Plan and Counterplan

Island Science

noreply@blogger.com (liberty) — Fri, 25 May 2012 12:14:00 +0000

For some reason economists love to use metaphors taking place on an island to explore their theories. I have one. It explains why I think economics is tricky, and how people often get it wrong.

Imagine there are two islands with bear populations, and an ecologist observer is watching the bear populations, seeing which island does better. There is a team ready to help the island that does worse, based on what is learnt from the one that does better. However the observer has only one tool with which to analyze the islands - it can estimate the bear population on each island and detect any difference between the islands which is transferable, i.e., which can be copied and applied to the island which has a lower population.

One of the islands (island A) is lush, covered in trees, bushes, lakes; there is lots of wildlife- insects, squirrels, snakes - and the bear populations is growing. There is also a disease that is passed along by the insects, which kills off some of the bears every so often, and makes many of them suffer. The other island (Island B) is dry, barren, there is little wildlife, and the bear population is falling. It has no disease.

The observer's tool detects that island A has a higher bear population, and it detects one difference which is transferable: island A has a transmittable disease. So, the observer tells the team and they capture some insects with the disease and release them on island B. This, they decide, will surely help island B increase its bear population - after all, it's the only difference which the tool picked up. Sure, there might have been other differences, but this is the only transferable one so the other differences are irrelevant. And it is clearly better to try something than nothing at all.

Executive Takeover of the Supreme Court

noreply@blogger.com (liberty) — Wed, 23 May 2012 17:56:00 +0000

Many people were concerned about politics affecting the Bush V. Gore case, however it would have been much different had it ruled to keep an incumbent president in. Although Republicans had a legislative majority, the executive in power when it decided was Democrat not Republican, so it is not obvious that the court was being bullied by the other branches of government, even if the makeup of the court (the justices having been appointed over many years by different presidents) might have affected their leanings in the case. Imagine though, if the president in power at the time had applied pressure for them to come down one way or the other - this would surely affect the state of democracy in the country, would it not?

As this overview on the subject explains:

In order for America to be a democracy the judiciary, i.e. the Supreme Court, needs to be independent and a-political. If not then what is good for the people and for America may be ignored in favour of judgements that favour a particular political Party or viewpoint.

Few would argue that the U.S. Supreme Court is uninfluenced by politics. However, it generally is considered to be part of a branch of government (the judicial) which is not subordinated to one of the other two branches (legislative or executive). This might be starting to change though.

Obama has been pushing the Supreme Court to uphold his health care plan for "nonlegal" reasons. In other words, he has been asking them to vote based on politics, and not be the independent law-interpreting judicial branch that they must be in order to retain the democratic nature of the country's political system. I fear that if the Supreme Court bows to this pressure, all semblance of an independent judiciary and a democratic political system will begin to crumble.

I wonder if Obama realizes this. An earlier Democratic president, who also favored expansion of social insurance programs for those in need and stimulus projects, also argued that the Supreme Court should put legal reasoning aside and uphold the projects and programs that he introduced. FDR, in addition to "packing the courts" with enough justices who would vote his way, also wanted to privately discuss cases and legislation with the justices in order to ensure they would not be struck down. Had Roosevelt gotten his way, there would be no division between the branches, and no checks and balances.

There will also be no separation if the justices begin to base their rulings on political pressure from the president or Congress - is there ever a time when pressure on the Supreme Court is right? It is easy to say yes when you want to see them rule differently, but if they cave to pressure they lose their independence. Sometimes it seems like this is the direction many politicians - not just Obama - would like to go. They would like all branches to agree with their vision, and simply "get things done" rather than squabbling about precedent and getting bogged down with “partisan bickering,” “obstructionism,” and “gridlock”. If everyone could just get on with things, it would be a progressive vision of cooperation, right? Or perhaps not. In The Gulag Archipelago, Alexandr Solzhenitsyn described this "seamless" cooperation in the judiciary - court trials where everyone must abide by the party line:

On the threshold of the classless society, we were at last capable of realizing the conflictless trial—a reflection of the absence of inner conflict in our social structure—in which not only the judge and the prosecutor but also the defense lawyers and the defendants themselves would strive collectively to achieve their common purpose.

I fear that bullying the Supreme Court to uphold his policies, Obama is helping to move us in that direction. If the Supreme Court must rule as the president wants when he pressures them, we will soon have a judiciary that simply rules according to the party line.

Protectionism in Trade With Foreign State-Businesses

noreply@blogger.com (liberty) — Fri, 18 May 2012 04:02:00 +0000

At Econlog there is a really fascinating history podcast, a discussion between Russ Roberts and William Bernstein. There is much to be said and discussed in it, but I want to focus on just one bit of Bernstein's historical revisionism (called such by Bernstein).

There is a strange omission during his telling of the Boston Tea Party, which he says was not about "no taxation without representation" but about protectionism. Bernstein argues that the tea manufacturers in America wanted to keep out the East India Company, and the Boston Tea Party was just an old-fashioned protectionist protest. Only Bernstein forgot to mention the indisputable state-subsidy, monopoly, and even empirical activities in India, of the East India Company. This little detail was somehow omitted.

Here is Bernstein's history, from the summarized transcript:

25:18 Boston Tea Party. Revisionist history by the victors is common. Columbus was ridiculed not because he thought the world was round but because he got the size very wrong. Very lucky that he bumped into the New World. Story of Tea Party is that they were patriots; taxation without representation. In 1773, Britain trying to help the East India Company by opening up the colonies. Previously they weren't allowed to sell in the colonies, which meant smuggling and high taxes. When Britain in 1773 allowed them to sell directly to the colonies, the middlemen were up in arms because it drove the price of tea down to half of what it had been. Middlemen and smugglers got together and painted themselves and started throwing the tea into the harbor. First anti-globalization riot. Protectionist in spirit. Opposite of their being against the tax. Story originally broken by Arthur M. Schlesinger, Sr. early 20th century article.

But is it really the 'opposite of being against a tax'? That depends on what kind of a company the East India Company was. Bernstein's account leaves out a critical 'detail'.

This lengthy passage describes some of the context of the East India Company and its relationship to the British government, which the colonists would have in mind when rioting and throwing tea in the water to keep them out of the American colonies - which would shortly be independent in order to be rid of said government:

The prosperity that the officers of the company enjoyed allowed them to return to Britain and establish sprawling estates and businesses, and to obtain political power. The Company developed a lobby in the English parliament. ...By an act that was passed in 1698, a new "parallel" East India Company (officially titled the English Company Trading to the East Indies) was floated under a state-backed indemnity of £2 million. The powerful stockholders of the old company quickly subscribed a sum of £315,000 in the new concern, and dominated the new body. The two companies wrestled with each other for some time, both in England and in India, for a dominant share of the trade.
It quickly became evident that, in practice, the original Company faced scarcely any measurable competition. The companies merged in 1708, by a tripartite indenture involving both companies and the state. ...By 1720, 15% of British imports were from India, almost all passing through the Company, which reasserted the influence of the Company lobby. The license was prolonged until 1766 by yet another act in 1730.
At this time, Britain and France became bitter rivals. Frequent skirmishes between them took place for control of colonial possessions. In 1742, fearing the monetary consequences of a war, the British government agreed to extend the deadline for the licensed exclusive trade by the Company in India until 1783, in return for a further loan of £1 million. Between 1756 and 1763, the Seven Years' War diverted the state's attention towards consolidation and defence of its territorial possessions in Europe and its colonies in North America.

The East India Company had been 'benefiting from the imperial patronage', and 'the rights to autonomous territorial acquisitions, to mint money, to command fortresses and troops and form alliances, to make war and peace, and to exercise both civil and criminal jurisdiction over the acquired areas' in India. They had monopoly power wherever they sold their goods, as evidenced in India. They were lending money to the British government, which was waging war and trying to 'consolidate' it's territories, including little old America. The colonists had every right to fear its entry into America. They also were being taxed by the company's money-minting activities and state-private Imperialist partnership and would be further taxed by the state-granted monopoly entering their market. They would also be vulnerable to the British Crown.

So, from the perspective of the tea traders and colonists, political leaders, and revolutionaries in America, allowing the East India Company into America was not a better deal than privately running their own companies. They were protesting against nationalization of their tea industry, by a 'foreign' nationalized company (its headquarters overseas) which was run by the state they paid taxes to, and which was imperially expanding around the world using companies like the East India Company as their bank*. How was it 'protectionist' to protest against this?

The company would fund war - including the war which would soon start against them.This kind of bullying was precisely why many in America were ready to start a revolution - which they did just following the Boston Tea Party.

* The state and the company imperially expanding, really. Minting money, lending the government money to fund imperialist wars, and running a militia itself? Sounds a bit like the Federal Reserve, Halliburton and big multinational banks today, all rolled in one.

Civilized Conversation

noreply@blogger.com (liberty) — Wed, 04 Apr 2012 17:20:00 +0000

In American politics, and elsewhere, there is a direction that discourse commonly takes, when it goes from rational conversation to hyperbole and name-calling. One person often accuses the other of being a hypocrite. This is so common, I have no fear that I need provide links for evidence of this phenomenon.

But hypocrisy is not a crime, it is a mistake or logical error. In fact, when one makes a hypocritical statement, it is often because he or she has been recently opened up to a new point of view: the treatment of a new situation has called for a change in reaction to an old problem. It may be unintentional. Even if it isn't, we can give a person the benefit of the doubt, just to better advance a discussion (and not end up with hypocracy).

Conversation would take a much more productive course if instead of calling the person a hypocrite, he or she was asked why the new situation warrants a different course of action.

Let's be civilized, people.

