Here are other questions Colbert did not ask, and those who support socialism aren’t asking either:
Do you believe only socialists are “moral”?
Do you think other people are opposed to proper housing, jobs, and healthcare and block simple solutions because they are not as caring as you?
In his book The Law the 19th Century French economist Frédéric Bastiat exposed the false premise behind those who think government is the only way to achieve social and economic ends:
Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.
We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.
A generative question is something that points us to the unknown and stimulates further inquiry. Here are a few generative questions that Colbert could have asked:
What are the conditions under which human beings flourish?
Why does power corrupt?
Why until recently in human history did each generation live in poverty, much the same as the generation before?
Ocasio-Cortez, Stephen Colbert, and millions of Americans leaning toward socialism have no knowledge of the economic problem. Invincibly ignorant, they assume the problem away by embracing the idea of redistributing other people’s money.
If you don’t know what the economic problem is, there is no possibility of discovering solutions to the problems you see. With a willingness to explore questions, more knowledge will be discovered. Freedom, not simplistic answers based on coercion, promotes voluntary human cooperation and creates economic progress, raising the well-being of all.
In 1938 the US government passed the Fair Labor Standards Act mandating a forty hour work week, establishing a minimum wage, and prohibiting child labor. Because of legislation like this, government is often credited for making the American work environment safer and more fair. Yet, as Antony Davies and James Harrigan demonstrate with historical data, market forces were already making things easier on the American worker long before the FLSA.
Learn More: https://fee.org/articles/child_labor_…
Data: http://www2.census.gov/prod2/statcomp… See page 170 for average weekly work hours. See page 134 for child labor rates.
By the way, try the autogenerated transcript function. It works surprisingly well.
After reading this, swap out “rare earth metals” with “wages”.
You can’t raise the price of labor to arbitrarily high levels without people finding ways around it.
How bad will climate change be? Not very.
No, this isn’t a denialist screed. Human greenhouse emissions will warm the planet, raise the seas and derange the weather, and the resulting heat, flood and drought will be cataclysmic.
Cataclysmic—but not apocalyptic. While the climate upheaval will be large, the consequences for human well-being will be small. Looked at in the broader context of economic development, climate change will barely slow our progress in the effort to raise living standards.
To see why, consider a 2016 Newsweek headline that announced “Climate change could cause half a million deaths in 2050 due to reduced food availability.” The story described a Lancet study, “Global and regional health effects of future food production under climate change,”  that made dire forecasts: by 2050 the effects of climate change on agriculture will shrink the amount of food people eat, especially fruits and vegetables, enough to cause 529,000 deaths each year from malnutrition and related diseases. The report added grim specifics to the familiar picture of a world made hot, hungry, and barren by the coming greenhouse apocalypse.
But buried beneath the gloomy headlines was a curious detail: the study also predicts that in 2050 the world will be better fed than ever before. The “reduced food availability” is only relative to a 2050 baseline when food will be more abundant than now thanks to advances in agricultural productivity that will dwarf the effects of climate change. Those advances on their own will raise per-capita food availability to 3,107 kilocalories per day; climate change could shave that to 3,008 kilocalories, but that’s still substantially higher than the benchmarked 2010 level of 2,817 kilocalories—and for a much larger global population. Per-capita fruit and vegetable consumption, the study estimated, will rise by 6.1 percent and meat consumption by 5.4 percent. The poorest countries will benefit most, with food availability rising 14 percent in Africa and Southeast Asia. Even after subtracting the 529,000 lives theoretically lost to climate change, the study estimates that improved diets will save a net 1,348,000 lives per year in 2050.
When I was in college, we had four exchange students from Mainland China. A couple of them were majoring in physics, and we’d have occasional conversations in the physics lounge. One day, one of the students asked me what my monthly ration of potatoes was. He just couldn’t believe they weren’t rationed.
If he’d asked me that question a few years later, my response would have been to state my monthly income, and divide it by the per-pound price of potatoes. And then part two of my answer would have been to introduce the opportunity cost of buying only potatoes.
