Equilibrium Conditions

Peter Schiff, “Hard-core free-marketeer,” is interviewed by the Washington Post. He’s running for Senate against Chris Dodd. Here’s my favorite part:

If I can take a Senate seat, there’s a lot more power in a Senate seat than a House seat. And most of the other senators spend 90 percent of their time trying to get reelected — raising money, doing what it takes to stay in the Senate, right? I’m not going to spend any of my time on that. So I’ll be, like, 10 senators all by myself.

Planet Money

I have to thank Thomas for introducing me to the Planet Money podcast from NPR, because it provides evidence for something that I really, really want to believe. Namely, that most of the time, when people disagree with me, our disagreement isn’t a normative, but positive, matter. To put it less charitably, that if people who disagree with me knew what the hell they were talking about, they’d be agreeing with me instead.

My fondest Planet Money memory so far came just after Obama announced the new tire tariffs. I was bracing myself for the standard journalistic “some economists say tariffs are bad, but some say they are necessary” treatment, but was pleasantly surprised to hear the announcer say, “You know, this issue is, for us, like climate change. NPR issued a memo a while back saying that we’re not going to get the opinions of climate change skeptics anymore, because the science is settled. It’s pointless to try to give listeners a ‘balanced’ set of opinions on tariffs when an overwhelming majority of economists agree that they are a terrible idea. They are a terrible idea.”

It’s enough to bring  a tear to my eye.

So, listen to Planet Money. It’ll make you smarter. Which means you’ll agree with me more.

20 Years Ago

On September 30th, 1989, thousands of citizens of East Germany waited in Prague for approval from the East German government that would allow them to travel to West Germany for the first time since the Berlin Wall was erected on August 13, 1961. The famous photo of the East German border guard is great but the DDR had 0nly been around for 14 years at that point. This video is awesome.

He says:

“Wir sind zu Ihnen gekommen, um Ihnen mitzuteilen, dass heute, Ihre Ausreise-”
(“We have come to you to announce that today, your departure —”)

According to Wikipedia he was about to say “in der Bundesrepublik Deutschland möglich geworden ist” (“into the Federal Republic of Germany (West Germany) has been approved”). But apparently the people he was talking to didn’t need to wait for that part.

I won’t say any more about this video, but yeah, as every German who comments on this video seems to say, I get Gänsehaut (goosebumps).

More on Language-Learning

From the Economist blog network:

[A]s more and more Europeans speak good English, the benefits to a Briton of learning European languages are reduced and the costs increase. The benefits are reduced because a smaller and smaller group of people can be reached only by speaking their language. The costs rise because Britons have to learn to speak foreign languages really well, to avoid inflicting halting French, say, on a room full of fluent English-speakers.

Yet another reason no one should or does study German.

See Keynes’ Prose Sparkle

I don’t own a copy of his General Theory, so the Marxists let me look at their copy. Couldn’t open to a random page, so I just went to the beginning of the third chapter. Behold!

WE need, to start with, a few terms which will be defined precisely later. In a given state of technique, resources and costs, the employment of a given volume of labour by an entrepreneur involves him in two kinds of expense: first of all, the amounts which he pays out to the factors of production (exclusive of other entrepreneurs) for their current services, which we shall call the factor cost of the employment in question; and secondly, the amounts which he pays out to other entrepreneurs for what he has to purchase from them together with the sacrifice which he incurs by employing the equipment instead of leaving it idle, which we shall call the user cost of the employment in question.[1] The excess of the value of the resulting output over the sum of its factor cost and its user cost is the profit or, it we shall call it, the income of the entrepreneur. The factor cost is, of course, the same thing, looked at from the point of view of the entrepreneur, as what the factors of production regard as their income. Thus the factor cost and the entrepreneur’s profit make up, between them, what we shall define as the total income resulting from the employment given by the entrepreneur. The entrepreneur’s profit thus defined is, as it should be, the quantity which he endeavours to maximise when he is deciding what amount, of employment to offer. It is sometimes convenient, when we are looking at it from the entrepreneur’s standpoint, to call the aggregate income (i.e. factor cost plus profit) resulting from a given amount of employment the proceeds of that employment. On the other hand, the aggregate supply price[2] of the output of a given amount of employment is the expectation of proceeds which will just make it worth the while of the entrepreneurs to give that employment.[3]

