Will on the Fed

April 21, 2008

Good stuff.

Behavioral economics

April 18, 2008
Here's the best one sentence indictment of it that I've ever seen:
[Behavioral economists] may have a more realistic view of borrowers than the average economist, but they have an even less realistic view of the political process.

Free will

April 17, 2008

some interesting findings

An interesting idea

April 17, 2008

From Mr Balko

Kling on behavioral economics

April 17, 2008
The bitch-slapping continues.  I agree with Professor Kling on this issue.
I would like to object to the word "science" being used to describe any form of economics.  I have a bachelors degree in a scientific field and in economics.  Since I graduated, I worked exclusively in economic areas.  I like economics better than most other subjects – it however, is not science.
Science requires provable, verifiable results.  It depends on precise, controlled experimentation.  Economic findings will never, ever rise to the level of certainty that are required for real science.  This objection isn't against all forms of economic knowledge.  I believe we can learn things outside of the scientific process – we have to, as many aspects of life are not amenable to controlled experiments.  But, we must be skeptical of all non-scientific findings.
The Austrian approach to economics is the right approach in my opinion (this is not necessarily an endorsement of Austrian economics, but just its methodology).  They start with some basic principles and draw logical conclusions from these principles.  When they run out of logical conclusions, they stop reasoning.  They don't try to make simplifying assumptions that would allow simplified versions of their theories to be put into mathematical language and manipulated mathematically.  In other words, they are fine with treating garning knowledge about economics with a process that is not the scientific method.
(Incidentally, I think global warming science is starting to fall victim to the same quasi-scientific area.  You can verify the greenhouse effect scientifically.  But once you combine all the scientific effects that we know and understand and combine them with some scientific effects that we don't understand as well (and perhaps others that we don't even know about) and then throw them all into a simplified model, the results are not scientific.  That is, they cannot be tested accurately, they cannot be repeated (except trivially), experiments to verify their accuracy cannot be properly controlled, etc.)

