Coyote Blog

Megan McArdle had a stat the other day that was pretty depressing, related to the number of kids of middle class African-Americans that appear to fall back into poverty:

A chapter of the report released last fall found startling evidence
that a majority of black children born to middle-class parents grew up
to have lower incomes and that nearly half of middle-class black
children fell into the bottom fifth in adulthood, compared with 16
percent of middle-class white children

That is not good, though I am always suspicious of income statistics (for example, income statistics show me as close to or below the poverty line over the last few years, a function of an entrepreneurial startup).

Then I saw all the silly to-do about Michelle Obama's senior thesis at Princeton (I can't say I honestly even know what my wife's thesis was about).  But what got me to thinking was the fact that as an African-American Ivy League student, she felt compelled to study and write her thesis about race.  I started to remember a disproportionate number (but by no means all) of my middle-class African-American Ivy League acquaintances studied and wrote on the same thing - race.  This means that while I was studying engineering, which had obvious value in the workplace, many blacks are studying a topic that has no marketplace value except to get a very low paying job in a non-profit somewhere.  Which is all fine and good if that is what people want to do, but if blacks are worried their kids are not financially successful, they should consider whether its smart that, while other kids are studying subjects that will get them ahead, their kids are studying a subject that seems to focus mainly on explaining to them why they will never get ahead.

Update:  I want to be careful not to call race / gender / group identity majors "worthless."  Worthless is in the eye of the beholder, and if a student values such a course of study, then it has worth.  However, by the same token, the student should be prepared for the fact that most of the world, particularly the subset called "hiring managers", does not value degrees in majors that have little practical application outside of academia and which have a reputation in general for having low academic standards.  The student does not have to accept the rest of the world's judgement of her degree, but in turn the student can't demand that the rest of the world adopt hers.

In fact, when I made these comments, I didn't know Ms. Obama's choice of course of study.  Knowing that now, it is even more amazing to me that she sees her student debt experience as an average data point indicating a structural flaw in the economy instead of the fact that she chose perhaps the most expensive college in the country and then chose to dedicate four years of study to a major that is nearly impossible to monetize in the job market.

Paul Krugman, on ethanol:

I'm almost never censored at the Times. However, I was told that I couldn't use the lede I originally wrote for my column
following the 2007 State of the Union address, in which Bush made
ethanol the centerpiece of his energy strategy: "Before the State of
the Union address, there had been hints and hopes that President Bush
would offer a serious plan to reduce our dependence on imported oil.
Instead, however, he took refuge in alcohol."

Well, anyway - the news on ethanol just keeps getting worse. Bad for the economy, bad for consumers, bad for the planet - what's not to love?

Well, I have heard that he was a pretty good economist before he became a political hack.

I think it's so cute when my fellow Princeton grads who pull down nearly a half million dollars a year complain about being put down by "the man."

Blaming your student debt on the structure of the economy when you chose to go to the most expensive school in the country is a bit like trying to get sympathy for the size of the note on your Lamborghini. 

By the way, lost in all this is the fact that Princeton is one of the two schools in the country that now help students graduate debt-free.  In most cases, Princeton has replaced student loans with outright grants. Somehow she kind of forgot to mention that Princeton solved this problem years ago, without even a whiff of government intervention. 

For a while, I have been worried that the next decade may well be a return to 1970's economics, with bipartisan commitment to large government, ever-expanding government micro-management of... everything, growth-destroying taxes, and consumer-unfriendly protection of dead US industries.

Now, Megan McArdle points to an article that hints that the stagflation of the 1970's may be back as well.

Inflation and sluggish growth haven't joined in that ugly brew called
stagflation since the 1970s. They may not be ready for a reunion, but
they are making simultaneous threats to the economy and battling one
might only encourage the other.

Among a batch of economic readings today, the Labor Department
reported that import prices jumped 1.7% last month. The data included
troubling signs that consumer products, many imported from China, have
caught the inflation bug. The signs pointing to slowing growth included
a sharp deterioration in consumers' mood, as measured by the
Reuters/University of Michigan Surveys of Consumers, and a worsening
outlook for manufacturers, revealed in the Federal Reserve Bank of New
York's Empire State Manufacturing survey for February. The government
also reported that U.S. industrial production only increased slightly
during January, as colder weather elevated utilities output and offset
sharp declines in the auto and housing sectors. If indeed inflation is
teaming up with slower growth, it means big headaches for policy
makers, in particular Ben Bernanke. The Federal Reserve chief in
congressional testimony yesterday suggested that he is willing to keep
lowering interest-rates if the economy stalls. But, naturally, he will
have less room to do so if those lower rates would accelerate inflation
to unacceptable levels.

Just the other day, I made the point that just because regulated corporations support a regulation does not mean that said regulation is sensible or good for the economy.  Often, incumbents are beneficiaries of industry regulation, which tends to give them certain advantages over new entrants.  I showed an example with General Electric and the new energy bill regulating light bulbs:

we see that GE has a product sitting on the shelf ready for release
that fits perfectly with the new mandate.  Assuming competitors don't
have such a technology yet, the energy bill is then NOT a regulation of
GE's product that they reluctantly bow to, but a mandate that allows GE
to keep doing business but trashes their competition.  It is a market
share acquisition law for GE.

Marlo Lewis makes a similar point, this time in relation to cap and trade systems:

I can't count how many times I've heard that line of
chatter"”and from people who usually assume anything corporations are
for must be bad!

 

There are many reasons some corporations
support cap-and-trade, or at least say nice things about it in public.
Some companies seek the PR value from looking green....

 

But in the case of energy companies, many who support
cap-and-trade do so in the expectation that they'll get a boatload of
carbon permits from the government"”for free!

 

Permits represent an artificial, government-created
scarcity in the right to produce energy. The right to produce energy is
very valuable, especially where government restricts it. The tighter
the cap, the more valuable each permit traded under the cap.

From a reader comes this story of Arizona looking to the public trough to get funds to lure another SuperBowl.  I can say from experience now that Superbowl week is made up mostly of private corporate and celebrity parties that the unwashed locals like myself are either a) not allowed to attend at all or b) can attend only by ponying up $1000 or more.  Not being resentful or a leftist, I couldn't really care less about the parties being near by.  However, my opinion changes real fast if my tax dollars are required to pay for them:

Super Bowl organizers will try to nail down another big game for Arizona, possibly as early as 2012.

But for the state to stay competitive, taxpayers need to shoulder the
majority of game costs, organizers say. And the organizers plan to
lobby for legislation to accomplish that.

The weeklong celebration culminating with Sunday's Super Bowl XLII cost
the local Host Committee about $17 million. The private sector,
including such big contributors as the Fort McDowell Yavapai Nation and
the Thunderbirds, bankrolled more than 80 percent, while state and
local agencies chipped in the balance.

