Monthly Archive for September, 2005

The Problems Of The Poor

Please, do me a favor and add Megan Mcardle, deputy countries editor of Economist.com, to your blogroll. We know her in the blog community as Jane Galt of Asymmetrical Information. She is a University Of Chicago economist that writes well and has many great posts like this one.

The post is worth quoting in full:

The poor really are different

The post below is complicated, for some conservatives, by the fact that if the poor acted like the middle class, they wouldn’t have problems like no credit or savings.

If poor people did just four things, the poverty rate would be a fraction of what it currently is. Those four things are:

1) Finish high school
2) Get married before having children
3) Have no more than two children
4) Work full time

These are things that 99% of middle class people take as due course. In addition, there’s some pretty good evidence that many people who are poor have personality problems that substantially contribute to their poverty.

For example, people with a GED do not experience significant earnings improvement over people who have not graduated from high school. In this credential-mad world, this simply should not be. And it is true even though people with a GED are apparently substantially more intelligent than people without a GED.

How can this be? Even if the GED were totally worthless, available evidence seems to indicate that intelligence carries a premium in the labour market.

The best explanation seems to be that people with a GED (as a group) are smart people with poor impulse control. What intelligence giveth, a tendency to make bad decisions taketh away. Anyone who has spent any time mentoring or working with poor families is familar with the maddening sensation of watching someone you care about make a devastating decision that no middle class person in their right mind would ever assent to.

So I think that conservatives are right that many of the poor dig themselves in deeper. But conservatives tend to take a moralistic stance towards poverty that radically underestimates how much cultural context determines our ability to make good decisions.

Sure, I go to work every day, pay my bills on time, don’t run a credit card balance and don’t have kids out of wedlock because I am planning for my future. But I also do these things because my parents spent twenty or so years drumming a fear of debt, unemployment, and illegitimacy into my head. And if I announce to my friends that I’ve just decided not to go to work because it’s a drag, they will look at me funny–and if I do it repeatedly, they may well shun me as a loser. If I can’t get a house because I’ve screwed up my credit, middle class society will look upon me with pity, which is painful to endure. If I have a baby with no father in sight, my grandmother will cry, my mother will yell, and my colleagues will act a little odd at the sight of my swelling belly.

In other words, middle class culture is such that bad long-term decision making also has painful short-term consequences. This does not, obviously, stop many middle class people from becoming addicted to drugs, flagrantly screwing up at work, having children they can’t take care of, and so forth. But on the margin, it prevents a lot of people from taking steps that might lead to bankruptcy and deprivation. We like to think that it’s just us being the intrinsically worthy humans that we are, but honestly, how many of my nice middle class readers had the courage to drop out of high school and steal cars for a living?

I’m not really kidding. I mean, I don’t know about the rest of you, but when I was eighteen, if my peer group had taken up swallowing razor blades I would have been happily killed myself trying to set a world record. And if they had thought school was for losers and the cool thing to do was to hang out all day listening to music and running dime bags for the local narcotics emporium, I would have been right there with them. Lucky for me, my peer group thought that the most important thing in the entire world was to get an ivy league diploma, so I went to Penn and ended up shilling for drug companies on my blog.

Maybe you were different. But think back to the times–and you know there were times–when trying to win the approval of your peers convinced you to do things that were stupid, wrong, or both. Remember what it felt like to be sixteen and skinny and maybe not as charming and self confident as others around you, and ask yourself if you’d really be able to withstand their derision in order to go to college–especially if you didn’t even know anyone who’d ever been to college, or have any but the haziest idea of what one might do when one got out. Try to imagine deciding to get a BA when doing so means cutting yourself off from the only world you know and launching yourself into a scary new place where everyone’s wealthier, better educated, and more assured than you are.

Or take a minute right now and try to imagine how your friends would react if you announced that you’d decided to quit work, have a baby, and go on welfare. They’d make you feel like an outsider, wouldn’t they? And isn’t that at least part of the reason that you don’t step outside of any of the behavioural boundaries that the middle class has set for itself?

