Wednesday, September 28, 2011


Comments said or written to Sydney Smith:

"You have been making fun of me, Sydney, for 20 years, and I do not think you have said a single thing I should have wished you not to say."

Jacques Barzun, From Dawn to Decadence, page 534

Tuesday, September 27, 2011

Dictators far and wide

I like how this post by David Price-Jones moves seamlessly from Assad to Abbas to Europe.  It's probably a bit over-stated but the overstatement is embarrassingly small.

"Perhaps the temptation is always there to rule without the consent of the ruled. The European Union is another example of it. I woke up one day to discover that I had a president, a Belgian, of whom I had never heard. Angela Merkel and Nicolas Sarkozy take decisions for whole populations like the Greeks who are expected to obey. Such figureheads have no legitimacy to be acting for people who are not their constituents and never will be. It is painfully plain that those who set up this EU made a historic mistake. It will be a matter of luck if the world gets out of it without a major crisis."

Sunday, September 25, 2011


"We are none of us tolerant in what concerns us deeply and entirely."   Coleridge (1836)

Jacques Barzun From Dawn to Decadence, page 273

Friday, September 23, 2011

How Columbus got his financing

From Jacques Barzun's From Dawn to Decadence:

"The Spanish queen Isabella is rightly credited with sponsoring him [Columbus], but not till she had turned him down several times like all the others...Finally, the queen's private treasurer pointed out that this sailor's request amounted to less than the cost of entertaining a royal visitor and he urged her to give the money."

Wednesday, September 21, 2011

It's the asymmetry stupid

I’d like to return to the David Brooks column, not because of its main theme of disappointment in Obama, which is rather pathetic, but because its basis in a pursuit of a moderate position strikes me as misconceived.  Brooks seems to view our politics as a roughly balanced contest, in which the term moderation and compromise conform to our understandings of these words.  That is a politics in which power and the direction of policy is changing hands as elections move control from Democrats to Republicans and vice versa.

But that isn’t what we have.  Our politics has been like the European nations voting to join or stay out of the European Union.  Vote in favor and you’re in, vote against and decent interval is allowed to pass and then you vote again and again until you get it right (unless of course another way can be found to get it done without a vote).  But once you’re in, you’re in.  Similarly, liberals propose government programs.  If they fail to pass they come back up again, perhaps in slightly different form, but with the essential scheme and extension of government intact until they pass.  And they needn’t pass in their final form, getting the program started is the key point, from there once again it is merely a matter of repeated attempts and waiting for the right circumstances until the program is extended to its more all encompassing final form.

For conservatives then politics is an asymmetric contest where wins come in the form of containment or postponements rather than anything resembling a true reversal.  Republican wins result in a slow down of new government initiatives and the management of past programs.  Thus the kind of compromise that Brooks seeks ignores the camel’s nose, toothpaste out of the tube, nature of politics in our time. 

In his column today, Jonah Goldberg gets at this essential point by relating Murray Rothbard’s fable of the shoes.  This is the curious bias that prevails for the status quo in government, where if government has done something for any period of time it is considered axiomatic that any alternative is considered to be beyond the pale.
“If everyone had always gotten their shoes from the government, writes Rothbard, the proponent of shoe privatization would be greeted as a kind of lunatic. ‘How could you?’ defenders of the status quo would squeal. ‘You are opposed to the public, and to poor people, wearing shoes! And who would supply shoes . . . if the government got out of the business? Tell us that! Be constructive! It’s easy to be negative and smart-alecky about government; but tell us who would supply shoes? Which people? How many shoe stores would be available in each city and town? . . . What material would they use? . . . Suppose a poor person didn’t have the money to buy a pair?’”

It’s a good argument, and also an absolutely hopeless one, as I think Goldberg would concede.  He goes on to note that it “is amazing how quickly status quo bias kicks in.”  Quite right, and quite important.  As I’ve noted elsewhere on this site, Walter Bagehot observed that to adequately judge a reform takes a generation.  I think Bagehot was an optimist (see Social Security, et al) but regardless, it should be noted that by then it doesn't really matter as the reform will have already been established.