But with a slumping economy making fundraising a challenge, the Arizona
Super Bowl Host Committee, the Arizona Cardinals organization and
Valley business leaders want see that ratio reversed, with public
dollars financing the bulk of the effort.

Don't you love the last sentence?  An exactly equivalent way to state this is "people have other priorities for their own money and refuse to give it up voluntarily, particularly in difficult economic times, so we need the state to take it by force."

No one yet knows how much this year's Super Bowl will fatten state
coffers, though organizers project the game created more than $400
million in spending. An economic-impact study won't be out for at least
a couple of months.

Bullshit.  Every major economic study not conducted by the management of a professional sports team has shown nearly zero impact from such events.  Here is the Seattle NBA team admitting they have no economic impact.  Here is yet another economic study to the same effect.

Here is my challenge:  Take the Phoenix-area GDP for this Jan-Feb, take out the growth trend line (which can be found in year-over-year comparisons of previous months) and then compare it to the GDP for Jan-Feb 2007.  I bet you whatever you care to bet you cannot find an additional $400 million. 

Bill Clinton is at least honest to some extent in saying that cutting back on CO2 emissions will requires us to throttle back the economy:

In a long, and interesting speech, he [Bill Clinton] characterized what
the U.S. and other industrialized nations need to do to combat global
warming this way: "We just have to slow down our economy and cut back
our greenhouse gas emissions 'cause we have to save the planet for our
grandchildren."

But how much?  Activists try to make the average person feel like the amount is "not much" by spinning out rosy stories of 3rd graders fighting global warming by recycling.  But in fact Bill's wife Hillary makes the degree of cuts clearer:

...[Clinton's] plan would reduce greenhouse gas emissions by 80 percent from 1990 levels by 2050 to avoid the worst effects of global warming...

And recognize, this is the typical figure being cited by global warming catastrophists for "necessary" US cuts.  So how much is 80%?  With current technology, an almost unimaginable cut.  Its hard to get good Co2 data, but here is a chart from some place called the Carbon Dioxide Information Analysis Center that purports to show US historic CO2 production from man-made sources:

The chartsmanship sucks here, but 1990 looks like about 1.35 billion metric tons.  20% of that would be 0.27 billion metric tons.  That appears to be the level we hit in about ... 1905.  So, apparently without using nuclear power (since Clinton opposed nuclear expansion in one of the debates, I think in Nevada)  she wants us in the next 42 years to get back to the energy production of about 1905.  Now this is a bit unfair, since efficiencies and GDP per ton of CO2 have improved substantially since 1905.  So to be fair she may only want to take us back to about 1930.

While this is scary, what Clinton and other global warming crusaders want to do to the third world is even scarier.  Right now, close to a billion people who have been in poverty forever are posed, via growth in China, India, and SE Asia, to finally exit poverty.  Global warming crusaders want this to stop.  For example, here is the former World Bank chief economist Nicholas Stern says that India must stay poor:

Mr
Stern, the former chief economist of the World Bank, sends out a very
clear message: "We need to cut down the total amount of carbon
emissions by half by 2050." At current levels, the per capita global
emissions stand at 7 tonnes, or a total of 40-45 gigatonnes. At this
rate, global temperatures could rise by 2.5-3 degrees by then. But to
reduce the per capita emissions by half in 2050, most countries would
have to be carbon neutral. For instance, the US currently has, at 20-25
tonnes, per capita emissions levels that are three times the global
average.

The European Union's emission levels stand at 10-15
tonnes per capita. China is at about 3-4 tonnes per capita and India,
at 1 tonne per capita, is the only large-sized economy that is below
the desired carbon emission levels of 2050. "India should keep it that way and insist that the rich countries pay their share of the burden in reducing emissions," says Mr Stern.

No cars for these folks either!

Well, Arizona nativists are getting what they wanted:  Productive workers who don't happen to have been licensed by the government to work here are leaving in droves  (via Disloyal Opposition)

Unable to find jobs, or fearful that their loved ones will be caught
and deported, illegal immigrants and their legal friends and relatives
are fleeing the state in what the press has dubbed "Hispanic panic." In
a state where illegals make up better than 10% of the workforce,
the exodus promises to have a major impact. The vacancy rate in
Tucson-area apartment complexes favored by illegal immigrants has
jumped dramatically since the law went into effect....

Of course, advocates of the sanctions law will say that this is exactly the result they were hoping for; they want Hispanics to flee the state (usually, they'll claim that they just want the illegal
ones to leave). But with workers leaving Arizona, taking their rent
money, mortgage payments and shopping dollars with them, and with state
employers facing rising labor costs -- if they can even find workers --
the economy is likely to take a major hit. In fact, the University of
Arizona predicts a $29 billion economic loss if illegal workers are successfully purged from the state (full report here in PDF).

The Arizona Republic this morning had some goofy headline in their print edition that said something like "How should you spend your $800 tax rebate?"  Far be it for me to presume to tell people how to spend their own money (what do I look like, a Congressman?) but here is a bit of advice:  Save it.  Because this is not a grant, it is a loan.

All of these rebates will be paid for with additional deficit spending.  This means that everyone will eventually pay for their rebate in the form of a) higher future taxes; b) higher future prices due to inflation; or c) increased job insecurity and/or lower future earnings due to reduced output in the economy; or d) all of the above.

It HAS to be this way.  Unlike private wealth creation, the government can't get wealth from nowhere.

In the absence of government meddling (e.g. price controls) healthy markets seldom create true shortages, meaning situations where one simply cannot obtain a product or service.  One might think there was a shortage, for example, of Superbowl tickets, since there are only a few available and tens of thousands, maybe hundreds of thousands, of people who would like to attend.  But in fact one can Google "Superbowl tickets" and find hundreds available.  You may not like the price ($3500 and up for one ticket), but they are available for sale.

Yesterday, the AZ Republic lamented that there is a shortage of truck drivers nationwide:

Trucking companies across the country are facing a shortage of long-haul drivers....

High driver turnover has traditionally been a problem throughout the
trucking industry. But retirements and growing shipping demand have
made the shortage of long-haul drivers more acute. Fewer drivers means
delayed deliveries and higher delivery costs that could be passed on to
consumers. The
issue is especially crucial for the Phoenix area, which touts itself as
a shipping hub for businesses fed up with the costs and congestion
around Los Angeles-area ports. The Valley also is headquarters to two
of the country's biggest for-hire trucking companies: Swift
Transportation and Knight Transportation....

Trucking experts say the problem goes beyond a labor shortage in the industry. They call it a threat to the economy.

"Our country needs to figure out how to fix this," said Ray Kuntz,
chairman and chief executive of Watkins and Shepard Trucking in Montana
and chairman of American Trucking Associations. "Our economy moves on
trucks."