Review of "Popular Government" by Sir Henry Maine

April 17, 2008
This book was sought to analyze Democracy just like it was any other political system.  Such an undertaking is bound to provoke some hostile feelings as everyone today believes in Democracy.  I was actually expecting Mr Maine's essays to be a little more controversial – the book sort of turns into a defense of the American post-Civil War government, with its systems of checks and balances.  The controversial aspects come from Mr Maine's examinations of some common beliefs about Democracy.  Mr Maine finds that our beliefs are not as historically accurate as we assume.
In the first essay Mr Maine claims that unbiased reading of history will lead to the conclusion that Democracies are not a particularly stable form of government.  He cites all sorts of ephemeral Democratic governments outside of the US and England.  He almost reaches the conclusion that Democracies are inherently unstable outside the US and England.  This instability is often created by people who adhere to their political beliefs with a religious fervor:
Irreconcileables are associations of men who hold political opinions as men once held religious opinions.  They cling to their creed with the same intensity of belief, the same immunity from doubt, the same confident expectation of blessedness to come quickly, which characterises the disciples of an infant faith.  They are doubtless a product of democratic sentiment.
In the second essay, Mr Maine argues that democracy is the most difficult form of government.  Some of the difficulty stems from the prejudices of the people:
The legislative infertility of democracies springs from permanent causes.  The prejudices of the people are far stronger than those of the privileged classes; they are far more vulgar; and they are far more dangerous, because they are apt to run counter to scientific conclusions.
The idea that Democracy will be easy and stable is based on an overestimation of human intelligence (he particularly accuses Bentham of this overestimation, though Rousseau pops up throughout as well).  Here's more on the people's ignorance:
It is that if you place power in men's hands, they will use it for their interest.  Applying this rule to the whole of a political community, we ought to have a perfect system of government; but, taking it in connection with the fact that multitudes include too much ignorance to be capable of understanding their interest, it furnishes the principal argument against Democracy.
One more:
The truth is, that the modern enthusiasts for Democracy make one fundamental confusion.  They mix up the theory, that the Demos is capable of volition, with the fact, that it is capable of adopting the opinions of one man or of a limited number of men, and of founding directions to its instruments upon them.
To overcome these obstacles, Mr Maine believes that Democracy requires the assistance of certain forces, namely party, corruption, and generalization.  The purpose of politics is to seize power and the vehicle through which power is seized in a Democracy is the party.  Corruption is necessary to allocate the spoils of victory – why else would anyone vote for a party?  Generalization is the process in which problems and ideas are dumbed down for the Democratic political process.
In the third essay, Mr Maine explains how Democracy is opposed to human nature (besides it vast overestimation of human intelligence).  Mr Maine believes that most people in the world value stability.  Democracy, on the other hand, needs constant "reform."  Mr Maine believes that change will succeed only when it is evolutionary in nature – i.e. a process of slow subtle changes extending over a long period of time as opposed to large, sudden, revolutionary changes.  Mr Maine believes that true Democracy cannot change in the former way.  Hence, checks on Democracy must be used to slow its propensity for rapid changes.  Mr Maine leaves us with a word of warning:
The question however, will not long or deeply trouble those who, like me, have the strongest suspicion that, if there really arise a conflict between Democracy and Science, Democracy, which is already taking precautions against the enemy, will certainly win.
In the fourth essay, Mr Maine gives his views on the US Constitution.  He notes that US Constitution brought back republics, which had fallen out of favor for a long time prior to the end of the 18th Century.  He analyzes US checks and balances and finds that the President was created to be like British King at the time the Constitution was written.  He likes the non-democratic nature of the Senate, as well as the divided nature of the legislative branch, which acts to slow down Democratic tendencies.  He notes that US was the first to truly divide government into executive, legislative and Judaical functions.  Mr Maine goes to great lengths to make clear that the US Constitution was drafted to be very much like the British Constitution as it was understood at the time the Constitution was written.  The differences were required by the structure, nature and history of the US.  He notes that the only failing of the US Constitution – The Civil War – was due to the fact that "the authors of the Constitution declined of set purpose to apply their political wisdom to a subject which they know to be all-important, the result was the bloodiest and costliest war of modern times."
This book was worth a read if only because Mr Maine is willing to analyze Democracy without all the baggage that is often associated with Democracy.  He is unafraid to question basic assumptions about Democracy.  That said, his conclusion – that Continental forms of more direct Democracy will not be as effective as their British counterpart which in turn will not be as effective as the American form – is hardly radical.

Global warming and hunger

April 16, 2008

This story has been making the rounds.  I don't see what the big deal is – it's not like previous environmental apocalypse-scenarios haven't also killed a lot of people.

Review of "Black Alley" by Mickey Spillane

April 16, 2008
Well, this book ends the Mike Hammer series.  I haven't been this sad to finish a series since I finished the Baroque Cycle (sad because I want more).
A lot of people didn't like the book because they thought Mike sold out – he finally proposed to Velda, he didn't get his usual amount of action from the ladies in the story.  I'm not sure I agree.  I think he just got old.  He stayed true to his ideals throughout, but we all get old and have to hang it up.  In some ways the negative critics are correct – I don't have much to say about this book's plot or whatever.  But they miss the broader end of the series, which was fantastic.
I can't figure out why no one has turned these novels into movies.  I always picture something sort-of-comic-book-like – I'm imagining something like Sin City.


