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John, Not that I want to defend Rand. But I do want to criticize your criticism. :) Because it is an example of a pervasive fallacy endemic in academic macro economics. (a) one of the reasons economics is not currently predictive is that it fails to account for morality, which humans demonstrate both in economic and political decisions - particularly when regarding punishment of 'cheaters'. Moral arguments are in fact, rational. And the failure of economists to incorporate moral biases is not a matter of the data, or a matter of the benefit that would be produced by continuation of objectively immoral economic policy (redistributions). The polity does not fail to understand that they pay a high cost for their resistance to additional debt that funds objectively immoral behavior. They are simply willing to pay the costs of punishing others for their immoral behavior. The US, UK, and EU nations all demonstrate this behavior. It is unscientific to ignore this behavior, and an error to fail to account for it. (b) Rand's argument is moral, and romanticism is a value attached to her moral arguments. As such, when an individual relies upon moral arguments he is often incorporating MORE rational argument than macro economists do. We forget that the enlightenment fantasy of universalism is a sales technique for the state, not a description of extant human behavior. Racism, culturalism, nationalism, tribalism, familialism, are demonstrated universally - and must be for any organism to survive reproductive competition. It is unscientific to fail to incorporate these realities in models, and to suggest policy according to those erroneous models, or to suggest that it is in the human interest to act according to the universalist models rather than the particularist needs of our reproduction. ;) (c) Those (few) of us who specialize in the somewhat lonely profession economic philosophy and political economy do not fail to make the distinction between an imprecise statement of the truth by means of allegory, and a precisely articulated statement of a falsehood. In this case, the good professor, as a moral man, is referring to the moral sentiments expressed correctly by the novelist, and it would behoove more economists to recognize that the discipline of macro is constructed immorally precisely by NOT incorporating moral arguments. And that much of failure of political economy to offer solutions is a failure to account for the demonstrated human preference in all cases for moral expression. (I hope that wasn't too far of a leap for a few hundred words. But I'm not a fan of perpetuating this rather troublesome error in macro and political economy.)
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There is one flaw with your proposal: Microsoft's architecture, inherited from the era of minicomputers, is 'antiquated'. And without a new OS that offers some significant improvement for use on 'appliances' as well as servers (clusters of cooperating appliances) the entire stack is useless. The conflict between the value of the network effect (entrenchment and all the apps built on windows), and the future of software (many small 'operating systems' on many small appliances, consistently loading and unloading processes, means that MSFT is in an unrecoverable position. Had they used the past ten years to invest in new technology they could have possibly made the transition. At this point, the future of programming is already understood, and it has no place for Microsoft: Javasript front ends, and similar (Javascript, Python, php etc) backends. Neither of which rely upon the compile process. And both of which require disposable-process operating systems and NOT running-process-dependent operating systems that were built for slower hardware and higher costs. If what I'm saying isn't clear: MSFT is DEAD because the windows architecture and development tools are dead weight on an archaic platform and Ballmer blew the accumulated market advantage. The big problem today, are that the best people do not want to work for Microsoft. So it's very hard to change the company's direction. And we haven't seen ENOUGH of a marginal improvement in what operating systems can do for MSFT to use it's cash horde and market position to gradually move people to something new. The smart answer would have been to develop a lighter phone based OS and move office and other tools to it. And people did advocate that in the past. But the world has already decided that on current hardware the linux platform is just 'better' for the current direction of software development - and its free. It's possible to improve on the linux model fairly easily. But MSFT does not have a good record of making monumental investments like that nor is it clear that they have the intellectual density any longer. It's just how it is. And anyone living is welcome to argue with me about this but I'm pretty sure that anyone capable of discussing the architecture of operating systems will pretty much agree.
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@PeterB "Can someone tell me when the idea of fractured and decentralized states competing with one another resulting in the "European miracle" was replaced by centralized and formal state capacity theories of economic growth and development?" (a) Napoleon and total war necessitated german consolidation. (b) World communism and marxism (c) Keynes, Unemployment and Credit Capacity (d) Democratic socialism and intergenerational redistribution (e) Post Communist state Corporatism (China) and modernization.