Planning Is Counterproductive
The Chinese students in that 1999 economics class began their MBA studies much like the essay writer who explained, “I had trouble conceiving of an economic or social order that is not deliberately made for a specific purpose.” “Government planning,” it seemed to him, was needed “to bring order and coordination to otherwise chaotic economic conditions.”
Reading Hayek’s, “The Use of Knowledge in Society” convinced him otherwise. He wrote, “Central planning ignores its impossible knowledge requirements. It demanded that all the fragments of knowledge existing in different minds be brought together in one mind, a feat requiring that single mind process knowledge far in excess of what anyone could ever comprehend.”
The student realized, quoting Hayek from his book Law, Legislation and Liberty, Vol. 2, there is no need to agree on aims: “The Great Society arose through the discovery that men can live together in peace and mutually benefiting each other without agreeing on the particular aims which they severally pursue.”
…except for all the others that have been tried.
Among Arnold’s themes that I especially like is this one: “Markets fail. Use markets.” The idea is the vital one that the case for markets does not depend on markets being perfect—or to use economists’ terms, the case for markets doesn’t collapse simply because of the existence of some “market failures.”
First, the concept “market failure” is notoriously slippery. The absence, say, of more light-rail transportation in Little Rock might plausibly be seen by Jones as evidence of market failure but also might plausibly be seen by Smith as evidence of the prohibitively high cost of expanding such transportation in Little Rock. Social and economic reality being what it is, there are simply no tests available to settle this question with the sort of certainty that is often achieved by tests of physical matter.
Importantly, Jones’s assessment might be correct. Perhaps investors and entrepreneurs really are underestimating the demand for—or overestimating the costs of building and operating—more light-rail lines in Little Rock. Arnold wisely advises friends of free markets to recognize and to publicly concede that markets can and do fail, even though such failure might never be provable in the way that the earth’s elliptical rotation around the sun is provable.
To reject Arnold’s advice is inadvertently to strengthen the hand of those who insist that instances of market failure are sufficient justification for government intervention. It is (at least to appear) to concede that if and when markets should fail, government should intervene to correct the failure.
But in reality markets aren’t perfect. They’re just not. Markets do sometimes fail because of (bear with me as I parade before you a band of fancy economics terms) “asymmetric information,” “moral hazard,” “time inconsistency,” “free-rider problems,” “opportunism,” “strategic behavior,” “empty cores,” “lumpiness,” “transaction costs,” “bounded rationality,” and other features of reality that prevent markets from performing ideally.
These sources of market imperfections are themselves a second reason to take seriously Arnold’s advice to use markets even though markets sometimes fail. Too many people—including economists—remain stubbornly unaware that even the proven existence of a “market failure” is only a necessary condition to justify government intervention; market failure is not a sufficient condition.
Voters and government officials don’t become more godlike simply by acting in the domain of politics. So voters and government officials are at least as likely as are investors, consumers, and other private-market participants to be poorly informed, to let their emotions block their rational faculties, and to suffer each of the other decision-making quirks that can lead to market failure.
But this fact suggests only that political outcomes are likely to be as imperfect as market outcomes. It does not suggest that political outcomes are likely to be worse than market outcomes. So why the strong advice to “use markets”?
The answer is that market institutions are better than political institutions at minimizing the frequency, intensity, and ill consequences of uninformed, emotion-ridden, and otherwise fallible decision-making.
The competition among businesses for consumers’ dollars, being never-ending, is more continuous than is the intermittent competition among politicians for citizens’ votes.
Yet another feature of government that causes its outcomes to be less desirable than those of the market is “lumpiness.” When Congress and the president agree on an annual appropriation for the U.S. military, every American is party to that specific annual appropriation. I—a dove—don’t get to have a lower appropriation than does my neighbor the war hawk. Government’s provision of national defense comes in a largely indivisible lump.