Basic Economics: Markets and Love

noreply@blogger.com (liberty) — Tue, 07 Feb 2012 10:01:00 +0000

Romantic love is selfish in a fundamental way. It is not love if you are romantically involved with someone out of pity (or altruism). It is out of a deep and genuine, greedy selfishness that we love someone romantically - that we make our love choice, create our destiny together with the one we love - this is a good kind of selfishness: it is doing what is in our true self-interest, giving ourselves what we all deserve, which is to be with someone we love. It is not the selfishness or greediness of vanity, a feeling of superiority, or power, or of otherwise choosing someone able to give us something else; that is not love; love is when the person we love is the something we want.

However, romantic love cannot flourish if we are selfish (or greedy), in the crude sense, in our interactions. It does not serve love, nor express love, if we dump the household chores on our romantic partners. In the day-to-day, love flourishes when we keep both our own and our partner's interests in mind. Love makes it rather easy to do things for each other, to be generous, kind, helpful, but sometimes doing the dishes is still doing the dishes, and we have to be willing to make an effort. Love also cannot flourish without honesty and openness (transparency) - lies, and lack of communication, destroy love relationships. Trust is critical for love. Succeeding in long-term love relationships can take work in the day-to-day sometimes, but it should be fun work! We just have to make our love life choices with integrity and with a fundamental, but good, kind of selfishness.

Markets are selfish in a fundamental way. Markets cannot function (because most businesses cannot make profit) if they are selling or buying goods at a price chosen out of altruism. It is out of a deep and genuine self-interest that we make our market choices, because it could cost us our livelihoods or create our dream life - this is a good kind of selfishness: it is doing what is in our true self-interest, giving ourselves what we all deserve, which is to make a decent living. It is not the selfishness or greediness of making market choices out of vanity, a feeling of superiority, or power, or of otherwise making market choices in order that others will give us something else; that is not the way to good market choices; good market choices are made when the market choice itself is the something we want.

However, markets cannot flourish if we are selfish (or greedy), in the crude sense, in our interactions. It does not serve markets, nor express market prices, if we dump the costs on other market participants. In the day-to-day, markets flourishes when we keep both our own and our customers' and workers' interests in mind. Markets makes it rather easy to do things for each other, to be generous, kind, helpful, but costs are still costs, and we have to be willing to bear them honestly. Markets also cannot flourish without honesty and openness (transparency) - fraud, and lack of communication, destroy market relationships. Trust is critical for markets. Succeeding in long-term market relationships can take work in the day-to-day sometimes, but it should be fun work! We just have to make our market life choices with integrity and with a fundamental, but good, kind of selfishness.

A Third Way

noreply@blogger.com (liberty) — Sat, 21 Jan 2012 13:23:00 +0000

I haven't posted in a long time - I've had thoughts for posts, but lacked the motivation to flesh them out. I can only be brief, but I have a little French man in my gut* saying that Gary Johnson should and maybe even possibly could have a chance, simply because the political frontrunners in the Democrat (Obama) and Republican (Romney, Gingrich, Santorum) are so utterly cookie-cutter identical political drones, and because Paul's support could be channeled into a viable candidate, in a third party. As far as I can see, that offers the one and only opportunity for an actual step in the right direction.

Starting on an obvious public-opinion, or political, rather than strictly policy (emotional, more than rational, perhaps) point, it should be obvious that everybody hates Newt Gingrich. This is true today - those who once loved him for his reforms in the early 1990s are wised up to him by now - his positive numbers are fleeting at best. He is a pork-filled lobbyist not a radical reformer. The radical reformers are distinguishable from the Newt, today. This is the kind of thing that makes this season so interesting; it is driven by the internet, where, right now - but not for long if we don't get this real change, information has made us all much more aware of who the candidates are, and what they've been up to.

All this gives me some very innocent ideas about the possibility of a third-party win. Sure, perhaps it sounds far-fetched, but clearly it is not impossible, it is simply the kind of the thing that requires change; it is a social event, the kind you create on the internet. So, incredibly I have a possibly rational optimism about the actual possibility of a third party win: i.e., Gary Johnson. This is founded, first of all, in my optimism that most Obama supporters can see that he has not only failed to come through on his promises, but actively worked for the opposite policies in most critical areas.

But, why Johnson? Well, because the Republicans are as bad as Obama, and Johnson is actually different. Nobody likes Newt but he's a contender because nobody likes Romney either. Romney is a robot, with a 'liberal' record in Massachusetts that makes conservatives hate him, both the social-cons that like Santorum and the libertarians who like Ron Paul. Of course, the probability of a majority of any party liking Ron Paul once they read his newsletters is slim to none at best. Now, here's the catch: Nobody likes Rick Santorum either. It is clear that he is so big government, and a bit scary even for conservatives socially, that he would shrink and split the Republican party vote too, giving a third party libertarian like Gary Johnson more than just the core Ron Paul supporters - he'd get any sane Republican, who wants more than rhetoric on the economy, and less bible-thumping and preaching - though certainly all of them too.

Any of the pathetic and bizarre group of contenders would split the party, though Santorum perhaps especially, giving Gary Johnson a real chance. And he should appeal to a good many Democrats who care about civil rights and liberties: from free speech, to Empire, corporate power (corporatism) and bailouts of banks and politically connected or funded corporations, corporate subsidies and tax breaks, the federal reserve, copyright, lobbying, campaign finance, guantanamo bay, executive power, the drug war, military-industrial-prison complex, gay rights, and other liberties... basically, anyone who can see that Obama has failed them on all that, and wants actual substantive change - and from a nice guy who doesn't seem at all like the usual sleazy politician, but who was also a successful two-term governor in a blue state who was fiscally conservative (balancing the budget) and socially liberal.

So, I have a strange hope. Let's turn these sausages we're making into something edible, for a change. We the people are the chefs, and we can do better than the bought-and-paid-for circus we've been letting entertain us for so long.

* Somewhere I learned that when your socks go missing it is because they are stolen by a little French man who lives in your washing machine (or visits) and I am pretty sure they sometimes also visit your gut to stand there, hands on hips, and have unnerving but sometimes interesting insights.

Call For Papers

noreply@blogger.com (liberty) — Fri, 19 Aug 2011 13:25:00 +0000

Reminder: I am putting together a collection of papers on the policy of a basic income guarantee, with the aim of bringing together Austrian economists and market socialists (and other libertarians, and others on the left). Here is the CFP.

The Aging of Power

noreply@blogger.com (liberty) — Fri, 19 Aug 2011 12:36:00 +0000

It has been said that the responsibilities of the US Presidency tends to rapidly age those who hold office. What about other leaders? Lenin not only became ill after taking office due to health problems; he aged very fast, and it has been pointed out that in his case it was likely due to the stresses of his office:

The pace of work was taking its toll. Lenin continued to fall ill when under pressure and the cycle continued. He complained more and more frequently ... Clara Zetkin painted a grim picture of him: 'his face before me was all shrivelled up. Countless wrinkles, great and small, furrowed deep in it. And every wrinkle spoke of a heavy sorrow or a gnawing pain. A picture of inexpressible suffering was visible on Lenin's face.' ... According to Gorky, the methods of rule he was forced into caused him great anguish.

It occurred to me that the responsibilities of the head of state in a planned economy would tend to be far greater than those of the US President. This may have aged Lenin faster than any US President. However, Stalin signed thousands of decrees per year during his long reign, taking on an even more stressful role, and with even harsher methods of rule than Lenin, yet Stalin seemed not to age as fast or become sick as quickly as Lenin. (And what about Kim Jong Il?) Why this discrepancy?

Two possible answers come to mind: (1) Lenin's stress and suffering were due to his humanity - he did not like to use harsh methods and see the suffering of the people caused by his policies. Perhaps Stalin had no such qualms (he didn't seem to!) (2) Stalin used body-doubles, and he doctored photographs. Perhaps Stalin aged much faster than is known.

Thoughts on the 2011 London (UK) Riots

noreply@blogger.com (liberty) — Thu, 11 Aug 2011 19:00:00 +0000

Although relatively few observers admit to fully condoning the riots and looting that took place (or are still perhaps taking place) in England, many have argued that (in addition to protest against the police shooting of Mark Duggan and others like it, and those doing it for fun or due to crowd psychology) they are a result of economic disadvantage in the affected communities. (See, for example commentary like these: The Guardian, The Telegraph, Euronews). I have even heard some say that although they may not condone them they also do not condemn them or blame the perpetrators. One striking fact about the riots, looting, and destruction (including the burning of vehicles and shops, which frequently also took nearby homes), is that they took place in the poorest neighborhoods, generally the same neighborhoods where the perpetrators reside. Why would they their own neighborhood?

Imagine the following conversation:

Observer, to looter: "What do you think is the cause of these riots? Is there any justification for the looting?"

Looter: "It's obvious. It's because we don’t have opportunity. We have no opportunity or ability to open a business; we can’t find work; the rich have millions but we can’t even afford a car or home, or any of the nice stuff sold in the stores we looted..."

Observer: "So you hit the businesses, cars and homes of those who have succeeded in your neighborhood? You’re thieving from the ones who have succeeded in your own area..."

Looter: "Come on - we've mainly targeted big multinational chain stores - the super-rich! They can afford it, and they're the ones making millions off the backs of the poor and working class!"

Observer: "But, by hitting big companies aren't you also making it harder for those who don't have work to find any work at all? At least they offer some kind of job..."

Is there any sense to the looter's rationale? They complain they have no jobs, opportunity to open a business, or property of their own - cars, or homes. Perhaps, rather than just opportunistically thieving from the rich, there is a political point: perhaps what they are trying to say is that they are willing to sacrifice the successful from their neighborhood, and the opportunities that do exist, to declare that it’s not enough. It's like saying "look, you can keep your petty offering, it’s an insult."

