Insta-Millard Pundit, economics edition: Adam Smith was a bleeding heart liberal

December 21, 2013

In a new book, author Jack Russell Weinstein argues that we should pay more attention to Adam Smith’s first book, The Theory of Moral Sentiments,  and not allow Smith’s humanitarian pleas for good community be hijacked by libertarians, conservatives or liberals.

Adam Smith’s Pluralism, Jack Russell Weinstein, Yale University Press, 360 pages

Adam Smith, updated. Illustration by Michal Hogue.

Adam Smith, updated. Illustration by Michal Hogue.

A review of the book explains further, at American Conservative, “Adam Smith, Communitarian“:

Weinstein builds upon Smithian harmony, explaining that while life is not always commercial, it is always communal. Community, in turn, derives its lifeblood from “imagination,” because imagination creates the capacity for sympathy. Unlike Kant and other Enlightenment thinkers, Smith “presumes human difference” as a necessary and inherent aspect of civilization, rejecting the Kantian ideal of “noncontextual normativity.” Smith recognized that cultural, temporal, and social differences shaped norms and values, making it impossible to create a single, all-inclusive norm of human behavior. This is why sympathy is so important. It offers a means that is natural to the human condition—our desire to commiserate with our fellow man—to bridge the gap between our differences.

Smith believed that “political society is not derived from a social contract,” according to Weinstein. Instead, society is a natural expression of what it means to be human. The state of nature for Smith is one of community, and the ultimate questions related to human society are questions of morality and virtue, not economics and politics. Thus, a broad, morally robust education rooted in a particular community is essential to forming sympathetic individuals. While Smith did not idealize the role of education—it could not completely eliminate human selfishness and vanity—he believed it had the power to “direct vanity to proper objects” and to “convert competing passions into a harmonious character.”

[The blog post’s headline should be read with more than a hint of sarcasm; hate to have to explain that.]

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Posted by Ed Darrell

Milton Friedman really said higher wages make a nation prosperous?

December 18, 2013

Chicago University and Nobel-winning economist Milton Friedman, inspecting fruits of free markets.

Chicago University and Nobel-winning economist Milton Friedman, inspecting fruits of free markets. (Photo found at Crooks and Liars, with quote of Friedman’s explaining the benefits of things like that Earned Income Tax Credit)

In Free to Choose, Milton Friedman wrote:

But when workers get higher wages and better working conditions through the free market, when they get raises by firm competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody’s expense. They can only come from higher productivity, greater capital investment, more widely diffused skills. The whole pie is bigger – there’s more for the worker, but there’s also more for the employer, the investor, the consumer, and even the tax collector.

That’s the way the free market system distributes the fruits of economic progress among all people. That’s the secret of the enormous improvements in the conditions of the working person over the past two centuries.

What would Friedman say about higher productivity and greater capital investment, an increasing pie, when the increases are denied to the worker, and the employer, and the consumer, and the tax collector?  Somehow, I think even Mr. No-government-regulation would cry, “Foul!”

Heck, that’s a good argument for raising the minimum wage, and for fixing income inequality.

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Posted by Ed Darrell

Quote of the moment repeat: Robert C. Lieberman, “Why the Rich Are Getting Richer: American Politics and the Second Gilded Age”

February 20, 2013

What? You missed this, on February 20, 2011? Well, here it is again. Please pay attention this time.

The U.S. economy appears to be coming apart at the seams.  Unemployment remains at nearly ten percent, the highest level in almost 30 years; foreclosures have forced millions of Americans out of their homes; and real incomes have fallen faster and further than at any time since the Great Depression.  Many of those laid off fear that the jobs they have lost — the secure, often unionized, industrial jobs that provided wealth, security and opportunity — will never return.  They are probably right.

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

And yet a curious thing has happened in the midst of all this misery.  The wealthiest Americans, among them presumably the very titans of global finance whose misadventures brought about the financial meltdown, got richer.  And not just a little bit richer; a lot richer.  In 2009, the average income of the top five percent of earners went up, while on average everyone else’s income went down.  This was not an anomaly but rather a continuation of a 40-year trend of ballooning incomes at the very top and stagnant incomes in the middle and at the bottom.  The share of total income going to the top one percent has increased from roughly eight percent in the 1960s to more than 20 percent today.

This what the political scientists Jacob Hacker and Paul Pierson call the “winner-take-all economy.”  It is not a picture of a healthy society.  Such a level of economic inequality, not seen in the United States since the eve of the Great Depression, bespeaks a political economy in which the financial rewards are increasingly concentrated among a tiny elite and whose risks are borne by an increasingly exposed and unprotected middle class.  Income inequality in the United States is higher than in any other advanced democracy and by conventional measures comparable to that in countries such as Ghana, Nicaragua, and Turkmenistan.

