Here are the details.

For those who won't be able to attend, which is most of these readers, you can read this piece I wrote on the issue a few years ago for the Independent Institute. Shortly after it was published, I briefed it to Congressman Ron Paul's Freedom Caucus in his office. Eight Congressmen, all Republicans, attended. I think I persuaded 7 of them although some of the 7 might have already believed it. Certainly Ron Paul already agreed with my bottom line.

I will also talk a bit about why I think the Iranian government, though it is a threat to Iranians, is not a threat to the United States.

I'm looking forward to going back to Rochester. I left there in 1979 after 4 years as an assistant professor at the Business School (now the Simon School) and returned once to visit in 1980. I haven't been back sense. At age 28 in 1979, I was kind of the Pied Piper on my street, Rockingham Street. I played with a bunch of the kids on that street. One of the parents was recently--I don't know if he still is--the mayor of Monterey.

My guess is that most intellectuals underestimate just how dysfunctional most firms are.

At Freddie Mac, I would have told you that they brought in McKinsey when it would have been easier if senior management had just listened to me in the first place (I was sort of full of myself in those days). I really resented the consultants, because I was jealous of all the power they could wield based on relatively little knowledge. But they probably helped me on net, because I tended to be pushing for things that a lot of executives did not want.

One of my fantasies is to have Cabinet Secretaries hire McKinsey to go through their agencies and whip them into shape. The problem is that a Cabinet Secretary has even less power than a CEO in dealing with the internal bureaucracy. And, unlike a CEO, a Cabinet Secretary has nothing to gain by making his organization more effective.

The PSST approach drops the assumption that production technology is known. Instead, the Smithian division of labour and Ricardian comparative advantage are constantly being developed and improved. Entrepreneurs, through a process of trial and error, figure out how best to configure production. In this process of ongoing discovery, there can be periods in which workers are unemployed, while the market mechanism tries to figure out how to utilize them.

For your convenience, I have put on my web site three academic papers, all pdfs:

1. My paper in Capitalism and Society
2. Peter Howitt's comment on my paper
3. The Adam Smith Institute paper (quoted above). The same paper is on their web site here.

Unfortunately, the patterns of specialization and trade that had emerged five years ago were not sustainable. Many jobs in home construction, durable-goods manufacturing and distribution, and mortgage finance were dependent on housing markets with ever-rising prices. In the U.S. and the U.K. in particular, the finance industry expanded well beyond its true economic value. Once the property bubbles burst, these jobs were exposed as not viable. Meanwhile, ongoing creative destruction brought about by the Internet and globalization have continued to allow substitution of capital and emerging-market labor for industrialized countries' labor in many sectors. Together, these phenomena have caused widespread dislocation.

According to recent estimates, the stock of human capital is over $750 trillion.6 According to a research report from JP Morgan called "U.S. Recession and Repression Are Only in Our Minds," this is much greater than the roughly $70 trillion of physical and financial assets owned by American households

The inquiries of the Congressional Budget Office, which haven't been made public, concern the CBO's analyses of some of Washington's most complex and controversial measures, including bills on financial regulation, health care, small-business lending and efforts to aid the housing market, said people familiar with the matter.

Meanwhile, apparently at least one left-wing think tank is up in arms over the CBO study that showed that Federal workers are overpaid. Andrew Biggs gives his perspective on that brouhaha.

In its overall budget forecasting, the CBO offers a useful check on politicians of both parties. I admit to being a big fan of the CBO for that reason. See the latest budget outlook.

I have two concerns about the CBO. One is that they are regarded as an all-purpose think tank by Congress, and this leads them into issues that are controversial and outside of their core competence. The most prominent example is forecasting the economic impact of fiscal policy, for which they use models that are not well regarded.

The study of Federal pay is another example of engaging in needless think-tankery.* In the end, I think CBO has more to lose than to gain by taking on such projects. At a time when the budget outlook is such a crucial issue, I wish that the CBO were focused laser-like on budget forecasting, without political distractions.