Feeling enlightened yet? Let’s keep going:

It follows that in a given situation of technique, resources and factor cost per unit of employment, the amount of employment, both in each individual firm and industry and in the aggregate, depends on the amount of the proceeds which the entrepreneurs expect to receive from the corresponding output.[4] For entrepreneurs will endeavour to fix the amount of employment at the level which they expect to maximise the excess of the proceeds over the factor cost.

Let Z be the aggregate supply price of the output from employing N men, the relationship between Z and N being written Z = φ(N), which can be called the Aggregate Supply Function.[5] Similarly, let D be the proceeds which entrepreneirs expect to receive from the relationship between D and N being written D = f(N), which can be called the Aggregate Demand Function.

Now if for a given value of N the expected proceeds are greater than the aggregate supply price, i.e. if D is greater than Z, there will be an incentive to entrepreneurs to increase employment beyond N and, if necessary, to raise costs by competing with one another for the factors of production, up to the value of N for which Z has become equal to D. Thus the volume of employment is given by the point of intersection between the aggregate demand function and the aggregate supply function; for it is at this point that the entrepreneurs’ expectation of profits will be maximised. The value of D at the point of the aggregate demand function, where it is intersected by the aggregate supply function, will be called the effective demand. Since this is the substance of the General Theory of Employment, which it will be our object to expound, the succeeding chapters will be largely occupied with examining the various factors upon which these two functions depend.

This is the beginning of the chapter, people! I didn’t have to work hard to find this passage because this is how the General Theory is written. What does it mean that Keynes is really difficult to read? Not much. I’ve been reading economics more or less without cease for the last three weeks, so I’m not about to claim that all good economists write interesting and easy-to-understand prose. But describing the General Theory as easy to read is a joke.

Elves?

I’m hard at work these days, trying to get me some learnin’. But in my most recent reading (The Introduction to James Buchanan’s Calculus of Consent) I came across the quoted phrase “Good fences make good neighbors,” and realized that, even though I recognized the quote, I had never actually read the poem from which it comes. So I looked it up and found it pretty good, though the quote turns out to be taken rather out of context. Anyway, read it too, if you want. How often do you read poetry, after all?

SOMETHING there is that doesn’t love a wall,
That sends the frozen-ground-swell under it,
And spills the upper boulders in the sun;
And makes gaps even two can pass abreast.
The work of hunters is another thing:                   5
I have come after them and made repair
Where they have left not one stone on stone,
But they would have the rabbit out of hiding,
To please the yelping dogs. The gaps I mean,
No one has seen them made or heard them made, 10
But at spring mending-time we find them there.
I let my neighbor know beyond the hill;
And on a day we meet to walk the line
And set the wall between us once again.
We keep the wall between us as we go.                        15
To each the boulders that have fallen to each.
And some are loaves and some so nearly balls
We have to use a spell to make them balance:
“Stay where you are until our backs are turned!”
We wear our fingers rough with handling them.    20
Oh, just another kind of outdoor game,
One on a side. It comes to little more:
He is all pine and I am apple-orchard.
My apple trees will never get across
And eat the cones under his pines, I tell him. 25
He only says, “Good fences make good neighbors.”
Spring is the mischief in me, and I wonder
If I could put a notion in his head:
“Why do they make good neighbors? Isn’t it
Where there are cows? But here there are no cows. 30
Before I built a wall I’d ask to know
What I was walling in or walling out,
And to whom I was like to give offence.
Something there is that doesn’t love a wall,
That wants it down!” I could say “Elves” to him,      35
But it’s not elves exactly, and I’d rather
He said it for himself. I see him there,
Bringing a stone grasped firmly by the top
In each hand, like an old-stone savage armed.
He moves in darkness as it seems to me,                   40
Not of woods only and the shade of trees.
He will not go behind his father’s saying,
And he likes having thought of it so well
He says again, “Good fences make good neighbors.”