Not so in markets. If I prefer wine to beer, I get to have more wine than beer while my neighbor with opposite preferences gets to have more beer than wine. And all the while the teetotaling couple down the block chooses—and receives—a third, alcohol-free bundle of consumption goods.
Arnold Kling endorses free markets not because they are foolproof or flawless. They aren’t. Arnold supports them because the alternative is generally much worse: an especially flawed institution that fosters unusual amounts of foolishness.
When the Congressional Budget Office released its updated budget forecast, everyone focused on the deficit number. But buried in the report was the CBO’s tacit admission that it vastly overestimated the cost of the Trump tax cuts, because it didn’t account for the strong economic growth they would generate.
Among the many details in the report, the one reporters focused on was the CBO’s forecast that the federal deficit would top $1 trillion in 2020, two years earlier than the CBO had previously said.
And, naturally, most news accounts blamed the tax cuts. “U.S. budget deficit to balloon on Republican tax cuts” is how Reuters put it in a headline.
But there’s more to the story that the media overlooked.
First, the CBO revised its economic forecast sharply upward this year and next.
Last June, the CBO said GDP growth for 2018 would be just 2%. Now it figures growth will be 3.3% — a significant upward revision. It also boosted its forecast for 2019 from a meager 1.5% to a respectable 2.4%.
“Underlying economic conditions have improved in some unexpected ways since June,” the CBO says. Unexpected to the CBO, perhaps, but not to those of us who understood that Trump’s tax cuts and deregulatory efforts would boosts growth.
In any case, the CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts.
The CBO report also makes clear that this faster-growing economy will offset most of the costs of the Trump tax cuts.
In a table buried in the appendix of the CBO report, it shows that, before accounting for economic growth, the tax cuts Trump signed into law late last year would cut federal revenues by $1.69 trillion from 2018-2027.
But it goes on to say that higher rate of GDP growth will produce $1.1 trillion in new revenues. In other words, 65% of the tax cuts are paid for by extra economic growth.
That faster growth will also reduce federal entitlement spending keyed to the economy — unemployment insurance, food stamps, welfare and the like — by $150 billion, the CBO says.
If you subtract that from the cost of the tax cuts, the net cost drops to $440 billion.
This is what we and other backers of the tax cuts had insisted all along. Not that tax cuts would entirely pay for themselves. But that the economic growth they generate would offset much of the costs.
Looks like we were right.
Spending Is the Real Culprit
That still leaves the problem of the deficit. By 2022, federal deficits will top 5% of GDP, something that happened only once between World War II and President Obama’s spending spree.
What’s more, national debt is on track to top 91% of GDP by 2025 and reach 96.2% by 2028.
Despite what Democrats and the media insist, the culprit here isn’t tax cuts. It is out-of-control spending, which will be nearly $1 trillion higher over the next decade thanks to recent spending deals.
Even with Trump’s tax cuts in place, federal revenues climb every year as a share of GDP, going from 16.6% this year to 17.5% by 2025. (The post-World War II average for revenues is 17.2% of GDP.)
Unfortunately, spending is on track to climb even faster — going from 20.6% of GDP this year to 23.6% by 2028. (The highest spending ever got under Obama was 24.4% of GDP, and the post-War average is 19.3%.)
This is little short of a disgrace, and shows that Republicans love spending taxpayer money as much as Democrats.
In fact, some GOP senators don’t even want Trump to use his rescission authority to strip some of the worst spending items out of the bipartisan $1.3 trillion spending monstrosity.
Someone needs to remind these alleged fiscal conservatives that if they can’t get control of spending today, it’s a virtual guarantee they’ll end up agreeing to a “deficit cutting” tax hike tomorrow.
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One of the things people like to fret about is that with automation, artificial intelligence, and so on, there will be a shortage of jobs. In fact I’ve been seeing essays worrying about such a shortage for three decades now, and I’m sure there were plenty before then.
