Arnold Kling  

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Cowen Contra Pacifism... Interpreting Data...

1. Robin Hanson writes,


We humans are much better at coming up with reasons for opinions than at choosing coherent sets of opinions

He shows a video of students asked about a proposal to redistribute grade-point averages by forcing the "rich" (high-GPA students) to give some of their grade points to the "poor." Put on the spot this way, students are awkward in their attempts to articulate why it is wrong to redistribute grades even though it is right to redistribute income.

I was curious to see this exercise tried in other contexts. Ask government officials about a proposal to redistribute power, so that voters get to make more budget decisions directly. Ask Ivy League university presidents about a proposal to redistribute college endowments. Ask Ivy League professors about a proposal to redistribute academic status.

2. David Brooks writes,


When asked if they preferred fascism to communism, 39 percent of depression-era Americans preferred fascism and 25 percent preferred communism. Back then, conservatives had an anti-market ideology they could subscribe to. That vision died with World War II and now it is hard to be right-leaning and anti-market.

Read the whole post, which offers some interesting results concerning how anti-market the public was during the Great Depression. I don't think I buy his last sentence as the explanation of the evolution of post-war ideology, but I need more time to articulate what's wrong with it.

3. Abhijit Banerjee and Esther Duflo write,


We asked Oucha Mbarbk what he would do if he had more money. He said he would buy more food. Then we asked him what he would do if he had even more money. He said he would buy better-tasting food. We were starting to feel very bad for him and his family, when we noticed the TV and other high-tech gadgets. Why had he bought all these things if he felt the family did not have enough to eat? He laughed, and said, "Oh, but television is more important than food!"

You've probably already seen links to this article, which is shocking in its political incorrectness. I suspect that if the authors had male, Anglo-Saxon names, it would not have been printed.

4. Megan McArdle writes,


I'm basically in the Shiller camp. Corporate profits have been unusually high for the last few years, as weak firms went out of business and firms shed their workforce. The S&P 500's price-to-earnings ratio is in the high end of its historical range. It's still within its historical range, to be sure, but after a punishing recession, and with further storm clouds on the horizon, that seems to me to point to a least some level of overvaluation.

She refers to an interesting debate between Robert Shiller and Jeremy Siegel. In addition to Megan's point, I would add that a suspicious amount of corporate profits accrued to the financial industry, and that could turn around quickly when the Fed stops handing out free lunches to bankers. If you believe the Recalculation Story, then a lot of future profits are in businesses that do not exist today. There firms that turn out to be valuable years from now may not be the ones with shares outstanding at the moment.



COMMENTS (11 to date)
Doug writes:

Well the Banerjee/Duflo piece has some even more disturbing implications then what I think people are taking away. A quote:

"They found that iron supplements made men able to work harder and significantly boosted income. A year's supply of iron-fortified fish sauce cost the equivalent of $6, and for a self-employed male, the yearly gain in earnings was nearly $40 -- an excellent investment.

...Most mothers could surely afford iodized salt, which is now standard in many parts of the world, or one dose of iodine every two years (at 51 cents per dose). Poor households could easily get a lot more calories and other nutrients by spending less on expensive grains (like rice and wheat), sugar, and processed foods, and more on leafy vegetables and coarse grains. But in Kenya, when the NGO that was running the deworming program asked parents in some schools to pay a few cents for deworming their children, almost all refused, thus depriving their children of hundreds of dollars of extra earnings over their lifetime"


When a corporation's management runs the firm this poorly, there's usually a simple solution that culls bad management and puts the poorly utilized assets to work. It's called a buyout.

What would the equivalent of a buyout be in this scenario? Well it looks pretty similar to what we would call indentured servitude or slavery.

If returns to such small nutritional investments are indeed this large the solution is simple. Give third parties the right to contract with third world residents (or their parents in the case of childhood inventions) in the following form:

"Investor A will pay slum dweller B a cash sum of X. In return A will retain the rights to dictate the diet, nutrition and health of B. A will also be able to dictate and direct B's labor, paying B Y% of the total revenue (or market value thereof) derived from his labor."

Jakartan slum dwellers might not understand iron supplementation, but my guess is most if not all would instantly respond to a large immediate cash payment. But let's see how well this proposal goes over at the UN...


My point is that before we dismiss an institution (slavery/indentured servitude) that's existed for 99% of human history as just a purely evil product of human wickedness, we should consider that maybe there were Hayekian reasons why it tended to be so prevalent across civilizations.