Robert C. Lieberman, reviewing the book Winner-Take-All Politics:  How Washington Made the Rich Richer — and Turned Its Back on the Middle Class, by Jacob S. Hacker and Paul Pierson, Simon and Schuster, 2010, 368 pages.  $27.00.; review appears in Foreign Affairs, January/February 2011, pp. 154-158.

More:

Two years later, even more:

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Posted by Ed Darrell

Ben Stein off the rails again

October 10, 2012

Ben Stein is nominally a smart guy, with a degree in economics and a law degree and enough moxie to wangle his way into the movies . . . lives a sort of a charmed life.

Ben Stein

Ben Stein

Which may be good on one hand, because he runs off the rails sometimes.  Bad on the other hand if others follow him off the rails, assuming he’s smart and knows where he’s going.

Stein’s latest droppings at American Spectator include this gross misunderstanding of the drive for justice and equality (all links added here):

But right now, which is Sunday, I am looking in my favorite book, Bartlett’s Familiar Quotations, for a quote by Hayek about how you cannot clearly associate economic effects with economic causes because so many different circumstances are at work each time.

I cannot find that quote in this edition — maybe a 1976 edition — but I did find a better one from Hayek which I paraphrase here: the attempt at social justice causes more misery than almost any other factor in human life (again, a paraphrase).

Yes. The Communists. The Jacobins. The Communards. The Maoists. The Khmer Rouge. They all caused untold suffering in the phony and vain attempt to make everyone equal… phony because it was just a fig leaf for terrible people to seize power.

We are not supposed to be all equal. Let’s just forget that. We are supposed to have equal rights under law. If we do that, we have done enough. If we try to engineer outcomes, if we overturn tradition to make everyone the same, we ruin society. If we upset tradition to allow for an equal shot at the starting gate, everyone wins, except for the charlatans and would be dictators.

Yet another reason to be a Republican. Give everyone an equal shot — but do not require equal outcomes or even roughly equal outcomes by law. That way lies catastrophe.

Every soul deserves a shot at a Cadillac, but not everyone should be guaranteed a Cadillac… that way lie the tumbrels and the guillotine.

Other groups in history caused untold suffering in the phony and vain attempt to keep everyone from having equal rights.  What’s his point, that he’s forgotten history and has so far avoided a visit from Santayana’s Ghost?

Consider the anti-Jacobins, the monarchy and strict class system against which the French revolted — better?  The Jacobins themselves were mostly upper-class, including a future King of France among them, and the club being composed almost completely of wealthy people or merchants on the rise, quite like a modern Republican-leaning country club.  Does Stein really know this history?

Communards organized and rebelled against a patrician government (think Occupy Wall Street with real venom, tired of eating cats and rats, and with the support of hungry front-line soldiers who sympathized with them).  They did not perpetrate misery in support of social justice, not so much as 18,000 Communards were murdered to put down the rebellion and  continue the social injustice, several thousands more were executed, and a few thousands were “deported” to prison colonies in New Caledonia.  Stein seems to have this history exactly backwards — it was the GOP-style Bismarck-Farve alliance that delivered misery to perpetuate inequality.

One might make a claim that the Maoists in China worked for a degree of a classless society, but not on the scale and not with the success of George Washington — which is probably a clear view into why Mao’s successors beat such a hasty retreat to more capitalistic-bent programs, but still leaving the peasants in the countryside and especially coal miners on the short end of the rights stick.  It’s simply fatuous to claim the Khmer Rouge worked to make people equal under the madman dictator Pol Pot.  It’s  a good, short debate line, but it doesn’t stand up to scrutiny of history — and remember, it was the communist North Vietnamese Army who chased Pol Pot out of power and restored order to Cambodia.

Consider the Roman Empire (which oddly is more akin to modern U.S. Republicans than the Roman Republic), or Czarist Russia before the Bolsheviks.  It’s not like the failed attempts by so-called communists brought down societies that honored equality for citizens.  Stein has the telescope of history by the wrong end, which means he really can’t see what he’s claiming to describe.

Did Hayek really say that working for social justice is error?  I doubt it.  He wrote about wrong-headed attempts to impose social justice, like keeping everyone from having a Cadillac, through formal legal means, or through informal, economic and class means such as closing off opportunities for the poor and middle class to rise.  Stein, a Jew with an Ivy League education, should be sensitive to the closing of opportunities, and appreciative that opportunities are generally open in this nation.  Religion once operated as keys the doors to Ivy League schools, to the detriment of Jews; once recast, those keys provided a door to economic and intellectual achievement for many Jews.

