A Course on Integrating Economics and Philosophy
In May, our friends at the Objective Standard Institute will be running a course on how to integrate the free market economic ideas of Henry Hazlitt with Ayn Rand’s philosophy of Objectivism. Hosted by economics professor Raymond Niles, the course will teach:
Why production and trade are fundamentally driven by reason and self-interest—and why grasping this principle is essential to making the moral case for capitalism;
How supply and demand jointly determine market prices, and why establishing and maintaining freedom for this “pricing mechanism” to work is in everyone’s self-interest;
Why coercive policies, such as wage controls and tariffs, harm all parties involved—employers and employees, job-holders and job-seekers, businesses and customers, exporters and importers;
What free-market banking is, why it is in everyone’s self-interest, and why government intervention in banking is morally and economically disastrous;
Why free markets result in better and safer health care, food, travel, education, etc.
If you want the most powerful tool in the world for advancing freedom and capitalism, this course is for you. By integrating the principles of economics with those of Objectivism, you will equip yourself to think, write, and speak in support of freedom with greater confidence and efficacy.
Full scholarships are available to students and under-30s. Full or partial scholarships may also be awarded to those with financial difficulties. To apply for the course and submit a scholarship application, just follow this link.
That public choice concept gains another proving
A proof as in a test of the veracity rather than an insistence upon it:
Specifically, “bad” outcomes, such as apartment blocks being built (which locals oppose) or school closures, are significantly less likely in neighbourhoods where politicians from a local ruling party live (compared with areas where local opposition politicians live).
The effect is large: when a party wins power it leads to a 19 percentage-point fall in the chance of proposed school closures in areas where politicians from that party live.
The authors say this is a sign that favouritism drives decisions and surprising to find in Sweden, with one of the world’s lowest corruption levels. Some might now want to break out the champagne when an MP moves next door but I’m old fashioned. Maybe it shows why we should care about them failing to live up to important ideals of public service, even if they’re not technically corrupt.
Public choice economics is simply the observation that politicians and their bureaucrats are humans like the rest of us. As such they are incentivised by their own self-interest along some spectrum of purely selfish to enlightened.
The corollary of this contention being true is that we should give politicians - and bureaucrats - minimal control over our lives so as to reduce the portion of it subject to their self-interest. That is, minarchy is the solution to the problem that we are all human, yea even those who rule over us.
Put not your faith in central government
We’re told often enough that government must intervene, take charge, because of market failure. Part of this is simply because the general conversation misunderstands what economists mean by market failure. Which is not that all flavours of all markets have and will fail to deal with a particular point or problem. Rather, that markets as currently constituted aren’t doing so.
Thus we get Nick Stern’s statement that climate change is the world’s largest market failure ever. His point being that carbon costs and prices are not in market prices, they are externalities to the market processes. As his Review then goes on to insist the solution is not then to use non-market processes. It is to lever the externalities into market prices and so use market processes to solve the problem. Market failure is not, in this and many other insistences, a declaration that markets fail, it’s that they don’t exist and must be created. The same is true, for example, of dealing with the commons problems of fisheries through individual transferable quotas, one of the few things known to actually solve the problems.
Along with this is insufficient consideration of government failure. Even in those cases where markets don’t work and cannot be created or adapted to do so it is not therefore true that government will. Government has its own modes and methods of failure. Consider, say, water provision to First Nations in Canada:
Amid mounting frustration, Whetung and other Indigenous leaders have launched national class-action lawsuits against the federal government. Arguing the federal government failed to provide clean water and forced communities to live in a manner “consistent with life in developing countries” they are suing the government for C$2.1bn (US1.7bn) damages – the costs associated with years of bottled water trucked and a water treatment system for the whole community.
Despite being one of the most water-rich nations in the world, for generations Canada has been unwilling to guarantee access to clean water for Indigenous peoples. The water in dozens of communities has been considered unsafe to drink for at least a year – and the government admits it has failed.
We’ve known how to do this for a couple of centuries now. Millennia if we think about water itself, the Romans and their aqueducts, if we emphasise the clean part then since perhaps the 1850s and that incident with the water pump handle in Soho. Providing potable water is something we collectively know how to do. So, why isn’t it being done?
As a consequence of colonial-era laws, Indigenous communities have been barred from funding and managing their own water treatment systems, and the federal government bears responsibility for fixing problems.