@Mark Lutter The way to articulate and therefore understand these abstract processes is to refer to their causes not effects: free-riding and rent seeking. The statement "State capacity essentially ensured sufficient power to stop local barriers to trade" is correct, but would be causally articulated as the state forced the centralization of rent seeking. This is the same purpose that the federal governments provides: negotiation of terms for access to markets. In other words, they force market prices to be free of rent seeking. The question is whether the multiplier from central rent seeking or the multiplier from distributed rent seeking is superior. I think that's very hard to prove. In fact, all we can prove is that the state centralizes rent seeking. I don't think we can prove that there is much benefit to the centralization of rent seeking. It appears only that stability in rent seeking is superior to volatility in rent seeking, because stability in rent seeking forces all individuals to compete in the market now that the capacity to seek rents is put at a distance. Conversely, the concentration of rents creates a rental economy that generates rent-based wealth. (Washington DC). But there isn't any evidence that rent based wealth has an particular value to a society other than generating wealthy consumers. The entire problem remains the same: how to force out rent seeking and free riding such that all individuals are participating in the market for goods and services. This is the necessary foundation for any economy, and the necessary foundation of property rights: property rights are a prohibition on rents and free riding, forced from the family to the individual, as rents and free riding are forced upward into the state at the expense of the family. If you grasp that this is what is being done, then you will grasp the causal nature, not the descriptive nature, of the process of developing states.
What we (Conservatives) Learned. (a) Capital flows were catastrophically risk producing. (b) Regulation of financial instruments was too weak to prevent fraud on a massive scale, and government created the incentive to commit systemic fraud, and the need to conform to systemic fraud because of a lack of regulation. (c) That the state allowed, and encouraged, the privatization of gains and the socialization of losses. (d) That the state still prevents individuals and organizations from suing individuals and institutions from regulating company, and financial system behavior via the courts, by declaration of standing, as a means of preserving the political right and responsibility for regulation of those institutions - and thereby creating the incentive for political influence and corruption. That they both create the problem and then offer to solve it isn't lost on some of us. (e) The Austrian theory of the trade cycle is correct, yet again. Expanding credit causes misallocation and eventually, structural unemployment. (f) That the left blocked attempts to produce a compromise deal for spending that suited left leaning supporters, and reforms that suited right wing supporters. And that this block continues today. (g) We tried very hard, and, it looks as though it is possible to bankrupt the state if we work at it long enough. And either we bankrupt it or it bankrupts us and our families. Our view is that our families are family and that the state is an arbiter, not that all citizens are 'family'. BUT THEN AGAIN, We aren't positivists. :)
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Hmm... (a) What is incorrectly allocated in the structure of production that allows people to desire to consume, but have nothing to exchange? (b) It is probably true that if we bypassed the financial system, and inflated the currency, by directly, say, crediting people's debit cards - as long as it was done equally, that this would increase activity in the economy by redistributing savings and investment that are not moving, to consumers who desire to spend. We've been talking about this for a couple of decades now. (c) But why is there structural misallocation in the first place, and what misallocations are we creating this way? --- We are creating poor single parent households. Would this activity increase the rate of creation of single parent households? --- We are clearly failing at education of our work force compared to the Germans --- We are clearly transforming old age savings into academic institution equity, and long term student debt, without performing any useful education other than sortition. --- We are clearly immigrating vast numbers of low wage workers rather than employing our young and old at higher cost, and therefore creating two dependent classes. --- We are clearly destroying the system of intergenerational cooperation of savings and borrowing, and the information system that goes with it. --- We are clearly depending upon future anticipated growth, based upon a five hundred years of the spread of anglo absolute nuclear families, accounting, law, money and prices around the world by forcible conquest and unforced competition. (d) Instead: WHAT TROUBLES ME IS THE MISALLOCATION OF ACTION, CAPITAL, CREDIT, and POLICY THAT PREVENTS PEOPLE WHO DESIRE TO PAY FROM EARNING SOMETHING TO PAY FOR IT. One can use the artful word 'wedge' as a means of obfuscation: As OBSCURANT LANGUAGE, in order to obfuscate the underlying CAUSAL RELATIONS. This is what it means to speak as a leftist: using obscurant, and therefore, unscientific language. :) At least the right's religious people speak in analogy not obfuscation. :) The left's religious people simply use obfuscatory language, and artificially select short time horizons so that they can ignore externalities. :)