Stein’s column is titled “A Reason to Be Republican.”  Instead he outlines reasons to question the current Republican platform and candidates for the presidency, U.S. Senate and U.S. House of Representatives.  Somehow he confuses Republican policy with the phrase “Equal Justice Under Law,” the words engraved on the West Portico of the U.S. Supreme Court.  It’s useful at such times to remember the building was completed in 1935, and that its design and construction was supervised by Chief Justice William Howard Taft, the former Democrat.  It’s also useful to remember that the GOP has fought against those words ever since, but especially after Richard Nixon determined to jettison GOP dedication to civil rights for African Americans, women and Hispanics, in pursuit of electoral success with the votes of bigots from the South angry at the Democratic Party for having successfully pushed the Civil Rights Act of 1964 and the Voting Rights Act of 1965.  Stein wrote speeches for Nixon.  He should remember that history better, or study it more if he can’t recall.

Especially not the rich should be guaranteed a Cadillac by the government.  They already have the money to get what they need; but having money should not confer rights to take everything while walking on the heads of the middle class and poor.  Everyone deserves a shot, Stein said.  I wish he’d support that claim with his actions, his political contributions, and his endorsement of candidates.

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Posted by Ed Darrell

Taking from the poor to give to the rich, 1979-2007

August 14, 2012

For honest seekers of economic truth, the question about what went wrong that led to the recent great economic collapse has deep roots — but not complicated roots.

Our increases in wealth came at the expense of the poor and especially middle class, and they went to the tiny fraction of people at the very top who now own much of your nation.

Redistribution of wealth, Paul Krugman from CBO figures

Paul Krugman’s graphic of redistribution of wealth in the U.S., figures from the Congressional Budget Office

Our most vocal Nobel-winning economist, Paul Krugman noted at his blog:

The top quintile excluding the top 1 percent – which is basically the abode of the well-educated who aren’t among the very lucky few – has only kept pace with the overall growth in incomes. Just about all of the redistribution has taken place from the bottom 80 to the top 1 (and we know that most of that has actually gone to the top 0.1).

Much of our current difficulty in climbing out of recession can be told from this chart.  People who would normally be spending money for food, gasoline, clothing, cars, home repairs and incidentals, simply don’t have the money to spend.  Consequently, demand is down.  Consequently, the top 1% will not invest their money in the U.S. to meet that non-existent demand.  This is the ultimate failure of “supply-side” economics writ large.  The very rich can consume only so much.  Additional wealth stashed away, even in domestic accounts, will not be spent for more food, or more housing, or more transportation.  Even the very rich can eat only so much, travel so much, and few of them behave exactly like Saddam Hussein, with palaces they will never even see.  Meanwhile, the bottom 80%, which includes the middle class, lacks money to spend on education, housing, durable goods, and transportation — despite needing more of all of those things.

Below the fold, the CBO report’s highlights press release, from the Congressional Budget Office.

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Posted by Ed Darrell

Cold War propaganda: “Make Mine Freedom,” 1948

October 10, 2011

Designed to promote democracy versus communism, and free enterprise (capitalism) over communism’s totalitarian governments then in vogue in the Eastern Bloc, this film was targeted to young college students who did not have the opportunity to fight for freedom in World War II.  “Make Mine Freedom” was produced by Harding College in 1948, preserved by the Prelinger Archives.

Is it a bit heavy handed? Is this an accurate portrait of economic or political freedom?  Are the characters in this animated short movie quite stereotyped?

In Blogylvania, the movie has been seized on as a sort of parable for our times.  Those bloggers who say it is a parable see a lot more in the movie than I do.  Almost any Lewis Hine photograph of child labor should be a good rebuttal.  Some say it seemed far-fetched in 1948 (then why did anyone bother to make it?).  It’s much, much more far-fetched now.

It’s a good departure point for discussions about propaganda in the Cold War.

Harding College resides in Searcy, Arkansas, and is affiliated with the Church of Christ.  It is now Harding University.

6 Comments | Cold War, Communism, Economics, Free market economics, Freedom - Economic, Freedom - Political, Propaganda | Tagged: , , , , , , , | Permalink
Posted by Ed Darrell

Quote of the moment: Robert C. Lieberman, “Why the Rich Are Getting Richer: American Politics and the Second Gilded Age”

February 20, 2011

The U.S. economy appears to be coming apart at the seams.  Unemployment remains at nearly ten percent, the highest level in almost 30 years; foreclosures have forced millions of Americans out of their homes; and real incomes have fallen faster and further than at any time since the Great Depression.  Many of those laid off fear that the jobs they have lost — the secure, often unionized, industrial jobs that provided wealth, security and opportunity — will never return.  They are probably right.

