PrestoPundit

Archive for October, 2007

The Principles of The Founder Fathers

Posted by PrestoPundit on 10/31/2007

are incompatible with Catholic social thought — so suggests Bush speech writer Michael Gerson, and so much the worse for the principles of the founders in Gerson’s view. (I’d like to hear Michael Novak weigh in on that one.) I don’t know how the Bush Republicans think they can grow a party when they are so busy alienating the conservative movement with such distorted and dishonest accounts of the ideas and motivations of the Reagan base. It’s sad to see the Bush Republicans now at open war with the Reagan base of the party. They feel some deep need to blame everyone else in the party for their own ideological failures. This is a war I’m guessing the Bush Republicans will lose, but perhaps not before driving the GOP deep into minority status.

As a political strategy, the Bush Republicans branded the GOP as a fundamentalist religious movement rather than as a party dedicated to the limited government principles of Ronald Reagan and the Founding Fathers — but even that vision is in crack-up mode. Without the anchor in the great political principles of the nation, the GOP builds its house on the shifting sand of the religious fashions of the fundamentalists. History shows that this is not a firm foundation, but a fluid ocean, moving into and away from politics — and hopping from cause to the next, e.g. from prohibition, to creationism, to abortion. The most recent fashion pioneered by the Bush Republicans/fundamentalists is the effort to block medical research. It’s hard to imagine how emotional appeals to fundamentalist religious conviction can sway the thinking of those large segments of the population which find very little appeal and close to no intellectual argument in favor of the latest religious/political cause of the day — Reagan conservatives by the millions think it’s OK to do medical research which will help keep grandma well and might cure their sick kid, and President Bush and a thousand fundamentalist in politics won’t convince them otherwise. (And for most Americans “test tube” babies aren’t a moral crisis — they are a great blessing of modern science and medicine. But then, fashions among fundamentalists have changed on this one too, haven’t they?)
But things are different if you look at the Reagan foundation — the limited government ideas of the Founding. There are deep and powerful arguments behind the principles of the founding fathers — and there is a natural and universal appeal in the founding story of the country based upon those principles. A party which has its foundation here has got something solid and lasting — and as a matter of historical fact it’s got religious appeal to boot, no matter what the contemporary fashion of your convictions.

Enough of my rant. In my judgment this Gerson fellow is a shallow and misguided soul, wrong about the history of ideas, wrong about the future foundations of the GOP, and wrong about the needs of the country. Bush speech writer Peter Wehner says the Republicans are “tired and uncertain” but what I really think he means is that Bush and the Bush Republicans are tired and uncertain — one important reason is that their ideas and policies were never very deeply grounded. The negative critique is now fairly universal from those with a background in past Republican Presidencies — the Bush team cared about little besides electorial politics, and left the table essentially empty when it came to detailed policy development and ideological argumentation. The good news is that the Bush era will soon be over.

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The War On Children — Mark Steyn

Posted by PrestoPundit on 10/21/2007

The read of the day. Money quote:

here’s the point: The Frosts are not emblematic of the health care needs of America so much as they are of the delusion of the broader western world. They expect to be able to work “part-time” and “intermittently” but own two properties and three premium vehicles and have the state pick up health-care costs. Who do you stick the bill to? Four-car owners? Much of France already lives that way: a healthy wealthy well-educated populace works a mandatory maximum 35-hour week with six weeks of paid vacation and retirement at 55 and with the government funding all the core responsibilities of adult life.

I’m in favor of tax credits for child health care, and Health Savings Accounts for adults, and any other reform that emphasizes the citizen’s responsibility to himself and his dependents. But middle-class entitlement creep would be wrong even if was affordable, even if Bill Gates wrote a check to cover it every month: it turns free-born citizens into enervated wards of the nanny state. As Gerald Ford likes to say when trying to ingratiate himself with conservative audiences, “A government big enough to give you everything you want is big enough to take away everything you have.” But there’s an intermediate stage: A government big enough to give you everything you want isn’t big enough to get you to give any of it back. As I point out in my book, nothing makes a citizen more selfish than socially equitable communitarianism: once a fellow’s enjoying the fruits of Euro-style entitlements, he couldn’t give a hoot about the general societal interest; he’s got his, and who cares if it’s going to bankrupt the state a generation hence?

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Krugman’s New Book Is A Waste Of Ink

Posted by PrestoPundit on 10/20/2007

Krugman’s Conscience of a Liberal “will do little to persuade the unconvinced or to advance the national discussion of the important issues it addresses.” That’s the of bottom line from left leaning historian David Kennedy.

On top of that Kennedy finds Krugman’s historical analysis “as factually shaky as it is narratively simplified.” That’s the professional judgment of a professional historian on the central core of Krugman’s book.

Krugman ought to go back to what he does best — spinning out mathematical “just so” stories about the logically possible down side of free international trade.

