Random Thoughts
In rural and suburban towns, why are street signs green? Often times the background of these signs, from the vantage point of a driver, are trees. In the spring, summer and early fall, that background is thus green. Now most drivers who are on the lookout for street signs are those reading directions and/or those who have little idea where they are going. So their focus is primarily on locating and reading the signs, as opposed to paying attention to the road and its surroundings. So wouldn't it make sense for these signs to be in red or another contrasting color so it would be easier for the driver to locate?
Protectionism vs Racism, continued
In his comment on my most recent post, Rob hints at an issue I feel I should have addressed in my post.
When we talk about state-compelled racism or protectionism (versus individual passive or aggressive stances), it is necessary to point out that the structure of the modern state lends itself very easily to international protectionist policy. This is not the case for state-compelled racism. For though it can be easily be mandated domestically (see slavery, Jim Crow laws, etc...), internationally it simply falls under the category of xenophobic protectionism. I don't know if Rob was arguing from this angle, but if he was, I find this argument more compelling than if it were to come from the individual passive or aggressive view. On the state level, comparing racism and protectionism as I was was a bit of an apples to oranges argument.
That being said, I have trouble buying Rob's externality argument. He is more or less advocating sanctions. I don't think this is sound trade policy and am not aware of many instances in history where growth and progress were the direct result of economic sanctions. My study of history, especially of 20th century history, has led me to believe that the more one opens one's borders the better off country will be in the long run.
But aside from us haggling over the economics, does Rob's argument suggesting that if Country A refuses to trade with Country B because A thinks B's domestic policies are reprehensible, they are doing the morally conscionable thing, hold water?
I don't know, but I think it's an interesting take. I'm going to mull it over for a bit and see what I can come up with.
Is Protectionism Worse Than Racism?
This Steve Landsburg post got me thinking about the above question (note: I have not read the column the said post is based on). I think if you were to ask a random sampling of (reasonable) Americans if racism was "bad", they would almost all say yes. On the other hand, if you were to ask the same sample if protectionism was "bad", I wouldn't be surprised if it was split down the middle, or even in favor of "no". So why is this?
As Landsburg points, racism and protectionism are simply two forms of discrimination; one is based on, well, race, and the other regional affiliation. Now Landsburg claims that his analogy isn't perfect because protectionism by necessity forces itself to act on another. I don't think this is true as I believe one needs to clarify the setting in which the policy is practiced. For instance, if I was a regular person who happened to be a protectionist to the extreme, I would buy a parcel of land in Montana and fend for myself beholden to no one. If I was the same person, but a racist to, say black people, I would attempt to find a community where no black people would ever be found. I could see if Landsburg was making an opportunity cost argument about protectionism (my withdrawal from society takes my skills from society and thus forces more people to take up more of a burden, as well as takes away any potential benefits I may have provided), but I didn't get the impression that was what he was referring to. Besides, one could probably make a very similar argument about the effects of racial discrimination.
But I think the real issue at hand is it worse for government to be protectionist or racist. As government has a monopoly over the use of force, its actions in the area of discrimination are far more powerful than any private entity.
(Yes, I know if an influential CEO is a protectionist or racist he is going to affect a significant number of people with his discriminatory policies, but in his case it would be a trade-off as he would be enduring the cost of significantly limiting the size of his potential resource pool. Government faces no such cost).
So, is it worse for government to implement racist policies or protectionist policies?
It's a moot question in my opinion. Both are stupid policies, and both are immoral policies. I don't believe either provide any benefits (except to certain special interests, but that's a topic for another day).
Yet that brings us back to our second and third questions. Why would a majority of people say racism is a bad thing, but protectionism not? Is there a discernible difference between the two that makes one worse than the other?
My guess is that is a combination of our [American] view of American History as well economic ignorance.
Breaking Bad - Episode 5
When Season 3 of "Breaking Bad" premiered I wanted to do an episode recap each week. Unfortunately I found that I don't really have the time to do so, at least to the level of quality I aspire to. Luckily, Hunter Stephenson of slashfilm.com has been doing this for Season 3, and has been doing a hell of a good job. So my plan is to link to his recap each week and offer some of my thoughts/observations as well. Here is the link to last Sunday's fifth episode, "Mas" (for recaps of episodes 1 -4, please see the following links, respectfully, here, here, here and here.