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@Posner This breach of peace is because that lesson has atrophied into a moral conviction expressed as policy. a) People have the right to self determination. b) Self determination is limited to good citizenship in the pattern of production and trade. c) That destabilization of the pattern of production and trade that influences commodities that could encourage warfare is equal to the waging of war against a neighbor. d) That if a people choose a government that abridges a, b or c, then we, the USA, will punish that government and the citizenry for their poor choices. We are not a peer nation. We are an empire. We act like an empire. We act like an empire in no small part because we must out of economic self interest, and in no small part, because our main trading, political, and cultural partners, actually WANT us to, so that they can participate in the reconstruction of Europe, after the first world war that destroyed human civilization as we know it, and from which we only begin to emerge in the present decade - albeit over a century behind what might have been. So, in closing, I'm a little uncomfortable with harkening back to historical reference of equal states, when our empire is run pragmatically for pragmatic purposes, and our policy has been reduced to ideology Curt Doolittle THe Propertarian Institute
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There is a reason that Wordpress powers something on the order of 20% of all internet sites. There is a reason that sites like the NYT and other magazines run on Wordpress. It's just easier to use for authors and editors, easier to use for readers and commenters, easier to use by administrators who can find a plugin make almost any part of Wordpress behave the way that they want or need it to. And it's easier to find someone to pay pennies to configure it if that's not something you want to spend time on.
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Libertarian Conservative : I Side With: 93% Ron Paul 89% Mitt Romney 77% Gary Johnson 30% Barack Obama 77% American Voters http://www.isidewith.com/
Toggle Commented Jul 26, 2012 on I'm a Liberepublicrat at Environmental Economics
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ie: we can add more police or more market. Libertarians prefer more market and fewer police. Leftists and conservatives prefer more police. THey just justify it using different language.
I don't know Gillespie, but I don't understand his argument. And you're arguing against a straw man because of it. The libertarian argument is this: a) violence is prosecutable (by restoration), even if conducted by children. b) theft is prosecutable (by restoration) even if conducted by children b) the social problem of ostracization (out-group sentiments) in schools is the product of not having a competitive market for schools, where children who misbehave can be ostracized from the school and therefore must attend one that is more disciplined. (ie: schools are indistinguishable from prisons.) c) the impact of this 'anti-bullying' when combined with the lack of physical activity is destructive to 'boys' who must learn dominance play, or be unable to function in a health manner in the real world. (This is a much longer argument.) But the data is pretty clear that males are 'checking out' of society in multiple cohorts. In other words, government is the problem because it prohibits market solutions to the natural course of human development, and in doing so creates 'prisons' that exacerbate natural human behavior. FUrther, that some of this 'dominance play' is highly useful for the healthy development of male interest in society, and without it, males will become detached from society. You're probably not a libertarian because you don't understand libertarianism, and neither do the vast majority of self described libertarians. :) That's OK. The rest of us will keep trying to help you understand it -- meanwhile our society devolves into castes and clans, and becomes completely polarized into political incompetence. Curt
Shotgun with Small shot. Easy to operate when you're half asleep and terrified. More likely to get a hit when you're full of adrenaline. Not likely to go through the walls and kill the neighbor by accident. People are terrified of them. Too. You will never see meth heads run as fast as they do when you chase them off your property at night with a shotgun. :)
Toggle Commented Mar 31, 2012 on Good gun for home defense at Half Sigma
1) Why should we expect that demand caused by credit expansion that does not result in productivity should be able to persist forever? 2) Japan isn't going to get out of it's situation for demographic reasons. The west is stuck in this situation for demographic reasons. The 30's were as much a reaction to rapid immigration followed by the decline of farming as a viable occupation as anything else. THe period of "recalculation" that followed may or may not have been solved by additional spending. But only if new innovations, relationships, and goals were developed, not past habits perpetuated.
