Disaster Keynesianism -- Say something responsive for once!

Last day in Budapest for now, leaving in a few hours. But it looks like the topic of the day is the economics of Hurricane Sandy, and, as with any discussion of economics during a natural disaster, whether it will be "good for the economy".

Needless to say, this is a discussion that has happened several times already. Still, engagement with the other side's arguments is always good -- as long as you're actually, well engaging, rather than extending and reinforcing a non-responsive (or no-longer-responsive) point.

Which brings us to pseudo-contrarian Steve Landsburg's latest pseudo-contribution to the matter. He thinks he has an even more devastating critique of the "hurricanes can be good for the economy" by posing this:

ask your opponent whether it’s “good for the ants” when you put a stick down their anthill, wiggle it around and destroy their infrastructure. Go ahead and acknowledge that this can sure put a lot of ants to work.

Or, for that matter….

Ask if spilling ink on the living room rug is “good for your household’s economy” because of all the cleanup work you’ll do.

Of course, this doesn't actually address the Keynesian's central point, because their claim is that normally such acts are destructive, but need not be so when there are idle resources (found after a quick search).

To make absolutely sure I'm not misunderstood, please read these caveats if you plan on responding:

- I don't agree with they Keynesian "idle resources" argument, and have said as much before.

- I realize that Keynesians (and their critics) acknowledge that there are always better ways to do economic stimulus than a natural disaster -- just employ those otherwise-would-be-disaster-response-resources to do something that's not completely wasteful.

And yet there's no mention of relevance of idle resources in Landsburg's post, or in the army of back-slappers or hangers-on that dominate the beginning of the discussion. When we finally do, it's from critics who offer surprisingly good analogies, like commenter "Brian", who compares a stagnant economy to laziness ("akrasia") in an individual:

Suppose Billy Joe has been in bed for years. He’s overweight and unmotivated. His life appears to continue to spiral out of control as he watches reruns of every horrible show made from the 1970′s on. But when that ink falls on the floor, this finally gave him a reason to get out of bed and clean up the mess, and the mere activity of it kick started him into action of doing thins again, and even being motivated [sic]

And the defenders of the post (I guess *not* surprisingly) miss the point that of course making new windows is better than fixing broken ones, but that's not an option here. Landsburg himself does that in this comment:

... this is ridiculous, on Keynesian grounds or any other. If you believe it’s important to hire idle resources in order to “stimulate the economy”, then you don’t have to wait for a hurricane — you can hire people to build *new* bridges instead of having them rebuild old ones. The hurricane does not in any way expand your set of policy options; it only destroys stuff.

Except, of course, that it does expand your options, since by supposition, policy makers won't allocate funds for public works projects that build new windows, but will gladly fund projects to restore the windows that were broken in the disaster. (To re-iterate: I disagree that such public works funding -- whether for building or fixing -- is a good idea for "helping the economy"; this is simply about appreciation of one's opponent's arguments and responsiveness thereto.)

***
My point here is that if you want a really hot one-line zinger for why the "hurricanes good for economy" meme (in its most intelligent form) is wrong, you're going to have to do a lot more than just say that destruction is bad. No -- you're going to have to show why destruction is not "better than nothing" if its effect is to put (only) idle resources to use, thus giving people the dignity of a job and practice of their skills, when you don't have the option (for e.g. political reasons) of simply employing those idle resources to build on top of existing wealth.

What's that, you say? It's hard to give a concise, fun explanation of why that thinking is wrong? Well, it should be. Two-sided political debates tend to be like that. My shortest debunking is at least this long

Can you do better? Perhaps. But it won't be by invoking the ten millionth permutation of "destruction is bad, m'k?".

Sarcasm, applied properly

In case you've been living in a cave for the past few weeks -- or rely on the mainstream media for your news -- you've probably heard about climate scientist Joe Romm's expose of the shoddy work on global warming in the new book SuperFreakonomics by Levitt and Dubner. (Excellent compilation of the discussion in the blogosphere and some mainstream publications.)

Long story short, it's like the kerfuffle a while back between me and Bob Murphy about his own, um, imprecise commentary on global warming, except that the mistakes by Levitt and Dubner were much bigger, they got called on their shoddiness by a lot more people, and they continued to dig themselves much deeper that Bob ever tried to. To top it off, they deliberately misrepresented one of their experts (Ken Caldeira added the quote you see to his web page in contradiction of a position attributed to him in the book after he found out what was in it.)