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Another Nobel For The Hayek Tradition In Political Economy

Posted by PrestoPundit on 10/16/2007

That is what Bob Subrick is calling the award of the Nobel prize to Leonid Hurwicz, Eric Maskin, and Roger Myerson:

Their research has improved our understanding of the role of institutions- market and non-market- in addressing issues that arise in the presence of informational asymmetries. What could be more Hayekian? Hurwicz’s is clearly responding to the issues raised by Hayek’s 1945 paper, “The Use of Knowledge in Society” (see his 1969 American Economic Review Paper “On the Concept and Possibility of Informational Decentralization”). His later work is well within the James Buchanan-Hayek study of political institutions in asking the age old question- but who will guard the guardians. Myerson has continued in this tradition (see here). He has also examined the effects of bicameralism on political decision-making, an idea clearly addressed in Hayek’s Law, Liberty, and Legislation. He has also analyzed the effects of democratic institutions more broadly (see here). Maskin’s contributions include his analysis of the soft budget constraint, problems with majority rule, the sometimes perverse incentives that elections introduce, and has raised issues regarding the nebulous role of property rights in the property rights literature (is it really all about contracts?). Overall, it looks like the Hayek research program is alive and well and continues to provide insight into the social order.

MORE: Alex Tabarrok explains what sort of contribution the Nobelists have made. Quotable:

I see mechanism design as a tool to make markets more powerful. In some situations, for example, mechanism design shows that public goods can be voluntarily provided. In other situations, mechanism design can make government more effective, but it will do so by making government more “market-like.” Contracting-out of government services like garbage pickup, prisons, and roads, for example, can be carried out even farther if contracts are more carefully designed. The theory of mechanism design provides the template for thinking about the best possible types of contracts.

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Hayek Student Wins Nobel Prize

Posted by PrestoPundit on 10/16/2007

For details see my posting at the Mises Blog. The work of the 2007 Nobelists was in part developed to address issues originally raised by Hayek in his work on the “knowledge problem” of economics coordination, and according to the citation of the Nobel committee:

“These results [of Hurwicz, Maskin, and Myerson] support Friedrich Hayek’s (1945) argument that markets efficiently aggregate relevant private information.”

UPDATE: See also Peter Boettke’s article on Hayek, Mises and yesterday’s Nobel Prize winners in today’s WSJ, as well as Nobelist Roger Myerson’s article on Leonid Hurwicz and his attempt to address Hayek’s knowledge problem.

From Pete’s WSJ article::

Mechanism design theory was established to try to address the main challenge posed by Ludwig von Mises and F.A. Hayek. It all starts with Mr. Hurwicz’s response to Hayek’s famous paper, “The Use of Knowledge in Society.”

.. Hayek summarized the fundamental challenge that advocates of socialism needed to come to grips with. Hayek’s argument .. basically stated that the economic problem society faced was not how to allocate given resources, but rather how to mobilize and utilize the knowledge dispersed throughout the economy.

.. Leonid Hurwicz, in his classic papers “On the Concept and Possibility of Informational Decentralization” (1969), “On Informationally Decentralized Systems” (1972), and “The Design of Mechanisms for Resource Allocation” (1973), embraced Hayek’s challenge. He developed mechanism-design theory to test the logic of the Mises-Hayek contention that socialism could not possibly mobilize the dispersed knowledge in society in a way that would permit rational economic calculation for the alternative uses of scarce resources. Mises and Hayek argued that replacing the invisible hand of the market with the guided one of government would not work. Mr. Hurwicz wanted to see if they were right, and under what conditions one could say they were wrong.

Those efforts are at the foundation of the field that was honored by the Nobel Prize committee ..

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The Science of Spontaneous Order

Posted by PrestoPundit on 10/14/2007

Scientists studying ants and bees are beginning to understand how “even complex behavior may be coordinated by relatively simple interactions” — and companies are using computerized versions of these “ant-based” strategies to handle extremely complex logistical puzzles.

If it all sounds a lot the like Friedrich Hayek’s account how economic explanations work don’t be surprised, because in fact it is the same explanatory model.

If economics is a science, it’s because on its better days it does make use of Hayek’s bottom-up “spontaneous order” explanatory strategy.

I’d also recommend economist Russ Roberts’ interview with ant scientist Deborah Gordon which you can listen to here.

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Global Warming — It’s A Good Thing

Posted by PrestoPundit on 10/14/2007

Global warming will save 1.8 million lives which would otherwise be lost due to the cold, over the next 40 or so years. In fact, “the first complete survey of the economic effects of climate change for the world, global warming will actually save lives.” It’s Bjorn Lomborg on Al Gore and the latest embarrassment from the Nobel “Peace” Prize committee.

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Wehner & Levin — What Next For Conservatism?