Of course, if what kids today have still is not enough, with all the social programs and opportunities of England in 2011, the high living standard of even the poorest, then what will ever be enough? It seems more likely to have emanated from a cultural or political (but non-economic) issue - parental, council-estate (public housing, drug wars etc), a bad entitlement/consumerism mix, a sense of being in a police-state, crowd-psychology of course, a problem of too much leniency, or a sense of having no voice. Most likely some mixture, I'd guess. Here is an interesting discussion of some.

There are also important lessons from Tsars in Russia, and other imperialist rulers: responding with more police, cracking down on protesters as a policy solution, often only makes it worse, even when combined with some concessions. This is a major reason for the collapse of the last Russian Tsar.

For much the same reason, CCTV might help find the perpetrators this time, but that would likely be the first thing to go next time - rioters would be sure to take the cameras out at the very start - and the public would likely be made more terrified when they are taken out, seeing it as a portend of doom, while the rioters might be further energized, infused with violent or chaotic energy, responding to the police-state atmosphere.

The experience of the Russian Tsars teaches us that you can’t quell riots by cracking down, increasing police response and reducing freedom and privacy - unless you take it to terrible extremes. You have to change the conditions that caused the riots somehow. However, it seems you cannot just buy people off with concessions of social programs. They will have to continually expand, because the people become accustomed to every new level. Then any reduction, no matter how high the baseline rises to, is a travesty. Social programs create a sense of entitlement, and when they are no longer entitled to something, no matter how small a thing it is, and no matter how well off they remain, they may becomes incited to riot.

Final thought: I was genuinely surprised and interested in the idea of banning gangs from public housing - can government actually help reduce such violence through their provision of public housing? Could it offer an opportunity unavailable if housing is only private (whether subsidized or not)?

Judging the Effects of Policy

noreply@blogger.com (liberty) — Thu, 11 Aug 2011 16:50:00 +0000

Can we know if a policy has succeeded? Some have argued that we never can, but most economists and policymakers at least act as if we can - whether through economic or statistical analysis, through simple observation, or in some other way. However, confirmation bias and ideology may also blind us. The US stimulus package is a case in point. Those who advocated for it contend that it succeeded, at least to ward off a worse crisis - and say that it should have been bigger, but at least it was something. Those who argued against it contend that it failed. How can we know?

Many who contend that it failed observe that the advocates of the policy cited a report by the administration's Council of Economic Advisers which predicted 9% unemployment without the proposed stimulus, and not more than 8% with it; whereas with the stimulus package in place unemployment actually exceeded 9%. Defenders of the stimulus program have replied that without the stimulus it would have been even worse. How can we know?

It is not possible (nor likely to be morally justifiable) to perform laboratory tests on social systems. Some economists argue that one can only use logical theory and deduction to make broad observations and predictions about economic behavior - that we cannot use models or statistics to predict precise outcomes or prove or disprove theory. However, it makes logical sense that if there is a situation in which a choice is to be made about whether to enact a policy, especially one introduced to avert a major crisis and which is expected to have a dramatic effect curtailing that crisis, and most else remains the same (something approximating "ceteris paribus"), observers should have some idea whether the policy was successful. If a prediction is made about the differing outcomes with and without that policy, we should look closely at the actual outcome and conclude whether or not the policy in fact achieved its intended results.

In 2009 many economists and policymakers argued that a massive "stimulus" package, a ramping up of government spending, was needed to avert economic crisis and turn the economy around. In 1917 before taking power Lenin made a similar prediction about his policy. The policy of swift nationalization of banks and major industry was argued by its supporters to be critical for avoiding crisis.

Lenin described what he saw as "the chief and principal measure of combating, of averting, catastrophe and famine." He said that it was well known, but "these measures are not being adopted only because, exclusively because, their realisation would affect the fabulous profits of a handful of landowners and capitalists." Lenin argued that the answer was state control of the economy:

This measure is control, supervision, accounting, regulation by the state, introduction of a proper distribution of labour-power in the production and distribution of goods, husbanding of the people’s forces, the elimination of all wasteful effort, economy of effort. Control, supervision and accounting are the prime requisites for combating catastrophe and famine.

Did it work? It is clear that it did not. Hardly anyone disagrees with this analysis. The economy slid into severe famine and ruin. Markets disappeared, as indeed Lenin intended, but nothing of use replaced them. The state found it near-impossible to even feed the people of the cities, let alone construct a production and distribution system that would alleviate the hardship the people already faced.

Of course, civil war replaced the war with Germany, and this did not help the government in its tasks. Other factors ensured there was nothing like a true "ceteris paribus" situation. Yet even Lenin understood that he had made a mistake. His belief in Marx's economic and social framework convinced him that the problem was that the policies were introduced too soon and too rapidly, but he did concede that his policies were to blame for the failure to avoid crisis, and that in fact his policies had exacerbated the crisis Russia had been facing when he took power.

Why? Because our previous economic policy, if we cannot say counted on (in the situation then prevailing we did little counting in general), then to a certain degree assumed—we may say uncalculatingly assumed—that there would be a direct transition from the old Russian economy to state production and distribution on communist lines.
...
Our Mistake

...we made the mistake of deciding to go over directly to communist production and distribution. We thought that under the surplus-food appropriation system the peasants would provide us with the required quantity of grain, which we could distribute among the factories and thus achieve communist production and distribution.

I cannot say that we pictured this plan as definitely and as clearly as that; but we acted approximately on those lines. That, unfortunately, is a fact. I say unfortunately, because brief experience convinced us that that line was wrong

What did Lenin do when he realized his mistake? He "retreated." He reversed the bulk of the policies which he saw had produced the negative results. "In substance, our New Economic Policy signifies that, having sustained severe defeat on this point, we have started a strategical retreat."

When restrictions on trade were lifted, there was an immediate blossoming of market activity, which resulted in an end to shortages and an improvement in living standards of all the people. Writer Mikhail Bulgakov described the change that NEP brought. "On Kuznetskii Most [a main street in Moscow], the painted faces of toy figures made by artel [co-operative] craftsmen smile. In the former Shanks store, ladies’ hats, stockings, boots, and furs gaze out at the clouds..... There is a confectioners shop at every step." Most importantly, the food shortages and famine were left in the past. "The luxurious displays at the gastronomes are startling. Mounds of crates with canned goods, black caviar, salmon, smoked fish, oranges." They were affordable enough that even the poorest Russians were made far better off.

This was obvious to all, regardless of ideology, and is not debated today by historians. It was clear that it was the wrong policy - whether it was because it was the wrong time to enact the policy or whether the policy would always produce these results*, at least all agree that Lenin's assertion that only his polices of nationalization and a swift advance toward a fully socialized economy could avert crisis was wrong and worsened, rather than alleviating, the hardships facing Russia when at that time.

I contend that the same method can be used to judge any major policy enacted to avert crisis. If the policymaker asserts that it will fend off a crisis, and the potential crisis is predicted to be of a certain magnitude, and the alternative path is anticipated and described, the policy should be judged accordingly. If the outcome is equal or greater than the expected level of the crisis path, the policy should be assumed to have failed unless a very good explanation is given to explain this discrepancy; this is simple common sense, and use of plain observation. Few citizens subjected to policy would disagree, and even given the complexities of society and economy, the ordinary citizen is right in this case.

--

* Trotsky, although not at first, also conceded the policies of that period were a failure, and although like Lenin he contended that they were simply enacted too soon, his descriptions of why they failed suggest otherwise. In 1924, Trotsky defended a return to use of markets, and economic independence of enterprises, explaining that, "With the liquidation of the market and of the credit system each factory resembled a telephone whose wires had been cut." In other words, there was no information being channeled from or to each factory or enterprise. Information that normally travels via the market through the medium of prices and profit and loss calculations had vanished, and the factories did not know how to produce efficiently, leading to chaos in production, shortages, and massive waste.

Book Review of Rediscovering Fire

noreply@blogger.com (liberty) — Mon, 18 Apr 2011 09:58:00 +0000

The book review by Barkley and Marina Rosser of Rediscovering Fire is finally out in print, and citable to the April issue of JEBO. I would like to make a few comments here in reply to it, since it is not altogether flattering.

First, although the reviewers spend a fair bit of time criticing the missing bits from the index and other relatively minor (but annoying) flaws in the final edit, I would note that their final book review managed to get the title of my book wrong (they wrote 'experience' not 'experiment'), so perhaps we'd both do better to stick to content and not criticize minor mistakes.

Second, the reviewers complain that I do not treat the industrialization debate or discuss the fact that a different outcome in this debate might have led to a different sort of system. However, this misses the central point of the book, which I make over and over again: collective ownership over "the means of production" (over investment, factories, farms, etc) requires planning, and whole-economy central planning is inevitably going to be inefficient and the society will lack freedom. If the debate had "gone the other way" as the authors of the review suggest it might, that would simply have meant that the leadership would have chosen not to return to common ownership over the means of production. (Bukharin was arguing for a longer period--but not indefinite!--of private ownership in some areas of the economy, known as the 'New Economic Policy', so that the market could help develop the economy, while the public sector could more slowly expand.)

Hence, this was irrelevent to the book's purpose. The book discusses what happens when there is common ownership of the means of production, not what happens when there isn't. A more in-depth discussion of this debate would have been interesting to be sure, and would have supported my other arguments, but there simply was not room for it. The book focuses on the lessons that planners learned about common ownership, rather than the debates that the leadership had about whether planning or markets would better help them industrialize.

