I looked at moving the site to Wordpress, but didn't like their features (or rather didn't want to pay for them).
The Liberal Evolution continues, but this blog is now renamed 'A Positive Externality'. Among other things, I got a little tired of the Evolution name as evolution is a more brutal and slow process than hopefully the continued liberal revolution will be.
Showing posts with label Creative Destruction. Show all posts
Showing posts with label Creative Destruction. Show all posts
Tuesday, August 19, 2008
Sunday, June 8, 2008
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 Joe learns that water has largely been replaced by 'Brawndo: The Thirst Mutilator', a Gatoraid-like drink advertised as rich in electrolytes.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.
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.
Wednesday, May 14, 2008
Equivocating About Trade
Economists almost universally favor expanding free trade. This is because they recognize that increased openness will help some and hurt some others, but (baring some bizarre conditions) the benefits always outweigh the 'costs'. So, it's not unreasonably for those who know a little about trade to just say that more trade is always good for the country. In fact, a more detailed explanation of the upsides and downsides of trade could be confusing to the vast bulk of people who don't understand comparative benefit and scope of the market arguments. Oversimplified summaries of these factors muddle the issue. As a result people are led to believe the issue of free trade is a toss up, and perhaps defer to their own conservative inclinations. Here Don Boudreaux makes a good point along these lines in a letter to the Wall Street Journal:
Would you introduce letters on the polio vaccine with "Vaccine Has Helped Some, Hurt Some"? After all, the vaccine eliminated jobs for workers who made crutches, wheel chairs, and iron-lung machines. Of course, the benefits of the vaccine - especially over the long run - far outweigh the costs. Likewise with consumers' freedom to spend their incomes as they choose. And free trade is nothing more than consistently allowing consumers to spend their incomes as they choose.There are always those who benefit and those who lose their privileges. Not just from trade, this is the nature of change and life. It is reasonable to help those who fall on hard times as a result of development. But, we shouldn’t let the crutch-makers determine public policy.
Wednesday, April 23, 2008
Dynamism and Enemies of Capitalism
Another excellent podcast this week at EconTalk. Russ Roberts has no guest this week, but instead delivers a monologue explaining why most of the popular criticisms of capitalism are quite wrong.
One thing that Robert's does not go into here is how individuals can be worse off due to creative destruction. Their children and grandchildren will almost certainly be better off, but in the short-run lots of people suffer due to trade.
Say tomorrow, the job of economist is made obsolete and replaced with a machine (stupid example). Those people who are employed in economists right now are doing it because it is the best that they can do right now and the profession they seem to enjoy the most. The former economists will all have to find other employment as journalists, bankers, retailers, etc. They’ll be alright and society will be better, but probably their lives would have been better without the economics machine.
Of course, most opponents of trade do not realize that their jobs were created in the first place because of trade, and new and better jobs will be created by the expansion of the market. They don’t know or they don’t care. The children of the previous generation of innovators often curse today's entrepreneurs and want to preserve the status quo. The same goes for lower level workers in mature industries. Saddle-makers did not like early autoworkers. Short-term losers in a capitalist economy are rationally (although selfishly) fearful of the dynamism of capitalism. So, a basic problem with capitalism is that it is constantly creating an opposition to itself. This is Schumpeter’s idea, and I agree with it. To paraphrase Milton Friedman, capitalism would be long gone if it weren’t so much and so obviously better for society especially in the long-run.
One thing that Robert's does not go into here is how individuals can be worse off due to creative destruction. Their children and grandchildren will almost certainly be better off, but in the short-run lots of people suffer due to trade.
Say tomorrow, the job of economist is made obsolete and replaced with a machine (stupid example). Those people who are employed in economists right now are doing it because it is the best that they can do right now and the profession they seem to enjoy the most. The former economists will all have to find other employment as journalists, bankers, retailers, etc. They’ll be alright and society will be better, but probably their lives would have been better without the economics machine.