Posted by PrestoPundit on 10/13/2007

Former Bush White House domestic policy advisers Peter Wehner and Yuval Levin look at the future of the conservative agenda. The big problem? In the hands of Wehner and Levin, Ronald Reagan conservatism gets dumped in the ash can of history. It’s time for a good old fashioned Fisking.

Wehner and Levin write:

Conservatives today are in a funk. The strains of governing, the challenges of war, and the frustration of an unsuccessful mid-term election have contributed to unease and unhappiness. But deeper than these issues is an intellectual fatigue and uncertainty about where the attention of the conservative movement now should be directed.

Reality check. There’s no “intellectual fatigue” at the great think tanks which provided the intellectual muscle of the Reagan years — check out the web sites of the Heritage Foundation, the CATO Institute, and the Competitive Enterprise Institute.

It’s a giant mistake to confuse the fatigue of the Bush White House and the neo-conservative movement with the freedom movement of the Ronald Reagan conservatives. The Ronald Reagan conservatives are doing just fine. What they need is someone in the political class who will carry their banner the way Ronald Reagan once did — that man was clearly not George Bush, and the GOP and the country suffered for it.

Wehner and Levin continue:

What domestic issues can unite and motivate conservatives to great political exertions, and can win the allegiance of the public? In this respect, the right is partially a victim of its own successes. If 25 years ago you had asked an American conservative to name the preeminent domestic policy challenges of the day, you probably would have gotten back, along with a general worry about cultural decline, some combination of welfare, taxes, and crime.

Twenty five years ago was 1982. In that year Ronald Reagan spoke to the Conservative Political Action Conference. The biggest domestic worry on Ronald Reagan’s mind was the economic effect of the fact that the Federal Government “was too big and had spent too much money.” Reagan reveled in the fact that his new administration was reigning in domestic spending and the growth of government. Contrast Reagan with Bush. Reagan halted a 25 year trend toward greater domestic spending and bigger government, while President Bush has increased domestic spending and the size of government like no other President since LBJ — or perhaps even FDR.
I’ll add more later.

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Larry Summers: I’m A Right Wing Right Winger In Academia

Posted by PrestoPundit on 10/08/2007

Self-described left of center Democrat Larry Summers says that at Harvard he’s “on the right half of the right.” More:

Summers ran some numbers from the study [of academic political bias]. He focused on elite graduate universities and on what he defined as core disciplines for undergraduate education (excluding health professions, for example). When conducting such an analysis, Summers said, he found “even less ideological diversity” than he thought he would, and that in the humanities and social sciences, Republicans are “the third group,” after Democrats and Nader and other left-wing third parties.

To date, Summers said, he has largely viewed the political imbalance as one of “able people making choices.” .. At the same time, he added, the extent of the imbalance and some informal research he has conducted “give me pause” and has him wondering about the possibility of bias against right-leaning thinkers. He examined the scholars being asked to give Tanner Lectures (a top lecture series at leading universities) and the political leanings of economists and political figures among honorary degree recipients at a top university (which he declined to name). Liberals receive more such honors by far, he said.

It’s not that there are no conservative professors, he said, but their share is so small as to raise questions that deserve more attention. Summers wondered if the situation isn’t like it was in the early days of baseball’s racial integration, when people trying to say equality had arrived could point to the relatively equal performance of black and white stars. “But it appeared that there were not any African-American.250 hitters,” Summers said. “The only [black] players who played were stars.”

Posted in Economics, The Left | Leave a Comment »

Bill The Kids

Posted by PrestoPundit on 10/04/2007

Although nearly all of them lack any genuine understanding of capital theory, even economists must admit it’s a mistake to be on the wrong side of the magic of compound interest on such a massive — and inevitably increasing — scale :

We are currently servicing $9 trillion in aggregate national debt. China and Japan alone hold over $1.5 trillion in U.S. dollar reserves .. Economists and government officials, of course, attempt to explain away all this red ink. Creditor nations, they remind us, simply lend us back money at relatively cheap interest to keep buying their goods ..

Still, there are problems with these easy rationalizations about charge-it America. First, we will have to spend trillions of dollars for unfunded Social Security and Medicare commitments in the next few years as our population ages. Ever fewer workers must support more lavish benefits for ever more retirees.

Our military has put off necessary plane and ship replacements, and needs billions to replace worn equipment. At home, neglected bridges, roads, airports and railroads need even more money in fresh investment. So we should be saving now, not going into debt, for an upcoming nasty date with fiscal reality.

Even more critical is the toll on our national psyche. Americans don’t like to read that they are borrowing to pay their annual bills, borrowing to import their gas, borrowing to buy Japanese cars and Chinese consumer goods – and passing on the ever-larger tab to their children ..

Americans wait in vain for a leader to tell us that the government will balance its ledgers – and that we the people must spend less and invest more now while we can, rather than later when we must.

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