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

And yet a curious thing has happened in the midst of all this misery.  The wealthiest Americans, among them presumably the very titans of global finance whose misadventures brought about the financial meltdown, got richer.  And not just a little bit richer; a lot richer.  In 2009, the average income of the top five percent of earners went up, while on average everyone else’s income went down.  This was not an anomaly but rather a continuation of a 40-year trend of ballooning incomes at the very top and stagnant incomes in the middle and at the bottom.  The share of total income going to the top one percent has increased from roughly eight percent in the 1960s to more than 20 percent today.

This what the political scientists Jacob Hacker and Paul Pierson call the “winner-take-all economy.”  It is not a picture of a healthy society.  Such a level of economic inequality, not seen in the United States since the eve of the Great Depression, bespeaks a political economy in which the financial rewards are increasingly concentrated among a tiny elite and whose risks are borne by an increasingly exposed and unprotected middle class.  Income inequality in the United States is higher than in any other advanced democracy and by conventional measures comparable to that in countries such as Ghana, Nicaragua, and Turkmenistan.

Robert C. Lieberman, reviewing the book Winner-Take-All Politics:  How Washington Made the Rich Richer — and Turned Its Back on the Middle Class, by Jacob S. Hacker and Paul Pierson, Simon and Schuster, 2010, 368 pages.  $27.00.; review appears in Foreign Affairs, January/February 2011, pp. 154-158.

More:

2 Comments | Books, Business, Democracy, Economics, Free market economics, Freedom - Economic, Freedom - Political, Government, Great Depression, Liberty | Tagged: , , , , , , , , , , , , , | Permalink
Posted by Ed Darrell

TARP saved my nation, and all I got was this bitter, cold tea party

October 5, 2010

Remember TARP, the Toxic Asset Relief Program?

Oh, that’s right — we hate it.  Big hole in the federal budget and all.

Then you should be dancing that it died Sunday night, right?  Yeah, that’s right:  TARP expired.

But, maybe we should be lamenting its passage, and celebrating it.  It ended up costing us almost nothing but the problem of having Tea Party, ignorant ingrates involved in the campaign.  It might even have turned a profit.  In any case, it didn’t leave a big hole in the federal budget, and there is little doubt that it saved us from the Greater Depression.

See the story at NPR:

What do we do with the end of TARP?

And what do we do with the news that TARP will not have cost anything like the $700 billion we thought it would? What if it really cost $50 billion, or less?

What if, in the end, the Toxic Asset Relief Program so controversial at birth and vilified throughout its two years of life turns out to have turned a profit for the government and the taxpayer?

We — most of the news media this is — simply don’t know what to do with this news.

The suggestion that TARP did not blow a hole in the federal budget potentially blows a hole in some other presumptions as well. Economists will argue for years over the necessity of TARP, and the rest of us can argue over the bonuses investment bankers still got (and continue to get).But we won’t argue about whether the government could or should have done more to prevent the collapse of the credit markets and the mass failure of banks in 2008. Because the government did do TARP, and those other things did not happen. We did not go back to 1929 or worse. And, unlovely as it may be, TARP remains the closest thing we have to an explanation for that.

Still, the expiration of the program as Sunday turned to Monday passed largely unremarked. And insofar as the media have noticed the story of TARP’s apparently much-reduced cost, that tale has been anything but ballyhooed.

(For an exception, see the package offered Sunday evening by Guy Raz and the crew at Weekend All Things Considered.)

On the last business day before TARP expired, The New York Times and The Washington Post did report the much-reduced cost figures — mentioning the potential for the program to actually make money for taxpayers in the final accounting.  But the Times put the story in the Business Section, and the Post played it on the Federal Page.

What other “common sense” delusions will misdirect this year’s election vote?

What thanks do we get?  What thanks do we give?

17 Comments | Accuracy, Elections, Free market economics, Freedom - Economic, Freedom - Political, History, News, Newspapers, Politics, Polling and Public Opinion | Tagged: , , , , , | Permalink
Posted by Ed Darrell

We need free marketeers in the White House

February 23, 2010

Who said this?

We are pro-growth. We are fierce advocates for a thriving, dynamic free market. But we do think that there have to be some rules of the road in place in the financial sector that will create an even playing field and allow businesses to raise capital and consumers to buy products with confidence.

Coming out of this past decade, there has been a sense on the part of a lot of middle-class families that they have been left behind, even when we were expanding. And I talked during the campaign about the need for us to restore a sense of balance to the compact between business, government, and employees all across the country.

If businesses are making record profits but employees are seeing their wages flatline—and in fact, incomes decline over the course of the decade—that puts enormous strains on families. It puts, I think, a dampening effect on consumers who help drive this economy. We are going to be better off if everybody feels like they have got a stake in growth and innovation moving forward. And I think that balance got lost.