Third, the authors criticize the frequent references to Barack Obama and his policies, and argue that the Soviet lessons do not apply to the moderate policies I critique. They also wonder why I don't compare the policies of different mixed economies. Again, I think they have missed the point of the book. I do reference Obama's policies more often than policies of other places and periods. (Although I do also discuss, for example, British, French, German and Japanese policy, as well as policy from the 1600s, the 1930s, 1970s, the Bush era, and other eras, and in fact lay blame for the housing crisis and the financial crisis upon earlier decades' policies.) But I reference Obama's policies more than earlier eras because they are current policy. The point is to take the lessons that the Soviet planners learned during their experiment with common ownership over the means of production and apply them to current policy debates. Although historical policy in the US or other counties is interesting (and I do mention some of them), and comparison between different mixed economies is valuable, this is not the central focus of the book.

Finally, in their discussion about my use of the planners' lessons regarding production, distribution, and middlemen, they argue that the US healthcare system spends more and has worse outcomes than European systems. They mention this because they find it frustrating that I did not compare the pre-Obama-reform US system to European systems. There are two mistakes in the reviewers' discussion. First, I was not arguing in the book that the US system was good; I was arguing that the proposed reforms would not necessarily produce the intended results. The US system might be worse than the European systems that the reviewers mention and it could still be true that the proposed reforms would not produce the intended results. So, the reviewers evidence on this count is irrelevant. Second, as a side point, the reviewers use the US ranking in infant mortality and life expenctancy as evidence that the US system is worse. Not only are such high level indicators fairly unreliable without controlling for e.g., immigration levels, but one of them is highly misleading. It is well known that the rankings of infant mortality are highly skewed because the US counts all infant deaths while many other countries count only deaths of infants who were born of a healthy weight and size, and also because the avilability of fertility treatments in the US has led to a higher average maternal age and births by mothers with other risk factors. Either the reviewers are citing statistics that they do not understand, or they are citing statistics they know to be misleading. Either way, I expect some of the readership to see the error.

In any case, I am grateful for the review. I hope that readers of the journal will recognize that much of the review is colored by the reviewers' own opinions and tastes, and that they may find the book more balanced and cogent than the reviewers did.

On Rights and Liberties Protected by a Constitution

noreply@blogger.com (liberty) — Thu, 10 Mar 2011 09:59:00 +0000

Jesse Jackson Jr. is apparently even more astounding in his speeches than his father. On the House floor he recently called for an amendment to the constitution to assert the right of every American citizen to housing, medical care, education and even an iPod and laptop! Probably more astounding was his assertion (or rather, rhetorical question suggesting) that enumerating these "rights" in the constitution would create jobs! "How many jobs would such a right create?" he kept asking...

Well, Jesse, I have an answer for you. None. Having government spend on such things or publicly provide them does not create jobs and does not improve living standards. Government must tax, borrow, or inflate the currency in order to purchase these goods and services. Taxing means the money comes from someone else who otherwise would have used that money in another way ("creating" just as many jobs); borrowing may "bring the money from the future" but it must eventually be paid for and in the meantime it will crowd out others from borrowing from the future and hence again not "create" more jobs than without it; and printing money to fund these purchases will only fuel inflation: government will buy the goods but the price will go up and you and I won't be able to afford as much on our own. No, Jesse, it's a nice thought, but asserting a 'right' to something does not create jobs.

But won't it help the poor? Well, despite all the calls for these 'positive rights', they have not proven to be helpful for the poorest in the given country either. Asserting a right to something also does not make it exist where it does not exist. If the only medicine that a country can afford is aspirin, it won't matter whether the constitution asserts a right to first-class medical care. And in fact the more that constitutions assert rights to this and that necessity, the less that natural rights to freedom, life, and property seem to be respected.

There is a good reason for this. If the state promises a right to medical care, then it might just try to come through on this promise - but this may be very expensive if the state would just give everyone a voucher that could cover existing costs. Hence, the state may then try to 'control costs' by setting the prices on medical products and on wages (which is allowed by a constitution which promises such positive liberties - after all, the government needs the power to achieve its promises). So, the state sets prices and wages, and tells the companies how they must provide care, and does the same for housing and for the other industries enumerated. And the more that is promised the more that is regulated and decided by the state - often spiralling out of control (to the extent that it is difficult for the state to afford everything--i.e., to the extent that the state faces an issue of scarcity*).

Of course, if enumerating rights in a constitution could magically create jobs, and if scarcity were completely eliminated, then sure - it would be lovely to have all these rights enshrined in our constitution. But, sadly, Jesse, that ain't the case.

* Scarcity is the fundamental problem of economics. If there were no scarcity, any economic system could work. Because there is scarcity, some systems work better and some worse in handling the forces and limits created by scarcity. Yet, very often people blame the system for something that scarcity has caused, and often suggest a remedy that could only work if there was no scarcity. One example of this is the call to eliminate money, which I discuss in Chapter 7 of Rediscovering Fire (draft version, buy the final book here).

Mushrooms and Toadstools

noreply@blogger.com (liberty) — Fri, 04 Mar 2011 16:14:00 +0000

In the introduction to my book, I address the fact that many people think that what existed in the Soviet Union, especially under Stalin, was not Marxist socialism at all but rather Stalin and others simply used Marx as a cover for tyranny. The section reads in part:

[Many people] subsequently became disillusioned by Stalinism, but a good number of them retained their belief in socialism, believing that Stalin hijacked the movement and maliciously turned it against the people. ...

One Marxist used the following metaphor to make the case:
Like mushrooms, you go out and pick the right kind and you can cook a tasty dish. But if you gather up the kind commonly known as toadstools and call them mushrooms, you will poison yourself. Stalinist “socialism” is about as close to the real thing as a toadstool is to an edible mushroom.

Yet was Stalin’s socialism different from that suggested by Marx? Lenin and Stalin were not just ambitious men conniving to push through their schemes; they were attempting to implement the theories of socialism, based on Marx. They had a specific set of institutions that they believed would bring prosperity and happiness based on public ownership of the means of production. The 1918 and 1936 constitutions outlined rules that enforced collective property rights, the duty to contribute, and the right to social proceeds.

My discussion in the book is apparently not very convincing. The other day a friend of mine quoted this toadstool metaphor back to me, explaining that Stalinism has nothing in common with true socialism. Many academic Marxists have made this case as well, frequently citing the "backwardness" of Russia, the lack of simultaneous international revolution, or simply asserting that the fact that the USSR did not retain democracy and freedom proves that it deviated from Marx's vision. (Some also argue that Marx would not have supported violent revolution because his theory was "evolutionary" and socialism was inevitable, but one need look no farther than a biography of Marx, or his Communist Manifesto, to see the error in this argument.)

This isn't a small matter. If Russia was a test bed for Marx's ideas, there is a huge amount that can be learned from the case study. But, if Russia did not implement Marx's ideas, or did not implement them appropriately, then one cannot draw those kinds of lessons. Since I seem not to have made the case well enough in my book (at least in the introduction) I will attempt to address these arguments here.

First, as for the "backwardness" of Russia at the time of revolution, it is not at all clear that Russia fell short of the necessary level of development called for by Marx. Russia in 1917 was in many respects at or above the level of development that countries such as Germany or France were in 1848 when Marx deemed them ripe for revolution. In The Revolution Betrayed, Trotsky argued that it was the underdevelopment of Russia that caused socialism to take the brutal form it took there.

Two years before the Communist Manifesto, young Marx wrote:

A development of the productive forces is the absolutely necessary practical premise [of Communism], because without it want is generalized, and with want the struggle for necessities begins again, and that means that all the old crap must revive.

This thought Marx never directly developed, and for no accidental reason: he never foresaw a proletarian revolution in a backward country. Lenin also never dwelt upon it, and this too was not accidental. He did not foresee so prolonged an isolation of the Soviet state. Nevertheless, the citation, merely an abstract construction with Marx, an inference from the opposite, provides an indispensable theoretical key to the wholly concrete difficulties and sicknesses of the Soviet regime.

Yet, Russia’s development was not at such a low stage compared with the Germany of Marx’s time. Trotsky admitted this and responded to this point by arguing that it is the relative, and not the absolute, level of development which a country must obtain before socialism will produce the desired results. He wrote:

The Soviet Union, to be sure, even now excels in productive forces the most advanced countries of the epoch of Marx. But in the first place, in the historic rivalry of two regimes, it is not so much a question of absolutely as of relative levels: the Soviet economy opposes the capitalism of Hitler, Baldwin, and Roosevelt, not Bismarck, Palmerston, or Abraham Lincoln. And in the second place, the very scope of human demands changes fundamentally with the growth of world technique. The contemporaries of Marx knew nothing of automobiles, radios, moving pictures, aeroplanes. A socialist society, however, is unthinkable without the free enjoyment of these goods.

By demanding an economy that has the innovations of capitalist countries on which to build socialism, Trotsky is admitting that socialism cannot produce the growth and innovation to advance an economy to meet those needs. Yet there will always be new needs and new demands. How then could socialism ever succeed if it cannot create this development on its own? Socialism is "unthinkable" without the inventions and innovations of the capitalist world: "automobiles, radios, moving pictures, aeroplanes." Yet since Trotsky wrote those words, we have added color televisions, computers, digital music players and recording devices, and cell phones to the list, along with a world of Web technology and Internet commerce, to name just a few more obvious inventions. The list of new medicines would be perhaps more significant. Now, socialism is "unthinkable" without those.

"This obvious underestimation of impending difficulties is explained by the fact that the program was based wholly upon an international perspective," Trotsky continues. But, if at any point many or all countries adopt socialism, this problem would just extend worldwide. Not only would Russia not have mobile phones or advanced cancer techniques and MRI scanners, but neither would Germany or France or Britain.