Toggle Commented Mar 30, 2012 on DeLong: The Shadow of Depression at Economist's View
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Everyone understands. But as long as the debate is conducted as class warfare it won't advance. Your argument is empirical, persuasive, and logical: we will have better growth if the money is spent by government rather than lent to government. And if we have better growth we will have higher returns on private sector retained earnings. The problem is, and will remain, the public's sensitivity to intrusive government. So without guarantees that the money will be used for domestic infrastructure improvements, and possibly those improvements only, and without some guarantee that the DOE will be reconstructed or eliminated, the opposite side will block all action to their dying breath. And in that sense, I agree with their approach.
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@cfaman RE:" "I can't understand why the wealth party doesn't agitate for policies to maintain wealth. " Externalities. The mission is to starve the state. The wealth delta is just the cost they are willing to pay to achieve it.
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The underlying problem is that there is no 'We'. No community. There exists no common interest, so there can exist no community of common interest. The agrarian aristocratic and the industrial egalitarian visions are incompatible. The lower intelligence and higher impulsiveness of the lower classes can only be compensated for by behavioral virtues. And the fertility of the unproductive can only be constrained by ostracization -- an ostracization we can no longer rely upon the winter weather and threat of starvation to accomplish. Instead, we subsidize them, and force the middle class to forgo consumption so that the underclass can fail to adopt the virtues that would enable them to be productive.
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@Paine: A community of common interest. Which your supposition is required to exist Can only do so when compensation is received for transfers. Where goals and sacrifices are the same. Where language, manners, ethics and morals are the same. That is where a community of common interest exists. Without which, none can. None does. And neither citizens nor politicians act so. Germans will not tolerate club-med behavior nor corruption. Germany restructured its economy and social order. The rest will have to follow or leave. Politics is an expression of human nature. And human nature is to rebel against injustice. And involuntary transfers without compensation are considered by all to be unjust.
Toggle Commented Feb 22, 2012 on "This Really Isn’t Credible" at Economist's View
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Excellent plan. Not original but still a good plan. Politically viable. Ethically tolerable. Behaviorally beneficial. Debt is the new citizenship anyway. :)
Toggle Commented Feb 20, 2012 on Illegal Immigration-Becker at The Becker-Posner Blog
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Roughly translated: "Paul has no idea."
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"Deserving" is an attempt to mislead the reader. "Deserving" requires an exchange. To 'deserve' something, one must have done something to deserve reward for it. The poor deserve something only if they refrain from theft, fraud, violence and childbearing, and only if they obey manners, ethics and moral norms. In exchange for those actions we can argue successfully that it is cheaper to subsidize them so that they continue to refrain from fraud, theft, violence and childbearing. If people are poor because they bore children that they cannot afford, or because they committed crimes, or because they refuse to obey norms, then they do not deserve anything. THey're just stealing from everyone else already. If people immigrated into this country and are poor, they don't deserve anything, they're just stealing. People are due someone in exchange, not due something because lack of exchange, or are obligated for something because of exchange. That is all.
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I think you miss the point that from the right's position, NGDP targeting would require that the government focus its efforts on industrial policy in order to be able to fund redistribution, and therefore cooperate rather than prey on business and industry. This in turn would require we correct our dysfunctional education system that creates uncompetitive workers, and it would reduce class warfare by focusing on specific policy initiatives that would make the nation competitive rather than devolutionary. The right originally abandoned industrial policy because of the collaboration between unions and the state. Now that they see unions as weak and foreign states as a threat, they would prefer to return to industrial policy and very likely, away from free trade - which was just a vehicle for competing against the government-union alliance while the USA had a temporary postwar technological advantage. Conservatism is the sentiment and subsequent philosophy of inter-temporal group persistence by the concentration of capital in all it's forms. In the USA conservatism also includes an allegiance to the status quo of classical liberalism, which in itself is a commercial meritocratic philosophy that retains the english system of class cooperation through multiple houses of government. The democratic socialist movement is an attempt by the proletariat and public intellectuals to obtain political and economic power by propagating the mythos of equality in order to undermine the multi-class system of government in which tehy are at a disadvantage compared to the commercial productive classes. But it is nothing more than an appeal to power for the purpose of material gain. Nothing more and nothing less. While conservatism is more likely to rely on historical metaphor and moral argument because of their inter-temporal content, and the left is more likely to argue for empirical positivism because it specifically lacks that inter-temporal content and replaces that historical view with an absolute faith in the human ability to manage it's own destiny, that does not mean that conservatism cannot be articulated as a rational philosophy. It simply means, that because it is more complex, it is harder to do so. But then again, concepts of this depth are usually outside of the understanding of macro economists, and are instead the provenance of political philosophers and historians to whom economic activity is a predictable cycle driven by little more than institutions, military power, trade routes, and population composition.