The other concern I have is that CBO has become, like the rating agencies during the mortgage securitization boom, a target for gaming. In my view, the Democrats gamed the CBO process in producing a health care bill that had "scorable savings" that almost surely were not real savings. Other watchdogs, such as the chief actuary for Medicare, called them out on this, but CBO was not able to do so. I suspect that the Republican resentment toward CBO stems from that experience.

It would be harder for legislators to game the CBO scoring system if CBO were less transparent. If legislators understood nothing about the details of the process and simply had to make rough guesses about CBO analyses, then they could not fine-tune bills to take advantage of scoring quirks.

This is a difficult issue with which to deal. On the one hand, legislators should obtain estimates of the fiscal impact of legislation before it is enacted. They should certainly make changes when the impact is not what is desired. What they should not be doing is playing games to make legislation appear to be better than it really is.

I do not see a simple solution for this problem. Perhaps a limit on the number of iterations of a bill that can be scored would (a) conserve CBO staff resources and (b) make gaming more difficult. However, it is hard to see how to devise and implement such a limit.

(*Part of my problem is that I reject statistical methods of determining government pay comparability in favor of the simple market test of looking at quit rates and application rates for government jobs.)

When someone asks for your support, it's natural to wonder, "Why do you need my support in the first place?"  Some answers are better than others.  If your friend asks you to pay for his lunch, "I was just mugged" is a better reason than "I already spent my whole paycheck on beer."  If your girlfriend misses your birthday, "My car and phone both broke down" is a better reason than "I forgot."  If a co-worker goes home early and asks you to cover for him, "I have the flu" is a better reason than "I want to play Skyrim." 

The key difference: If there are reasonable steps the person could take - or could have taken - to avoid his problem.  Your friend didn't have to spend all his money on beer.  Your girlfriend could have put your birthday on her calendar.  Your co-worker could wait to play Skyrim.  These steps may not be appealing, but they are reasonable. There are grey areas, but you can usually tell which is which. 

I propose to use the same standard to identify the "deserving" and "undeserving" poor.  The deserving poor are those who can't take - and couldn't have taken - reasonable steps to avoid poverty. The undeserving poor are those who can take - or could have taken - reasonable steps to avoid poverty.  Reasonable steps like: Work full-time, even if the best job you can get isn't fun; spend your money on food and shelter before you get cigarettes or cable t.v.; use contraception if you can't afford a child.  A simple test of "reasonableness": If you wouldn't accept an excuse from a friend, you shouldn't accept it from anyone.

If I sound harsh, notice: by my standards, many of the poor are clearly deserving: low-skilled workers in the Third World, children of poor or irresponsible parents, the severely handicapped.  Still, on reflection, many people we think of as "poor" turn out to be undeserving. 

Let's start with healthy adults in the First World.  Even the least-skilled full-time jobs pay more than enough for adults to comfortably support themselves.  In the U.S., the average income for janitors is about $25,000/year; the average for maids is about $21,000.  A household with one janitor and one maid averages $46,000, enough to put them at the 96^th percentile of the world income distribution - and well above the U.S. poverty line.  Even Americans below the poverty line typically possess a long list of luxuries that the Kings of France would have envied: 80% have air conditioning, nearly three-quarters own a car, two-thirds have cable or satellite t.v., one-third have a plasma or LCD t.v.  My point isn't that all healthy adults in the First World do enjoy such living standards, but that there are reasonable steps they can take - or could have taken - to do so.

 The same logic applies to everyone who used to be a healthy adult in the First World.  Were there reasonable steps you could have taken earlier to avoid poverty?  Sure.  The elderly could have saved more.  The sick could have bought insurance.  It's tempting to say, "When they were young and healthy, they didn't have the money!"  But didn't they have the money for cable t.v. and beer?