Now, what of the claim that Russia was not democratic or free, as Marx promised communism would be? In a book called Marx and Soviet Reality, Daniel Norman argued that a close reading of Marx will reveal that Stalin’s Russia had absolutely nothing in common with Marxism, and simply used Marx’s name to hide a system which was in fact the opposite of what Marx advocated. "There is at least one point on which Soviet propaganda and the opponents of Marxism – and of Socialism in general – agree," Norman begins, "both describe the USSR as the embodiment of the Marx – Engels conception of a Socialist society." However, he asserts, "Nothing could be wider of the mark."

His first evidence of this vast gulf? "Under its Marxist veneer of Bolshevik terminology, Soviet reality can be easily identified with everything abhorred, criticised and fought against by Marx and Engels all their lives."

Although this might sound like a reasonable argument, it is in fact no argument at all. At least, if by "embodiment of the Marx-Engels conception of a socialist society" Norman does not simply mean whether the USSR lived up to the wildest hopes and dreams that Marx and Engels might have had—surely it did not, but no one is likely to deny that. Few would impart sinister motives upon Marx and Engels, or imagine that they had the desire for millions to die of famine. This simply means that the results were not what Marx would have wanted.

But this is presumably not what Norman means. Norman seems to be asserting that what was implemented in Stalin’s USSR was not what Marx and Engels would have liked to see implemented--that somewhere along the line the system was hijacked and the policies diverged from what Marx had advocated. Now, it is true that Marx and Engels, as well as Bukharin, Lenin and Trotsky, were against the "leviathan" of state capitalism and favored democracy and freedom. However, they prescribed certain distinct policies to achieve what they deemed "true freedom" and "true democracy." If these policies were put in place and they resulted in a system very much like state capitalism, then it matters not that they were against such a system.

The fact that the results of implementing Marxist policy did not turn out in the way envisaged by Marx is irrelevant. Marx may have desired a democratic and free society, but if his policy prescriptions could not produce a democratic and free society, then any society which implemented them would still be Marxist, even though it did not live up to these ideals. If a religious leader calls for all citizens to be made to pray every day, and argues that it will make all men angels, and the policy of mandatory prayer is then enforced, then his policy has been enacted whether or not the men become angels as a result. One cannot argue that the system was never implemented simply because the results were not those expected.

Norman goes on to make several complaints regarding the rhetoric in the Soviet Union.

a British worker, employed in a nationalised factory (whose economic, social and political situation has undergone so great an improvement as to amount to a revolution since Marx and Engels’ day, and who still retains the means to fight for the maintenance and further improvement of his situation) is a ‘wage-earner’ in the Marxian sense of the word, and still ‘exploited’; but in the Muscovite ‘Marxist’s’ eyes he is only a ‘slave’.

His opposite number in the USSR (where ‘the system of wage labour and exploitation has been abolished’, as Stalin pretended) earns less, works longer hours, has much less variety of goods on which to spend his money, has trade unions which exist only to squeeze more and more work out of him, is tied to his particular factory, and has the prospect of being sent to a forced labour camp if he makes a mistake or protests against his lot; yet he, according to Muscovite ‘Marxism’, represents the most ‘advanced, emancipated and free’ worker in the world.

To admit the justice of this, one must first accept the anti-Marxian Soviet distinction between an amount of unpaid labour which is ‘surplus value’ when it is the British state which is the beneficiary, and the same amount of unpaid labour which is not ‘surplus value’ when the Russian state is on the receiving end – a subtlety that would perhaps not have been very well received by the author of the theory.

First of all, Marx did call workers under capitalism wage-slaves. But, how could Stalin argue that the workers of the Soviet Union were not exploited when made to work for the Soviet state? Easy. Norman forgets the distinction made by Marx about the class ownership of the state. Indeed, it is not "exploitation" to Marx if the workers have taken power. In the lower phase of communism (known since Lenin as "socialism") the workers run the state: the dictatorship of the proletariat. Only later can the state "wither away." And the people will indeed work for the state for wages: to each according to his work. To Marx this is not exploitation, it's the first step on the road to communism.

Then, again, Norman complains that the workers do not have direct control over production, and it is a complaint about results not policy. He argues:

In Russia, it is true, there is no private ownership of the means of production, and it is the state which is the owner. But state property is no more Socialism than are the rationalisations under liberal capitalist regimes, for the workers are still not the masters of their labour conditions and remain separated from the production process.

He quotes Marx: "State ownership of the productive forces is not the solution." But he does not quote the entire passage which makes clear that first the workers' state must employ the people, and then this will eventually lead to their ability to take direct ownership in such a way as to become masters, and no longer alienated from the production process:

The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is rather brought to a head. But, brought to a head, it topples over. State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.

This solution can only consist in the practical recognition of the social nature of the modern forces of production, and therefore in the harmonising of the modes of production, appropriation, and exchange with the socialised character of the means of production. And this can only come about by society openly and directly taking possession of the productive forces which have outgrown all control except that of society as a whole. ...But with the taking over by society of the productive forces, the social character of the means of production and of the products will be utilised by the producers with a perfect understanding of its nature, and instead of being a source of disturbance and periodical collapse, will become the most powerful lever of production itself.

This was a prediction about how relations of production would change when workers took control of the state. The prediction turned out to be wrong. But this is again an argument only that the results did not coincide with what Marx predicted, not that Marx's policy prescriptions were not implemented in the Soviet Union.

It would be tedious to continue picking apart all of Norman's arguments, but think twice before assuming that because the Soviet Union did not look like Marx's promised utopia that it was not in fact Marxist. And if I have whetted your appetite on this subject, please find more in my book.

Rediscovering Fire to be assigned at UNC

noreply@blogger.com (liberty) — Mon, 27 Dec 2010 21:51:00 +0000

Breaking News: Steven Rosefielde will be assigning Rediscovering Fire in a course on Russian History at the University of North Carolina, Chapel Hill.

Ever-expanding expectations

noreply@blogger.com (liberty) — Mon, 25 Oct 2010 16:35:00 +0000

In about 1926, the old Bolshevik and leader of the All-Russian Central Council of Trade Unions Mikhail Tomsky visited Britain. Despite his Marxist understanding of capitalism and the inevitability of socialism, and all his years of struggle for revolution for the Russian people, Tomsky was so impressed with the high living standard of the average British worker that he declared:

"I cannot see why your western European workers should be Communists. I do not see any possibility of revolution in the west."
(p. 402, Stalin: a political biography, Isaac Deutscher, my emphasis)

The goal of communism was to bring a better life and a higher standard of living for the regular worker - this had already been achieved without communism in Britain. Why should the British worker be a communist? Yet, it was just at this time that the Labor Party came to power in the UK -- perhaps the majority of Britains electorate were not communists, but they were advocates of some sort of socialism, and today in Britain, Europe and in certain pockets of the US, people demand that government give them more.

Yet, what was this standard of living that so impressed Tomsky that he would essentially argue that capitalism (read: markets) was giving the worker so much that he need not demand that government (read: socialism) give it to him? Well, the GDP per capita was $6,947. The average worker's income was probably less (GDP per capita would be an average of all income including the very rich, and does not represent a median but a mean).

But, to be generous, lets say it was $7,000. Can working people make $7,000 today? $7,000 per year is about $3.50 per hour. Even in the worst recession since the Great Depression, even the lowest skilled high school dropout can easily find a job at that wage (if state minimum wage laws have not killed off those jobs!) In fact, even illegal immigrants make more than $7,000/year on average.

Yes, I know that nobody is calling for communist revolution in America, and I know that this is a low bar of comparison: but still, think of it. One hundred years before Tomsky visited Britain only the wealthy elite had many of the things that he saw workers have in 1926, and when he saw how well off they were, he understood why they would not fight for communism and demand of government the redistribution of wealth along egalitarian lines. Today even those unprotected by any law, illegal immigrants, can expect immediately and without any skills, without even speaking the language, to earn more than those workers did. The median American worker earns more than three times that, and the median household income is seven times that.

Yet, if Americans and western Europeans do keep demanding more and more of government, in the way of entitlements, labor laws, bailouts and so forth, we may ruin the economy which has given us this high living standard and leave ourselves worse off in the end. (And in a tragic and ironic twist, probably see a radical turn afterward.) Why do we demand so much - and why are our expectations so ceaselessly expanding?

Stalin and Western Views on Planning

noreply@blogger.com (liberty) — Fri, 22 Oct 2010 17:59:00 +0000

Its amazing to read Isaac Deutscher's famous biography of Stalin today. Written in the late 1940s (original edition published 1949) he had an incredible belief in the superiority of planning and the freedom which would be available in the Soviet system once the temporary need for terror was over. Because of these two beliefs, he was able to reluctantly excuse and explain the famine, executions and gulag system under Stalin, all of which he knew, despite not being a hard-core Marxist himself.

On page 340 he cites official statistics without any concern about their reliability. He tells the reader that between 1929 and 1938, "electricity per annum rose from 6 to 40 billion kwh., of coal from 30 to 133 million tons" and "in 1941 the total output of the Soviet machinery-building industry was 50 times higher than in 1913", among other amazing feats.

on p. 341 he writes:

the significance of the second revolution [collectivization and industrialization] lay not only and not even mainly in what it meant to Russia. To the world it was the first truly gigantic experiment in planned economy, the first instance in which a government undertook to plan and regulate the whole economic life of its country and to direct its nationalized industrial resources towards a uniquely rapid multiplication of the nation's wealth.
... We have seen the follies and the cruelties that attended Stalin's 'great change'. They inevitably recall those of England's industrial revolution, as Karl Marx described them in Das Kapital. The analogies are as numerous as they are striking.
...In spite of its 'blood and dirt', the English industrial revolution--Marx did not dispute this--marked a tremendous progress in the history of mankind. It opened a new and not unhopeful epoch of civilization. Stalin's industrial revolution can claim the same merit.
...Even in the most irrational and convulsive phase of his industrial revolution, however, Stalin could make the claim that his system was free from at least one major and cruel folly which afflicted the advanced nations of the west: 'The capitalists [these were his words spoken during the Great Depression] consider it quite normal in a time of slump to destroy the "surplus" of commodities and burn the "excess" agricultural produce in order to keep up high prices and ensure high profits, while here, in the USSR, those guilty of such crimes would be sent to a lunatic asylum.