Now, making sure that we restore that balance without tipping too far in the other direction in ways that squelch innovation and investment is going to be an important challenge, and one that we take very seriously. But the important message I would have for the business community—and this is something that I emphasize every time I have lunch with CEOs, and we have had a lot of them in here—is we have every interest in you succeeding.

Another big hint below the fold.

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Posted by Ed Darrell

Social studies train wreck at Texas State Board of Education: Live! A Nation at Risk

January 13, 2010

Steve Schafersman will live blog the hearings on social studies standards before the Texas State Board of Education (SBOE) today, at Evo-Sphere.  Schafersman is president of Texas Citizens for Science, and a long-time activist for better education in Texas on all topics.

Rapid updates or live-blogging should be available at the blog of the Texas Freedom Network, TFN Insider.

It’s Item #6 on the SBOE agenda, with a title that tips off the trouble:

Item #6 — Public Hearing Regarding Proposed Revisions to 19 TAC Chapter 113, Texas Essential Knowledge and Skills for Social Studies, and Chapter 118, Texas Essential Knowledge and Skills for Economics with Emphasis on the Free Enterprise System and Its Benefits.

Schafersman e-mailed an introduction to the meeting:

Some say the Social Studies public testimony by the religious right, liberals, etc., then the SBOE debate, motions to amend, votes, etc. is a bigger circus than adopting the science standards. Judge for yourself. You can watch the entire circus, carnival, and sideshow on the webcast video at http://www.texasadm in.com/cgi- bin/tea.cgi

This is Texas democracy in action, when sullen and tight-lipped State Board members listen to public testifiers for 3 minutes each and profoundly ignore them since they already know what they are going to do. But I, at least, feel better after speaking so I don’t later feel responsible for the crappy amendments, changes, and policies that come out of this horrible Board because I did nothing. The proposed Social Studies standards written by the panels composed of teachers and professors are excellent (when have I heard this before), but the SBOE can’t wait to shamelessly impose their own Religious Right agenda on them.

You’ll recall that SBOE has at every possible turn disregarded the advice of famous and serious historians, respected free-market-advocating economists, geographers and educators on these standards.  Economists, for example, want Texas kids to learn about “capitalism,” since that’s what it’s called by economists and policy makers, and colleges.  SBOE thinks “capitalism” sounds too subversive, and wishes instead to require Texas kids to learn about “free enterprise” instead.

‘A rose by any other name’ you think, until you start thinking of how Texas kids do on standardized tests, college admission exams, and the punchline on the joke, about Texas kids being told not to study capitalism.  No siree, no capitalism in the fictional home of J. R. Ewing, never mind the real-life capitalists like T. Boone Pickens or H. Ross Perot (Jr. and Sr.).

In Dallas, the city prepares to name a street after Cesar Chavez, the great Hispanic union organizer and advocate for working Americans.  In Austin, SBOE works to strike all mentions of Chavez, because they dislike the politics of heroes of our ethnic minorities (soon to be a majority in Texas).  In Washington historians and policy-makers follow the legacy of Thurgood Marshall, the great civil rights attorney and first African-American to sit on the U.S. Supreme Court.  In Austin, SBOE thinks Marshall should be left out of history books.  Many of us suspect he’s anathema to the white right-wing in Austin:  A smart, successful and noble man of color.

Mel and Norma Gabler died years ago, but their history lingers in the halls of education policy in Austin.  It’s Shakespearean.

This is a massive battle.  David Barton worked for 30 years to gut history standards nationally to teach a history of America that never was, and as the official religionist appointee of the right-wing SBOE members, he stands on the brink of accomplishing much of the revisionism he’s advocated.  See the Texas Tribune story on the issue, “Hijacking History.”

Generally we shouldn’t negotiate with terrorists, Ronald Reagan said.  At the SBOE, we’ve put the terrorists in charge of history and economic curricula — if not the terrorist themselves, at least the terrorists’ camels’ noses.  Texas’s process has earned flashing red-light, claxon-sounding repeating of the words of Ronald Reagan’s Commission on Excellence in Education:  If a foreign nation did this to us, we’d consider it an act of war [excerpt below the fold].

Make no mistake about it.  SBOE’s goal is to roll back any of the reforms left from Reagan’s Commission’s work.  Our nation is more at risk from foreign competition than ever before.  SBOE plans to give away a bit more of our future to China, this week.

Our saving grace is the general incompetence of SBOE members to make significant reform in Texas’s wounded schools, reeling from unworkable and damaging requirements under the No Child Left Behind Act and a testing program that severely limits what can be taught in any social studies course other than those bastions of learning left in International Baccalaureate programs and Advanced Placement courses (estimates are that between 5% and 10% of Texas high school students can take one of those good courses).  Whatever silliness, craziness or lies SBOE orders to  be taught, it can’t be taught and tested well.  Inertia preventing change works to save America in this case.