Ted writes:

I think I can explain why students would be hesitant to redistribute grades, but still support income redistribution. It just the deserving versus undeserving poor distinction.

Most students perceive GPA outcomes as being mostly determined by effort, not natural ability or luck. Now, I think most would agree high natural ability students need to put in less effort, but I think most students would also argue that lower ability individuals can compensate by working harder. The students are viewing low GPA individuals as the "undeserving poor." Whereas with income, many people view the poor as being poor for various structural reasons, not that they are poor because they are lazy. I think if the students thought poor people were poor simply because they were lazy bums they wouldn't be sympathetic to redistribution of income.

Marcus writes:

Why is fascism always described as being 'right-wing'? There were plenty of left-wing fascists. Many of the social goals of fascism came straight out of the socialist playbook.

As far as I can tell, fascism was largely 'wing-agnostic'. Outside of Italy, early on, everyone from FDR to Winston Churchill looked on with nodding approval at Fascist Italy.

The only significant difference I see between fascism and the socialist movement that proceeded it is the token nod fascism gave to private property. I say 'token nod' because the fascists also made it abundantly clear that if you didn't use your property as they saw fit, they'd take it from you.

So in effect, it was largely a semantic difference. It allowed existing property owners to become part of the apparatchik, so to speak. Which avoided the class war of communism. But the end result seems largely the same.

Please note, I'm not denying that anti-market right-wingers approved of fascism. I just don't understand why it is almost always attributed exclusively to them.

kebko writes:

I hope this doesn't sound mean or cheap, but I thought this sentence was humorous, coming right after the Hanson link:

"I don't think I buy his last sentence as the explanation of the evolution of post-war ideology, but I need more time to articulate what's wrong with it."

Chris Koresko writes:

Marcus: "The only significant difference I see between fascism and the socialist movement that proceeded it is the token nod fascism gave to private property."

Goldberg argues that the difference between Fascism and Communism lies mainly in Fascism's loyalty to the host nation while Communism was loyal to the CPSU (Communist Party of the Soviet Union).

It's significant that the Nazi party is referred to as "National Socialist" to distinguish it from the "International Socialist" movement.

Apparently it was Stalin who demanded, in writing, that socialist movements not loyal to Moscow refrain from using the Communist name but call themselves Fascist instead.

If memory serves, Goldberg argues that the myth that Fascism and Communism are "opposites", and that Fascism is or appeals primarily to conservatives, was created by American progressives post-WWII to obscure their links to Fascism.

David Brooks: "Back then, conservatives had an anti-market ideology [Fascism] they could subscribe to. That vision died with World War II and now it is hard to be right-leaning and anti-market."

Conservatives (in the American tradition, anyway) have always advocated respect for the individual (and the assumption of the individual's basic competence to run his own life). That necessarily includes the right to own property and to make mutually agreeable contracts. It's pretty hard to reconcile that view with opposition to the free market, or with support of Fascism or any other branch of the socialist movement.

Bo writes:
Chris Koresko: Conservatives (in the American tradition, anyway) have always advocated respect for the individual (and the assumption of the individual's basic competence to run his own life). That necessarily includes the right to own property and to make mutually agreeable contracts.

Except if they're gay?

David N writes:

I was under the impression that financials usually lead a recovery. Is that wrong?

Aidan writes:

Grades are used for evaluation, taxes are not. The federal government does not examine the work of each individual American and decide the proper tax rate.

Taxes are used to fund the functions of local, state, and federal government. Grades have no fungible purpose. Should college tuition be lower for the poor than for the rich? Sure, which is why we have financial aid, scholarships, and Pell Grants. I'm not sure I see the relevance of comparing grades to taxation.

Government assistance to the poor can be used to directly purchase basic needs like food, clothing, and shelter. It makes sense to provide such assistance as Americans are generally uncomfortable with the idea of rich people living in affluence while poor children go without food, clothing, or shelter. I have yet to see any studies comparing the effectiveness of providing the poor with higher grade point averages to the basic social safety net.

David C writes:

From the foreign policy article:
"Both (William Easterly and Dambisa Moyo) argue that aid does more bad than good."

I wish I didn't have to register with the site to point out that William Easterly does not believe that.

Philo writes:

". . . a lot of future profits are in businesses that do not exist today." One can certainly believe this without accepting "the Recalculation Story"--I do--but it has nothing to do with the question whether the stock market is overvalued at present.

Philo writes:

"I suspect that if the authors had male, Anglo-Saxon names, it would not have been printed." A very plausible conjecture, and a terrible indictment of American academia.

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