Ah, yes, government does have its own modes and methods of failure. Central government, far away from the problem, perhaps more than most.
A water treatment system for a community is certainly a collective problem but it’s not obvious - to be polite - that government is the solution now, is it?
Curve Lake First Nation, a forested community in southern Canada, is surrounded on three sides by fresh water.
But for decades, residents have been unable to safely make use of it.
Perhaps we should stop being polite about it? That comment about government being short of sand in a desert is meant to be a joke rather than a diagnosis, isn’t it?
There's an easy answer here - public choice economics
A piece in The Guardian lauding the end of neoliberal economics and politics:
Taken together, these developments indicate that neoliberalism is dying in Britain, for the time being at least. But those who have long dreamt of neoliberalism’s demise should think twice before popping the champagne. A more assertive state does not inherently lead to more progressive outcomes. Instead we must ask: in whose interest is the state intervening?
In the UK, the unprecedented levels of state support in the economy have been accompanied by what appears to be widespread cronyism and potentially corruption.
Not that we agree with either the description of neoliberal being used or the recognition of its imminent demise. Still, to answer that question about whose interests state intervention will deployed in favour of - public choice economics.
The central observation here is that those who are in government and the bureaucracy are human beings just the same as the rest of us outside those gilt-edged offices. They react to, suffer from, the same temptations and incentives as the rest of us too - gaining office does not suddenly turn you into a morally pure and self-disinterested saint. It also doesn’t proffer omniscience but that’s a slightly different point.
Think on what the complaint - untrue but the complaint all the same - is about neoliberalism. That the capitalists have gained power and are using it to enrich themselves. A rational observation of human beings in all their glories would be that those who do gain power will use it to enrich themselves. Government and the bureaucracy gain power over the economy and the governors and bureaucrats will use it to enrich themselves.
So, whose interests will prevail in this new and non-neoliberal world? Those of the governors and the bureaucrats. Any connection between their interests and our own out here in the citizenry will be somewhere between a coincidence and a mistake.
Those with power in the economy will use it to bend that economy to their interests - the underlying failure in the critique of neoliberalism is to believe that we neoliberals don’t already know that. Neoliberalism is an insistence that power and economic benefit are intractably, ineluctably, intertwined. Which is why we must have that neoliberalism.
For only in a market economy, one of competitive markets, are we as individuals in control. Therefore and thus we need a competitive market economy so that we are the people with that control and thus the economy works for us - not for any of those other groups that may gain power whether capitalists, bureaucrats or the people we elect to get the rubbish taken out.
As PJ O’Rouke once remarked, never let the people with all the money be the people with all the guns. The neoliberal revolution is exactly that, an insistence that we the people be the ones with the economic power. So that the economy works for us, the people - not any other grouping that might gain the power to manipulate in their interests.
What do women want?
“Minister. Can you spare a few minutes?”
“Of course, Humphrey. How can I help?”
“We’ve drafted a new consultation paper. May I take you through it? We are asking women what they want.”
“Good luck, Humphrey. That is not a question I have ever been able to answer.”
“We are asking women, and of course men, what the government should do, or rather what women would like the government to do, to improve women’s health.”
“You’re joking. You are asking men what women think the male Secretary of State should think about doing to make women think he is doing something they think they want to improve their health.”
“Yes, that sums it up nicely, Minister.”
“Maybe, but I cannot understand why men, and those who are neither men nor women, are being asked to fill in these forms at all.
“It would be discrimination if we didn’t, Minister.”
“Come to that, why are we doing this at all? Why are we concerned with women’s health rather than everyone’s?”
“I believe it has something to do with votes. Women have a propensity to believe that the health system discriminates against them, and they want to be heard.”
“That’s nonsense Humphrey. You know as well as I do that women’s life expectancy is, on average, five percent longer than men’s. If we are going to play silly games with gender studies, we should start with men, or maybe those others. How many “others” are there?”
“We are not dealing with reality, Minister, but with votes. Votes are based on perceptions.”
“Perception no doubt explains, Humphrey, why you gave me the “easy read” version of the questionnaire. And as East Anglia is not part of the Midlands nor the South of England (page 6), it is not perceived as being in England at all?”
“Oh dear. That could indeed be an oversight, Minister.”