Some thoughts on Episode 5:
-I thought there were a number of nice directorial touches throughout the episode: the wooden beam dividing the screen in half at the dinner scene, separating Walt from Skyler and Walt Jr., then Walt and Skylar, and ultimately Walt and the baby from Skylar; the towel separating Skylar's feet from Ted's heated floor (Natasha Vargas-Cooper felt it was one of the many insinuations of hell in the episode; I feel it was more of a symbol of temptation for Skylar for which life she is going to choose; Jessie smashing Walt's windshield (remember, Jesse indirectly caused Walt's windshield to be crushed last season, all while they were passive-aggressively fighting. Now Jesse directly smashed the windshield; foreshadowing a climatic clash between the two?)
-I feel Gus is often wearing yellow; an illustration of his cowardly nature/potential back-stabbing ways?
-NVC felt Gus' tempting of Walt was similar to Satan tempting Christ in the desert. I like this interpretation, though I think Eve and the apple is a more appropriate allusion. Walt is Eve, Gus is the Serpent, the lab is the great desire/temptation, and the United States government is God. That's probably too simple though.
-When David Simon talks "The Wire", he often invokes the idea of Greek tragedy, in that post-modern institutions take the place of the gods and that the human characters have no control over their tragic future. I think "Breaking Bad" is proving to be a wonderful contrast to "The Wire" as it is proving to be the modern Shakespearian tragedy. In it we see character after character slowly but surely succumbing to their own hubris and in the end, self-destruction.
-In my eyes, the primary themes of this episode were temptation and inadequacy.
Ezra Klein on Alleged Goldman Fraud
If you want to better understand the SEC fraud charges against Goldman Sachs, Ezra Klein does a nice job summing it up:
Confused about the SEC's fraud filingagainst Goldman Sachs? You're probably not alone. Let's try this two ways.
First, let's play it straight: Goldman Sachs let hedge-fund manager John Paulson select the subprime-mortgage bonds that he thought likeliest to explode and put them into a package called Abacus 2007-AC1. Paulson, who guessed early that the market was heading for a crash, wanted to bet against these bonds. But he needed someone on the other side of the bet. So Goldman went out and found him some suckers, or, as Goldman called them, "counterparties." Many of them were Europeans.
But here's the rub: Goldman didn't tell the counterparties that Paulson had picked the bonds. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party,” said Robert Khuzami, the director of the SEC’s division of enforcement.
Another way of think about it comes from the Washington Independent's Annie Lowrey, who analogizes it to a housing sale. Imagine a broker shows you a home. It looks good to you. Looks like the other homes, in fact. But when you buy it, it turns out that the foundation is cracked and the roof leaks and the neighborhood is full of crackhouses.
How can this be? You got the home appraised! And your broker knows all about homes!
Well, it turns out that your broker was working for the seller, who did the appraisal himself. And the seller had bet a bookie that whoever he sold the home to would move out within a year, which and your broker knew that but never told you. In this analogy, as you've already guessed, the broker is Goldman, the seller is Paulson, and the buyer is the counterparties.
Please note that these are charges, not yet determined fact.
More Bootleggers and Baptists. Or Just Bootleggers.
Russ Roberts on US sugar quotas and imports. The comments section is worth reading as well.
One of the books I'm currently reading is Bastiat's Economic Sophisms. Very early on Bastiat makes the (not original) point that production is not an end in and of itself but is a means for consumption. For example, sugar is not produced because it is enjoyable to make or because it "creates jobs" or for any other production-based reason. It is manufactured because there is significant demand to consume it.
Now if consumption is the end, it should be done in the most efficient manner possible so that costs are reduced and prices go down. There are many obstacles to achieving such a process, but some are more avoidable than others. Tariffs and subsidies should be some of the more avoidable obstacles.
Unfortunately our political system makes the abolition of said policies nearly impossible. As long as hypocrites like Michelle Bachmann are the ones making the rules, you can be sure all sorts of coercive government actions will be taken to maintain the status quo.
One of the books I'm currently reading is Bastiat's Economic Sophisms. Very early on Bastiat makes the (not original) point that production is not an end in and of itself but is a means for consumption. For example, sugar is not produced because it is enjoyable to make or because it "creates jobs" or for any other production-based reason. It is manufactured because there is significant demand to consume it.
Now if consumption is the end, it should be done in the most efficient manner possible so that costs are reduced and prices go down. There are many obstacles to achieving such a process, but some are more avoidable than others. Tariffs and subsidies should be some of the more avoidable obstacles.
Unfortunately our political system makes the abolition of said policies nearly impossible. As long as hypocrites like Michelle Bachmann are the ones making the rules, you can be sure all sorts of coercive government actions will be taken to maintain the status quo.
Decriminalization of Drugs Going Mainstream?
I caught the end of Charlie Rose on Bloomberg earlier this evening, and I found the final three minutes very interesting. The topic was the State of Latin America and the panel was the Chair of NYU's Latin America History Department, the Dean of International Studies at Columbia, a policy wonk for a think tank devoted to Latin American studies, and a former high-ranking Costa Rican official (I apologize for not remembering names or details 100% accurately).