Some people think it's pointless to talk about desert.  I disagree.  If you're a libertarian who opposes any government spending on the poor no matter what, you should still consider desert when you give to charity.  Starving Haitian children really do deserve your help more than almost any American.  If you have a more expansive view of the proper role of government, you should still see a big difference between forcing taxpayers to help starving kids, and forcing taxpayers to help irresponsible adults.  If you've ever told a frustrating friend or relative, "It's your mess, you clean it up," you should see the injustice in forcing taxpayers to support undeserving people they don't even know.

The most important lesson, though, is that First World governments' priorities are upside-down.  The Third World contains hundreds of millions of deserving poor: desperate people who would love to work as a janitor for $25,000 a year.  If we owe charity to anyone, we owe it to people who struggle to earn a dollar a day.  But when First World governments hand out charity, the deserving poor in the Third World get next to nothing.  Foreign aid's about 1% of the budget.  Indeed, First World governments actively prevent the world's deserving poor from helping themselves: They make it illegal for them to move to the First World and accept a job from a willing employer.   Even if we owe charity to no one, the least we can do is stop kicking the world's deserving poor while they're down.

My wife, Rena Henderson, is a breast-cancer survivor and is active on the Susan G. Komen website. She wanted to write what follows below on that website but she decided that there's no point in doing so because the volume and nastiness on that site are too high. Lots of name calling, lots of people refusing to think about what others are saying, etc. So she posted it on Facebook. I read it and decided that it's worth posting here. It hits some themes that I've discussed in the recent past. Here it is:

Yes, the free and/or low-cost breast cancer screening that Planned Parenthood has provided, in part through grants from the Komen Foundation, is very valuable. I wish Komen had not withdrawn its funds, although I don't know what else they plan to do to help uninsured/underinsured women get potentially life-saving screening. Hopefully something good. However, I don't understand the narrow vision people have--i.e., that, somehow, Planned Parenthood is the only option. Granted, it's the best known and probably the most easily accessed. But there ARE other options. I just Googled "foundations that provide funds for breast cancer screening" and found many that I'd never heard of. In my own community, we have the Carol Hatton Memorial Fund. I donated to it yesterday. Why not find out if your community has such a fund and do the same? In the old days, we depended on the generosity of individuals. These days, we seem to expect either the government or one large organization like Komen to do it all. I wish the people who are spending their time flooding the Komen message boards and preventing women with breast cancer from getting the support they need would shut their mouths and open their wallets. If you can't afford a lot, then give a little. And for crying out loud, do a little research!

there just wasn't that much difference between the lifestyle of a highly influential attorney or senior executive of a corporation and people who were several rungs down the ladder.

I have more excerpts and my comments below the fold.

Much of the specialized quantitative information I need about the new elite's tastes and preferences exists, but I cannot get hold of it. Everybody who sells advertising has data on the demographics of consumer preferences...but such data are proprietary

Outside elite circles, there may be mild angst about whether children get into their first choice in the state university system, but no more than that. Most mainstream Americans lose no sleep whatsoever because their child's college is not in the top ten

In the early 1990's, Bill Gates was asked about what competitor worried him the most..."Software is an IQ business...Our competitors for IQ are investment banks."

it amounts to one of things that people are glad they have done, but did only because they had to

Beyond college, high-IQ people sort themselves into what Murray calls Superzips, which are zip codes that contain a concentration of people with high educational attainment and high income.

It is not a problem if truck drivers cannot empathize with the priorities of Yale professors. It is a problem if Yale professors [and others in the elite] cannot empathize with the priorities of truck drivers.

Murray argues that America as we know it depends on four founding virtues: marriage, religiosity, a work ethic, and honesty. He uses slightly different terminology, and along the way I think he sneaks in community engagement. That is, he praises social trust and social capital, but sometimes he treats those as independent virtues and at other times he treats them as if they were the product of religiosity and honesty.