“You’re the logician around here, Humphrey, not me, but I have a problem with the subjects proposed for inclusion in the eventual strategy paper. Tacking “against women and girls” onto almost any subject brings it into the frame. For example, this draft has “Violence against women and girls” as one of the five possible topics. Violence may obviously result in health problems but that has to be addressed by stopping the violence – a matter for the Home Office, Humphrey, not this department. You might as well include “Taxation of women and girls”. The arrival of any HMRC envelope addressed to my wife sends her completely off her rocker but I don’t think that’s the business of this department.”
“With the utmost respect, Minister, perhaps it should be. We are seeking to ascertain what women perceive to be damaging to their mental well-being and if the HMRC is the cause, you should take it up with the Chancellor.”
“Oh great, Humphrey. Thank you very much. I can just hear him announce, in his next Budget, that all envelopes addressed to the fair sex will, in future, be coloured pink.”
“Excellent idea, Minister, except I would not advise you to refer to women and girls as the “fair sex”. Pink envelopes might well benefit the health of the nation.”
“On my same logical theme, I liked “Finding out more about health issues that only women have”. Shouldn’t the whole consultation be limited to that? We might even ask the medical professional what those are? We spend quite a bit of money training them to address that matter.”
“Votes, Minister, votes. It’s all about perceptions and votes. Women want to be listened to or at least given the impression of being listened to. Please don’t imagine we are in the least interested in what the answers might be.”
“Silly me. You are quite right, Humphrey. Still, I did wonder about “Do you feel OK talking about health issues with doctors, nurses or other health and care staff?” and the need to define care staff as those who “support people to live at home or do everyday things”. (p.8) It’s obvious you talk with some people about some things and other people about other things. Women friends gossip about ailments and husbands, sorry partners, help women to live at home. Perhaps the word “professional” should be inserted before care staff?”
“I am beginning to think, Minister, that we should have given this consultation more thought before bringing it this far. I have to admit that some might consider that its whole tone is rather patronising.”
“The questionnaire does mention, once in passing, the internet as a source of information. Is that really enough? For many people, it is their primary source of information about their health. And it could be, but usually isn’t, the primary means of communicating with one’s GP. Getting through by phone is next to impossible, appointments are all booked and they’ve never heard of email.”
“Minister, you exaggerate.”
“Yes, I do but not by a lot. One good thing that has come out of the pandemic is consulting with the GP by phone. My wife really likes that, and it works well. It could easily be on Zoom when the doctor needs to look at something.”
“All good points, Minister. I have to agree that the consultation is weak on the digital front.”
“Thank you. The big question is what the outcome of all this consultation and report writing will be. On p.12 the consultation asks “Have you been given enough information about women’s health issues?” Obviously the expectation is that the answer will be “no”. That will allow us to employ a lot more people to pump out pamphlets. The clue lies in the illustration to the left of the question. I know the objective is just to give the appearance of listening, and I do the same thing over breakfast every morning, but isn’t that all a bit cynical even by our standards?”
“Minister, as you know, that is a political matter on which I could not possibly comment.”
About half of Americans are in poverty or near poverty, have low incomes
This is one of those claims about the United States that we rather like. Not because we revel in the low living standards of the cousins you understand, but because it’s something that is both true and entirely meaningless. This insistence that some half of all Americans live in poverty or near poverty - the alternative formulation being in poverty or have low incomes.
Every month, millions of working folks are forced to choose between rent, bills, healthcare, childcare and food because they are not paid a living wage. According to one measure, 43.5% of Americans were living in poverty or low-income households in 2017, with the latter often just one emergency or missed paycheck away from falling below the poverty line.
Well, yes, that 43.5% is in fact correct. Correct given the definition being used that is. Compared to the average human living standard over time or across geography now it’s ludicrously ridiculous but given how it is constructed it is in fact true:
“By the Official Poverty Measure (OPM), more than 95 million Americans (nearly 30 percent of the total population) are either in poverty or considered ‘low-income’ (living below twice the poverty line),” the report says. “That number rises to 140 million people (43.5 percent) when using the SPM, which takes into account federal assistance resources, such as refundable tax credits, as well as critical out-of-pocket expenses for food, clothing, housing, and utilities. It also takes into account geographic differences in costs of living.”
The crucial part is that “twice”. The numbers do vary a bit over the years, the Official Poverty Line is linked to earnings in the early 1960s upgraded for inflation only, the SPM is linked to a percentage of current median household incomes and clearly household incomes vary with changes in wages as well as inflation. There is also the necessary adjustment for household size to consider.