Don Boudreaux has a contrary view:
Strictly speaking, there will always be jobs to do as long as humans have unfulfilled desires and demands.
If you imagine a future where no one has to work, it’s because it’s a future where everyone’s needs are met. If all your needs are met, whether it’s by Autofac, the Krell machine, or an army of robot slaves, do you really care if you have a job?
By the way, “all your needs” would have to include the human need for meaning in life. “All” means “all”.
Net Neutrality has been disposed of, and somehow everyone seems to have survived.
Part of the problem is that “net neutrality” doesn’t seem to have a solid definition. It’s merely a term everyone thinks means something nice and desirable.
In thinking about it, it seems to me that we had “net neutrality” in the form of every bit being equal back before Earthlink started offering “all you can eat internet” — all the internet access you wanted for a fixed monthly price. In other words, if we were serious about treating every bit equally, ISPs would charge for every megabyte transmitted between any two points.
I have a feeling that’s not what the net neutrality advocates have in mind.
The Heartland Institute looks at Burger King’s take on Net Neutrality:
The problem with the video – from the perspective of BK and its media cheerleaders – is it is supposed to tell us why massive government regulations under the banner of Net Neutrality are so vital.
What the video actually, accidentally does – is demonstrate (yet again) how dumb and unnecessary Net Neutrality regulations actually are.
The video begins with man-on-the-street interviews – where no one included has any idea what Net Neutrality is. They shouldn’t feel bad – because after watching BK’s video…they still won’t know what Net Neutrality is.
The video then shows a computer screen and typing. Which claims BK will now explain what Net Neutrality is using their famed BK burger – The Whopper. By showing just how awful a world without “Whopper Neutrality” is.
The video’s theoretical BK store – sells three different speeds of “Whopper Pass.” You can pay $4.99, $12.99 or $25.99 for your burger – with the higher prices ensuring you increasingly fast delivery.
The customers are incensed. Oops – and there you have it: The first reason why this video is dumb. And why Net Neutrality regulations are dumb and unnecessary.
That reason is: The customers are incensed. Internet Service Providers (ISPs) – are in the customer service business. If they don’t service their customers – they will very soon be out of business.
ISPs strive mightily to deliver an incredibly fast, ever-increasing speed. Which is how and why we have gone in just two decades from the sloth of 14K dial-up – to massively-fast 1GB of speed…and up.
Which is why no one – save for the most radically ridiculous of multiple-HD-movie-downloading-at-once or incessant-gaming freaks – runs into any speed impediments to anything they wish to do online.
Oh: And any ISP stupid enough to slow down anyone as an extortion effort – would run afoul of several existing consumer-protection laws. And be swiftly dealt with by the Federal Trade Commission (FTC).
Thus there is zero need for any Federal Communications Commission (FCC) regulations – such as the massive ones imposed in 2015 by the Barack Obama Administration. Which were in December rightly, reasonably undone by the Donald Trump Administration.
All of this and more is why – in the two-plus decades without the FCC having any say in any of this – nothing like what BK depicts in its ridiculous video….ever actually happened.
Another reason the BK video is stupid: ISPs do charge more for even more bandwidth – because everyone on the planet charges more for more of anything.
Ask BK why they charge more for a Double Whopper than they do for a Whopper Jr. Where’s their Whopper Neutrality?
In fact, BK violates these Neutrality principles all over the place – beyond just their tiered-prices for tiered-burgers. They engage in all sorts of non-neutral exclusionary practices.
BK won’t sell you a McDonald’s Big Mac or a Wendy’s Single, Double or Triple. Where’s the Neutrality?
BK won’t sell you a Pepsi or an RC Cola – because they have an exclusive contract with Coca-Cola. Where’s the Neutrality?
And to further flesh out the utter stupidity of the one-size-fits-all model of bandwidth speed – where “all bits are treated equal”:
“What’s a truer depiction of Burger King under Title II utility regulation? A Burger King menu with only one product at one price – an expensive all-you-can-eat meal. For those ordering 10 triple-Whoppers and onion rings, with extra large milkshakes, it might be a good deal.