(Note: this isn't about "rah rah let's cut carbon emissions" vs. "those durn whiny hippies". Regardless of your opinion on the issue, Levitt and Dubner's handling was extremely shoddy, and exactly the kind of thing that neither side should want, even and especially if you agree with their policy positions.)

With that in mind, take a look at this post on the Freakonomics blog, where Levitt complains that he's unfairly portrayed, in his university's alumni magazine, as someone not tackling the "big questions" and who's ruining economics.

Yep, this is one of those times when only Silas-grade sarcasm will do. Here's what I posted:

Well, it's a good thing you've moved on from sumo-wrestling into important issues like global warming, where you've carefully researched the issue, accurately represented expert opinion, and presented an even-handed, informative discussion of the issue that helps sustain the University of Chicago's excellent reputation.

Needless to say, the comment didn't make it through moderation.

By the way, it's my birthday today! Wish me a happy 28th if you haven't already!

"Cynical comment left elsewhere" of the day

I've been pretty fed up with the combined favoritism and outright stupidity in the financial system these days. This has led me to guess that any exchange involving a promise from a large, old (and therefore probably protected at all costs by our Overlords in Washington) corporation is going to, less and less often, be treated as something they have to *sigh* actually honor. With Sears and K-Mart reinstituting layaway (in which you make installment payments and then, after the last, receive the product), I figured this would be just another promise you can't trust anymore.

Well, a former happy customer of layaway services, calling herself "Princess of Swords", didn't seem to notice this trend and so disputed my prediction in a discussion on a Megan McArdle post. (UPDATE: previous link was to the wrong site.) Here, I post my response, in which you'll start to understand the basis for my pessimism:

******

Princess_of_Swords: Thanks for taking the time to detail your experience with the intricacies and standard practices prevailing with respect to layaway at the time you availed yourself of it.

Now I'm going to explain to you how it works in the real world.

In the real world, an obligation no longer means anything.

-GM was obligated to pay pensions. They didn't even bother to internally classify them on the same level as a bond, until forced to by law.

-Insurance companies are obligated to pay when disaster strikes. They fight as hard as they can to avoid paying, even for plain vanilla cases.

-Individual consumers buy things on credit, deferring the first payment for a long while. They are routinely caught not having saved for that big first payment.

-Securities brokers engage in naked short-selling of stocks, which obligates them to produce actual ownership of that stock at a later date. Yet as we've seen recently, they've ended up flooding the market with fake stocks and then casually aver that they "can't locate your stocks" and offer to reverse your purchase as if it were no big deal.

-Gift card issuers are unilaterally stealing money from gift card owners on the grounds that "they need it" because they're in financial trouble, despite having obligated themselves to treat the gift cards as equivalent to cash.

-AIG got a massive bailout from the Fed, but, we were assured, they would be obligated to pay a hefty penalty interest rate and start immediately and orderly unwinding their enterprise. Well, the Fed went back and cut their payments in exchange for nothing, thus debasing the Fed's assets (and thus the dollar). And AIG has done virtually nothing to liquidate its assets.

You get the point. I just don't care how you think things used to work back then. We are in a new world, where only us responsible commoners have to keep our word.

And even *more* GM ROFLcopters!

This is too rich. Daniel Gross of Slate writes in defense of propping up the Big Three automakers. But since Slate recently started putting links in the middle of articles instead of at the end, we see that right in the MIDDLE, they post a link to Gross's previous article from '03 where he REJECTED the claim that the auto industry was doomed. Check out these gems:

"...the Big Three enjoy remarkably large market caps: $21.5 billion for GM [now under a tenth of that -- SB].... Throw in all the money that has been lent to the companies, and you have to come to the conclusion that either there's an awful lot of stupid money invested in the survival of the U.S. auto industry or the declinists are mere alarmists."

"...the Big Three are unlikely to seal their own near-term doom for the sake of short-term labor peace. It's safe to assume that the companies will gain the upper hand in negotiations ..."

Yeah, why would unions shoot themselves in the foot? And why would GM have anything but a long-term perspective?

"Ford, as Moneybox has described it, is a profitable bank lashed to an unprofitable carmaker."

Now, without the profitable part!

"...it's hard to go out of business when you have a great deal of brand equity, ready access to the capital markets, and the potential to print money when you have the right product mix at the right economic climate."

I really have to hand it to Slate: highlighting an author's unflattering earlier work is quite a selfless, helpful act!

(Cross posted at the ever-more-foot-in-mouth Megan McArdle's blog.)