Like I said

Via today's Morning Jolt newsletter I find that Robert McCain is on the same page in regard to David Brooks (see my posts from yesterday):

"And here is why you’re a sap, Brooks: You looked at the long era of Republican ascendance (1981-2006) and decided that the cause of GOP policy failure was that Republicans were too conservative. Ergo, you reasoned, some sort of “moderate” bipartisan compromise was the solution. But the failures of the GOP are due to other reasons entirely — including the constant stream of disinformation flowing from the media — and so the bipartisan compromise approach you recommend only leads to Democrat victories."

I wouldn't single out the media, but the rest is spot on if "ascendance" is noted as a relative term.

Tuesday, September 20, 2011

Perry's chances (and David Brooks)

A post on Contentions by Seth Mandel comments on a Michael Gerson column in which he [Gerson] “is confident GOP primary voters will nominate Mitt Romney over Rick Perry because Romney seems to be the “safe” candidate at a turbulent hour in American economic history.  Gerson writes that Republicans prefer to elect known quantities and are wary of nationally-untested firebrands.”
Mandel replies “Romney’s “safety” isn’t the advantage Gerson thinks it is, and more importantly, many writers and pundits are probably underestimating the appeal of Perry’s unapologetic conservatism to general election voters as well as Republican primary voters.”

I think that’s right for two reasons related to my prior post on David Brooks.  First, columnists like Brooks who are likely to make the case for Romney over Perry have lost their credibility.  Second, again contra to Brooks, most conservatively inclined voters have realized that “safe” Republicans end up as squishes and if elected the state will probably grow more slowly than under a Democrat administration but grow it will.  Third, the argument against Perry seems to be that he isn’t very smart.  But again that argument, or variations of it, is now so overused that it is likely to be ignored.

As someone who is wary of populism I find the current situation troubling.  I don’t trust the masses, but our elite have failed us spectacularly.  The next election is a big one.  I wish I felt better about our chances of choosing wisely.

David Brooks is also a sap for moderation

At the N.Y. Times supposed conservative columnist David Brooks admits to be “an Obama sap.”  The column essentially details Brooks’ disappointment in Obama to which the best responses on Twitter have been by Iowahawk who commented first “if you’re so smart, how come you’re so stupid” and then “the intellectuals are always the last to figure it out.”

Too true, and more evidence for that last observation is when Brooks writes:

The president believes the press corps imposes a false equivalency on American politics. We assign equal blame to both parties for the dysfunctional politics when in reality the Republicans are more rigid and extreme. There’s a lot of truth to that, but at least Republicans respect Americans enough to tell us what they really think.”

It seems to me that false equivalency falls mainly on the other side.  What Brooks the intellectual apparently hasn’t noticed is that the liberal/progressive vs conservative political battle has been a rout since roughly the New Deal.  The moderation that Brooks pines for has to date resulted in more and more government to our present state of unsustainability.  Disappointment for liberals has been largely a function of impatience, their programs have been passed slower and been less sweeping than they’ve desired, for conservatives disappointment has been serial defeats, offset by containment type “victories.”

Brooks the intellectual is observing things in shorter increments and ignoring the larger historical sweep of things.  Meanwhile the rubes in the hinterlands, who don’t get to write for the NY Times, and who didn’t get taken in by Obama, have noticed the extent of their losses and are disinclined to compromise in the form of giving liberals half victories.  Like Iowahawk says, “the intellectuals are always the last to figure it out.”

Friday, September 16, 2011

European Union

A good column on the single currency and the European Union.

Social Security as Ponzi scheme

I find it curious that there has been such a harsh reaction to Gov. Perry’s description of Social Security as a Ponzi scheme.  Of course it is.  And yet today an online Washington Post poll had about two thirds of respondents objecting, and a Gallup poll shows independents less favorably inclined towards Perry by a margin of 32% to 12% because he described it as such.

I don’t know where the controversy lies.  Are there still people out there that think their Social Security contribution is being invested in treasuries waiting for the day they retire and then being returned?  If so, then Perry’s comments are long overdue.

