Monthly Archive for February, 2005

The Religious Left?

No, not on moral issues, but on economic issues.

Don Boudreaux, Chairman of the Department of Economics at George Mason University, writes:

The bottom-line, fundamental reason I endorse markets over government direction of the economy – the essential reason I support extensive and vigorous private property rights and the consequent decentralization of decision-making that this institution brings – is that I cannot tolerate the mysticism that motivates too much reliance on government.

Too many people, including otherwise very smart people, believe in secular magic. They believe that words written on paper by people, each of whom receive a majority of votes on certain days of the year of adult citizens living in certain geographic areas, and who utter ritualistic pronouncements under marble domes in buildings conventionally called “capitols,” are somehow endowed with greater understanding of society’s complexities and with superhuman capacities to care about the welfare of strangers. These priests preach devotion, dedication, and sacrifice to the One True State (your own government), even while each recognizes that legitimate disputes about the details of the dogma divide various cliques of the secular clergy. When they speak and act in their official roles, they expect – usually correctly – that the laity pay their words special heed as if these words have extraordinary power.

Posner On Medicare

Richard A. Posner, Professor of Law at the University Of Chicago and federal judge, writes:

As a matter of economic principle (and I think social justice as well), Medicare should be abolished. Then the principal government medical-payment program would be Medicaid, a means-based system of social insurance that is part of the safety net for the indigent. Were Medicare abolished, the nonpoor would finance health care in their old age by buying health insurance when they were young. Insurance companies would sell policies with generous deductible and copayment provisions in order to discourage frivolous expenditures on health care and induce careful shopping among health-care providers. The nonpoor could be required to purchase health insurance in order to prevent them from free riding on family or charitable institutions in the event they needed a medical treatment that they could not afford to pay for. People who had chronic illnesses or other conditions that would deter medical insurers from writing insurance for them at affordable rates might be placed in “assigned risk” pools, as in the case of high-risk drivers, and allowed to buy insurance at rates only moderately higher than those charged healthy people; this would amount to a modest subsidy of the unhealthy by the healthy. Economists are puzzled by the very low deductibles in Medicare (including the prescription-drug benefit—the annual deductible is only $250). Almost everyone can pay the first few hundred dollars of a medical bill; it is the huge bills that people need insurance against in order to preserve their standard of living in the face of such a bill. But government will not tolerate high deductibles when it is paying for medical care, because the higher the deductible the fewer the claims, and the fewer the claims the less sense people have that they are benefiting from the system. They pay in taxes and premiums but rarely get a return and so rarely are reminded of the government’s generosity to them. People are quite happy to pay fire-insurance premiums their whole life without ever filing a claim, but politicians believe that the public will not support a government insurance program—and be grateful to the politicians for it—unless the program produces frequent payouts. If Medicare were abolished, the insurance that replaced it would be cheaper because it probably would feature higher deductibles…

Here is the whole post.

Professor of economics, Tyler Cowen, has more.

Professor of economics, Glen Whitman, has more.

Picture Of The Day


Quote Of The Day

“Do corporations have social responsibility? Yes. Nobel Laureate Professor Milton Friedman put it best in 1970 when he said that in a free society “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Only people, not businesses, have responsibilities. A CEO is an employee. He’s an employee of shareholders and customers. When the corporate executive community fails to recognize that fact and engages in activities unrelated to the pursuit of profits, lower national wealth, higher product prices, and lower return on investment are the result. ” —Walter E. Williams, Economics Professor

Quote Of The Day

“People who oppose the privatization of Social Security call it “a risky scheme.” But is anything more risky than turning money over to politicians and hoping that they won’t spend it before you retire? They have been spending the “trust fund” for decades”. —Thomas Sowell

Quote Of The Day

“If sanity ever returns to our society and we stop taking pretentious elites seriously, one of the signs will be that the public will force the removal of those ugly pieces of twisted metal that are called “art” in front of government building”. — Thomas Sowell

Capitalism And Slavery

Donald J. Boudreaux, chairman of the Department of Economics at George Mason University, has a must read article on Capitalism and Slavery.