“For those seeking one salad or one chicken sandwich, and in a hurry, the high-priced all-you-can-eat plan would be a terrible idea. The all-you-can-eat subsidy would attract all the gluttons in town and discourage the customer seeking a quick snack.
“Gluttons would clog the line with their huge orders, and others would have to wait. The supplier of niche content – the small salad in this case – would suffer, too.
“The ad thus had the congestion problem exactly backwards. Diverse products at varied price points encourage economical consumption and incentivize investments in faster, more capacious networks.
“Everybody wins – Internet user, network provider, and content creator. Yes, in the future there will be some forms of priority service for real-time applications – think telemedicine and virtual reality – but the higher prices for these services will help pay for more capacity overall.
“Consumers across the diverse ecosystem of digital services will benefit.”
A grandma who only emails her kids and grandkids – should not be force-fed way-too-much-bandwidth for way-too-much-money – to subsidize the Web gluttons.
The late, great Robert Conquest wrote more than a dozen books about the Soviet Union – so he eminently understood Net-Neutrality-esque collectivism. He created his Three Rules of Politics – the first of which is:
“Everyone is conservative about what he knows best.”
Burger King knows the burger business. And in their burger business – they don’t want any part of Neutrality.
Burger King knows nothing about the Internet bandwidth business. So they ignorantly clamor for the Neutrality they would never, ever impose – or have the government impose – on themselves.
At first glance, the core insights of economics seem mundane. As something’s cost rises, consumers buy less of it. Producing more clothing requires transferring more resources to textile factories and, hence, away from other uses. When Jen buys a pear from Al for a dollar, she does so because she values the pear more than whatever she otherwise would have purchased with that dollar — and Al values what he will buy with that dollar more than he values the pear.
Pretty straightforward. But what economists do with such “obvious” observations is often mind-blowing.
An important counterintuitive insight was vividly conveyed long ago by my late colleague Gordon Tullock. Asked in the 1960s what government should do to maximize reduction in traffic fatalities, he replied, “Mandate that the steering column of each car be mounted with a steel dagger pointed directly at each driver’s heart.” Initially, that sounds crazy. Yet when you think about it, you realize such daggers would cause drivers to dramatically increase the care they exercise behind the wheel.
Instead of really wanting government to mandate mounted daggers, Gordon was warning government against going too far in mandating safety features such as airbags, seat belts and collapsible steering columns. Just as mandated daggers would lead to more-careful driving, mandated safety features lead to less -careful driving. Safety features truly might reduce highway deaths, but keep in mind the possibility that mandated safety features might have surprising opposite effects.
David Friedman explains another counterintuitive insight: “Economists are often accused of believing that everything — health, happiness, life itself — can be measured in money. What we actually believe is even odder. We believe that everything can be measured in anything.”
What Friedman means is that each of us routinely makes trade-offs among things that seemingly can’t be compared. Consider your enjoyment from going to a concert. Getting there conveniently requires driving. Yet by doing that instead of staying home, you raise your chance of being killed in an auto accident. If you nevertheless drive there, you conclude that the added enjoyment you expect from the concert is worth more than the added safety you’d experience by staying home. That is, you compare the experience of a concert to the risks of driving. Obviously, if the risk of being killed while driving there were high enough, you’d decide to stay home.
Another example: You buy a jacket, telling friends it “cost” you $100. But your statement is inaccurate. When you gave, say, five $20 bills to the clerk, what you really gave up wasn’t five pieces of paper engraved with Andrew Jackson’s portrait. What you really gave up is whatever you otherwise would have bought with those five pieces of paper.
Suppose that, had you not bought the jacket, you would have bought a meal at a nice restaurant for you and a friend. In this case, you compared a jacket to that restaurant meal.
We humans constantly compare apples to oranges — and choose sensibly between them.