In business, most CEOs at least appreciate the value of having good front-line employees who are the ones who really deliver the service or product and produce the profit of the enterprise (even if they don’t treat those employees so well as the employees deserve).  Education may be the last bastion of flogging the horse that should be pulling the cart instead.  In this case, having well-trained teachers in the classroom is the last hope for Texas, Texas parents and Texas students — and Texas’s economic future and future in liberty.  Teachers are the last defense of freedom in Texas.  Today SBOE will make another assault on the ramparts that protect the teachers in their work.

When will the French fleet arrive to lend aid?  Will it arrive at all?  And if it arrives, will Texas kids know better than to shoot at the ships?

Carol Haynes, who claims to have a doctorate in some discipline, told the board how to rewrite the standards to completely change the history of the civil rights movement in their last hearing on the topic.  According to Haynes, apparently, Dr. Martin Luther King, Jr., was opposed to civil rights and Barry Goldwater was in favor — the Board didn’t offer to correct her revisionism, but instead asked her to go beyond her three minutes in fawning acceptance. This appears to be SBOE’s approval of various Other Universe hypotheses offered by Star Trek, allowing any damned thing at all to be taught as history (except the right stuff).  Haynes is scheduled to testify again (#128), probably very late at night, but perhaps in time for the 10:00 p.m. Texas television news broadcasts.  Oy.

Excerpt from the Report of the Commission on Excellence in Education, A Nation at Risk, below the fold.

ae_summer2015mehta_opener-1100x736

Cover of A Nation at Risk: The Imperative for Educational Reform, the 1983 report that started the education reform mess. AFT graphic.

Stand up for your nation, it’s children and future; sound the alarm:

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2 Comments | Economics, Education, Education quality, Free market economics, Freedom - Economic, Freedom - Political, Geography - Economic, Geography - Physical, Geography - Political, History, Politics, Social Studies, State school boards, Testing, Texas, Texas Citizens for Science, Texas Freedom Network, Textbooks | Tagged: , , , , , , , , , , | Permalink
Posted by Ed Darrell

Trouble at Texas Board of Education: Social studies

January 11, 2010

Here is a news rundown of stories on the Texas State Board of Education, who have been planning for a year now to mess up social studies standards for Texas public schools, this week.

Get on your horse and warn Texans:  The Idiots are coming to get your good schoolbooks:

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5 Comments | Capitalism, Economics, Free market economics, Geography - Economic, Geography - Physical, Geography - Political, History, History Revisionism, Social Studies, State school boards, Texas, Texas Citizens for Science, Texas Education Agency (TEA), Texas Freedom Network, Texas history, Textbook Selection, Textbooks | Tagged: , , , , , , , , , , | Permalink
Posted by Ed Darrell

Al Gore shows how green investing works

November 3, 2009

Then Vice President Al Gore campaigning in Des Moines, Iowa, November 25, 1999.

Then Vice President Al Gore campaigning in Des Moines, Iowa, November 25, 1999.

Among the more amusing about-faces in conservative knee-jerk politics is conservative criticism of Al Gore for being a successful investor.

No, I’m not kidding.

Back in April, Gore testified to a House Energy and Commerce Committee in April — one of the committees where Gore was a shining star when he was a Member — and he ran into a challenge from Tennessee Rep. Marsha Blakburn who tried to play bad cop in grilling Gore about his investment work.  Since leaving politics Gore has worked to put his money where his advocacy is, backing green industries and energy efficiency projects. Blackburn is a Republican representing Tennessee’s 7th District. Blackburn appears not to understand how cross-examination works.

In most discussions I’ve had on warming issues over the past two months, advocates for doing nothing almost always bring up Gore as as “profiteer” for investing in green businesses.

It’s as if conservatives and Republicans have forgotten how business works in a free-enterprise system, and they think that free enterprise is tantamount to communism.

T. Boone Pickens used to be a favorite witness for Republicans to call at Congressional hearings.  Pickens was, and still is, a staunch advocate of free enterprise, and he advocates a lot less regulation than most Democrats want.  Then Pickens’s investments, especially his vulture investments in dying companies where he’d sell off the assets and put the company out of existence, were touted by Republicans as indication that Pickens is a genius.

A hard look at Gore’s investments shows him to be nothing more than a free-enterprise advocate who leads the way in green investments.  He has made huge gambles in businesses that warming skeptics claim won’t work — and his investments have tended to pay off, to the great consternation of warming do-nothings who understand markets.