Bad peer groups, like good ones, create their own equilibrium. Doing things that prevent you from attaining material success outside the group can become an important sign off loyalty to the group, which of course just makes it harder to break out of a group, even if it is destined for prison and/or poverty. I think it is fine, even necessary, to recognize that these groups have value systems which make it very difficult for individual members to get a foothold on the economic ladder. But I think conservatives need to be a lot more humble about how easily they would break out of such groups if that is where they had happened to be born.

That leaves us in a rather awkward place, because while I don’t agree with conservatives that the poor are somehow worse people than we are, I also don’t agree with liberals that money is the answer. Money buys material goods, which are not really the biggest problem that most poor people in America have. And I don’t know how you go about providing the things they’re missing: the robust social networks, the educational and occupational opportunity, the ability to construct a long-term life instead of one that is lived day-to-day. I think that we should remove the barriers, like poor schools, that block achievement from without, but I don’t know what to do about the equally powerful barriers that block it from within.

But I also don’t think that the answer is to use those barriers as an excuse to wash our hands of the matter.

As someone who grew up in Compton, California, I have a hard time accepting the extremes on both sides of the political aisle. On one hand, I cannot accept the lefts philosophy that the primary problems affecting the poor are racism and materialistic needs, however, on the other hand, I can’t accept the rights philosophy that the poor ‘have only themselves to blame’, as if anybody else would have been drastically different had they grown up in the same neighborhood under the same circumstances.

In other words, yes the problem is not primarily racial, it is not primarily financially related, but at the same time nobody intentionally wants to be poor, cultural surroundings, parental upbringing, peer groups, and yes, economic circumstances all mixed in together create environments where even the best of people can get sucked into the circle of poverty.

Jane Galt is a rarity; she understands both, the economic tools necessary to create change, and the proper outlook that addresses the problem at its core (You can’t fix the problem if you don’t know what the problem is). A combination I rarely see in others, economists Thomas Sowell (here and here), Roland G. Fryer Jr. (here and here) and Walter Williams (here and here), are other examples of those who also exhibit this rare combination.

Now, if only I could get her to write more on poverty, and how to address it…

Update: Jane Galt has more, she recommends mentoring over money.

Quote Of The Day

“Lincoln said, “Those who deny freedom to others deserve it not for themselves; and, under a just God, cannot long retain it.” We’re not explicitly denying freedom to illegal immigrants, but shouldn’t we be more welcoming to those who simply seek a better life? Is there such a difference between Haitian refugees and Cuban dissidents? I’m not talking about any criminal element, or those seeking to come here and live off our welfare systems. I’m talking about people who want a slice of the American dream, people who are willing to work hard, and people who want to live honestly. It’s an awfully big pie, and I always thought there’s plenty of room at the table”. —Perry Eidelbus, blogging over at EidelBlog

Principled Conservatives Are Not Happy With President Bush

…and frankly, that is a good thing.

Conservative Republican economist Bruce Bartlett testified before the Senate Democratic Policy Committee, this is what he said:

Statement by Bruce R. Bartlett

September 23, 2005

Thank you for the opportunity to testify before you this morning. As you know, I testify as a Republican—I have served in senior political positions in Ronald Reagan’s White House and George H.W. Bush’s Treasury Department, and as executive director of the Joint Economic Committee, a cosponsor of this hearing. However, I do not represent the Republican Party or any organization with which I may be associated. I am here speaking only for myself.

I testify as someone who is very disenchanted with his party’s fiscal policy since 2001. Unlike the other witnesses, I am less concerned about the deficit per se or about the size of the tax cuts enacted over the last five years. Rather, what really bothers me is the increase in spending and expansion of government that my party has been responsible for.

I used to believe that the Republican Party was the party of small government. That’s why I became a Republican. I don’t believe that the federal government has the right to one penny more than absolutely necessary to fulfill its essential functions as spelled out in the Constitution. I think government is over-intrusive and could do what it has to do far more efficiently and at lower cost, which means with lower taxes.

Therefore, it bothers me a great deal when Republicans initiate new entitlement programs, massively expand pork-barrel spending, and show the most callous disregard for fiscal integrity. Not too many years ago, Ronald Reagan vetoed a politically popular highway bill because it contained 157 pork-barrel projects. The latest bill contained at least 5,000. Yet President Bush signed this $295 billion bill into law, despite having promised repeatedly to veto a bill larger than $256 billion.