Deutscher cites the suffering of the peasants, but argues that workers were faring well. He makes several comparisons to the English industrial revolution to excuse appropriation of the peasants and famine, and elsewhere he argues that workers in the Soviet Union felt pride similar to the pride of a soldier in other countries. Although he concedes that the "masses" earned little compared to high party officials, he clearly is arguing that industrialization is raising the standard of living for workers if not yet peasants.

We now know that he overestimated both economic growth (and the value of the output itself) as well as the remuneration of the workers:

Collectivization was carried out following the logic of primitive accumulation. The Soviet leadership presumed that, by buying grain at low prices and selling at higher prices, budget surpluses would be generated for investment finance. According to Marx's model of expanded reproduction, a poor country must create capital at as fast a pace as possible. From a simplistic point of view, any strategy that reduces consumption (e.g., by reducing peasant incomes) increases saving, which is the difference between output and consumption. Primitive accumulation appeared to work insofar as the investment rate doubled between 1928 and 1937, but was this increase a consequence of collectivization's depression of rural living standards or did everyone's consumption fall to accommodate more investment? Abram Bergson, the most noted student of Soviet growth, answers as follows: “Contrary to a common supposition, the industrial worker fared no better than peasants under Stalin's five-year plans.” In other words, something went wrong in Stalin's execution of primitive accumulation!

(The Economic transformation of the Soviet Union, Davies, Harrison, and Wheatcroft)

Expropriation and famine are not all Deutscher excuses. He also explains away Stalin's terror, executions and repression. Deutscher compares Stalin's terror and purges to the French Revolution and to earlier Russian terrors under various tsars, and essentially pleads necessity. Then he criticizes (p. 366) as "a grim page in the annals of Russian literature" Stalin's repression of artists and writers, but then essentially retracts his criticism:

the cultural significance of Stalinism cannot be judged merely by the way it ravaged letters and arts. It is the contradiction between Stalin's constructive and destructive influences that should be kept in mind. While he was mercilessly flattening the spiritual life of the intelligentsia, he also carried, as we have seen, the basic elements of civilization to a vast mass of uncivilized humanity. Under his rule Russian culture lost in depth but gained in breadth. The prediction may perhaps be ventured that this extensive spread of civilization in Russia will be followed by a new phase of intensive development, a phase from which another generation will look back with relief upon the barbarous antics of the Stalinist era.

(p. 367-8)

I wonder: Has this phase come yet?

In short, I think the belief in the economic validity and even superiority of central planning over the longer term allowed Deutscher to see Stalin in the best possible, rose-colored, light. The more completely we put this false belief to bed, the less likely we shall be duped again into giving over complete power to a tyrant.

Rediscovering the causes of famine

noreply@blogger.com (liberty) — Mon, 11 Oct 2010 19:34:00 +0000

Why it Matters

My book describes 10 economic lessons from the Soviet experiment. I argue that the Soviet experience offer important lessons because the economic system was based on theory, and hence the theory was tested. My conclusions about economic theory also apply to market economies. Yet, some critics, even if they agree that my premise is reasonable and my conclusions accurate, might still say: so what? Maybe markets are superior to planning but a bit lower economic growth is not the end of the world. It isn’t the 1800s anymore, when Marx was writing, and so slightly lower growth isn’t going to kill anyone.

Well, I want to shake that notion out of you. Central planning, the ultimate end of socialist theory, leads to much worse than just a slightly lower level of growth. It is 2010, yet North Korea has been mired in frequent famines and endless impoverishment, while South Korea has been booming. They started at the same place five decades ago. Yet now they are night and day. What is the explanation?

First of all, North Korea is far from the only example of famine in a planned economy in recent history. Here is a quote from Robert Service on the Great Leap Forward in China:

Mao … readied the leadership for an intensive campaign of economic transformation. This became known as the Great Leap Forward. Aiming to eliminate the differences between town and countryside, he called for rapid growth of rural industry. As the campaign got under way, about a tenth of the population volunteered – or more frequently found themselves directed – to work in makeshift iron foundries. A million of them were built. Planned output of steel was raised from six millions tons in 1958 to thirty million by the end of the following year. These were the years when Chinese communists repudiated the Soviet denunciation of Stalin and claimed that only China could supply an authentic model for communism around the world.

… A vast famine afflicted the country. Drought affected some regions in 1958, but the industrializing campaign and its consequences were the main reason for the hardship. Survivor Bian Shaofeng described the result: ‘When you were hungry you would eat anything. We ate all kinds of wild grass, wild roots, pumpkin leaves and peanut shells; we ate worms, baby frogs, toads. It was disgusting to eat toads as they made you sick. We ate rats if we could catch any, but often we were too weak.’ Her relatives died off like flies. People kept the deaths secret so they could go on receiving the rations of the deceased. Parents lived with the rotting corpses of their children. Cannibalism was widespread. On a trip into town, Bian Shaofeng noticed a man’s head and chest by the roadside. On questioning a local woman, she was told unashamedly that he had been chopped up for his plump flesh.

The exact incidence of mortality through starvation may never be known; the most plausible estimate is that at least thirty million people perished. It was the worst man-induced famine in history. … Supposedly this was Mao’s reaction to all the suffering: ‘You have only leaves to eat? So be it.’ What is undeniable is that he took no serious steps to change policy until it was too late. He continued to take satisfaction from communist successes in the decade since 1949. Land had been collectivised, industry nationalised. Rival parties had been eliminated.

The “successes” were that the Communist Party had enacted their policies. The policies themselves were not successful – unless Mao had wanted to starve his people. But Service argues “The Great Leap Forward had not worked out as Mao intended.” Mao had wanted to build up industry, not to wipe away thirty million of his population, and turn the rest against him and against the Party.

Why was the Great Leap Forward such a failure? Is it inevitable that planning will fail? This is a critical question. As famine looms in North Korea again, this question is one of life and death for twenty million Koreans. A recent Times article interviewed some refugees who escaped over the border to China to find food to smuggle in to their families:

While snow falls outside, Choi Kum Ok squats on the floor of an anonymous apartment not far from the border. Her eyes fill with tears as she talks of the son she had to leave behind. “I came over to earn money for his medical care. I need to get him food or he will starve.”

She covers her face and sobs as she remembers the 1990s, when harvests failed and up to 10 per cent of the population starved. She lost a sibling. “I don’t want to talk about it,” she says.

A former security guard and member of the elite ruling Workers' Party, she cannot understand how the leaders that she still worships could have failed their people so completely.

Without an understanding of the economic problems of planning, one is left simply wondering why their politicians have failed them. Perhaps they are evil? Lazy? Greedy? Maybe they are market fundamentalists (or bourgeoisie) and have not tried hard enough! However, an intellectually honest closer examination reveals that policies whereby government tries to centrally plan either the whole economy or just a part tend to lead to trouble - while allowing markets to emerge has the opposite effect. The article continues:

Some are already dying from malnutrition, the women said. Food had been available, if not plentiful, since the Government relaxed the ban on free markets after the 1990s famine.

In late November, however, the Government abolished old banknotes and introduced a new currency at the rate of 100 old won to one new. The maximum people could change was 100,000 won. Private savings, such as they were, were wiped out. The North Korean minister held responsible for the reform was executed by firing squad last week.

...Food disappeared overnight as the black markets closed. Traders had no incentive to sell now-worthless products; better to hoard their rice and oil for the times of need they knew lay ahead. Venting their frustrations, many people with savings threw them away.

Once again, when markets were allowed to emerge they relieved shortage and famine, and when they were destroyed (this time by a reform that left the people without disposable income to spend in the markets) famine ensued. Of course, this is a fairly simple and clear case - and does not imply that there is no role for any kind of intervention - but it is one that some have yet to digest.

For a close analysis of major economic lessons, read my book. This example simply points to why it is so important to understand the failures of planning and centralized directives.

Video Posted

noreply@blogger.com (liberty) — Fri, 17 Sep 2010 19:35:00 +0000

For those unable to make it to my book event, you can watch the video either on that page, or on my site here.

Two upcoming events

noreply@blogger.com (liberty) — Fri, 03 Sep 2010 14:51:00 +0000

I will be presenting this paper at The Heritage Foundation on Friday September 10th, at a noontime lunch seminar. Email me if you would like to come and were not invited.

Then, on the following Thursday, September 16th, I will officially launch my book Rediscovering Fire: Basic Economic Lessons from the Soviet Experiment, at noon at the Heritage Foundation. You can watch the latter online if you aren't in the DC area.

Cuts from Rediscovering Fire (#2)

noreply@blogger.com (liberty) — Mon, 26 Jul 2010 21:13:00 +0000

The following was adamantly opposed by my publisher and was entirely cut out, minus a small footnote referring to the story. For some reason my publisher was sure that it was a smear campaign against the Soviet Union, even though the story is recounted by Simon Liberman, an honest and faithful socialist who was quite close to Lenin. (It turns out the whole book is available here). Remember that the passage is also within a chapter that further explores the problems of investing without the use of market prices or the signals of profit and loss (i.e., there is further evidence and theory on this subject within the chapter).