Of course, most opponents of trade do not realize that their jobs were created in the first place because of trade, and new and better jobs will be created by the expansion of the market. They don’t know or they don’t care. The children of the previous generation of innovators often curse today's entrepreneurs and want to preserve the status quo. The same goes for lower level workers in mature industries. Saddle-makers did not like early autoworkers. Short-term losers in a capitalist economy are rationally (although selfishly) fearful of the dynamism of capitalism. So, a basic problem with capitalism is that it is constantly creating an opposition to itself. This is Schumpeter’s idea, and I agree with it. To paraphrase Milton Friedman, capitalism would be long gone if it weren’t so much and so obviously better for society especially in the long-run.
Saturday, April 12, 2008
Review: The Mind and the Market
‘The Mind and The Market: Capitalism in Western Thought’ by Jerry Z. Muller
In The Mind and The Market, Jerry Muller attempts to give an overview of Western views about the ‘market’ driven economy from Antiquity through the 20th Century. I found this book to be an excellent overview of the debates over capitalism (a term that Marx popularized), and significant views on the “moral implications and ramifications of the market”. Muller fairly presents liberal views on the benefit of the market along with Marxist, nationalist, conservative, and romantic critiques. Each view is presented within its context, but Muller finds that many of the same concerns continue to repeat throughout history, alternatively as benefits or downsides of capitalism.
Muller places a particular emphasis on German intellectuals, an intellectual history that is the author’s specialty. Perhaps the strongest section is Muller’s discussion of German intellectuals of the pre-World War I and interwar years. In the Austro-German context, capitalism went from precarious ascendance at the turn of the century to being almost universally viewed with hostility after the first war.
This book is not so much a discussion of the history of economic theory as a history of philosophy of the market. As a result, Keynes surprising only gets half of a chapter. Almost all the intellectuals mentioned in this book admit that capitalism had greatly increased the material well being of society. But, what has most worried thinkers throughout history has been the effects of the market on moral, cultural, and political values. People have long agonized over the effect of the market on institutions like the church, family and the nation. Modern commentators have a tendency to reinvent these concerns and overrate the novelty of modern problems. The arguments of Justus Möser fighting the decline of feudal society, and the breakdown of the traditional order, don’t sound that far off from a modern trade unionist. There is little popular romance about capitalism, so its driving force has always had to be that it is the most efficient system. Schumpeter would point out that capitalism is always breaking down and rebuilding society. This is certainly for the long-term material good of about everyone, but in the short term it creates constant enemies of those who are on the wrong side of “creative destruction”.
8/10 – Recommended
In The Mind and The Market, Jerry Muller attempts to give an overview of Western views about the ‘market’ driven economy from Antiquity through the 20th Century. I found this book to be an excellent overview of the debates over capitalism (a term that Marx popularized), and significant views on the “moral implications and ramifications of the market”. Muller fairly presents liberal views on the benefit of the market along with Marxist, nationalist, conservative, and romantic critiques. Each view is presented within its context, but Muller finds that many of the same concerns continue to repeat throughout history, alternatively as benefits or downsides of capitalism.
Muller places a particular emphasis on German intellectuals, an intellectual history that is the author’s specialty. Perhaps the strongest section is Muller’s discussion of German intellectuals of the pre-World War I and interwar years. In the Austro-German context, capitalism went from precarious ascendance at the turn of the century to being almost universally viewed with hostility after the first war.
This book is not so much a discussion of the history of economic theory as a history of philosophy of the market. As a result, Keynes surprising only gets half of a chapter. Almost all the intellectuals mentioned in this book admit that capitalism had greatly increased the material well being of society. But, what has most worried thinkers throughout history has been the effects of the market on moral, cultural, and political values. People have long agonized over the effect of the market on institutions like the church, family and the nation. Modern commentators have a tendency to reinvent these concerns and overrate the novelty of modern problems. The arguments of Justus Möser fighting the decline of feudal society, and the breakdown of the traditional order, don’t sound that far off from a modern trade unionist. There is little popular romance about capitalism, so its driving force has always had to be that it is the most efficient system. Schumpeter would point out that capitalism is always breaking down and rebuilding society. This is certainly for the long-term material good of about everyone, but in the short term it creates constant enemies of those who are on the wrong side of “creative destruction”.
8/10 – Recommended
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