Here is the key fact:

"¢ Long-haul wages vary by company and are typically based on
experience, safety record and commercial-driver's-license endorsements.
Long-haul drivers with two or more years of experience usually earn at
least $50,000 to $60,000 a year.

"¢ An entry-level driver with no over-the-road experience starts in the high $30,000 range. Team drivers can earn more.

There is no way in a Platonic vacuum to determine if a wage is too high or too low.  But the driver "shortage" gives us a really good hint that maybe these salary levels are no longer sufficient to attract people to the rather unique trucking lifestyle.  I probably could write a similar article about how there is a shortage of Fortune 500 CEO's or airline pilots who will accept a $30,000 starting salary.  The problem then is not shortage, the problem is that wage demands are rising as trucking is out-competed for talent by alternative careers.   In fact, there is not shortage, but a reluctance by trucking firms to accept a new pricing reality in the market for drivers.

By the way, to some extent this "shortage" is indeed an artificial creation of the government.  Under NAFTA, Mexican truckers were long-ago supposed to have been given access to the US market, but overblown safety concerns have been used as a fig-leaf to block the provision as a protection for US truckers and a subsidy to the Teamsters.  If a truck driver "shortage" is really a national economic problem, then let's stop blocking this NAFTA provision.  But my sense is that the trucking companies in this article would freak at this, because they are not really concerned about the national economy but, reasonably, with rising wages hurting their bottom line.  My guess is this article is the front-end of a PR push to get states like Arizona to subsidize ... something.  Maybe truck driver training.  Look for such legislative proposals soon.

Those of us with long memories, say back to the 1970's, can remember that the Left constantly complained about manufacturing and assembly-line work as "dehumanizing."  Their goal was for workers to transcend this Tayloristic "hell" into clean, white collar office work.  Well, now that we have done so by replacing many assembly-line workers with machinery programmers and service workers, the Left now makes the argument that assembly-line work was the Nirvana of all employment, and the only possible road to the middle class for many Americans.  If I was an academic with time on my hands to do an in-depth research project, I would love to go back to records of leftish complaints about the economy form the 1960s and 1970s.  Because in large part, they have gotten everything they were asking for and more, but now they complain about the change. 

One of the explanations of this paradox is that progressives, despite their name, are extremely conservative (little c) in that they fear change in the economy and in work patterns more than anything else.  Changing trade patterns, changes in economic mix, changes in work relationships -- these all send progressives into a tizzy.  I know that in some sense I am answering a paradox with a greater paradox.  Rather than repeat the argument, here is my argument in depth that capitalism is too dynamic for progressives.  An excerpt from that post:

Beyond just the concept of individual decision-making, progressives
are hugely uncomfortable with capitalism.  Ironically, though
progressives want to posture as being "dynamic", the fact is that
capitalism is in fact too dynamic for them.  Industries rise and fall,
jobs are won and lost, recessions give way to booms.  Progressives want
comfort and certainty.  They want to lock things down the way they are.
They want to know that such and such job will be there tomorrow and
next decade, and will always pay at least X amount.  That is why, in
the end, progressives are all statists, because, to paraphrase Hayek,
only a government with totalitarian powers can bring the order and
certainty and control of individual decision-making that they crave.

Progressive elements in this country have always tried to freeze
commerce, to lock this country's economy down in its then-current
patterns.  Progressives in the late 19th century were terrified the
American economy was shifting from agriculture to industry.  They
wanted to stop this, to cement in place patterns where 80-90% of
Americans worked on farms.  I, for one, am glad they failed, since for
all of the soft glow we have in this country around our description of
the family farmer, farming was and can still be a brutal, dawn to dusk
endeavor that never really rewards the work people put into it.

Postscript:  I still argue that the "decline" of American manufacturing is a chimera of how statistics are gathered.  As I wrote here:

The best way to illustrate this is by example.  Let's takean automobile assembly plant circa 1955.  Typically, a large manufacturing
plant would have a staff to do everything the factory needed.  They had
people on staff to clean the bathrooms, to paint the walls, and to
perform equipment maintenance.  The people who did these jobs were all
classified asmanufacturing workers, because they worked in a manufacturing
plant.  Since 1955, this plant has likely changed the way it staffs
these type jobs.  It still cleans the bathrooms, but it has a contract
with an outside janitorial firm who comes in each night to do so.  It
still paints the walls, but has a contract with a painting contractor
to do so.  And it still needs the equipment to be maintained, but
probably has contracts with many of the equipment suppliers to do the
maintenance.

So, today, there might be the exact same number of people in the
factory cleaning bathrooms and maintaining equipment, but now the
government classifies them as "service workers" because they work for a
service company, rather thanmanufacturing workers.  Nothing has really changed in the work that people do, but government stats will show a large shift from manufacturing to service employment.

From Venezuela:  (via Mises)

Venezuela launched a new currency with the new year, lopping off three
zeros from denominations in a bid to simplify finances and boost
confidence in a money that has been losing value due to high inflation....

"We're ending a historical cycle of ... instability in prices,"
Finance Minister Rodrigo Cabezas said Monday, adding that the change
aims to "recover a bolivar that has significant buying capacity."

Prices have risen as Chavez has pumped increased amounts of the
country's oil income into social programs, reinforcing his support
among the poor and helping to drive 8.4 percent economic growth in 2007.

The Central Bank is promoting the new monetary unit with an ad
campaign and the slogan: "A strong economy, a strong bolivar, a strong
country." Officials, however, have yet to clearly spell out their
anti-inflationary measures.

Good to see the government taking meaningful steps.  Next up will be "Whip Inflation Now" buttons. 

The 8.4 percent growth cited above may be illusory, given this:

Venezuela has had a fixed exchange rate since February 2003, when
Chavez imposed currency and price controls. The government has said it
is not considering a devaluation any time soon.

But while the strong bolivar's official exchange rate will be fixed
as 2.15 to $1, the black market rate has hovered around the equivalent
of 5.60 to $1 recently.

Russell Pearce is the Arizona legislator who authored the AZ employer sanctions law.  Remember, that's the law that requires, among other things, employers to check the immigration status of current employees using an INS system that has federal rules in place that make it illegal to use this system to... check the immigration status of current employees.  His plan is to reduce a major source of labor in the Arizona economy which, by the way, has a 3.5%-4.1% unemployment rate over the last year, the lowest level in 30 years. 

Anyway, now Mr. Pearce has decided to target babies:

The newest front in the battle over illegal immigration is dragging health-care workers into the fray.

The Arizona Hospital and Healthcare Association is trying to kill a
proposal by Rep. Russell Pearce, R-Mesa, that would require its members
to check the citizenship of patients who deliver babies at Arizona
facilities.

If neither of the parents can prove citizenship, the hospital would be barred from issuing a regular birth certificate.