As you may know by now, Murray tries to enliven his statistics by describing two quasi-fictional neighborhoods, Belmont and Fishtown. I think I would have preferred just a dry presentation of real data, because what I want to be able to quote hard facts, not stylized facts.

The Coming Apart story is that since 1963 a segment at the top has left the middle class behind and a segment at the bottom has become a permanent underclass. Murray does not use a consistent definition of the top segment from one part of the book to another. Are they the top 5 percent of the income/education distribution? Are they people who live in SuperZips? Are they the people of Belmont? It is hard to keep straight.

The bottom is defined somewhat more clearly. Murray includes: men who do not earn a decent living, defined as roughly $14,000 a year (the poverty line for a household of two); women who have children without ever marrying; and people of either gender who are "isolates," meaning that they belong to no churches, clubs, or other social organizations. Although the definition may be easier, the tabulation is difficult, but Murray makes a case that this lower tier is 30 percent of the population, or more.

He documents the decline in ethics at the bottom of his scale. For example, he points out that disability claims have soared even though the proportion of jobs that would give rise to disability has fallen and even though health care has improved. This indicates a decline in the work ethic (and, yes, he does address other potential explanations).

Concerning the decline in the work ethic, I found myself wondering about the impact of (a) marginal tax rates and (b) immigration. Because of the way many social benefits are tied to (low) income, the marginal tax rate for working must be pretty high. Maybe immigrants are doing jobs that "Americans won't do" because of this high marginal tax rate. (Of course, once the immigrants get more solidly situated as citizens and figure out the marginal tax rate, they too may stop doing these jobs.)

Murray's evidence for a decline in honesty is rather weak. He looks at crime rates (which reflect a thin sliver of the population) and bankruptcy rates. However, in a later chapter, he shows a dramatic decline in favorable answers to the question "other people can be trusted" in his artificial lower-tier community. That probably is the strongest indicator of a decline in honesty.

By this point in the book, I am starting to ask myself if Murray is not simply taking values that matter to him and decorating them with sociological jargon and statistics. This is something that social scientists on the left do all the time as they "diagnose" conservatives.

One of the questions that is always in the background in reading Murray is whether today's elite is truly more isolated than the elite of the country club in 1950 or the elite of the "better church" in 1850. Murray's best defense is a quote from Theda Skocpol's Diminished Democracy to the effect that in the 1950s elites participated in local clubs and organizations (think Rotary or Kiwanis) to which ordinary people also belonged.

Murray recycles a number of statistics from Robert Putnam's Bowling Alone that show major drops in civic participation (declining PTA membership, etc.). However, Murray sees civic participation alive and well in the top tier. Where it has fallen off a cliff is in the bottom tier.

Without using the term "externality," Murray makes a case that poverty per se is not a negative externality. However, he argues that the decline in the work ethic, honesty, marriage, and religiosity are negative externalities.

Murray's solution is what he calls a "Civic Great Awakening" led by the elite. He wants the elite to "preach what they practice." The way I would put it, using terms from Neal Stephenson's The Diamond Age, the Vickies should speak up for their values. (But what if the thetes resent this and push back?)

He thinks that the U.S. will step back from becoming a social welfare state that trades what Deirdre McCloskey would call its "bourgeois virtues" for a European system when we see what is happening in Europe. Hmm. Perhaps the left is going to say, "Oh, gee. Europe's troubles prove that we were wrong. We surrender." But I am not holding my breath.

My favorite sentence in the book:

How in a country where most people don't need a penny of income transfers to begin with, can we spend $1.5 trillion on income transfers and still have material want?

Not surprisingly, much political activity consists of trying to create, or keep, opportunities to collect economic rent. That's what lobbyists for various licenses, tariffs, tax breaks and subsidies -- from the sugar industry to Solyndra -- have in common.