For the life of me, I cannot understand why President Bush seems so incapable of using his veto pen. His father knew how to veto bills. He vetoed 29 of them in his four years in office. But in his first four-plus years, this President Bush has vetoed nothing. He is the first president since John Quincy Adams to serve a full term without vetoing anything. Curiously, Adams is also the only other son of a former president to become president—and his father, John Adams, didn’t veto anything, either.

When I complain about this to the White House, they tell me that it is very hard to veto bills when your party controls both Congress and the White House. But this explanation is simply implausible. Franklin D. Roosevelt had huge Democratic majorities, yet vetoed a record 372 bills. John F. Kennedy, Lyndon Johnson and Jimmy Carter also had large majorities of Democrats, yet Kennedy vetoed 12 bills during his short presidency, Johnson vetoed 16, and Carter vetoed 13.

I won’t bore this committee with numbers. You know them as well as I do. Suffice it to say that our fiscal situation is dire and growing worse by the day. My principal concern, however, is not with today’s deficits—even if they are swollen by Katrina and Rita-related emergency spending. What worries me is the retirement of the baby boom, the first of which turns 62 in 2008. I’m not saying that we are close to driving off a fiscal cliff, but clearly the implications of this event have not impacted on policymakers in any way whatsoever.

I have struggled with a way to illustrate the consequences of an aging population and its effect on the budget. This is the best I have been able to do. Social Security’s unfunded liability comes to 1.2 percent of GDP in perpetuity (1.4 percent without the trust fund)—about what is raised by the corporate income tax—according to that program’s actuaries. The comparable number for Medicare is 7.1 percent of GDP—about what is raised by the individual income tax. And remember that these figures are for the unfunded portion of these programs, so they are over and above payroll taxes.

The chilling conclusion, therefore, is that virtually 100 percent of all federal taxes, on a present value basis, do nothing but pay for Social Security and Medicare. Unless there are plans to abolish the rest of the federal government, large tax increases are inevitable.

Let me be clear that I am no advocate of higher taxes. I’m the one who drafted the Kemp-Roth bill back in the 1970’s and I have spent most of my career looking for ways to cut tax levels and tax rates. But that was predicated on an assumption those supporting tax cuts also wanted to downsize government. I never saw tax cuts as a substitute for spending cuts, but more as sugar to make the medicine go down. My ultimate goal was to reduce both taxes and spending.

Unfortunately, few in my party seem to share this philosophy any longer. For many, tax cuts have become a substitute for spending cuts. It truly amazes me how often I hear people on my side talk about cutting taxes as if this is the only thing necessary to downsize government. They seem genuinely oblivious to the fact that the burden of government is largely determined by the level of spending, not taxes. Nor do they understand that in the long-run, all spending must be paid for one way or another. Increasing spending today, therefore, absolutely guarantees that taxes will have to be raised in the future.

I am often criticized by friends on my side of the aisle for implicitly endorsing tax increases. I do no such thing. I am simply adding two and two and getting four while my friends seem to think there is some way of only getting three.

They also criticize me for implicitly abandoning the fight to cut spending and downside government. Again, I plead innocent. It is not I who has abandoned the fight, but my party. I don’t need to remind anyone here that the biggest spending increases in recent years passed Congresses with Republican majorities largely without Democratic votes. Nor do I need to remind anyone here that during the Clinton years we not only went from budget deficits to budget surpluses, but did so to a large extent by cutting spending—something my conservative friends seldom acknowledge.

Here’s the basic accounting. Defense spending fell by 1.4 percent of GDP between 1993 and 2000, and domestic discretionary spending fell from 3.8 percent to 3.3 percent. Even spending on entitlements fell for temporary demographic reasons, from 10.2 percent of GDP to 9.8 percent. Finally, interest on the debt fell, largely because of falling interest rates, from three percent of GDP to 2.3 percent. The result was an overall decline in spending of three percent of GDP, from 21.4 percent to 18.4 percent, the lowest level since 1966, before the Great Society geared up.