ROFL = rolling on floor laughing
ROFLcopter = internet meme alluding to mechanization of this phenomenon

Well, I guess I don't count as a libertarian anymore

Yesterday I was kicked off the private LibertarianForum Google Group and mailing list. The reason was that I had the audacity to remind other libertarians of the responsibility side of liberty (with respect to global warming), and for pointing out flaws in really stupid arguments against intellectual property (and, conversely, explaining how an IP-free system is vulnerable to Mises's economic calculation critique). The proverbial last straw was a discussion sparked by someone linking this TokyoTom post about Bob Murphy finally admitting, after being dragged kicking and screaming, to admit he misled readers in his op-ed, though of course he's not going to actually say it where any victims of his deception are going to see it.

The head of the list claimed that he was deluged with requests from people who were asking me to be removed, and who apparently lacked the guts and the brains to actually explain where my points were in error. I'm not going to name any names.[1]

Naturally, people are going to claim that, oh, it wasn't what I said, but my rudeness. This is ridiculous -- it's standard practice on the LibertarianForum list to use the exact same tone I did, as even my detractors readily admitted. A more plausible claim would be that the people there didn't like being uncomfortably reminded of the implications of their stated (though certainly not actual!) beliefs.

So why the title of this post then? I believe, after all, everything I did before. But look at it this way: time and time again, I see people nominally also "libertarian" reveal themselves to have been coming from completely different premises. I never imagined that I would see, for example, Bob Murphy take the attitude of, "Oh, did I destroy your land with my CO2 emissions? I got it! Here's the solution! Fix it your own damn self!" (Yeah, way to preach responsibility and universal adherence to basic morality there...)

There's only so many times I can see cases like that before the self-appellation "libertarian" obscures more than it clarifies.

So what to call myself now? One good option is Birchian, after Paul Birch (a former Anti-State Forum contributor), since I've been seeing my views more and more resemble his, especially in terms of focusing on whether the victims of one's actions have been adequately compensated.

Alternatively, I could -- gasp! -- call myself a mutualist as per the philosophy of Kevin Carson, my former nemesis. (As recently as July of this year he quipped that I couldn't grasp an argument even with velcro-covered mittens!) The reason for that term would again be because of my focus on the extent to which nominally "libertarian"-favored activities are in fact predicated on the state stepping in an exempting certain groups from having to actually bear its true cost.

Before inferring too much from this post, I ask that you heed this caution: There is a big difference between "Problem X is often overstated in an attempt to give politicians more power" and "Problem X doesn't exist." I certainly sympathize with those who have seen so many phony environmentalist rationalizations for statist measures that are thinly-veiled attempts to shut down markets, that they hear about Problem X and immediately view it as the former. But ask yourselves: has the tide turned to the point where it's more common to see anti-environmentalist arguments as thinly veiled attempts to shove onto other people, costs that the arguer should be bearing?

[1] Since a lot of you might be sketchy on terminology, a so-called "name" is a label used to refer to a specific instance of a proper noun. An example of a name might be Brad Edmonds or Max Chiz.

The Bob Murphy and Gene Callahan problem

If you've read their post about banning me, you may have by now a one-sided view of the dispute. I will explain here why I make so many posts on their blog that they find annoying. (some links missing and I apologize)

1) I have called out Bob on his deception of readers. As Bob admits here, his shameful op-ed was written to convince the public that carbon caps are necessarily stupid, a position he rejects. Now, when you are so misleading -- basically trivializing the suffering of hundreds of millions of people to justify why your gas should be cheaper -- yes, it will make you livid when someone points this out in front of others, and Bob's desire to ban me is a predictable manifestation this effect.

2) I regularly call out Gene on his selective invocation of rules of civility. Hey: having a civilzed discussion is great. But here's how Gene defines "civility":

Acceptable behavior:
-Lying about what someone believes (geo-engineering thread)
-Lying about the economics and morality of tradeable pollution caps (the op-ed above)
-Assuming the worst possible interpretation of any argument someone makes. (The discussion on the iMac and the "He must own the place" thread)
-Personal attacks, when Gene or Bob is making them. (apple thread and recent posts resulting in the ban consideration)

Non-acceptable behavior:
-Personal attacks, when Silas makes them.
-Asking for clarification (iMac thread)
-Suggesting that someone did in fact read a blog post just before submitting a full essay on it (in the case of Bryan Caplan's challenge)
-Mentioning that someone should have known something, given his job. (geo-engineering thread)
-Mentioning that someone know about the philosophy of others, given his job. (same)

Note here: Bob and Gene have repeatedly claimed that even when I do have a valid point, they dislike my posts because of the "tone". Well, I'll admit it: I do use a harsh tone, and I should. Their mistakes go well beyond the point where I can attribute it to mere stupidity or ignorance. They reflect a corrupted philosophy, one that says, "Whoa, you thought libertarians supported principled, private property rights? Hell no! We support cheap oil, first and foremost, even and especially if it permanently floods the residences of hundreds of millions of people. The right to slightly increased profits OBVIOUSLY supercedes the right not to have your homesteaded land permanently submerged."

