Arnold Kling  

Economic Nationalism

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Measurement Without Measuremen... A Story that Warms My Heart...

My latest essay:


Nationalistic rhetoric about economics is even worse than nationalistic rhetoric about the Olympics. Nationalism about the Olympics is a marketing tool for commercial exploitation, and the harm done is relatively minor. Nationalism about the economy is a marketing tool for politicians, and it leads to loss of freedom and responsibility, with enormous quantities of resources channeled through government.


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CATEGORIES: Political Economy



COMMENTS (25 to date)
Tom writes:

Arnold, that was the your best article yet.

David Thomson writes:

“Every Family Left Alone”

This should become a popular slogan. I’m sure it can become a winner with red state voters. What about the blue? It may be too late. The Republicans may often act cowardly and hypocritically---but they are the only game in town. There is little hope for the Democratic Party. It is dominated by fringe lefties. Hillary Clinton and her allies are totally committed to the government pervading virtually every aspect of our lives.

“Today, however, university education departments seem to turn out teachers who are folk Marxists, not folk Locke-ists.”

A holder of a soft science degree should be treated as an idiot until proven otherwise. Is this fair? What about those who truly brilliant? Unfortunately, as a general rule---the stark raving crazies seem be the norm. I have just ordered David Horowitz’s The Professors. He addresses the intellectual corruption of today’s campuses.

daveg writes:

You really can't think of practical (and selfish) reasons to favor the well being of you fellow countryman?

A modern western nation is an "agreement" or "contract" between a large group of people to live according to a certain set of rules. In order to receive the benefit of thse rules the indivdual also gives up some freedoms.

Now, in our case the rules include the right to vote and tax, which translates to transfer of money from some to others based on the vote.

Given this right, it is much more important for me to make sure my fellow countryman is reasonably well employeed. Becuase if he is not well employeed he can vote to tax me and take my money to ensure he has at least some reasonable standard of living.

Now, I am not advocating that everyone deserves a reasonable standard of living. I am just pointing out the political reality that my fellow countryman can demand a reasonable standard of living through heavy taxation.

A non-countryman, however, does not have a ready ability to tax me. If he is poor he will not be able to increase his well being at my expense.

So, it is very rational for me want to maintain or improve the well being of my fellow countryman in preference to the well being of non-countrmen. It is not just "nationalistic" or "jingoistic" behavior.

I also don't want to make it seem that the "national contract" is all negative. Hardly. I receive lots of benefits in exchange for agreeing to live under the vote of others, but I don't think I need to discuss those benefits here.

Tom writes:

Daveg,

Money is used to help the poor, but to think the poor have tremendous political power to vote themselves out of poverty is naive at best. Most of what you said has no basis in reality.

Arnold says that we must think logically about issues. Thinking logically is beneficial to our fellow countrymen.

N. writes:

Yes, that people can vote themselves ameliorations is a political reality. It is also true that seldom will someone vote against a subsidy in his favor.

The problem arises, at least in my view, with the realization that you will always get more of a thing that is subsidized rather than less (cetaris paribus). Thus, as time goes on, (1) the number of people who demand a reasonable standard of living (however that might be defined) will increase, and (2) the definition of a reasonable standard of living will grow to include additional ameliorations.

This does not account for the increased costs of administrating the ameliorations, which, I believe, must also always increase.

Assuming the above is true, costs will always increase and never decrease (again, ceteris paribus).

It is possible, I suppose, that growth will outstrip the costs of maintaining the subsidy. However, I would suspect that (1) as growth increases, the drive for ameliorations (what will be considered a reasonable standard of living) will also increase; and (2) conversely, as additional tax pressures are brought to bear, growth has a tendency to decrease (why work harder if you keep less of what you earn?)

Of course, as they say, ceteris is never paribus. The sudden discovery of, say, cold fusion or cheap nanotech could change the equation considerably. Failing that, however, I think the subsidy of ameliorations is unfavorable and self-defeating in the long run. As much as it is true that technology improves over time, I think it is equally true that human nature does not.

Christopher writes:

Awesome and Scary... Awesome because it's true and scary because it is so true.

The only thing that allows it though is the ignorance of the mass population. Keep up your good work teaching.

Josh writes:

Daveg,

So, it is very rational for me want to maintain or improve the well being of my fellow countryman in preference to the well being of non-countrmen

But on the flip side, your countrymen are also subject to your whim at the voting booths. Your non-countrymen are not. If an American declares Jihad against you (or tries to get a nuke, etc.), he can be arrested by the American gov't. If a Syrian does it, he can't. Sounds like there's good reason to favor improving the well-being of non-countrymen as well. See the entry under "Bush Doctrine" for more info.