On the revenue side, individual income taxes rose by 2.5 percent of GDP, mainly as the result of rising incomes that pushed people up into higher tax brackets and higher capital gains taxes from the booming stock market. Corporate income taxes and payroll taxes added another 0.8 percent, for a total revenue increase of 3.3 percent of GDP. Thus lower spending and higher revenues constituted a fiscal turnaround of 6.3 percent of GDP, which explains how a deficit of 3.9 percent of GDP in 1993 became a budget surplus of 2.4 percent by 2000.

I don’t give President Clinton full credit for this performance. I think most of the credit goes to gridlock. Mr. Clinton wouldn’t support the Republican Congress’s spending and it wouldn’t support his. So for a blessed six years, government effectively was on automatic pilot. Sadly, unified government has led to an utter lack of restraint by my party that is simply inexcusable. It is extremely dismaying for me to hear House Majority Leader Tom Delay say that there is no fat in the budget and that Republicans have cut it to the bone. This is, quite frankly, ludicrous. My real fear, however, is that he may actually believe it.

I remain convinced that given the total lack of fiscal responsibility demonstrated by the Republican Party that very large tax increases are inevitable. I believe that the fiscal hole is now so large that it is unrealistic to think that we can just tinker with the tax system, as we did so often in the 1980’s, and raise enough revenue to pay for spending commitments that have been made. And under the circumstances, I have no faith whatsoever that spending will be significantly restrained—at least not by my side. They would first have to admit error and beg for forgiveness from people like me, something I don’t expect to be forthcoming any time soon.

Therefore, like it or not, we must travel the same route taken by the Europeans, who long before us made peace with the welfare state and tried to figure out how to pay for it with the least negative impact on economic growth and incentives. They all imposed a broad-based consumption tax called the value-added tax as an add-on tax to all the others. I think it is only a matter of time before we are forced to do the same thing and the longer we wait the more painful it will be when it is finally done. Unfortunately, we are more than likely going to have to be forced into it by a financial crisis of some sort. It would be better to avoid that cost and deal with our fiscal situation rationally. But I see no leadership on either side that would allow that to happen.

I don’t know when, where or how a financial crisis will develop. I only know that trends that can’t continue don’t. Since it is unlikely that the vast fiscal imbalance will be resolved with a whimper, it becomes a certainty that it will end with a bang. Among the areas ripe for triggering a crisis are a popping of the housing bubble, a crash of the dollar, a mistake by some big hedge fund, excessive tightening by the Fed and others too numerous to mention. It will take extraordinary luck and skill to avoid every boulder in the stream and I have little confidence that this administration has the personnel to even give us a fighting chance. There are too many Michael Browns at senior levels of the government today and too few Bob Rubins or Alan Greenspans.

Contrary to popular belief, I don’t think the American people are a bunch of children who only want hand-outs from the government and will only reward the party that promises them something for nothing. Experience and academic research confirm that they are more likely to support the candidate who treats the public purse with prudence and trust and not as a piggy bank to be routinely broken on a whim. In short, I think there is a political market for the party and the candidate who speaks honestly about the nature of the fiscal crisis that is looming. The payoff may not be immediate and the public trust has to be earned by more than just rhetoric. But if, as I believe, some event will eventually change the political landscape, voters will remember who spoke the truth and who mouthed the platitudes.

It’s dirty work, but someone has to do it. Since my party won’t do it, yours is going to have to. If it’s done right, your party will gain at the expense of mine and you will deserve the benefits and my party will deserve the electorate’s disdain.

Quote Of The Day

“I would like to return to the issue of motivation. One reason that I am pro-immigrant is that I think that many immigrants — and certainly the immigrants I most want to encourage — are highly appreciative of the American system. Coming from countries where government controls more of the economy and where public officials are more corrupt, they are often grateful for the opportunities that our economy provides. In contrast, as the school year begins, my daughter in high school is being inundated with the typical anti-American propaganda of the Left. She is bombarded with lessons claiming that America “controls” too much of the world’s wealth, that we are racist and uncaring, that we spoil the environment, etc. So here is what I propose. Let all of the teachers, professors, journalists, celebrities and others who espouse disgust with America be encouraged to emigrate. And let immigrants take their places”. —Economist Arnold Kling, writing in TechCentralStation, more on the topic here.