---

The socialist ideal was to direct investment centrally and to aim it at social ends rather than according to profitability. By inviting workers to suggest projects the Bolsheviks expected to facilitate a high level of innovation. Workers could suggest projects that they would not have enough capital to undertake in the old capitalist system.

Lenin put this ideal into practice almost immediately. Inventors from all over the Soviet Union came to Lenin with their ideas. However, evaluating the profitability and advisability of these projects now rested with the state. In the market system, an inventor must convince a private investor to risk his own money. If it is a poor project, the private money is lost and the project dies. With the Soviet government, investing worked a little differently. The inventor had to convince the Party to invest, and this was often decided on political grounds.

Reliable Party members were more likely to have their inventions funded, and if top Party officials liked an idea dissenting voices were shushed. Simon Liberman, director of the Russian timber industry under Lenin, described an incident like this in his memoirs. Sitting in his office three blocks away from the Cheka (the secret police), Liberman received a call from Felix Dzerzhinsky, head of the Cheka. Liberman was to receive a young man with an invention that would help in fuel acquisition:

In a few minutes an extremely well-built young man appeared in my office. His military uniform was all leather, from cap to boots. There was a fire in his eyes as he turned the key in my door behind him and stepped toward my desk. He stared at me, then asked: “Are you a member of the party?”

Upon hearing from me that I was not a Communist, he threw the key upon my desk before him, drew a revolver out of his pocket, and put it down beside the key. He then pulled out an oilskin-bound notebook. This, too, he placed on the desk.

In the notebook, Liberman found pages and pages of equations. He asked the visitor what they meant. The man had “invented” a perpetual motion machine. “I had no doubts as to its fantastic futility,” Liberman recounts, “but there was that revolver on the desk.” Liberman also knew the potential dangers of honesty. He called Dzerzhinsky and told him what he thought, the head of the secret police replied, “That’s strange. Our technical committee has examined this proposal and found it worthwhile.” This, Liberman knew, could mean his own arrest.

In this case, Liberman was lucky to have a contact with the Scientific Committee and so was able to “pass the buck” to them. However, it was clear that political, not economic, factors were driving the investment choices.

Another invention came to Liberman around the same time. The man proposed that the vast pine forests of the nation be exploited for their energy reserves because they “burn remarkably well.” Liberman was skeptical. The man explained that the Central Fuel Committee and Lenin himself were already interested in the plan and wanted to put it into effect. Liberman again deferred to the Scientific Committee, but then went abroad before hearing more about the project.

By the time he returned, the Chief Pine Cone Administration had been created. Liberman was called in to a meeting of the administration, which included Lenin, a representative of the Central Fuel Committee, and a representative of the Cheka. The fire was lit with pinecones. The meeting began, and Liberman was denounced for his skepticism. Then, the Cheka representative began to recite a formal indictment of Liberman, accusing him of sabotage. The Cheka man was sure that Liberman was diverting the pinecones away from their destination.

Trainloads of pinecones were being sent from the forests by train to a mill for pressing, but none had arrived: The trains always arrived empty. Liberman knew immediately what was really happening. “The reason was simple: the locomotive consumed all the cones on its way to the mill; the cars arrived empty because of the locomotive’s natural appetite for fuel.”

Liberman explained to the men that the journey was too far to be economical. The enormous distances from the forest ate up more fuel than the cones could produce. Liberman also argued that if pinecones were a very good fuel idea, some businessman in another country probably would have thought of doing this before. Sweden was full of pine forests. Fortunately for Liberman, Lenin accepted this explanation, although he did not admit it in the meeting.

These are examples of investment decisions made for political—because the inventor was a Party member or a top politician liked the idea—rather than economic reasons. The Party and the state had little choice but to make the decisions politically. Even if the Party wanted to avoid waste, the regular signals of profit and loss were not available because the state owned all of the resources, and set all of the prices, in the economy.

Cut bits from my book

noreply@blogger.com (liberty) — Fri, 16 Jul 2010 19:41:00 +0000

I haven't been blogging in a long time, but I may now post some bits of my book that were cut before going to press. Inspired by the article The Long Goodbye, I recalled this cut passage (footnotes omitted):

Renowned socialist economist Beatrice Webb spoke highly of Stalin’s Russia in Soviet Communism: A New Civilization? Cambridge University economist Joan Robinson visited Russia in 1952 and wrote a pamphlet praising Stalin’s achievements and criticizing those who claimed that foreigners were being followed or led around. She retracted her statements within a few years (comparing Stalinism with McCarthyism), but promptly put all her faith in Mao’s China. She spoke of the hope of the Cultural Revolution in China. “The people are conscious of taking part in a great political experiment. They are being given not only something to eat, but something to live for.” Possibly most amazing was her claim that North Korea was outgrowing the South. In a perfect inversion she argued in 1964 that “as the North continues to develop and the South to degenerate, sooner or later the curtain of lies must surely begin to tear.”

The public was also duped by Soviet statistics for nearly the entire period. In the 1930s, over 100,000 Americans applied for jobs working in Soviet factories, and several thousand Americans emigrated to the Soviet Union. A BBC article reviewing a book on the subject reminds us that “Those American emigrants who entered the ‘workers’ paradise’ were certain that they were leaving the misery of unemployment and poverty behind them. They considered themselves fortunate.” However, the emigrants first had their U.S. passports confiscated and then began to face Stalin’s terror. Most of these emigrants ended their stay in the Gulag or were quietly taken away to be shot. Sadly, when they asked for help, the American embassy turned these Americans away.

The show trials of the mid and late 1930s were seen by many in the West as legitimate. These included such prominent figures as Walter Duranty of The New York Times, a Russian speaker; Beatrice and Sidney Webb; and the American Ambassador, Joseph E. Davies, who reported that there was “proof…beyond reasonable doubt to justify the verdict of treason” against the defendants. Robert Conquest argues, “Perhaps the commonest reaction was to believe that the case against the accused in these trials was exaggerated, rather than false in every respect. This formula enabled those who subscribed to it to strike what they felt to be a decent commonsensical balance. It fact it was simply a mediocre compromise between truth and falsehood, between right and wrong.”

By the late 1940s there were eyewitness accounts not only of the terror and show trials, but also of the Gulags. Thousands of Poles released from the camps in 1941 and 1942 shared their knowledge, and by 1948 there was “a very full analysis of the system listing hundreds of camps, together with reproductions of camp documents” published for all those interested to see. Many intellectuals actually worked to cover up the truth, silence those with evidence, and discredit their testimony. For example, Jean-Paul Sartre took the position that evidence of the camps should be ignored in order that the French proletariat not be discouraged. In late 1949, David Rousset, former war prisoner of the Nazis at Buchenwald, and co-founder with Jean-Paul Sartre of the radical left-wing group the Revolutionary Democratic Assembly (RDR), wrote a letter protesting the Gulags in the Soviet Union. He asked other French intellectuals to sign. Among those who refused to sign it were Jean-Paul Sartre and Merleau Ponty. Although they conceded the existence of the camps, they argued in an editorial that to sign the protest would mean to side with American imperialism and absolve the capitalist world.

The American public continued to believe Soviet statistics and propaganda until near the end. For example Time reported in 1973: “Already the East Germans have surpassed the Italians and the Irish in per capita income, and they are closing in on the British.” Of course, when the Berlin Wall fell, the true nature of the East German economy was revealed. It took many years for the former West German economy to absorb the troubles of the eastern half and lift it up to its own level.

This passage was probably unnecessary for my book, but it is important to remember the willing illusions that many intellectuals then--and to some extent now--held simply because they wanted to believe in the socialist ideal society. As the article The Long Goodbye reminds us:

[Those who mourn communism argue that] communism was devoted to the Enlightenment principles of reason, progress, science, education and popular government. That it periodically paid lip service to those ideals is true; and it even tried to cheat by passing off utterly bogus imitations of their realization (such as "the world's most democratic Constitution"). But communism was also, and preferentially, devoted to ideals incompatible with the Enlightenment project, such as monolithic authority; class-relative truth, central economic planning, and the religion of the party-state. Thus it engendered poverty; injustice and mass murder not by contingent chance but always and everywhere by its very own logic. Michael Oakeshott would have said that that logic contained as much bookish rationalism as the American Constitution, but so does any coherent policy for a modern state; that tells us nothing about its attachment to education, science, democracy and the other Enlightenment values.

They also claim that "communism was never tried" -- despite all the Marxist leaders who implemented common ownership across the globe:

True socialism was never tried [they say]; only distortions. You can choose your own distorter: Lenin, Stalin, Pol Pot, as you please. Hobsbawm chose Russian "circumstances" and maintained, in 1994, that "the failure of Soviet socialism does not reflect on the possibility of other kinds of socialism." There was nothing in "the socialist idea" to suggest a one-party state or the imposition of an orthodoxy, he says, ignoring the massive evidence that a central plan will always require both.

... if local circumstances or individual villainy is distorting the socialist ideal, how does it happen that the identical formula for "really existing socialism" is transmitted from Stalin to Mao, to Kim Il Sung, to Ho Chi Minh, to Pol Pot, to Ceausescu, to Castro and to Mengistu? Were all these men suffering the betrayal of a pure ideal, or were they not rather all applying the same horrendous methods to reach the same impossible goal, the only methods and the only goal communism ever knew?

Despite leaving the passage out of my book - which may make my book easier for those with Utopian dreams to stomach - these are also lessons that we should not forget. We are too easily fooled, too easily led around in blinders, because of our own desperate hopes and wishes.

