Can You Tell The Difference Between Economics And Politics? (@EconTalker, @EconLib, #economics, #politics)

These days, it is trendy to practice political punditry under the guise of a thoughtful economist handing out enlightened “economic policy” suggestions.

A recent case in point is the interview with Harvard’s Ed Glaeser with EconTalk’s Russ Roberts, wherein Glaeser shared the following ideas about reforming city governance with respect to “historic preservation districts”:

In the case of the city historic preservation districts I would probably replace the ever-increasing swatch of territories–15% of the land area in Manhattan south, in the bottom half of Manhattan excluding Central Park as an historic preservation district right now–and areas go into historic preservation districts but they rarely come out of them. So, it seems like it’s going to be an ever-increasing swath of the city. I don’t much like the idea of cities being museum pieces. There are a few which are appropriate, like Bruges, but I think it’s good that cities change and that they develop new space, combination of new activities and people. So, I would in terms of preservation–my father was an architectural historian so I do really believe in the value of preserving some old, beautiful buildings–but I would have a fixed number of the total number of buildings that they are able to set aside as being preserved rather than allow them to just keep on getting new areas for preservation districts.

Here is what an economist would say:

Land and property use should be conditioned on “most highly valued use”, as evidenced by voluntary exchanges agreed to by participants in the property market. For some, purchasing historic properties for the purposes of preserving them, perhaps for commercial exploitation as a tourist attraction or simply to be kept out of the hands of the public or those who might privately redevelop them, might be the “most highly valued use” for which a person would exchange their wealth to control these properties. For others, tearing the historic buildings down or otherwise modifying them from their original, historic state, may be the “most highly valued use”, perhaps for the purpose of providing new housing or areas of commerce and industry.

There is no moral reason why future generations should be beholden to the land-use decisions of ancient generations, and even if there was, it is not an economist’s place to discuss such topics.

Notice– Glaeser said none of this, and in fact violated the statement at the end while complementing it all with a bit of arbitrary personal psychological projection, the idea that because his father was an architectural historian he has some kind of special need or special knowledge into the value of preserving historic properties that necessitate the violence of the State to protect such value impositions.

In fact, the closest Glaeser came to say anything “economic” about the subject was his attempt to calculate a “fixed number of total buildings” which would be available for historic preservation. But even here, his theorizing falls flat on its face, for Glaeser does not explain how his arbitrary calculus would be superior to the outcomes of voluntary exchanges between market participants.

How many is a “fixed number”? What constitutes a “building” for purposes of this policy? Which “buildings” shall be a part of this “fixed number” and which shall remain outside it, and how are such decisions evaluated in an objective way?

Such policies are an invitation for gross, arbitrary and wild government intervention and special interest group politicking that Glaeser claims earlier in the interview he is strongly against. Yet, he opens the intellectual door to them in moments like these when he places his economist costume over his political self and attempts to perpetrate a theoretical deception.

The Value Of Hierarchical Supremacy Directly Proportional To The Base’s Dependency (#psychology, #politics)

The only reason the position at the head of the herd is worth fighting for is because the rest of its members will mindlessly follow.

Video: Giraffes fight to the death to take place at the head of the herd

Brilliant Economist Proposes Bold Solution To Education Crisis From Comfort Of Keyboard (@noahpinion)

I saw this on the Atlantic Monthly’s website, written by an economist (/physicist? /finance professor? /midget wrestler?) named Noah Smith. He came up with a plan for solving the nation’s college education crisis. I am so out of touch, I didn’t even know the nation was having a college education crisis! There are too many crises today, it’s hard to keep up with them all so I hope you’ll forgive me.

Anyway, I read through it and my take-away was that economists like Noah Smith have given up on the whole “voluntary social cooperation” style of getting shit done and have decided it’s more effective to just crack a few whips and get people on board with their objectives that way:

So here’s my idea for increasing the supply of college: A system of federal universities. Currently, we have no such system, but it is not unconstitutional. After all, the federal government runs the United States Military Academy at West Point. My idea is simple: The federal government provides start-up funding for a large number of new universities, offering attractive salaries to professors.

I just realized something. Racism isn’t unconstitutional, but if we don’t amend the Constitution, pronto, someone might decide that the fact that racism isn’t unconstitutional is reason enough to be racist.

