Triumphant Return

I am back from my exciting vacation.

One observation from my trip. In Spain and Italy, just about everywhere you go, there are plenty of signs in English. However, in Marseilles, France it is impossible to find any public signs or monument blurbs in English. There is one place you see lots of English in France: the giftshops.

Vacation

I'm leaving on a ten day vacation today. So, as to not let this feed go dry, I lined up a series of guest bloggers: Tony Schwartz, Tim Russert, and Harvey Korman. They were going to help take this blog in a more aggressive political advertising, interrogation style political interview, and classic although dated comedy direction. It was going to be a great ten days for this blog, but it was not to be...

Instead, I leave you with this.


I will tastefully return in about ten days.

Che Guevara Fashion

Chris Blattman recently had a piece about the fashion trend of Che Guevara clothing items and posters. I don’t have a knee-jerk negative reaction to seeing a Che Guevara decorated shirt. I think that shot of him in black and red that you usually see is a pretty cool looking image. Generally the people who display it will say it stands for some form of idealism and rebellion, which I am sympathetic to. I think it does stand for that to them and to most people, and that’s how I interpret it when I see it.

However, when you invest some thought in Che Guevara, I think it quickly becomes untenable to hold him up as an icon. He’s basically a fashionable Stalinist. I’m not an expert on the history of the Cuban Revolution, Castro’s Cuba, and Che’s adventures in Latin America. However, there seems to be a consensus that Che led death squads, imprisoned dissidents, prosecuted homosexuals, and executed many innocent people in Castro’s quest to create the Cuban "new man." This column by Paul Berman at the time of The Motorcycle Diaries gives a good overview of his regrettable actions.

If most of them knew all the facts, and saw Guevara as I and many other do, they would run from using his image. While we are living through this Che Guevara phase, we don’t see how ridiculous it should be. I think this is something that will eventually die out and then we’ll all be disgusted in how it was able to persist for so long. I view it as somewhat like wearing Confederate flags, which fortunately has become much less acceptable in the last ten years. But a flag is generally more vague; I think this is more like a fad of wearing Nathan Bedford Forrest shirts.

Again, I don’t think that people who wear Guevara’s image are hateful (only a very small percentage). But I do think that everyone should definitely stop doing it.

Starving the Democrats

The United States’ first Treasury Secretary, Alexander Hamilton said that under the right circumstances a national debt could be a national blessing. At the time, he probably did not have the ‘Starve the Beast’ theory in mind. However, I did when I read columnist/economist Paul Krugman’s piece today in the New York Times. The gist of Krugman’s column is that George Bush’s tax cuts have made it very difficult to reasonably pass any major increases in government spending on health insurance. This has had an effect in limiting what both candidates are promising during this election. Krugman doesn’t mention Bush’s sizable spending increases for wars and prescription drug coverage. But, that’s the other (worse) part of the math for Bush’s “poison pill”.

I am not sure I want to sound cavalier about debt. Ideally, I would favor limited debts to sponsor corresponding long-run projects and larger debts for use in a national emergency. If we were governed by angels or libertarians, the cynical view of roundabout ways of restricting government spending would be ridiculous. However, we are government by politicians with their politically popular ideas. My view is that it is best that it be obvious to politicians (or at least their advisors) and hopefully the public that grand new spending proposals are impractical.

The ‘success story’ for starving the beast is the Reagan presidency. Reagan’s terms saw significant cuts in income taxes and increasing spending on defense. This left his successors, H.W. Bush and Clinton, with quite sizable national debts compared to the historical average. One of the effects of this was that those two presidents were quite constrained on their policy options. Bill Clinton would have needed much larger, and probably politically unpalatable, tax increases in 1993 to pass a national government health insurance bill. So, he ended up pursuing a moderate economic path, even in his first years with sizable Democratic majorities in both houses on Congress. Economically, this turned out quite well in the 1990s. George W. Bush has set the next President up for a similar situation to Reagan’s successors (although without the 1980s boom or the end of history).

Could this lead to the future redemption of the Bush presidency? I think not, he needs Iraq to turn into Germany in five years. But perhaps this is a silver lining. I’d be quite content with President Obama as a Bill Clinton who improves our standing abroad. I would like Democrats who didn't spend money, I would also like Republicans who didn't...

(H.T. Greg Mankiw)

Idiocracy

If you haven't seen Idiocracy you probably shouldn't. However, I just did this weekend and it does have some politcal-economic themes in it.

In the film, Luke Wilson and Maya Rudolph are frozen for a military experiment and awake in the year 2505. In the future, the stupid have so far outbred the intelligent, Luke and Maya arrive as the smartest living people in the world. Eventually, the President who is also a porn star and wrestler puts Luke Wilson's character (Joe) in charge of solving the agriculture crisis one of the many major problems that has been caused by the dumbing of the population. Joe learns that water has largely been replaced by 'Brawndo: The Thirst Mutilator', a Gatoraid-like drink advertised as rich in electrolytes. One of the many uses of Brawndo is crop irrigation. Over time, the sugar from Brawndo accumulated in the soil, killing the crops and causing the food shortage.