But by and large and roughly that poverty line is 40 to 50% of median wages/median household income. 200% of the poverty line is thus 80 to 100% of median wages/household income.
That official poverty measure for a family of four (two adults, two children) was $26,200 last year, 200% of that is $52,400, Median household income (for 2019) was $68,000 or so. The SPM is higher than the OPM. As we say, that estimation that the poverty line is 40 to 50% of median household income is not accurate but it’s a darn good guide.
The claim that 40% of whatever of American live in poverty or near poverty, or in poverty or have low incomes, is entirely driven by the initial definition that “poverty and near poverty” is close to median income.
Half the population has an income below median. It’s only in Lake Wobgeon that this won’t be true and as Garrison Keiller has spent decades telling all and sundry that’s a fantasy world.
Just who do these people think the media is?
The specific complainant here is George Monbiot but it’s a more general whine that can be heard from points left:
The media are allowing this government’s cronyism and dishonesty to flourish
George Monbiot
OK, that’s actually The Guardian’s subeditor giving a precis of Monbiot’s views in the headline but still, it’s an accurate enough one.
The interesting question is who is this media? Monbiot’s column has been running over 20 years now. If we’ve managed to manipulate The Guardian’s search engine properly that’s 1,357 pieces that have been presented to us. We can’t even bear to calculate how many decades Polly Toynbee has been occupying that pulpit from which she sermonises on how the country should be.
Add the BBC to the newspapers, as we must (not least because both named there worked for the BBC as an indication of that internal culture) and “the media” is in fact that very group that so continually complains about what the media does.
This is not, just for the avoidance of doubt, a complaint about how they get their views out there and we do not. Rather, this story that’s retailed that the media is some group over there that’s misbehaving is wearing more than a little thin to us. For the people doing this complaining are the media panjandrums of our time. Whatever “the media” is it most certainly includes George and Polly. Time to take a certain responsibility for what has been created rather than continue with the rebellious outsider complaint.
Face it folks, you are now the media establishment.
There is no reason to tax wealth in the UK
We might have mentioned this before, just the once or twice, but the reform that the UK needs is the abolition, the blowing up, of the Town and Country Planning Act 1947 and successors. This is the one reform that solves a number of problems, from how the young might afford a house, to lowering the equilibrium unemployment rate to dealing with that wealth inequality Mr. Piketty and others whine about so much.
It would even solve the problem the IFS is worrying about:
Rising house prices, growing wealth and stagnant earnings mean that inheritances are becoming ever more important in determining life chances and lifetime income. Relative to other sources of income, inheritances are likely to be about twice as important to the generation born in the 1980s as they were for those of us born in the 1960s. That trend looks set to continue.
It’s worth reminding ourselves what household wealth is actually composed of. 42% of it is pensions, a largely self-solving problem. Defined benefit pensions die with the recipients, defined contributions ones are largely consumed before death. The reason why this has grown so much as a portion of the national wealth is that we’re all living longer. That - welcome - move from a three year retirement to a 15 to 20 year one requires an increase in savings, in wealth, to pay for it. This explains a goodly chunk of Mr. Piketty’s concerns over the wealth to GDP ratio - what does he expect to happen if we do have decades long retirements?
Financial and physical wealth are about a quarter of the total (OK, 24%) and that’s entirely in line with historical numbers and portions of GDP. There isn’t a change here that requires consideration, let alone action.
Then there’s that property wealth that is 35% of the total. This is not actually in housing, as we know, it’s the value of the planning permissions attached to the piece of land that may be built upon. If we wish to reduce this inequality - we certainly want to reduce the price - then the answer is to reduce the value of those planning permissions. As no system of rationing nor allocation will ever be left alone to get on with things the answer is therefore to blow up that Town and Country Planning Act 1947, plus successors, that creates the woeful shortage and thus excessive valuations.
The increase in household wealth is a result of pensions and planning. Acknowledge the one - that it’s a sensible, desirable, reaction to longer lifespans - and solve the other and we’re done. There is no economic problem left to be solved by wealth taxation, is there?
Or, as we might also have mentioned the once or twice, government can indeed solve problems, all too often by stopping doing what it is currently doing.
Nomadland and the Amazon labour monopsony
The New York Times tells us of Joan Robinson’s injection - perhaps reinjection as the idea is clearly there in Marx - of the idea of labour monopsony into economic discussions:
Crucially, Robinson argued that workers, as sellers of their own labor, almost always faced monopsonistic exploitation from employers, the buyers of their labor. This technical point had a political edge: According to Robinson, workers were being chronically underpaid, even by the standards of fairness devised by the high priests of the free market.