There is another way of thinking which is even clearer and that is to ignore the distinction between distinct taxes and benefit programs altogether.  In truth, we have different schemes for paying taxes—on property, on income, on usage—and we have different benefit programs which pay out based on various qualifications.  Total money in versus total money out equals the deficit.  The distinction of income, unemployment, medicare, social security taxes, etc. have more to do with political marketing—establishing buy in-- than economic reality. 

At any rate, Charles Krauthammer’s column on the Social Security/Ponzi description is worth a read

Wednesday, September 14, 2011

A football thought

I assume there is something like sabermetrics for football, but I haven't seen it.  While I'm no stathead there are football statistics that I think are flawed.

Running backs tend to be evaluated by average yards per carry.  But average is a terrible stat, often concealing more than it reveals (the median would be a little better here).  Since the passing game tends to be more of an all or nothing venture, I think what you want from your rushing game is consistent yardage.  You run not only to keep the defense off balance but to stay out of long distance situations, and to pick up short yardage first downs.  Average yards per carry doesn't address this at all.  If a back runs for sixty yards on one carry, and gets zero yards on nine other carries, the average is a healthy six yards but you've only had one positive play out of ten.  If you face a third and two, how confident would you be in running for it? 

I'd argue a better measure would be the percentage of carries over a certain benchmark, say three yards, plus first down carries for shorter distances.  That is,you'd get credit if you got two yards on a third or fourth and one.  This statistical measure would I think accurately work to the advantage of a Larry Csonka type and against a Barry Sanders style back. 

Thursday, September 8, 2011

Moderately opposed to moderation

At Right Turn Jennifer Rubin calls for a more rhetorically moderate conservatism.  I’m generally in agreement, finding a great deal of political speech cringe worthy, but Rubin’s essay leaves a lot out.

First, she makes an apples to oranges comparison between how Reagan governed (willing to make compromises) and the current crop of Republican presidential candidates.  But running isn’t governing.  Rubin wants the candidates to speak as if they are addressing a college seminar on political philosophy when they are desperately trying to stand out in a crowded field to a committed base.  The one thing politicians know how to do is get elected.  The candidate who wins the Republican nomination, like all nominees before him will tack to the center and tone it down a bit.  Surely Rubin knows this.

Second, immoderate rhetoric may not fit the conservative profile but it hasn’t been totally absent either.  National Review was founded with the motto “standing athwart history yelling stop!”  Not slow down, not move a little more to the right, but stop.  And this was in the fifties!    New Hampshire has “live free or die” which doesn’t sound very moderate to me. 

Third, she brings in Burke to make the case for prudential rather than dogmatic conservatism.  Again, this is fine so far as it goes but it begs the question of what are the circumstances.  Politics in Burke’s time was aristocratic with far less reach than the government of today.  At the same time that Burke was writing, the Americans were breaking free from his government.  And if you read Carl Becker’s study of The Declaration of Independence you will note that Becker doesn’t find it moderate at all.  Indeed, you can sort of picture him smiling as he details how over the top it is in laying out the crimes the King.

Most of me would like, along with Jennifer Rubin, more reasoned political speech, but not all of me.  When you’ve reached the point where your government is telling you what kind of light bulb you can buy, you sort of hope people will stand up and shout “that they’re mad as hell, and aren’t going to take it anymore.”

An aside: why turn to Burke (18th century) when Oakeshott’s On Being Conservatism  (1956) elegantly makes the same point(s) with the distinct advantage of being more or less contemporary

Wednesday, September 7, 2011

More Keynes/stimulus spending

For those of you following at home, you may have noticed that while I think Keynes' basic prescription for getting out of a recession makes sense in certain circumstances, I question whether it applies to current circumstances.  As I've pointed out our problems aren't due to too much savings but rather over-spending.