Economic Science: Back To The Basics

noreply@blogger.com (liberty) — Thu, 09 Jul 2009 12:53:00 +0000

My book (on lessons from socialism) is about using the grand experiment -- to run an economy efficiently through replacing the market with a plan -- to understand economics. After all, economics is precisely about what an economy is: the question of whether this experiment should work, and why, seems very central. Is an economy by nature a market economy? Or is it just as workable to replace the market with a plan? Or, if not completely replace the market, can you replace bits of it, or guide the market? And, if the latter, then why can't you replace the whole thing (why is that different?) and does the answer to that question have bearing on how well a partial replacement or guidance will work?

So, my interest in economics is very basic: getting back to the basics of what economics is. Getting to the core. And, I think generally this is what Austrian economics is about. Austrian economists do not want to take what other economists have done and add fancy and tangential extensions to it, or mathematically prove something into or out of existence. Austrian economists want to ask fundamental questions about economic systems that often appear easy or obvious, and then carefully and methodically work out the answers.

This is also what makes Austrian economists great teachers: at least a couple of Austrian economists that I know are, in my opinion, at their worst when they attempt to do conventional-type work that they can publish in top journals, and at their best when lecture to students or present to (or publish for) non-academics. Does this mean that Austrian economics is not scientific - that it is only palatable to the uneducated? No, I do not think so at all. Conventional economics is based on absurd, often times bizarre, assumptions. Economists realize this, but excuse it because they hope the simplifications will help to generate useful predictions. Economists then build elaborate models and equations based on these assumptions, and learning all about what they've done takes years of academic training.

However, most of Austrian economic insight is not built on such assumptions, and it is therefore not simplified enough to build elaborate models and equations upon. It therefore does not take years of academic training to understand these basic insights--instead it takes a few hours to begin to understand the basic insights (if they are taught well). After that, of course, they can be more and more deeply understood, and applied to different policy questions, economic questions, and other pursuits.

This also leads me back to where I started: Austrian economics is about the basics. Understanding and applying basic economic principles to questions in daily life. I think this is good. I do not think that we need elaborate models built on absurd assumptions: models are fine, but they are not the really critical thing. The really critical thing is to understand what economic system works best for what ends, and why. This can then answer "how can we increase economic growth?" and "can we help developing countries to grow? why are they poor in the first place?" and "should we nationalize the banks?"

It is highly unlikely that an elaborate economic model built on incredibly simplifying assumptions will answer this first and most fundamental question better than a study of the fundamentals.

The Soul of an Academic

noreply@blogger.com (liberty) — Mon, 29 Jun 2009 01:44:00 +0000

Here is a profound quote from The Sisters by Vikenty V. Veresaev, that I think gets to the core of an idealistic academic:

We were going to work together, but somehow neither of us were inclined to. We decided to have a drink. Nurka brought a bottle of port wine. We drank it, and lay down on the bed. I began to "preach" to her. I said there is no such thing as love. There are only sexual needs. She looked at me sadly with her innocent blue eyes; it hurt her to listen to me. She dreams of a "pure" love. I laughed at her and said: "Rubbish! Can a Komsomolka be such an idealist?"

I suddenly remembered and struck my forehead:

"The synopsis! I'd forgotten all about it!"

I sat down at the table and wrote out the synopsis for the lecture.

The next evening came. ... My speech poured out, vivid and unhesitating. I laid down the economic basis, passed to materialism, and so on and so on. ... The young folk were impressed; they're thirsting to be shown the path to the new life. And this is what I longed to say in the concluding words: "Listen all of you! I haven't been speaking seriously, I was making fun of you, I wrote out the synopsis of my speech when I was drunk. It was very easy because there was nothing of mine in it. I have only repeated what others have written before. I have no ideas of my own any more than you have. Tear up your notes and lets begin from the beginning; lets find the way to the new life with our own brains."

I wanted to go home alone, but I had to go with some of the others, and we argued on the way. I got heated trying to prove something, and when I reached home my heart was very heavy and I even cried into my pillow when everyone else in the room was asleep. It appears that, in order to be a charlatan, you must have a great sadness in your soul.

That about sums everything about academia up that I know.

The Time Factor

noreply@blogger.com (liberty) — Fri, 22 May 2009 02:45:00 +0000

Pete Leeson wrote recently, on the Somali pirate situation, that "the market has spoken," he said:

The market has spoken: Even in today’s pirate-infested waters off Somalia, the low probability of being captured by pirates, together with the fact that pirates release their hostages unscathed, means it’s cheaper--and safer--to go without armed guards.

There were a lot of pretty good responses to this argument in the comments. However, one really fundamental one is this: the market takes time to gather knowledge, respond to incentives and price fluctuations. When we forget this, as Austrians, we look like the neoclassical economist who disbelieves that there is really a dollar in front of his eyes, on the ground, because someone would have already picked it up. As Austrians we should know better.

The planners were right about this. What they got wrong was that a quick government fix would be better. They assumed that government would know, and could then use its swift ability to fix any flaws seen. This is not correct, despite the loud proclamations that we have to "do something" because any quick action is better than nothing--even if the gas truck arrives first, any old liquid is not better than nothing on a house fire. If government's actions both exacerbate the problem, and make it harder to figure out the right solution, it is not better than nothing either.

Government doesn't know, but sometimes the market doesn't know either: before it learns. So, the idea that the "market has spoken" is not necessarily correct. And in some cases, like this one, the "right solution" is based on unknowns, probabilities, and changing circumstances. What this means is that whatever the market "chooses" may or may not work out best. The choice that produces 60% success is a better choice than the one that produces 50% success, if they cost the same, but there is still a 40% chance it will fail.

Then, if it works out poorly, it will be assumed that this was the wrong choice--but it may have actually been the choice with the higher probability of success. It may have been safer, cheaper or wiser, but there is no way to know, at least without a hundred randomized trials. We don't have that--any other similar situation still has a thousand variables, just for the one data point.

If the market chooses, we won't know if it was the right choice. Market purists are wrong to say that the choice was right simply because the market chose it. The choice may be wrong, humans are fallible, information is scarce, and evolving the best choice takes time. Sometimes there simply isn't enough time. There are mistakes and trials along the way. Sometimes it would have been better to choose differently--its a learning process. On the other hand, even if it looks wrong, it may have been right, even as planners point to the failure: statistics are statistics.

If government chooses, we also won't know if they chose correctly. Market purists will say that the choice that emerged in the market was right, because the market chose it. Planners and lovers of the government fix will assume that what government chose was right, because "the people," or the voters, chose it. But, we don't know. We can't know--that is just the fate of being human, and living in a world of time and uncertainty. Life would be pretty boring if this weren't the case, but it makes economics a lot less precise than is usually assumed.

The Five Types of Economist

noreply@blogger.com (liberty) — Wed, 20 May 2009 11:38:00 +0000

Yes, its been done many times before. I just had an early morning urge.

1. The Mathematical Economist

"[The mathematical economist] has 30 pages of mathematics, and at the end there emerge the assumptions he put in at the beginning."
- Voprosy Economiki 1948.

The Mathematical Economist should have been a mathematician, but he knew that he would end up teaching community college if he went that route. He also knew how to write down his assumptions (name his variables) at the top of his paper, and repeat them at the end, having done some simple calculus in between. Therefore he knew he could get a top teaching position at a good research university as an economist. The Mathematical Economist has no friends, a wife, two or three children and a bland, pasta-filled life. But he is happy, and has absolutely no idea how the economy works, which makes him smirk whenever he admits it to himself, which is rarely.

2. The Clever Tear-Down Artist

The Clever Tear-Down Artist is the loudest, if not also the most common, kind of economist. The best ones teach at Harvard and win Nobel Prizes. The Clever Tear-Down Artist spends his days writing "one-liner papers" (which are about 10-20 pages) that illustrate cleverly that (if you make certain absurd assumptions) water runs uphill, the Sun actually revolves around the Earth, and Bill Clinton was a faithful husband.

Well established facts are cleverly whisked aside to make room for much more important econospeak and charts and models. Every paper is exciting and pathbreaking, and does it all in just 12 pages! They are great for cocktail parties because they can be explained so easily and they wow the girls. This is important because the Clever Tear-Down Artist is always on a conference loop or book tour, so he finds himself at a lot of cocktail parties.

3. The Whiz-Bang Kid

The Whiz-Bang Kid is a fun breed. He isn't really an economist as much as a clever flame thrower. Unlike the Clever Tear-Down Artist, he means no harm (unless he wants to start a revolution). He isn't interested in poking holes in theory, he is interested in re-writing language. For the Whiz-Bang Kid, 10 pages should be enough to explain the origin of life, and still have space for an homage to his favorite poet. Any one of his papers would win him the Nobel Prize, except that none of them have any content. Although he is brilliant the first time you hear him, and he is clearly smart, after a while it becomes clear that he isn't really saying anything. Probably first in his class, The Whiz-Bang Kid is always chipper and has a beautiful wife. A little quirky, he works hard and everyone likes him. He goes on book tours and possibly becomes a talking head* if he strays too far into policy.

4. The Small Contributor

This breed is excruciatingly boring, which means that they could possibly die off, which would be a great relief. The Small Contributor writes 25-50 page papers offering an extremely well proven argument defending the (already accepted) theory that firms in southeast rural Thailand had seen lower demand for dyed cloth in the 1994-1998 period than in the 1998-2002 period... or at least accepted theory believes that is what this kind of economist writes about, as nobody has actually managed to stay awake through to the end of the title, let alone read a whole paper. It is well established fact that papers written by these economists are tagged "BioHazard" when they reach the peer review office, and quietly passed through without another glance. These economists are either unmarried, or have an equally dull wife, if such a thing is possible for a woman.

5. The Good Economist

...usually either is, or should be, in another department

*I have not included the Policy Wonk, but they are pretty self-explanatory. They wonk.