This certainly has happened, company towns were notorious for it. The closest the UK has been to chattel slavery this past millennium - domestically that is - is probably the example of certain remote Scottish coal mines. At a very much more superficial level Street in Somerset had no pubs - they were all immediately outside the area controlled by the Clark’s of the shoe company fame. This is why the Truck Acts where wages must be paid in cash, not company scrip. This is also a problem dealt with by the 1980s which is why the Truck Acts were repealed - simply not necessary in an age of personal mobility.
….a recent investigation by House Democrats concluded that Amazon deploys monopsony power and that its warehouses tend “to depress wages” for warehouse and logistics workers when they enter a local market.
Nomadland is, we agree, a film, it’s people playing dress up. It might even be art but it’s scripted drama, not a documentary. Still, the conceit is that those warehouses pull in labour from possibly thousands of miles away. That people travel hundreds of miles to work at them. There are echoes of the Joads in this but that tale, in all its grapey wrath, is of how the Model T frees from monopsony. The choices available might not please a progressive’s heart but choice is, by definition, the antithesis of either monopoly or monopsony.
A mobile force of 160 million people picking and choosing among millions of potential employers simply is not a labour market suffering from monopsony. That’s a tale that needs to be confined to the “once upon a time” section of the movie storage vault.
Theorising around The Theory of Moral Sentiments
Today we think of Adam Smith as an economist. But it was not his 1776 book The Wealth of Nations that made him famous. It was a work of moral philosophy, published seventeen years earlier.
The Theory of Moral Sentiments came out on 26 April 1759. It was a sensation, and made Smith a hot intellectual property. Moralists had been struggling for centuries to work out what makes some actions morally good and others morally bad. To clerics, who held great sway over the public and in intellectual debate too, the answer was plain: it was the word of God. Though of course, human life was complex, so God’s word needed a good deal of interpretation coming from those who understood it — the clerics, naturally. But then, in an age of science, there was a spreading reluctance to take the word of church leaders as definitive, and skeptics scrabbled round for other explanations. One popular theory is that human beings had a ‘moral sense’ just like smell or touch, such that they could instantly (and somehow) detect what was right and what was wrong, and distinguish them just as they distinguished red and green. But that too seemed unsatisfactory, as it was far from obvious how such a supposed sense worked, and why different people had different perceptions of right and wrong.
There were other theories too. But Smith’s breakthrough was to explain that our moral judgement stem from our very psychology as social creatures. Human beings, he suggested, are born with a natural ’sympathy’ (today we would say ‘empathy’) for other members of their species. They are distressed by the pain of others, and uplifted by the joy of others. And that is what helps us shape our behaviour in ways that produce a general good. We enjoy the praise that comes from others when we do something ‘right’ and are troubled by the disapprobation of others when we do something ‘wrong’.
Smith was writing exactly a century before Darwin’s 1859 classic The Origin of Species, so he did not have advanced evolutionary theory to help him explain why we should have this rather useful social psychology. He put it down to ‘Providence’. His friend David Hume had struggled with similar problems in the last section of his own Treatise of Human Nature. But Smith had no doubt that this social psychology persisted because it brought our species a general benefit. He knew it must be something like what we now call ’natural selection’. Honour among thieves and all that: if we started behaving wickedly to each other, our society would break down pretty quickly.
The Theory of Moral Sentiments was an instant and international best seller. Not only was the central idea sensational, but the prose (for the time) elegant and Smith’s rubbishing of other (often pompous) moral theorists was thought exquisite. It brought Smith to the attention of Charles Townsend, a leading intellectual and British government official, who asked Hume to introduce them. It led to Smith being plucked out of Glasgow University and hired, for a very generous lifetime income, to become tutor to Townsend’s young stepson, the Duke of Buccleugh. The tutoring took Smith on the grand tour of Europe with his the young aristocrat, where he was able to talk with some of the leading European intellectuals and to see the different industries and ways of working on the Continent. He started thinking about a new book: not this time on moral philosophy but on another part of human social psychology — economics. It took him over a decade to turn his ideas and the vast mountain of economic facts he assembled into what would become The Wealth of Nations. And with that, his fame was assured, not only in his own time, but in centuries to come.