There’s a tradition at least as old as Kant of investigating philosophical dilemmas by appealing to our intuitions about extreme cases. Kant, remember, proposed that it was always wrong to lie. A contemporary of his, Benjamin Constant, made the following objection: suppose a murderer is at the door and wants to know where your friend is so he can murder her. If you say nothing, the murderer will get angry and kill you; if you tell the truth he will find and kill your friend; if you lie, he will go on a wild goose chase and give you time to call the police. Lying doesn’t sound so immoral now, does it?
This is a great way of doing philosophy, but reading it, I realized I had heard it before. I’ve heard this sort of argument in the context of policy debates.
Unlike the case of the door-to-door murderer, which is a deliberately fanciful way of examining a broader moral truth, this is a policy proposal made on the basis of a fanciful scenario. The argumentation goes like this:
In an unlikely scenario, economic system A would allow bad outcome X
Therefore, abolish A (and substitute it with another system, such as B)
There are a lot of errors packed into this line of thinking. What if bad outcome X happens under both systems? What if changing systems just substitutes bad outcome Y for X? What this fails to do is compare the relevant alternatives. Is the implicit claim that under socialism, nobody would ever starve? Millions of Soviet citizens beg to differ. Continue reading The Trolley Car Approach to Public Policy→
…or How I Learned to Stop Worrying and Love Inequality.
David R. Henderson is a research fellow at Stanford University’s Hoover Institution, and a professor of economics at the Graduate School of Business and Public Policy, Naval Postgraduate School, in Monterey, California.
What sounds more difficult to you, figuring out supply and demand, or accurately measuring the Earth’s circumference? It must be supply and demand, because Eratosthenes figured out the other one two thousand years before anyone really managed any progress on that supply-and-demand stuff.
So now that we’ve established that supply and demand is much harder than accurately measuring the Earth’s circumference, we should ask ourselves why it is so. If you don’t know how Eratosthenes managed it, try thinking for a moment about how you might go about accurately measuring the Earth’s circumference with only the tools available in Ancient Egypt. Hint: you can compute the circumference of a sphere with the arc length and angle between two points. Continue reading Economics and the Cognitive Minefield→
The arguments largely focus around the usefulness of mathematics for various applications. These are the technical arguments of practitioners. I’d like to abstract from these arguments and look at the issue as an economist.
The economics labour market is very competitive. Researchers need to demonstrate their quality to compete for the top academic jobs. Now, why should we expect this competition to produce anything besides the optimal research methods? Let’s apply some economics to this problem. Continue reading The Meta-Economics of Mathiness→
Meanwhile, Hillary’s actual policies on women are a disaster waiting to happen. Consider her support for “equal pay for equal work.” What effect will this have on women in the workforce? It not only puts government in charge of micromanaging every aspect of payroll and personnel of every business in America. It also incentivizes managers to keep women in lower positions in a firm in order to comply with the wage mandates, and disincentivizes advancing women up the ladder by making the costs of ascending too high. The result will be the very “glass ceiling” that mainstream feminism abhors.
An intelligent friend, who shall remain nameless, replied:
I feel like this runs on the same logic that if you raise minimum wage to a livable wage, jobs will be destroyed and small business will crumble, when in fact the opposite has been shown to be true.
Now, this friend is not an economist. What I suspect is that the news sources he typically reads report heavily on the few studies that show positive employment effects of minimum wage increases, and ignore the rest of the literature. This isn’t exclusively the territory of the left, I’m sure people who read only right-wing or libertarian news sources overestimate the disemployment effects in the other direction.
But look at the conclusion he drew! Since he got the false impression that raising the minimum wage has positive employment effects, he concluded that there is essentially no tradeoff in government artificially boosting any wage; in this case the wages of half (!) the population. But given the initial error, this extreme conclusion naturally follows. Continue reading It All Comes Back to the Minimum Wage Debate→
…it’s Aladdin’s attitude towards wealth and poverty. That’s what struck me while re-watching this thoroughly enjoyable movie. After being called a “street rat,” Aladdin tells Abu, “Someday, Abu, things are gonna change. We’ll be rich, live in a palace, and never have any problems at all.”
This is an extraordinary view for a peasant orphan in thirteenth century Arabia! It is a thoroughly modern view. Throughout most of history, if you were born into the lower classes, you lived in poverty. Your entire extended family lived in poverty. Everyone you knew, and all their ancestors stretching back as far as anyone could remember, lived in poverty. Imagining life without poverty would have been as fanciful as imagining life without gravity. Continue reading Aladdin’s Biggest Anachronism isn’t Genie’s Jack Nicholson Impression…→
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As a Canadian, it’s very strange hearing Americans talk about the Great Depression. The American public education system apparently has a monolithic view on the subject. Based purely on my interactions with people who have passed through that system, I imagine their kindergarten classes must be something like this:
TEACHER: Alright students, what’s 1 + 1?
TEACHER: What’s 2 + 2?
TEACHER: What do you call someone who doubts the efficacy of FDR’s policies in bringing an end to the Great Depression?
The Great Depression is a complex historical event, so the level of confidence I see from American laymen certainly makes it seem like they’ve been brainwashed from a young age. Maybe it’s just the sort of Americans who make internet comments.
If you believe that it is clearly and obviously true that (1) the New Deal ended the Great Depression or that (2) World War 2 ended the Great Depression, this article is for you. I’m not going to make a slam-dunk case against these notions; if you’re looking for one, you’ll need to read something far longer than a blog post. I recommend Robert Higgs or Bob Murphy. My goal here is to make the case that these ideas, far from being obvious, are actually very counter intuitive given the facts. Continue reading The Prima Facie Case that Great Depression Policy was Really Really Bad→
Don Boudreaux is a professor of economics at George Mason University. He blogs at Café Hayek. I invited him to discuss civil asset forfeiture on the podcast because of a conversation we had about it at a recent Mercatus Center colloquium.
Civil asset forfeiture is the practice of the state taking someone’s property on suspicion that the property has been used for wrongdoing, without having to charge the owner with a crime.
Civil asset forfeiture had its origins in British maritime law. The British had difficulties with pirates along the Barbary Coast. When the pirates were apprehended and their ships brought back to London, British courts had difficulty deciding what to do with these ships. The ships’ owners were outside the jurisdiction of British law, so the courts couldn’t try and convict them, but they couldn’t send the ships back to them either only to have them return to the seas with a fresh pirate crew! Parliament thus passed a law allowing the courts to charge the property itself with the crime if and only if the property’s owner was outside the jurisdiction of British law. Continue reading Civil Asset Forfeiture with Don Boudreaux→
JIMMY: Ever since Alan Greenspan became the Federal Reserve Chairman in the mid-80s, he’s just been bailing out Wall Street every chance he can get: the S&L crisis, the Tequila crisis in Mexico in the early 90’s, and the dot com bubble. You know, whenever there’s a problem he just prints and prints and prints, and so over the course of twenty years, Wall Street realized this. They took the risk out of the situation because they could make money when things were good and then when things were bad, bailouts would be there.
GARRETT: Greenspan…had a reputation as a free-market guy. Some people got the wrong idea that Greenspan’s policies were somehow free market.
JIMMY: It’s funny, Greenspan wrote an article in favour of the gold standard in the 60s, and a lot of people point to that and talk about it, but when you look at somebody’s life, what matters is what their actual policies were and the things that they did. And the fact was that this is a guy that created bubble after bubble, and at the end he was creating a billion dollars a day just to keep everything going.
Garrett M. Petersen's blog about markets, institutions, and ideas.