The Growing Education Gap And Universities Part In It

Conservative New York Times columnist David Brooks wrote in the New York Times:

Especially in these days after Katrina, everybody laments poverty and inequality. But what are you doing about it? For example, let’s say you work at a university or a college. You are a cog in the one of the great inequality producing machines this country has known. What are you doing to change that?

Economist Mark Thoma takes issue with this comment and responds with:

Let me defend universities against the implied notion that colleges aren’t doing anything to address these problems…I chaired the University’s Scholarship Committee, the committee responsible for allocating the entire pool of University scholarship money. As Chair, I had the committee reexamine each step in our process to try and identify hidden bias in the award of scholarship money…I resent the implication that we do not care, are not sensitive to, or are not taking action to address these problems. We are.

To which economist Arnold Kling responds:

In my view, the issue is larger than universities’ policies concerning admissions and financial aid. It concerns how universities are financed, and how this affects the distribution of income.

First, consider state subsidies for universities. These are almost certainly regressive. Much of the subsidy goes to raise the rents earned by administrators and professors. Much of the rest goes to affluent students. The taxes that pay for the subsidies come from all economic classes.

Second, consider university endowments. Again, they serve to increase rents of employees and to subsidize those students who attend the most elite institutions–a student population that is disproportionately affluent.

Imagine instead what might happen if state funds and alumni donations funded vouchers for student tuition.

Compared with reforming university finances, tinkering with admissions and scholarship policies is beside the point. It may “show that you care,” but has little practical significance.

The complete exchange, along with Mark Toma’s final response, can be found here.

Quote Of The Day

“It’s worth remembering that Ruth Bader Ginsburg was nominated to succeed Justice Byron “Whizzer” White — a conservative. There wasn’t any hand-wringing on the Republican side (and certainly none in the press!) about whether she would “shift” the court to the left . . . it was understood that she would. It was also understood that elections have consequences, and this was one of them.”. — Confirm Them Blog

Intellectuals And Socialism

The Adam Smith Institute reports:

Vaclav Klaus, President of the Czech Republic, spoke to the Mont Pelerin Society meeting in Iceland about the attraction which intellectuals feel for socialism and similar ideologies. He quoted Hayek’s observation that intellectuals are drawn to visions and ideas, as well as to systems which accord them a greater share of influence and power. Intellectuals feel ‘under-valued’ by the market, in that it puts a value on them less than they think appropriate.

The case Klaus put was that the ‘hard’ version of socialism (ie communism) might be over, but the weak versions, including social democracy, the welfare state, and the ‘social model,’ now posed the threat of big and patronizing government, high regulation, and large-scale income redistribution. Intellectuals are attracted to this type of thinking because it elevates their importance and the chance to impose their ideas on a world which would otherwise reject them.

The threat these days, Klaus said, came from the spread of illiberal ideas OUTSIDE of socialism. He instanced ambitious social engineering, radical human rightsism, the enforcement of the perceived good, environmentalism, what he called ‘NGO-ism,’ and Europeanism (meaning moves to an integrated European over-government). All, he said, were substitute idelogies for socialism, and all provided niches for interference by intellectuals in the spontaneous activities of human societies.

It was a tough speech, identifying the new threats to liberal values, and the allure they always have for intellectuals who stand aloof from the real world.

It should also be noted that since the Adam Smith Institute is a European institute, they use the term liberal in the traditional sense, not in the North American meaning. In other words, a liberal, both in its traditional usage and in its European usage, means someone who strongly supports free-markets, less regulations, and an overall Laissez-faire economy, what we would associate more with conservatives and especially libertarians here in the United States.

Quote Of The Day

“It is particularly interesting that Crash illustrates one of the deep truths of models of statistical discrimination: The real social conflict is not between groups, but within groups. People who are below-average for their group make life worse for people who are above-average for their group. Women who get job training and then quit to have children hurt the careers of single-minded career women, because they reduce the profitability of the average woman. This lesson is beautifully expressed in the scene where the successful black t.v. producer (Terrence Howard) chews out the black teen-ager (Chris “Ludacris” Bridges) who unsuccessfully tried to car-jack him:

You embarrass me. You embarrass yourself.

