Bryan Caplan  

Refuted By Events

PRINT
Sharks--or Angels?... Maladjustment...
Did the financial crisis of 2008 refute capitalism once and for all?  I was just on Al Jazeera to debate this question.  My opponents - and, I suspect, my host - thought so.  Obviously I disagreed about capitalism.  But even if I were a staunch socialist, I would never claim that the events of 2008 "refuted" much of anything.  Vivid, dramatic news often sways public opinion about policies and philosophies.  But such news should have little influence over the judgments of serious thinkers.  Unless...

1. The events are extremely bad, with no significant countervailing events in the other direction over a long period of time.

2. The events occurred under an extremely pure form of a particular policy or philosophy.

3. The events can't plausibly be linked to luck.

From this perspective, it's absurd to claim that capitalism was refuted by the events of 2008.  (1) World output fell by a few percent.  Bad, but hardly an historic disaster.  And there were many obvious countervailing events - like the massive increase in world output during the preceding decade.  (2) As I pointed out on Al Jazeera, every affected country had a strong admixture of markets and government.  Why would mere events pin the blame on markets?  (3) Almost everyone was shocked by 2008 - a classic sign of bad luck at work.

What real-world events would measure up to my standards?  I'd be willing to argue that extreme nationalism was refuted by the history of Nazism, and radical socialism was refuted by the history of Communism.  Both sets of events were awful; neither produced significant countervailing events; and both showed philosophies in very pure forms.  You could argue that Nazism and Communism suffered from the bad luck of extremely wicked leaders.  But given the two philosophies' disdain for division of powers and embrace of unrestrained hatred of their enemies, the atrocities of Lenin, Stalin, Hitler, and Mao reveal a systemic flaw in the philosophies themselves.

Any other examples you'd care to defend?  Again, my question isn't whether some policies or philosophies are wrong.  My question is whether you can honestly point to decisive events that close your case.
 


COMMENTS (21 to date)
Ricardo writes:

Congratulations for staying polite in the face of so much idiocy, I couldn't have done it.

Steve Sailer writes:

"Any other examples you'd care to defend?"

Your opinion on California real estate and illegal immigration hasn't looked terribly persuasive since 2008.

adam zur writes:

"Any other examples you'd care to defend? "

Yes. I have extensive experience with the Jewish orthodox world. I have seen a lot of things which would suggest that it is indefensible in the same way that communism and your other example. Yet there was plenty of good also. So this has been a question I have struggled with for a long time. The evil that I saw would seem to be decisive- but the good I think balances it. So I have tended to look at this like the Kant Fries school--that orthodox Judaism occupies one small niche on the sphere of positive value.

Evan writes:

Jim Crow and Apartheid were such a huge and long-lasting disasters that white nationalism/separatism has been thoroughly and justly discredited. Unfortunately some people have failed to generalize those conclusions and realize that they should also discredit every other type of ethnic nationalism/separatism.

The psychopathic reign of Qin Shi Huang aptly demonstrated that legalism is a terrible political philosophy in spite of its superficial resemblance to positive concepts like Rule of Law. The fact that it was praised by the monstrous Mao Tse Tung is only icing on the cake.

Countdown to Final Crisis and Ultimatum were written when shared universe comics were under a prolonged policy of tight editorial control over the storylines and emphasis on shocking the reader with surprise deaths. The critical and commercial failure of those, and other, similar storylines has discredited that particular philosophy of editing fairly completely.

DougT writes:

Does this argument run afoul of Godwin's Law?

Chris Koresko writes:

Bryan Caplan: I'd be willing to argue that extreme nationalism was refuted by the history of Nazism, and radical socialism was refuted by the history of Communism.

I disagree with this. Nazism fails the "extremely pure form of a particular policy or philosophy" test pretty badly, since it was more or less Communism with the devotion to Moscow replaced by nationalist and racist sentiment.

What would an extremely pure form of nationalism look like? Would it imply anything at all about the internal political and social order, beyond fervent patriotism? I have not clear ideas here.

And speaking of Communism, its usual defense is that it's never been tried in its pure form. I'm skeptical of that claim, but it's out there.


Steve Miller writes:

I would say the neo-Malthusian predictions of resource exhaustion and mass starvation from the 1960s and 1970s were unequivocally proven wrong. World population actually grew more quickly than they predicted, and not only did natural resources "not run out", most are very near their inflation-adjusted price of 40 years ago. Many are actually cheaper. Further, instead of mass starvation and abject poverty, billions of people were lifted out of poverty, above what Hans Rosling calls the "power line" and even the "wash line". Amartya Sen has shown that famine, rather than being a population problem, is a political one. China and India have seen the most rapid growth in standards of living, and that's more than 2.5 billion people right there.