Babies of parents who are here legally but not citizens also would be denied regular birth certificates.

Beyond the obvious concerns about driving moms away from medical care for their deliveries, Mr. Pearce has a teeny-tiny Constitutional issue he must deal with in the 14th Amendment:

All persons born or naturalized in the United States, and subject to
the jurisdiction thereof, are citizens of the United States and of the
State wherein they reside.

Mr. Pearce is hoping that "subject to the jurisdiction thereof" can be stretched to say that such persons do not include immigrants.  In fact, the Supreme Court does not seem to have ruled on this specific issue (corrections welcome in comments) but historically they have been extremely loath to place limits on this.  And no one except Mr. Pearce and perhaps a few of his immediate family members believes that barring citizenship to children of legal immigrants will pass Constitutional muster.  And I am pretty sure that no matter how these questions come out, disallowing birth certificates would never survive a court challenge.  I don't think the immigrants' home country would issue a birth certificate in such a case so we would be creating people without a country.

For years, protectionists in this country have tried to argue that "oh, I am really for free trade, but to be fair we must impose environmental and labor standards on our trading partners."  Well, now Europe is proposing doing exactly the same to us:

The European Commission is considering proposing a
carbon dioxide tariff on imports from states failing to tackle
greenhouse gas emissions, while also considering a toughening-up of the
EU's own emission trading system....

The plan reflects pressure by French president Nicolas Sarkozy who
argued in October that Europe should "examine the option of taxing
products imported from countries that do not respect the Kyoto
Protocol," referring to the 1997 international agreement on fighting
climate change.

Mr Sarkozy urged Brussels to discuss the implications of "unfair
competition" by firms outside the EU, which do not have to abide by
strict European standards on CO2 emissions.

This letter from Don Boudreaux seems relevant:

Hillary Clinton needs a
language lesson.  She favors only trade that is found by government to
"benefit[] our workers and our economy" and that promotes "rising
standards of living across the world" ("" December 3; my emphasis).  She then asserts that "There is nothing
protectionist about this."

Oh please.

Protectionism
exists whenever, wherever, and whyever government artificially raises
its citizens' costs of buying imports.  Protectionism has forever
rested on the false notion that government officials know best how
consumers should spend their money.  And it attempts today to hide its
ugly face behind the smiling mask of allegedly noble intentions, such
as those mouthed by Sen. Clinton.

The title of his post is "The Moment Somone Must Explain that He or She Isn't a Protectionist, You Can Bank on that Person Being a Protectionist."

It is always amazing how big round numbers hold the media in thrall.  Last week we saw the inevitable spate of articles about oil crossing the $100 mark, if only for a few minutes of trading  (actually, the more interesting milestone was somewhere back in the low $90 range when we exceeded the highest past price for oil in inflation-adjusted dollars).

I don't get hugely worked up about gradual commodity price changes.  Oil price increases are signals, signaling marginal consumers to use less and suppliers with historically marginal sources and substitutes to consider their development.  Also, our economic dependence on oil per dollar of GDP has declined, meaning that $100 oil has less impact on the economy than, say, it would have 20 years ago:

I would certainly prefer lower oil prices, and my business suffers to some extent when gas prices rise, but it is not a disaster  (it is interesting that higher oil prices are considered bad in the media, while lower home prices are considered bad in the media).  I know from past experience in the oil patch that oil price bubbles are often followed by oil price drops.  The high oil prices of the seventies were followed by rock-bottom oil prices in the eighties, and subsequent recession in the oil patch (causing the housing bust I discussed here). 

Also, given how we got to these higher oil prices, I tend to take them as good news.  Oil prices are not rising due to some drop off in supply.  Instead, they are rising because of a strong global economy, in particular with millions of people entering the middle class in Asia.  This is GOOD news. 

I have written on peak oil a bunch, so I won't get into it again.  Oil production at worst is going to flatten out for a long time, meaning we will have a steady rise in oil prices over time as the economy grows.  If you want a third party evaluation of peak oil theory, go ask climate catastrophists who believe that CO2 production is an impending disaster for the economy.  These guys know that there are lots of unproduced hydrocarbons out there, and it terrifies them.   Al Gore and James Hansen were running around last week trying to close off Canadian tar sands from development.

Finally, after this series of random thoughts, one more interesting take on this via Megan McArdle:  $100 oil was a stunt

Some observers questioned the validity of the price mark when it
emerged that the peak was the result of a trader "“ one of the "locals"
who trade on their own money "“ buying from a colleague just 1,000
barrels of crude, the minimum allowed, industry insiders said. The deal
on the floor of the New York Mercantile Exchange was at a hefty premium
to prevailing prices.

Insiders named the trader as Richard Arens, who runs a brokerage
called ABS. He was not available for comment. Analysts said he may have
been testing the ceiling of the crude price, but the premium he paid
surprised the market.

Before the $100-a-barrel trade, oil prices on Globex were at $99.53
a barrel. Immediately after the trade, prices went down to about
$99.40, suggesting a trading loss of $600 for Mr Arens.

Stephen Schork, a former Nymex floor trader and editor of the
oil-market Schork Report, commented: "A local trader just spent about
$600 in a trading loss to buy the right to tell his grandchildren he
was the one who did it. Probably he is framing right now the print
reflecting the trade."

From Scientific American Magazine - January 2008 via the Mises Blog

...As with living organisms and ecosystems, the economy
looks designed"”so just as humans naturally deduce the existence of a
top-down intelligent designer, humans also (understandably) infer that
a top-down government designer is needed in nearly every aspect of the
economy. But just as living organisms are shaped from the bottom up by
natural selection, the economy is molded from the bottom up by the
invisible hand.

I need to read the whole article, it looks awesome, but in fact yours truly made the same observation over a year ago (emphasis in the original - I was going through an overuse-of-bold-type phase.

So here is this week's message for the Left:  Economics is a
science.  Willful ignorance or emotional rejection of the well-known
precepts of this science is at least as bad as a fundamentalist
Christian's willful ignorance of evolution science (for which the Left
so often criticizes their opposition).  In fact, economic
ignorance is much worse, since most people can come to perfectly valid
conclusions about most public policy issues with a flawed knowledge of
the origin of the species but no one can with a flawed understanding of
economics....

In fact, the more I think about it, the more economics and evolution are very similar.  Both are sciences that are trying to describe the operation of very complex, bottom-up, self-organizing systems.  And,
in both cases, there exist many people who refuse to believe such
complex and beautiful systems can really operate without top-down
control. 

For example, certain people refuse to accept that homo sapiens could
have been created through unguided evolutionary systems, and insist
that some controlling authority must guide the process;  we call these
folks advocates of Intelligent Design.  Similarly, there are folks who
refuse to believe that unguided bottom-up processes can create
something so complex as our industrial economy or even a clearing price
for gasoline, and insist that a top-down authority is needed to run the
process;  we call these folks socialists. 