So a current post over at
should sound familiar:

"I think John Maynard Keynes would be horrified at the slavish adherence to this simplistic strategy by so many policymakers and economic thinkers, as his theory was much more complex. This thinking might be correct under circumstances other than those in which we find ourselves. If the ratio of our national debt to gross domestic product was low - say 25 percent - and the federal government had run surpluses before the downturn, this college freshman-level Keynesian analysis would have great weight. Put another way, if Uncle Sam were a rock-solid financial entity with low debt to value and he had judiciously used debt for capital improvements that were accretive in value, as the biggest dog on the porch, a stimulus might work.
But with a national debt of more than $14 trillion and unfunded, future “off the books” debt of Social Security and Medicare combined at $104 trillion in present value, according to the Dallas Federal Reserve, Uncle Sam ain’t the man he used to be. This in turn makes American businesses that are sitting on a pile of cash focus on deleveraging. The American consumer is doing the same. In fact, from where I sit, it appears as though everyone except Uncle Sam is working like mad to strengthen his balance sheets. The legitimate fear across the country is that Washington’s refusal to join our common-sense parade will result in higher taxes, more regulations, more inflation and Japanese-style stagflation. In other words, Washington’s attempts at stimulus through spending are having the opposite effect. Businesses and consumers stay hunkered down."

The GOPs non-response response

The GOP has decided it won’t respond to President Obama’s speech on Thursday night.  To borrow from Jonah Goldberg, the only thing better than this would be if they had Rep. Ryan give the response from a Lambeau Field tailgate party, Leinenkugels in hand with a trashed Boehner standing by his side.

I love the idea of passing (pun intended) on a rebuttal.  It’s like the defense resting without calling any witnesses.  It says, we haven’t heard your speech but we don’t have to, to know you’ve got nothin’.  At NRO Goldberg has commented that Pelosi is wrong in claiming the GOP is being disrespectful here.  For the first time in my life I actually have to side with Pelosi on this one.   

Tuesday, September 6, 2011

European Union

An interesting post by Walter Mead on the European Union reaching a moment of decision.  Mead writes the common currency was always intended to bring about a closer political union, that once its benefits became apparent political integration would follow.  Instead, the currency has proven to be an albatross for economies that aren't aligned.

But again, contrary to plan, this failure may still lead to the desired closer union.  European officials are now supposedly looking at America's experience and the failed Articles of Confederation leading to the Constitutional Convention as an analogous situation.  You have to admire their resourcefulnesss.

The question is whether the Europeans constitute a people.  The Americans could declare that "we hold these truths to be self-evident."  Arguably the one fundamental where there wasn't general agreement was race, and that led to a civil war.  If the American states didn't have a history of working together, they at least didn't have centuries of war, of distinct political and cultural history working against them.

As Mead points out, it is hard to see how far the American experience goes in looking at Europe:

"From the US it looks as if Europe’s political and economic cultures are too dissimilar to coexist under a common government.  The cultural differences between Italy’s north and south have ensured that the Italian national government is something of a hollow shell that is almost never able to act; a united Europe would likely end up looking much more like a super-sized and super-dysfunctional Italy than a new United States."

The full post is here:

Monday, September 5, 2011

Two more from Lord Byron

"I remember a methodist preacher who on perceiving a profane grin on the faces of part of his congregation exclaimed 'no hopes for them as laughs'"

"His answer was, that his style was a system, or upon system, or some such cant; and when a man talks of system, his case is hopeless."

Lord Byron, Selected Letters and Journals

Lord Byron - taste and its drawback

"If you enter his [the poet Rogers] house--his drawing room--his library--you of yourself say, this is not the dwelling of a common mind.  There is not a gem, a coin, a book thrown aside on his chimney piece, his sofa, his table, that does not bespeak of an almost fastidious elegance in the possessor.  But this very delicacy must be the misery of his existence.  Oh the jarrings his disposition must have encountered through life!"

Lord Byron; Selected Letters and Journals

The percent of GNP measure

Nearly all the measures of U.S. Government spending that you see are presented as a percentage of GNP.  That this measure is so commonplace is rather curious, because from a spending side it makes no sense.  The rationale for government spending is need, so why would spending track GNP?

Government is of course different from business, but in the business world if you are projecting growth in a budget or plan your expense target will almost always be at a lower percentage.  That is you expect your expenditures to go up but at a slower pace than revenues.  Government expenditures should follow a similar path, there being no reason why military, social security, the judicial system, etc. costs should go up at the same rate as GNP.

More directly, you would think that as a nation became wealthier the safety net would become proportionally smaller.  If say you had a decade where real income doubled you would still have people who would need assistance, but presumably you’d have many more that would move to a state of self-sufficiency. 