This story in the New York Times suggests just how well Gore has done, and how much his leadership in investing might benefit us.  It’s worth bookmarking for your next discussion on what we should do about global warming — because you know somebody will try to make it about Al Gore.  It just galls the heck out of conservatives and anti-science folks that Gore is right so often, and that he is such a practitioner of the Scout Law.

Anti-pollution is good business.  Reducing the dumping of poisons into the air and water makes sense, and it makes a better economy in the long run.  Sometimes it makes a better economy in the short run, too.  Gore stepped into the marketplace, a very capitalist act.  His investments paid off, demonstrating that markets do work, and demonstrating that green business is smart business.  What are Republicans and conservatives thinking in taking after Gore’s business success?

Oh — Boone Pickens? He used to have an office in Trammell Crow Tower when our offices at Ernst & Young LLP were a floor or so away.  We shared elevator rides many times, and he is in person as gracious and smart as he appeared in those Congressional hearings years ago.

His money today?  He’s investing in wind power, because he thinks we need to act now to reduce dependency on oil imports.

Maybe Republican anti-green politics is coming home to roost.

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4 Comments | air pollution, Business, Business Ethics, Capitalism, Climate change, climate_change, Free market economics, Global warming, Politics, Science | Tagged: , , , , , , , | Permalink
Posted by Ed Darrell

Insurance experts: Get ready for climate change now

July 12, 2009

Climate change denialism is an astounding ball of contradictions and conundrums.

For example, while most denialists claim to be free-market devotees, they pointedly ignore market indications that climate change is real, aggravated by human actions (and inaction), and that humans can do anything about it.

Look at the insurance industry.  I’ve noted often that, here in Texas, we pay higher premiums on home insurance because climate change has produced worse weather, which costs insurance companies a lot.  Insurance company actuaries are paid to predict the future, reliably.  If they fail, insurance companies die quickly.

Weather-related catastrophes, such as wildfires, are posing a serious threat to the insurance industry worldwide. (Photograph source: John McColgan, Bureau of Land Management, Alaska Fire Service.) Caption from Berkeley Lab Research News

Weather-related catastrophes, such as wildfires, are posing a serious threat to the insurance industry worldwide. (Photograph source: John McColgan, Bureau of Land Management, Alaska Fire Service.) Caption from Berkeley Lab Research News

The “market” girds itself to fight climate change that governments are not going to move fast enough to prevent.  This will cost you a lot of money.

A good place to go for information about climate change and how it affects is the Lawrence Berkeley Laboratories, a group that studies the future and is no longer limited (if it ever was) to nuclear future issues.

Insurance in a Climate of Change, The Greening of Insurance in a Warming World, is loaded with information about insurance industry calculations of what the future is, and how insurance companies might and should react to the changes.

How relevant are weather-related natural disasters for insurers, and is there any evidence that the situation is worsening?

Globally, we are seeing about $80 billion/year in weather-related economic losses, of which $20 billion (about a quarter) are insured. This is like a “9/11” every year. Weather-related losses represent about 90% of all natural disaster losses, and the data I just cited do not include an enormous amount of aggregate losses from small-scale or gradual, non-catastrophic events (e.g., lightning, soil subsidence, gradual sea-level rise).

Inflation-adjusted economic losses from catastrophic events rose by 8-fold between the 1960s and 1990s and insured losses by 17-fold. Losses are increasing faster than insurance premiums. The insured share of total losses has increased dramatically in recent decades, and variability is increasing (a key trouble sign for risk-wary insurers). Weather-related catastrophes have clearly visible adverse effects on insurance prices, and availability. Of particular concern are the so-called “emerging markets” (developing countries and economies in transition”, which already have $375 billion per year in insurance premiums (about 12% of the global market at present, but rising). They are significantly more vulnerable to climate change than are industrialized countries. Emerging markets are the center of growth for the industry, yet they are also the center of vulnerability.

Increased exposures are surely influenced—and no doubt heavily in some areas—by rising demographic and socioeconomic exposures. Yet, the rise in losses has outpaced population, economic growth, and insurance penetration. The science of “attribution analysis” is still in primitive stages, and thus we cannot yet quantify the relative roles of global climate change and terrestrial human activities. Some have prematurely jumped to the conclusion [PDF] that demographic trends explain the entire rise in observed losses. In the year 2005, three independent refereed <!– –>scientific articles drew linkages between hurricane trends and climate change.