For my money, your logic makes me want to improve the lives of dangerous foreigners a lot more than the lives of the less-dangerous locals. Or we could just recognize that Arnold is right and stop all this nonsense...

Either way, great essay.

David Thomson writes:

“...but to think the poor have tremendous political power to vote themselves out of poverty is naive at best”

I am going to take for granted that you are referring to the poverty of the permanent underclass as defined by scholars like Edward Banfield and Charles Murray. If so, it is virtually impossible for these people to “vote themselves out of poverty.” Their childish immaturity dooms them. Any money they receive---will soon be wasted. It’s similar to giving a skid row bum a few dollars and expecting them not to buy more booze.

daveg writes:

Money is used to help the poor, but to think the poor have tremendous political power to vote themselves out of poverty is naive at best. Most of what you said has no basis in reality.

The responses to my post fall into two categories - a) denial and b) your right but we need to change that.

For those who say that people can't vote themselves out of poverty I have to laugh. You have fallen for the ever increasing definition of "poverty" that liberal love to push because without poverty they would be out of a job. They are the ultimate poverty pimps.

The largest single category of expenditures in this country are transfer payments. And someone on welfare in the country makes more than 90% of the rest of the world.

People vote themselves out of povery all the time. Then the liberals lift the bar and claim that they are still in poverty and that we need to raise the bar ever more. And you guys fall for it!

So, don't tell me people can't and won't vote themselves out of poverty. The can and do everyday.

Again, you have to deal with the geopolitical realities of life, or your policies are doomed to failure.

And I haven't even brought the issue of other country's "nationalistic" policies and whether those country are doing well or poorly economically. There is lot of evidence to suggest that such policies do work.

spencer writes:

there is a wide spread rule that the first person who brings up Hilter in a discussion or disagreement loses.

You are doing the same thing by calling people folk Markists or calling liberals fools the other day.

Adam Smith held a labor theory of value. Does that make him a Markists? why not? Things change and fields of knowledge advance; often because of mistakes made by earlier thinkers.
We all learn and change, but calling people of different views such names is something you should be ashamed of.

Do you believe your arguments are so weak that the only way you can advance them is by insulting anyone that does not agree with you?

Tom writes:

Arnold brings up the issue of health care. Some in this country would like to reduce the amount that the “nation” spends on health care by introducing a single payer health system. If only the government controlled the financing and administration of health care system, the government could contain the amount the “nation” spends on health care.

But the “nation” doesn’t need to see the doctor, the “nation” doesn’t get an operation, the “nation” doesn’t get a prescription, individuals do. What business is it of anyone else's about how much I spend on healthcare? It is only when the system is socialized and the government, i.e. the taxpayer, pays for my healthcare that it becomes a concern for others.

As the government gets more and more involved in the healthcare system you will have less and less rights to spend your own money to get the healthcare that you need. Busy bodies in Washington will say, “too much money is spent on healthcare to extend the life of the elderly for only a few months.” Or, “too much healthcare money is spent on smokers, the obese, chronic drinkers, etc….”

There will be a drive to institute the single payer plan in order to contain how much “we” spend on healthcare.

Tom writes:

Spencer writes: "there is a wide spread rule that the first person who brings up Hilter in a discussion or disagreement loses."

I am not sure who "Hilter" is, but since you're the first to bring him up, I guess you lose.

daveg writes:

I am not sure who "Hilter" is, but since you're the first to bring him up, I guess you lose.

Yup. I searched this thread and the only post with a an original reference to Hitler (or Marks) is Spencer's.

Who is he reffering to?

James writes:

Spencer,

You ask "Do you believe your arguments are so weak that the only way you can advance them is by insulting anyone that does not agree with you?"

I can't speak for Arnold, but I think if he actually believed this, he wouldn't publish his arguments via TCS and Econlog. These seem to be his preferred means of advancing his arguments. I realize that there are people who disagree with his conclusions. That's fine. They should either explain why they deny his premises or point out reasons why the premises might not warrant the conclusions he reaches.

If his essays said "You guys are folk Marxists and nationalists! Yuck!", I'd sympathize with your concern. But read his essays and you'll observe that he is pointing out nationalistic thinking or folk Marxist thinking in the same way that one might point out any other fallacy. There is a distinction.