The upshot: If you really want to improve your group’s image, telling other groups to stop stereotyping won’t work. The stereotype is based on the underlying distribution of fact. It is far more realistic to turn your complaining inward, and pressure the bad apples in your group to stop pulling down the average”. — Economist Bryan Caplan, discussing the movie Crash

A Message From The President Of Iraq

The President of Iraq writes:

We Need American Troops
Thank you for liberating my country. Please don’t leave before the job is done.

BY JALAL TALABANI
Wednesday, September 21, 2005 12:01 a.m. EDT

BAGHDAD–There is no more important international issue today than the need to defeat the curse of terrorism. And as the first democratically elected president of Iraq, I have a responsibility to ensure that the world’s youngest democracy survives the inherently difficult transition from totalitarianism to pluralism. A transformation of the Iraqi state and Iraqi society is impossible without a sustained commitment of soldiers from the United States and other democracies.

To understand why, let us recall how we reached this juncture in history. How is it that Iraq today has a democratically elected head of state, government and Parliament? How it is that members of the most repressed ethnic groups now hold the highest offices of state? All these welcome developments are a result of the courage and vision of President Bush and his allies, British Prime Minister Tony Blair and Australian Prime Minister John Howard, leaders whose commitment of troops to enforce U.N. Security Council resolutions liberated Iraq.

Without foreign intervention, the transition in Iraq would have been from Saddam’s bloodstained hands to his psychopathic offspring. Instead, thanks to American leadership, Iraqis have been given an opportunity of peaceful, participatory politics. Contrary to the new conventional wisdom, Iraq and the history of 20th-century Europe demonstrate that force of arms can implant democracy in the most arid soil.

Continue reading ‘A Message From The President Of Iraq’

If It Was Up To You, What Government Pork Would You Cut?

I am not sure if I agree with everything, but Ken over at Chicago Boyz is on the right track.

Quote Of The Day

“…what are the fruits of militant secularism? Are the lives of Robespierre, Lenin, Stalin, and Mao not instructive? And have we no personal knowledge of the utter misery that has plagued friends who mistakenly thought they could live happy and completely secular lives? As for wholly secular states, Oz Guinness, writing in the Wilson Quarterly (Spring 2005) observed, “It’s a simple fact…that, contrary to the current scapegoating of religion, more people were slaughtered during the 20th century under secularist regimes, led by secularist intellectuals, and in the name of secularist ideologies, than in all the religious persecutions in Western history.” Read that again, slowly”. –Historian Thomas C. Reeves, writing in the History News Network

A Brief History Of Roe vs. Wade

Given to us by the LA Times:

Roe Ruling: More Than Its Author Intended
By David G. Savage Times Staff Writer
Wed Sep 14, 7:55 AM ET

WASHINGTON — In mid-1971, the Supreme Court agreed for the first time to hear a constitutional challenge to the long-standing state laws limiting abortion. Its decision to do so reverberates today.

At that time, Texas and 30 other states had laws, dating from the 19th century, that made an abortion a crime unless it was performed to save the mother’s life.

Georgia, like California, had revised its laws in the late 1960s to permit abortion in specific circumstances: if the mother’s health was endangered, if the pregnancy was caused by rape or if the fetus had a severe defect.

The newest member of the Supreme Court, Justice Harry A. Blackmun, saw much to like in the revised abortion laws. A lawyer who greatly admired doctors, he had been general counsel for the Mayo Clinic in his home state of Minnesota before becoming a federal appellate judge.

He believed that doctors needed to have leeway to do medically necessary abortions. In the court’s first private conference on the issue, he described Georgia’s law as “a fine statute [that] strikes a balance that is fair.”

Yet, a year later, Blackmun wrote an opinion for the court that struck down all of the nation’s abortion laws. Equally important, his opinion made virtually all abortions legal as a matter of a constitutional right.

That opinion, in the case of Roe vs. Wade, remains the court’s most disputed decision of recent decades. By abruptly voiding all laws against abortion, it galvanized a powerful antiabortion movement that has transformed American politics.