As was to be expected, there was disagreement among these men on a litany of topics. Yet when Rose brought up "non-State players", as I believe he so aptly put it, there was universal agreement among the panel that the War on Drugs was an absolute failure, needed to be amended, if not shut down, and that it was the single most devastating policy Washington, D.C. had enacted on Latin America in the past forty years.
Obviously such things won't happen for many years, if they happen at all. But it is encouraging to see such well-respected intellectuals of various ideologies and backgrounds all taking this position.
Race to the Bottom?
From David Henderson of Econlog:
Throughout the discussion about the bill, various proponents said that the law would immediately prevent insurance companies from denying coverage to children based on pre-existing conditions. And it does. What, apparently, it doesn't do is require insurance companies to cover children. At least that's what some insurance companies are reputed to be saying. Having heard this, Obama appointee Kathleen Sebelius wrote a threatening letter to the health insurance companies' trade association.
Interestingly, various Democratic Congressmen expressed outrage at the insurance companies for reading the law carefully and trying to figure out what they are and are not required to do. There's no report that the Congressmen are angry at themselves for their carelessness.
This is an isolated issue, so I don't want to make too much of a big deal over it. But I do think this story illustrates a couple of key points about regulation in general.
My thoughts circle around Hayek's Knowledge Gap. Hayek's critique of central planning stated that it was impossible for a small, selected group of "enlightened" individuals to possess the massive amount of knowledge necessary to effectively and efficiently "plan" an industry (obviously a very poor summary on my part).
I think the intuitive points of this theory are very obvious and quite convincing, from a basic common sense perspective. What is even more interesting though, in my view, is that in today's health care system, which is very much a top-down, centralized regime, we have a tug-of-war between knowledge and power. In other words you have a couple hundred of legislators with the most power but least knowledge, followed by legions of bureaucrats with less power but more knowledge, finally ending with health care professionals, mostly private sector, with the least power but the most knowledge. So, in essence, you have this bizarre power/knowledge paradox where those who understand the system best are more or less the slaves of very naive politicians with very bad incentives.
I think what this will do will create a long-term race to bottom for health. At least that's what the systemic incentives in place tell me what will happen. You will have episodes like the one above ("Yes, we have to cover children with pre-existing conditions, but where does it say we have to cover children at all?) or simply a decrease in quality because the best and brightest will not have the power incentive (autonomy) to match the knowledge they possess and the cost it took to attain that knowledge.
Like with all complex pieces of legislation, the unintended consequences, the Unseen as Bastiat said, are very difficult to foresee and account for.
Throughout the discussion about the bill, various proponents said that the law would immediately prevent insurance companies from denying coverage to children based on pre-existing conditions. And it does. What, apparently, it doesn't do is require insurance companies to cover children. At least that's what some insurance companies are reputed to be saying. Having heard this, Obama appointee Kathleen Sebelius wrote a threatening letter to the health insurance companies' trade association.
Interestingly, various Democratic Congressmen expressed outrage at the insurance companies for reading the law carefully and trying to figure out what they are and are not required to do. There's no report that the Congressmen are angry at themselves for their carelessness.
This is an isolated issue, so I don't want to make too much of a big deal over it. But I do think this story illustrates a couple of key points about regulation in general.
My thoughts circle around Hayek's Knowledge Gap. Hayek's critique of central planning stated that it was impossible for a small, selected group of "enlightened" individuals to possess the massive amount of knowledge necessary to effectively and efficiently "plan" an industry (obviously a very poor summary on my part).
I think the intuitive points of this theory are very obvious and quite convincing, from a basic common sense perspective. What is even more interesting though, in my view, is that in today's health care system, which is very much a top-down, centralized regime, we have a tug-of-war between knowledge and power. In other words you have a couple hundred of legislators with the most power but least knowledge, followed by legions of bureaucrats with less power but more knowledge, finally ending with health care professionals, mostly private sector, with the least power but the most knowledge. So, in essence, you have this bizarre power/knowledge paradox where those who understand the system best are more or less the slaves of very naive politicians with very bad incentives.
I think what this will do will create a long-term race to bottom for health. At least that's what the systemic incentives in place tell me what will happen. You will have episodes like the one above ("Yes, we have to cover children with pre-existing conditions, but where does it say we have to cover children at all?) or simply a decrease in quality because the best and brightest will not have the power incentive (autonomy) to match the knowledge they possess and the cost it took to attain that knowledge.
Like with all complex pieces of legislation, the unintended consequences, the Unseen as Bastiat said, are very difficult to foresee and account for.
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