It is interesting, then, given their similarity, that socialists and
intelligent design advocates tend to be on opposite sides of the
political spectrum.  Their rejection of bottom-up order in favor of
top-down control is nearly identical.

I was watching CNBC over lunch and saw that Alan Greenspan has criticized the President's plan for freezing the interest rates on some adjustable rate loans.  He argued, and I agree, that it is bad to mess with contracts and markets, and bad to stand in the way of a real estate bubble that needs to correct.  He said that if the government feels sorry for certain mortgage holders, it should give them cash.

I am not too excited about giving away cash to people who made bad financing decisions, particularly since I have successfully weathered a couple of tough years in my business brought about in part by rising rates on our businesses adjustable rate loans.  However, I am very much a supporter of being as open and up-front as one can be in government taxing or spending.  For example, I prefer direct payments to farmers rather than price supports.  I prefer a carbon tax to CAFE-type mandates.  In both cases, while both alternatives probably cost the economy about the same in total, the cost-benefit tradeoff is more clear in the first alternative.  Which is why, predictably, politicians usually prefer the second alternative. 

All of this pops into my head because apparently the President's reaction was that he preferred his plan to a "bailout."  Huh?  How is his plan any more or less a bailout, except that the exact costs are more hidden and who pays the costs are more obscure.  The only real difference is that Greenspan's approach is probably less likely to set bad precedents for the future or to make mortgages more expensive for the rest of us, which the President's plan almost certainly will.

I really want to thank Michael Tobis at environmentalist hang-out Grist.   For years people have accused me of over-reading  the intentions of climate catastrophists, so I am thankful that Tobis has finally stated what climate catastrophists are after (emphasis in the original, but it is the exact phrase I would have highlighted as well)

Is infinite growth of some meaningful
  quantity possible in a finite space? No scientist is inclined to think
  so, but economists habitually make this
  claim without bothering to defend it with anything but, "I'm, an
  economist and I say so", or perhaps more thoughtfully, "hey, it's
  worked until now".

Such ideas were good approximations in the past. Once the finite
  nature of our world comes into play they become very bad approximations. You know, the gods of Easter Island
smiled on its people "until now" for a long time, until they didn't.
The presumption of growth is so pervasive that great swaths of economic
theory simply fail to make any sense if a negative growth rate occurs.
What, for instance, does a negative discount rate portend? ...

The
  whole growth thing becomes a toxic addiction. The only path to a soft
  landing is down; we in the overheated economies need to learn not just
  to cope with decline but to celebrate it. We need not just an ideology
  but a formal theory that can not only cope with reduced per capita
  impact but can target it.

Decline isn't bad news in an airplane. Decline is about reaching
your destination. Perhaps there is some level of economic activity
beyond which life gets worse? Perhaps in some countries we have already
passed that point? Could the time where we'd all be better off with a
gradual decline have arrived? How much attention should we pay to the
folks who say we should keep climbing, that there's no way we can run
out of fuel, that we'll think of something?

So there it is, in the third paragraph, with no danger of misinterpretation.  These folks want economic decline.  That's a fancy way of saying "We want you poorer."

I could spend weeks writing about the fallacies and anti-human philosophy embedded in these four paragraphs, but here are just a few reactions.

The Zero Sum Fallacy

Every generation has people, like Mr. Tobis, who scream that we are all living in a petri dish and this is the generation we run out of Agar.  Of course they are always wrong.  Why? 

Well, first, the prime driver of economic growth is not resources but the human mind.  And the world of ideas has no capacity limits.   This is an  issue that Julian Simon wrote about so clearly.   Tobis is trying to apply physical models to wealth creation, and they just don't apply.  (and by the way, ask the passengers of TWA flight 800 if decline isn't bad news in an airplane).

Further, if we talk about the world of resources, we currently use a trivial fraction of the world's resources.  By a conservative estimate, we have employed at most (including the soil we till for agriculture, extracted minerals, etc) less than 0.0001% of the earth's mass.  In terms of energy, all energy (except nuclear) comes ultimately from the sun  (fossil fuels, hydropower reservoirs, etc are just convenient storage repositories of the sun's energy).  We currently use an infinitesimal percentage of the sun's energy. I wrote much more on the zero-sum wealth fallacy here.  And here is my ancestor blogger in Coyote Broadsheet making the same fallacy as Mr. Tobis back in the 19th century, writing on the Peak Whale Theory.

Wealth Benefits the Environment

Just like actual 20th century data tends to undermine catastrophic climate forecasts, experience over the last century tends to contradict the notion that growth is devastating to the environment. 

We can find the best example right here in the environmental Satan called the USA.  The US has cleaner air and water today than in any time in decades.  Because of technology and growth, we can produce more food on less land than ever -- in fact the amount of land dedicated to agriculture has shrunk for years, allowing forests to steadily expand in the US for over eighty years (that is, until the environmentalists got the government to subsidize ethanol).   No one in Brazil would be burning huge tracts of the Amazon if they enjoyed the agricultural productivity we do in the US.  Sure, we have done some things that turn out to be environmentally bad (e.g. lead in gasoline) but our wealth has allowed us to fairly painlessly fix these mistakes, even if the fixes have not come as fast as environmentalists have desired. 

I will confess that the Chinese seem hell bent on messing up their air and water as much as possible, but, just like the United States, it will be the wealthy middle and upper class of China that will finally demand that things get cleaned up, and it will be their wealth, not their poverty, that allows them to do so.   Similarly, I don't think CO2 reduction will do much of anything to improve our climate, but if we find it necessary, it will be through application of wealth, not squalor, that we overcome the problems. 

Here is a simple test:  Which countries of the world have the worst environmental problems?  Its is the poorest countries, not the wealthiest.

Growth / Climate Tradeoffs

For the sake of argument, let's assume that man-made global warming increases severed storm frequency by 20%, or by 3 or 4 extra hurricanes a year (why this probably is not happening).  Even a point or two knocked off worldwide economic growth means hundreds of trillions of dollars in lost annual GDP a century from now (2% growth yields a world economy of $450 trillion in a century.  3% growth yields a world economy $1,150 trillion in a hundred years.)  So, using these figures, would the world be better off with the current level of hurricanes, or would it be better off with four more hurricanes but $700 trillion a year more to deal with them.  Hmmm.  Remember, life lost in a hurricane correlates much higher with poverty in the area the hurricane hit rather than with storm strength, as demonstrated by recent cyclones in Asia.  This general line of reasoning is usually described as warmer and richer vs. cooler and poorer. 