Joe proposes uses water for irrigation which is seemingly laughable as water is only used in toilets. Fortunately, Joe is able to get the transfer from Brawndo to water enacted. However, the reaction from the unenlightened entrenched interests comes quickly. Joe is harshly criticized for harming the sports-drink industry, in which a large fraction of the population appears to be employed. His policy is criticized for causing unemployment and destroying the economy, with little evidence about the overall economic situation other than Brawndo being upset. After being verbally attacked by the management of Brawndo, Joe is physically attacked by an angry mob of now unemployed sports-drink workers. He is soon removed from his office and sentenced to 'rehabilitation' which is a lot like a futuristic feeding to the lions.

...I thought about creating a Luddite Fallacy tag for this brief piece, but I think I'm just going to go with more Creative Destruction.

Robin Hanson on Health Care

Here is a great youtube clip of a Robin Hanson interview, where he mentions of some of the biases that affect our Healthcare decisions and gives an overview of signaling theory. I subscribe to Overcoming Bias and I don't recall this interview being mentioned there at any point, so I will mention it here.

Hanson is a GMU economists and one of the most interesting guests on EconTalk. He's done two podcasts, both of which anyone who finds this clip interesting will enjoy very much. His blog Overcoming Bias is a much read, although I must warn some of Eliezer Yudkowsky's posts can be a little intense for the casually rational reader. Near the end of his recent EconTalk interview, Russ Roberts asks Hanson the reason for wanting to overcome all of our biases if those who are most successful act according to all the signals and seemingly irrational behavior our society rewards. I liked Hanson's response: "If you want understand the world and you don't understand this you will miss a lot... Some of us just want to look the world straight in the eye, see what it is, and even if it isn't a pleasant sight we just want to see." ...So maybe it's fun, but perhaps it's irrational to overcome our biases? Or rather, it's interesting to understand our biases, but generally it's best to act biased anyway. Curious.

Updated My attempt to embed did not work, so just click on the link.

The Reaction in Ohio

The return of medieval usury laws is another worrying signal of the reactionary turn politics have taken in the state of Ohio. I view the dominant economic and political trends in the state to be main causes of this turn. Those trends are decline of traditional manufacturing industries and the strength of entrenched interested in the major political parties.

The state Democratic Party appears to be controlled by Unions and anti-market religious types – They are the main cause of the anti-market climate in the state, which is the principle reason that business is leaving for better run areas of the country. Conversely, the Republican Party seems to be controlled by rent-seeking businessmen and religious types – who when in government appear to steal and increase taxes. There aren’t many good options right now. What the state needs to do is restrict the excessive power of Unions, become a right to work state, rationalize regulations, lower and rationalize the tax system, and it would be nice if the state government set a progressive/liberal tone.

As a result, the state’s political discourse is dominated anti-lending laws, anti-gay marriage laws, anti-illegal immigrant crackdowns, and anti-trade rhetoric.* So, Ohio is turning into France. The state needs a rupture. Unfortunately, I see no reason to think Ohio will be shocked out of its descending path anytime soon as 1970s Britain, post-Katrina Louisiana, and a few others have been. Perhaps someone like Rob Portman could shake up the state in 2010, but that’s unlikely, and in the near future it appears the reactionaries have the upper hand.

*See Benjamin Friedman’s ‘The Moral Consequences of Economic Growth’

The Return of Usury Laws

Democratic Governor/Baptist Minister Ted Strickland along with the Republican state legislature has banned “Payday lending” in the state of Ohio. They have done this by capping the interest rate that may be charged at an annual rate of 26%. The effect will be that no one will be able to lend short-term money to risky borrowers (ie. Pay day lending). Previous borrowers (generally the relatively less well off) are thus banned from borrowing short-term.

I have never taken out a Payday loan, but I know people who claim to have. These people don’t seem to think they were scammed, although they still don’t like the high rates. They wouldn’t have used payday lending if they had preferable alternatives. So, they paid the high rate – not the end of the world. Payday loans generally aren’t pleasant, but there is a service being provided here – making high risk loans. High risk loans necessitate high rates. But, now they are illegal. Some of this lending will no doubt go underground (remember loan sharks). Also, this will no doubt be a boon another form of credit for high risk borrowers, Pawn shops (Until they are also banned).

When I see market transactions that I don’t view as pleasant, my first instinct (like Tyler Cowen’s) is not necessarily to ban them. But many people do have that instinct, often on religious or pseudo-moral grounds. My feeling is that part of the dislike of Payday lending is aesthetic – the dislike of bad neighborhoods. The middle and upper classes don’t really like poorer neighborhoods, which are often full of Pay-day lenders, which are often full of poorer people. There is certainly a tendency of moral crusaders in society to take away unbeautiful options from those who are not rich. The institution of government mandated wage floors, the bizarre campaign against Wal-Mart, and usury laws are three prominent examples of this trend. Although on the surface morally-inspired, I think this is a mean-spirited and anti-liberal trend. I find it worrying.