It's worth pointing out, by the way, that many "hard scientists" such as biologists, chemists, physicists, etc. accepted this neo-Malthusian truth and remain essentially ignorant of its failure. They view the Green Revolution, for instance, as a "countervailing event", even though that was exactly the kind of innovation that cornucopian thinkers like Julian Simon predicted.

Chris Koresko writes:

Steve Miller: I would say the neo-Malthusian predictions of resource exhaustion and mass starvation from the 1960s and 1970s were unequivocally proven wrong.

Great point!

Along similar lines, didn't the IPCC predict there'd 50 million 'climate refugees' due to global warming by 2010?

Hume writes:

[Comment removed pending confirmation of email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

steve writes:

maintenance of a colonial empire - entire history
treating substance abuse as a crime - entire history
fighting a "limited war" to win - entire history
keeping a fiat currency stable - entire history

Bob Loblaw writes:

I disagree with these criteria for a couple reasons.

First, if one believes these sorts of events are affected by random chance, it's quite possible to get extremely long streaks of a particular occurrence due to sheer randomness. This would seem to rule out 1 as a good objective measurement device.

I would rule out 2 as well, on the premise that all decisions or ideologies involve tradeoffs, and generally no ideology is pursued at all costs. If tomorrow all laws were repealed and we wound up in a corporate fascist state, it wouldn't prove libertarianism was a bad idea, it would just suggest that libertarianism, pursued at all costs was a bad idea.

Three seems tricky as well to me, due to your suggested parameterization. Simply because an event is unpredicted doesn't make it random. Hardly anyone saw NBA star Lin over the horizon, but that doesn't mean him excelling at basketball was due to luck.

I therefore think this is overly simplistic. I would be more inclined to believe each observed event increases the likelihood of certain conclusions being true, but no one event or string of events can really prove anything, especially not for all circumstances.

Seth writes:

"if one believes these sorts of events are affected by random chance, it's quite possible to get extremely long streaks of a particular occurrence due to sheer randomness." But not probable.

"I would rule out 2 as well, on the premise that all decisions or ideologies involve tradeoffs, and generally no ideology is pursued at all costs."

I believe that was exactly the point of rule 2.

James A. Donald writes:

> (3) Almost everyone was shocked by 2008 - a classic sign of bad luck at work.

This is not my recollection of the events.


No one I knew was shocked by 2008 - in part because the crisis actually happened in 2005 November, and from then to 2008 the elite was running in circles with extend and pretend, a frantic game of pass the hot potato with toxic assets, and the government trying to get financial institutions to swallow toxic assets and say they were lovely.

Being shocked by 2008 is like being shocked by Greek default.

And in the lead up to the crisis and collapse of 2005 November, everyone knew that the policy of lending large amounts of money to anyone, and especially anyone who belonged to a non asian minority, could not continue, and was going to lead to crisis and collapse. We all knew what was coming, but we did not know when. And then, in 2005 November, we knew that the long expected crisis was finally upon us.

Everyone I knew expected the imminent fall of the Soviet Union, and everyone I knew expected the imminent collapse of the financial system, and by 2006, early 2007 at the latest, everyone knew it had already collapsed.

Floccina writes:

Yeah a would be socialist told me after 2008 "look at what unfettered capitalism brought us to". My reply was indeed look at what our (fettered) capitalism brought us to, obesity is now a bigger problem that starvation in most of the world. Electricity, cars, lights, computers in abundance. Three cheers for where capitalism has gotten us.

Another point that I like to make is that people in North Korean are not starving just because of the avarice of their leaders. Even with those leaders consuming what they do North Korea could would produce enough to provide for them and an above starvation standard of living if most North Koreans would work hard to produce, but there is no incentive to work hard. Too many people will not work for nothing for communism to work even if the ruled by the best of men.

James A. Donald writes:

In 2005 November, a very large number of people who were over extended on real estate stopped making mortgage payments, indicating that they knew the game was over. At the same time numerous major financial institutions also showed "game over" behavior, for example AIG stopped issuing mortgage guarantees.

So in 2005 November, the panic stricken rush to the exits began. The panic set in then, and what caused the panic was that we had long expected a crisis, and believed the crisis was finally upon us.