I cannot speak for Mr. Tobis, but many environmentalists find this kind of reasoning offensive.  They believe that it is a sin for man to modify the earth at all, and that changing the climate in any way is wrong, even if man is not hurt substantially by this change.  Of course, in climate, we have only been observing climate for 30-100 years, while climate goes through decadal, millennial, and even million-year cycles.  So it is a bit hard to tell exactly what is natural for Gaia and what is not, but that does stop environmentalists from declaring that they know what is unnatural.  I grew up in the deep South, and their position sounds exactly like a good fiery Baptist minister preaching on the sins of humanity.

More from Jerry Taylor, who got Tobis started on his rant in the first place.

Postscript:  Here is an interesting chicken or the egg problem:  Do you think Mr. Tobias learned about man-made global warming first, and then came to the conclusion that growth is bad?  Or did Mr. Tobis previously believe that man needed to be fewer and poorer, and become enthusiastic about global warming theory as a clever packaging for ideas most of the world's population would reject?  The answer to this question is a window on why 1)  the socialists and anti-globalization folks have been so quiet lately (the have all jumped onto global warming); 2)  no one in the global warming movement wants to debate the science any longer  (because the point is not the science but the license to smack down the world economy)  and 3)  why so much of the Bali conference seems to be about wealth transfers than environmentalism.

I really want to thank Michael Tobis at environmentalist hang-out Grist.   For years people have accused me of over-reading  the intentions of climate catastrophists, so I am thankful that Tobis has finally stated what climate catastrophists are after (emphasis in the original, but it is the exact phrase I would have highlighted as well)

Is infinite growth of some meaningful
  quantity possible in a finite space? No scientist is inclined to think
  so, but economists habitually make this
  claim without bothering to defend it with anything but, "I'm, an
  economist and I say so", or perhaps more thoughtfully, "hey, it's
  worked until now".

Such ideas were good approximations in the past. Once the finite
  nature of our world comes into play they become very bad approximations. You know, the gods of Easter Island
smiled on its people "until now" for a long time, until they didn't.
The presumption of growth is so pervasive that great swaths of economic
theory simply fail to make any sense if a negative growth rate occurs.
What, for instance, does a negative discount rate portend? ...

The
  whole growth thing becomes a toxic addiction. The only path to a soft
  landing is down; we in the overheated economies need to learn not just
  to cope with decline but to celebrate it. We need not just an ideology
  but a formal theory that can not only cope with reduced per capita
  impact but can target it.

Decline isn't bad news in an airplane. Decline is about reaching
your destination. Perhaps there is some level of economic activity
beyond which life gets worse? Perhaps in some countries we have already
passed that point? Could the time where we'd all be better off with a
gradual decline have arrived? How much attention should we pay to the
folks who say we should keep climbing, that there's no way we can run
out of fuel, that we'll think of something?

So there it is, in the third paragraph, with no danger of misinterpretation.  These folks want economic decline.  That's a fancy way of saying "We want you poorer."

I could spend weeks writing about the fallacies and anti-human philosophy embedded in these four paragraphs, but here are just a few reactions.

The Zero Sum Fallacy

Every generation has people, like Mr. Tobis, who scream that we are all living in a petri dish and this is the generation we run out of Agar.  Of course they are always wrong.  Why? 

Well, first, the prime driver of economic growth is not resources but the human mind.  And the world of ideas has no capacity limits.   This is an  issue that Julian Simon wrote about so clearly.   Tobis is trying to apply physical models to wealth creation, and they just don't apply.  (and by the way, ask the passengers of TWA flight 800 if decline isn't bad news in an airplane).

Further, if we talk about the world of resources, we currently use a trivial fraction of the world's resources.  By a conservative estimate, we have employed at most (including the soil we till for agriculture, extracted minerals, etc) less than 0.0001% of the earth's mass.  In terms of energy, all energy (except nuclear) comes ultimately from the sun  (fossil fuels, hydropower reservoirs, etc are just convenient storage repositories of the sun's energy).  We currently use an infinitesimal percentage of the sun's energy. I wrote much more on the zero-sum wealth fallacy here.  And here is my ancestor blogger in Coyote Broadsheet making the same fallacy as Mr. Tobis back in the 19th century, writing on the Peak Whale Theory.

Wealth Benefits the Environment

Just like actual 20th century data tends to undermine catastrophic climate forecasts, experience over the last century tends to contradict the notion that growth is devastating to the environment. 

We can find the best example right here in the environmental Satan called the USA.  The US has cleaner air and water today than in any time in decades.  Because of technology and growth, we can produce more food on less land than ever -- in fact the amount of land dedicated to agriculture has shrunk for years, allowing forests to steadily expand in the US for over eighty years (that is, until the environmentalists got the government to subsidize ethanol).   No one in Brazil would be burning huge tracts of the Amazon if they enjoyed the agricultural productivity we do in the US.  Sure, we have done some things that turn out to be environmentally bad (e.g. lead in gasoline) but our wealth has allowed us to fairly painlessly fix these mistakes, even if the fixes have not come as fast as environmentalists have desired. 

I will confess that the Chinese seem hell bent on messing up their air and water as much as possible, but, just like the United States, it will be the wealthy middle and upper class of China that will finally demand that things get cleaned up, and it will be their wealth, not their poverty, that allows them to do so.   Similarly, I don't think CO2 reduction will do much of anything to improve our climate, but if we find it necessary, it will be through application of wealth, not squalor, that we overcome the problems. 

Here is a simple test:  Which countries of the world have the worst environmental problems?  Its is the poorest countries, not the wealthiest.

Growth / Climate Tradeoffs

For the sake of argument, let's assume that man-made global warming increases severed storm frequency by 20%, or by 3 or 4 extra hurricanes a year (why this probably is not happening).  Even a point or two knocked off worldwide economic growth means hundreds of trillions of dollars in lost annual GDP a century from now (2% growth yields a world economy of $450 trillion in a century.  3% growth yields a world economy $1,150 trillion in a hundred years.)  So, using these figures, would the world be better off with the current level of hurricanes, or would it be better off with four more hurricanes but $700 trillion a year more to deal with them.  Hmmm.  Remember, life lost in a hurricane correlates much higher with poverty in the area the hurricane hit rather than with storm strength, as demonstrated by recent cyclones in Asia.  This general line of reasoning is usually described as warmer and richer vs. cooler and poorer. 

I cannot speak for Mr. Tobis, but many environmentalists find this kind of reasoning offensive.  They believe that it is a sin for man to modify the earth at all, and that changing the climate in any way is wrong, even if man is not hurt substantially by this change.  Of course, in climate, we have only been observing climate for 30-100 years, while climate goes through decadal, millennial, and even million-year cycles.  So it is a bit hard to tell exactly what is natural for Gaia and what is not, but that does stop environmentalists from declaring that they know what is unnatural.  I grew up in the deep South, and their position sounds exactly like a good fiery Baptist minister preaching on the sins of humanity.

More from Jerry Taylor, who got Tobis started on his rant in the first place.