He writes:

slavery had been an ever-present institution throughout human history until just about 200 years ago. Why didn’t slaveholders of 2,000 years ago in Europe or 500 years ago in Asia accumulate wealth that triggered economic growth comparable to ours? Why is Latin America so much poorer today than the United States, given that the Spaniards and Portuguese who settled that part of the world were enthusiastic slavers? Indeed, the last country in the Americas to abolish slavery was Brazil — in 1888, a quarter-century after U.S. abolition. By American and western European standards, Brazil remains impoverished.

And why, having abolished slavery decades before their Southern neighbors, were Northern U.S. states wealthier than Southern states before the Civil War? …

The fact is that slavery disappeared only as industrial capitalism emerged. And it disappeared first where industrial capitalism appeared first: Great Britain. This was no coincidence. Slavery was destroyed by capitalism.

To begin with, the ethical and political principles that support capitalism are inconsistent with slavery. As we Americans discovered, a belief in the universal dignity of human beings, their equality before the law, and their right to govern their own lives cannot long coexist with an institution that condemns some people to bondage merely because of their identity.

The whole article is worth the read.

A Few Questions For Europeans

Some things we’ve been wondering about Europe that needs some answers.

Quote Of The Day

“[Harvard President Larry] Summers’ mistake was that he did not treat women badly. Take Summers’ old boss, Bill Clinton, who was able to date while married, as his top female staffers (who considered themselves feminists) strove to protect him from nubile workers. In this politically correct era, words speak louder than actions: You can act like a sexist cad, but you can’t talk as if you think a sexist cad conceivably might have a point” — columnist Debra Saunders, writing in the San Francisco Chronicle.

Differences Between The Sexes

While discussing the Harvard President Lawrence Summers’ incident, Steven Pinker, Johnstone Professor of Psychology at Harvard University, detailed some of the overall settled differences between males and females:

Many of Summers’s critics believe that talk of innate gender differences is a relic of Victorian pseudoscience, such as the old theory that cogitation harms women by diverting blood from their ovaries to their brains. In fact, much of the scientific literature has reported numerous statistical differences between men and women. As I noted in The Blank Slate, for instance, men are, on average, better at mental rotation and mathematical word problems; women are better at remembering locations and at mathematical calculation. Women match shapes more quickly, are better at reading faces, are better spellers, retrieve words more fluently, and have a better memory for verbal material. Men take greater risks and place a higher premium on status; women are more solicitous to their children.

Of course, just because men and women are different does not mean that the differences are triggered by genes. People develop their talents and personalities in response to their social milieu, which can change rapidly. So some of today’s sex differences in cognition could be as culturally determined as sex differences in hair and clothing. But the belief, still popular among some academics (particularly outside the biological sciences), that children are born unisex and are molded into male and female roles by their parents and society is becoming less credible. Many sex differences are universal across cultures (the twentieth-century belief in sex-reversed tribes is as specious as the nineteenth-century belief in blood-deprived ovaries), and some are found in other primates. Men’s and women’s brains vary in numerous ways, including the receptors for sex hormones. Variations in these hormones, especially before birth, can exaggerate or minimize the typical male and female patterns in cognition and personality. Boys with defective genitals who are surgically feminized and raised as girls have been known to report feeling like they are trapped in the wrong body and to show characteristically male attitudes and interests. And a meta-analysis of 172 studies by psychologists Hugh Lytton and David Romney in 1991 found virtually no consistent difference in the way contemporary Americans socialize their sons and daughters. Regardless of whether it explains the gender disparity in science, the idea that some sex differences have biological roots cannot be dismissed as Neanderthal ignorance.

Since most sex differences are small and many favor women, they don’t necessarily give an advantage to men in school or on the job. But Summers invoked yet another difference that may be more consequential. In many traits, men show greater variance than women, and are disproportionately found at both the low and high ends of the distribution. Boys are more likely to be learning disabled or retarded but also more likely to reach the top percentiles in assessments of mathematical ability, even though boys and girls are similar in the bulk of the bell curve. The pattern is readily explained by evolutionary biology. Since a male can have more offspring than a female–but also has a greater chance of being childless (the victims of other males who impregnate the available females)–natural selection favors a slightly more conservative and reliable baby-building process for females and a slightly more ambitious and error-prone process for males. That is because the advantage of an exceptional daughter (who still can have only as many children as a female can bear and nurse in a lifetime) would be canceled out by her unexceptional sisters, whereas an exceptional son who might sire several dozen grandchildren can more than make up for his dull childless brothers. One doesn’t have to accept the evolutionary explanation to appreciate how greater male variability could explain, in part, why more men end up with extreme levels of achievement. (emphasis added)

These differences (along with others) have to be part of the reason why we find fewer women in fields where competition (CEO positions, for example) or a high mathematical ability is absolutely critical.

