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A Little Perspective

 

As recently as a few months ago, doctors were held in high esteem and educated people believed that medicine could be useful. All that changed, of course, with the medical profession’s stunning failure to prevent or even predict the breakout of ebola in West Africa. Worse yet, many doctors to this very day cling to their old ways of thinking, writing prescriptions, setting broken bones, and performing surgery in bull-headed defiance of the urgent need to jettison everything we know about medical practice and start over from scratch.

Nobody, of course, writes such nonsense about medicine. Why, then, do so many write equivalent nonsense about economics?

Most economists failed to predict the 2008 financial crisis and ensuing recession for pretty much the same reason most doctors failed to predict the 2014 ebola epidemic — their attention was, quite reasonably, directed elsewhere. It’s easy to say in hindsight that if economists had paid more attention to the shadow banking system, they’d have seen what was coming. But attention is finite, and if economists had paid more attention to the shadow banking system, they’d have paid less attention to something else.

For a little perspective, have a look at this chart showing U.S.~per capita income in fixed (2005) dollars:

That little downward blip you see near the top is the recent crisis. The somewhat bigger downward blip in the 1930s is the Great Depression. The moral is that in the overall scheme of things, recessions don’t matter very much. At the trough of the Great Depression, people lived at a level of material comfort that would have seemed unimaginably luxurious to their grandparents. Today, while Paul Krugman continues to lament “the mess we’re in”, Americans at every income level live far better than Americans of, say, 1980. If you doubt that, you surely don’t remember what life was like in 1980. Here’s how to fix that: Pick a movie from 1980 — pretty much any movie will do — and count the “insurmountable” problems that the protagonist could have solved in an instant with the technology of 2014. Or reread any of the old posts on this page.

If you care about human well-being, recession-fighting is small potatoes. It’s that long-term upward trend that matters. And economists, fortunately, understand a lot about what it takes to nourish that trend — things like well-enforced property rights, the rule of law, free trade, sound money, limited regulation and low marginal tax rates. Even more fortunately, economists have managed, however imperfectly and with fits and starts, to impress that understanding on the minds of policymakers. As a result (and going back, at least, to the repeal of the Corn Laws), we’ve had better policies and greater prosperity.

To throw out all that hard-won knowledge because we failed to prevent a financial crisis would be like closing all the hospitals because doctors failed to prevent an epidemic.

Moreover, it’s entirely possible that some of the best policies for fighting recessions are inimical to long-term growth. It could easily follow that even if you knew exactly how to fight recessions, you might prefer not to.

It’s a very good thing that some economists are trying to understand recessions, and a very good thing that they’re accounting for the lessons of the past few years. It’s also a very good thing that most economists are working in the myriad of other areas where we’re capable of doing good. Another very good thing is historical perspective. The current so-called “mess” that economists have (partly) gotten us into is not just the most prosperous era in human history; it is prosperous beyond the wildest imaginings of your parents’ generation. And yes, economists helped get us here.

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A Little Perspective
Steve Landsburg
Mon, 06 Oct 2014 06:01:23 GMT

Utah Trip 2014 # 1

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This is at Zion National Park on July 26, 2014.

Canada pulls the plug on the U.S. Keystone Pipeline – will send oil to Asia

brucetheeconomist:

I like President Obama, but I have never been able to understand why his administration is so lukewarm on increased supplies of North American energy, including that from Canada. It is one of the bright spots in this mediocre economic climate that we all have suffered from.

Originally posted on Watts Up With That?:

Approves Asia Supply Route, Ignores US Route

H/T Eric Worrall and Breitbart – Obama’s inability to make a decision on Keystone has finally yielded a result – Canada has made the decision for him.

Breitbart reports Canada has just approved the Enbridge Northern Gateway Project – a major pipeline to ship Canadian oil to Asia.

The Canadian oil will still be burnt – in Asia, instead of America.

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Jesus and Ayn Rand

brucetheeconomist:

I can’t add much, other than it has always amazed me that Christian conservative like Ayn Rand, when she was such a militant atheist.

Originally posted on Prometheus Unbound:

What sort of conservatism blends Jesus with Ayn Rand? Oh, that would be contemporary Tea Party conservatism.

But why isn’t it more widely noticed that “Christian libertarian” is an oxymoron? I would argue that this has to do with the human mind’s capacity for compartmentalization and cognitive dissonance, for Jesus and Rand simply do not go together coherently. Buckley, before he died, was less illusioned: he saw that his Catholicism and Randianism are not a match. Rand herself recognized this as well. She was an atheist.

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What the State Produces

 

In anarchist literature, one often finds the contention that the State produces nothing, and is entirely parasitic on the rest of society.
This claim is false. Of course, it is true for some things that modern states do, such as the provision of welfare. But it is false applied to the state as a whole, because there is one service that is highly productive, and that only the state can provide: the service of being the final arbiter for all disputes between its members. This service must, logically, come from a monopoly provider: if there are multiple providers of arbitration at the same level, then none of them are final. (And that is why, if a network of ancap defense agencies can provide this service, they will, in fact, compose a state. And if they can’t provide it, then we will have “anarchy” in the bad sense of social chaos.)
Once one focuses on this service, one can easily understand why German barbarians would fight to get inside the Roman Empire: both productivity and security go up in the presence of such a final arbiter. And that is why we have never seen any wealthy, stateless societies.

What the State Produces
Gene Callahan
Wed, 14 May 2014 23:10:00 GMT

Unique Date

 

If our current civilization lasts another 8,000 years, it's probably fair to assume the Long Now Foundation got things right, and at some point we started listening to them and switched to five-digit years.

Unique Date
Mon, 10 Mar 2014 00:00:00 GMT

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Modesty

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