Postscript:  Here is an interesting chicken or the egg problem:  Do you think Mr. Tobias learned about man-made global warming first, and then came to the conclusion that growth is bad?  Or did Mr. Tobis previously believe that man needed to be fewer and poorer, and become enthusiastic about global warming theory as a clever packaging for ideas most of the world's population would reject?  The answer to this question is a window on why 1)  the socialists and anti-globalization folks have been so quiet lately (the have all jumped onto global warming); 2)  no one in the global warming movement wants to debate the science any longer  (because the point is not the science but the license to smack down the world economy)  and 3)  why so much of the Bali conference seems to be about wealth transfers than environmentalism.

I really want to thank Michael Tobis at environmentalist hang-out Grist.   For years people have accused me of over-reading  the intentions of climate catastrophists, so I am thankful that Tobis has finally stated what climate catastrophists are after (emphasis in the original, but it is the exact phrase I would have highlighted as well)

Is infinite growth of some meaningful
  quantity possible in a finite space? No scientist is inclined to think
  so, but economists habitually make this
  claim without bothering to defend it with anything but, "I'm, an
  economist and I say so", or perhaps more thoughtfully, "hey, it's
  worked until now".

Such ideas were good approximations in the past. Once the finite
  nature of our world comes into play they become very bad approximations. You know, the gods of Easter Island
smiled on its people "until now" for a long time, until they didn't.
The presumption of growth is so pervasive that great swaths of economic
theory simply fail to make any sense if a negative growth rate occurs.
What, for instance, does a negative discount rate portend? ...

The
  whole growth thing becomes a toxic addiction. The only path to a soft
  landing is down; we in the overheated economies need to learn not just
  to cope with decline but to celebrate it. We need not just an ideology
  but a formal theory that can not only cope with reduced per capita
  impact but can target it.

Decline isn't bad news in an airplane. Decline is about reaching
your destination. Perhaps there is some level of economic activity
beyond which life gets worse? Perhaps in some countries we have already
passed that point? Could the time where we'd all be better off with a
gradual decline have arrived? How much attention should we pay to the
folks who say we should keep climbing, that there's no way we can run
out of fuel, that we'll think of something?

So there it is, in the third paragraph, with no danger of misinterpretation.  These folks want economic decline.  That's a fancy way of saying "We want you poorer."

I could spend weeks writing about the fallacies and anti-human philosophy embedded in these four paragraphs, but here are just a few reactions.

The Zero Sum Fallacy

Every generation has people, like Mr. Tobis, who scream that we are all living in a petri dish and this is the generation we run out of Agar.  Of course they are always wrong.  Why? 

Well, first, the prime driver of economic growth is not resources but the human mind.  And the world of ideas has no capacity limits.   This is an  issue that Julian Simon wrote about so clearly.   Tobis is trying to apply physical models to wealth creation, and they just don't apply.  (and by the way, ask the passengers of TWA flight 800 if decline isn't bad news in an airplane).

Further, if we talk about the world of resources, we currently use a trivial fraction of the world's resources.  By a conservative estimate, we have employed at most (including the soil we till for agriculture, extracted minerals, etc) less than 0.0001% of the earth's mass.  In terms of energy, all energy (except nuclear) comes ultimately from the sun  (fossil fuels, hydropower reservoirs, etc are just convenient storage repositories of the sun's energy).  We currently use an infinitesimal percentage of the sun's energy. I wrote much more on the zero-sum wealth fallacy here.  And here is my ancestor blogger in Coyote Broadsheet making the same fallacy as Mr. Tobis back in the 19th century, writing on the Peak Whale Theory.

Wealth Benefits the Environment

Just like actual 20th century data tends to undermine catastrophic climate forecasts, experience over the last century tends to contradict the notion that growth is devastating to the environment. 

We can find the best example right here in the environmental Satan called the USA.  The US has cleaner air and water today than in any time in decades.  Because of technology and growth, we can produce more food on less land than ever -- in fact the amount of land dedicated to agriculture has shrunk for years, allowing forests to steadily expand in the US for over eighty years (that is, until the environmentalists got the government to subsidize ethanol).   No one in Brazil would be burning huge tracts of the Amazon if they enjoyed the agricultural productivity we do in the US.  Sure, we have done some things that turn out to be environmentally bad (e.g. lead in gasoline) but our wealth has allowed us to fairly painlessly fix these mistakes, even if the fixes have not come as fast as environmentalists have desired. 

I will confess that the Chinese seem hell bent on messing up their air and water as much as possible, but, just like the United States, it will be the wealthy middle and upper class of China that will finally demand that things get cleaned up, and it will be their wealth, not their poverty, that allows them to do so.   Similarly, I don't think CO2 reduction will do much of anything to improve our climate, but if we find it necessary, it will be through application of wealth, not squalor, that we overcome the problems. 

Here is a simple test:  Which countries of the world have the worst environmental problems?  Its is the poorest countries, not the wealthiest.

Growth / Climate Tradeoffs

For the sake of argument, let's assume that man-made global warming increases severed storm frequency by 20%, or by 3 or 4 extra hurricanes a year (why this probably is not happening).  Even a point or two knocked off worldwide economic growth means hundreds of trillions of dollars in lost annual GDP a century from now (2% growth yields a world economy of $450 trillion in a century.  3% growth yields a world economy $1,150 trillion in a hundred years.)  So, using these figures, would the world be better off with the current level of hurricanes, or would it be better off with four more hurricanes but $700 trillion a year more to deal with them.  Hmmm.  Remember, life lost in a hurricane correlates much higher with poverty in the area the hurricane hit rather than with storm strength, as demonstrated by recent cyclones in Asia.  This general line of reasoning is usually described as warmer and richer vs. cooler and poorer. 

I cannot speak for Mr. Tobis, but many environmentalists find this kind of reasoning offensive.  They believe that it is a sin for man to modify the earth at all, and that changing the climate in any way is wrong, even if man is not hurt substantially by this change.  Of course, in climate, we have only been observing climate for 30-100 years, while climate goes through decadal, millennial, and even million-year cycles.  So it is a bit hard to tell exactly what is natural for Gaia and what is not, but that does stop environmentalists from declaring that they know what is unnatural.  I grew up in the deep South, and their position sounds exactly like a good fiery Baptist minister preaching on the sins of humanity.

More from Jerry Taylor, who got Tobis started on his rant in the first place.

Postscript:  Here is an interesting chicken or the egg problem:  Do you think Mr. Tobias learned about man-made global warming first, and then came to the conclusion that growth is bad?  Or did Mr. Tobis previously believe that man needed to be fewer and poorer, and become enthusiastic about global warming theory as a clever packaging for ideas most of the world's population would reject?  The answer to this question is a window on why 1)  the socialists and anti-globalization folks have been so quiet lately (the have all jumped onto global warming); 2)  no one in the global warming movement wants to debate the science any longer  (because the point is not the science but the license to smack down the world economy)  and 3)  why so much of the Bali conference seems to be about wealth transfers than environmentalism.