Or, to look at it from a different angle, these differences also help to explain why men have a virtual monopoly on the least attractive jobs.

Price Controls On CEO Pay?

Some people seem to think that a proper solution to the economic problems of lower income households is to double the minimum wage and limit CEO salaries.

Mark Steckbeck, economics professor at Hillsdale College, explains why it’s not; here is more.

Update: Walter Williams has more.

What Comes Next?

Ian Sample asks leading scientists what comes next.

Quote Of The Day

“Summers’ other point concerns statistical distributions. On a variety of attributes, statistical measures show that men have higher variance than women. Thus, if you look at the very top or at the very bottom of the distribution, you will find a larger share of men, while if you look in the middle, you will find a slightly larger share of women. He conjectures that this difference at the extremes exists for some attribute that is important in math and some branches of science. If to be at the top of one of those fields you need a genetic trait that is found only once in every 5000 or 10,000 people, and if rare genetic traits are more often found in men, then when you look at the top of those fields you will see more men”. — Arnold Kling, Explaining the science behind Summers’ statements

A Face To School Vouchers

If you still doubt that school vouchers can make a significant difference, please, please, please read Casey J. Lartigue Jr. detailing his day activities volunteering with the Washington Scholarship Fund. It is a must read, especially for those who have the most needy and troubled youths in mind.

For example, he writes:

there is one woman who needs a cane to get around. She is rather frail, probably in her 70s. Last year she went to a JAIL in DC to recruit families for the scholarship program. I wasn’t there that day, but heard from someone else there that the many ladies waiting to get into the jail to see their men were eager to sign up. I don’t know the exact story behind it, but one inmate “temporarily” got away from officers to make sure his child was signed up for the voucher program.

He even writes about those who are against vouchers:

It was stressful talking to these parents, hearing their stories, knowing how desperate they are to get their children out of the situations they are in now. I’m on the WSF board, I volunteer, and every time I leave one of those sessions I feel drained. When I hear people denounce the program, I always like to check from where the person is talking. It is never in the room or at any Washington Scholarship Fund events. That’s because the parents would probably rip them up. It is so much easier to denounce when you aren’t involved or have an ideological or political axe to grind.

Some of the parents who feel that this is the last chance to get their children into a quality school get really emotional about the program. I was present last year during the publicly funded lottery–a cold process with a lot of lawyers and other witnesses present. Then I was there when some of the parents were notified that they had received scholarships. So many shouts of hallelujah! and praise the lord! were coming through the phone lines. Then there are the sad calls to parents to let them know that they had not received a scholarship. So many are skeptical before, during, and after the process. When they don’t receive a scholarship, it confirms their worst fears. But the ones who win scholarships? Hallelujah!

When I read stuff like this, it makes me wonder why liberals (read: Democrats), instead of spending so much time defending affirmative action (a policy that benefits very few inner city people) or ‘programs for low-income families’ that have dubious records, instead of wasting their time with those measures, don’t put all of their energy behind policies that have a track record of helping specifically those in need the most? Why don’t they get behind vouchers as strongly as conservatives (read: Republicans)? If they really care about the poor and the disenfranchised, why not put most of your energy behind something that primarily benefits them, especially early on in their life when they need it most?

Then I remember exactly why they don’t. And I am once again reminded of some of the reasons why I am conservative and not liberal.

If it were up to me, I would take every child of an anti-voucher limousine liberal out of the private school or fancy public school they are attending and send them to some of the worse public schools in the country – for example, schools in Compton, Watts or South Central Los Angeles. I can guarantee that all of their babble about how one more billion to the school system is the solution will quickly vanish and they will start pushing for solutions that have some track record of working and start to clearly see the power and hope vouchers bring.

Families at a Washington Scholarship Fund school fair, June 2004

A Constrained Vision has more.

Why Is Manhattan So Expensive?

Apparently, for the same reason that other areas with a high concentration of liberals (read: Democrats) are so expensive, land use restrictions (regulations).

Think Taxes Don’t Matter?

25 Year Decline In Dividends Reversed

HatTip: Division Of Labor.