If I said "spencer makes bandwagon appeals to support nonsequiturs. Yuck!", I'd be guilty of namecalling. If I pointed out that your remark, "there is a wide spread rule that the first person who brings up Hilter in a discussion or disagreement loses.", is a bandwagon appeal to support a nonsequitur, I'd be pointing out a fallacy. See the difference?

David Thomson writes:

"There is lot of evidence to suggest that such policies do work."

Where? I am not aware of any long term successful results. Could you possibly provide some examples?

Roger M writes:

Fantastic assessment of the President’s report! One of the most important principles that Americans need to learn is that politicians and the media need crises, for without crises, citizens won’t pay attention to politics or follow the media. Consequently, if no crises exist, politicians, and the media as accomplice, will invent them.

Roger M writes:

Given this right, it is much more important for me to make sure my fellow countryman is reasonably well employeed.

Is it possible to make sure my fellow countryman is well employeed? I don't see how. That's up to my fellow countryman, determined by how well educated he is, his work ethic, how well he can get along with co-workers and bosses, which industries he chooses to work in, etc. Explain to me how the government can guarantee a good job to a neighbor.

daveg writes:

Where? I am not aware of any long term successful results. Could you possibly provide some examples?

Japan, Finland, Germany, China and maybe Israel...

Russia would be a counter example in that opening up ones economy does not ensure positive economic outcomes.

daveg writes:

And add S. Korea to that list.

Mike writes:

Spencer,

I think the difference between Adam Smith and Karl Marx is that people who ascribe to and teach Smith's economics (and of his successors) do not still teach the labor theory of value, while many of the folk Marxists and actual Marxists I work with today do in fact believe this fallacious theory.

This says nothing about Smith or Marx, rather about the people that adhere to various doctrines.

-Mike

liberty writes:

>So, don't tell me people can't and won't vote themselves out of poverty. The can and do everyday.

Actually, the reason that the poor are better off today than they were, say 50 years ago has nothing to do with voting for a higher level of transfers and everything to do with the rising GDP/capita, rising employment, economic growth and improved technology *despite* the transfers. But you are correct that the liberals keep raising the bar.


>there is a wide spread rule that the first person who brings up Hilter in a discussion or disagreement loses.

>You are doing the same thing by calling people folk Markists or calling liberals fools the other day.


People are easily ignored if they bring up Hitler, usually because they aren't making a valid or well thought out point. I don't think people should be ignored if the point is a good one. People that being up Marx, still considered (goodness knows why) a respectable economist by many, on an economics blog is surely not a sign of a desperate strike; it may be a reasonable, well thought out and valid counter-argument. Should we ignore hundreds of years od socialist economic theory and then experimentation? Should we ignore those who still are proponents of such theories and wish to continue the experiment?

liberty writes:

>Russia would be a counter example in that opening up ones economy does not ensure positive economic outcomes.

Janos Kornai and others explain why - Russia did not simply privatize the nationalized industries and sell them off, instead they tried a half-measure whereby the newly privatized firms were given away with vouchers (so that things were more fair and equal). Doing this meant that people who had no idea how to run a business (nor inclination) suddely owned one. This led to a lot of re-selling and deals, often to mafia-types, rather than bidding in an open and visible market such as the stock market as we know it. There was immediately a problem with corruption often by the same old corrupt officals seen under communism.

joebod writes:

I don't understand the immoral aspects of Gov't debt arising from inter generational transfers. Our children will not only PAY taxes to pay interest and principal they will also RECEIVE payments of principal and interest. Thus, no inter-generational transfer. There is still the issue of the morality of government spending but it has nothing to do with the means of financing the spending.

daveg writes:

I don't understand the immoral aspects of Gov't debt arising from inter generational transfers. Our children will not only PAY taxes to pay interest and principal they will also RECEIVE payments of principal and interest.

The will pay interest via taxes, which applies to everyone. Only those who purchase the bonds will receive interest, which is very few.

I really don't see why this is such a difficult concept.

Arnold, nice essay, nice critiques, etc. One quibble? You write:

"If you think about it, the nationalistic element of the Olympics is unnecessary. Why make a big deal about how many medals are won by "the United States" as a collective entity? Why not just focus on the achievements of the individual entrants?"

When I think about it, the nationalistic element of the Olympics isn't just necessary, it's why the Olympics exist in the first place. Get rid of the nationalistic element of the Olympics, and the Games would come to an end. Which would be an example of what tends to happen when excessive logic and rationality are applied to situations and phenomena where instinctive understanding of basic human nature -- in this case, people like belonging, as well as cheering for their teams -- would be a lot more useful.

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