These are the guys trying to take over the world economy in the name of environmentalism:

...But after a full week of attending plenary sessions and contact
groups I can see why the process can be frustrating. I sat in a session
about Carbon Capture and Storage last Thursday that exemplified the
kind of frustration I think they were referring to. After 45 minutes of discussing how the discussion should take place, the facilitator noted that time was up and dismissed the meeting.
Seriously? I was reasonably appalled at the productivity with which
such an important part of the global conference was conducted.

The Democrats of late seem to be pining for the "Ward Cleaver" economy of the 1950's, lamenting that a) the middle class is worse off today financially, b) it takes two income earners to "survive" today rather than one and c) the middle class faces more risk without any additional reward.  Rather than refute all this mess in detail yet again, I will leave you with this quiz, via TJIC, from Tamara K:

1) The balance on Ward Cleaver's three most frequently used credit cards is?

2)
Does Wally have an Xbox3 hooked to a flatscreen TV in his room, or is
he making do with an old Play Station hooked to a hand-me-down 19" Sony?

3)
In addition to electricity, water, and the telephone, the Cleaver's
largest monthly bill is: a. Cellular Service, b. Cable TV, c. Broadband
Internet Access, or d. Late Fees At Blockbuster.

4) The Cleaver's timeshare is in: a.) Destin, or b.) Gatlinburg.

5) June's bread maker was made by: a.) Sunbeam, or b.) Krupps.

6)
The amount of money Ward loses annually playing Powerball, Online Slots
at home, and Texas Hold 'Em on vacation in Branson, Missouri is: $____
(Round to the nearest dollar.)

I am happy to see others making the point I have tried to make for years:  That the coming financial problems with Social Security are not its biggest problem.  Megan McArdle and Clive Cook say it very well:

In this post on Paul Krugman and Social Security,
Clive, as usual, targets with laser accuracy the real problem with the
Social Security system: not that it is bankrupt, but that it encourages
people to make extremely bad decisions about providing for their future.

It starts with childbearing:  social security systems seem to exert downward pressure on birthrates,
in effect undermining their own actuarial base. Social security
socializes the benefits of childbearing in providing for retirement,
but no one has yet figured out how to socialize the main cost, which is
turning your life choices over to a screaming pre-verbal dictator.
People are thus tempted to free ride on the childbearing of others, and
the more generous benefits are, the more they seem to free ride. This
is one reason that Social Security, which used to have more than 30
workers for each retiree, now has only three, headed towards two.

Social Security also encourages people to leave the workforce
earlier than they otherwise would. People are healthier than ever at
65, but while in 1950, almost half of all men over the age of 65
worked, that number is now less than 20%. This appears to be highly
correlated with the spread of defined benefit pensions such as social
security, which offer no advantage to delaying retirement. Indeed,
Social Security perversely penalizes anyone who takes early benefit but
continues to work, docking a third of their earnings.

Finally, Social Security discourages private savings. This is
terrible for two reasons. If future fiscal problems force the
government to reduce benefits, the people who didn't save enough
because they relied on those promises will be made much worse off than
they would otherwise have been.

The other problem is that Social Security is not a productive
investment. Privately saved money is mostly lent to corporations that
mostly use the money to do things that make the economy more
productive, such as R&D and capital equipment upgrades. Social
security "contributions" are lent to the government, where they are
mostly spent on things that could not be remotely described as
improving our economy's productive capacity, such as farm subsidies.

Excellent.  I ran the numbers and discussed what a bad investment return was paid by Social Security here.  I discussed Social Security as intellectual welfare here.

In my previous post on urban planning, I mentioned the increasingly popular idea of sustainability through poverty.  Don Boudreaux responds to the currently hip idea that somehow we need to revert to a more local economy with local food production.  This is absolutely absurd, for any number of reasons.  I'll just list three:

• It doesn't work.  The total energy used for transport, say of food products, is a small percentage of the total energy used in the total production process.  The energy transportation budget is generally smaller than efficiency gains from scale or from optimizing location.  For example, a wheat farm in Arizona on 50 acres is going to use a lot more energy (and water, and fertilizer, and manpower) than a wheat farm on a thousand acres in North Dakota.
• It leads to poverty.  Our modern society, our lifestyles, our lifespans all are a result of the fantastic increases in efficiency we have reaped from the division of labor.  A push to localize all production reverses the division of labor.  Many products, such as semiconductors, become outright impossible on a local scale.
• It leads to starvation.  It is hard for us to imagine famine in the wealthy nations of the world.  Crop failures in one part of the world are replaced with crops from other parts of the world.  But as recently as the 19th century, France, then the wealthiest nation on earth but reliant on local agriculture, experienced frequent crop failures and outright starvation.

More on the food-miles stupidity here.  And an interesting study that shows that processed foods greatly reduces waste and trash to landfills was here.

Update: More on food miles here at Reason

Over the last few years, there has been a lot of arguing back and forth about income mobility.  Typically, folks, particularly on the left, look at changes in median incomes and declare that since median incomes aren't moving much, there is not income mobility.  I have criticized this approach to the problem on a number of occasions.  For example, I have argued that median income numbers are skewed downwards because tens of millions of low-skill new immigrants have entered the job market over the last several decades.  As I wrote here,

If you really want to know what the current median wage is on an apples
to apples basis back to 1970, take the current reported median wage and
count up about 10 million spots, and that should be the number -- and
it will be much higher.

What you really have to do is take the same people, and follow their progress through tax returns or whatever data is available.  What this type study finds, time and again, is that income mobility remains high in this country.  And what happens, time and again, is the media and politicians ignore the study in favor of the more flawed approaches that support their narrative better.

Well, the study has been performed again, and the results are the same:  Income mobility remains high in this country, especially for the poorest 20%.

They say a picture is worth a thousand words, and in one chart 60% of the hot air in the Democratic Presidential debates is refuted.

By the way, it is worth noting the drop in income of the top 1%, because it helps to point out a flaw in the usual income distribution numbers we see.  In 2002, I showed no income on my 1040 (because I was starting a new business).  In the income distribution numbers for 2002, my family and I showed up in the bottom 20%, living on less than a $1 a day.  Of course, that is an absurd characterization.  On the opposite end of the scale, imagine a small business owner plugging along making $80,000 or so a year, comfortably middle class, and then in one year sells his business for $1 million.  In that year's statistics, he is rich.  The next year when his capital gains go away, it looks like he has gotten poorer, when no such thing happened.

Of course, some are still struggling, though my suspicion is that this is less related to structural issues in the economy or availability of opportunity than with cultural issues.