It also dominates public debate over the court and its future. The Senate confirmation hearing for Judge John G. Roberts Jr., like those of all recent nominees, is focusing on one question: Will he vote to uphold or to reverse Roe vs. Wade?

Continue reading ‘A Brief History Of Roe vs. Wade’

Quote Of The Day

“But I also hope that around the world it’s noted that on matters of race, the United States is about 100 percent ahead of any place else in the world in issues of race. And I say that absolutely fundamentally. You go to any other meeting around the world and show me the kind of diversity that you see in America’s cabinet, in America’s Foreign Service, in America’s business community, in America’s journalistic community. Show me that kind of diversity any place else in the world, and I’m prepared to be lectured about race. “. —Secretary of State Condoleezza Rice, in an interview Monday (9/12/05) with the editorial board of The New York Times

More Free Books Online

Human ActionThe first one is, “Human Action: A Treatise on Economics“, by Ludwig Von Mises. This book is one of the, if not the, most important work of economic or social theory written in the twentieth century, it is written by a world-respected economist with Human Action being his masterpiece. A must read for anybody even remotely interested in economics.

The book can be found here, along with other free books on the right hand side.

The second one is, “I, Pencil” by Leonard E. Read. Milton Friedman describes the book this way,

Leonard Read’s delightful story, “I, Pencil,” has become a classic, and deservedly so. I know of no other piece of literature that so succinctly, persuasively, and effectively illustrates the meaning of both Adam Smith’s invisible hand—the possibility of cooperation without coercion—and Friedrich Hayek’s emphasis on the importance of dispersed knowledge and the role of the price system in communicating information that “will make the individuals do the desirable things without anyone having to tell them what to do.”

It is a very small and light read, if you have time during lunch or something, it is a perfect time to read it. It can be found here.

The third one is, “The Theory of Moral Sentiments“, by Adam Smith. The Adam Smith Institute describes it this way, ” It was not the famous Wealth of Nations, but a work on ethics and human nature called The Theory of Moral Sentiments, which made Adam Smith’s career. It was the sensation of its age, sold out in weeks. … In The Theory of Moral Sentiments, Smith asks that most fundamental question: Why do we regard certain actions or intentions with approval and condemn others? At the time, opinion was divided: some held that the only standard of right and wrong was the law and the sovereign who made it; others, that moral principles could be worked out rationally, like the theorems of mathematics. Smith took a completely new direction, holding that people are born with a moral sense, just as they have inborn ideas of beauty or harmony. Our conscience tells us what is right and wrong: and that is something innate, not something given us by lawmakers or by rational analysis. And to bolster it we also have a natural fellow-feeling, which Smith calls “sympathy”. Between them, these natural senses of conscience and sympathy ensure that human beings can and do live together in orderly and beneficial social organizations”.

The book can be found here.

The fourth one is, “The General Theory” by John Maynard Keynes. This is book should be read more for historical significance than modern economic education, as economist Tyler Cowen explains, “Keynes’s great contribution was to create an economics in which a persistent Great Depression was possible. But on policy recommendations, I would stick with Milton Friedman, or for that matter Keynes’s earlier Tract on Monetary Reform. We can recognize the dangers of deflation without embracing Keynes’s seductive yet unworkably byzantine analytical framework”.

The book can be found here.

Enjoy!!!

Update: Several other books here.

Quote Of The Day

“India is a good example to consider in evaluating the respective roles of aid and self-generated reforms. India probably received more economic aid from international organizations than any other nation during the 40 years from its independence to the mid-1980’s. Yet this large and complicated democracy experienced only a slow growth in per capita income during this period-sometimes referred to as the “Hindu” rate of growth, as if Hinduism was an inevitable drag on economic progress. However, a serious macro-economic crisis around 1990 forced India to change its ways, and brought in a reform-minded economist as finance minister, Dr. Manoman Singh. He introduced a series of simple but basic economic reforms during the early 1990’s that included sharp lowering of very high tariffs and quotas, substantially reduced regulation of private domestic investments, a little encouragement to foreign direct investment, and the opening of more sectors to private enterprise. With no increase in foreign aid, and very likely a decrease, India’s rate of economic growth sky-rocketed after these reforms to above 6 per cent per year, second highest only to China, and a pace of growth that would be the envy of African nations”. —Gary Becker, winner of the Nobel Prize in Economic Sciences in 1992, writing at the Becker-Posner blog about foreign aid and its benefits and costs

What Is The Federalist Society?