None of the people panicking in 2005 could be said to be taken by surprise by the events of 2008

James A. Donald writes:

Starting 2005 November, mortgage fraud abruptly escalated to levels that showed that very large numbers of people believed the game was over, and they were going to perform one last big sting in order to get out while the getting was good. Typically you would pay your gardener or some day laborer picked up from home depot several thousand dollars to sign papers that he could not read committing him to a stupendously expensive mortgage, give him the keys to one of your numerous houses, and put your financial affairs in order. The behavior of loan officers and suchlike during this period shows they did not expect their jobs to last much longer. Everyone involved in the boom had known it to wholly based on fraud, pretence, and political correctness, long expected that the end was night, and in 2005 November, a very large proportion of them suddenly came to the conclusion that the end was finally upon us, that suddenly everyone was going to stop pretending that low IQ Mexicans without regular jobs were going to pay for expensive houses in leafy suburbs.

What astonished me is not the events of 2008, but that the pretense about minority home ownership is still nominally upheld.

James A. Donald writes:
Jim Crow and Apartheid were such a huge and long-lasting disasters that white nationalism/separatism has been thoroughly and justly discredited.

South Africa was doing fine under Apartheid. Upon abolishing apartheid, is now suffering severe economic decline and a massive and terrifying explosion of crime, among them racist attacks on whites that in rural areas are effectively genocidal, clearing whites from large areas of South Africa.

Jim Crow still seems to be in effect in the cafeteria of elite universities, indicating that to a considerable extent it reflected people's spontaneously chosen preference, rather than being imposed from above. Traditional black universities do a markedly better job of educating blacks in tough disciplines such as engineering than do elite universities. A black engineer from an elite university can seldom do any actual engineering. A black engineer from a traditionally black institution is usually adequately competent, suggesting that separate but equal actually was separate but equal, and worked better than today's integration.

Whites and blacks differ by about one standard deviation on numerous qualities. Such a difference is sufficiently large that integration is apt to cause problems.

Evan writes:
South Africa was doing fine under Apartheid. Upon abolishing apartheid, is now suffering severe economic decline and a massive and terrifying explosion of crime, among them racist attacks on whites that in rural areas are effectively genocidal, clearing whites from large areas of South Africa.
Apartheid was a horrifying crime committed against a huge group of people. It's impossible for any place with apartheid policies to "do just fine."

Furthermore, South Africa is not undergoing an economic decline, its GDP is considerably higher than it was in the 80s and 90s. Its score on the Human Development index has also risen since then. The murder rate has fallen by nearly 50% since Apartheid was dismantled in 1994.

Jim Crow still seems to be in effect in the cafeteria of elite universities, indicating that to a considerable extent it reflected people's spontaneously chosen preference, rather than being imposed from above.
If that was true then passing mandatory segregation laws would have been unnecessary. My personal experience indicates that segregation in universities is by culture rather than race, it just happens that in the USA culture is often correlated with race for historical reasons.
Whites and blacks differ by about one standard deviation on numerous qualities. Such a difference is sufficiently large that integration is apt to cause problems.
The gap may be closing, although it's probably still too early to say.

However, a difference in IQs and other qualities is more reason for integration, not less. If both groups had the same attributes you might be able to argue that they'd get along well without each other. But if the two groups differ in attributes it would be better for them to live together so that they can take advantage of the gains from trade produced by the law of Comparative Advantage.

I think the reason people mistakenly think IQ differences are grounds for segregation, rather than integration, is modern culture's odious tendency to regard intelligence as something that makes you better than other people, instead of as a gift you can use to help those less intelligent than you.

If you want more proof of the thorough discrediting white nationalism has received consider that just 60 years ago nearly every white person in the southern USA subscribed to it. Nowadays white nationalists are justly regarded with horrified disgust by nearly everyone in the USA. If someone admits they are a white nationalist they are rarely taken seriously again. The evidence against it was truly overwhelming.

GregS writes:

I think the Hoover/Roosevelt New Deal refutes the notion that massive economic intervention is a good idea in the event of a downturn. I believe that was the largest intervention in our history, and was followed by the longest lasting depression in our history. When we don't respond to a recession with massive intervention, we tend to recover fairly quickly. Murray Rothbard gives some historical examples in "America's Great Depression."
In this same vein, essentially every true shortage can be linked to a price control. I'd say this type of policy is "refuted by events."

I second the notion that our drug laws (and every regime of substance prohibition ever) are refuted by events; someone already expressed this above. This is quite clearly a zero-benefit all-cost policy. It meets your criterion 1 easily.

Peter St Onge writes:

Colonial Pennsylvania and sovereign real estate corporations. Leopold's Congo and sovereign extractive corporations.

Almost everyone was shocked by 2008 - a classic sign of bad luck at work.

Those who understand Austrian Business Cycle Theory were not at all shocked by it. We would have been shocked if the events of 2008 did NOT happen.

Comments for this entry have been closed
Return to top