Why federal universities instead of state universities? State spending is likely to focus on the existing state university systems. But that will have a limited impact on total college availability, for two reasons. First, increased state funding for existing universities may simply displace alumni funding or tuition funding. That could lower the net price of college, but would have a limited impact on enrollment. Second, there are many geographic areas that don’t yet have elite universities, or only have a few (Ohio comes to mind, as well as much of the Southwest and the Pacific Northwest). Federal universities could fill these gaps. Finally, it’s very difficult to coordinate policy between states, and if we want to create new universities on a large scale, only federal government can do it. [bold emphasis added]

Damn straight! We don’t want any of these puny, fancy-pants small scale universities. If we’re gonna get serious about this crisis, we gotta put our big boy pants on and hire the big guns, FedGov-style!

My take? Dragooning national labor and capital into massive social development projects at the federal level is a great idea, Noah. And I agree, public goods, like education and pyramids, can’t be built any other way.

It’s like I’ve always said– if it’s good enough for the Pharaohs, it’s good enough for our education system!

If you enjoyed this article, you might also enjoy Noah Smith’s glowing praise of a man who is “an important and positive figure in America today,” Michael Moore. I love being helpful.

*UPDATE* (11/19/12)

I stand corrected! A reader is also a writer and e-mails in a correction:

It is unconstitutional for the government to be racially biased–See the Equal Protection Act of the 14th Amendment. It’s why affirmative action is getting to the court so much these days.

I think I might still have a technical case in saying that the Average Joe isn’t prevented from being racist by the Constitution itself, but this is close enough that I might as well retract that little bit of wit.

Politicians Open The Oil Supply Floodgates Post-Sandy; Lessons Learned Or Lost? (#economics)

In “Flared Tempers Over Gasoline Lines Prompt Supply Waivers” at Bloomberg.com, we learn that politicians at the state and federal levels of government are temporarily suspending existing rules, regulations and taxes to increase the supply of gasoline  available in storm-stricken areas while simultaneously lowering the price:

The Obama administration said today that it waived the Jones Act, which requires ships moving goods between U.S. ports to use U.S.-flag vessels. The action, which applies only to refined products, will increase the number of tankers available to transport fuel from Gulf Coast refineries to the East Coast.

In New Jersey, Governor Chris Christie suspended requirements that restrict filling stations from buying gasoline from out-of-state suppliers, while New York Governor Andrew Cuomo waived taxes and regulations to accommodate more fuel tankers and process them more quickly.

To the average observer, it may seem that these powerful political leaders are able to work economic miracles. Merely by suspending laws, a vast new supply of much-needed gasoline appears out of thin-air to come gushing forth to the masses, alleviating them of their post-hurricane energy stress.

But did these poles really create these refined oil products themselves? Did they create them and summon them into existence through sheer force-of-will and a few expert penstrokes?

No, of course not! This supply of energy existed the whole time, but it wasn’t able to service the people of the affected East Coast regions because rules, regulations and taxes, imposed and enforced by these very politicians, had forcibly prevented and impeded its efficient and cost-effective arrival!

This is an excellent example of Bastiat’s emphasis on the unseen. When the storm arrived and devastated the normal supply-demand equation, it became transparently obvious to everyone that these interventions impose real, dangerous costs to everyone in society and it became politically necessary to suspend them for the benefit of all. But the costs of these programs and policies do not come and go with the storms– they are with us all of the time, imposing unseen costs because the “margin” of economic activity that is thus proscribed is further and further away from the central attention of the average person.

Because these policies impose costs and undue social burdens all of the time, not just in the aftermath of natural disasters, it follows that if and when — though “temporary” increases in government power almost always prove to be anything but, temporary decreases in government power rarely become permanent — these rules and regulations are reimposed, their costs will return as well. And this means everyone will be the poorer for it.

Who will remember this hands-on lesson with the real economic and social costs of government regulations which senselessly restrain trade and commerce? Who will cry out in anger that the politicians deem it necessary to hurt them once again, having tasted this bit of freedom? How many will stand up and ask, “Why? Why are you doing this to us?”

My guess is almost no one, and the few voices which may sound will quickly be muffled, condemned and ultimately ignored.

Videos – Not The Lesser Of Evils, Just Evil (#voting, #democracy)

This November 6th, enjoy your fleeting and delusional sense of empowerment!

It is imperative that you validate CFR Candidate A or CFR Candidate B (or, alternatively, Bilderberger A or Bilderberger B) on Election Day!

Isn’t it interesting how an election, even when “your side” wins, never manages to bring the lasting sense of security and satisfaction it always promises and which you always believe it will bring?