Eugene Volokh, professor of Law at UCLA describes the federalist society:

Having joined the Federalists in 1987, two years before starting law school (I was 19 and had seen their ad in the National Review), I feel qualified to answer these questions. The Federalist Society is a group of conservatives, libertarians and moderates who share two things: an interest in law and a sense that the liberal legal establishment often (not always) gets things wrong.

We have no articles of faith. Some of us are pro-choice, others pro-life. Some Federalists — such as Gary Lawson, a member of the society’s board of directors and a professor at Northwestern University School of Law — think the Constitution should be interpreted primarily based on its original meaning. Others focus more on precedent or on evolving tradition. Some, like professor Randy E. Barnett of Boston University, argue that the Constitution protects a broad range of rights beyond those specifically listed in the first eight amendments. Still others, such as Supreme Court Justice Antonin Scalia, who was a faculty adviser to the University of Chicago’s chapter of the Federalist Society in the 1980s, believe that decisions about such unenumerated rights should be left to the democratic process, not to judges.

Many Federalists — such as Paul Cassell, a prominent critic of Miranda v. Arizona, who teaches at the University of Utah College of Law — believe the police deserve more flexibility than they now have. Some, like Roger Pilon of the libertarian Cato Institute, are much more skeptical of government power. And still others fall somewhere in between.

Most Federalists, like most Americans, believe in free markets — though of course there’s a range of views on when the government should intervene. Most adopt a vision of civil rights under which the government must generally be color-blind, and may not engage in racial discrimination or racial preferences. This is a widely held view (though most liberal advocacy groups disagree with it). It has been held by, among others, Supreme Court justice William O. Douglas, leading constitutional scholar and former ACLU board member William Van Alstyne, and millions of liberal and moderate voters in California and Washington state. But even with this hot-button issue, there’s disagreement within the Federalists, some of whom support certain race preferences.

What, then, unites us? The society does have a statement of purpose (available at http://www.fed-soc.org/who.htm) but it mentions general ideals such as individual freedom, separation of powers and the rule of law — important principles, but ones that are understood quite differently by different people. I would wager that most members have never read this statement, or (like me) read it once but had long forgotten it.

Rather, our common bond is just that most of us fall somewhere vaguely right of the center of the political spectrum most of the time. Many leading legal academic and professional institutions are dominated by liberals: A recent study finds, for instance, that 80 percent of U.S. law professors describe themselves as “Democratic or leaning Democratic,” and only 13 percent call themselves “Republican or leaning Republican.” We who dissent from this orthodoxy naturally enjoy talking with each other, even when — especially when — we disagree.

The society is genuinely open to a variety of views. It takes no position on legislation or on candidates. It files no lawsuits or friend of the court briefs. Its charter is to create discussion, not to lobby, litigate or get out the vote. It welcomes moderates and liberals, if they want to participate, as well as libertarians and conservatives; anyone is free to join.

This openness extends to Federalist conferences, which invariably include liberal speakers, such as Justice Stephen Breyer; Clinton administration White House counsels Abner Mikva and Bernard Nussbaum; professors Akhil Amar, Alan Dershowitz, Randy Kennedy and Kathleen Sullivan; ACLU leaders Nadine Strossen, Burt Neuborne and Steve Shapiro; and many more. I know of no other law-school-based group that consistently sets up panels as balanced as the ones we Federalists put together.

We think that a fair debate between us and our liberal adversaries will win more converts for our positions than for the other side’s. You can call this view cocky, but the result is a real addition to civil discussion and the diversity of ideas in law schools and the legal profession. As my colleague Dan Lowenstein, a Democrat and political appointee of former California governor Jerry Brown, once said, “The Federalist Society is one of the few student organizations putting on public events that contribute to the intellectual life of the law school.”

In other words, it’s a shame that John Roberts is not a member of the federalist society.

Link via Catallarchy.