Source

The Mind-Killer

“Politics is an extension of war by other means. Arguments are soldiers. Once you know which side you’re on, you must support all arguments of that side, and attack all arguments that appear to favor the enemy side”

-Eliezer Yudkowsky, Politics is the Mind-Killer

The Marginal Revolution blog is somewhat unique* for the high-quality comments to most of the posts. The posts themselves, especially Cowen’s, can be what wiktionary calls gnomic: mysterious and often incomprehensible, yet seemingly wise. Yet the comments on any sufficiently interesting issue usually contain some good discussion and insights. With one exception. Even on MR, to mention politics in any form guarantees a two-standard deviation decrease in comment quality. Check out Tyler Cowen’s posts What is Progressivism? and What is Conservatism? and weep for the minds slain by politics. The comments aren’t uniformly bad, but they are bad enough to worry me.

The main reason I am worried is because of the cult I just joined. It’s a fact that I think economically-informed, public-choice centric libertarianism is truer than other ideologies, and yet being part of a group dedicated exclusively to economically-informed, public-choice centric libertarianism is kind of unsettling. I do wonder whether being around such people all the time will give me a disincentive to seriously question whether libertarians might be wrong and progressives or even conservatives (gasp) might be right. I worry that the mere fact of having joined this program is evidence that I already am only fooling myself in believing that I take other ideologies seriously.

I don’t have any elaborate plan at this point for how I’m going to avoid succumbing to peer pressure, but for now I’ll adopt an easy rule: If, while describing a position or belief that I disagree with, I find myself bemused, I’m on a bad track.

Smart People Agree With Me

Well, who knows if this Scott Sumner guy is smart. But people read him and talk about him, which is basically the same thing.

Character and Circumstance:

I seem to be the only person in the world who thinks Al Gore would have led us into Iraq. Why? Perhaps because he campaigned as a hawk, and was known to be very distrustful of Saddam. Perhaps because being elected by a tiny margin, with (in that case) blame for the intelligence failure of 9/11 falling 100% on the Dems, he would have been under tremendous pressure to look tough with a candidate like McCain getting ready for 2004. Perhaps because he would have been surrounded by pro-war hawks. He promised that Richard Holbrooke would be his foreign policy “czar.” And remember his VP pick in 2000? This counterfactual seems obvious, but I’ve never met a Republican or a Democrat who agrees with me. My history is a bit shaky, but didn’t McKinley oppose the Spanish American war? Didn’t Wilson promise to keep us out of WWI? Didn’t Johnson promise to keep American boys out of Vietnam? Presidents don’t go to war, countries go to war.

The rest of the essay is pretty good, too. Good in that I agree with it, which is basically the same thing. But I think we did a decent point/counterpoint on this back in January.

Foreign Language Learning

Being on the Camino again gave me a good chance to practice my German, and also make some observations about how language comprehension is going at this point. As Tom once said, it’s hard to get to the point where you are like “Yes, I’ve finally finished learning this language! Huzzah!” For me, there hasn’t been a point where it all just “clicks” and I can understand and speak fluently. Rather, when someone is talking to me, it goes more like this:

Comprehension of the last spoken sentence, by frequency

10% – I have absolutely no idea what this person just said. Smile and nod.

50% – I picked up some key words and filled in enough blanks to understand what was just said to my satisfaction.

20% – I understand every word and the meaning of the sentence.

10% – I understand all but one key word, which prevents my comprehending the sentence.

10% – I believe that I have understood every individual word just spoken, but nevertheless cannot grasp the meaning of the sentence

But in better news, I have found a purpose to all my German learnings. Clearly, talking to German people cannot be the purpose, because all German people speak English. However, there exists a German television program called Mitten im Leben which is so good that it makes all the struggle worthwhile.

So, Huzzah for that.

I’m Back

Back from Spain and New York, and for tonight, I have only this to say:

Every variation on the name Obama, e.g. Obamacare, is annoying.