When you have whored out your ideology, and so cheaply at that, a constant reminder from some, some ... nobody will put you into overdrive. It will cost you sleep. It will want you to shut up that voice in any way you can. Hence, the discussion of whether to ban me, which is where we are today.

I am appalled at the way libertarians have reacted to the global warming issue. While libertarians like Bob may have made valid cases why right now carbon caps can't be justified, in doing so, many of them have tipped their hands as to what philosophy they were really following the whole time -- and it's not pretty. If you were confused as to why I've been so harsh, you no longer are. And it is instances like these that give serious substantiation to the claims of those like Kevin Carson who say that many libertarians are more interested in shoving costs onto others than in seriously establishing principled private property rights.

In Bob's defense, he has written a paper on how a private law system would handle the current global warming evidence we've faced. I find it unacceptable (as I do Gene Callan's attempt to solve the economic calculation problem with protests), but we can save that for when it's publicly available. For now, I just want you to note Bob's prioritization: first, ridicule all attempts to define clear rights in the atmosphere. Then, much later, if ever, try to sort out what the libertarian position on atmospheric rights actually is. Oh, and support atmospheric socialism until a serious problem comes up.

Your taste for alcoholic beverages is a lie

UPDATE: I perform this blog post on my YouTube site.

I've previously blogged about my non-addiction to alcohol, and inability to taste its greatness. It has long perplexed me how people can get so hyped up about how this or that beer or wine has this or that subtlety in its taste that makes it so enjoyable and the best drink you could ever possibly have. And, at the same time, I have accepted, with open arms, the claim that certain people like alcohol because of its psychoactive effects, like "relaxation" and drunkenness.

I've long held the theory that people only make these claims about the super-awesome taste of alcoholic beverages as a pretense for their desire to get drunk (or relaxed, etc.), and I've been roundly ridiculed for it. However, unlike socially-mandated beliefs that people readily admit are garbage in private, people actually claim, in private, to enjoy the taste of their favorite alcoholic drinks and, amazingly, retain that belief to arbitrarily deep levels of "belief in belief" recursion. They see no sense in which they are faking.

But now, I have cracked the code. I know how to get people to recognize their own self-deception about the supposed greatness of the taste of their favorite wine or beer. It goes like this: if you genuinely enjoy the taste of your favorite alcoholic drink, then you should still want to drink it more than any cheapo kiddie drink, even if all it has is the taste -- that is, if it no longer had the psychoactive effects.

So, I did a quick sample among the co-workers of mine who have claimed to, like, seriously, I promise, be wine or beer connoisseurs and are perplexed at how there could be no alcoholic beverages that I like the taste of. I asked them the following question:

Assume that alcoholic drinks had no psychoactive effects whatsoever: that they don't make you relax, or open up, or get drunk, anything like that. And assume no drink has any impact on your body either, including health (such as making you fat). That is, assume all that there is to a drink is its taste. Then, comparing on taste only, would you rather have your favorite alcoholic drink, or a milkshake?

Every single one of them preferred the milkshake -- even the one beating down the door to get me to start liking wine. And I strongly suspect (and would like to test) that this holds across the general population as well.

The upshot is that I'm right: that the whole practice of rating and having a taste for alcholic drinks is one big sham, and people have extraordinary abilities to deceive themselves on the issue -- they are completely oblivious to the lie they are telling, well beyond the obliviousness they can show on any other issue.

So what would make people put on such an act? Simple: they need a rationale to convince legislatures not to ban alcoholic drinks, as they ban every single other mind-altering substance. They need to show how it's a "tradition", how it's "cultured", how it's a fundamental part of our society, how oh oh oh, I just gotta have my glass of wine with dinner, it's just so mature of me. And the crazy thing is, from my perspective, they don't even need these rationales. As I see it, your decision to drink alcohol is between you and your god (or Dionysus, as the case may be). Even if the most extreme claims about the dangers of drugs are correct, that would at best justify restricting their use to highly monitored "padded room" equivalents in which such consumption can take place, not outright banning.

And to top it all of, I bet the response I'm going to get to this post is a big, "Duh. Now shut up about it."

So, I find myself asking this question yet again: is the world crazy, or just me?