This may seem to be of no importance, but I don’t think it is.  The measures used tend to both reflect and shape thinking.  Until the current recession, we had a rather extraordinary economic run.  It seems reasonable to ask whether the standard view of looking at expenditures as a percent of GNP contributed to making commitments which are unsustainable when growth slowed significantly.  Measure expenditures on a percent of GNP basis concedes that spending is based on affordability rather than need.  That’s a big concession.

Sunday, September 4, 2011

The Economy - the question of what to do

This morning I went to the Star & Tribune to find out how the Gopher football team did against USC.  Reading sports columnist Joe Souhan I naturally got political opinion: “Congress might want to take a few notes about quickly making good decisions.”  Behold the idiotic notion that it is only politics that keeps good things from happening right away.

The nub of course is “good decisions.”  What eludes Souhan is that what constitutes a good decision my not be obvious or shared by everyone; case in point, stimulus spending to drag an economy out of a recession.  If you are roughly my age, you’ve been fully drilled in this view, but as noted elsewhere on this blog, Keynesianism is premised on too much saving while our current predicament is too much debt. 

Then there is the question of whether Keynes’ solution really was the miracle cure of the last depression.  Arthur Herman’s piece in The Weekly Standard makes you wonder.  Herman takes a look at World War II—“the ultimate stimulus”—and points out how the economic data doesn’t quite support the deficit spending myth.  Economist Robert Barro states that “the data show that output expanded during World War Two by less than the increase in military purchases.”  If you read the piece you’re struck not by how government spending lifted the economy out of depression but rather how the story follows Bastiat’s broken windows fallacy, that you can grow an economy by breaking things because people will be employing in fixing them.

What is particularly illuminating is the post war boom and the reduction in government spending that went with it.  By Keynesian logic this should have led to contraction not expansion.
This postwar boom has always posed a problem for Keynesians like Krugman. As government spending plummeted with the coming of peace— military spending alone collapsed from 37.5 percent of GDP in 1945 to just 5.5 percent in 1947—many predicted that, without this prop and with the new burden of millions of returning veterans looking for work, the economy would sink once more into the abyss. Paul Samuelson, later the dean of American Keynesian economists, wrote that unless the government did something drastic, “there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced.”
Instead, after a brief hiccup in 1946, the economy rebounded, growing from $231 billion GDP in 1947—roughly what it was in 1945—to $258 billion in 1948, and from there to $285 billion in 1950. Unemployment, despite the dire predictions, increased only to 3.9 percent between 1945 and 1947, in spite of the fact that some 10 million new workers came into the civilian labor market
Herman argues that what caused the boom was business investment, the very same thing that went in decline as America prepared for and went into war.  “Instead, the biggest trigger to growth turns out to have been a sharp rise in private capital investment, which the New Deal had slowed—one reason the Great Depression lingered as long as it did, Higgs argues—and the war had all but halted. That investment jumped from $10.6 billion in 1945 to $46 billion in 1948, as plants expanded and retooled for the production of civilian goods. Even though the overall personal savings rate fell, the private investment rate soared from 5 percent to almost 18 percent, with the biggest leap coming in 1946—a leap that would be reflected in GNP numbers only two years later. Meanwhile, business savings almost doubled in the same period, from $15.1 billion to $28 billion—providing a sure way to finance expansion and hiring.”

Friday, September 2, 2011

Free speech

"...why in fact do we cherish the right to speak freely?  Because we have become a people with a variety of opinions about all sorts of matters and we do not see why we should not utter them.  We know there are limits to this right, but we know also that these limits have nothing whatever to do with 'truth' and 'error', but only with peace and tranquility.  The proper rationale of free speech, and the limits commonly imposed upon it by liberal-democratic governments, is not the belief that every utterance is a bona fide participation in a search for some one 'truth', but the belief that politics are not concerned with this sort of 'truth' at all.  They are concerned with the cultivation of what from time to time are accepted as the peacable decencies of conduct among men who do not suffer from the Purtian-Jacobin illusion that in practical affairs there is an attainable condition of things called 'truth' or 'perfection.'"

