) as the creationist afterthought to evolution, but just as eager to embrace its analog in economics. Disciples of Adam Smith know better. Darwin, after all, read Smith. As the late naturalist Stephen Jay Gould wrote, “the theory of natural selection is a creative transfer to biology of Adam Smith’s basic argument for a rational economy: the balance and order of nature does not arise from a higher, external (divine) control, or from the existence of laws operating directly upon the whole, but from struggle among individuals for their own benefits.”

It’s particularly ironic (and there must have been some cognitive dissonance) that Gould wrote this, because my understanding was that he was a life-long Marxist. And of course, the opposite applies as well — many free marketeers refuse to believe in biological evolution. They understand that there is a natural emergent order in the marketplace, but can’t believe that life could evolve unguided from above.

I’m one of those weirdos who believes in both free markets, and free nature.

[Update late morning]

Arnold Kling has some thoughts on the myth of the “economic multiplier”:

It is amazing what happens when you assume that you live in a linear world. You say that the multiplier for government spending is 1.57.

Really? Over what range? Think of it this way: at which level of additional government spending would the path of U.S. real GDP be the highest?

(a) $100 billion in spending above the baseline
(b) $1 trillion in spending above the baseline
(c) $100 trillion in spending above the baseline

If you use a constant multiplier of 1.57, the right answer is (c). Yet we know that this is not the right answer. At $100 trillion in additional government spending, the United States would be operating like Zimbabwe, with similar results.

This is similar to the (dumb) argument often made by space advocates that space spending has a high (or higher) “multiplier” effect than other kinds of spending (the study most cited on this is the one done by Chase Econometrics back in the 70s).

Yes, obviously, if you pay engineers to do things, they’ll go out and spend the money on goods and services, and create more jobs for other people. And yes, if you develop technology, some of it is bound to have an economic benefit and improve productivity, or create new products, and grow the economy.

But when one makes these kinds of arguments, it’s all too easy to ignore what you’re spending the primary money on. It really does matter what product the engineers are building with government money. When it comes to space, does anyone think that it makes no difference whether we had continued to employ people building and flying Saturns, or had developed the Shuttle? Or that if we’d developed a better version of the Shuttle (perhaps by starting with smaller prototypes, and continually improving the concept over the past thirty-five years) that it would have made no difference in our prospects for being spacefaring? That it makes no difference whether we spend thirty-billion dollars developing Ares, or instead something that actually reduces the cost of access to space?

To listen to the “multiplier” argument, it doesn’t matter at all. Having the engineers design a machine to bore a hole to the earth’s center has the same economic value as to build a space elevator.

When we are talking about government spending, it isn’t sufficient to talk about how much we’re spending, and whether or not it will “stimulate the economy.” We have to talk about what we’re spending it on, and unfortunately, much of what the Democrats want to spend it on will (relative to letting people decide what to do with their own money) not create wealth, or grow the economy, but rather destroy it. It’s what governments do.

Business, Economics, Media Criticism, Philosophy, Political Commentary

From Fiction To Reality

10 Comments

Steve Moore says that we are fulfilling Ayn Rand’s dystopian prediction:

In the book, these relentless wealth redistributionists and their programs are disparaged as “the looters and their laws.” Every new act of government futility and stupidity carries with it a benevolent-sounding title. These include the “Anti-Greed Act” to redistribute income (sounds like Charlie Rangel’s promises soak-the-rich tax bill) and the “Equalization of Opportunity Act” to prevent people from starting more than one business (to give other people a chance). My personal favorite, the “Anti Dog-Eat-Dog Act,” aims to restrict cut-throat competition between firms and thus slow the wave of business bankruptcies. Why didn’t Hank Paulson think of that?

These acts and edicts sound farcical, yes, but no more so than the actual events in Washington, circa 2008. We already have been served up the $700 billion “Emergency Economic Stabilization Act” and the “Auto Industry Financing and Restructuring Act.” Now that Barack Obama is in town, he will soon sign into law with great urgency the “American Recovery and Reinvestment Plan.” This latest Hail Mary pass will increase the federal budget (which has already expanded by $1.5 trillion in eight years under George Bush) by an additional $1 trillion — in roughly his first 100 days in office.

The current economic strategy is right out of “Atlas Shrugged”: The more incompetent you are in business, the more handouts the politicians will bestow on you. That’s the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies — while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to “calm the markets,” another trillion of national wealth is subsequently lost. Yet, as “Atlas” grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate “windfalls.”

She was far ahead of her time.

History, Philosophy, Popular Culture, Science And Society, Space, Technology and Society

Living On Mars

3 Comments

Some thoughts from Bob Zubrin, who apparently has a new book
out on the subject.

I have to say, though, that when he says:

It’s a common view that Columbus was just interested in finding a spice route to the Indies, and that was his sales pitch to the Spanish courts. But I actually believe that contrary to conventional history, Columbus was looking for unknown continents — he just couldn’t pitch it that way.

I’d be curious to know the basis for that belief, or if it’s just wishful thinking or projection. My reading of the history does not indicate that Columbus was averse to making a buck.

Economics, Media Criticism, Philosophy, Technology and Society

Fishing for the Future

2 Comments

…Soylent green. The miracle food of high-energy plankton gathered from the oceans of the world.

Soylent Green, 1973

The New York Times predicts that “if current fishing practices continue, the world’s major commercial stocks will collapse by 2048.” Their solution: lower energy content by eating sardines instead of feeding them to farm-raised salmon.

Mistaking energy content for price is a common mistake. Chew on this: organic lettuce is more expensive than a hamburger.

Wild fish will be eclipsed by farm-raised fish just as farm-raised beef has eclipsed free-range beef. Get used to it, perhaps by preparing to pay an extreme premium for free-range fish. Don’t expect the Chinese middle class to prefer wild cod once a year to farm-raised salmon once a month. Expect the coastal waters to be fenced into fish farms just as the Great Plains was fenced in during the 19th century.

It’s time to manage the pollution and reserve the wild fish parks upcurrent. This tide isn’t going to be turned back by pondering how the old days were until we’re eaten up.