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Dani The question you must follow with, is "once a country has enough of a middle class to develop democracy, how long can that country remain a democracy before Schumpater's problem of public intellectuals converts it back to totalitarianism?" :)
Legislatures traditionally cut services that will punish taxpayers, rather than obligations that serve the interests of the bureaucracy. Education, emergency services, and recreation are the favorite targets. Despite the fact that bureaucratic obligations are the source of the financial problem. There is enough of a body of evidence to support the allegation. Given that education is being cut because of California's overindulgent financial policies, what is it that you recommend be done instead of cutting costs on education? Complaining about cuts is easy - and meaningless. Recommending alternatives is the hard part.
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@CM So, I'm sorry (and I'm not being sarcastic) but I don't really understand your point. What I think you mean is that even slums will have businesses? That's true. But if you you want prosperity in a population you need productivity in order to obtain that which you cannot produce yourselves, and to create productivity you need to produce exports, and exports that are more scarce than competing products. If you mean something else, I don't understand. The point I was making was the "little things" strategy of urban renewal: "Ticket for jaywalking and spitting on the street or fixing a broken window". Fix the little things and the big things will be taken care of. This is the opposite of the 'big project' urban development projects put forth in Detroit. Clean, Safe, Friendly, and Available Credit and the market will take care of the problem. The problem is making it clean, safe, and friendly so that credit can do it's job. The other problem, which I refer to below is the culture of the political system. And that, I don't think, can be fixed in Detroit. And it's pretty clear that it isn't getting fixed in souther california either. and because of that, it isn't getting fixed in california in general.
Toggle Commented May 1, 2011 on "Subtracted Cities" at Economist's View
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Yes. They are part of the 'western expansion', which combined the ports, cheap labor, and financial power of NYC with the politics, administration and military power of washington. This greater area, in 'Nine Nations Of North America' terms, is 'the foundry'. Or what we call 'the rust belt' now that the US has been de-industrialized. NYC's position is the result of the middle class and upper middle class leaving the city in order to spend money on child rearing. Human beings appear, in all cultures, to favor 'spatial freedom' (homes) above all other freedom. They do so because they must make fewer compromises, and can more easily avoid interpersonal conflicts. DC is a slum on the european model. A high investment core surrounded by a donut of subsidized poverty and ignorance. If you are brave enough to look at the data, you will find the same racial and cultural problem as the Levant experienced: A sufficient number of a certain class and culture of people is necessary to preserve an economic order. The less 'white and christian' a police force the greater will be incidence of crime. That's just the data. Plain and simple. It may not be a race problem in the sense that it is genetic. It is more likely a cultural problem common to a race of people who establish an identity that consists largely of a set of status signals, where status signals also incorporate physical appearances. As such, status signals are more 'profitable' intra-group than extra-group. (For example, women are far more unlikely to mate across racial groups than men - except for hispanic women. Women value race and looks more than money in their mates - to the disappointment of wealthy men everywhere.) But either way, whether the biases are genetic or cultural, they are a problem for governance. The same cultural biases are present in most minorities, and more importantly, in the middle classes of each minority. Jews are the most interesting at 2%, and americans of protestant english heritage as well at12%, because the cultures are commercially biased. So, because of status signals in cultural and racial groups, and primarily in the middle and upper proletariat classes, tribal proclivity can easily overwhelm political institutions. Institutions only codify tribal proclivities. They do not create them. In other words, a city dies if it's racial and cultural mixture are incompatible with it's constitutional institutions and processes -- all of which place unmodified requirements on individuals in order to function. Believing differently will not make it so. The data is the data.
Toggle Commented Apr 30, 2011 on "Subtracted Cities" at Economist's View
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