Michael Oakeshott, Religion, Politics, and the Moral Life, The Customer is Never Wrong , page 116
Review of Walter Lippman's The Public Philosophy

Another green investment fails

I picked up and read The Death of Conservatism yesterday which argues that movement conservatism expired at the hands of Barack Obama, “a leader of rare political skills.” I also read yesterday that solar panel maker Solyndra is declaring bankruptcy and closing its doors.  According to the report at Bloomberg “the company had borrowed $527 million of the $535 million covered by the Energy Departments loan guarantees.  Solyndra was part of the Obama administrations efforts to create green jobs.

What caught my eye in the story was this:

“The Energy Department’s portfolio of dozens of other government-backed investments ‘continues to perform well and is on pace to create thousands of jobs’.”

The claim that these investments are actually on pace is dubious, as other noted stories have pointed out, but the real question is what is the government doing talking about its investment portfolio?  The typical justification for government is need, but if there is one thing you would think isn’t in short supply in America it is capital and people willing to pursue riches (at least prior to the Obama administration).

It is also my understanding that government officials like the president have to put their investments into a blind trust so as to avoid conflicts of interest.  Are we then to assume that a government portfolio is conflict free?  I doubt it.  Those obviously outmoded ideas of conservatism--like the idea that government isn't very good at picking economic winners--are looking pretty good these days

Addendum:  Rich Lowry on Solyndra

Thursday, September 1, 2011

Jeff Miron on capitalism and income distribution

The 2nd myth is that capitalism generates an unfair distribution of income. What true capitalism does is rewards people who are productive, people who work a lot of hours, people who have a lot of talent, people who come up with good ideas, they get big rewards.  People who don’t do those things get less.”

So says Harvard economics professor Jeff Miron in his three myths of capitalism.  Without a great deal of elaboration and qualification this statement is unlikely to convince anyone not already convinced.  Left alone it probably hurts the case of capitalism just like any other weak argument.

First, if you look at businesses it isn’t clear that profitability is aligned with the values of a society, to the extent we can ascribe values to a society.  For instance gaming and pornography are or have been lucrative businesses.  The social stigma attached to both probably helps their profitability in that it keeps out competition. 

In investment services it isn’t clear that the benefit of making the markets more efficient by closing small price discrepancies is worth the enormous profits and divergence of skilled manpower that has gone into this field.  Moreover, the people who could most critically benefit from having a skilled financial advisor can’t afford it, whereas those who already have a great deal of money have access to the best advice thereby accentuating differences in wealth.

For individuals the statement is even more dubious.  Consider sports where statistics provide at least something approaching objective measures of performance. Prof. Miron will have a tough time convincing White Sox fans that capitalism is in tune with performance when Adam Dunn in the first year of a four year contract that will pay him $56 million is on pace to have the lowest batting average of anyone who ever had enough at bats to qualify for the batting title (he’s hitting .163 with 157 strikeouts out of 368 at bats). 

In truth, as only who works outside of academia will notice, there is considerable luck involved in how much money you make.  How the company performs, how your area is perceived within the firm, how well your boss does and how well he or she supports you are at least as important as hard work and talent.  You can be an exceptional employee and if you are on the wrong side of an acquisition you’re likely to find yourself out of a job.

I would assume Mr. Miron would accept most of these objections, so what is he saying?  I believe his point should be understood by thinking of a normal distribution or the bell curve, that is with the bulk of the population in the middle and smaller numbers at the extremes.  Capitalism distributes income in something like a normal distribution when you look at businesses and individuals.  The majority will earn about what they are worth, with lesser numbers being either lucky or unlucky all the way to the extremes.  Attempts to equalize income aren't fair since they deny these differences.

But it is important not to oversell capitalism as I believe Prof. Miron does in this clip.  The “cure” for whatever unfairness exists in the distribution of income may well be worse than the disease.  And it should be kept in mind that the benefits of capitalism are largely derivative, that the chief argument for capitalism is that it is the only system consistent with a truly free people.  If Krushchev’s boast that communism would bury the West economically had come to pass it wouldn’t make it a better political system than ours.  What needs to be made more consistently is not an economic argument for capitalism but an argument for it that doesn’t rely on its material benefits.  And one that recognizes that life is indeed unfair.