Denialists claim weather stations are badly-placed, and so we need not worry about climate change since warming can’t accurately be measured — never mind the worldwide rise in temperatures of atmosphere and oceans.   Denialists claim that the greenhouse effect cannot be blamed on carbon dioxide emissions since carbon dioxide is such a small proportion of the gases in the atmosphere, apparently wholly unaware of the greenhouse effect in atmospheric gases, or unaware that only a thin pane of glass makes a greenhouse work.  Denialists claim that polar bears do not decline precipitously, yet, so all wildlife will be unaffected – nevermind the dramatic shifts in migration patterns of birds and migrating mammals, and the dramatic shift in the arrival of spring.  Denialists claim that Boston Harbor has survived 300 years of human development, so all harbors can survive any increase in ocean levels, nevermind the pending disasters of islands sinking out of site and destroying entire nations in the South Pacific, and never mind the drownings in Bengla Desh at every cyclone.

Most denialists rent apaartments or own homes.  Denying the insurance increases will be more difficult, though I fully expect Anthony Watts and Co. will deny that the insurance company actions and studies of global warming are warranted or accurate.

Is there any good news in all of this?

By all means. Insurers need to look no farther than their roots as founders of the original fire departments, early advocates for building codes and fire safety, etc. That is to say that insurers’ history is all about risk management and loss prevention. The same thinking can apply in the case of climate change. Just as insurers fought fire risks through encouraging fire safety, better modeling, and fire suppression, so too can they be part of the climate change solution. This can take many forms, ranging from providing new insurance products (e.g., for carbon trading or energy savings insurance [PDF]), to promoting energy-efficient and renewable technologies [PDF] that also help prevent everyday losses, to engaging in the broader policy discussion on climate change. Insurers can also be part of improving the underlying science of climate change, modeling, and impacts assessment. We maintain an extensive compilation of examples of how leading insurers are stepping into the arena in a constructive manner.

Alas, there is no insurance against the dithering of climate change denialists.

Go, with all thy internet getting, get thee wisdom.

14 Comments | Accuracy, air pollution, Capitalism, Climate change, denialism, Disasters, Economics, Environmental protection, Free market economics, Freedom - Economic, pollution, Science | Tagged: , , , , , , , , , , , | Permalink
Posted by Ed Darrell

Economics: Tracking layoffs

January 28, 2009

Economics students doing reports or projects on employment or unemployment rates?

Need something depressing?

Check out Layoff Daily.

Let’s hope they run out of news, very, very soon.

Tip of the old scrub brush to Californian in Texas.

Leave a Comment » | Accuracy, Capitalism, Capturing history, Economics, Free market economics, Government, Labor and unions, Student projects | Tagged: , , , , | Permalink
Posted by Ed Darrell

Christmas in October in Congress: Be grateful

October 2, 2008

Senate conservatives, probably hoping to derail the bill, posted the full text of the “bailout” bill today.  It’s a grand gesture.  The bill has turned into a real Congressional “Christmas Tree” bill, with some little bauble to meet the needs of everyone.  I think it was Marketplace that noted earlier today it even includes a provision killing the excise tax on arrows of a particular kind, a tax that probably should have been killed a long, long time ago.

I’m sure you can find something to complain about, and much to be happy about.  The text is posted in .pdf form, so you can search it for specific words.

You might search for “executive compensation,” for example, and find starting on page 102 that Congress has stripped out the tax exemption for high executive salaries and other compensation over $500,000 annually, for executives in “troubled” companies.  In short, Congress has cut the pay of executives at the companies who will be saved from bankruptcy by this bill.  That could not have happened any other way.

Wankers who wail about how business in Congress is conducted, those same wankers who claim they can clean up Washington merely by stopping “earmarks,” will fume.  With luck, perhaps, those wankers who also happen to be Members of Congress will vote against this bill despite their constituents’ needs being met directly by it.  With more luck, their opponents in the election will figure that out and make a campaign issue.  With just a little bit more luck, some of these wankers will lose their seats.

Better they lose their seats than America loses its ass.  (Apologies if your sensitive eyes were offended.)

Real public servants — “politicians” in the spat-out views of crabby people — had their way with the bill that President Bush was too lazy to make workable.  (I don’t blame Treasury Sec. Henry Paulson — he’s a wheeler dealer, a man who probably understands the markets, but not a politician who can make Congress go.  It’s not really all his fault the other bill didn’t pass.)  The real politicians loaded this bill with actions that should have been taken months or years ago.  These actions had no chance in the current Congress, with Republicans holding a large enough minority to stop legislation simply by refusing to work on it, and willing to do so in the hopes they could claim it was the Democrats’ fault.

America will not be crucified on a cross of Republican intransigence.  There’s a goody for everybody.  Everybody should take their goody and rejoice in it.

I hope Americans can figure out who to thank, and will thank them.

Leave a Comment » | Economics, Free market economics, Law, Politics, U.S. Senate | Tagged: , , , , , | Permalink
Posted by Ed Darrell

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