April 16, 2008
I cited a piece by Professor Rothbard on H.L. Mencken awhile back.  I also gave this quote:
Any man who is an individualist and a libertarian in this day and age has a difficult row to hoe. He finds himself in a world marked, if not dominated, by folly, fraud, and tyranny. He has, if he is a reflecting man, three possible courses of action open to him: (1) he may retire from the social and political world into his private occupation: in the case of Mencken's early partner, George Jean Nathan, he can retire into a world of purely esthetic contemplation; (2) he can set about to try to change the world for the better, or at least to formulate and propagate his views with such an ultimate hope in mind; or, (3) he can stay in the world, enjoying himself immensely at this spectacle of folly. To take this third route requires a special type of personality with a special type of judgment about the world. He must, on the one hand, be an individualist with a serene and unquenchable sense of self-confidence; he must be supremely "inner-directed" with no inner shame or quaking at going against the judgment of the herd. He must, secondly, have a supreme zest for enjoying life and the spectacle it affords; he must be an individualist who cares deeply about liberty and individual excellence, but who can—from that same dedication to truth and liberty—enjoy and lampoon a society that has turned its back on the best that it can achieve. And he must, thirdly, be deeply pessimistic about any possibility of changing and reforming the ideas and actions of the vast majority of his fellow-men. He must believe that boobus Americanus is doomed to be boobus Americanus forevermore.
Professor Rothbard thought this described Mencken perfectly.  I think it's also a perfect description of Albert Jay Nock – memoirs reviewed here.
Nock's memoirs are title Memoirs of a Superfluous Man.  I was going to try to post something on what he meant by superfluity.  But then I remembered that Rothbard quote – he said it better.  A superfluous man must be a individualist and he must pursue option (3).  To achieve the seemingly dubious goal of superfluity (an achievement which in reality would, no doubt, be very rewarding) our hero must of course be self-confident, inner-directed, full of enjoyment for life, capable of getting enjoyment from the obvious and unchanging follies of society and willing to accept society for what it is – for if he hopes to change it, he will not be able to enjoy the farce that it is.
Most of today's libertarians take route (1) and an annoying, vocal minority take route (2).  We need more superfluous men of route (3).  They seemed to have all died out after the World Wars.

Review of "Walden" by Henry David Thoreau

April 16, 2008
I've never really been able to get into this book before now.  I'm not sure if it was the somewhat strange economic theories Thoreau espouses or his environmentalism that turned me off, but it was something.  This time I got sucked in once I got past the first few economic parts.  I actually listened to this book (free) from Librivox.  One guy read the whole book and he did an amazing job.  He just the right tone – often lapsing into a slight angry tone that was perfect.
Thoreau's economic theories bother me less than they used to.  I can now sympathize with critiques of materialism and progress.  Though I disagree with condemnations of new technologies, etc. I no longer believe that they necessarily lead to progress in-and-of themselves.
I used to confuse Thoreau's environmentalism with modern day environmentalism (which I've discussed).  While Thoreau is certainly an environmentalist he doesn't wish to keep humans away from nature – instead he wants nature conserved so that people will be in nature.  Further, though Thoreau was a vegetarian, he recommends hunting.  This is not your typical environmentalism.
It was very interesting to listen to Walden while I was reading Nock's Memoirs.  Who after all, was more superfluous than Thoreau.  I also read this Emerson piece on Thoreau.  Both Emerson and Nock mention the following story:
Henry applied himself for a time to this craft, believing he could make a better pencil than was then in use. After completing his experiments, he exhibited his work to chemists and artists in Boston, and having obtained their certificates to its excellence and to its equality with the best London manufacture, he returned home contented. His friends congratulated him that be had now opened his way to fortune. But he replied, that he should never make another pencil. "Why should I? I would not do again what I have done once."
I believed I earlier confused this rejection of materialism (economism to Nock) with rejection of success and progress.  Instead, Thoreau had higher, nobler ideals to pursue.  He had succeeded and he moved on to something more challenging.  This process is not a good way to make a fortune, but it may be a good way to live a life – though that life will be condemned to superfluity.
This is not to say that Thoreau necessarily succeeded in living up to his ideals or that his ideals were even completely logical.  If you followed his beliefs to their logical conclusion, why wouldn't you move farther out into the wilderness?  Who needs a full house, when you could just build a small shelter for your books?  Etc.  But it's easy to see why his idea have lived on – it's also easy to see why they have a devoted following.