I would like to know why you think this book is so extra-special. I read the first chapter for which you provided the link. It was well written, but I saw nothing there that I haven't read a hundred times.  I am a consequentialist libertarian myself, and I find the radical approach very unconvincing, especially when one considers some of the potential consequences when one takes such an absolutist view against government.

I can see how you might think Huemer is merely hewing to a standard dogmatic natural rights position, which has indeed been done a hundred times.  But he's not.  He starts from much weaker premises, along the lines of "You shouldn't coerce other people without a good reason."  And a prime example of  "good reason," for Huemer, is "There would be very bad consequences of not coercing."  He never claims that consequences don't matter.  His reply to the consequentialist defense of government is:

(a) The defense only implies the rightness of government coercion when the consequences of not coercing are in fact very bad.

(b) Almost everyone sees that many, if not most, laws don't actually prevent very bad consequences.

(c) The good consequences of government coercion in the remaining, controversial cases are greatly overrated.

One big problem with libertarian consequentialism is that it focuses almost exclusively on (c).  Huemer's insight is that you can get very far with (a) + (b) alone.

And if I am not convinced, someone who is very skeptical of 90% of the acts of government, all the more reason that your average statist (a majority of the citizenry) will reject these ideas out of hand.

Empirically, you're right.  Most people can't be persuaded.  I admire Huemer's book because would change the minds of reasonable, fair-minded people on many moderate points - and at least pique their curiousity about his more radical positions.

I presume you have read the whole book. Can you give us some more clues as to what Huemer says that is different from previous writers?

You presume correctly.  What's great about the book is that he grants the plausibility of many seemingly statist intuitions, avoids absurd absolutism and obscurantism, and still reaches strong libertarian conclusions.  I was repeatedly surprised by how far he gets without assuming anything controversial.

I have no interest in reading it if he doesn't have fresh ideas, even if it is very well written.

Consequentialists will be tempted to dismiss it as yet another dogmatic natural rights book.  Natural rights theorists will be tempted to dismiss it as confused consequentialism.  But both dismissals are wrong.  Huemer is doing something novel: Starting with pluralist common-sense morality and ending with radical libertarianism.

And I don't see how it could have any affect on the population at large in that case.

I doubt one philosopher can have much effect on the population at large no matter how fresh his ideas are.  What a philosopher can do is bend over backwards to persuade reasonable people who don't already agree with him.  Which is precisely what Huemer does.

Update: In response to M.R. Orlowski, there's still no official publication date.  I'm guessing early 2013.

Here's the link.

Topic: "Five Myths about Free Markets."

The truth is, members of the upper tribe have made themselves phenomenally productive. They may mimic bohemian manners, but they have returned to 1950s traditionalist values and practices. They have low divorce rates, arduous work ethics and strict codes to regulate their kids.

Brooks concludes,

I doubt Murray would agree, but we need a National Service Program. We need a program that would force members of the upper tribe and the lower tribe to live together, if only for a few years. We need a program in which people from both tribes work together to spread out the values, practices and institutions that lead to achievement.

By the time you read this, I hope to have gotten through a decent amount of Murray's book, assuming it's available for download.

A 'phony right'

Your article Saturday on CSU Monterey Bay students who are unhappy with a private company's inspections of the student housing they live in contains a telling quote. Student spokesman Michael Frederiksen states, "We all deserve safe and secure housing." But to say that someone deserves something is to say that others have a duty to provide it. Who has that duty? Frederiksen thinks that taxpayers owe it to him and his fellow students. But why do students' decisions to attend a heavily subsidized Cal State University automatically impose a duty on taxpayers who do not attend?

Frederiksen is advocating a "phony right." What's the difference between a phony right and a real right? A real right is, say, my right not to be murdered. The only responsibility that imposes on you and others is not to murder me. In other words, it's a responsibility not to do something. The "right" to good housing, though, is a phony right because it implies that someone else has a positive duty to provide it. And let's not hide behind government. The only way government can provide things is by forcibly taking from others.

David R. Henderson
Pacific Grove